Avivas Services Marketing Mix Marketing Essay

Avivas Services Marketing Mix Marketing Essay This report will be looking at the services which Aviva provides and how the services the business offer differ from a typical manufacturing firm. Looking at the theoretical issues of intangibility, heterogeneity, inseparability and perishability which affect the various elements of the services marketing mix of Avivas products provided to their customers. Company Introduction Aviva is the sixth-largest insurance group in the world. It has a turnover of over  £47.1 billion. Aviva provides more than 44.5 million customers with insurance, savings and investment products. They are one of Europes leading providers of Car insurance, Motor insurance, Life insurance, Home insurance, Health insurance, Travel insurance, Personal accident insurance, Pet insurance and Business insurance. Avivas main activities are the provision of general and life insurance, long-term savings products and fund management services. The group has around 36,600 employees,  £379 billion of assets under management and 43 million customers. Avivas Principal subsidiaries are: Aviva Life Pensions, investments, Life Insurance and long term savings (formerly Norwich Union) Aviva Insurance General Insurance Aviva Investors Fund Management (formerly Morley Fund Management) Aviva is ranked as one of the UKs top 10 most valuable brands in 2012 and has been voted the UKs top life, general and health insurer by insurance intermediaries. Aviva aims for superior long-term investment performance and it is UKs one of the most financially strong investment company. Aviva provides an extensive range of value-for-money, good quality products investments, retirement, protection and healthcare designed and changing to meet your needs, both now and in the future. Aviva was created by a merger of two British insurance firms, Norwich Union and CGU plc. In October 2009 the company decided to focus on its commercial insurance sector and demonstrate its commitment to brokers by launching their find a broker facility, using the British Insurance Brokers Association search engine. To help them with this endeavour, Paul Whitehouse was recruited to play the part of a successful hairdresser running three salons. The message of the campaign focused on business insurance through insurance brokers. The closing line of the campaign was Were in business to keep you in business. The Marketing Mix Marketing is the ability of an organisation to provide the right product, at the right price, via the right outlets and presented in the correct way . In addition to product, price, place and promotion, services marketing calls for three additional Ps people, processes and physical evidence. The idea of classification affecting the marketing mix often expands our understanding of the marketing mix itself. For example excluding product classifications such as tangibility, reputation, heterogeneity, inseparability, perish-ability and ownership which are associated with service, we can look at the marketing mix as simply four Ps: The product, the price, the place, and the promotion. This initial idea of a marketing mix originated in the 1960s when developed by Neil Borden in his book: The Concept of the Marketing Mix (Borden, 1965) In this article Borden lists various elements of the marketing mix for manufacturers, twelve in total, stating the list can be long or short depending on how far one wishes to go in his classification and sub-classification of the marketing procedures. From this list has derived the four Ps of the marketing mix we know today. These four Ps make up the raw product without any service factor, the actual product, where it is sold, the promotion to the target consumer and the selling price. There is arguably no evidence to show any kind of customer service in the four Ps marketing mix, can be thought of as distinctly producer-orientated. (Kotler, Armstrong, Harker, Brennan, 2009) Product Distinctions Theoretical issues of Intangibility, Heterogeneity, Inseparability and Perishability are as follows Intangibility is a unique characteristic of service which cannot be seen physically, felt, tasted or touched as physical goods are. For example when we watch a movie in the theatre, we are entertained by watching it. Entertainment is the output of the service that is delivered. Issues caused by intangibility are Lack of service inventories: Services cannot be stored as the physical goods are. Lack of patent protection: As services are intangible, they cannot be patent protected as the physical goods are. Service offered by one firm can be also offered by other company in different way. Difficulty in communicating services: Goods can be physically displayed, but whereas services are not physically shown to customers. Its hard for the companies to convince the customer to buy make the products that are offered as services. E.g. Insurance Difficulty in pricing services: Services offered by companies differ and no two services can be same as customers needs are different. Services are customised and hence tend to have fixed pricing. Heterogeneity is a unique characteristic of service that reflects the difference in the service that is provided from one customer to other customer. For example when a customer goes to a restaurant and ordered food would be different kind from the other customer and no customers experience is the same. Similarly no ones custom made jewellery looks alike as its unique to the customers requirements. Issues caused by heterogeneity Service standardization and quality control are difficult to achieve Services provided by different providers within the same location tend to be same. Mood and skills of a single provider differ from day-to-day Inseparability is a unique characteristic of service which displays the association between the people or company which provides service and the person who is engaged in receiving the service and also other customers who are indirectly or directly getting the knowledge. For example when a customer wants to take