The Strategic Significance of Standardization for Phoenix Insurance Company - Assignment Example

Question one The company to be analyzed here is Phoenix Insurance Company. This first section looks into the way in which this company can standardize its service or product offering. The professional staff in the company always works towards determining the needs mainly in order to offer sufficient insurance solutions at possible and affordable costs. When working with this company, it deals with highly knowledgeable business agents. It has over 200 years of intense collected experience and the staff is well trained with high professional accreditation. This company has 24 hours claims reporting services and for this reason the in house claims coordinate as well as facilitate a prompt settlement of all the insurance claims. The main primary goal however is to be fair as well as honest in all the dealings. During times when people are being told to constantly value the different and the new, then the surprising thing is when these people learn of the standard. This also includes the shared as well as the common factors that can act as strong transformation drivers. Several innovations that have over time changed the world include agriculture, modern manufacturing, railroads, containerized shipping, internet, language as well as money. All of these have succeeded mainly due to standardization and nothing else (Nagle 2010). Organizations like Phoenix Insurance Company always look towards transforming their customer experience, their operations as well as their industries. All these help in benefitting incorporations in many ways. All these forms of motivation include benefitting businesses, strategic significance to standardization, and several other factors. Companies have in the past been generally unaware of standardization’s strategic significance. This is the reason as to why it is important for businesses to implement standardization. Corporate decision-makers seem hardly aware of the strategic benefits of standards. This lack of knowledge on the part of decision-makers in companies means that the strategic potential of standards is not fully appreciated. The strategic significance of standardization is all understood well by individuals who are involved in standards. This means technical experts that participate often in standards development. The survey done showed that insurance companies who involve standardized factors of business often reap so much profit as well as long term cost savings. Such companies also benefit on the issue of competition whereby such companies rise above the competition. There are potential competitive advantages that arise mainly through standards. Having intense influence on the content of the standard is a great factor that aims at gaining competitive advantage. A company like Phoenix Company needs to always be motivated in order to participate in standardization. This is because it will aid the company in gaining an edge over all the other non-participating companies. This is mainly in terms of insider information. Early access to information is highly valuable. The conducted survey also shows that this company needs to forward its interests in the entire standardization process. More than the total 50% will have the ability to exert great influence mainly on the standards substance. Cost reduction can be possible through standardization. Standardization leads to a lowering transaction costs in an entire economy and this saves also in the individual business. Interviews that are conducted with experts who are the representatives of the major firms and even the medium sized companies reveal the fact that developing companies’ costs are not easily quantified. The businesses made a survey as well as rated standardization effects on transaction costs to be positive. This indicates that transaction costs will drop considerably due to standards. This is because they make information to be available (Smith 2011). They are also accessible to all the interested parties. There are certain effects of standardization on the client and supplier relationship. Standardization has positive effects on companies’ buying power. Standards aid businesses to avoid dependence on purely single suppliers. This is because an availability of standards leads to the opening up of a market. A result is a broad choice of businesses as well as increased competition that exists among suppliers. Companies tend to have an increased confidence in both the reliability of suppliers as well as the quality of goods involves. Standards are also used in businesses with the aim of exerting market pressure on organizations for them to lower their value chains. This means their clients. Businesses therefore are able to use standards to further broaden all their potential markets. There is also the aspect of standards as well as a formation of strategic alliances. It is very clear that a cooperation that exists between companies mainly in standardization matters is highly advantageous. This is because a resulting aids in reducing costs as well as increasing profits. There are industry wide standards. These standards aid in forming a collection of harmonized rules that are also technical rules. Coding knowledge highly aids businesses in cooperating as well as creating strategic alliances. All the respondents rated specific standardization effects on cooperation with positive competitors. Standardization highly encourages constant cooperation in between same stage businesses in a value chain. There is also the aspect of standards as well as R&D. Businesses reduce the entire economic risk of all their R&D activities mainly by participating in forms of standardization. This also lowers R&D costs. Whenever a company influences the contents of all its standards to its advantage, that economic risk becomes lowered. An expense of the potentiality of R&D is basically reduced mainly when standards’ participants work turn their results to be generally available (Hesser 1998). Research therefore does not need to be in any way duplicated. Question two Implementing an integrated communications strategy that can be used in marketing provides competitive advantages for one’s business. Companies however still to date employ linear direct marketing. This is a process whereby products are developed. Messages are also created whereas incentives are added into that mix. After this, the products are then pushed further through several Medias or sales forces directed to consumers. The methodology therefore relies on some on certain behavior assumptions that consumers decide to follow on similar decision processes (Nagle 2010). The process begins with awareness, followed by knowledge then evaluation then purchase. The strategy has over time worked well. This is mainly because targeting as well as smart advertising gives companies an edge over their consumers who have limited product knowledge. Buying behavior however becomes more