Tag: University of Mumbai BMS Notes

Competitive research is the backbone of a strong marketing strategy. After all, if you can’t identify your competitors and their marketing tactics, you’ll struggle to differentiate yourself and your product from the crowd.

But how do marketers identify their primary competitors and their strategies? Here is our five-step strategy for how to identify your competitors, research your competition, and channel it into powerful marketing that meets your customers needs.

Finding your competitors doesn’t have to be taxing or complicated. The first step to finding your competitors is to differentiate between your direct and indirect competition.

Direct Competition

Direct competition is a term that refers to the companies or publishers who sell or market the same products as your business. Your customers will often evaluate both you and your direct competitors before making a purchase decision or converting.

Indirect Competition

Indirect competition is a term that refers to the companies or publishers that don’t sell or market the same products, but are in competition with your business digitally. They may write the same type of content as you and be competing for the same keywords. In short, they are competing for your customers’ attention.

How to Identify Direct Competitors?

When identifying competitors who are in direct competition to your business, you’ll want to start with your product. A thorough understanding of your product and the value it provides to your audience or customers is crucial to identifying your direct competition.

If you work for a sneaker brand, for example, you are not simply in competition with other sneaker brands. You’re also in competition with large shoe retailers, and any other brands and business that are creating footwear. Only by looking at your product and evaluating its value (you need to know not just that your sneakers cover and protect feet, for example, but also that people might evaluate them for durability, athletic use, and style), will you realize the full scope of your competition.

A few effective techniques for identifying direct competitors:

1. Market Research

Take a look at the market for your product and evaluate which other companies are selling a product that would compete with yours. Talk to your sales team and find out which competitors they see come up often in their sales process. From there, you’ll be able to take a closer look at those companies, their product and marketing efforts, and create strategies to outperform them.

2. Solicit Customer Feedback

Again, your customers are the key to unlocking your direct competitors. Once they’ve decided on your business and product, you can ask them which other businesses/products they were evaluating. Customers often reveal unexpected competitors that aren’t even on your radar.

In addition, during the sales process your sales team can also ask your potential customers which businesses they are considering. If they haven’t decided on your product yet, your team will be able to speak to their needs better if you know which businesses or products they are considering.

3. Check Online Communities on Social Media or Community Forums

In this day and age, your potential customers will often seek out advice and recommendations on social media sites and apps, or on community forums like Quora or Reddit. By investigating the conversations your customers have on these websites, you’ll be able to further identify your competitors.

This is especially true for any marketers speaking to millennial audiences. Research by Deloitte shows that 50% of millennials report that a recommendation from a friend or family member has a high influence on their buying decision. And 27% of both millennials and Gen Z feel an online recommendation from someone in their social media circle has a high influence on their buying decisions.

How to Identify Indirect Competitors?

Your indirect competitors have just as much influence on your selling process as your direct competitors. In fact, because your indirect competitors are often writing content that competes with yours, they have an even greater effect on potential customers in the early stages of the buyer’s journey. So how do you discover them?

1. Keyword Research

Keyword research is the best way to identify your indirect competition. By conducting a competitive SEO analysis, you can determine which businesses or publishers are competing for space on Google. After all, many of your customers are looking for your products and solutions by typing them into search engines. For today’s marketer, that means that you’re in competition not only with your direct competitors but with every other website competing for keywords important for your business.

If you are currently using an SEO platform or technology, you may find that your SEO technology can help you identify competitors with data and insights. For example, Conductor Searchlight can provide a high-level look at the keywords your direct competition is targeting. It also can tell you which websites are ranking for a keyword important your business. These represent your indirect competitors.

Keyword research can really help you when looking to identify your competitors in business.

If you’re working manually, check out our guide to scoping out your competition through keyword research, A Step-By-Step Guide to Competitive Analysis.

2. Analyzing Google’s Search Engine Results Page

When it comes down to it, many of your indirect competitors are writing about topics close to your value proposition. If you examine the value proposition of your product, you’ll be able to identify keywords that are central to your product or offering. From there, type the keywords into Google and see who is competing with your content on search engines. Anyone writing content around your value proposition, represents a person, blog, business, publication, or organization that is the indirect competition of your business.

3. Take a Look at Paid Data

If you’ve taken the first two steps on this list, step three should be a breeze. Head into AdWords and scan those keywords that are important to your business. Is there a lot of competition for any of those keywords? If there is, check out which businesses or websites are purchasing ads for those keywords. If websites are paying for paid space on the search engine results page for a keyword, they’re competing with your content for space on Google.

How to Identify Marketing Opportunities Based on Competitor Research?

After you’ve identified your competitors, you’ll want to identify marketing opportunities so you can start outperforming them.

Again, at this stage, keyword research can really help you decide where to put your efforts. If your competitors are targeting specific keywords with their content, where is there opportunity to outperform them? Are they implementing a particularly strong keyword strategy? What insights can you glean from that?

Similarly, by looking at your competitor’s social media presence, you can evaluate where they’re focusing their attention and efforts. From there, you can look toward opportunities to either compete with them directly for attention around specific topics or questions, or differentiate your approach by looking for gaps in their content or new angles to approach questions your audience is posing.

Lastly, you can always go back to paid data. If your indirect or direct competitors are putting money behind ads, you can be sure those keywords represent important business initiatives. This will also provide insight into where your competition is placing their efforts and money. From there, it’s up to you to craft marketing strategies to compete.

In today’s financial marketplace, a well-maintained portfolio is vital to any investor’s success. As an individual investor, you need to know how to determine an asset allocation that best conforms to your personal investment goals and risk tolerance. In other words, your portfolio should meet your future capital requirements and give you peace of mind while doing so. Investors can construct portfolios aligned to investment strategies by following a systematic approach. Here are some essential steps for taking such an approach.

Step 1: Determining Your Appropriate Asset Allocation

Ascertaining your individual financial situation and goals is the first task in constructing a portfolio. Important items to consider are age and how much time you have to grow your investments, as well as the amount of capital to invest and future income needs. An unmarried, 22-year-old college graduate just beginning his or her career needs a different investment strategy than a 55-year-old married person expecting to help pay for a child’s college education and retire in the next decade.

A second factor to consider is your personality and risk tolerance. Are you willing to hazard the potential loss of some money for the possibility of greater returns? Everyone would like to reap high returns year after year, but if you can’t sleep at night when your investments take a short-term drop, chances are the high returns from those kinds of assets are not worth the stress.

