Product Channeling in the Realm of Insurance - Essay Example

The methods of distribution include the internet, independent marketing organizations, catalog houses, commodity managers, exclusive distribution methods, factory direct sales, general distributors, internet cataloging, manufacturers’ representatives, master distributors, mill supply houses, selective distribution, specialty distribution systems, and vendor convergence. These systems can be integrated vertically or as separate, independent entities. Insurance distribution can be found using any or all of these methods collectively.

The ability to navigate distribution channels would require an understanding of optimal timing. “Choosing the right channel for the life cycle stage of the product can have a dramatic impact on sales, and often it determines the success or failure of any new or existing product.” (Combs, L. S.; The Right Channel at the Right Time; Industrial Management; 46(4); July –August 2004) But in essence, there are many methods for choosing either a singular channel or multiple channels for distribution purposes, especially in the world of insurance. “The proliferation of disconnected distribution channels is a product of the competitive nature of the insurance industry.” (Toth, W.; Navigating Distribution Channels; Insurance & Technology, 30(7), S6-S8; 2005) This alone speaks volumes in the realm of the life cycle considered to be prominent in insurance sales, that during peak times the effectiveness of disconnected distribution channels, or independent distributors or contractors, would be of benefit to the industry.

The most effective channels for insurance would have to be independent marketing organizations for two reasons; This gives the company the ability to function independently of the whole, yet also in a vertically integrated method where all the segments can interact with each other. The insurance enterprise has utilized many methods toward channeling its product including master distributors, selective distribution, and commodity managers. Selecting the best, most efficient model, would not always be a simple endeavor, and again relies heavily on the product’s life cycle.

Distribution is a vital consideration in any marketing model. “Models of distribution channels have defined retailer and manufacturer pricing decision variables in different ways, such as absolute retail price or absolute retail margin and absolute manufacturer price or absolute manufacturer margin.” (Tyagi, R. K.; Do Strategic Conclusions Depend on How Price Is Defined In Models of Distribution Channels?; Journal of Marketing Research; 42(2), 228-232; 2005). This consideration would be true for the insurance industry as well. Models of distribution channels will define the methods and even the life cycle of the insurance industry. Read More