Middlesex Insurance Company conducts market research on demand to help the management make informed decisions on available products, new products and market trends and segmentation. Market research also helps in identifying specific product attributes that match the capabilities of the target market.
Market research on available products also assists the firm address matters relating to accessibility, prices and effectiveness. Market research is an indicator of activities that complement insurance as well as revealing people’s perception, understanding and trust of insurance. This is important to Kate Farm because of the uptake and designing and conducting customer awareness and marketing strategies.
Middlesex Insurance Company’s research plan guides the collection and analysis of data in the following ways; the research team outlines the research objectives, the audience, and how the results will be used. The team defines the key questions and points out the primary and secondary sources the information to be used.
The research team then makes a decision on the method they intend to use in data collection, then determine and document the procedure for participants’ selection. Data analyzing plan is developed and a timeline set for the process. The team members assign themselves roles and responsibilities for conducting the research.
They organize logistics, schedule collection of data, design data collection tools such as interview guides and analysis matrices. The team collects data, some of the main data collection techniques are Mail questionnaire telephone interview, personal interview and online interview (Kotler & Keller, 2009). After collecting data, they analyze it, draft a report and finally draw a final report to the management.
According to Talvinen (1994), marketing information system inform the management on the current market trend. Middlesex Insurance Company has developed an effective long-term marketing strategy which is very helpful and important for every organization that wants to get and attract the necessary audience according to Shaw and Stone (). This strategy is aimed at adding more clients on their book within twelve months.
The organization uses a guide on’ how to save on insurance’ as a lead generator. This guide is sent via sales letters, newsletters, handouts, emails, endorsement and direct mail marketing. Prospective clients continuously receive mails until they respond positively.
Middlesex Insurance Company offers good content in the mailed offer so as not to bore the recipients, those who do not respond within two weeks, are put in another marketing funnel. A newsletter is sent to them, then a follow up with another guide, they are kept in the newsletter system.
Segmentation, Targeting, Positioning, and Dealing with Competition
Middlesex Insurance Company provides property and casualty policy cover, therefore, it targets two customer segments, home and automobile buyers. Kotler and Keller (2009) classify this consumer segment as demographic consumer market.
Demographic consumer market adopts demographics to understand consumers. In this segmentation, consumers are categorized according to their age, race, gender, income, education, family size, family life cycle,occupation.
According to American Housing Survey(2006), first time home buyers averaged thirty-three years with a household income of approximately sixty-four thousand dollars a year. Middlesex Insurance Company’s customers are generally aged between 30 and 50 years, with a majority below 40 years. Move up homebuyers earned substantially higher than first time buyers, most doubled the average earned by first time buyers.
Most customers who were first timers bought homes covering 1500 square feet. These houses were also single family homes as many of them were married with children. Eleven percent of the customers bought town homes and another eleven percent insuring condominiums.
The move uppers bought slightly larger homes with a large percentage moving into detached homes, eight percent moving to town homes and another eight percent insuring condominiums.
On the other hand, Aizcorbe, Bridgeman and Nalewaik (2009), one’s willingness to pay for a vehicle depended on their household income.They listed other factors to be considered as educational attainment and age. Middlesex Insurance Company’s customers in 2010 who insured 2011 model-year cars had $ 8000 more income than households who bought 2010 model-year cars.
Those who bought newer model-year in 2010 had $ 5000 more income and in 2011, newer model year owners earned about $ 6000 more income. In all cases, owners of newer model year cars earned significantly higher income compared to owners of the older year models.
Product and Service
Middlesex Insurance Company demonstrates an effective and efficient service delivery to the client base by offering best offers at affordable rate (Sawhney, Balasubramanian, & Krishnan, 2004).The company has evaluated sales and profits related with each offer (Kotler & Keller, 2009).
It provides homeowner’s insurance that combines certain personal insurance such as loss that occur to the house, the house’s content, loss of the house use, loss of homeowner possessions and also insurance against accidents that occur at the home or at the homeowners hands within the territory of the policy.
Types of policies
Middlesex Insurance Company offers three types of homeowners’ insurance policies.
Basic form homeowner policy
Middlesex Insurance Company offers this insurance policy against eleven listed perils. This include “fire, storms or hailstones, vandalism or malicious mischief, theft, destruction from automobile and aircraft, explosion riot or civil strife, glass breakage, smoke, volcanic activity, and personal liability. Exceptions include floods, earthquakes.”
Broad form homeowner policy
This is a more advanced policy that gives coverage against seventeen perils that include the eleven listed above. The policy covers named perils and indicates the event that would be covered.
Special form homeowner policy
This is the most comprehensive policy cover offered by Middlesex Insurance Company. The policy covers all risks associated with homeownership. It is mostly used for single-family homes.
Middlesex Insurance Company also offers three main types of auto insurance.
Comprehensive coverage
This insurance policy cover damages the customer’s car that are not caused by other motorists. These include damage to the whole car, or parts from such events as fire, theft, storms, tornado, floods and hail. It also covers the car in event of hitting an animal.
This policy is optional and purchased for vehicles that are worth more than $ 1000. This policy coverage does not raise the premium and the policy owner has the option to choose from deductible amount.
Collision coverage
This policy covers the vehicle against physical damage because of collision. In this case, if the policy owner crashes, the insurance will pay to fix the vehicle. This policy cover is optional and the monthly deductibles range between $ 200 and $1000. This policy is ideal for vehicles worth more than $ 4000 and policy owners who have no accident history.
