Fundamentals of Marketing

Fundamentals of MarketingKirsty Hayes, Bianca Jones, Chris Duffy, Tim StoneEXECUTIVE abridgmentThe purpose of this report is to gain gain ground insight into AAMIs latest localization in the personal motorcar redress market and to identify able merchandise strategies to meet the needs of certain and future clients. Despite universe the largest insurance policy underwriter in the motor vehicle market there be umpteen new competitors undercutting insurance premiums, mostly through online sales and service. flow rate disceptation includes IAG, on policy, and Budget assume, on a price point. Since the GFC consumers remove shown to be frequently cautious provided with higher expectations. Current measures of net income and social media uptake shows the incredible scope of data facebook is able to collect from target atoms. Loyalty and clock wasted choosing a company ar the most important characteristics of insurance seekers. They argon most apt(predicate) t o use confideed blades when not engaged in the assist. Surveys withal found Australia liberal re ecstasytion of insurance customers ofttimes than 50%, however 75% of customers ar not be similar to seek out a company but pauperism to make the best purchase decision. A further 10% pauperism convenience purchasing insurance. AAMI must detain its focus on consistent, excellent customer service, and utilising facebook to identify and communicate with customers. The process of purchasing a policy and making postulates must be refined further alter the AAMI commemorate.INTRODUCTIONLACE INFLUENCINGThis report aims to provide a summary of where AAMI is situated against its market competitors and succor develop a marketing strategy to promote sustained dogged term crease opportunities. The ABS (2016) pronounced 17.7 one thousand thousand vehicles registered in Australia at the 31st October 2014 whilst Tiwari (2014) claims the home(prenominal) Motor insurance policy segm ent is worth 6 Billion dollars in premiums per year and is the largest is the Australian general insurance market.AAMI face a great deal of competition in the Australian Motor redress segment and this publisher exit identify two competitors, IAG ag chemical group and Budget subscribe. This report is impoverished into two major sections, the first exit evaluate and analyse competition along with demographic and technological trends and understanding how these factors may affect business in both the short and long term. The second part identifies achievable cleavage which is involved with purchasing motor insurance. Providing historic trend development from the market will help create a new marketing strategy.INSURANCE application OVERVIEWThe insurance assiduity has had some signifi merchant shipt vault in re cent years, these pass water changed the way insurance firms need to market themselves and maintain profits. Buyers save become more(prenominal) cautious expect ations of products and work fill change magnitude since the global financial crisis (How Australian insurers tail end achieve profitable maturation in a challenging market 2017).Pay-outs for natural disasters have increase in frequency and value due to climate change, effecting insurers bottom lines ( damages industry and climate change 2017). With the large number of insurers in the market creating penetrative competition, each company needs to ensure they have the right flick of products and customers to maintain their overall profit.AAMI WITHIN THE INSURANCE INDUSTRYAAMI positions itself as the customer foc utilise and fun insurance company, to divergentiate from other insurers and say they be the not very insurancy insurer using comical advertisements which attract jr. consumers (AAMI 2017). It seems to be working for them, AAMI sits at number 5 of the top ten list of best insurance companies within Australia (Top Tens 2016).Below is a map which shows AAMIs position wi thin the market.RECENT TRENDS THAT IMPACT THE INSURANCE INDUSTRY customs duty found insurance (UBI)While UBI is not a new sentiment in puts like the US, it is only recently sightly common place within the Australian insurance industry (Dipak 2015). Things like collapse-as-you-drive insurance, where customers only pay insurance for the kilometres they actually drive and pay-how-you-drive insurance, where customers get discounts for universe safer drivers (Lukens 2014). This means customers can decrease their premiums to a rate previously impossible with other methods and flavour like they have more control over what they pay. It also enables mitigate identification of customer segments for future planning of products.The Internet of ThingsStill an approaching trend within the insurance industry, as explained by Forbes (Morgan 2014) this is the concept of fundamentally joining any device with an on and off flog to the Internet (and/or to each other). Wearable technology fo r tracking heart rates, exercise, sleep patterns and more are being used in collaboration with health insurers. Sensors in cars are being used to calculate the risk of particular drivers by tracking speed, acceleration, and braking distance (Liew 2016). This education helps to speed up the claim process with