Imagine that you have been hired by a life insurance company to serve as a consultant. The company is especially interested in your opinions about what it might do to(1) convince consumers that currently do not own life insurance that they should have a life insurance policy, and (2) encouraging existing policyholders with inadequate levels of coverage to increase their coverage. Which stage of the decision-making process is most relevant here? How would you proceed in deciding what the company should do?

Dear Sir, Thank you for hiring me to serve as a consultant in your firm. At present there are currently two obstacles that are faced and here are my opinions on how to overcome them.

How to convince consumers that currently do now own life insurance that they should have a life insurance policy.

The stage of the decision making process that has to be focused on is “Need Recognition.” Where the consumer would purchase on believing on a product’s ability to solve a problem, in this case is the reassurance given to the consumer via the policy.

By focusing on it, we could also see what we could do to influence the consumer, such as the environmental influences such as culture(Marieke K. 2004) and the individual’s differences which are seen as motivational factors for them(Krishna. 1999). By also tapping on the memory of the consumer to remember the company name when it comes to insurance via an internal search by searching through the memory for relevant information, feelings and experiences(Hoyer. 2007). Environmental influences can be heavy on the person as he/she may think of purchasing a policy for himself/herself to ensure that the family is taken care of should something happen to him/her, or even purchasing policies for the other family members.

Individual differences such as the consumer’s personality are also important as the consumer may find needs for more than one policy or even deciding it is not mandatory to buy an insurance policy. A consumer may think that a policy is not needed as perhaps they think that they are in a safe and unharmful environment or they perceive that they can go on without a policy. They may also feel uncertainty, as life is unpredictable and no one knows what may come or fall tomorrow, which can cause the person to think about whether he should or not purchase an insurance policy. This can be overcome by finding new influences to influence the consumer’s need recognition.

Influencing Need Recognition should be one of the targets for the company as new ways of altering consumers’ perceptions would help. By innovating new packages of the life insurance that are more attractive, would see more interest within the consumers to learn more about the product. Another point to look out for would be the purchase factor, of which it would be better to make the consumer be able to plan the purchase, and also having the company name be the first on their mind should they plan to. Which makes portraying the identity of the company important.

Encouraging existing policy holders with inadequate levels of coverage to increase their coverage.

The stage of the decision making process that has to be focused on is the “post consumption evaluation” stage. Where the policyholders would decide should they want to increase their coverage or not.

If the policyholder is satisfied with the current policy they are holding, then they would not feel the need to increase coverage. However if they are dissatisfied, the company could encourage them to increase levels of coverage to an adequate level.
Satisfaction from the consumers are important as it influences repeat buying, in this case adding on to their existing policy. It also shapes word of mouth as well as word of mouse communication, by spreading good word about the company through friends or even online means, this would help the company as there would be more referrals and more people signing up for new policies. It is also critical for customer retention, as well as lowering the consumers’ price sensitivity. This will create a loyalty from the customers towards the company and a following, causing them to return and stick to the company when they need new or upgrading their policies. Thus it is important for the consumer to feel that the policy covers what they are looking for and need something more to cover their expectations, meaning setting and shaping the consumers’ expectations should be on the company’s agenda. However, dissatisfaction can also lead to word of mouth and mouse communication, but in a bad way towards the company as there would be lesser people wanting to sign up or even continue with the insurance policies. Thus dissatisfaction from the policyholders must be avoided and minimised by implementing ways to make the consumer more satisfied.

There may a discrepancy in the desired and actual state, with the consumers desire to have a high payout insurance policy but only able to have a low payout policy in actual. To curb this maybe the company could change policy packages or maybe give discounts for some of the higher payout policies.

With these areas more focused on, i believe the company would be able to achieve the current goal of having more insurance policies sold and current policyholders having their policies upgraded to the adequate levels. Thank you.

Question 2 (20 marks)
Select a high involvement and a low involvement product being marketed or promoted on the web.
How do the websites differ? Specifically, are there differences in(i) the amount of information offered? (ii) the types of information and (iii) the number of links to other sites? How does the organization of each website differ?
Is one site more focussed on brand equity than the other? Do the websites differ in the amount of promotional materials offered?

