Marketing Strategy Recommendations - Medibank Insurance Company - Case Study Example

Marketing Strategy Recommendations Professor’s Name University The City and State Date Marketing Strategy Recommendations Background Summary of Part 1 Travel insurance has gained increased popularity based on the increased number of people willing to travel safely. The Australia travel insurance market is shared by both government-owned and private companies. Australia’s travel market has grown tremendously over the past five years in terms of product development, revenues, and number of consumers. Moreover, the number of global travelers has also increased by about 8.8% annually in the past five years. The travel insurance market is expected to grow constantly in terms of revenues, products, and consumer base. Medibank Insurance Company is the biggest private insurance company in Australia. It has about 340 million customers with insurance policies, which is about a third of the insurance market share in the private sector. Medibank also offers travel insurance and basically provides global insurance for travel in terms of health incidents, termination of trips, baggage loss, and delay in trips. The main insurance covers offered include, a comprehensive cover for foreign travel, health insurance for international trips, multi-trip annual cover for domestic travel. In terms of the market environment, Medibank operates is an environment that requires increases collaboration and relationships with intermediaries such as suppliers and travel companies. Moreover, the company also operates in a highly competitive market with its main competitors being AAMI and BUPA. The travel insurance market is influenced by numerous factors including demographics and economic aspect of consumer spending and earning. Medibank has not segmented its travel products effectively to meet rising consumer needs especially for low income earners such as students. Overall, the company requires a robust marketing strategy to re-launch their travel insurance products and meet customer needs. The main focus on the company should be towards developing different products that are likely to attract new consumer’s especially low-income earners. The product, market, and marketing analysis of Medibank is an effective way of understanding the numerous issues that need to be enhanced to0 compete effectively in the marketplace. The analysis illustrates the current travel insurance environment and how products can be designed to meet specific customer needs as well as business goals. The following report aims at developing numerous marketing recommendations for Medbank in terms of travel insurance. The report will focus on products and services, pricing, place and distribution, and promotional mix strategies. The overall aim is developing specific strategies for MEdibank to re-launch it travel insurance and take the necessary steps to ensure it reaches customers and meets their needs. Products and Services Travel insurance is becoming more necessary than previously thought (SHEEDY, 2016, p. 18). This is because travellers bear the largest risks when travelling, which is evident given the sale of non-refundable tickets among other examples. Therefore, there is an ever increasing demand for travel insurance. Travel insurance is both a product and service. In terms of service, travel insurance enables people to be able to mitigate the risks of any or specific incidences while travelling. The most common service characteristic is ensuring that travellers can make claims especially when trips are cancelled or delayed. Medibank should adopt a travel insurance policy that enables customers to get 100% of their refund when trips are cancelled. Moreover, there are numerous issues that are proving challenging for travellers. For instance, some people may choose to cancel their trips for numerous reasons resulting in loss of their tickets or fare. To enhance such scenarios, Medibank should adopt a “cancel for any reason policy”, which means that customers are free to cancel their trips and make claims for refunds or settlements (Phillimore, 2015, p. 1). Moreover, the travel insurance should also include the ability to recover costs when trips are interrupted. In terms of service, there is increased need to provide all-round support and assistance. This includes the manner in which customers can make claims and get their refunds. Additionally, there is increased need to provide effective means of support including travels tips, medical support and evacuation, as well as baggage recovery. Therefore, Medibank should partner with other businesses who should act as intermediaries for ensuring that customers receive their services. Travel insurance cannot work without such services, thus the need to develop good relationships with other businesses to support insurance delivery. As indicated earlier, travel insurance is becoming a necessity based on the risks that traveler bear. The market for travel insurance is strongly increasing each year. Medibank should target low-income earners and the young generation to tap into the rising market for travel insurance. Most young people are travelling frequently for education, leisure, and work (Eddy, 2015, p. 2). Moreover, the travel insurance industry has not yet catered for low-income consumers such as students. The main target consumers should be youths aged between 18 years and 35 years. These are either student, young professional, or recently married couples. Most of these customers earn less than $30,000 per year meaning, but travel a lot especially for international students (Hughes, et al. 2015, p. 20). Moreover, the company should also focus on international travellers, since they perceive increased risks over domestic traveller especially when visiting new countries. Service differentiation is paramount to ensure that travel insurance is competitive and offers alternatives to the existing products in the market. To enhance service