Clarifying your current situation, your future needs for capital, and your risk tolerance will determine how your investments should be allocated among different asset classes. The possibility of greater returns comes at the expense of greater risk of losses (a principle known as the risk/return tradeoff). You don’t want to eliminate risk so much as optimize it for your individual situation and lifestyle. For example, the young person who won’t have to depend on his or her investments for income can afford to take greater risks in the quest for high returns. On the other hand, the person nearing retirement needs to focus on protecting his or her assets and drawing income from these assets in a tax-efficient manner.

Conservative vs. Aggressive Investors

Generally, the more risk you can bear, the more aggressive your portfolio will be, devoting a larger portion to equities and less to bonds and other fixed-income securities. Conversely, the less risk you can assume, the more conservative your portfolio will be. Here are two examples, one for a conservative investor and one for the moderately aggressive investor.

Step 2: Achieving the Portfolio

Once you’ve determined the right asset allocation, you need to divide your capital between the appropriate asset classes. On a basic level, this is not difficult: equities are equities and bonds are bonds.

But you can further break down the different asset classes into subclasses, which also have different risks and potential returns. For example, an investor might divide the portfolio’s equity portion between different industrial sectors and companies of different market capitalizations, and between domestic and foreign stocks. The bond portion might be allocated between those that are short-term and long-term, government debt versus corporate debt and so forth.

There are several ways you can go about choosing the assets and securities to fulfill your asset allocation strategy (remember to analyze the quality and potential of each asset you invest in):

• Stock Picking: Choose stocks that satisfy the level of risk you want to carry in the equity portion of your portfolio; sector, market cap, and stock type are factors to consider. Analyze the companies using stock screeners to shortlist potential picks, then carry out more in-depth analysis on each potential purchase to determine its opportunities and risks going forward. This is the most work-intensive means of adding securities to your portfolio, and requires you to regularly monitor price changes in your holdings and stay current on company and industry news.
• Bond Picking: When choosing bonds, there are several factors to consider including the coupon, maturity, the bond type, and the credit rating, as well as the general interest-rate environment.
• Mutual Funds: Mutual funds are available for a wide range of asset classes and allow you to hold stocks and bonds that are professionally researched and picked by fund managers. Of course, fund managers charge a fee for their services, which will detract from your returns. Index funds present another choice; they tend to have lower fees because they mirror an established index and are thus passively managed.
• Exchange-Traded Funds (ETFs): If you prefer not to invest with mutual funds, ETFs can be a viable alternative. ETFs are essentially mutual funds that trade like stocks. They’re similar to mutual funds in that they represent a large basket of stocks, usually grouped by sector, capitalization, country, and the like. But they differ in that they’re not actively managed, but instead track a chosen index or another basket of stocks. Because they’re passively managed, ETFs offer cost savings over mutual funds while providing diversification. ETFs also cover a wide range of asset classes and can be useful for rounding out your portfolio.

Step 3: Reassessing Portfolio Weightings

Once you have an established portfolio, you need to analyze and rebalance it periodically, because changes in price movements may cause your initial weightings to change. To assess your portfolio’s actual asset allocation, quantitatively categorize the investments and determine their values’ proportion to the whole.

The other factors that are likely to alter over time are your current financial situation, future needs, and risk tolerance. If these things change, you may need to adjust your portfolio accordingly. If your risk tolerance has dropped, you may need to reduce the number of equities held. Or perhaps you’re now ready to take on greater risk and your asset allocation requires that a small proportion of your assets be held in more volatile small-cap stocks.

To rebalance, determine which of your positions are overweighted and underweighted. For example, say you are holding 30% of your current assets in small-cap equities, while your asset allocation suggests you should only have 15% of your assets in that class. Rebalancing involves determining how much of this position you need to reduce and allocate to other classes.

Step 4: Rebalancing Strategically

Once you have determined which securities you need to reduce and by how much, decide which underweighted securities you will buy with the proceeds from selling the overweighted securities. To choose your securities, use the approaches discussed in Step 2.

 When rebalancing and readjusting your portfolio, take a moment to consider the tax implications of selling assets at this particular time.

Perhaps your investment in growth stocks has appreciated strongly over the past year, but if you were to sell all of your equity positions to rebalance your portfolio, you may incur significant capital gains taxes. In this case, it might be more beneficial to simply not contribute any new funds to that asset class in the future while continuing to contribute to other asset classes. This will reduce your growth stocks’ weighting in your portfolio over time without incurring capital gains taxes.

At the same time, always consider the outlook of your securities. If you suspect that those same overweighted growth stocks are ominously ready to fall, you may want to sell in spite of the tax implications. Analyst opinions and research reports can be useful tools to help gauge the outlook for your holdings. And tax-loss selling is a strategy you can apply to reduce tax implications.

Expanding into a new market is not an easy endeavour for any company, regardless of the size. It requires financial and human resources that need to be justified. In addition to that, any new market or product takes away from your existing focus which, on its own, is incredibly important.

The process I describe here is how I have approached product positioning for new markets at my current job. Whether it’s expanding products or testing new distribution channels in the UK or launching in China, both the business and sales teams can truly benefit from involving the product and marketing team from the start. Because asking the right questions, coming up with hypotheses, and testing ideas is what we do every day. We spend the time to understand our customers.

Because asking the right questions, coming up with hypotheses, and testing ideas is what product and marketing does every day.

I have divided the process into three main steps; developing a hypothesis, conducting extensive researching, and making hard decisions.

Step 1. Developing a hypothesis: what do we think we know and are we right?

There is a reason why you’ve decided to look into expanding into a new market. In this step, we need to understand what those reasons are. It’s usually not one person’s opinion that has triggered this process. Begin by asking your team members two key questions: emphasise that you’re looking for their answer and not the right answer. You want honest reasons that explain why this market is interesting to your team members.

(i) Why now?

• Why are we going to this market now? Here, try to think of more reasons other than opportunistic deals that have come our way.
• What’s going on in the market that is exciting to you? What has lured us into this new venture?

(ii) Who is our customer in this market?

• Who are the potential buyers of our products and services?
• Why do they care about our service/product?
• Why doesn’t this product already exist in this market?
• What are the top priorities of the potential partners? What are their biggest use cases?

Step 2. Researching: All that I can learn.

(i) Competitors

Don’t tell me you don’t have any competitors. If not in the more direct way, you must have some indirect competitors. What insurance companies are currently operating in this market? What products are they selling that directly or indirectly compete with what you’re selling?

Things to consider:

• Specific insurance product landscape. What are incumbents selling? Did they stop selling a product? See if you can learn about the failed products.
• Prices, premiums, and coverage. What is being covered for how much?
• How are the products being delivered and distributed? Online, brokers, agents…
• Product details. What’s included and what’s not covered. What are the products called? (This matters too, trust me.)
• What are the competitor’s USP’s and who are they targeting? Can you guess why?

