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Impact of direct channels in the insurance industry
1. As an established insurance company, Progressive Insurance offer services that can be described using the four characteristics of services. All products offered by Progressive Insurance are intangible since they cannot be touched or seen (Pride & Ferrell, 2010). What is evident is that these services have an impact customer’s life in one way or the other. For example in personal insurance, one can insure their home and its contents, but one cannot see the actual service being offered. Progressive Insurance services are also perishable in the sense that if one has not been able to receive compensation on a cover because there has been no cause for insurance pay out, the customer cannot transfer the insurance payments to another period (Barker, 2000). If a period lapses without payment then the customer has to renew the service.
Progressive Insurance services are inseparable to mean that the company offers cover, and at the same time the customer has a sense of being covered within the period the insurance product is valid (Bryson & Daniels, 2007). In personal insurance covering the home and its contents, the service apply differently to customers since people have different homes with different values. Insurance therefore, is heterogeneous, that is being unique to individual needs (Fisk, John & Grove, 2007). The company does its best to ensure customer satisfaction by offering a detailed and comprehensive cover that makes it is for the customer to get compensation during claim. In terms of growth, the insurance company is at the growth stage of product life cycle. The company is trying to encourage customers their products are the best in the market so that they can increase the market share.
2. A major advantage of a customer having an insurance agent is that they are able to understand what an insurance cover means. The customer can also determine the most suitable cover for them and clear up aspects of the cover not understood. This approach also gives the company a caring façade by offering personal attention to customers (Peppers & Rogers, 2004). An online transaction, on the other hand, is faster especially for a customer who knows what they already want. A personal agent would be disadvantageous to the company since an insurance company will have to hire personnel to attend to customers and this can be expensive. An online approach is disadvantageous to the customer especially if the customers do not understand how to navigate the website. It is also a disadvantage to a company since the company has no way of judging the personal needs of the customer to offer a comprehensive cover (Fitzgerald & Arnott, 2000).
3. Using an agent in acquiring a service is more likely to serve the customer well, as opposed to using an online approach. The agent approach gives the customer more leeway to modify the cover to suit them best, and this may run up the cost (De Weert, 2011). On the other hand, insurance offered online is more rigid to modification and the premiums may therefore, be standard. The pricing in this sense is fair to the customer since it is dependent on the customer needs assessment (Jamal & Naser, 2002). Since the personalized approach is more comprehensive, the customer gets value for their money. Therefore, a less comprehensive cover as presented online should be cheaper.
4. Since Progressive, AllState and State Farm insurance companies are using similar advertisement strategies, it is difficult to tell the difference among them. Further more, the use of Flo, Mayhem and Jessica as the company faces in the humorous campaign does more to show the similarities among them than exhibiting any differences especially when the products offered are almost similar. The humorous approach to advertising is indeed unique. This approach is important since the company tones down the seriousness with which insurance matters are deemed. This approach is enticing and allows the customer to approach the insurance companies while more at ease and less apprehensive.
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