Aami Car Insurance Advertising - Case Study Example

AAMI CAR INUSRANCE ADVERTISING] Name Course Lecturer Date Table of Contents Table of Contents 2 Addressing current needs 3 Objectives of advertising 3 Advertising strategy 3 Justification 5 Advertising budget 5 USP 6 The target audience 7 Broad media recommendations for future advertising 7 Tvs 8 YouTube 8 Stickers 8 Budget 9 Any timing issues 9 Conclusion 9 Reference List 11 Introduction AAMI was founded in 1970 and it currently has over 2.5 million holders of its policy and countless calls yearly. It is a top insurer in home, car, small business and compulsory third party insurance. AAMI deals directly with its customers and uses innovative marketing and business strategies to give them outstanding customer service and high quality products. The company has introduced several insurance benefits including no fault, lifetime repair assurance, no penalty and valet service, among others. In this report, AAMI plans to carry out a campaign to promote its car insurance, which comprises of comprehensive insurance, third party insurance and Compulsory Third Party (CTP) Green slip (AAMI 2013). The aim of the campaign is to create awareness on the product and create interest to draw new customers between the age of 18 and 30 years. Addressing current needs Objectives of advertising There are a lot of insurance companies offering car insurance policies around Australia and thus, the objectives of the intended campaign include: To increase awareness of AAMI’s various products under the car insurance, especially to people aged between 18 and 30 years. To increase the number of car insurance policyholders. To convince more people in the target group to enrol for the car insurance policy by highlighting its various benefits to them. To make AAMI’s car insurance the preferred insurance among most car owners across Australia. Advertising strategy To address the current needs, AAMI should take on a number of strategies. To start with, AAMI should use the budget of $100, 000 which will enable it to carry out its campaign for the car insurance product targeting people between the age of 18 and 30 years. This seems like a good budget since it is based on last year’s budget and also includes media inflation costs. Taking into account the inflation costs is a significant move because it will enable the company to effectively match the availed resources with expected advertising expenditure. A Unique Selling Proposition (USP) is important when a company is planning to carry out a promotion on its products or services. In the case of AAMI, it has USPs in relation to the various packages under its car insurance. Some of its USPs includes paperless claims, ability to choose one’s premium, free towing of damaged car, drivers course, driver rewards and 24/7 customer service. In its campaign to promote its car insurance product, a USP is crucial since it will assist the company to be in a position to convince potential customers on the unique benefits that they should expect from taking car insurance with AAMI not any other company. According to Shimp (2010, p.223), creating a USP for a product ought to be a company’s first priority. This is because; if the company does not make its business to stand out among others, it is hard to persuade the target audience to purchase its product. Lamb, Hair, & McDaniel, (2008, p.421) maintain that, the main reason why it is crucial for a company to form a USP is the need for a method to show prospective buyers that it is offering a product or service that is very distinct from those being offered by other companies. Without a USP, potential customers will not have a reason to patronize a company, since they will not see the way its product is original and different. A USP is what convinces buyers to try a company’s product and it is crucial to create a very powerful USP (Burtenshaw, Barfoot, & Mahon 2006, p.88). Accordingly, USPs is necessary for AAMI in its campaign. AAMI will use the radio as its medium for advertising. Most people especially in the target group have radios fitted in their cars and tend to listen to them while they are driving. Thus, AAMI will be able to reach a large group of audience through this medium. In its ad, AAMI should mention the various packages being offered under its car insurance and the specific benefits that those who will enrol for its insurance will be able to enjoy. This will provide potential buyers with criteria on which to compare AAMI’s insurance with those being offered by other insurers. Justification Advertising budget The $100, 000 budget that AAMI plans to use in carrying out its car insurance’s campaign may not be adequate. On top of last year’s advertising budget and media fluctuations costs, the