Foundation of Marketing of Pure General Insurance - Case Study Example

Pure General Insurance Case Study (PGI) Table of Contents A. Introduction B. Situational analysis audit and assumptions (Question B1) Audit: B2) Internal Audit (men, money, machine, marketing) B3) Market Audit: PESTEL ANALYSIS Political Economic Social Technological Ecological Legal C) Customers as a valuable asset of Pure General Insurance (Question 2) D) PGI: Marketing objectives and Marketing Strategy (Question 3) D1) SWOT analysis D2) Ansoff Matrix D3) STP: Segmentation, Targeting, Positioning 7Ps: prefer to do 7Ps: Product, Price, Promotion, Place, People, Physical evidence and Process (you have to match ideas) E) Conclusion (words: 1511) A. Introduction In order to understand the appropriateness of a marketing strategy applied by a particular firm, it is necessary to examine primarily its environment (internal and external) trying to identify all the factors that may influence the performance of the marketing policies followed by the specific firm. Current paper refers to the marketing strategy used by the Pure General Insurance, a firm that was established in 1922. Until today the firm has managed to retain its position in the market; however the severe turbulences within the local and the international market had their consequences on the firm’s performance the last years. For this reason, the revision of the firm’s marketing strategy has been considered as necessary in order for any potential operational weakness to be identified and appropriate measures to be applied. B. Situational analysis audit and assumptions (Question 1) B1) Customer Audit: In accordance with the memo sent by the marketing manager, Joe Palmer, to the firm’s marketing consultant, consumers that seek for household insurance are interested in the following issues: a) whether the particular firm pays quickly after a claim is made, b) whether this firm treats its customers fairly and c) whether the services offered by the firm are appropriate and effective within the context of the particular industry. In any case the reputation of the firm should be also taken into consideration. On the other hand, the identification of the characteristics of PGI’s potential customers regarding the particular activity is of particular importance for the success of the specific attempt. In this context, it could be stated that the majority of the firm’s customers are expected to be people of middle and low income. B2) Internal Audit (men, money, machine, marketing) In accordance with the case study, firm faces for many years a significant pressure. In these terms, the firm could not easily retrieve the necessary funds in order to hire additional staff for its new division – household insurance. On the other hand, existed machines should be considered as appropriate for the new firm’s activity (there is no particular differentiation from the firm’s activities in the past). As for the money available for new marketing strategies, it could be stated that this could be an issue in the long term. The firm can manage to support financially a marketing strategy referring to its household insurance services department; but in the long term, a source of capital would be required in order for the firm to remain in this sector (potential use of sponsorships or advertisements offered) B3) Market Audit: If examining the British market using the Porter’s five forces model (as presented below) the following assumptions could be made regarding the market conditions for PGI: a) there is always the threat of new entrants in the household insurance industry, b) customers use the strategy of ‘shopping around’ for cheap premiums so it would be very risky to speak for loyalty in the particular sector, c) in the same context, there are substitute products offered to the customers – usually in lower prices, d) the firm’s suppliers do not have particular power in this case because there are no materials used in the particular business activity that they could not be retrieved easily and e) in the specific industry the competition is extremely strong; therefore it would be risky for the firms to expect a long term success in this sector. In the particular sector the most strong competitors are the following ones: Mills (Sable), Bullring, Blair Patterson, TE Bexley and Cherry Ash. Figure 1 – Porter’s Five Forces (source: Porter, 1998, 22) PESTEL ANALYSIS Political The political conditions in Britain have been stabilized for years with the Labour Government to have the main political power in the country. This fact could be regarded as favourable for all initiatives that aim to support people with low and middle income across the country. Economic The financial conditions within the British market (as in the global market also) should be characterized as extremely difficult. The firm should have the appropriate funds in order to cover any potential losses caused by unexpected failures. Social The severe turbulences in the financial markets globally and locally have not much influenced the social conditions in Britain; the high percentage of the population to belong to low and middle income class (that would welcome a cheap household insurance scheme). Technological In the household insurance sector, technology is not expected to have any particular influence as there is no specific involvement of this sector in the daily activities related with the household insurance. Ecological In the same context, the particular activity is not expected to have any consequence to the natural environment. Legal The provision of household insurance services should be designed in accordance with the current British laws related with the commercial activities and specifically with the provision of insurance services across UK. C) Customers as a valuable asset of Pure General Insurance (Question 2) Customers’ views on the particular sector can be found in the Appendix section. In accordance with these comments, PGI should focus on the following issues when developing its marketing strategy regarding the entrance of the firm in the household insurance sector: minimization of the number of terms included in the relevant contract: the existence of many terms would cause a significant increase in the premium. On the other hand, the procedure for claiming the money related with damage should be simplified; no machines would be involved in the procedure which should be made quick and effective. The development of communication with customer should be also promoted; all customers interviewed made negative comments regarding the phone lines that are always busy; they all commented negatively the fact that they cannot easily contact their broker whenever necessary. D) PGI: Marketing objectives and Marketing Strategy (Question 3) D1) SWOT analysis STRENGTHS WEAKNESSES 1) Years of operation with the insurance industry 2) Existed customer base 