1. Chapter 11 Case Study 7 By Donatas Sumyla 12/07/2004

2. Why this company? It was selected as a case study to demonstrate how the distribution (place or convenience) factor of the marketing mix is being impacted by Internet technologies. It was selected as a case study to demonstrate how the distribution (place or convenience) factor of the marketing mix is being impacted by Internet technologies. The 3 things that this case looks at: SCM SCM CRM CRM BI BI

3. Company Overview Niche-based insurance company; Niche-based insurance company; Focused on homeowner insurance policies (competitive advantage to differentiate itself from others); Focused on homeowner insurance policies (competitive advantage to 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 reduction in services; –Broader market reach within its distribution channels;

4. Action taken: Action taken: –Meet with its intermediaries within its three-level channel system; Purpose: Purpose: –Strategize alternatives for removing costs from the distribution system; Direction: Direction: –Electronic environment with its Internet technologies that drive costs out of the transaction (Chircu and Kauffman 1999); Reasons: Reasons: –There was information about other industries that used WWW in order to sell their products directly to customers; Fears: Fears: –Disintermediation;

5. Company’s Decision: Conduct an extensive study of their operations to determine areas of possible redundancy; Conduct an extensive study of their operations to determine areas of possible redundancy; Reduce costs in that fashion according to study’s results; Reduce costs in that fashion according to study’s results; Agreed on with its intermediaries: Share the marketing costs; Share the marketing costs; Sponsor a survey of homeowner’s insurance; Sponsor a survey of homeowner’s insurance; Determine what the customers need and want; Determine what the customers need and want;

6. Survey content: Survey content: –Sales, delivery, and servicing questions; Survey focus: Survey focus: –Preferred method for purchasing and receiving insurance policies and their support services; Survey participants: Survey participants: –500 current company’s policyholders; Survey key factor: Survey key factor: –Open-ended comments; Survey results: Survey results: –Customers didn’t prefer one channel over the other; –Customers wanted flexibility depending on complexity of their policy; –No support for disintermediation; –New technologies needed to meet customers’ needs and wants;

7. Company’s Goal Combine traditional and Internet- enabled technologies to deliver products and services based on customer preference. Combine traditional and Internet- enabled technologies to deliver products and services based on customer preference.

8. Changes Deepen its relationship with its distribution channel; Deepen its relationship with its distribution channel; Treat the intermediaries as its partners; Treat the intermediaries as its partners; Combine the sales and delivery intermediaries; Combine the sales and delivery intermediaries; Change the distribution channel into two-level; Change the distribution channel into two-level;

9. E-business marketing strategy Provide customers with the technological environment they prefer; Provide customers with the technological environment they prefer; Develop Web sites for online purchase, delivery, and customer service; Develop Web sites for online purchase, delivery, and customer service; Merge the off-line customer information databases with data collected online and provide customization; Merge the off-line customer information databases with data collected online and provide customization; Create online marketing support for the intermediaries’ use; Create online marketing support for the intermediaries’ use; Create delivery channel for each type of delivery preferred by the customer; Create delivery channel for each type of delivery preferred by the customer;

10. Empowering new structure Using BI identify those individuals needing homeowner insurance; Using BI identify those individuals needing homeowner insurance; Design a Web site that discussed the features and benefits of its policy; Design a Web site that discussed the features and benefits of its policy; Intermediaries directing targeted individuals to the Web site; Intermediaries directing targeted individuals to the Web site; Use of toll-free number for less technology savvy people; Use of toll-free number for less technology savvy people;

11. Stockholders Suppliers (through its distribution channel); Suppliers (through its distribution channel); Customers (existing and potential); Customers (existing and potential); –Did not have direct contact with them; –Provided technology enabled marketing tools at no cost;

12. Value Bubble 3 stages for its intermediaries: 1. Engaging; 2. Retaining; 3. Learning;

13. Technologies JavaServer Pages (JSP); JavaServer Pages (JSP); –To get insurance quote online; CGI and scripts written in Perl; CGI and scripts written in Perl; –Providing a claim to establish a relationship with the company and put it on the database; Frames; Frames; PDF files; PDF files; CSS; CSS; JavaScript; JavaScript; –Web-based calculators; Website to quickly respond to events; Website to quickly respond to events;

14. Response to 9/11 attacks Special messages about the 9/11 attack; Special messages about the 9/11 attack; 2 phone lines for employees and their families to call to check on their relatives who worked there; 2 phone lines for employees and their families to call to check on their relatives who worked there; Counseling provided through a toll-free number; Counseling provided through a toll-free number; Special link for its policyholders to report all property-casualty damages; Special link for its policyholders to report all property-casualty damages; Toll-free assistance number to clients in New York City and Washington D.C.; Toll-free assistance number to clients in New York City and Washington D.C.; A clear statement that the company is strong; A clear statement that the company is strong;

15. 1. Engaging Reintermediation strategy; Reintermediation strategy; The sales channel to present the policy based upon the customer’s preferences: The sales channel to present the policy based upon the customer’s preferences: –Face-to-face; –Online; –Combination; The delivery channel to deliver the policy based upon the customer’s preferences: The delivery channel to deliver the policy based upon the customer’s preferences: –Mail; –Personal; –Online; –Combination; Service-orientated site: Service-orientated site: –FAQ’s

16. Engagement Technologies Web-based calculators: Web-based calculators: 1.Retirement; Income after retirement; Income after retirement; How retirement affects expenses?; How retirement affects expenses?; 2.Roth IRA; – Effects of tax rate changes on decision; – Converting IRA to Roth IRA; – What IRA can one contribute to?; 3.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;

17. 2. Retaining Ongoing upgrades; Ongoing upgrades; Enhancements; Enhancements; Regular Web site updates with stories regarding homeowner issues and customized based on: Regular Web site updates with stories regarding homeowner issues and customized based on: –Theft; –Flooding; –Fire; –Catastrophic occurrences; Input and feedback options; Input and feedback options;

18. Retain Technologies Random collection of photos on the home page using JavaScript line of code; Random collection of photos on the home page using JavaScript line of code; Spanish language link (Español); Spanish language link (Español); –Problems with the links and the reasoning for that; Alzheimer’s disease; Alzheimer’s disease; –Just an interesting article from a university study sponsored by the company;

19. 3. Learning Critical to monitor the Web site usage of the intermediaries and the customers; Critical to monitor the Web site usage of the intermediaries and the customers; Clickstream behavior and log files should be analyzed: Clickstream behavior and log files should be analyzed: –Trends; –Length of time on specific pages (“stickiness”); –Frequency of visits; Using all this information develop profiles and offer improvements; Using all this information develop profiles and offer improvements;

20. Learn Technology A lot of problems! A lot of problems! Clickstream technology; Clickstream technology; –Some pages had code and some didn’t; Navigation is very complicated consisting of various subsites; Navigation is very complicated consisting of various subsites; Online forms; Online forms; –Difficult to find;

21. Summary Successful in a short run; Successful in a short run; –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; –Make your intermediaries your partners; –Traditional and technology enabled marketing mix; Questions please… Questions please…