Chapter 11Chapter 11

Case Study 7Case Study 7

By Donatas SumylaBy Donatas Sumyla12/07/200412/07/2004

Why this company?Why this company? It was selected as a case study to It was selected as a case study to

demonstrate how the distribution demonstrate how the distribution (place or convenience) factor of (place or convenience) factor of the marketing mix is being the marketing mix is being impacted by Internet technologies.impacted by Internet technologies.

The 3 things that this case looks at:The 3 things that this case looks at: SCMSCM CRMCRM BIBI

Company OverviewCompany Overview

Niche-based insurance company;Niche-based insurance company; Focused on homeowner insurance Focused on homeowner insurance

policies (competitive advantage to policies (competitive advantage to differentiate itself from others);differentiate itself from others);

Has a three-level channel system;Has a three-level channel system; Wants to:Wants to:

– Lower distribution costs through a Lower distribution costs through a reduction in services;reduction in services;

– Broader market reach within its Broader market reach within its distribution channels;distribution channels;

Action taken: Action taken: – Meet with its intermediaries within its Meet with its intermediaries within its

three-level channel system;three-level channel system; Purpose:Purpose:

– Strategize alternatives for removing costs Strategize alternatives for removing costs from the distribution system;from the distribution system;

Direction:Direction:– Electronic environment with its Internet Electronic environment with its Internet

technologies that drive costs out of the technologies that drive costs out of the transaction (Chircu and Kauffman 1999);transaction (Chircu and Kauffman 1999);

Reasons:Reasons:– There was information about other There was information about other

industries that used WWW in order to sell industries that used WWW in order to sell their products directly to customers;their products directly to customers;

Fears:Fears:– Disintermediation;Disintermediation;

Company’s Decision:Company’s Decision: Conduct an extensive study of their Conduct an extensive study of their

operations to determine areas of operations to determine areas of possible redundancy;possible redundancy;

Reduce costs in that fashion according Reduce costs in that fashion according to study’s results;to study’s results;

Agreed on with its Agreed on with its intermediaries:intermediaries:

Share the marketing costs;Share the marketing costs; Sponsor a survey of homeowner’s Sponsor a survey of homeowner’s

insurance;insurance; Determine what the customers need and Determine what the customers need and

want;want;

Survey content:Survey content:– Sales, delivery, and servicing questions;Sales, delivery, and servicing questions;

Survey focus:Survey focus:– Preferred method for purchasing and Preferred method for purchasing and

receiving insurance policies and their receiving insurance policies and their support services;support services;

Survey participants:Survey participants:– 500 current company’s policyholders;500 current company’s policyholders;

Survey key factor:Survey key factor:– Open-ended comments;Open-ended comments;

Survey results:Survey results:– Customers didn’t prefer one channel over Customers didn’t prefer one channel over

the other;the other;– Customers wanted flexibility depending on Customers wanted flexibility depending on

complexity of their policy;complexity of their policy;– No support for disintermediation;No support for disintermediation;– New technologies needed to meet New technologies needed to meet

customers’ needs and wants;customers’ needs and wants;

Company’s GoalCompany’s Goal

Combine traditional and Internet-Combine traditional and Internet-enabled technologies to deliver enabled technologies to deliver products and services based on products and services based on customer preference.customer preference.

ChangesChanges

Deepen its relationship with its Deepen its relationship with its distribution channel;distribution channel;

Treat the intermediaries as its Treat the intermediaries as its partners;partners;

Combine the sales and delivery Combine the sales and delivery intermediaries;intermediaries;

Change the distribution channel Change the distribution channel into two-level;into two-level;

E-business marketing E-business marketing strategystrategy

Provide customers with the technological Provide customers with the technological environment they prefer;environment they prefer;

Develop Web sites for online purchase, Develop Web sites for online purchase, delivery, and customer service;delivery, and customer service;

Merge the off-line customer information Merge the off-line customer information databases with data collected online and databases with data collected online and provide customization;provide customization;

Create online marketing support for the Create online marketing support for the intermediaries’ use;intermediaries’ use;

Create delivery channel for each type of Create delivery channel for each type of delivery preferred by the customer;delivery preferred by the customer;

Empowering new Empowering new structurestructure

Using BI identify those individuals Using BI identify those individuals needing homeowner insurance;needing homeowner insurance;

Design a Web site that discussed Design a Web site that discussed the features and benefits of its the features and benefits of its policy;policy;

Intermediaries directing targeted Intermediaries directing targeted individuals to the Web site;individuals to the Web site;

Use of toll-free number for less Use of toll-free number for less technology savvy people;technology savvy people;

StockholdersStockholders

Suppliers (through its distribution Suppliers (through its distribution channel);channel);

