Marketing Strategy and Marketing Plan - Small Insurance Company in UAE

CASE STUDY XYZ Insurance Corporation

Contents

Analy Analysi sis s of Key Key Mark Market etin ing g issu issues es faci facing ng the Company 

Marketing strategy and marketing plan for  the next 2 years 

Prepared by:

Noushad Muttippalathingal Dubai, UAE  _______________________________________________________________________   _  1 of 10

Case : XYZ Insurance

From 2000 – 2008 XYZ Insurance's impressive growth was based on a strategy which focused on the development and maintenance of strong customer relationships. Rather than spend money speculating about the generation of new customers, XYZ’s policy has been to invest and build relationships with current customers. In order to help realize their strategy XYZ removed their middle management and delegated responsibility to teams of customer service (CS) personnel, who focus up their client’s total requirements. Clients talk directly to CS agents who are empowered to mange decisions and manage a ll aspects of their client’s requirements. There are no appointed managers or secretaries and each CS team manages itself organically and recruits its own new staff. The role of senior management has been to manage time and resources through the use of management information systems (MIS). They are able to identify areas across and within CS teams where productivity might be improved. This has helped to ensure 85% of the hours worked in each CS team are used to generate revenues. As a result of this approach revenues has doubled to US$ 2.3m, profits are stable at 6.5%, sales per worker are double that of the national average and staff numbers have remained relatively stable. Not surprising, XYZ Insurance has become the centre of attention for its innovative and seemingly successful approach to business. The company's success has been built around 42 client companies, some of whom are very loyal. Part of the company’s philosophy has been to ‘meet and beat customer’s expectations’ and the attitude of staff in each CS team reflects this perspective. Through high levels of quality service and customer involvement, new orders have been won. However the growth experienced to date has been based on new orders from exiting clients and very little new business has been acquired. The CS teams regard senior management as being responsible for generating new customers, yet the senior management team see their role as managing and teaching the, ‘XYZ way’. Little effort appears to have been made to attract new customers and there is no marketing department or  sales force. These are costs which do not fit the current culture and are thought to be activities which would add very little value and create high overheads. The company currently outsources cleaning and payroll, so outsourcing a sales operation would be a compatible activity. There has been little planned use of marketing and/or corporate communications and the primary emphasis has been on strong word-of-mouth communications, supported by some limited public relations (PR) activities. However, a basic website, some use o f telemarketing, the unplanned use of some out-of-date sales literature and attendance at exhibitions have been the only marketing communications carried out so far. The organization needs to address the balance of its current customer portfolio and attract new clients if it is to achieve its current customer portfolio p ortfolio and ambitious five-year growth target. Questions

As a marketing advisor you have been asked to consider the information available and to prepare a report which: 1. 2.

Identifies th the ke key ma marketing is issues fa facing th the co company Makes akes reco ecommen mmend dati ations fo for XYZ XYZ’’s mar marke ketting ing st strateg ategy y fo for th the nex nextt two two years ears

 You should justify your recommendations recommendations and state any assumptions made.

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KEY MARKETING ISSUES FACING THE COMPANY  Where the company stands NOW?

Current Strategy: •

The current strategy of the company seems to be ‘Focus or Niche Strategy’ where organization focuses effort and resources on a narrow or defined segment of a market.

•

Focusing on Invest and build relationships with current customers and Targeting new market/customers is not a priority

•

Avoidance of middle management bottleneck to ensure fast efficient and personalized customer service facilitated by decentralized decision making of CS team.

In spite the results are good presently, but for a long run, relying on a narrow client-base  puts the company at risk of loosing its competitive advantage at any point by threat from any possible competitor with innovative or differentiated products or services or better   pricing. The current customers, though they are loyal to the company, may relocate to a competitor forced by their specific business objectives at any time. This is a strategy  suitable to a Broker rather than an Insurer.

The Company has build up a limited loyal client-base and good reputation supported by better results. An excellent group of Customer Customer Services Teams is already in place and their efficient execution of customer service has resulted in loyalty of customers towards the company. company. While searchin searching g for the new market, the above above factors can form form vital investment to the firm in order or der to achieve success.

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A SWOT analysis of the company can bring out the current strengths, weaknesses, opportunitie opportunities s and threats facing facing the company. company. These will will help to identify the areas areas where the company stands now. Then, the Marketing issues facing the company company would easily be recognized.

Strengths •

Strong customer relationships leads to

Weaknesses •

loyal customer. •

Proper delegation of responsibility to teams of customer service (CS).

•

Proper time management.

•

Excellent customer services.

•

Deriving better results

Opportunities •

Joint ventures or strategic alliances with

channels of marketing. •

Limited client-base and target segments

•

Lack of innovative products

•

Lack of spread of risks (only 42 major  clients)

•

Growth relying on existing customers.

•

Failing to target new customers.

•

Limited Public relation (PR) activities.

Threats •

Bancassurance and brokers. •

•

Price wars with competitors.

offer improved profits.

•

A competitor has a new, innovative product or service.

A new market in new geographical •

•

Internet as a powerful marketing tool.

•

Needs by a market segment where the

Repositioning or wind-up of existing client-base

Any possible market vacated by an

•

Competitors have superior access to channels of distribution.

Reputation as a successful firm will

ineffective competitor.