(ii) The market: Insurance

This step requires you to stay curious. Feel free to go off tangent and explore. Let the information you find lead you to learn more about the market. Like an investigative journalist let the story develop as you ask more questions.

This step can begin by reading all the market reports published by the consulting firms. I wouldn’t suggest reading them all, but for some markets, especially fast-moving ones like China, it’s important to read the latest reports. Look at what the reports say about the insurance industry for the past two years and their predictions. Take it with a grain of salt. Consultants and analysts can also be wrong. Learn what you need to better understand what’s happening in that market and make notes of the trends.

Next, read about the latest insurtech and fintech activities in that country. This includes investments, M&A’s, and potential closings of companies. In addition to insurtechs which are selling the same insurance product as you, what other insurance products are being sold through online distributions in that market? What stands out? For example, for China Xian Hu Bao’s model of a membership-based supplement to conventional health insurance stood out to me. My curiosity led me to investigate this further, realizing that the speed with which the company grew doesn’t compare with any other insurance product. Why? and how did they expand in such a regulated market so fast? Well, I found out they call it a membership because it’s not an insurance product. Also, by using Alipay and Ant Financial, they have positioned their product as part of an existing ecosystem, rather than a standalone product.

Finally, what are the insurance buying behaviours in this market? Who’s buying insurance and from whom? In China, it was surprising to see that many people prefer to buy insurance from an acquaintance than a broker. Or that families decide to buy insurance together, many times a family member buys insurance for the rest of the family members. Again, I looked deeper into this topic. How are families structured in China compared to western countries? I learned a lot about the family dynamic here, and believe it or not, insurance is a very sensitive topic within the Chinese families these days.

(iii) Secondary markets: the healthcare system, automotive industry, or investment appetite

I come from the world of healthcare and am very familiar with the industry: my own Canadian company operated in the health and mental health space, but I still managed to be surprised by the many things I learned by researching the Chinese healthcare system. For example, there are people in China whose job is to go to the hospitals in the morning and take a number and wait in the queue. They then sell that number/spot to patients who want to see the doctor that day.

At this stage, speak to anyone willing to speak to you! For research, start by reading more about the industry, don’t shy away from reading popular news outlets and Buzzfeed-like websites. It’s important to see what’s being said about the system on these platforms.

• Ask personal questions. Would your family do this? Where would you go personally to search for X?
• How often do people do that?
• Can I follow up with you regarding this to see the sources of the numbers?

Step 3. Making the hard decisions: building and testing products and messaging.

(i) Product(s) check-in: Do we have something this market needs?

It’s possible that the answer to this question is no, and that’s okay. This step is a check-in to measure if you have a deep understanding of the market’s needs as well as your company and product’s capabilities.

(ii) Who will benefit most from our existing product or potential product that we will build?

This is when you go back to the hypothesis from the beginning of the process and see if you were right about whom to target.

(iii) What stands out as barriers to entry?

Is it customer behaviour, price and resources needed to educate the market or compete with the existing competitors? Keep an eye out for barriers for insurance products and your product specifically.

1. IV) What can you do with product positioning to address these barriers?

Bringing your learnings together, this final stage is all about working to define aspects of your product or marketing tactics that have a strong answer to the market’s problems.

Being a unique selling point, this will differ for each product and the company’s capabilities. At Medigo we know that our product is unique in its ability to provide high-quality medical treatments as a result of a claim. One of the major competitive advantages we have in any market is our breadth of experience providing international access to exceptional healthcare services. So when I look at our presence in the Chinese market, I can find ways to emphasise this to gain the trust of the potential buyers of our Cancer and Critical Illness product.

In summary, there is great value in adding a product positioning exercise to the market research phase of opening up new markets. The best time for this exercise is after the business and research teams have conducted initial research, spoken to some potential partners/investors, and have some first hand experience speaking with other active companies in the insurance space.

As for who should conduct this exercise of product positioning, I would say someone with experience in product development, marketing, and ideally strategy. This person needs to be neutral and very good at bringing people together. All departments including operations, sales and of course the leadership team need to be involved in developing a hypothesis and validating the product strategy.

Value chain analysis is a framework developed by Michael Porter that divides the company into primary and secondary activities related to delivering a product or service. The primary activities include inbound logistics, operations, sales and marketing, and outbound logistics. The secondary activities are supporting activities and include the firm infrastructure, human resources, information technology, and procurement.

The components of the value chain

A closely related concept is the supply chain. A supply chain is defined as the connected activities related to the creation of a product or service up through the delivery of the product to the customer. It includes upstream suppliers as well as downstream activities such as wholesalers and distribution warehouses. Figure illustrates the supply chain.

In general, the terms value chain and supply chain can be used interchangeably; although the value chain is rooted in the strategic planning literature, the supply chain is linked to the work in the operations management area. The key concept is that products and services have to be created and eventually delivered to consumers and the in-between activities can be referred to as the supply chain or the value chain.

The supply chain is an important visual tool because it can be used to understand where to look for processes that can be reengineered. That is, improvements can be made in connecting, coordinating, and controlling activities across linkages. It can also be used to determine what kind of information should be gathered to improve communications throughout the value chain and where value chain performance could be improved. For example, the firm can investigate where information technology can be marshaled to support the supply chain activity and where technology can be used to automate tasks. The goal, of course, is to reduce transaction costs up and down the supply chain. Transaction costs refer to the effort that goes into choosing, organizing, negotiating, and entering into agreements for products and services. Transaction costs come in a variety of flavors and there is significant overlap among the various costs.

• Search costs: In general, these costs are related to gathering information on a product or service, including the costs associated with locating a product and offering a product for sale.
• Discovery costs: These costs are involved in locating an acceptable price for a product.
• Decision costs: These costs are associated with making a decision on what product to purchase. These include personal cognitive effort and organizational decision processes related to selecting a product or service.
• Negotiation costs: These costs are related to agreeing to the terms of a contract including the price, what will be delivered, how much, and when.
• Acquisition costs: These costs are involved in transporting, receiving, infrastructure development, and managing the product in inventory.
• Enforcement costs: These are the costs that the parties in the contract incur in order to enforce the terms of the contract.
• Settlement costs: These are the costs related to paying and getting paid for a product or service.
• Social costs: These include costs that are not necessarily picked up by the buyers and the sellers. Examples include pollution costs, health costs, privacy costs, and bankruptcy costs.

Supply Chain Analysis

Supply chain analysis is the process of evaluating every stage of a supply chain starting from the time the business acquires raw materials or supplies from its suppliers to the delivery of final products to the customers. The purpose of the analysis is to determine which part of the supply chain can be improved or shortened to deliver the product more quickly and efficiently to the customers. The philosophy behind supply chain analysis is that the more flexible a business can be, the faster its growth rate will be.