Pricing
Middlesex Insurance Company sets insurance rates 10% below market rates to attract customers (Baye, Gatti, Rupert, Kattuman, & Morgan, 2007). In addition to this, other factors are significant in calculating prices. In case of homeowner insurance, the following are considered: the company selected this price setting method in line with research done and available data on risks connected to homeownership (Kotler & Keller, 2009).
Location
Where the customer lives is a factor to be considered. Middlesex Insurance Company gather claims experience based on location and use this to adjust the premiums. For instance if a customer lives in high theft area then they will pay more.
Coverage
The more the cover purchased the higher the premium will be. For example, a $50,000 insurance policy is less expensive than $85,000 policy. In addition, a town house insurance policy will be less expensive than a condominium. Other considerations will be a customer’s customization of their insurance policy with optional coverage’s, like a bicycle, these will increase the premium.
Proximity to fire station
The closer a customer lives to the fire station the lesser the premium on the policy. The company assumes that the property stands a greater chance of being saved from fire.
Amount of deductibles
The more the customer pays on the deductibles the lower the premium will be. For example if the standard policy deductible is $500 and the customer chooses to pay $ 1000, this definitely reduces the premium.
Security features
Having a safe home environment is advantageous especially in calculating premiums.
Installation of alarm systems, smoke detectors, carbon detectors and other security features will reduce insurance premiums.
The following factors determine the pricing of auto insurance:
Age
Policy owners who are younger than 25 year of age pay more rates. In the insurance industry, research indicates that younger drivers get into more accidents as compared to older ones.
Driver’s Record
The policyholder’s driving record is critical in determining the amount to be paid. The more traffic violations the higher the premiums. They however drop every year that violation is not reported.
Place of residence
If the customer lives in a city where crime is reportedly high, the rates will be high. This is because the likelihood of a crime affecting the customer’s car indicates the likelihood of that customer making acclaim.
Make and model of the vehicle
The type of car the customer insures will determine the amount of premium. A customer driving a sports car will pay more because it is more likely to get broken into.
Marketing Channels
Middlesex Insurance Company uses agents as the main marketing channel. The company sells 80% of policies through this channel. According to Kotler and Keller (2009), these are independent organizations involved in the process of making the products available to the customers. The agents owe the company a number of duties these include: the agents perform the tasks specified by the agency and not to perform unauthorized tasks.
The agents discharge duties with caution and due diligence, the agent does not engage in conduct that benefits them to the detriment of the company. The agents should not accept inconsistent obligations with the work owed to the company. The agents can represent the conflicting interests of other companies only after full disclosure and with consent of Middlesex Insurance Company.
The agents should not take advantage of their position in transactions for their own interests rather than for the interests of the company. An agent should not usurp the company’s opportunities by passing them on to a third party.
The company makes full disclosure of all information relevant to transactions that the agents are allowed to perform. The company also pays the agent as stipulated in the agreements. The laws of the United States of America regulate the relationship between the agents and Middlesex Insurance Company (Randall, 1999).
Marketing Communications
Middlesex Insurance Company deploys marketing strategies to attract prospective customers. The company pursues to have a target audience by developing creative messages that they will receive without resistance (Kotler & Keller, 2009).
The company has contracted a firm to undertake direct mail pieces in the target audience area. The target audience receives regular sales materials as well as newsletters. This is done every two weeks. The company also creates personalized advertisements that are emailed to customers. The internet is one of the latest techniques the company has employed in marketing.
The company is investing in a zip code exclusive online advertizing to get unique exposure. The company’s website developer has initiated the construction work. Through the internet host, they intend to link the agents’ sites to the Company’s Website. Here agents act as Intermediaries who facilitate advertisers as well as consumers linking with each other (Rochet & Tirole, 2003).
This way it stands to reach target audience as more people are using the internet and searching for insurance. “Web-based sellers use online advertising to drive consumers directly to their sites where they can browse for goods and services and purchase them with a few clicks. Online advertising accounted for 8.8 percent of all advertising in the United States in 2008” (Hallerman, 2008).
According to Evans (2009), internet based sellers use advertizing to attract consumers directly to their websites where they check for products and buy them with a click of the mouse. Middlesex Insurance Company is continuously looking to find new agents to work with. It advertises in the local newspaper in order to attract prospective agents.
References
Aizcorbe, A., Bridgeman, B., & Nalewaik, J. (2009). Heterogeneous Car Buyers: A Stylized Fact. Finance and Economic Discussion Series Division of Research and Statistics and Monetary Affairs, 12.
American Housing Survey. (2006). American housing survey: Current housing reports. Washington DC: U.S Department of Housing and Urban Development.
Baye, M., Gatti, J., Rupert, J., Kattuman, P., & Morgan, J. (2007). A dashboard for online pricing. California Management Review, 202-216.
Evans, D. (2009). The online advertizing industry: Economics, evolution and privacy. Journal of Economic Perspectives, 23(3), 37–60.
Hallerman, D. (2008). US online advertising: Resilient in a rough economy: Summary. eMarkete.
Kotler, P., & Keller, K. (2009). Framework for Marketing Management. New Jersey: Pearson Prentice Hall.
Randall, S. (1999). Insurance Regulation in The United States: Regulatory Federalism and the National Association of Insurance Commission. Web.
Rochet, J.-C., & Tirole, J. (2003). Platform competition in Two Sided Markets. Journal of the European Economic Association , 990-1029.
Sawhney, M., Balasubramanian, S., & Krishnan, V. (2004). Creating growth with services. MIT Sloan Management Review, 34-43.
Shaw, R., & Stone, M. (1988). Database Marketing. Aldershot: Gower House.
Talvinen, J. M. (1994). Information System in Marketing: Identifying Opportunity for New Application. European Journal of Marketing, 29(1), 8-26.