an internet connection, the sales team of the internet company need not interact face to face with the customer to give the information about the product. But whereas in a production process like Saloon, the customer has to be physically present to get his hair cut. Issues caused by inseparability Physical connection of the service provider to the service: In order to provide the service to the customer, the service provider has to be physically present and Face-to-face interaction with customers makes employees satisfaction critical when they are not able to provide proper guidance to customers. Involvement of the customer in the production processes: Customers involvement may vary according to the requirement that the customer be physically present to receive the service, i.e. for a dental service, customer has to be physically present in order to solve his or her problem related to teeth. Involvement of other customers in the production process: Customers presence is required in some service and some customers often share a common service experience and that shared experience can be negative or positive depending upon the experience the customer gets out of the service he has received. Perishability is a unique characteristic of service in which the service cannot be saved. Unused services cannot be reserved or neither can be inventoried. For example seats in a theatre can be inventoried for a period of time before the purchase of the ticket and cannot be inventoried after the show is finished. Another example of perishability is fresh meat, it can be stored for certain time period but once it sold it is completely perished. Issues caused by Perishability Matching supply and demand is a major challenge for the service provider, if there is a higher demand of service, than service providers tend to make the supply of the service maximum. When there is a higher demand, than the service provider gives optimal supply level. Avivas services marketing mix Product There is no point in developing a product or service that no one wants to buy. Companies try to find out what the customers need and then develop the right product that attracts customers. A produce is we produce. If we produce goods it means tangible product and when we produce or generate services, it means intangible service product. A product is what a seller sells and what buyer buys. Thus, Aviva provides insurance services and therefore insurance services are their products. Aviva is the leading company offering insurance services to the users. Apart from offering life insurance policies, they also offer underwriting and consulting services. When a person or an organisation buys an Insurance policy from Aviva, he buys a policy along with it the assistance and the prestige of the insurance company and the facilities of claims and compensation. It is natural that the customers expect a reasonable return for their investment and Aviva as insurance company wants to maximize their profitability. Aviva would have intangibility issue as the company can introduce new insurance scheme which would give the customer the advantage of having to take single insurance policy for the whole family. The company can protect the product brand but it cannot restrict other insurance companies to come up with similar scheme with a different name, hence there is lack of patent protection. The company provides different schemes according to the customers needs and the pricing of the insurance is not the same for every customer. Pricing A product is only worth what customers are prepared to pay for it and the price needs to be competitive. In insurance business the pricing decisions are concerned with the premium charged against the policies that a customer would take and also interest is charged for defaulting the payment of premium. The factors that Aviva uses for determining the premium rates under a life insurance plan are mortality, expense and interest. The premium rates are revised if there are any significant changes like Mortality: When deciding upon the pricing strategy the average rate of mortality is one of the main considerations that it takes in to care. Expenses: The cost of processing, commission to agents, reinsurance companies as well as registration are all incorporated into the cost of instalments, premium sum and forms the integral part of the pricing strategy. Interest: Rate of interest is one of the major factors which determine if the customers willingness to invest in insurance. Customers will not be willing to put their funds to invest in insurance if the interest rates provided by financial institutions are much greater than the perceived returns from the insurance premiums. Aviva would have intangibility issue in pricing, Aviva provides different kinds of insurances. Customers tend to choose which product they would want to opt and as insurance is not same for all the customers the price varies depending on the premium and the term that a customer is will to go for. Hence pricing the service plays a major role in Aviva. Place The place where customers buy a product must be appropriate and convenient for the customer and the product must be available in the right place at the right time. Place plays an important role at Aviva. It has branches all over the UK and also has insurance agents in order to offer the services. This helps the company to process the services to the end-user so that the gap between services that are promised and services that are offered is bridged over. Aviva also offers customers to apply for policies online. This helps the customers to get their insurance without going to the branch or to contact agent and saves customers time. Aviva would have inseparability issues, if a customer wants to take insurance he has to get in touch with the staff and get the information needed to choose the right kind of product he wants. Aviva should have more dedicated advisers to educate the customers for taking insurance and explaining the benefits of having insurance from their company . Promotion Promotion is the way a company