•

market. •

attract new customers. •

A possible new competitor in your current

Moving into new market segments that

areas •

Limited marketing force and limited

•

Deterioration quality in service by CS teams

•

Collusion by CS teams with their own

company so far not entered

clientbase due to lack of checks and

New Governmental initiative to

controls.

encourage insurance

•

Adverse catastrophic losses may endanger company with limited portfolio

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Based on above analysis, the XYZ Corporation needs to address the following Marketing issues.

•

•

•

•

Planned use of marketing techniques o

Set up Marketing Department

o

Allocate funds and resources

Identifying new market segments and their needs o

Do extensive market research and other analytical processes

o

Competitor analysis to foresee the possible market rivals

o

Diversified Market segmentation and identifying specific needs

Developing products serving the needs of target segments o

Product development

o

Comparison with alternatives

o

Decide a suitable Pricing strategy

Do promotional and advertising campaigns, market launch, media briefing etc to communicate to the consumer communities

•

o

Plan promotional schemes

o

Public relations (PR) activities

o

Advertisement policies and techniques

Building new channels of distribution to ensure the reach to customer  o

In Personal Lines Insurance this is very important factor comparing to the Commercial lines.

o

Direct marketing tools, Intermediaries, branches etc.

o

Consider making use of the CS team to generate new business as well for which they may earn extra commission.

•

Translate the current capabilities of CS team into complete CRM solution serving both existing and new customer.

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MARKETING STRATEGY  FOR THE UPCOMING 2 YEARS Where the company wants to be IN TWO YEARS TIME?

HOW?

It is advised to have a Growth Strategy in place for XYZ Corporation with a ‘ New  Market Strategy’ , concentrating on growth in organization’s market presence, attracting

new customer, by placing themselves in newer newer markets. This will include geographical geographical expansion as well as market penetration. The suggested Marketing plan for the same can be as narrated below.

TITLE: NEW MARKET STRATEGY

Executive Summary :

XYZ Corporation Corporation looks forward to have growth in their business by identifying

new market segments, attracting new customers, developing suitable products to meet the needs for identified customer segments and maximize the sales with new distribution tools and channels with the paramount concern of optimizing profit of the organization, but without compromising the standards of customer  service.

CONTEXT:

•

Mission:

Widen the company’s appeal to attract customers from new segments of the market

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•

Vision:

To be the market leader in terms of volume and quality of  service within five years time

Introduction, Aim and Objectives :



Chosen to have a New Market strategy to enter new markets and attract new customers.



Identify the potential market segments



Tailor products those meets the customer needs



Gain superior competitive advantage over the competitors within the chosen market



Ensure the proper communication about the new offerings



Implement adequate distribution channels

Corporate Objectives (SMART):

•

Maximize the reach of organization

•

Risk spreading by large number of clients

•

Optimize the profitability and revenue

•

Satisfaction of customer’s needs

ANALYSIS

Background Analysis & Overview :

EXTERNAL ENVIRONMENT ANALYSIS – Conduct a Market Research & PESTLE (Macro environment) analysis to identify the company’s position in relation to the Market and possible potential for growth. INTERNAL ANALYSIS - Identifies the company’s strengths, weaknesses, opportunities and threats by SWOT analysis (given above) to see the current position.  _______________________________________________________________________   _  7 of 10

APPRAISAL OF COMPANY’S RESOURCES – Manpower, financial strength etc. SEGMENTATION - Identification of target market – Demographical segmentation, segmentation by risks and hazards, geographical factors

FORMING STRATEGY – APPLICATION OF MARKETING MIX

Marketing Activities, Implementation and Ownership

Product

Price

Promotion

Plac Place e

-

Types of standards of services

-

Variety of products offered

-

Develop new products to suit the market needs

-

Forming Pricing strategy based on the product & market

-

Package deals

-

Special la launching of offer/discounts

-

Gaining co competitive ad advantage

-

Decide Wh What/Where/When/Why an and Ho How?

-

Advertising in appropriate media

-

Promotional literature

-

The Company Image

-

Group discounts

-

Buil Build d new new dist distri ribu buti tion on and and deli delive very ry chan channe nels ls to ensu ensure re reac reach h to potential buyer 

-

Dire Direct ct Mark arketing ting via Sales ales Depar eparttment ent and and Sal Sales forc orce

-

Ope Opening up up new branches, call centre, kiosks

-

Stra Strate tegi gic c all allianc iance e with ith Brok rokers ers and and Banc Bancas ass suran urance ce

-

Appointed agents

-

Dedicated Web portal

-

Targ Target etiing econ econom omie ies s of of sal sale e thr throu ough gh infl influe uent ntia iall gro group ups s

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Implementation of the above elements has to be assigned to specified teams who assume the ownership of their role. Their duty includes setting up SMART & short-term objective appropriate for implementation the corporate objectives.

The company’s current strategy for outsourcing their few services can be extended to the following areas as well: •

Sales force

•

Call centers or telesales agents

•

Advertising campaigns

•

Promotional activities

•

Web Portal

•

Value added services attached to the products

FINANCE

Allocate budget for whole plans to implement strategy Consider affordability and feasibility

ALTERNATIVES

Plan for alternatives in case the plan fails due to unexpected circumstances

REVIEW AND REPORTING

Periodic review of the progress and results Return on investment Customer analysis – retention and profitability analysis Revisions in plan and objectives --------------------------

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References: Books

Websit Websites es -

Insurance Marketing by Arthur Meidan A framework for Marketing Management by Philip Kottler  Marketing and Public relations – Ins. Inst. of India GII MD MDMM co course ma materials Variou Various s websit websites es on Market Marketing ing mainly mainly www.marketingteacher.com

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