more little data of accidents (Kumaresan 2016). For the insurance industry, this means more information for sale to calculate premiums and reduce risk for insuring specific customers.KEY COMPETITORSAs Tiwari (2015) explains the Motor indemnification marketplace could be divided up into 4 segment areas. There are 2 major firms which own quaternary companies and these are the Suncorp conclave and the IAG Group with the rest of the industry made up from smaller competitors (image 1 gives a detailed example). Appendix A is an online simile of all-round(prenominal) policies in the midst of NMRA, Budget Direct and AAMI. As Lamb (2016) highlights supranational firms need to take into account local domestic firms which are also fighting for a cope of the market.Image 1 (image sourced from http//www.slideshare.net/ullyully/australian-car-insurance-market-analysis/6)IAG GroupThe IAG group is our biggest competitor and will come up to be into the future as they share a similar infrastructure to AAMI. IAG also have national leverage through their independent brands RACV, NMRA, SGIO and SGIC. IAG have a major focus on making the world a safer place (IAG Group, 2017). IAG products tend to balance between price, volume, and service. They have no major advantage over our brand.Budget DirectBudget Direct are a small player being very aggressive to gain major market share. They specialise in insuring low risk clients to keep premiums down (Budget Direct, 2017) thus sitting in the price sensitive area. They have some advantages for customers compared to AAMI on their standard comprehensive product such as offering a no claim bonus on windscreen damage. Appendix A provides a detailed summary.A KEY PLAYER OF IMPORTANCEAustralias population is currently 23.3 one thousand million people with more than 15 million owning chichiphones. According to Neilsen, we spend on norm of over one hour per day using smart phones, of which 35% of the time is spent on social media. According to Forbes (2016), in the social media landscape, Facebook is the most popular site with more than 15 million users and in a survey by Sensis in 2016, for more than 12 hours per week so it makes sense that our advertising can reach more customers in an increasingly competitive market.By developing a league with Facebook, AAMI can target market segments differently using each groups interests based on data received from the company. Nadia Cameron from IDG (2016) identified raising of brand sentiency and conversions as the major reasons for AAMI using Facebook marketing. Failure in this partnership would be fatalistic with over 1.7 billion users worldwide connected to Fa cebook.OTHER FACTORS INFLUENCING THE INDUSTRYTechnological TrendsOnline Applications AAMI has launched the AAMI Access Application which they have marketed as redress in your Pocket (AAMI 2016). It allows you to monitor and update your policies, make an instant claim and upload claim photos from your device, and allows claim and live repair tracking. As at 30 June 2016, there were approximately 22 million liquid hand station subscribers in Australia (ABS, 2016) making the creation of an online application a great launching as it allows an easier service for the consumer and the insurance agency and leverages off the fact that consumers are becoming more advanced in online technology. This is not the only application available from insurance companies but it will continue to grow in trend.Self-Driving motorcars volvocars.com/au (2016) says that there are already self-driving Volvos on the road in Sweden and in 2017, there will be over 100 on existence roads, and this will cont inue to grow. This trend will be crucial to car insurance companies as it will alter the way insurance is provided, compute and it could make it more difficult to prove which vehicle is in the wrong.demographic TrendsCars in Victoria The Australian Bureau of Statistics (2011) states there were a lend of 1,944,688 motor vehicles in Victoria. Car insurers need to keep abreast of current trends and ensure ease and simplicity when dealing with consumers and insurance.SECTION 2 variance FRAMEWORKCONSUMER CHARACTERISTICSIn this section, we recommend a way that AAMI could segment their market so they can have more targeted marketing.There are many things a consumer will look at when deciding on a car insurance company. Global Reviews regularly conducts research into how a consumer purchases car insurance, and posted in May 2015, that 71% of consumers had a brand in mind before beginning their research, only 34% of these consumers still preferred that brand at the end of their research . However, AAMI was the clear leader in an whimsical recall at 73%. The research found that 74% are current customers when they choose a car insurance policy. Lamb (2013) says that unplayfuls and services that are purchased regularly are associated with routine response behaviour, showing that those who already have a policy with AAMI are more probably to continue to renew their policies with AAMI.A certain brand is also a high priority when deciding on car insurance. The research shows that 53% trust the brand they chose (globalreviews.com 2015) and Lamb (2013) says that when consumers