communicates what it does and what it offers to the customers. Good promotion is necessary for a company to have better income and it also shows what advantages the customers get when they choose their services. Aviva promotes its services by advertising in television ads, radio and billboards. This helps Aviva to boost its sales. It also provides loyalty discounts to existing customers which helps the company to attract new customers by word of mouth. The company also uses direct mail and online campaigns to target new customers. Aviva also offers special promotional deals which help the company to get new customers who wish to switch from an existing insurance company. When it comes to promotion, Aviva would have heterogeneity and intangibility issues as no customer would have the same kind of policy. Insurance policy depends on various factors like age , health etc. so the company has to customise the policy according to the customer needs so that they could attract more customers. The company gives promotional offers to customers which are intangibility in nature and this makes it hard for the company to actually convince the customer to take their service as they are not physical products which a customer can feel. People Anyone who comes in contact with customers will make an impression and it might have positive or negative. It is out most important for a company to ensure that all employees who have contact with customers are properly trained and also should have right kind of people for the job. Understanding the customer better allows designing appropriate products. Aviva being a service industry and involves a high level of people interaction, Aviva makes sure that all its staff is given regular training so that they can maintain strong relationships with the customers. They have 24 hour helpline with multi-lingual staff to answer customer queries regarding them policies or any other service related issues. When it comes to people, Aviva would have perishability issue. If a customer is not happy with the service that the company is providing then he tend to look for better services that other company offers. Employees should make sure that they understand what the customer issues are and try to help them out so that they dont loose the customer. Process The process of giving a service to a customer is crucial in terms of customer satisfaction such as waiting times, the information given to customers and the way the staff helps the customers are important for a company to keep the customers happy. Customers are not interested in the detail of how the business runs. Avivas process is customer friendly. They advise customers about the products that they offer and tell the customers which product is best suited. Aviva has the reputation of speed and accuracy of payment. Their processing method is easy and convenient to the customers. The instalment schemes they provide cater to the ever growing demands of the customers. They provide different schemes to cater the demand of customers who wish to go for the service. The IT Data Warehousing system of Aviva helps the company to have a unified way to provide service large no. of customers efficiently and maintain their overheads. This helps to improve customer service levels. When it comes to process, Aviva could have issues related to inseparability, intangibility and perishability because they have to have advertise regularly about their products that they offer, new schemes that the company is giving to its existing customers as well as new customers. Service and quality control could also have adverse effect on the sales of their products. If they dont offer customers the help that they need on time, customers might feel unhappy about the service that they get which leads to switchover to a different company. Physical evidence Service cannot be experienced before it is delivered. Physical evidence given by an organisation must confirm the assumptions of the customer. As the customer cannot experience the service before buying it, but they can talk about the service with other people about the experience they have got by choosing their product. Distribution is a key determinant of success for all insurance companies. Today, the insurers have a large reach and presence throughout UK. Building a distribution network is very expensive and time consuming. Aviva provides all the information on their website so that customers can have all the information about the products and the services the company provides. Aviva has also been using remote distribution channels such as telephone and email in order to reach more customers so that they can avoid intermediaries, bring down overheads and increase profitability. Aviva offers an entire range of products including motor, home and life insurance and pensions. Conclusion The seven ps of Marketing Mix The marketing mix is the combination of marketing activities that an organisation engages in so as to best meet the needs of its targeted market. Taking product classification in to account when dealing with marketing of services, it expands the understanding of the original 4ps. The Insurance business deals in selling services and therefore due weightage in the formation of marketing mix for the Insurance business is needed. The marketing mix includes sub-mixes of the 7 Ps of marketing i.e. the product, its price, place, promotion, people, process physical attraction. The above mentioned 7 Ps can be used for marketing of Insurance products. The services that Aviva offers as mentioned above is affected by issues of classification of being Intangibility, Heterogeneity, Inseparability and Perishability which based on the researched information is performed well by the business. Aviva offers services which are competitive with other insurance companies on price and service support which has helped the company to be ranked as one of the UKs top 10 most valuable brands in 2012 and sixth-largest insurance group in the world. It has become one global brand with 43 million customers and has over 300 years of heritage.