CAIB 4 - Chapter 6

Introduction to Marketing

• Marketing is a system of business activities aimed at satisfying consumer and company objectives.

• Four critical aspects of marketing: System of Business Activities, Value, Products, Services, and Ideas, Objectives of the Consumer and the Organization.

• The marketing department is responsible for creating value for clients.

• Clients must perceive value in the company's offerings.

• Historically, marketing focused on tangible consumer products.

• Today, the marketing of services plays a larger role.

• Clients expect a compelling offering beyond just products—services are critical to future business growth.

• Products/services must meet client needs to ensure satisfaction.

• Organizations must meet their objectives—e.g., profitability.

• Building long-term client relationships is key.

The Evolution of Marketing

• The original concept of marketing involved manipulating the 4Ps: Product, Price, Place, Promotion.

• Modern marketing is strategic, focusing on client needs and building long-term relationships.

• Modern marketing strategies include market segmentation, differentiation, and market positioning.

• Marketing is now part of corporate culture in leading companies.

• The goal of marketing is to create an environment where clients return and advocate for the brand.

Marketing in the Insurance Industry

• The insurance industry provides significant societal contributions.

• The public perception of the insurance industry is often mixed, influenced by negative experiences.

• Brokerages play a pivotal role in enhancing the industry’s image.

How Progressive Brokerages Use Marketing

• Brokerages must motivate industry stakeholders to elevate standards.

• Advertising and public relations efforts shape the public's perception.

• The marketing mix determines how insurance is presented and sold.

• Misconceptions about insurance are linked to how it's marketed.

• Insurance is an intangible product unlike typical consumer goods.

• Clients often undervalue insurance because it is unused unless something bad happens.

• Brokerages must overcome the perception of insurance as a commodity.

Overcoming Price-Based Competition

• Clients often focus on price due to difficulty distinguishing between brokers.

• Many brokerages reinforce this by marketing based on "low premiums.“

• Brokerages need to add more perceived value to insurance offerings.

The Real Value of Insurance

• Clients are buying more than just a policy – they are purchasing security, protection, and service.

• Insurance is about peace of mind, not just price or coverage.

• Brokerages must highlight the service and relationships they provide.

Challenges in Adding Value

• The core product is often indistinguishable across insurance companies.

• Brokerages need to offer more than just policies – they must offer relationships.

• Value-add comes from customer service and claims support.

The Role of Product in the Marketing Mix

• The product in the brokerage context includes insurance policies and supplementary services.

• Brokerages must decide which lines of business to focus on.

• Expanding into financial services can enhance offerings.

Pricing Strategies

• Pricing strategies for brokerages must be competitive and competitive.

• Pricing strategies must consider the need to meet company objectives.

The Importance of Convenience

• Accessibility and convenience are critical in modern insurance distribution.

• Brokerages must consider online services and call centers.

• Clients expect flexibility in how they interact with brokers.

Promotion in the Marketing Mix

• Brokerages use personal presentations, advertising, and public relations.

• Corporate advertising can build trust and positive image.

• Direct marketing can be effective when personalized.

The Importance of People in the Brokerage

• Employees play a crucial role in shaping client perceptions.

• Service excellence hinges on employee-client interactions.

• Management must empower employees to provide outstanding service.

Building Client Relationships

• Strong relationships are key to client retention and satisfaction.

• Superior service often matters more than the actual policy.

• Clients are more likely to stay loyal when they feel valued.

Strategic Marketing Management in Brokerages

• Brokerages must make strategic use of resources to seize market opportunities.

• A marketing plan includes strategies, objectives, and goals.

• The marketing plan must align with the brokerage’s vision and mission.

• Brokerage marketing should be focused exclusively on the marketing function.

• Mission-driven strategies enhance client retention and relationship-building.

Marketing Objectives and Implementation

• The brokerage should set marketing objectives based on market share growth.

• The brokerage should implement strategies to achieve growth, such as differentiation and positioning.

• Value-added services attract and retain clients.

Positioning and Differential Advantage

• Positioning is based on client perceptions of the brokerage.

• Brokers can be seen as low-cost, service-oriented, or fast to settle claims.

• Competitor positioning is relative within the same market.

• Technological advances create new competitive pressures.

Differential Advantage in the Digital Age

• Differential advantage comes from features clients deem important.

• 24-hour access and technology-driven services are competitive advantages.

• Failure to adopt new technologies leads to competitive disadvantage.

The Marketing Action Plan: Core Components

• The marketing action plan should be tailored to the competitiveness of the brokerage’s market.

• The plan includes strategies, objectives, and unique components like financial schedules and evaluation procedures.

Financial Schedules and Timetables

• Financial schedules forecast sales, expenses, and profits.

• Budgets define resource allocation for marketing objectives.

• Timetables outline when activities will be carried out.

Evaluation and Adaptation

• Continuous performance evaluation is essential.

• The brokerage should review client satisfaction and relationships regularly.

• Flexibility in the plan allows for adaptations based on evaluations.

Introduction to Market Segmentation in Brokerages

• Understanding client needs and wants is key to successful marketing.

• Clients vary in their preferences, requiring segmentation of the market.

• Market segmentation helps target appropriate client groups with tailored services.

What is Market Segmentation?

• Market segmentation divides the total market into smaller, manageable sub-markets.

• Key segmentation variables: geography, demographics, psychographics, behavior.

• Database usage enables bottom-up segmentation based on client data.

The Power of Client Databases in Segmentation

• Client databases store valuable demographic, behavioral, and relationship information.

• Profiles can categorize clients into segments for targeted marketing.

• Data allows brokerages to design more personalized services and messages.

Demographic Segmentation

• Demographics: age, gender, life cycle, education, occupation, ethnic background.

• Demographics are easy to collect and provide accurate, objective client data.

• Demographic data alone is not enough—must be combined with other variables.

Demographic Segmentation: Age and Gender

• Insurance needs vary significantly over a client’s lifetime.

• Buying patterns differ between men and women, though these are changing.

Demographic Segmentation: Life Cycle and Education

• Stages like "Full Nest" or "Empty Nest" affect insurance needs.

• Higher levels of education may influence insurance expectations and buyer behavior.

Demographic Segmentation: Occupation and Ethnic Background

• Occupation impacts income level and the types of assets clients must insure.

• Cultural differences affect preferences and expectations in the insurance process.

Geographic Segmentation

• Geography influences client behavior and needs.

• Key factors include city size, urban-rural divide, and climate.

Explore the fundamentals of marketing, including its role as a system designed to satisfy consumer and organizational objectives. Learn about the evolution of marketing strategies, focusing on the importance of value creation and client relationships in both product and service offerings.