Supply chain analysis helps businesses identify the suppliers and/or processes that can be bypassed, reduce inventories, schedule events and programs, and improve forecasts. This increases efficiency, reduces costs and minimizes risks. It helps businesses optimize their processes to remove redundancies in the supply chain while helping create new value-added processes.

Conducting a supply chain analysis involves the following steps:

1. Mapping the Supply Chain

This involves identifying all the organizations, people, activities, information and resources involved in the supply chain and creating a flowchart to obtain an overview of the chain, the flow of raw materials and product, the position and function of chain actors and the type of interaction between the actors.

2. Developing Economic Accounts Corresponding to Each Actor Involved in the Supply Chain

This involves quantifying the activities of each actor and contribution to the flow of materials both in physical and monetary terms. It helps the analyst assess the importance of the actor in the chain and to point out where the weaknesses lie and how they can be rectified.

To start a complete supply chain analysis, you need to collect data pertaining to every actor and every stage of the supply chain. This requires a lot of research and hard work. Most small and midsize businesses rely on manual methods of data collection and the use of spreadsheets, such as Microsoft Excel, for analysis.

A faster and easier way to conduct the analysis is to use a software program to automate the process. Such a program can extract information from all the different sources into one console removing the need for tedious and time consuming manual data collection. You can analyze shipping schedules, improve transportation and inventory planning, increase transportation management efficiency and track just-in-time delivery metrics.

Some top of the line software programs for supply chain analysis have advanced and useful features like data blending and cross-data source triggers, built-in geocoding, built-in calculation support, connectivity to external web services and support for WMS mapping services. The programs require considerable investment, but the saving on time, efficiency and accuracy amply compensates for that.

Insurance Regulatory and Development Authority of India (IRDAI), is a statutory body formed under an Act of Parliament, i.e., Insurance Regulatory and Development Authority Act, 1999 (IRDAI Act 1999) for overall supervision and development of the Insurance sector in India.

The powers and functions of the Authority are laid down in the IRDAI Act, 1999 and Insurance Act, 1938. The key objectives of the IRDAI include promotion of competition so as to enhance customer satisfaction through increased consumer choice and fair premiums, while ensuring the financial security of the Insurance market.

The Insurance Act, 1938 is the principal Act governing the Insurance sector in India. It provides the powers to IRDAI to frame regulations which lay down the regulatory framework for supervision of the entities operating in the sector. Further, there are certain other Acts which govern specific lines of Insurance business and functions such as Marine Insurance Act, 1963 and Public Liability Insurance Act, 1991.

IRDAI adopted a Mission for itself which is as follows

• To protect the interest of and secure fair treatment to policyholders;
• To bring about speedy and orderly growth of the Insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy;
• To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates;
• To ensure speedy settlement of genuine claims, to prevent Insurance frauds and other malpractices and put in place effective grievance redressal machinery;
• To promote fairness, transparency and orderly conduct in financial markets dealing with Insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players;
• To take action where such standards are inadequate or ineffectively enforced;
• To bring about optimum amount of self-regulation in day-to-day working of the industry consistent with the requirements of prudential regulation.

Entities regulated by IRDAI

(i) Life Insurance Companies: Both public and private sector Companies

(ii) General Insurance Companies: Both public and private sector Companies. Among them, there are some standalone Health Insurance Companies which offer health Insurance policies.

(iii) Re-Insurance Companies

(iv) Agency Channel

1. Intermediaries which include the following:

• Corporate Agents
• Brokers
• Third Party Administrators
• Surveyors and Loss Assessors.

Regulation making process

• Section 26 (1) of IRDAI Act, 1999 and 114A of Insurance Act, 1938 vests power in the Authority to frame regulations, by notification.
• Section 25 of IRDAI Act, 1999 lays down for establishment of Insurance Advisory Committee consisting of not more than twenty five members excluding the ex-officio members. The Chairperson and the members of the Authority shall be the ex-officio members of the Insurance Advisory Committee.
• The objects of the Insurance Advisory Committee shall be to advise the Authority on matters relating to making of regulations under Section 26.
• Accordingly the draft regulations are first placed in the meeting of Insurance Advisory Committee and after obtaining the comments/recommendations of IAC, the draft regulations are placed before the Authority for its approval.
• Every Regulation approved by the Authority is notified in the Gazette of India.
• Every Regulation so made is submitted to the Ministry for placing the same before the Parliament.

The Authority has issued regulations and circulars on various aspects of operations of the Insurance companies and other entities covering:

• Protection of policyholders’ interest
• Procedures for registration of insurers or licensing of intermediaries, agents, surveyors and Third Party Administrators;
• Fit and proper assessment of the promoters and the management
• Clearance /filing of products before being introduced in the market
• Preparation of accounts and submission of accounts returns to the Authority.
• Actuarial valuation of the liabilities of life Insurance business and forms for filing of the actuarial report;
• Provisioning for liabilities in case of non-life Insurance companies
• Manner of investment of funds and periodic reports on investments
• Maintenance of solvency
• Market conduct issues

Supervisory Role

The objective of supervision as stated in the preamble to the IRDAI Act is “to protect the interests of holders of Insurance policies, to regulate, promote and ensure orderly growth of the Insurance industry”, both Insurance and Reinsurance business. The powers and functions of the Authority are laid down in the IRDAI Act, 1999 and Insurance Act, 1938 to enable the Authority to achieve its objectives.

Section 25 of IRDAI Act 1999 provides for establishment of Insurance Advisory Committee which has Representatives from commerce, industry, transport, agriculture, consume for a, surveyors agents, intermediaries, organizations engaged in safety and loss prevention, research bodies and employees’ association in the Insurance sector are represented. All the rules, regulations, guidelines that are applicable to the industry are hosted on the website of the supervisor and are available in the public domain.

Section 14 of the IRDAI Act, 1999 specifies the Duties, Powers and functions of the Authority. These include the following:

• To grant licenses to (re) Insurance companies and Insurance intermediaries
• To protect interests of policyholders,
• To regulate investment of funds by Insurance companies, professional organizations connected with the (re)Insurance business; maintenance of margin of solvency;
• To call for information from, undertaking inspection of, conducting enquiries and investigations of the entities connected with the Insurance business;
• To specify requisite qualifications, code of conduct and practical training for intermediary or Insurance intermediaries, agents and surveyors and loss assessors
• To prescribe form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other Insurance intermediaries.

To create a brand, a truly great brand is one of the most powerful ways a business can differentiate it business, products or services from its competitors. Not only will a strong brand make customers sit up and take notice but it will allow your business to charge a premium over its competitor, build customer loyalty, drive sales and accelerate product differentiation in the market.