differentiation, there is need for investing in latest technologies as well as communication channels. The company should adopt an effective and efficient process of purchasing and claiming insurance products. This can be achieved by partnering with banks and other businesses to facilitate such processes. Another important area focuses on service quality. To ensure service quality, there is increased need for employee training in terms of communication as well as service delivery. Employees are the main resource of any company, and through training they can help to ensure that service quality is always effective and excellent. Additionally, service productivity can also be enhanced by ensuring that market research is conducted to understand what consumer expects from the company. Service productivity can also be reinforced through the development of quality measures such as integrity, honesty, and security in terms of travel insurance. Overall, there is an increased need to enhance the travel and insurance services to meet the rising demand for travel insurance. Pricing To effectively re-launch its travel insurance products, Medibank will require adopting a new and effective pricing strategy. The first strategy the company can purse is based on customer0based value pricing. Customers do not necessarily care how much it costs them to buy a product, but they care about the value they get by purchasing a certain product. This means that customers will be willing to pay for a product or service that they perceive is valuable. This means that how customers perceive the value of a product is the key to successful marketing. Travel insurance covers numerous areas that are of great concern to customers. Therefore, whenever customers perceive increased value in a product and service, they can purchase the product at any cost. In the travel market, there are numerous similar products and services. Therefore, it would be challenging for the company to utilize the value-based pricing strategy. This is because the travel insurance is highly competitive and the number of alternatives is many. With increased competition, there is high demand for low cost insurance coverage (EYAL & GARD, 2016, p. 49). Therefore, no matter what type of value is perceived by the customer, they will be always on the look for low cost coverage. When it comes to cost-based pricing, a business sells its products at a price that is meant to cover the costs of production and generate profit. This means that the company must understand the costs of producing its products or rendering its services. The main challenge with this strategy is its implementation since it can limit the company’s ability to make profits. The issue here is not about value, but the costs of production illustrating a challenging task of balancing the two Emms, P, (Haberman & Savoulli, 2007, p. 18). In the travel insurance market, the cost of production is based on how many claims are made or the frequency of claim payouts. This means that it would be difficult to determine the costs of producing travel insurance products and services. Moreover, there is a great deal of concern based on the intensified competition from other insurance firms. This strategy can only work well in industries that develop unique products. For Medibank, it would not be a good idea to adopt a cost based pricing strategy. The pricing strategy that works best for Medibank is the competition based pricing strategy. Competition based pricing refers to setting prices to be different from that of consumer, thus making the products and services more attractable and affordable for consumers (Haberman & Savoulli, 2007, p. 20). Based on the increasing competition of the travel insurance market, there is need to offer affordable and flexible prices. Although not all insurance coverage policies can be made affordable, there are other services that can be modified to meet the needs of low-income earners. Medibank should focus on pricing its products and services considerably lower or at a discount than that of competitors. With an already huge customer base, Medibank can easily succeed by making insurance products more affordable and flexible. Place and Distribution Place and distribution dwells on how products and services are delivered or made available to the customer. In this case, there is need for an effective supply chain system that can ensure products and services are available to consumers. For the travel insurance industry, place and distribution is a bit complex. This is because insurance covers are supplied by numerous partners including security agencies and health organizations among others. In terms of the supply chain, there are numerous distribution channels available for Medibank. The most common distribution channel for travel insurance is through direct sales. This means that travel insurance products and services are sold openly by the company that has the direct link or connection with the end customer or user. This means that third parties do not apply as customers can purchase insurance directly from the insurer (Trigo-Gamarra 2008, p. 392). With numerous branches across Australia, Medibank has the ability to sell its travel insurance products and services directly to customers. Selling directly is effective since the distribution costs are less than other alternatives. The second distribution channel is through the use of intermediaries especially banks. Selling insurance products through bank branches can be effective given the wide reach of banks in Australia. For such a distribution strategy to work, Medibank will need to partner with a bank that has country-wide reach and develop distribution relationships to enable its products to reach consumers. Furthermore, the firm can also sell its insurance through brokers. Brokers are effective based on their unlimited access to different and specific markets. Brokers can ensure that products and services reach a wider customer base