CAIB 4 Chapter 6 Marketing PDF

CAIB 4: Chapter 6 Marketing CAIB 4  CAIB 4 Section 1 Introduction to Marketing The Role of Marketing in Insurance Marketing in insurance involves various activities: Placing business with insurers. Promoting products to brokerages...

CAIB 4: Chapter 6 Marketing CAIB 4  CAIB 4 Section 1 Introduction to Marketing The Role of Marketing in Insurance Marketing in insurance involves various activities: Placing business with insurers. Promoting products to brokerages. Promoting products to consumers. Client satisfaction is a key component of long- term business success. CAIB 4 Defining Marketing Marketing: A system of business activities aimed at satisfying consumer and company objectives. Four critical aspects of marketing: 1.System of Business Activities. 2.Value. 3.Products, Services, and Ideas. 4.Objectives of the Consumer and the Organization. CAIB 4 System of Business Activities & Value Creation System of Business Activities: Value Creation: Marketing involves multiple tasks working Clients must perceive value in the company’s together cohesively. offerings. It is the responsibility of everyone in the Value is central to whether a consumer company, not just the marketing department. chooses to do business with a company. CAIB 4 Products, Services, and Ideas in Marketing Historically focused on tangible Today, the marketing of services plays Clients expect a compelling offering consumer products. a larger role. beyond just products—services are critical to future business growth. CAIB 4  Consumer Objectives: Products/services must meet client needs to ensure satisfaction. Objectives of Consumers Organization Objectives: and Organizations must also meet their Organizations objectives—e.g., profitability. Building long-term client relationships is key. CAIB 4  Toolkit Marketing: The original concept of marketing involved manipulating the 4Ps: Product, Price, Place, Promotion. The Evolution Strategic Marketing: of Marketing: Modern marketing is strategic, focusing on client needs and building long-term From Toolkit to relationships. Strategy Strategies include: Market segmentation. Differentiation. Market positioning. CAIB 4  Marketing is now part of corporate culture in leading companies. Marketing as Focused on client satisfaction Corporate and fostering long-term loyalty. Culture Goal: Create an environment where clients return and advocate for the brand. CAIB 4  CAIB 4 Section 2 How Progressive Brokerages Use Marketing  The insurance Public industry perception is provides often mixed, significant influenced by societal negative Public contributions. experiences. Perception of High-pressure Insurance is the Insurance sales, rate hikes, and intangible: selling "peace Industry claim issues tarnish the of mind" rather than a tangible industry image. product. CAIB 4 Role of Brokerages in Shaping Public Perception Brokerages play a Need for Brokerages must pivotal role in perception shift in motivate industry enhancing the how insurance is stakeholders to industry’s image. viewed by clients. elevate standards. CAIB 4 Impact of the Marketing Mix on Public Image 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. CAIB 4 Unique Nature of Insurance as a Product 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. CAIB 4 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. CAIB 4 The Real Value of Insurance Clients are buying more Brokerages must Insurance is about than just a policy – they highlight the service and peace of mind, not just are purchasing security, relationships they price or coverage. protection, and service. provide. CAIB 4  Challenges in Adding Value The core product is often Brokerages need to offer more Value-add comes from customer indistinguishable across than just policies – they must offer service and claims support. insurance companies. relationships. CAIB 4 The Role of Product in the Marketing Mix THE PRODUCT IN THE BROKERAGE CONTEXT BROKERAGES MUST DECIDE WHICH LINES OF EXPANDING INTO FINANCIAL SERVICES CAN INCLUDES INSURANCE POLICIES AND BUSINESS TO FOCUS ON. ENHANCE OFFERINGS. SUPPLEMENTARY SERVICES. CAIB 4 Pricing Strategies for Brokerages CAIB 4 The Importance of Convenience (Place) 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. CAIB 4 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. CAIB 4  Employees play a crucial role The in shaping client perceptions. Importance of People in Service excellence hinges on employee-client interactions. the Brokerage Management must empower employees to provide outstanding service. CAIB 4 Building Client Relationships Strong relationships Superior service are key to client often matters more retention and than the actual satisfaction. policy. Clients are more likely to stay loyal when they feel valued. CAIB 4  CAIB 