3) Skills of employees 4) Cooperation with trade unions 1) Lack of innovative approaches 2) Operations focus on a particular sector (motor insurance) OPPORTUNITIES THREATS 1) Insurance market in UK is a profitable one 1) Possible entrance of more competitors 2) Unknown response of customers D2) Ansoff Matrix The above issues are also highlighted if using the Ansoff Matrix. The particular Matrix which is developed below shows the potential relationship among the following elements: the insurance market, the product/ service provided, the potential development of the market and the chances for diversification. In the Ansoff matrix presented above1 the following elements should be highlighted: a) market penetration: because the household insurance industry is an unknown sector a careful estimation of the cost involved should be made in advance, b) after the entrance in the new sector the services offered to the public would be continuously developed. On the other hand, market development will be achieved using an appropriate marketing strategy. However, despite the fact that the firm enters a new sector (the household insurance) it remains with the same industry (insurance sector). In this case the diversification is characterized as relevant. D3) STP: Segmentation, Targeting, Positioning 7Ps: prefer to do 7Ps: Product, Price, Promotion, Place, People, Physical evidence and Process (you have to match ideas) Regarding the above ‘elements’ of the marketing strategy the following comments should be made: as already stated above the product promoted, i.e. the household insurance program, is a new one for the particular firm, however the fact that the firm already operates for years in the insurance industry will be helpful towards the success of this initiative. On the other hand, the price of the product promoted will be relatively low (meeting also the demands of the customers as expressed in the relevant interviews). The promotion of the product will be made through an appropriately customized marketing strategy that it will be advertised through the media and the newspapers. People to whom the product will be promoted will be all residents in UK. The product will be appropriately described to the public through the marketing plan applied. In this way, the success of the marketing strategy deployed for the particular product should be considered as secured. E) Conclusion When having to decide on the appropriate marketing strategy, firms tend to use a series of criteria. On the other hand, if the marketing strategy chosen is not appropriately designed (or if it is inappropriate for the targeted audience) then a series of negative consequences may result for the firm involved (Low, 2000). There is also the chance that the preferences of the customers have been changed regarding a particular product or service (Treise et al., 1994, Kline, 2005). All the above issues should be taken into consideration by firms when designing and applying their marketing plans. In the specific case, PGI seems to be ready in order to enter the household insurance sector. In the long term, it would be necessary that its marketing strategy would be reviewed periodically in order to ensure the completion of the requirements set by the market and the preferences of the public. References Dobie, K., Grant, J., Megehee, C. (2003). ‘Time versus Pause Manipulation in Communications Directed to the Young Adult Population: Does It Matter?’ Journal of Advertising Research, 43(3): 281-295 Griffin, T., Mcarthur, D. (1997). A Marketing Management View of Integrated Marketing Communications. Journal of Advertising Research, 37(5): 19-26 Hills, G. (1994). Marketing and Entrepreneurship: Research Ideas and Opportunities. Quorum Books. Westport, CT Kline, J. (2005). ‘Ethics for International Business: Decision Making in a Global Political Economy’. Routledge. London Low, G. (2000) Correlates of Integrated Marketing Communications. Journal of Advertising Research, 40(3): 27-32 Porter, M. (1998) On Competition. Harvard Business School Press Treise, D., Weigold, M.F., Conna, F., Garrison, H. (1994). Ethics in advertising: ideological correlates of consumer perceptions’, Journal of Advertising, 23(3), 59-70 Appendix I Analysis of Customers’ demands A. Male, 46yrs: In accordance with the interview of a male customer of 46 years old, it would be expected that the provider of the motor insurance policy (through the Trade Union) would be the one that should provide also the household insurance policy. It is noticed that an effective contents policy should have the following elements (R3): ‘accidental insurance cover, and theft, plus fire damage yes and that new for old thing were they give you enough money to buy a new replacement’. The particular customer reveals that he has not thought the case of a household insurance and the only ‘channels’ that he is informed on this matter is through the TV, the newspaper and the letters sent by the firms directly to the public. B. Female, 56yrs: The household content policy should be provided by the mortgage lender (as in her case). Moreover, it is noticed that apart from the basic elements of the policy (like the protection from fire and theft) other issues should be taken into account like the protection of the area outside of house also while the terms that introduce ‘exclusions’ to the protection offered should be reduced. The procedure for claiming the compensation should be also simplified. C. Male, 23yrs: Price seems to be the decisive criterion for choosing a household contents policy. The particular customer has also changed his broker using currently an online one after the local insurance broker became too expensive. D. Female, 23yrs: The interview with the next customer (female, 23 yrs) reveals that she would prefer to choice her insurance provider through the Internet (where prices are also compared). On the other hand, the particular customer thinks that in a household contents policy just fire and theft could be included because the existence of many terms makes the relevant insurance scheme too expensive. E. Male, 63yrs: The particular customer would expect from a household content policy: ‘The usual fire, theft, accidental damage, legal expenses insurance and all those telephone help lines –you know the repair, tradesman-sourcing etc’ (R2), a common point with customer D. He would also prefer a direct communication with his broker stating ‘I don’t like those telephone answering systems just give me a person any time’ (R4) F.Female, 43yrs: She would prefer to deal directly with an insurance firm in case of household insurance. She mentions that ‘I like to buy insurance from people who know about insurance, I mean does my trade union know anything about insurance? I don’t think so!’ (R1) She doesn’t like the existence of exclusions within insurance contracts, stating that ‘I do hate those exclusions.’ (R2) Read More