especially when covering international customers. Again, the firm can also utilize agents who act as intermediaries connected to one or more insurance companies (Dumm & Hoyt 2003, p. 35). Another effective distribution channel is through price aggregators, which is an internet platform that compares different insurance products and prices from different firms. Such a channel is effective in ensuring that customer can make comparisons based on competitor products. Moreover, the company can also sell its products and services directly through the internet. An effective supply chain system requires increased partnership and collaboration between different facilitators and businesses (Dumm & Hoyt 2003, p. 30). The main challenge for the travel insurance business is making and paying claims. To avoid the increased costs of filing claims, Medibank should use a third-party organization for verifying claims or conducting investigations on possible risks or incidents (Trigo-Gamarra 2008, p. 392). Moreover, Medibank should also rely on external partners such as medical organization or banks in terms of making payment or delivering services after claims have been verified. All these collaborations and partnerships are important for ensuring business continuity as well as effectiveness of product distribution. Promotional Mix A business can never make any sales without promoting its products to consumers. The most effective strategy for promoting products and services is through the integrated marketing communications strategy. The first focus for Medibank should be in terms of advertising. Currently, advertising can be conducted in numerous platforms including the internet, smartphones, television, radio, and print (Percy 2014, p. 25). The most effective and efficient means of advertising is through the internet. Using online marketing platforms, Medibank can easily promote its products to consumers. Online platforms for promoting travel insurance include the use of social media, blogs, and websites. Moreover, there is a great need to utilize the emergence of smartphone usage to market products. Most people nowadays own smartphones that they use to access numerous media on the internet. Another promotional strategy is developing television advertisements that are likely to encourage customers to purchasing products and services. In addition, Mediabank can also apply direct marketing through the use of mouth-to-mouth selling where people can recommend travel insurance to customers especially in airports and transport stations. Direct marketing offers a cost-effective and efficient method of encouraging customers to buy a product (Kitchen, et al. 2011, p. 125). Again, based on the huge network of suppliers and intermediaries, direct marketing can increasingly utilize the huge resources for such a promotional strategy. Medibank should also develop a travel insurance campaign especially through the internet to effectively re-launch its products. The marketing campaign should adopt a clear and convincing message to customers, which is based on the value and affordability of the products. Furthermore, the company should also use social media to gain increased access to the young generation who are targeted as the primary customers. Promotional campaigns enable customers to fully understand what a product offers by allowing customers to compare and analyze the real value of products being offered. Overall, these promotional mixes are an effective way of ensuring that customers are aware of travel insurance products and are motivated to buy. Conclusion In conclusion, Medibank should re-develop its travel insurance products by increasing their value in terms of coverage and affordability. The first step is ensuring that services and products are developed with quality standards. Moreover, employees should also be trained on how to enhance service quality, productivity, and effectiveness. The company should target the young generation aged between 18 and 35 years and are low-income earners. The pricing strategy that best fits the company is that of setting prices slightly lower than that of competitors. Again, Medibank should implement an effective and efficient supply chain system to keep its production and operational costs down. An effective and efficient supply chain can only be possible through wide networks of partners as well as intermediaries. The use of an integrated marketing communications strategy will also ensure that products and services are promoted effectively. References Dumm, RE, & Hoyt, RE 2003, 'Insurance Distribution Channels: Markets in Transition', Journal of Insurance Regulation, vol. 22, no. 1, pp. 27-47. Eddy, K 2015, 'An Older Australia', Journal of the Australian & New Zealand Institute of Insurance & Finance, vol. 38, no. 2, pp. 1-4 Emms, P, Haberman, S, & Savoulli, I 2007, 'Optimal strategies for pricing general insurance', Insurance Mathematics and Economics, vol. 40, pp. 15-34. EYAL, O, & GARD, J 2016, 'THE SIX STEPS TO PRICING POWER IN INSURANCE', FICCI Studies & Surveys, p. 49. Hughes, K, Wang, J, & Shu, M 2015, 'Exploring the travel patterns, preferences and recommendations of Chinese university students living in Australia', Journal of Hospitality and Tourism Management, vol. 23, pp. 12-22. Kitchen, PJ, Patti, CH, & Schultz, D 2011, The Evolution of Integrated Marketing Communications : The Customer-driven Marketplace, Routledge, London. Percy, L 2014, Strategic Integrated Marketing Communications, 2nd ed, Routledge, Hoboken. Phillimore, N 2015, 'Shades of Grey', Journal of the Australian & New Zealand Institute of Insurance & Finance, vol. 38, no. 4, pp. 1-2. SHEEDY, RL 2016, 'Insuring a Trip In Uncertain Times', Kiplinger's Retirement Report, vol. 23, no. 5, p. 18. Trigo-Gamarra, L 2008, 'Reasons for the Coexistence of Different Distribution Channels: An Empirical Test for the German Insurance Market', Geneva Papers on Risk & Insurance - Issues & Practice, vol. 33, no. 3, pp. 389-407. Read More