4 Section 3 Marketing Management  Strategic Marketing Management in Brokerages STRATEGIC USE OF MARKETING PLAN MUST ALIGN WITH FOCUSED EXCLUSIVELY MISSION-DRIVEN BROKERAGE RESOURCES INCLUDES STRATEGIES, BROKERAGE’S VISION ON THE MARKETING STRATEGIES ENHANCE TO SEIZE MARKET OBJECTIVES, AND GOALS. AND MISSION. FUNCTION. CLIENT RETENTION AND OPPORTUNITIES. RELATIONSHIP-BUILDING. CAIB 4 Marketing Objectives and Implementation Setting objectives based on market share growth. Multiple strategies available to achieve growth. Differentiation and positioning as key strategies. Value-added services attract and retain clients. CAIB 4 Positioning and Differential Advantage Brokers can be Positioning seen as low- based on client cost, service- perceptions of oriented, or fast the brokerage. to settle claims. Competitor Technological positioning is advances relative within create new the same competitive market. pressures. CAIB 4 Differential Advantage in the Digital Age Differential advantage 24-hour access and comes from features technology-driven services clients deem important. as competitive advantages. Failure to adopt new technologies leads to competitive disadvantage. CAIB 4 The Marketing Action Plan: Core Components Tailored to the competitiveness of the brokerage’s market. Includes strategies, objectives, and unique components like financial schedules and evaluation procedures. CAIB 4  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. CAIB 4 Evaluation and Adaptation Continuous performance evaluation is essential. Review client satisfaction and relationships regularly. Flexibility in the plan allows for adaptations based on evaluations. CAIB 4  CAIB 4 Section 4 Client Segmentation Introduction to Market Segmentation in Brokerages Understanding client needs and Clients vary in their preferences, Market segmentation helps target wants is key to successful requiring segmentation of the appropriate client groups with marketing. market. tailored services. CAIB 4 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. CAIB 4 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. CAIB 4 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. CAIB 4 Demographic Segmentation: Age and Gender Gender Age Buying patterns differ Insurance needs vary between men and significantly over a women, though these client’s lifetime. are changing. CAIB 4 Demographic Segmentation: Life Cycle and Education Education Life Cycle Higher levels of Stages like "Full Nest" or education may influence "Empty Nest" affect insurance expectations insurance needs. and buyer behavior. CAIB 4 Demographic Segmentation: Occupation and Ethnic Background Ethnic Background Occupation Cultural differences Impacts income level affect preferences and and the types of assets expectations in the clients must insure. insurance process. CAIB 4 Geographic Segmentation Geography influences client behavior and needs. Key factors include city size, urban-rural divide, and climate. Legislation differences between provinces also affect insurance needs. CAIB 4 Psychographic Segmentation Psychographic variables: personality, social class, lifestyle. Adds depth to demographic and geographic data. Helps in understanding client preferences and values. CAIB 4 Behavioral Segmentation Focuses on how clients interact with products. Key factors: shopping behavior, payment methods, claims history. Client databases capture essential behavioral data. CAIB 4 Relationship Variables in Segmentation Relationship variables determine the type of relationship a client desires with the brokerage. Some clients prefer minimal contact, while others seek personalized communication. Brokerages must understand these preferences to avoid alienating clients. CAIB 4  Target Market Selection Target markets must align with the brokerage’s goals and image. Focus on clients who offer long-term profitability, not just immediate returns. Resources must be matched with target market expectations. CAIB 4 Targeting Clients Within Segments NOT ALL CLIENTS IN A SEGMENT USE CLIENT DATA TO TAILOR TARGETED MESSAGES REDUCE WILL RESPOND TO THE SAME COMMUNICATIONS TO SMALLER COSTS AND INCREASE MARKETING MESSAGE. GROUPS WITHIN SEGMENTS. EFFECTIVENESS. CAIB 4  One marketing approach for the entire market. No distinction between client Undifferentiated segments. Market Strategy Suitable for broad, general products. CAIB 4 Differentiated Market Strategy Develop a different marketing mix for each segment. Tailor products, pricing, communication, and delivery methods. Increases relevance but can be resource-intensive. CAIB 4 Niche Marketing Strategy Focuses on a single, narrow market segment. All marketing efforts are concentrated on this segment. Suitable for brokerages in large, urban markets or with specialized expertise. CAIB 