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Insurance Industry In Australia
Transcript of Insurance Industry In Australia
ABS. 2016. Motor Vehicle Census, Australia. [ONLINE] Available at: http://www.abs.gov.au/ausstats/abs@.nsf/mf/9309.0. [Accessed 14 January 2017].
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A Group Presentation By:
Akshay Mehta, Karyn Bailey, Vieanna Brooker
Coles Insurance is competing on an already extensive playing field; a virtual sea of insurers and wide ranging policies. With major players that sell only insurance products such as Budget Direct and YOUI for instance, Coles is also in competition with smaller insurance agencies such as auto clubs (RACQ and NRMA) and major banks. Interestingly, it is also competing with in house insurance provider Westfarmers. In fact, the underwriters for the insurance IAG also supply other companies (RACV, NRMA and CGU) that Coles Insurance hope to entice their customers to their brand.
It is assumed with the introduction of a new player Woolworths Insurance, that Coles and Woolworths would enter an insurance war, cutting prices and increased offerings and possibly creating a duopoly as with their supermarket and retail chains and petrol stations. Woolworths Insurance is not at a point where it can be considered a major player in the market with low uptake at present, however, it is anticipated that Woolworths will ramp up their insurance marketing and sales to gain a bigger share of the lucrative insurance pie.
According to Myatt (2016) & Bennett (2016), using well known rivals as an example, Coles resorted to using bright bold colours and somewhat "cheesy" tags (think the revamp of old rock songs and the red hands "down, down prices are down" as an aggressive, intrusive style of marketing to amplify its voice in the market. These advertisements work due customers able to recall them easily.
In particular spruiking for their insurance campaign, using small red cartoon-ish vehicles and using the tag line "little red quote" and an emphasis on being over 25 or 30 means cheaper insurance, is how Coles Insurance intends to capture new clients with more people aware of Coles advertisements. In comparison, Woolworths despite having large marketing budgets have opted for a quieter voice in their campaigns adopting their recent tag line "That's why I pick Woolies." It is noted that Woolworths are usually quick to counteract Coles at different points to offer cheaper or better deals for the consumer.
According to Insurance Australia group(2017),Coles is part of a conglomerate of retail operations owned by the Westfarmers Group. Westfarmers Insurance is owned and underwritten by IAG insurance. This means Coles does not have an option to change its supplier.
KEY PLAYER OF IMPORTANCE
Image source : www.flybuys.com.au
Social media has become a way for companies to interact with its consumers. It is a way of garnering wider exposure, a vehicle for driving traffic to a company's website and use the information extracted from the traffic volumes to not only improve product but also enhance a shopper's experience Veiders, (2012). If the experience is positive enough it could even tilt a potential customer's loyalty just by how it behaves online. One way Coles encourages engagement with social media is to invite consumers to Google "little red quote." Which will take them to Coles Insurance website.
An Appeal To Customers
Coles Versus Woolworths, a Key Competitor
KEY Competitors Continued..
What this means, according to Bryan (2016), due to the insurance industry in decline for about fifteen years, a strong economy saw reduced profitability in insurance markets.
Premiums charged by Coles Insurance and its counterparts are being impacted certain conditions like higher employment levels, consumer confidence is a trigger for consumers to allow the purchase of more cars. More cars equal more accidents and a rise in potential payouts by insurers. The age of the car also determines the price of a premium. A newer vehicle uses more expensive materials than olde cars. This means a rise in premiums varying from insurer to insurer.
As customers are more mobile keeping irregular hours, so too can Coles Insurance by being available twenty four hours a day and seven days a week with a dedicated claim telephone service line. This is similar protocol when compared other insurance companies.
It is interesting to note that Coles does not yet have (nor do many others) mobile device applications (apps) to complete, keep track of insurance and or claims. This might be an avenue to use to gain advantage over its competitors.
The purpose of this report is to underline any concerns around Coles car insurance environment and to advise the improvement of their marketing strategy.
In the first section company’s marketplace in which coles insurance operates and any factors that can influence the company is closely examined. The report also identifies major competitors such as Woolworths, Budget Direct, Youi, closely examining their similarity to Coles car insurance, recent trends within their marketing strategy, any threats they may cause in near future to Coles car insurance followed by other demographics and technological advancement which may cause threat to the marketing strategy to coles car insurance.
In the second section, segmentation framework with its two key characteristics that are the vital differentiator in Coles car insurance purchase, are explained. Then it explains different logical and segments based on different types of consumers.