sophisticated mainly because consumers have acquired technology access like search engines, on demand TV, mobile phones, and iPods as well as the internet. Technology has made it possible for traditional linear marketing as well as the entire communications process to be redundant. This refers to the product or brand, the channel, the media as well as the customer. Since consumers have an ability to block out all marketing messages using pop up blockers, spam filters or remote controls (Smith 2011). Communication landscape that is consumer controlled has over time emerged with a quick learning process on consumers that is dynamic. The outcome is declining efficiency rates as well as increased costs. It arises from marketing activities that are traditionally direct marketing activity. The companies need integrated marketing forms of communications. All these combine traditional media, PR, online channels, people, products, social networks as well as affiliate partnerships. Developing an integrated communication strategy requires four main aspects. The first one is audience. This is a key ingredient that uses extensive data as well as analytics in order to understand one’s target segment. A creation of pen portraits for the core customers includes lifestyle information and demographics that will aid in optimizing the media with a targeting marketing strategy. The second one is the brand. This refers to one’s service or product. It must have unique selling propositions in order to provide competitive advantages. It must also deliver a superior value for an audience as well as the ability to differentiate price, services or features. Another one is content. Several competitors use a similar form of linear marketing strategies that target similar consumer segments. When one supplies value added content, then it is possible to provide consumers with reasons to engage with a brand. There is also the ability to connect with one’s services and products (Hesser 1998). The final one is delivery. One needs to constantly connect with digital media channels as well as traditional channels aimed at creating a push-pull system. There are traditional measurements systems that do not work well with some integrated marketing. Most companies however have all data and the only problem is to align it. There are problematic areas and these include internal silos breaking down as well as other success defining measures. Question three It is important to set appropriate prices for the market. When one launches a product for the very first time, then prices falls as one of the first topics that needs to be addressed. The majority of these pricing charges are however for those products which are in life. During the beginning of a pricing a cycle there is the conducting of an initial audit. This is used to pull together any available insights and data. Pricing objectives always need to be straight forward in a relative manner. There should also be an emphasis of the flow from the company strategy. Another main challenge is in selecting various pricing strategies. Another one is picking that appropriate pricing structures as well as the price levels that can always meet the objectives. During several instances, all of these factors will always be ready as well as well understood. The only thing that is required is a tweak towards current pricing levels. Once the pricing is approved by a certain business, then it has to be implemented and once again the cycle can begin (Nagle 2010). Coming up with pricing strategies are extremely important. There are three main pricing strategies. Marketing skimming refers to the issue of setting prices to be highly relative even to other major competitors. This is always used even if the pricing objectives work towards maximizing profitability. There is also an issue of market penetration. Companies often adopt a certain penetration pricing approach. This is because they need to grab market shares. Penetration pricing always requires iron grip on efficiency and costs the same way with scale economies that make a product to be profitable (Nagle 2010). There is the challenge of penetration pricing. This is the issue of penetration pricing. The issue here is sustainability. Here, customers base their buying mainly on prices that are most fickle. Whenever there are low priced competitors with better operational modes, then customers often churn towards them rapidly. Japanese insurance companies for example in the 1980’s undertook the penetration pricing approach. This approach was mainly based in the successful insurance companies until they were undercut by the Chinese as well as the Korean companies. There is also the issue of competitor matching. The pricing strategy always results in propositions. These propositions are always priced at same competition levels. The strategy is often appropriate mainly where markets only grow or do not grow at all. Inside such mature markets, pricing changes can easily be matched by competitors (Hesser 1998). This therefore results in minor shifts in market share as well as profit reduction for all. Any competitor with a matching pricing strategy always results in more stable markets for all the people. The pricing strategy can also be a second tier competitor who will align with a market leader who is strong. An example is that second tier competitors who do not have differentiated offers often price lower than the leaders. All the pricing strategies come with their merits. Choosing an appropriate one always depends on one’s pricing objectives. Pricing strategy is important. Pricing strategy often evolves during a product’s lifecycle. This is often with a certain tendency directed at average prices since markets mature and further move into a stage of declining. There are other pricing strategies and structures. These include the aspect of up-selling. This is whereby customers are persuaded towards the idea of buying a more advanced option. Cross-selling on the other hand is where customers are highly persuaded to buy additional products in the company’s portfolio. There are telecoms operators in all the mature markets always use price complexity in order to make it very difficult for customers to always compare offerings within the entire competition. There are also supermarkets that often use promotional pricing strategies combined with constant sets of special discounts as well as offers. There is also the issue of cost plus pricing. This is where there is an open book approach used in revealing a certain supplier's costs (Hesser 1998). Once this happens a given fixed profit margin is then agreed with the customer. References Hesser, I. (1998). An Introduction to Standards and Standardization. Berlin: Beuth Verlag. Nagle, T. (2010). The Strategy and Tactics of Pricing: A Guide to Growing More Profitably . New York, NY: Prentice Hall. Smith, T. J. (2011). Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures. Cengage Learning: New York, NY. Read More