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Direct Channels Impact on Insurance Industry Essay


Recently, Progressive Insurance Company has introduced new products for regular drives – snapshots. These devices are necessary for developing rewarding systems that would encourage drivers to ride carefully. Hence, the more accurately you drive, the more money drivers save. The initiated complain focuses on new options for consumers to gain discounts.

The product creates several benefits for consumers whose driving habits are much more accurate and less aggressive (Schultz, 2011a). Hence, the proposed item is both progressive and innovative, which correspond to the strategic vision and mission of the insurance company. Flo, the mercantile character, representing the Progressive’s objectives, highlights the main benefits for drivers who are interested in discounts and money-saving.

With regard to the four characteristics of the service, including service intangibility, inseparability, variability, and perishability, the least attention is given to the service perishability (Kotler & Armstrong, 2011). The reference, however, is made to the analysis of the functionality of iPod device, which can also be used as a mile counter while driving (Kotler & Armstrong, 2011).

In fact, the service providers failed to introduce the terms under which snapshots can be maintained and regulated. As per the service tangibility, Flo has managed to demonstrate the device and explain how this product works. There is also an evident connection between the provider and its service and, therefore, strong evidence for service variability and inseparability from the Progressive Insurance is revealed. Because the company’s product has been advertised, it can be stated that the snapshot is at the stage of commercialization.

Introducing online transactions as a direct channel for communication with customers supports the Progressive’s customer-centered policy. Specifically, using virtual space contributes to greater availability and simplicity of utilizing insurance services. Hence, it also justifies the company’s strategy to keep in constant contact with people who are interested in its services.

Hence, independent agents can communicate with consumers both by phone and by online channels (Toops, 2009). Using the Web as an additional channel of communication makes the independent agents’ work much easier because it provides them with greater coordination and visibility of virtual space. Introducing direct insurance also provides customers with greater awareness and control of policy accomplishment.

Despite the suggested advantages, independent agents still face a number of challenges while gaining experience in online communication. This is of particular concern to the skills and experiences of independent agents’ dual approach to promoting the Progressive’s brand. Two-fold orientation creates difficulties in terms of defining priorities to which the insurance agent should adhere (Toops, 2009).

The problem can also influence the profitability and performance of the employees who should cooperate with customers traditionally and via online devices. Increased workload creates some challenges in terms of the quality of work. Nevertheless, the Progressive Insurance invests resources into Web development, as well as insurance of their employees’ exceptional performance.

The pricing strategy of Progressive Insurance is confined to the unlimited paying capabilities of consumers. It implies that buyers are entitled to choose the price they want to pay. Such a strategy is typical of the Snapshot case because customers also pay money for freedom. The pricing considerations are significant for the Progressive’s competitors, such as State Farm and All-State. The greatest insurance companies are aware of the fact that customers are more interested in money issues rather than in insurance (Schultz, 2011b).

The pricing strategies that Progressive Insurance has developed correspond to the techniques of introducing prices based on customer value. In particular, the pricing policy should reflect basic buyers’ attitudes to and perception of values, but not the costs introduced by the seller (Kotler & Armstrong, 2009). The process of setting prices should primarily concern the marketing mix concepts, although the cost-based scheme is not of the least importance. Therefore, consumers must perceive the value of service to understand whether they need to buy it or not.

Introducing fictional characters in the leading insurance company’s commercials is another approach to meeting customer needs and objectives. The point is that consumers have always been interested in saving their money and receiving discounts rather than in getting car insurance only. Therefore, the task of the Progressive’s Flo, All State’s Mayhem and Farm States’ Jessica is to enhance the customer-based approach. More importantly, a humorous approach to advertising is another technique to advance face-to-face communication and add to the value of the service.

According to Schultz (2011b), “the good-hands people needed their own over-the-top personality to push their message that there is more to insurance than price” (p. 2). Therefore, such personality as Mayhem has received recognition in popular culture because he embodies all possible threats that could happen with consumers’ property.

Similar attention is given to Flo whose eccentric personality has also lured many customers (Schultz, 2011b). Therefore, introducing these fictional characters makes customers understand how services can become more tangible, which is among the priorities in the insurance industry. Moreover, the introduction of progressive and innovative approaches to insurance has provided a shift from traditional approaches and has created more opportunities for customers.

References

Kotler, P., & Armstrong, G. (2011). Principles of Marketing. New York: Prentice Hall.

Schultz, E. J. (2011a). Flo Thumbs A Ride With Drivers. Advertising Age 82(11), 1.

Schultz, E.J. (2011b). How the Insurance Industry Got Into A $4 Billion Ad Brawl. Advertising Age, 82(8), 2.

Toops, L. M. (2009). Progressive Looks to Promote Agents While Protecting Share on Direct Sales. National Underwriter, 113(34), 10-25.

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IvyPanda. (2020, May 7). Direct Channels Impact on Insurance Industry. Retrieved from https://ivypanda.com/essays/direct-channels-impact-on-insurance-industry/

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"Direct Channels Impact on Insurance Industry." IvyPanda, 7 May 2020, ivypanda.com/essays/direct-channels-impact-on-insurance-industry/.

1. IvyPanda. "Direct Channels Impact on Insurance Industry." May 7, 2020. https://ivypanda.com/essays/direct-channels-impact-on-insurance-industry/.


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IvyPanda. "Direct Channels Impact on Insurance Industry." May 7, 2020. https://ivypanda.com/essays/direct-channels-impact-on-insurance-industry/.

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IvyPanda. 2020. "Direct Channels Impact on Insurance Industry." May 7, 2020. https://ivypanda.com/essays/direct-channels-impact-on-insurance-industry/.

References

IvyPanda. (2020) 'Direct Channels Impact on Insurance Industry'. 7 May.

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