Automobile Insurance: A Comprehensive Brand Audit

Transcription

1 Automobile Insurance: A Comprehensive Brand Audit by Rich Brose, Director, Financial Services Research Consulting, Maritz Research and Gary Selinger, Senior Research Manager, Financial Services, Maritz Research Introduction Competition in the automobile insurance business has become more intense as GEICO and go to market with value propositions that rely heavily on the web and telephone. Advertising activity in the automobile insurance sector exemplifies the ongoing battle as industry mainstays such as State Farm and respond to the changing environment and seek to secure their positions in the marketplace. According to an Insider s Report on advertising expenditures released by Universal McCann, advertising spending in the automobile insurance category has risen faster than in nearly every other industry group. The McCann report indicates that ad spending by auto insurance companies nearly quadrupled from 1999 through the first half of 2006 while ad expenditures for all national marketers doubled over the same time period. The ongoing change in the automobile insurance industry triggered several questions in our minds: What is the current shape of the industry landscape? What market positions have the various auto insurance companies staked out? On what basis does each of the companies compete and how have they differentiated themselves? Which, if any, of the auto insurance brands can command a premium price? How effectively are the companies acquiring new business? To answer these questions, Maritz Research used its new Comprehensive Brand Audit research approach to examine the automobile insurance industry. This article summarizes the results of that research. The Comprehensive Brand Audit Designed as a holistic measure of a brand s equity, the Comprehensive Brand Audit combines traditional brand measures (position, affinity, and purchase behavior) with several measures that have recently emerged from various fields of academia. Maritz Research applied academic learning to form measures of brand worth, brand personality, the emotional impact of brands, and the higher-order values customers seek from brands. According to Keith Chrzan, Maritz Research s Division Vice President, Marketing Sciences, the Comprehensive Brand Audit puts emotional and personality factors on an equal footing with rational factors in the understanding of brand equity. In addition, it allows us to understand all of the factors that affect brand equity. The Auto Insurance Industry Maritz Research conducted an online research study in the Summer of 2007 among a nationwide sample of 1,200 consumers who were actively involved in selecting an automobile insurance carrier over a one-year period. To qualify as actively involved, the consumer must have purchased a new auto insurance policy or seriously considered changing their current insurance company by receiving customized rate quotes either from an agent, over the internet, or by phone. The study focuses on the six largest automobile insurance companies in the United States:,,, GEICO,, and. According to the Insurance Information Institute, these firms collectively accounted for 53% of the direct insurance premiums written for private passenger automobiles in 2006.

2 First, we examine the industry landscape by assessing awareness and brand positioning. We then look at how the companies compete and differentiate themselves by evaluating perceptions of the brands personalities, their relative performance on key functional benefits, the emotions they evoke, and how well they fulfill higher-order values. Finally, we delve into the brands ability to command a premium price and their success at acquiring new business. Brand Positioning The Comprehensive Brand Audit s approach to evaluating brand image involves asking respondents to rate brands on functional benefits using a semantic differential scale. As shown in the perceptual map (Figure 3), differentiates itself as a brand that rewards safe drivers, is distinguished by its agents characteristics, while GEICO and are defined by their web and telephone access. Awareness The four national brands included in the study (,, GEICO, and ) had very high aided awareness and advertising awareness levels. As shown in Figures 1 and 2, awareness levels are somewhat lower for the regional brands, and. Website Claim/Pay Figure 3: 3: Brand Image Positioning Reward Safe Drivers Not Raise Claim Website Info. Figure 1 Aided Brand Figure Awareness 1 Aided Brand Awareness (Among Consumers Actively in Market Within Past Year) (Among Consumers Actively in Market Within Past Year) Coverage Options TollFree Number Discount Meets Needs Accessible Agent/Rep Knowledge Agent/Rep Trustful Agent/Rep Competitive Promptly Pay Claims Convenient Location 99% GEICO 100% 100% 97% Figure Figure 22 Aided Advertising Awareness 1 1 (Among Consumers Actively in Market Within Past Year) Viewed from the perspective of the full slate of functional benefits, and have established themselves as the industry s preeminent brands by virtue of the consistently more favorable ratings given them by the consumers who considered them for auto insurance (see Figure 4). and are the weakest brands. GEICO and are generally weak, but have selected strengths in the areas of competitive rates and remote access. Figure 4: 4: Brand Functional Benefits and and GEICO & are the are the have a remote access preeminent brands weakest brands strength but have weaknesses 63% Knowledge Agent/Rep 72% Meets All Insurance Needs GEICO 25% 41% 92% Trust Agent/Rep advice Accessible Agent/Rep Variety of Coverage Options Discounts 71% Promptly Pay Claims Rewards Safe Drivers Better Not Raise /Drop if Claim Toll Free Number Perceptions Relative to Other Brands Competitive Worse 1 Have seen or heard advertising within the past 30 days Website for Claims/Payments Website Info. Convenient Location