Your brand isn’t just an add-on to be considered as and when. It should be right at the centre of your business, affecting everything you do and simultaneously reflecting the sum of everything you do. It is, in essence, both the cause and effect of all your actions.

A brand is not just a logo, it’s the collective emotional response to the logo and other elements. Your branding is all geared towards generating that response.

Branding

A brand is a promise of a particular experience that has been created through the sum of various elements including the logo and tagline, the brand personality, promise, messaging and the visual elements.

The process of branding is building that brand, all the way from designing the logo, doing research into the name, working through the attributes, doing the focus group work branding is part of the business you are building.  Much like a Method actor lives and breathes his or her character, so too should a business live and breathe its brand if it wants to convince customers. Creating a brand, like an individual personality, is based on a set of behaviours and characteristics with the strength and consistency of these impacting on its effectiveness.

Advantages of branding

Branding is one of the most effective ways to separate your business from the rest of the market and build a loyal customer base but it also has many other benefits at the very least helping you to establish and grow your business among many other benefits.

Your business direction

Without the sense of purpose a brand gives you, how do you know if the direction you’re heading in is the right one for your business, or if the decisions you’re making are in keeping with the ideals of your business and customers? The decisions you make and the directions you choose can reinforce or completely undermine what your company stands for.

Nike’s co-founder, Philip Knight, once put it like this: “We wanted Nike to be the world’s best sports and fitness company. Once you say that, you have a focus. You don’t end up making wing tips or sponsoring the next Rolling Stones world tour.”

Your business growth

Every business needs to innovate its approach, products and services to grow. But a brand provides the DNA for that growth, rather than inhibiting it. Your brand is the seed that grows the plant of your growing business. The plant may have different aspects to it like products and services that change with the times. But they’re still underpinned by the DNA in that seed that is your brand. Your core values will always be visible, as will the consistent customer experience you provide. Growth without a brand in mind can see your customers desert you in their droves.

Your customer base

Your brand is the focus that keeps you building a solid, loyal customer base. Because when you consider your brand in everything you do, you’re essentially asking yourself the question: “How will this product [or service] impact on our customers’ lives? How will it make them feel differently than competitor products on the market?” These considerations are fundamental to the success of your business, which is why branding must be considered from the word go.

Your business reputation

Your brand gives you the ability to stand out from the crowd, particularly in competitive markets. How well you deliver on your brand promises and strengthen your brand through every area of your business can help make or break your business reputation. And there are few things more valuable to both maintaining existing customers and attracting new ones than a good, solid reputation.

Your customer communications

Every possible contact your business has with a new or existing customer should enforce your brand values. That doesn’t mean you need to be shoving what you stand for down your customers’ throats every time you answer the phone. It just means the way you interact with customers should be thought through and in keeping with your vision and purpose.

Every time you communicate with a customer or prospect, your brand should be felt whether this is through your advertising and promotional activities or customer-facing communications. Your brand is your DNA so make sure it works its way upwards through every layer of your organization.

What to consider when creating a brand

Coming up with a name and a logo at a minimum requires a huge amount of effort and research, the whole process of creating a brand is even more complex and time-consuming. So in order to help here’s a list of the things you should be aware of and consider when creating and building your brand.

A brand should reflect your core values

Everything you do, or what anyone working with you does, will reflect the brand. If you solve problems fast, save people money, do what you say you will listen to your customers, etc., all of this will be translated in their minds as what your business represents. When I work with any start-up, the last thing on my mind is building the brand. First, I want to know what they do differently and make sure that every form of communication and interaction with the outside world is consistent tone, messages, look and feel of the website, fact sheets, logo, etc. This is a pain and can be tricky but does not cost a fortune to do and is, in essence, how you build your brand.

Ultimately if you wish your business to mean/represent one thing and the feedback you get from the outside world is different, you have what is termed ‘brand dissonance’. In plain terms, listen up and change what needs to be changed! The devil is in the detail here, but it’s a question of making sure everything you are working on is consistent and comes across in the way you want. The next issue is to get those around you to do likewise; another challenge for another day.

In essence, your brand represents both who you are as an individual and what your business is as an enterprise. To start with, there is no difference between the two, but as your business grows this will come to mean different things, which in turn presents other issues. But irrespective of what you think about branding, it is ultimately a measure of your success; do things well, and its valuation will grow and with it.

The desired feeling you wish to communicate

What feeling is your product or service going to give the consumer? What is the desire or need it will fulfil? It might be the desire for freedom, safety, confidence or success, or something completely different. Understanding your audience is key their age, sex, ethnicity, income, education level and locale. What motivates them to buy? How do they think?

Once you’ve identified the purpose, define it as succinctly as you can as it will form the basis of your branding efforts. Consider this commonly used core purpose or mission: “We strive to meet or exceed expectations through exceptional service and a dedication to quality”. The problem with this is that it’s too ambiguous, it could belong to any number of businesses and so doesn’t differentiate the company from its competitors. It doesn’t tap into the hearts and minds of customers. So strive to identify exactly what does and make sure it’s something inspiring, specific and believable.

From this, you will be able to define your values which set out how you get your customers to that ‘place’ you’re taking them in their minds. This is not about your own personal values, this is your company’s values which underpin the purpose you’ve defined. They should reflect the vision, culture, and goals of the company and clarify what you stand for and why you do business the way you do. Core values focus on the “why”, more than the “how”. Why are these qualities the key to success? Leave room for these values to develop into new and exciting interpretations of possibilities later down the line, allowing your company to adjust and adapt in a changing world.

The more work you do in this area, the less you will need to spend on your branding and graphic design in the long run, as you’ll be able to approach your chosen branding or graphic design professionals with a clear outline of your core purpose and values. It costs you more in the long run if you don’t know what your brand is and can’t share it.

Create a brand message that is clear, compelling and consistent

Imagine you don’t know a thing about your company. Now tell yourself the key message you want customers to hear. Do you get a clear picture in your mind of the benefit to you as the customer? If not, why not? Have another look at your proposition and whittle it down to what distinguishes you. Is it price? Quality? Innovation? Or something else.

Use the ‘so what?’ Test to decide whether or not your USP is compelling. Read your USP to yourself. Does it warrant the response ‘so what?’ If so decide what you’re trying to say about the benefit you deliver and repeat the ‘so what?’ test until you have a truly compelling USP.

Once you’ve nailed it, be consistent, both in communication and in practice. You don’t have to be the best, just the most consistent. Few would argue that a Mr. Whippy is the best ice-cream in the world for example. But we know what it is, how it will look and taste and we can see at a glance which ice-cream vans stock it – and it’s been the same as long as we can remember. And these are the factors that sometimes make us want one, even though it’s not necessarily our most favourite ice-cream in the world! Consistency helps build trust and loyalty which are invaluable to your brand.

