CASE STUDY 7 Re-intermediation Tony Gauvin, 2006

Company 7 Small niche-based insurance company –Home insurance –Very competitive –Well-branded Goal – lower distribution costs –Reduction in services –Create broader market reach Marketing Theme –Creating and delivering goods, services and ideas.

Overview Traditional View –3-level channel system –Sales Agents Sales Delivery Service Distribution Channels –Intermediaries Disintermediation Reintermediation Company G Sales Agent Delivery Customer Service

Electronic Distribution View Productivity gains Reduce costs $ Redefinition (elimination) of distribution channels Insurance company’s efforts to implement –Meet with intermediaries Company GCustomer Sales AgentDeliveryService

Intermediaries View Company 7 is becoming a supplier and competitor Electronic direct sales vs. Sales Agent Loss of “face-to-face” interaction with customer Contends that goal can be achieved without disintermediation –Reduction of costs –Direct marketing –Share Cost of marketing (Company 7 used to pay for all) Sponsor survey of Homeowners –3 objectives to measure Preferred method of service Preferred method of purchase Preferred method of delivery

Results of survey Equal distribution of sales channel preference –Open-ended comments suggests that choice to buy on- line or not depends of complexity Same results for service channel –Simple – online FAQs –Complex – Agent Results for delivery –varied Customers want Choice! Marketing Mix transformation –4 P’s enhanced by four C’s

Solution Reintermediation Strategies –Deepen relationship with existing intermediaries –Develop relationships with new Intermediaries –Provide technologies to improve productivity for the intermediaries 2 Level distribution channel Company G Customer Service Sales and delivery

Stakeholders Suppliers –Sales agents –Became partners (Strategic alliance) Customers –Existing –Prospects

E-Commerce The delivery of the policy is selected by the customer Online courses available to the brokers, dealers and agents –pay for courses through the web site Site maximizes security and encryption software –evaluating possible combined solutions (e-commerce with CRM, ERP, SCM)

Business Intelligence Surveyed customers Attitudes toward SST (self service technology) Met with intermediaries Discovery for company Solution –re-intermediation

Customer Relationship Management Two customer groups to focus on –internal customers (brokers, dealers and agents as external sales force) –external customers (end-users; policy holders) Case focuses on both Internal customers –re-intermediation provided electronic supplement to the brokers, dealers, agents

Customer Relationship Management Internal customers (cont.) –Portal to conduct business electronically External customers –Customer communication focus on the web site –Almost 2100 links to the company’s site –Alliances with various groups leading to a referral to broker, agent, dealer

Customer Relationship Management Illustrates the Services Marketing Pyramid (Case Study 6) firm to sales force (internal marketing) –uses web site to recruit sales force –online insurance training external sales to external customers (Interactive marketing) firm to customers (external marketing) using web site for information and sales/lead generation to external sales force

Supply Chain Management Somewhat “blurred” –External sales force is also distribution channel Productivity gains –reduced paperwork –increased broker, dealer, agent convenience for managing the process (24/7 availability) –created more time for sales force to generate more business

Enterprise Resource Management Leveraged the external sales force portal concept Created one for internal employees Reduced routine human resource inquiries –HR staff focused on more complex issues SCM productivity gains lowered the cost of doing business

Value Bubble Attract –Use external sales force –Use attractive design –Technologies JSP Frames CSS PDF Reacted to 9/11 on 9/12

Engage Customer concentric based on Intermediaries direction Enhancements and new offerings FAQs Ability to get quotes online Online calculators Technologies –JSP –JavaScript –databases

Retain Upgrades and enhancements Stories on homeowners issues Technologies –Random collection of photos –Espanol/English Limitation –One article

Learning Clickstreams log files & user input –Not uniform –Problems with links Merging of on-line on off-line customer databases –Study demographics Relate??

Value Bubble Evaluated the external marketing site –Site was leveraged during September 11 tragedy External sales force site is in prototype Recognized as differentiator and leader –reinforcing the brand among sales force Engage, Retain and Learn are key stages –portal (internal marketing) and public site (external marketing ) Relate is for the future

Summary Success ?? –likely –Good strategy & actualization –Some technology glitches..easily overcome –Good example of reintermediation Marketing Theme –Valuable exchange process Questions