This report examines the strategy by which Coles insurance operates and any changes it could make to improve its marketing strategy.
This Report explains the marketing strategy for the launch of Coles Car insurance. This product has been developed by Coles Insurance group. In the beginning of this report, the broad marketplace in which company operates is explained followed by the factors that influence company’s mission and vision. After that, this report presents the segmentation framework that can be used by the Coles car insurance in influencing the consumers. In the first section, the report explores the general overview of the organisation and the recent trend in this industry. Research conducted by our team members’ show that there have been a significant increase in the insurance provider within this industry. In addition to this research, it has also been found that Australia has one of the most expensive car insurances around the world. This report also shed some light on different factors influencing the purchase of car insurance followed by the risks technology or demographic change have on this product. Research shows that the entire potential client base for Coles car insurance was distinguished along with the key qualities of customers that identify with their needs around insurance.
Segmentation framework uses different characteristics to explain the important differentiator for Coles car insurance.
SECTION 1 : THE MARKETPLACE AND INFLUENCING FACTORS
According to Wu (2016), The Car Insurance industry is projected to grow over the next five years.The market research shows that It is due to the increase in the population resulting in more motor vehicles on Australian roads. Therefore, these have been a significant increase in insurance providers in last few years.
Coles Car Insurance position in Insurance Industry
Coles car insurance is one the leading provider in the insurance industry. With its price beat guarantee, coles insurance is highly recommended among the customers. A report by Marketline (2016) Coles group is one of the major brands in Australia and is owned by largest Australian company Wesfarmers due to which consumers prefers to join Coles insurance as their first choice. Tree diagrams show where coles car insurance positions itself in the insurance industry.
According to Wu (2016), there are 47 different motor vehicle insurance provider raising a whopping 3.6 bn revenue. Due to increase in the population, there seems to be a rapid increase in cars on the roads over the last five years. According to Australian road death database (2017), there have been 1300 deaths on the road due to motor vehicle accidents which are 7.9% higher than the same time last year. The increase in road death toll leads to increase in people being more cautious about their safety which leads to increase in the demand for insurance of their respective motor vehicle.
Coles group being one the biggest companies in Australia, native Australians are one of the key consumers of coles car insurance. Consumers using subsidiaries of coles group such as National Australia Bank, Kmart group, Target, coles supermarket are seemed to be joining coles car insurance because they get discounts for using one company.
Due to increase in Insurance providers, there seems to be a lot of competition among companies. According to Bryan (2017), it hasn’t been this bad for car insurance industry in 15 years. He blames stronger economy and increase in the cars on road due to which premiums are going up and more claims are made as a result of which new insurance companies are emerging to target new customers with their low prices.
Current challenges faced by Industry
Due to stronger economy and increase in cars on road, industry seems to be weakened as margins and profits are getting all time worse for car insurance industry. With 47 insurance companies competing against each other to get the customer, industry tends to be in doldrums.
SECTION 2 CONSUMER SEGMENTATION
In this segment, we look at how Coles Insurance could segment their market to achieve greater target marketing.
Based on the research we have identified two different consumer characteristics that are important in the car insurance industry.
Based on the above characteristics, one way Coles insurance could segment their market would be by dividing into four segments, as shown below:
Proposed Segmentation framework for Coles Insurance
The following information has been used to roughly estimate the size of each of these segments. For a more accurate reflection of segment sizing, Coles Insurance would need to conduct further research with consumers.
Approximately 76% of drivers are reliant on their car (Understanding Insurance 2014)
65% of those reliant drivers use their car daily (Understanding Insurance 2014)
Car Insurance rose an average of 3% in 2016 (abs.gov.au, 2017)
Car insurance is a large investment and many consumers will purchase multiple policies throughout their lifetime.
The Insurance market is highly competitive with new competitors entering the market frequently and with many consumers relying heavily on their cars, Coles Insurance needs to ensure it is providing both comprehensive and affordable cover to maintain their position in the market.
Using the four segments that have been proposed in the segmentation framework, it is proposed that Coles Insurance invest in research that will gain further insight into their consumer needs from current and potential consumers. This will provide greater knowledge as to the consumer needs and allow Coles Insurance to better adapt their product to achieve a great market portfolio.
Car Insurance at a Glance
MARKET SHARE AND RECENT SHIFTS IMPACTED THE INDUSTRY
Demand among Australians
Table 1. Tree Diagram
Image (n.d) <www.flybuys.com.au>