High involvement product - Amazon.com
Low involvement product - Fairprice.com.sg

High involvement products are goods that have high capital value and are purchased only after long and careful consideration. Low involvement products are goods that are bought frequently with minimum thought or effort because they are not of vital concern or have a great impact on the consumer.

the websites differ a pretty great deal compared to each other.
The amount of information offered between the two websites are vast, amazon.com is a huge online store of which products of high involvement are sold while fairprice.com is an online grocery store with low involvement products. There are vast amounts of information regarding a whole array of different products ranging from books to video cameras in the amazon website, while the fairprice website carries just grocery items that we can find at supermarkets.
The types of information at the amazon website show’s us lots of pictures of the particular item selected, a detailed description and specifications about it, as well as other recommended items, review comments about the items and also recommended similar items that the consumer may like to purchase too, if the recommended item is purchased with the original intended purchase item, a discount will be given. The fairprice website only shows the item, a brief description and picture, and the price of the item.
Amazon has lots of links in their website, especially in an individual product’s page, of which has links to the producers of the product, or the original site showcasing the product. Fairprice does not have links to other sites.

The organisation of each site differs as they are both reaching different target markets. The layout of the Amazon site is intuitive for consumers who are looking for different products such as the different categories that they offer so that customers can just go straight to the product category that they are looking for, for eg. Books, Dvds, Video Camers etc. The fairprice site also has the category system, however it is less detailed compared to the amazon site. Even with the differences, both sites are strong in catering to what their target markets needs and wants such as special items or things that are hard to get to groceries and the similarity of the ease for the customer to shop from the comforts of their own homes.

Yes, the Amazon website is focussed on more brand equity than the other, carrying major brands such as apple, nikon and canon to name a few, the fairprice website on the other hand does not focus on as much brand equity as consumers who purchase through them are just looking for cheap deals for grocery items.

Both websites have promotional materials such as shipping and delievery offers and also discounts when their cards are used eg. amazon.com rewards card and fairprice credit or debit card.

Once a problem is recognised by the consumer, the individual begins a search for preferable alternatives to solve the problem at hand, both externally and internally. The internal search is uncounsious and is insufficient to indentify preferable alternatives, when that happens, external searches are used such as looking to friends or faily or help from the internet. (Krishna. 1999) This would give the consumer a perceived increased ability to search on the internet, which will eventually affect external search online in a positive manner. (Yuan Gao. 2005)

Websites are external searches that are used by consumers and these sites help them to make better consumption choices especially the ones rich in the product details. Sites with other customer reviews are also helpful to the consumer as they can read on what other people who have already purchased the product feel about it and whether it is a good purchase or not.

They also create a knowledge base for customer’s future decisions as they would store some of that information into their memory should they need the item in future they know where to look for it or could also remember what are the features and points about the product that they want. They could also read up on the information about the product for their own enjoyment or interests.

Companies can benefit from understanding how consumers utilise external search so they can create more products to cater more of their needs or wants. They can also adjust and set the price according to how they can make the best amount of profits, discounts and packages can also be used to attract more customers to buy their product. Brand placements can also be done in sites to link to their own or attract consumers.

Therefore, marketing and promotion of products on the web are a good way for companies to reach out to their consumers and targets. With the vast amount of information available, the internet is a very good form of external search.References:

Marieke K. 2004. Consumer behavior and culture: consequences for global marketing and advertising. Sage Publication

Krishna N, Reddy L. 1999. Consumer Behavior. Discovery Publishing House.

Wayne D, Deborah J. 2008. Consumer Behavior. Cengage Learning.

Yuan Gao. 2005. Web systems design and online consumer behaviour. Idea Group Inc.

Blackwell. Miniard. Engel. 2006. Consumer Behavior. 10th Edition. Thomson South Western.

Amazon. 2010. http://amazon.com. (assessed August 31, 2010)

NTUC Fairprice. 2010. http://fairprice.com.sg. (assessed August 31, 2010)