Understanding and Analyzing Marketing Strategies for PGI - Essay Example

Understanding and Analyzing Marketing Strategies for PGI ---- Prajakta Kanegaonkar PIG Ltd is insurance Broker Company located in the UK. The main product for the company is car insurance. The company has a strong brand image and started its operations in 1929. BIG Company is considering launching of household insurance. To make this product successful the organization needs to understand the conditions of the business environment. Any marketing plan will be successful only when proper analysis of external and internal environment is done by an organization. It is also very necessary to take into account the requirements of the customer. Else it is only going to add to the problem of putting a product in the market which does not suit the customer and which nobody is willing to invest into. Hence primary surveys such as understanding the customer’s expectations, segmentation of the markets as per age and gender etc are required. Following tables indicate the findings of such surveys. We are going to consider this data while designing a marketing plan for the organization. Following are the data surveyed by the company Table 1: Summary of the Interviews conducted   Age Gender Happy Customer Expectations from the product (coverage) Expectations from the product (service) Non-salient Features How they know about the product 1 25 M Yes Exterior and interior of the house In case of theft the customer can buy own replacement Legal advice not required Media, Newspaper, Mails 2 33 M No Accident, Fire, Theft, Exterior of the house Should provide for legal expenses Exclusions Bank and TV 3 37 M Yes Accident, Fire, Theft 24 hour service helpline and assistance Wear and tear reduction Internet, Radio, TV 4 40 F Yes Fire, Theft Theft replacement should be quick and at customers discretion Not really On-line Brokers, Radio, Mails 5 29 F Yes Fire, Theft, Accidental Damage Less time and money consuming after sales service Exclusions Friend 6 44 M No All the points mentioned above Can also include travel insurance, excellent customer care support system Frills Local Insurance Agent Table 2: Market Segmentation - Gender Market Segmentation - Gender     Gender   Questions Male Female 1 Satisfied Customer Divided into middle Yes 2 Expectations from the policy Fire, Theft, Accident, Legal Expenses, Exterior area of the house should be covered The same as mentioned in the adjacent column 3 Extra Features Ready to pay for replacement installment, Travel Insurance Legal expenses, efficient after sales service 4 Non-Salient Features Theft replacement Exclusions 5 Product Awareness All the channels such as Internet, Mails, Direct Sales etc. Broker, Advertising, Friends, Word of mouth Table 3: Market Segmentation – Age Market Segmentation - Age     Age Groups   Questions 15 - 25 years 26 - 35 years 36 - 45 years 1 Would you consider purchasing the policy Yes Yes/No Yes/No 2 Expectations from the policy Accident, Fire, Theft, Covering the entire house-exterior and interior Accident, Fire, Theft, Covering the entire house-exterior and interior Accident, Fire, Theft, Covering the entire house-exterior and interior 3 Extra Features Theft Replacement at customers discretion Should cover legal expenses, Less time and money consuming after sales service Theft Replacement at customers discretion, Travel Insurance 4 Non-Salient Features Legal advice not required Exclusions and Frills Not Really 5 Product Awareness Media, Newspaper, Mails, Internet Bank, Internet, Radio, TV, Friend Online Brokers, Internet, Bank, Local Insurance Agent Table 4: 7Ps of Marketing 7Ps of Marketing   Title Description 1 Product The features of the product or the services offered by the company to the customer 2 Price The cost at which the customer buys or acquires the product or the service offered 3 Place The place is where the product or service of the company actually sold 4 Promotion This is about creating awareness in the market on a continuous basis regarding the product or service offered 5 People People within and outside the organizations are extremely crucial for the success of the product or service. Organization cannot afford to forget the people who make the product or the service happen in the market 6 Process Process is a system that is set in such a way in which the customer is included at various points from the mere introduction to satisfied after sales service of the product 7 Physical Evidence This especially indicates to the physical part of the service. As services do not have physicality associated customers tend to rely on material cues or tangible descriptions of the services rendered Table 5: Application of 7Ps of Marketing to Home Insurance Industry Application of 7Ps to Home Insurance   Title Application 1 Product 1. Protection is offered for the structure, any non moveable items 2. It needs to cover the cost of rebuilding which is apart from the market value of the property. 3. The risks covered under the insurance policy could range from fire, explosion, theft, to social riots, earthquake, and landslides 4. Contents insured would be any moveable item which the insurer would take along with him. 5. Clear instructions on services provided along with after sales services. 2. Following are the optional features of home insurance: 1. Accidental damage to any of the contents within the house. 2. Accidental loss or damage on personal possessions such as mobile phones, jewelery, laptops etc. 3. Access to legal advice 2 Price Price of a home insurance product will be affected by: 1. rising construction and property cost, 2. Customers age, habits, need, policy choice and income 3 Place Home Insurance would typically feature in markets which is highly aware. 4 Promotion Marketing and promotional activity will have to be aligned with the customer base that needs to be addressed. Home insurance industry should also take into account the state of economy while promoting the product. The promotions can happen through various media such as virtual and real. Direct marketing also features very predominantly in marketing and promoting home insurance. 