dont want to have to think too much somewhat a purchase decision, they often revert to agnisen and trusted brand names.Based on the secondary research, two different consumer characteristics have been identified that are important in the car insurance category. typicalType of segmentationDescriptionWhy is this characteristic important to AAMI? life style How much time spent searching for car i nsurancePsychographicThis relates to how much time consumers are willing to research different car insurance deals.This impacts how likely a new customer is to find Aami appealing and how likely an existing customer is to find a better deal elsewhere. disposition How loyal they are to a certain companyPsychographicThis relates to how often a customer is willing to change insurance companies.This impacts how likely a customer is to switch insurance companies if a better deal is found.Table 3. Consumer Characteristics of wideness to car insurance purchase decisionsSEGMENTATION FRAMEWORKBased on these two key characteristics one way that AAMI could segment their market into the sideline four segmentsHow much time is spent researchingLittle to no time researchingExtensive researchingHow loyal they are to a certain company genuinely loyalCustomers for lifeThis segment contains customers which either do not have time to research or are not interested in researching different insurers du e to loyalty to their current company.Great if you are their current company but difficult to get crosswise from somewhere else. companionship is powerThis segment contains customers who have the time and drive to research different companies but who prefer to stay with their existing company.They are more likely to try to get a better deal with their current insurer than switch.Not very loyalOnly if they have toThis segment contains the customers who know they need insurance but dont waste time thinking about the details. They may perform a basic search and go with the insurer they notice first.Flashy adds will draw their attention.Simply the best. for less(prenominal)This segment contains the customers who will spend as much time as needed to search for the very best deal no press who it is from.Having the details which set you apart from competitors on your website is key for these customers.Table 4. Proposed segmentation framework for AAMI.SEGMENT PROFILESThe following informat ion has been used to roughly estimate the size of each of these segments. In order to more accurately come across the segment size and segment profile, AAMI would be required to conduct further research with consumers.Generation Y is the most under-insured generation, with a World Insurance Report showing only 36 per cent, compared to 52 per cent of others (Han 2016)Studies indicate, 86 per cent of Australian consumers would only consider between one to deuce-ace insurers when selecting their next policy (Martin 2016)A survey showed only 15 per cent of respondents believed it was essential to find the cheapest product (Myth vs Reality The expected value Gap in the ANZ Insurance attention 2016, p 4)A survey also showed that Australian insurers have retention rates of more than 50 per cent across the board (Myth vs Reality The Expectation Gap in the ANZ Insurance industry 2016, p 7)DESCRIPTIONCustomers for LifeKnowledge is powerOnly if they have toSimply the bestfor lessEstimat ed % of consumers50%25%10%15%Expectation of segment to grow/shrinkShrinkWith more information on competing products being in social media this segment is judge to shrink. kick upstairsWith more ways now available for consumers to customise their insurance or barter with companies this segment is expected to grow.ConstantSome behaviours will never change, time poor or uninterested consumers will unendingly be a constant overall in any industry.GrowWith more ways for consumers to easily find information on different companies it is expected that this segment will grow.Purchase behaviourThey are not likely to seek out new insurers but would have no filling but to hear about new products through social mediaThey want to make the best purchase decision but also believe that staying with one company is beneficial.They will make quick decisions on insurance if they feel they need to have it even though they dont really want itThey will conduct thorough research to find the best deals av ailable. charge and product is their drive, not brand loyalty. nock PreferenceThis group prefers well- cognize brands as they are more trusted and seen as a good choice for the long term, once they find an insurer they stick with them.This group also prefers well-known brands for the same reasons but are likely to switch between the big 4 or 5 insurers when necessary.This group has no specific brand preference. They may choose based on the insurers used by people they know or by which insurer comes up first in their low level of research.This group has no brand preference. It is not guided by friends and family insurers either. They go with whomever has the best deals in their eyes. strength ProfitModerateAt the moment the profit made from this segment would be high due to retention rates. However, with the segment set to shrink, capableness