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conformity with marketing theory, the marketing plan will include a definition of the product (including price, target customers, distribution, etc.), general objectives, a communication and overall strategy, as well as a budget breakdown for the relevant elements of the marketing plan.
Defining the product refers not only to describing its main features and how it will work, but also what makes it different from the competitors' similar products, giving it a competitive advantage. Defining and describing the targeted customer segment is generally discussed separately, however, it is best we do it here so as to link it with the product's positioning on the market. The third part of the product definition phase is determined by the price, promotion and distribution aspects.
The product that the British Insurance Group is preparing for launch is called GapSure and is a new travel insurance product. This came as a reaction to the latest tendencies in the industry, corroborated with a "growing interest in adventure"
from the consumers. If we look at some of the data, "in the U.S., half of all adults have taken an adventure trip in the last five years" and some one third of these were involved in high-risk enterprises during these vacations. As such, the company needed to adapt its strategy to the demands coming from the market.
GapSure brings this extra opportunity of being able to cover activities that had been in the past non-insured because of their risks. Among these, we may enumerate white-water rafting, mountain climbing and scuba diving. Additionally, the product has the additional feature of covering more countries than any of the other products from the same industry segment.
The targeted market segment definition is important before moving on to price, distribution and promotion-related issues. The description of the product has already accounted for part of the definition of the targeted market segment: the product is targeting adventure enthusiasts and people willing to take risks on their vacations. On the other hand, we need to consider the fact that the most important part of this category are young people, who generally take chances more willingly than people in their 30s or 40s.
The fact that many teenagers decide to interrupt their studies for a year or two after finishing high school and moving on to the University is an excellent incentive for the product. We may as thus define the targeted market segment and the targeted consumers as being approximately 18 to 25 years old, willing to travel (abroad or in their own country) and take upon adventurous activities. In terms of socio-cultural factors and lifestyle, the individual targeted by our insurance product is interested in new experience, open to knowledge and discovering new things and interested in his development as a person. The customers we are addressing are innovative and may prove to be leaders in the future, given their inclination for risk taking. On the other hand, they may also prove somewhat aggressive in their risk preference and this may somewhat rise the price of the product, if individuals do show inclinations towards unwise and immoderate risk.
In terms of income, the product is addressing the average-low income teenager, who will probably work in order to provide for himself for the travel period. It is useful to keep this in mind when addressing the product's price issues.
In order to determine the size and value of the target market, we need to evaluate the number of potential purchasers the product may have (the potential market). In order to do this, we need to estimate the number of persons, aged 18 to 25, with low and medium income, high school or college graduate, likely to be leaving for year-round adventure trips. The value of the market is obtained by multiplying the total number of potential customers with the price that will be charged per insurance sold.
The pricing, promotion and distribution strategies are vital to the success of the enterprise. In terms of pricing, in my opinion, the best strategy we should use for GapSure is a high volume-low/moderate price strategy. There are several justifications in this sense. First of all, I have already mentioned the category of customers we are addressing. Even if they may come from rich families, it is most likely that their families will not offer them financial security over their period of travel. They will be supporting themselves and, in this sense, it is more than likely that they will…[continue]
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