Customers (existing and Customers (existing and potential);potential);– Did not have direct contact with Did not have direct contact with

them;them;– Provided technology enabled Provided technology enabled

marketing tools at no cost;marketing tools at no cost;

Value BubbleValue Bubble

3 stages for its intermediaries:3 stages for its intermediaries:

1.1. Engaging;Engaging;

2.2. Retaining;Retaining;

3.3. Learning;Learning;

TechnologiesTechnologies

JavaServer Pages (JSP);JavaServer Pages (JSP);– To get insurance quote online;To get insurance quote online;

CGI and scripts written in Perl;CGI and scripts written in Perl;– Providing a claim to establish a relationship Providing a claim to establish a relationship

with the company and put it on the with the company and put it on the database;database;

Frames;Frames; PDF files;PDF files; CSS;CSS; JavaScript;JavaScript;

– Web-based calculators;Web-based calculators; Website to quickly respond to events;Website to quickly respond to events;

Response to 9/11 Response to 9/11 attacksattacks

Special messages about the 9/11 Special messages about the 9/11 attack;attack;

2 phone lines for employees and their 2 phone lines for employees and their families to call to check on their families to call to check on their relatives who worked there;relatives who worked there;

Counseling provided through a toll-free Counseling provided through a toll-free number;number;

Special link for its policyholders to Special link for its policyholders to report all property-casualty damages;report all property-casualty damages;

Toll-free assistance number to clients Toll-free assistance number to clients in New York City and Washington D.C.;in New York City and Washington D.C.;

A clear statement that the company is A clear statement that the company is strong;strong;

1. Engaging1. Engaging

Reintermediation strategy;Reintermediation strategy; The sales channel to present the policy The sales channel to present the policy

based upon the customer’s preferences:based upon the customer’s preferences:– Face-to-face;Face-to-face;– Online;Online;– Combination;Combination;

The delivery channel to deliver the The delivery channel to deliver the policy based upon the customer’s policy based upon the customer’s preferences:preferences:– Mail;Mail;– Personal;Personal;– Online;Online;– Combination;Combination;

Service-orientated site:Service-orientated site:– FAQ’s FAQ’s

Engagement Engagement TechnologiesTechnologies

Web-based calculators:Web-based calculators:1.1. Retirement;Retirement;

Income after retirement;Income after retirement; How retirement affects expenses?;How retirement affects expenses?;

2.2. Roth IRA;Roth IRA;– Effects of tax rate changes on decision;Effects of tax rate changes on decision;– Converting IRA to Roth IRA;Converting IRA to Roth IRA;– What IRA can one contribute to?;What IRA can one contribute to?;

3.3. Savings;Savings; Value of my savings;Value of my savings; Time it will take to save for product;Time it will take to save for product; Saving for college education;Saving for college education;

2. Retaining2. Retaining

Ongoing upgrades;Ongoing upgrades; Enhancements;Enhancements; Regular Web site updates with stories Regular Web site updates with stories

regarding homeowner issues and regarding homeowner issues and customized based on:customized based on:– Theft;Theft;– Flooding;Flooding;– Fire;Fire;– Catastrophic occurrences;Catastrophic occurrences;

Input and feedback options;Input and feedback options;

Retain TechnologiesRetain Technologies

Random collection of photos on the Random collection of photos on the home page using JavaScript line of home page using JavaScript line of code;code;

Spanish language link (Español);Spanish language link (Español);– Problems with the links and the reasoning Problems with the links and the reasoning

for that;for that; Alzheimer’s disease;Alzheimer’s disease;

– Just an interesting article from a university Just an interesting article from a university study sponsored by the company;study sponsored by the company;

3. Learning3. Learning

Critical to monitor the Web site usage of Critical to monitor the Web site usage of the intermediaries and the customers;the intermediaries and the customers;

Clickstream behavior and log files Clickstream behavior and log files should be analyzed:should be analyzed:– Trends;Trends;– Length of time on specific pages Length of time on specific pages

(“stickiness”);(“stickiness”);– Frequency of visits;Frequency of visits;

Using all this information develop Using all this information develop profiles and offer improvements;profiles and offer improvements;

Learn TechnologyLearn Technology

A lot of problems!A lot of problems! Clickstream technology;Clickstream technology;

– Some pages had code and some Some pages had code and some didn’t;didn’t;

Navigation is very complicated Navigation is very complicated consisting of various subsites;consisting of various subsites;

Online forms;Online forms;– Difficult to find;Difficult to find;

Summary Summary

Successful in a short run;Successful in a short run;– Factors:Factors:

Only half of the job done;Only half of the job done; Needs Web site improvements;Needs Web site improvements;

Marketing theme:Marketing theme:– Reintermedation;Reintermedation;– Make your intermediaries your partners;Make your intermediaries your partners;– Traditional and technology enabled Traditional and technology enabled

marketing mix;marketing mix; Questions please…Questions please…