company should take into account other factors in deciding on the budget for the current campaign. According to O'Guinn, Allen, & Semenik (2009, p.272), budgeting for the funds to be used in advertising is among the most challenging tasks for most companies. The responsibility for making an advertising budget is normally assumed by the company itself. In most cases, firms depend on their advertising agencies to make suggestions concerning the budget. In order to be accountable and judicious in spending funds on advertising, marketers use different methods and consider different factors to set the advertising budget. Percentage of sales method is among the most commonly used techniques in setting up an advertising budget. Under this method, the budget for advertising is calculated on the basis of a proportion of the sales of the previous or projected year, which usually range between 2 and 12 percent. The main advantage with this approach is that, it is simple to comprehend and implement. However, this method has some shortfalls including a high probability of overspending in advertising and failure to match advertising budget with advertising objectives (Pride & Ferrell 2012, p.541). Despite the shortcomings associated with the percentage of sales method, I think AAMI should use this method to determine its advertising budget and then adjust it based on other factors. Moreover, in setting up its advertising budget, AAMI should also consider available funds. Drawing from Chitty (2011, p.123), a budget for advertising should be highly determined by the amount of money that a company can manage to pay for advertising. This factor is important since it helps a company avoid financial strains that may result from overspending on advertising. In the case of AAMI, the fact that the company was able to spend close to $100,000 on advertising does not mean that the same amount is available for advertising this year. Therefore, in deciding on its advertising budget, the available funds should be considered. Furthermore, AAMI should factor in likely changes in legislation and regulations relating to advertising in preparing its budget. For instance, fresh EU e-privacy regulations seemed to catch most marketers unaware last May. Any changes in advertising legislation affect marketing plans and usually result in increased costs and thus, it is important for a company to consider such changes in its budgeting activities (Arthur 2013). USP Having a USP is the most effectual way of standing out amid many competitors. In creating an effective USP, a company should conduct a market research in order to identify any opportunity or gap that rival firms are not exploiting at the present. This might be a service or a product that is not being offered by competitors currently. Innovation, which may involve creating new services or products or improving the existing ones, is a fast-track in the creation of a USP (Queensland Government 2013). According to Allianz Australia Insurance Limited (2013), some of the benefits being offered under the comprehensive car insurance include towing, legal liability for damaging the property of other people, caravan cover and repairs. Most of these benefits are similar to those offered by AAMI. Accordingly, AAMI’s USP for the car insurance campaign should comprise of a special benefit that is not being offered by other insurers such as emergency costs, and driver awards. The inclusion of these features in the ad will draw the attention of potential customers and encourage them to give it a trial. The target audience The current campaign for promoting AAMI’s car insurance targets people aged between 18 and 30 years. This is a good audience since most young people listen to radio and like cars. Moreover, this age group can recommend the insurance to their elder siblings or parents. On the contrary, AAMI does not seem realistic in the choice of its target audience. This is because; most people in this age group do not own cars. For those who do, they use family cars and it is only the parents who have a say in relation to things like insurance. Thus, AAMI should change its target audience from 18 to 30 years to 28 and 40 years in order for the campaign to be relevant to the intended audience. Broad media recommendations for future advertising The use of radio to advertise AAMI’s car insurance is not enough and may not help reach a large number of the targeted audience. Drawing from Tibbs (2009), various media have various drawbacks, advantages, strengths and expenditure level. An effective campaign strategy should use a blend of 2 to 3 types of media to convey the message to the audience. In this regard, I would like to make several media recommendations to AAMI: Tvs AAMI should put its advert for car