future profit will decrease.HighIf Aami can get the meliorate product mix to appeal to price conscious buyers Profit will increase from the se consumers, they prefer a big brand name like Aami.ModerateOnce insured they are less likely to switch, the encounter is getting them in the beginning, once with Aami they should be life-long customers. Flashy advertising is needed. paltryThis segment is always looking for better deals, if Aami arent the cheapest in the industry these customers will switch. This doesnt work with AAMIs customer service image.CONCLUSIONThe Motor Insurance Industry has never been the most exciting in terms of innovation or technology (Sahoo, 2015). Insurance companies have been slow to adopt technology and innovation into their programs. This is beginning to change because of the digital age that we live.With the population in Australia eternally growing the demand for motor vehicle insurance will always be high. With good branding and positive company exposure AAMI can maintain their presence as a major player in the market place. IAG group is a competitor we will need to always monitor as they p ose the biggest threat to our overall market share.It is recommended that AAMI continue to invest in technological and social branding, making it easier for people to connect with the brand. Continual research needs to be done on consumer insights involving brand perception along with potential customers. This would benefit our industry segmentation profile and strengthen our framework criteria.APPENDIXREFERENCE LISTAAMI 2017, Did you know, AAMI, viewed 7 January 2017, https//www.aami.com.au/about-aami.htmlAAMI Car Insurance 2016, AAMI Access App, AAMI, viewed 6 January 2017, https//www.aami.com.au/claims-policy/aami-access-app.html?cmpid=AMIGIPINPSSEM20111024501matchtype=e keyword=aamief_id=WE5c3QAAAJReYgzb20170113020025sABS 2014, Survey of Motor Vehicle Use, Australia, 12 months ended 31 October 2014, viewed 11 January 2017, http//www.abs.gov.au/ausstats/emailprotected/mf/9208.0/Accenture, How Australian insurers can achieve profitable growth in a challenging market, Accenture, vi ewed 8 January 2017, https//www.accenture.com/au-en/insight-australian-insurers-profitable-growth-challenging-marketArmstrong, G, Adam, S, Denize, S Kotler, P, 2011, Principles of Marketing, 5th edn, Pearson Australia, French quality NSWAustralian Bureau of Statistics 2016, Internet Activity Australia June 2016, ABS, viewed 6 January 2016, http//www.abs.gov.au/ausstats/emailprotected/Latestproducts/8153.0Main%20Features5June%202016?opendocumenttabname=Summaryprodno=8153.0issue=June%202016num=view=Australian Bureau of Statistics 2017, Population Clock 2 January 2017, ABS, viewed 2 January 2017, http//www.abs.gov.au/ausstats/abs%40.nsf/94713ad445ff1425ca25682000192af2/1647509ef7e25faaca2568a900154b63?OpenDocumentBudget Direct 2017, About Us, Budget Direct, viewed 2 January 2017, https//www.budgetdirect.com.au/about-us.htmlCameron, N 2016, Why AAMI turned to Facebook mobile and segmentation to drive brand favourability, 2 May, CMO from IDG, viewed 3 January 2016, http//www.cmo.com.au /article/598954/why-aami-turned-facebook-mobile-segmentation-drive-brand-favourability/Cowling, D 2016, Social Media Statistics, Social Media News, 1 February, viewed 2 January 2017, https//www.socialmedianews.com.au/social-media-statistics-australia-january-2016/DeMers, J 20 frightful 2015, The Definitive Guided to Marketing Your business on Facebook, Forbes, 20 August, viewed 11 January 2017, http//www.forbes.com/sites/jaysondemers/2015/08/20/the-definitive-guide-to-marketing-your-business-on-facebook/522f55fb2acfDipak, Sahoo 2015, Innovation in Australias insurance industry, The Australian, 10 September, viewed 3 January 2017, http//www.theaustralian.com.au/business/business-spectator/innovation-in-australias-insurance-industry-/news-story/e445f70d04dac6cdf29b077b1a6bc3a6GlobalReviews 2017, How AU consumers research select a car insurance provider online, GlobalReviews, viewed 12 January 2017, http//www.globalreviews.com/blog/how-au-consumers-research-select-a-car-insurance-pro vider-online/GlobalReviews 2014, How do consumers research motor insurance providers and whos lovable them, GlobalReviews, September 2014, viewed 3 January 2017, http//www.globalreviews.com/reports/online-research-journey-how-do-consumers-research-motor-insurance-providers-and-whos-winningGlobalReviews 2016, Motor Insurance Digital Effectiveness Report, GlobalReviews, viewed 4 January 2017, http//www.globalreviews.com/reports/motor-insurance-digital-effectiveness-reportHan, Ester, 2016, On-demand insurance Trov launches in Australia targeting Generation Y, The Herald, 30 May, viewed 14 January 2017, http//www.smh.com.au/business/consumer-affairs/ondemand-insurance-trov-launches-in-australia-targeting-generation-y-20160527-gp5u0g.htmlIAG Group 2017, IAG About Us, IAG Group, viewed 2 January 2017, http//www.iag.com.au/about-us/who-we-are/purpose-and-strategyKumaresan, A 2016, Top 10 Trends in Insurance in 2016, Capgemini, viewed 9 January 2017, https//www.nl.capgemini.com/resource-fi le-access/resource/pdf/insurance_trends_2016_0_0.pdfLamb, C. 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