4  Each client receives a unique marketing mix. Leveraging database information Customized to deliver personalized services Marketing and messages. Strategy Requires a robust database and flexible marketing capabilities. CAIB 4  Importance of client database analysis in segmentation. Target Market Example: High-value home clients without auto insurance. Strategies Overview Introduction to four basic target market strategies. CAIB 4  One marketing No distinction approach for between client the entire segments. market. Undifferentiated Marketing Suitable for Potential Strategy general products with drawbacks: missed opportunities universal for targeting appeal. specific needs. CAIB 4  Differentiated Marketing: Different marketing mix for each target market. Tailored products, pricing, and communication strategies. Differentiated and Niche Niche Marketing: Marketing Focused on a single, narrow target market. Concentrated marketing efforts for Strategies specialized segments. Example: targeting new homeowners in a specific area. CAIB 4  Individualized marketing mix for each client. Leveraging client data for tailored Customized messages and offerings. Marketing Increasing popularity due to advanced database capabilities. Strategy Example: American Express’s personalized newsletters based on spending patterns. CAIB 4  CAIB 4 Section 5 Selling Versus Buying  Definition of consultative selling. Importance of a multi-step process. Seven typical steps in the sales process. 1. Prospect and Qualify Consultative 2. Set Objectives Selling Process 3. Make the Initial Contact Overview 4. Probe for Needs 5. Present the Proposal 6. Overcome Objections & Close 7. Follow-up CAIB 4  Identify and qualify prospects. Sources for finding prospects: Step 1: Prospect referrals, past clients, media. and Qualify Qualifying prospects: authority, need, affordability, benefits. CAIB 4  Use competitive information for planning. Develop key questions for the Step 2: Set meeting. Objectives Aim for clear objectives based on prospect knowledge. CAIB 4  Importance of the first impression. Goals for initial contact: professionalism, trust, Step 3: Make the interest. Initial Contact Key elements to convey during the introduction. CAIB 4  Fact-finding through questioning. Importance of active listening Step 4: Probe for and rapport building. Needs Techniques: open and closed questions. CAIB 4  Tailor the proposal to the prospect’s needs. Highlight features and benefits Step 5: Present of products. the Proposal Offer options and differentiate from competitors. CAIB 4  Addressing objections as opportunities. Importance of asking for the Step 6: Overcome sale. Objections and Close Strategies for handling objections effectively. CAIB 4  Importance of thanking the client multiple times. Address ongoing concerns Step 7: Follow- promptly. Up Building long-term relationships through regular contact. CAIB 4 Understanding the Buying Process Overview of the buying process. Contrast between sales and buying perspectives. Importance of adapting to client needs. CAIB 4  Step 1: Problem Recognition Initiation of the buying process. Buyers recognize a need or problem. Triggered by personal analysis or external suggestions. CAIB 4 Step 2: Identify and Analyze Solutions Buyers actively search for solutions. Heightened need for information. Brokers must provide valuable insights. CAIB 4 Step 3: Identify Sources Buyers look externally for solutions. Opportunity for brokers to engage. Qualification of sellers begins. CAIB 4 Steps 4-6: Compare, Decide, and Evaluate Compare and Decide: Buyers choose a seller based on trust and information. Make the Purchase: Implementation of the chosen solution. Evaluation: Buyers assess if the solution meets their needs. CAIB 4 Improving Sales Performance through Client Perspectives IMPORTANCE OF MEASURING CLIENT SERVICE TAILORING TRAINING TO CLIENT UNDERSTANDING BUYER QUALITY. FEEDBACK. PERSPECTIVES. CAIB 4 The Broker as the Product Importance of broker-client Insurance viewed as a Brokers as key differentiators interaction. commodity. in client decisions. CAIB 4 Characteristics of a Successful Broker CAIB 4 Additional Characteristics of a Successful Broker Further essential traits: Motivation Commitment CAIB 4 Brokers as Service Centers Viewing brokers Understanding as service client needs. centers. Distinction between internal and external clients. CAIB 4  Consequences of deteriorating service levels. Importance of internal The Impact of service quality. Service Levels Negative impacts on client retention. CAIB 4 Building Relationships with Clients Importance of relationship building. Applying principles to both internal and external clients. Strategies for enhancing client relationships. 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