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CASE STUDY

XYZ Insurance Corporation

Contents

 Analysis of Key Marketing issues facing


the Company

 Marketing strategy and marketing plan for


the next 2 years

Prepared by:
Noushad Muttippalathingal
Dubai, UAE
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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 all 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 of 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 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. Identifies the key marketing issues facing the company


2. Makes recommendations for XYZ’s marketing strategy for the next two years

You should justify your 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 Services Teams is already in place and
their efficient execution of customer service has resulted in loyalty of customers towards
the company. While searching for the new market, the above factors can form vital
investment to the firm in order to achieve success.

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

Strengths Weaknesses
• Strong customer relationships leads to • Limited marketing force and limited
loyal customer. channels of marketing.
• Proper delegation of responsibility to • Limited client-base and target segments
teams of customer service (CS). • Lack of innovative products
• Proper time management. • Lack of spread of risks (only 42 major
• Excellent customer services. clients)
• Deriving better results • Growth relying on existing customers.
• Failing to target new customers.
• Limited Public relation (PR) activities.
Opportunities Threats
• Joint ventures or strategic alliances with • A possible new competitor in your current
Bancassurance and brokers. market.
• Moving into new market segments that • Price wars with competitors.
offer improved profits. • A competitor has a new, innovative
• A new market in new geographical product or service.
areas • Competitors have superior access to
• Reputation as a successful firm will channels of distribution.
attract new customers. • Repositioning or wind-up of existing
• Any possible market vacated by an client-base
ineffective competitor. • Deterioration quality in service by CS
• Internet as a powerful marketing tool. teams

• Needs by a market segment where the • 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 markets. This will include 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 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.

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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 - Types of standards of services


- Variety of products offered
- Develop new products to suit the market needs

Price - Forming Pricing strategy based on the product & market


- Package deals
- Special launching offer/discounts
- Gaining competitive advantage

Promotion - Decide What/Where/When/Why and How?


- Advertising in appropriate media
- Promotional literature
- The Company Image
- Group discounts

Place - Build new distribution and delivery channels to ensure reach to


potential buyer
- Direct Marketing via Sales Department and Sales force
- Opening up new branches, call centre, kiosks
- Strategic alliance with Brokers and Bancassurance
- Appointed agents
- Dedicated Web portal
- Targeting economies of sale through influential groups

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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 - Insurance Marketing by Arthur Meidan
- A framework for Marketing Management by Philip Kottler
- Marketing and Public relations – Ins. Inst. of India
- GII MDMM course materials
Websites - Various websites on Marketing mainly www.marketingteacher.com

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