Explain the impact of direct channels in the insurance industry

Assignment Objectives
1. Role of multiple channels in customer satisfaction and value
2. Explore pricing issues associated with multiple channels
3. Impact of competition on marketing communications
Course Concepts
• Customer-driven marketing strategy (Chapter 1)
• Customer value and satisfaction (Chapter 1)
• Competitor analysis (Chapter 18)
• Four service characteristics (Chapter 8)
• Product Lifecycle (Chapter 9)
• Considerations in setting price (Chapter 10)
• Supply Chain (Chapter 12)
• Value delivery network (Chapter 12)
We have all come to know Flo from Progressive, Mayhem from All State, and Jessica from State Farm. For the insurance industry, long a buttoned up and marketing shy business, these characters represent some pretty innovative changes. Now insurance is a highly competitive environment with consumers having difficulty differentiating one company’s product from its competitors.
This case explores how the three top companies in the industry have changed in terms of how they reach customers through both retail and online channels, and how they have shaken up the entire industry through their customer-centered approach to marketing consumer insurance products using multiple channels.

1. Insurance products are services. Describe Progressive Insurance’s products in terms of the four characteristics of services. How does Progressive deliver value to its customers? In what stage of the product lifecycle are Progressive’s products and why?
2. What are the advantages to customers to have either an insurance agent (indirect channel) or an online transaction (direct channel)? What are the disadvantages? How does each add value to the customer?
3. The Progressive video mentioned that prices might be different depending on whether the customer uses the agent or the online service. Based on the pricing considerations discussed in your text, does this pricing strategy appear to be customer focused? Why or why not?
4. Progressive and its two primary competitors, All State and State Farm, have all developed ‘characters’ to communicate with the target market Flo, Mayhem, and Jessica are becoming the face of the companies. Using the humorous approach is one way companies hope to differentiate themselves from their competitors. Based on the ads for Progressive, All State and State Farm, can you differentiate each of the companies? Why or why not? Do you think the humorous approach works? Why or why not?

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