Understanding your customers

To create a brand that is successful requires you to understand the values of your target audience and focus your offering on these customers. Trying to be all things to all people will only dilute and confuse the strength and message of your brand.

Effective brand positioning and brand promise

The brand positioning is how the brand is perceived in the context of competitive alternatives. Brand positioning needs to remain consistent throughout all your marketing efforts, or customers will become confused. The brand promise addresses customers’ expectations about a product or service. Examples of brand promises include Coke’s, “To inspire moments of optimism and uplift” and Google’s, “To provide access to the world’s information in one click”.

Keeping your brand real

If you want people to buy into your brand, make it believable. Instead of claiming perfection, claim something more unique, justifiable and in keeping with your brand. Again, think of your company as a person. What kind of person goes around claiming perfection? More than likely someone you wouldn’t necessarily want to associate with or believe.

Creating brand elements (Logo, name…)

Creating a brand is about more than just a catchy name – it is about creating a whole identity for your business and the products or services it sells. Once you’ve answered some or all of questions above and have some clarity of what you want your brand to me its time to start creating some branding elements, not least a name, logo and visual identity.

Brand name

When choosing your name, it’s a good idea to bear in mind what a useful tool it is in getting across to customers the benefit of using your business instead of your competitors’. After all, it’s the first thing your customers are going to see, and they’ll base split second judgements on it. Which is why it’s so important that it’s memorable and gives the right first impression. The perfect recipe for success is a good name combined with good branding.

One method which can be useful for inspiring trustworthiness is to link your business’ name to the area in which you operate – customers associate such firms with strong local roots and a friendly approach. Humour or a play on words can help your business stand out, but the overriding aim is to make sure that whatever you choose is snappy, original and instantly informs the customer what the business does.

You’ll also need to bear in mind that your business name will dictate which Web domain you can register and your trademark if applicable.

Brand logo

Next, you need an eye-catching logo to be used alongside the brand indeed in some cases instead of the brand. Successful logos include the Nike ‘swoosh’, the London Underground symbol and Mcdonald’s golden arches. You know when brand identity is working when consumers can recognise your brand from the logo only they just know it.

Most successful businesses will tell you that logos matter a lot. In the early days of your new business especially, perception is everything. So investing a little money to encourage the perception that you’re professionals is pretty high up the agenda for the vast majority of new businesses.

You’ll want to work toward something smart, not just something pretty. What I mean by that is you need to begin with a thought: What is the emotional response (worked out in step one) that you want your product to elicit? What else can you think of that will help people understand not just what you do but how you’re different from your competitors?

Brand indentity & visual identity

Finally, you need to create a strong identity for your business which runs through everything you do. To do this, you need to firmly establish what your company stands for. Do you want to be seen as a funky cutting-edge high fashion business, for example, or would you rather be seen as solid, dependable and reliable? What is the core idea of the company and the message you want to project? You can come up with the most fantastic name and logo, but if you have no vision or proposition for the company, then it’s just not going to work.

Creating brand assets and marketing materials

If your website, stationery, etc. exude and reinforce your values, your brand will be strengthened. But if they don’t, your brand and your business could be seriously damaged. For example, your product could genuinely be of a high quality. You may have sourced the very best components available. But if you’ve got a naff, clip-art logo and poor quality stationery, that undermine your promises of quality, you’re fighting a losing battle with customers. You can tell them your product is superior until you’re blue in the face. If they do not see that message reflected consistently in every area of your business, they’ll head to a supplier they’re more sure of instead.

Protecting your brand

Branding isn’t a one-off event- your brand needs to be continually protected. Take out trademarks to safeguard your brand name, logo and tagline. You can also use trademarks to protect phrases and groups of words that you use as part of your brand. You can apply for trademarks online via the Intellectual Property Office website. Protect designs associated with your business by registering them under UK Design Protection, again through the Intellectual Property Office. Make sure you continually monitor your brand identity to ensure that it remains relevant. Remember that brands can be tweaked and refreshed along the way.

Branding, by definition, is a marketing practice in which a company creates a name, symbol or design that is easily identifiable as belonging to the company. This helps to identify a product and distinguish it from other products and services. Branding is important because not only is it what makes a memorable impression on consumers but it allows your customers and clients to know what to expect from your company. It is a way of distinguishing yourself from the competitors and clarifying what it is you offer that makes you the better choice. Your brand is built to be a true representation of who you are as a business, and how you wish to be perceived.

There are many areas that are used to develop a brand including advertising, customer service, promotional merchandise, reputation, and logo. All of these elements work together to create one unique and (hopefully) attention-grabbing professional profile.

Branding Important

Branding is absolutely critical to a business because of the overall impact it makes on your company. Branding can change how people perceive your brand, it can drive new business and increase brand awareness.

1. Branding Gets Recognition

The most important reason branding is important to a business is because it is how a company gets recognition and becomes known to the consumers. The logo is the most important element of branding, especially where this factor is concerned, as it is essentially the face of the company.

2. Creates Consumer Preference for the Product or Service Behind the Brand

A wide variety of products leads to confusion. One way purchasers manage these issues is by leaning towards brands they know and trust. Genuine and widely known brands are viewed as less risky to buy from. Hence, customers believe that the products from brands that are intensively marketed would always perform better.

3. Generates Increased Revenues and Market Share

When a firm does extensive marketing or branding, its revenues and market share increases. This means that the firm can become stronger than it was before. It can use its power to enter new geographical markets, do co-branding and gain new distribution opportunities.

4. Helps the Company Survive Temporary Crises

Toyota, a brand with the best quality, has had some genuine product quality issues in 2009, which created a PR nightmare. However, the company has spent numerous years conveying its “quality” image, which has helped the organization oversee the crisis and re-establish trust in their products.

5. Expands the Organization’s Estimated Worth

An organization’s physical resources and the number of workers do not contribute much to its market value. What actually matters is the brand’s equity. John Stewart, the previous CEO of Quaker says “If the business splits up and I give you the land, bricks, and cement, and take the goodwill and trademarks, I’d still stand better than you.” The company’s worth shows the importance of branding.

6. Keeps New Competition Away

A market segment that is targeted by popular brands is a huge hurdle for most new competitors. If you are the first one to create and target a segment, you will gain tremendous benefits.

7. Increases Employee Productivity

When your brand is well-known, people will want to work for you. This opens your company up to the top talent and provides you with the most qualified and skilful employees for your company. Once you have the best people for the job, your company’s productivity level will increase as well.