5 People Insurance companies these days deal not only with the in house sales staff but also through the people who are appointed as advisors. It is necessary that both these factors pay attention to the name and reputation of the company providing insurance. Along with efficiency they should also be trained to be customer friendly and supportive. These people should also be knowledgeable, compassionate and understanding. 6 Process The system of selling a home insurance policy and further servicing it should be based on clarity, honesty and transparency for the customer. There is always suspicion and skepticism involved when either of the parties, insurer or insured talk or deal with each other. 7 Physical Evidence The literature provided by the home insurance company will be the physical evidence here. Service industry will always have paper work or documentation as physical evidence to the policy provided. The evidence of the service provided will start from the brochure and end with the premium receipt along with the policy documents. In such case it is necessary for an organization to maintain relationship through the paperwork provided. Table 6: SWOT Analysis SWOT analysis is done to analyze the external as well internal environment of the organization. Strengths and Weaknesses (SW) feature the internal environment in which the organization operates. The circumstance in the external environment can be perceived as an Opportunity or Threat (OT) based on an effective internal analysis of an organization. Both the factors are highly interconnected. For effective planning and implementation an organization needs to do SWOT analysis from time to time. An accurate analysis of the strengths and weaknesses will result into the conversion of threats into opportunities and new heights to scale. Today organizations cannot and do not operate without taking a cognizance of the surrounding society. It even provides for an anticipation of a possible threat and gives time to rectify the situation to prohibit any further damage control. Let us have a look at the SWOT Analysis of Home Insurance product for this company. SWOT ANALYSIS STRENGTHS WEAKNESSES 1. The organization is in the business for a long time. In such situation it always has a trustworthy name built over a period of time. 1. The company being tradition bound wakes up with a start to the changes adopted by other insurance organizations in the market. 2. The premium rates are high and hence the earnings become very lucrative for the firm 2. For an insurance company it is necessary that all the segments of a market are thoroughly combed for business. Ignoring a segment because it is allow risk segment can prove fatal to the business. 3. The concept of tie ups is very predominant in the culture of the company. Sharing the profits with other agencies has proven to be essentially beneficial for the company. It has helped the organization to grab a better market share 3. Although the brokers have competitive prices from all the agencies offering insurance, loyalty towards PGI needs to be built within the brokers as they form the face of the organization, whether appointed internally or externally. 4. Operating through Direct Line of advisors has enabled the organizations to cut on the operations cost which, strategy which has proven to be a strength going stronger for the organization. 4. UK especially the market is very sensitive to which party is leading the nation. This is primarily because the political changes trigger the changes in economic, legal, social, foreign policy areas as well. Organization is not effectively proactive to the changes. 5. As motor insurance is mandatory on UK roads the market would never cease for PGI. Good legal requirement has resulted into a good business 5. The biggest weakness is being an organization to offer a single product to the customers. Today the customers would want a basket of products being offered to them under one roof. Similarly absence of translation and diversification of expertise in one area into another shows lack of pragmatism and foresight on company’s part. SWOT ANALYSIS OPPORTUNITIES THREATS 1. Building on the history of an already established name. 1. Introduction of NCD (No Claims Discount) is on its way to Insurance market. This will give more flexibility to the customer and in turn have to have the malleability in the plans that are introduced by the insurance companies. 2. As this is a single product company, areas of diversifications are vastly available. With a good analysis team set to work the company can raise the benchmark of its performance and achievements both internally as well externally. 2. The UK home insurance industry although is very demanding, it also has reached the stagnation. There are many players and many products. Adding to a product saying "me too" is not going to help the company. 3. So far tie ups have proved to be the better bet in the organization; hence a vast network to reach the market effectively could be built. 3. Internally for an organization to cope with the changes around is going to create a lot of resistance. Externally image building and then reaping of the benefits is a long procedure. The distance between the existing organizations and the said company is too much to cover in a short time. 4. Market segmentation is a good move to find out potential markets. Today as the business environment promotes catering to niche areas; it could prove a very profitable strategy to cater to particular segments. 4. Customer today is extremely aware. With the coming of internet and availability of online services convenience of transactions takes over everything else. Even if the company offers a good product it not having a convenience of value over money and operational leniency is going to cost the company. 5. Home Insurance is the largest insurance market in UK. In such case as there is no product offered from the companys stable regarding home insurance. There is definitely an opportunity to offer customized, innovative and flexible products in the market with a fresh perspective. 