Today, buying an auto insurance policy has become a breeze. Companies like Progressive have spent extensive amounts of time and funds to improve the buying experience for their customers. Progressive has been successful at developing additional channels to improve their customer’s procurement options adding customer value to their product. Progressive has grown into one of the best auto insurance companies available and they have done so through customer-centered marketing strategies.
In the following we will discuss what makes Progressive Insurance a service company, the pros and cons of direct and indirect buying and the value added from a customer’s perspective, and lastly, how Progressive Insurance uses its ads to differentiate itself from its two mayor competitors, All State and State Farm. According to Kotler and Armstrong, there are four primary characteristics of services: intangibility, inseparability, variability, and perishability.
Service Intangibility is the inability to touch, see, smell or hear the service customers have purchased. With service inseparability, the service cannot be set apart from its provider. Service variability means that the service delivered may vary depending on who, where, and how it has been distributed by individual company personnel. Service perishability refers to services that be cannot place aside for later use. These four characteristics of service are manifested in Progressive’s product, therefore, making it a service.
Consumers cannot hold their policies, they cannot think of their auto insurance policies without thinking of Progressive, the service provided by Progressive may fluctuate in quality, and the service cannot be physically stored. Progressive delivers value to its customers by a promise to solve their claims as soon as possible. That includes performing next-day estimate, fixing the customer’s vehicle and having them back on the road as soon as possible. Progressive is in its maturity stage. It is a satisfying service that continues to challenge itself and others in its industry.
According to Bernstein, Progressive plans to develop a brand that will be recognized for their superior value and unusually good service. Progressive have been laying the tracks and others have been following their lead. They were the first to launch an auto insurance website in 1995, and the first to introduce auto insurance on-line purchase just two years later. The latest service feature is a device called Snapshot, which captures the speed, mileage used, and other significant data.
This information is then used to calculate discounts for those customers with low mileage and saver driving habits. Customers can now buy policies from Progressive through direct channels, phone or on-line, or an indirect channel, local agents. Some customers like to purchase their Progressive policies on the phone, some like to buy on-line, and others prefer building personal bonds with Progressive agents. They can choose which way they want to buy, when and where. The advantage of buying direct is that the customer saves money due to the lack of expenses associated with intermediaries.
Another advantage of direct purchase is that the customers can communicative via telephone or live chat with a knowledgeable representative who has been trained to consistently delight its customers with fast and easy service. Customers value their time, therefore, if they can enter a website or talk on the telephone to a Progressive representative who can help them get the cheapest rate at the fastest pace, customers will be satisfied. The advantage of buying indirect is that customers can potentially build a relationship with their agents.
Customers value agents who can recognize them at the entrance of the store or remember the unique aspects of their lives. This type of connection helps build trust, which is exact the disadvantage of buying direct. When customers buy direct they miss the opportunity of relationship building. The disadvantage of indirect buying is that the customers pay more to have access to the middleman and the service is more likely to be inconsistent with Progressive’s way of handling customers.
Their pricing strategy does not seem to be customer focused since the cost associated with buying Progressive auto insurance policies are included in customer premiums. The point is to save the customer money, and eliminating these cost can do just that. Either way customers choose to buy may have its good and the not so good aspects, but the choice is always up to the customer. According to Barone, Progressive’s current marketing strategy is to be considered the consumers’ number one choice for automobile insurance regardless of how they buy. Customers appreciate the versatility of the Progressive buying experience.
The dual-channel is definitely working. Progressive Insurance uses its ads to differentiate itself from its two mayor competitors, All State and State Farm. In 2008, Progressive introduced their perky, cashier, Flo, who stole the hearts of many with her comical obsession for helping Progressive customers. Most of the latest commercials have featured her in the Progressive “Superstore”, where according to their commercials, customers could choose their price. She has become a viewers’ sensation and a great tool for differentiation from its competitors.
All state and State Farm each have their spokes person to help them communicate with the target market, but their characters are not as influential. All States has Mayhem who helps illustrate Murphy’s Law at it best but in a funny way. Everything that could go wrong will go wrong with your car. State Farm has Jessica the reliable auto insurance agent who reminds consumers of potential catastrophic situations that State Farm can no longer help customers if they decided to switch to an inferior auto insurance company. The fictional customers express their regret for switching companies and begs Jessica to take them back.
Progressive, All State and State Farm all use a humorous approach to appeal to their audience. In my opinion using humor as a way to reach the target market works in the advantage of both Progressive and its audience. Spectators are now entertained while watching TV commercials. I remember a time when people would not sit to watch one single commercial on television. They used commercial as time for sandwich making, laundry loading, or just simply channel surfing. Now consumers search for the humorous, attention grasping commercials on YouTube.
In conclusion, Progressive Insurances continues to grow its profit and customer base thanks to their customer-driven marketing strategy. They do an outstanding job at providing customers with different purchasing options through their broad selection of buying channels. Customers have the choice to buy direct or indirect, which represents great customer value. Its brand is recognizable to consumers and their humorous commercials are well received. Their pricing strategy may need some work so they can remain consistent in the prices seen across the bored, but they have room to improve. Bibliography
Kotler, P. , & Armstrong, G. (2012). Principals of marketing. New York, NY: Pearson. Bernstein, Sanford C. (1996). Black Book – The Private Passenger Auto Insurance Market.
New York, NY: A market research report on banking, finance & insurance. Progressive Corporation. 2013 Annual Report. Mayfield Village, OH. Progressive Corporation 2013. Print. Barone, Karen M. Interview with Laura M. Toops. National Underwritter Property & Casualty, Ohio. 14, September, 2009 Ritchey, Brittany (2012). History; How Progressive Began.
Retrieved from http://www. progressive. com/progressive-insurance/history/.