insurance on the television. This is a mass media that reach many people across the country (Trehan & Trehan 2011). However, since it is not possible to advertise in all TV channels due to limited funds for advertising, it is advisable for AAMI to choose the most popular channel that most young people watch. This will enable it to reach a big percentage of its target audience. According to Beal, Barwise, & Collins (2004, p.6), adults in multichannel families in the UK spend approximately 25 hours watching TV every week. About 65 to 70 percent of the viewing time is used on entertainment programs. Therefore, in order for AAMI’s advertising to be effective, it ought to use a TV channel that mostly broadcasts entertainment programs. YouTube YouTube is becoming a popular advertising media among businesses of all sizes since it offers a variety of advertising options including engagement of audience. Most people, especially young ones, are turning to YouTube where they are able to watch videos and share them with friends (Funk 2012). Thus, it is a good choice of medium to advertise through for AAMI. Stickers The fact that AAMI has over 2.5 million insured people under its different types of insurance covers presents the company with an added advantage. Besides using the mass media, the company can put stickers on its policyholders’ cars to advertise the car insurance. In order for this method to be more effective, AAMI can decide to give commission to its current policyholders for bringing in new clients. Budget Media November December January February March April Total($) Radio 7,500 10,500 5,500 6,500 30,000 TV 9, 000 11,500 7,000 7,500 35,000 YouTube 5,500 8,500 2,000 4000 20,000 Stickers 3000 4,500 2,500 1,500 2000 1500 15,000 Total Cost 100,000 Any timing issues In advertising, it is hard to carry out a campaign for a long period due to high costs and also boredom among audience. It is thus important for companies to have a good timing for its campaign. Targeting the festive season is an advisable move (Czinkota & Ronkainen 2007). During this time, most companies are giving offers to customers on its products or services, and thus AAMI can use it to promote its car insurance product. After the festive season, people are a bit broke due to heavy spending during the season and thus, the campaign should take a break or reduce its intensity. Conclusion The main objectives of AAMI’s car insurance campaign are to create awareness of the insurance package and to attract new customers. In its campaign strategy, AAMI will use a $100,000 budget, will include a USP and the various benefits of its car insurance will be included in the radio ad. In future, AAMI will need to change its budget, USP and target audience. Moreover, radio is not enough for an effective campaign. Thus, in future, AAMI should combine it with TV, YouTube and stickers. Festive season is the ideal time for carrying out intensive advertising. Reference List AAMI 2013, AAMI: Leading insurer. Pacesetter in customer benefits and service, Retrieved May 28, 2013, from http://www.aami.com.au/company-information/profile Allianz Australia Insurance Limited 2013, Comprehensive Car Insurance Comparison Chart, Retrieved May 29, 2013, from http://www.allianz.com.au/car-insurance/car-insurance-comparison Arthur, L 2013, January 1, Five Essential Factors To Consider Before You Allocate Marketing Spend, Forbes. Beal, V, Barwise, P & Collins, M 2004, TV viewing patterns: loyalty to program genres, University of South Australia, Ehrenberg-Bass Institute for Marketing Science. Burtenshaw, K, Barfoot, C & Mahon, N 2006, The fundamentals of creative advertising, Lausanne, AVA Publ. Chitty, W 2011, Integrated marketing communication, South Melbourne, Vic., Cengage Learning. Czinkota, MR & Ronkainen, IA 2007, International marketing, United States, Thompson. Funk, T 2012, Advanced social media marketing: a manager's guide, New York, Apress. Lamb, CW, Hair, JF & McDaniel, CD 2008, Essentials of marketing, London, Cengage Learning. O'Guinn, TC, Allen, CT & Semenik, RJ 2009, Advertising and integrated brand promotion, Mason, Ohio, South-Western/Cengage Learning. Pride, WM & Ferrell, OC 2012, Marketing, Mason, Ohio, South-Western Cengage Learning. Queensland Government 2013, May 1, Find a unique selling proposition, Retrieved May 29, 2013, from http://www.business.qld.gov.au/business/running/marketing/responding-competition/find-unique-selling-proposition Shimp, TA 2010, Advertising, promotion, and other aspects of integrated marketing communications, Mason, Ohio, South-Western Cengage Learning. Tibbs, A 2009, Advertising: Its Business, Culture and Careers, London, Routledge. Trehan, M & Trehan, R 2011, Advertising and Sales Management, New Delhi, FK Publications. Read More