5. Relationship building in insurance company takes years. Most customers would prefer to stick to their "favorites" in such a case, which will result into a cost to train and retrain the staff. Externally skepticism and suspicion is always the viewpoint to look at an insurance provider, howsoever transparent the del may be. Marketing Plan for Home Insurance Now let us combine the data that is collected through the customer interviews and the analysis of the organization. If we have to look at launching a new product such as home insurance successfully in the market we must form a marketing plan for the organization. Objective of the plan: The company would launch a home insurance plan successfully by the end of the financial year 2011 and then onwards look and cater into the home insurance market of UK by customizing the product as per the requirement and also setting the service delivery standards. The objective of the company falls into 3 categories: 1. Launching of the new product: As per the SWOT analysis done, we have understood that the company does not have any other product other than car insurance in its stable to offer to the customer. The organization stands for its credibility in the market when it comes to car insurance and respective dealings of it. This would give an added advantage of reliability for the customer. The survey has revealed that the customer to be targeted is in the age group 26 – 35 years of age which is the younger earning population of the society. This category although targeted by every other company in the market forms the single most earning division. The majority of the earnings for the company would come from this sector. Hence the product needs to be designed and launched as per the convenience of this category. Insurance sector would not necessarily allow launching of pilot projects, but it would be easier for the organization to target the existing customers falling into the age group mentioned. It can also come as a package along with the car insurance offered. There is also a second emerging category of 15-25 years which can be looked upon as potential customers. Although minors it would incur into expenditure towards customer education for the organization. However it will also result into creating market awareness and potential market for the company. Even in this age group people who are 18 years and above have decision making capacity and form a good base of a highly lucrative potential market. Age group 36 – 45 years is a more stable age group resulting into high premiums for the company. This is also an experienced group who would look for “value for money” as discussed. It would be very advisable if the product features would have at least 2 clauses such as travel insurance, legal advice incorporated for this group. Policy of the product can be designed as per the needs mentioned such as expanding the list of movables to be insured along with the structure and fixtures of the home will also help in attracting the customer. If the product needs to be launched by the end financial year 2011, then the product run has to happen in the mid of the year that is August 2010. Only then with the help of fresh surveys and interviews with the potential customers the company would be able to incorporate changes if any in the product to be launched. 2. Customizing the product as per the market: This could be handled by dividing the industry and market into various verticals such as, IT, Services Industry, Education etc. The working hours and earnings of a person would change from each sector. In such situation, the product needs to adjust itself to the demands and experience of the person. Hence one single home insurance product needs to be made with different icings and toppings, which means variations to suit everybody’s appetite. As the industry is stagnated beyond limits creating niche markets could be a very powerful way to penetrate the market effectively. Taking into account the heavily debated No Claims Discount policy also the company can come up with innovative plans to cater specific markets. This would invariably result into creating a strong market base first and then gradually expanding to a more general category. 3. Creating benchmarks of service: As we have already noted that the company has a strong tie up network which has given an operational advantage, this could be further built upon. Extending the network will result into reaching more and more market segments effectively. We also noted that brokers have a comparative price analysis of all the insurance providers. In such case the organization can definitely create loyal brokers or gents by introducing suitable reward systems. Increasing the commission value is just one way of retaining a broker. Creating a recognition value along with the money becomes necessary for retention of the staff. Internet although the most clichéd tool of reaching to people can be turned into advantage by creating effective online assistance and advisory team. One has to appreciate that over a period of time all the insurance providers more or less provide a standardized product to the market. Howsoever customized the product would be, to stay ahead in the competition; the company will have to fall back on the standard of service it sets. It cannot be denied that the insurance company is almost always recognized by the quality of service it provides. Hence creating a dedicated service staff, who is compassionate and understanding of the customer, who puts customer and his priority ahead of everything is always a strategy that is and will prove beneficial for the company. Post the launch of the product it is also necessary to retain the market share. No company can afford a negative publicity especially by word of mouth. Similarly for a company to survive it has to have its eyes and ears open to the changes, whether externally or internally. For an organization strengths need to be even stronger as to convert them into core competencies and weaknesses needs to be identified and plucked out, all this keeping in mind and anticipating the changes that are happening in the external world and essentially adapting to those is the key for an organization to become a successful. References: 1. Marketing Management : Philip Kotler and Keller (12th edition) 2. www.agencyinfo.net 3. www.marketingteachr.com/lessons/lessons_swot.com 4. www.insurancejournal.com 5. www.marketingteacher.com 6. www.entrepreneuer.com 7. www.goodwithmoney.co.uk 8. The Winner’s Manuel, Marketing Effectively, Moi Ali, Dorling Kindersley Book, www.penguinbooksindia.com Read More