8. Increases Profitability by Commanding a Higher Price

This is one of the most important reasons for the significance of marketing. Clients tend to be more willing to pay a premium for a well-established brand’s product compared to a similar item from a brand that isn’t as well-known.

When you are a huge firm and the biggest customer of your suppliers, they will never want to lose you. You can use this power to insist that quality products are on time and to bargain over prices as well. Often they will take a pay cut just to keep working with your company.

9. Helps the Company Attract New Distribution for its Products

A popular brand with known customer loyalty has little issues discovering distribution partners, on a local and global scale. Everyone wants to work with a brand where the client demand and return on investment are high.

When employees work for a well-known brand, they showcase a sense of loyalty and purpose. This means that the employee turnover rate would drop dramatically because employees believe in what their company is doing and are proud of it.

10. Makes a Remarkable And Unique Brand Image

A brand goes well past the offering of a tangible product. If your business is unique from the rest, you will attract a market in which your competitors are not able to compete.

Brand Extension is the use of an established brand name in new product categories. This new category to which the brand is extended can be related or unrelated to the existing product categories. A renowned/successful brand helps an organization to launch products in new categories more easily. For instance, Nike’s brand core product is shoes. But it is now extended to sunglasses, soccer balls, basketballs, and golf equipments. An existing brand that gives rise to a brand extension is referred to as parent brand. If the customers of the new business have values and aspirations synchronizing/matching those of the core business, and if these values and aspirations are embodied in the brand, it is likely to be accepted by customers in the new business.

Extending a brand outside its core product category can be beneficial in a sense that it helps evaluating product category opportunities, identifies resource requirements, lowers risk, and measures brand’s relevance and appeal.

Brand extension may be successful or unsuccessful.

Instances where brand extension has been a success are:

• Wipro which was originally into computers has extended into shampoo, powder, and soap.
• Mars is no longer a famous bar only, but an ice-cream, chocolate drink and a slab of chocolate.

Instances where brand extension has been a failure are:

(i) In case of new Coke, Coca Cola has forgotten what the core brand was meant to stand for. It thought that taste was the only factor that consumer cared about. It was wrong. The time and money spent on research on new Coca Cola could not evaluate the deep emotional attachment to the original Coca- Cola.

(ii) Rasna Ltd.: Is among the famous soft drink companies in India. But when it tried to move away from its niche, it hasn’t had much success. When it experimented with fizzy fruit drink “Oranjolt”, the brand bombed even before it could take off. Oranjolt was a fruit drink in which carbonates were used as preservative. It didn’t work out because it was out of synchronization with retail practices. Oranjolt need to be refrigerated and it also faced quality problems. It has a shelf life of three-four weeks, while other soft- drinks assured life of five months.

Advantages of Brand Extension

• It makes acceptance of new product easy.
• It increases brand image.
• The risk perceived by the customers reduces.
• The likelihood of gaining distribution and trial increases. An established brand name increases consumer interest and willingness to try new product having the established brand name.
• The efficiency of promotional expenditure increases. Advertising, selling and promotional costs are reduced. There are economies of scale as advertising for core brand and its extension reinforces each other.
• Cost of developing new brand is saved.
• Consumers can now seek for a variety.
• There are packaging and labeling efficiencies.
• The expense of introductory and follow up marketing programs is reduced.

There are feedback benefits to the parent brand and the organization.

• The image of parent brand is enhanced.
• It revives the brand.
• It allows subsequent extension.
• Brand meaning is clarified.
• It increases market coverage as it brings new customers into brand franchise.
• Customers associate original/core brand to new product, hence they also have quality associations.

Disadvantages of Brand Extension

• Brand extension in unrelated markets may lead to loss of reliability if a brand name is extended too far. An organization must research the product categories in which the established brand name will work.
• There is a risk that the new product may generate implications that damage the image of the core/original brand.
• There are chances of less awareness and trial because the management may not provide enough investment for the introduction of new product assuming that the spin-off effects from the original brand name will compensate.
• If the brand extensions have no advantage over competitive brands in the new category, then it will fail.

Brand Development: Branding Decisions

Branding decisions finally include brand development. For developing brands, a company has four choices: line extensions, brand extensions, multibrands or new brands.

• Line extension refers to extending an existing brand name to new forms, sizes, colours, ingredients or flavours of an existing product category. This is a low-cost, low-risk way to introduce new products. However, there are the risks that the brand name becomes overextended and loses its specific meaning. This may confuse consumers. An example for line extension is when Coca-Cola introduces a new flavour, such as diet cola with vanilla, under the existing brand name.
• Brand extension also assumes an existing brand name, but combines it with a new product category. Thus, an existing brand name is extended to a new product category. This gives the new product instant recognition and faster acceptance and can save substantial advertising costs for establishing a new brand. However, the risk that the extension may confuse the image of the main brand should be kept in mind. Also, if the extension fails, it may harm consumer attitudes toward other products carrying the same brand name. For this reason, a brand extension such as Heinz pet food cannot survive. But other brand extensions work well. For instance, Kellog’s has extended its Special K healthy breakfast cereal brand into a complete line of cereals plus a line of biscuits, snacks and nutrition bars.

Multibrands

marketing many different brands in a given product category. P&G (Procter & Gamble) and Unilever are the best examples for this. In the USA, P&G sells six brands of laundry detergent, five brands of shampoo and four brands of dishwashing detergent. Why? Multibranding offers a way to establish distinct features that appeal to different customer segments. Thereby, the company can capture a larger market share. However, each brand might obtain only a very small market share and none may be very profitable.

New brands are needed when the power of existing brand names is waning. Also, a new brand name is appropriate when the company enters a new product category for which none of its current brand names are appropriate.

As you might have recognised, these four branding decisions are all interrelated. In order to build strong brands, brand positioning, brand name, brand sponsorship and brand development have to be in line with each other

The insurance industry is saturated with national brands making a lot of noise, making it tough for local insurance agencies to be heard by consumers. Smart marketing strategies are necessary so that an insurance agency can stand out from the national and local competition. These are but a few examples of marketing strategies an insurance agency can employ, but every agency should consider the market and exactly what the target market is looking for before implementing any new program.

Go Grassroots in the Community

Most agencies seek to capture the market close to the office. It’s easier to build relationships with customers when you can meet with them. There are a lot of ways to become known and visible within the community that surrounds your insurance agency.

Look at broad marketing strategies such as billboards, bus benches and grocery store advertising as a way to get your agency name and your image out in the world. This develops general credibility but really, it’s a shotgun approach.

More active approaches to marketing will build community goodwill and have a more targeted approach to drive the leads in. Visit local high schools to speak to students about the dangers of drunk or distracted driving. Hold workshops that discuss the benefits of life insurance at a local church. Get a booth at the local chamber of commerce event.