3 Brand Personality Maritz uses Jennifer Aaker s 15 dimension personality scale to evaluate brand personality. The auto insurance brands have divergent personalities, some strong and unique (See Figure 5). and are the up-to-date brands, with being perceived as upper-class and as imaginative. GEICO has a somewhat edgy personality, being described as spirited, daring, charming and cheerful. and have solid, traditional personalities, characterized as honest, reliable, and peaceful. Figure 5: Brand Personality Up-to-date Emotions For our survey-based emotional measures, we re-analyzed some data presented by Russell and Mehrabian. We used hierarchical cluster analysis to reduce his set of 151 emotional states to a manageable list of 16 that brands might be thought to elicit. The various brands elicit a full range of both positive and negative emotions (see Figure 7). GEICO elicits the more positive, intense emotions such as curiosity, surprise, excitement and joy. evokes pride and gratefulness and elicits superior and relaxed, all emotions associated with stately brands. and elicit more negative emotions. In the case of, it evokes boredom, fearfulness, and sadness. elicits skepticism, anger and disgust. Imagination Upper Class Figure 7: Brand Emotions Daring Spirited Down-to-earth Successful Passionate Honest Intelligent Reliable Wholesome Tough Peaceful Bored Fearful Rejected Sad Angry Skeptical Protected Disgusted Contempt Relaxed Superior Surprised Impressed Cheerful Charming Outdoorsy Excited Proud Grateful As shown in Figure 6, the market is comprised of several brands with fairly well developed personalities (,, and GEICO) and several with undeveloped personalities. Curious Joyful Happy Best developed brand personalities. and similar Figure 6: Brand Personality Undeveloped personalities Reliable Successful Up-to-date Honest Intelligent Down-to-earth Cheerful Wholesome Peaceful Imaginative Describes Higher Order Values Many researchers believe consumers buy brands to fulfill higherlevel needs, and qualitative researchers use laddering techniques to identify the linkages of a brand to those needs. Based on Maslow s famous hierarchy of needs, Kahle devised a standard list of values. As we view the brands against those values in Figure 8, we see that and fulfill the most higher-order needs. and are notable for their failure to help consumers achieve any higher-order needs, even one of the most basic to the insurance industry, security. Spirited Passionate Charming Tough Class Upper Class Does Not Describe Daring Outdoorsy

4 Figure 8: Higher-Order Values Being well-respected Self-respect Fun and enjoyable life A sense of belonging Self-fulfillment A sense of accomplishment Warm relationship with others Excitement Security Helps Achieve Does Not Help Achieve Brand Preference Brand preference is an assessment of a company s ability to generate new business. Brand preference, as shown in Figure 10, looks at the relationship between brand awareness, the inclusion of the brand as part of a consumer s consideration set, and the decision to purchase the brand. Several interesting differences appear among the brands when evaluating brand preference. GEICO and most successfully enter the consideration sets of consumers who are aware of their brands. Fifty-three percent of aware consumers considered GEICO, while 46% considered. Both companies, however, face difficulty in converting consumers who consider them into customers. GEICO converted only 19% of these consumers and converted only 18%. State Farm, on the other hand, effectively enters consideration sets and excels at converting consumers who consider it into customers as demonstrated by its 37% conversion rate. Figure 10: Brand Preference High Worth Brand Affinity and Worth Now that we have examined the components of brand equity, we shift our attention to their business impact. The Comprehensive Brand Audit assesses business impact through two primary measures, brand worth and brand affinity. Brand worth is a measure of consumers willingness to pay a premium for a specific brand. Brand affinity gauges consumers overall connection to the brand., as shown in Figure 9, can command a premium price and its customers have a very high affinity to the brand. Consistent with their positions, GEICO and cannot commmand a premium price and their brands carry relatively low affinity. Figure 9: Brand Afinity and Worth Awareness Consideration Have Policy Conclusion Among the brands included in this study, and have established themselves as the preeminent brands in the automobile insurance industry., above all others, can command a premium price in the marketplace. Both State Farm and are perceived very well on the key functional elements that consumers value in an auto insurer. Although they are somewhat different, both and have solid, well-developed personalities., in particular, effectively develops business by converting consumers who consider it into customers. % HH s Conv 99% 16% 37% GEICO HH s Conv % Conv HH s Conv HH s Conv % Conv % % % 100 % 10% 23% 18% 3% 21% 17% 16% 4% 18% 25% 100 % 53% 10% 53% 19% 97% 45% 8% 46% 18% GEICO Low Affinity Low High

5 GEICO and distinguish themselves through their web and telephone access and GEICO has established a distinct personality. Consumers have noticed GEICO and as indicated by their awareness levels and their success at breaking into consumers consideration sets. Their challenge is to convince consumers who are considering them to sign on the dotted line. To accomplish this objective, GEICO and must improve consumers perceptions of their ability to successfully deliver on the wider array of key functional benefits. References Aaker, Jennifer L. Dimensions of Brand Personality, Journal of Marketing Research 34 (1997): Coen, Robert J. Robert Coen Presentation on Advertising Expenditures December 2006, Insider s Report, Universal McCann, Kahle, Lynn R. Social Values and Social Change: Adaptation to Life in America, New York: Praeger, Russell, James A. and Mehrabian, Albert. Evidence for a Three Factor Theory of Emotions, Journal of Research in Personality 11 (1977): Insurance Information Institute. Auto Insurance. 9 October 2007.

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