Piggyback Off the Brand

Big brands such as Allstate, Farmers and State Farm spend a tremendous amount of their annual budgets on marketing. If you have an agency with one of these companies, you know the limitations of being a captive agent. But there are advantages to the marketing funnels these big brands pump money into, and you can piggyback off these funnels.

Allstate agents can host local community cleanups that partner with the city council, using the Allstate tagline, “You’re in good hands.” Farmers’ agents can hold regular insurance and financial workshops, bringing Farmers University directly to consumers. State Farm agents can have fun with, “Jake from State Farm,” an agent who’s wearing khakis and the signature red shirt in the office and to all community events.

When you have the brand behind you, use its well-paid marketing department to create the programs that you only need to execute.

Build a Referral Network

A referral network is one of the best ways insurance agencies grow the business. Strategic partners for insurance agencies include real estate agents, mortgage lenders, estate planning attorneys and even other insurance agents. If your agency specializes in a specific type of insurance for example, worker’s compensation many other agencies are instead focused on auto and home insurance, and they can refer business clients to you.

When it comes to building strategic partners, plan it out and be consistent. Take a box of donuts to a mortgage lender’s office once a week with a stack of your cards and a note thanking them for thinking of you. Offer to sit in open houses with real estate agents. Add value and partners will emerge to provide you with solid referrals.

Spend Ad Money in Local Social Media

Social media ads allow the insurance agency owner to target specific clients. It also gets them in front of Millennials in ways other traditional advertising might not. Use the tools social media provides to set demographics for certain products. For example, target young families with small children for life insurance prospects.

Market segmentation is the activity of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as segments) based on some type of shared characteristics.

In dividing or segmenting markets, researchers typically look for common characteristics such as shared needs, common interests, similar lifestyles or even similar demographic profiles. The overall aim of segmentation is to identify high yield segments that is, those segments that are likely to be the most profitable or that have growth potential so that these can be selected for special attention (i.e. become target markets). Many different ways to segment a market have been identified. Business-to-business (B2B) sellers might segment the market into different types of businesses or countries. While business-to-consumer (B2C) sellers might segment the market into demographic segments, lifestyle segments, behavioural segments or any other meaningful segment.

The STP approach highlights the three areas of decision-making

Market segmentation assumes that different market segments require different marketing programs that is, different offers, prices, promotion, distribution or some combination of marketing variables. Market segmentation is not only designed to identify the most profitable segments, but also to develop profiles of key segments in order to better understand their needs and purchase motivations. Insights from segmentation analysis are subsequently used to support marketing strategy development and planning. Many marketers use the S-T-P approach; Segmentation→Targeting→Positioning to provide the framework for marketing planning objectives. That is, a market is segmented, one or more segments are selected for targeting, and products or services are positioned in a way that resonates with the selected target market or markets.

Types of Market Segmentation

But what types of market segmentation are there? How can companies divide their prospective markets?

In general, there are four basic types of market segmentation (with some variation in them) – behavioral, demographic, psychographic and geographic.

1. Behavioral

As the name may suggest, behavioral market segmentation is focused on how consumers interact with a product, or how much they know about a product.

For example, behavioral segmentation could include what brands consumers are loyal to, how sensitive consumers are to certain prices, their usage or certain decision-making processes. Behavioral also includes occasion, engagement and life cycle.

Behavioral marketing is often employed most during Christmas or holiday shopping seasons when consumer behavior is somewhat altered.

Advantages

• Behavioral segmentation allows brands to use valuable time and resources more efficiently.
• It helps to develop smart marketing strategies to improve and expand the customer base.
• It promotes behavioral patterns that help in predicting customer’s behavior and outcomes.

Disadvantages

• The behavior of people never remains the same, and it keeps on changing. This is the reason marketers do not prefer such a strategy.
• It covers a limited number of potential consumers.
• It cannot be measured easily, or in other words, it is qualitative and cannot be quantified due to its subjective nature. So one cannot justify it with figures or estimates as far as the behavior of the consumers is concerned.

2. Demographic

One of the major ways to segment the market is by demographics. Marketers often segment consumers into groups based on similar age, gender, family size, religion, nationality, income and education level. These are often helpful ways for businesses to better assess what might interest their prospective consumers and better target them based on more narrowed needs.

An example of demographic market segmentation could be marketing a retirement service to older citizens.

Advantages

• It saves time by selling unnecessary things to potential consumers.
• Targeting specific audiences improve customer retention and loyalty.
• The marketer can modify their product or service in less time to suit the needs of the target segment.

Disadvantages

• It involves limited production because customers are limited in each segment.
• It is expensive because the cost of production rises due to shorter production runs and product variations.

3. Psychographic

With psychographic segmentation, companies examine consumer’s lifestyles, personality, interests, opinions, social class, habits and activities to better ascertain their needs.

For example, a consumer who is very active with outdoor activities like camping, hiking and skiing would more likely be interested in tents, hiking boots and ski shoes than someone who spends lots of time reading indoors. In marketing, much of this information is procured through surveys or other data that give a company a better picture of a consumer’s lifestyle and interests to better target their specific niches.

Advantages

• It gives due importance to consumer preferences, beliefs, and thought processes. It understands customer concerns.
• A researcher not only fulfills consumer needs but also creates a sense of satisfaction and loyalty amongst them by catering to varied activities, interests, and opinions.
• This segment proves best when you involve customization of products and services.

Disadvantages

• The implication of this segment is difficult as compared to demographic and geographic segments.
• It can cover a limited number of potential consumers at a time.

4. Geographic

Geographic information about consumers can be very helpful (and even essential) to marketing to the right groups. Geographic market segmenting takes into account what country, region, city or area a potential consumer resides in. However, it may also encompass the density of a city, population, climate and language to help further group consumers.

For example, marketing to Spanish-speaking consumers would be very different than marketing to English-speaking consumers. Or, a company selling heaters would likely need to know where their customers in colder climates were as opposed to those in warmer climates who may have less need of their product.

Advantages

• Since geographics are well defined through borders, population, density, topography, etc., it becomes easier for companies to identify the needs of the potential customers and produce accordingly.
• Companies identify people with similar needs and preferences with the help of geographic segments.
• Densely populated areas lead to huge market potential and a company can earn more profit by offering a wide range of products or services.

Disadvantages

• You can only predict the weather but cannot be sure about it as it keeps on changing. So it becomes risky at times for companies, who engage their segments according to geographic weather patterns.
• It does not focus on the buying behavior pattern of consumers. People living in the same region can have different needs and desires. Thus, can result in different buying patterns.