Marketing essay on:  Travel insurance policy

1           Introduction

A travel insurance policy is of high use to travellers as they will cover theft, loss and medical problems. It is also a very sensible precaution to take. The way people arranges for travel insurance is different. Travel insurance companies tend to give offers that are more inclusive in comparison with the travel suppliers. It gives a guarantee that complications will be taken care of in case the unpredicted happens (Dean, 2009). Easy Travel insurance is also one such company that provides travel insurance and is a part of the QBE group that has been providing insurance for Australians and overseas clients for about 125 years. This is a report that discusses the prospective market for travel insurance in China for inbound travellers in Australia and provides suggestions and strategies to increase their market share.

1.1         Aim

The aim of the research is to analyse the potential of china as a market for penetration. It is very important to analyse and evaluate the status and nature of the country for doing business to determine strategies and to make a favourable or unfavourable decision. This decision as to if business should be conducted in China is analysed in this report. Strategies are also recommended for the purpose of adaption to this report.

1.2         Scope

This report can be used as a base of making a decision on whether business should be expanded into china or not. The current status of the country as well as the friendliness of the country on terms of political, economical, socio-cultural, infrastructural, technological and legal aspects is done in this report. These are some of the factors that are used for making major decisions when formulation of strategies and decision making in a particular country is concerned.

2           Environmental Analysis

2.1.1        Key Facts China

Source: (CIA, 2012)

2.2         Macro Analysis

2.2.1        Political Analysis

The fourth generation party leadership headed by Hu Jintao and Wen Jibao are highly focussed on two factors that are economic development and social inequality. Communist Party of China has been the ruling part in China since 1949 and has more than 70 million members. The policies including the ones at the provincial level are formulated by this party in China (Market Line, 2012).

Source: (Market Line, 2012)

2.2.2        Economic Analysis

It can be seen that a high amount of reformation has happened in China when the past two decades are concerned. The reformation has turned China into an open and liberalized market from being a regimented and regulates economy. This is the economy that is also known as the manufacturing hub of the world. The proportions in their GDP involve 44.93% from manufacturing industry, 45.69% from service and 9.38% from agriculture. The growth target that is set by China is 7.0% growth in the case of the annual GDP and the same is set as the intention behind the five year plan (Market Line, 2012).

The following is a table that depicts the key fundamental in the case of China

Figure 1 Key Fundamentals

Source: (Market Line, 2012)

1. The fundamental of the economy are very strong
2. There is a high flow in the case of the foreign investments

Challenges

1. Lopsided growth
2. Development of the economy that is unequal

Prospects

1. There are chances for a reduction in the fiscal deficits
2. Rebalancing the economy

Risks

1. Housing bubble
2. European debt crisis
3. Increasing local government defaults

Source: (Market Line, 2012)

2.2.3        Social analysis

There has been an improvement in the social security in the 12th five year plan which is in motion now. They are trying to decrease the disparities in the nation through means of increasing the wages and providing more benefits. China was once criticised for being an impoverished nation and now they are concentrated on developing the same. Migration is an issue that is faced by China and this means a decrease in the agricultural output and a strain on increasing the infrastructure of various cities (Market Line, 2012).

Source: (Market Line, 2012)

2.2.4        Technological Analysis

There has been an increased amount of investment in the case of the R&D investment and it has contributed to the production of technology that is pivotal to the economic development of the country. They have also reduced their dependence on the imported technologies. China has also entered into a treaty with the World Trade Organisation in relation with intellectual property rights and trade related aspects. The number of patents they are receiving in only increasing and never decreasing (Market Line, 2012).

Source: (Market Line, 2011)

2.2.5        Legal Analysis

The rating of the country has fallen down by four places according to the Doing business survey that was done by World Bank (World Bank, 2012). The government has plans f being liberal on the stringent policies so as to make the business climate friendlier for investment. There are also chances for having a unified tax law for domestic and international companies (Market Line, 2012).

The system is decentralised in the case of China which is also one of the reasons why all the problems can be uprooted at the initial stage. The legal bodies are also responsible for resolving the disputes. When rules and regulations are considered for opening a business, they have all become all liberated now (China Country profile, 2008). Here is a summary of the legal situation in China

1. There is decentralisation in the case of the court system
2. There is facilitation of FDI

Challenges

1. There is no safeguards for the purpose of maintaining independence
2. There is freedom for expression
3. There are lack of proper reporting and accounting standards

Prospects

1. Reformations in tax
2. Criminal Procedure Law may have Amendments

Risks

1. There are chances for the legal system to be violated
2. There are chances for the government to boost censorship of internet

Source: (Market Line, 2012)

2.3         Micro Analysis

2.3.1        Prospective Consumers

The prospective consumers that are targeted by Easy Travel Insurance are the ones who are using broadband and internet as it is the major way through which communicates with one another. By the end of 2010 it could be seen that China population of about 420 million were connected through internet, the commercial sector fails to gather connection with broadband but there are increasing number of customers who have opted to take these services.

Figure 2 No. Of Internet Users in China

Source: (Market Line, 2012)

The dependency or the risk that customer are willing to take for electronic commerce and transactions also helps in analysing the number of willing customers that can be targeted by the insurance company. On the basis of the conclusions as put forward by Ministry of Industry and Information Technology’s promotion department, e-commerce in China is to grow at 32% in 2011-2015. It is also said that more sales of about 9% will be done online in comparison to the 3.3% in 2010. The government is in high support of the e-commerce industry which is also a very favourable sign for successful results of marketing travel insurance in China (Market Line, 2012).

It is highly important to analyse the outbound travellers in China so as to analyse the number of travellers who comes to Australia and other continents. According to report by Voellm (2011), there is an increase in the amount of disposable income that people have and this is one of the main reasons why Chinese are looking more in to travelling abroad.

Figure 3 Outbound Travellers of China

Source: (Voellm, 2011)

It can be seen that there is about a fivefold increase in the case of outbound tourism in the case of China. On a review that was conducted on 18 countries it was also found that in the markets that registered an increase in the case of international visitation, about 18% to 19% ranges in the case of USA and Australia. The number of visitors has increased for about 438% to Cambodia. Growth in the case of markets like Australia and New Zealand are registering moderate growth (Voellm, 2011)

From the perspective of Australia, China is one of the most valuable inbound markets, and it has contributed about $3.26 billion to the economy of Australia.

Figure 4 Potential China

Source: (Australian Government, 2011)

The above graphs show the trends for tourism potential of China which is very high and inspires to frame marketing strategies.

2.3.2        Competitor Analysis

From the point of view of Travel insurance in Australia, there are three main competitors. They are Comprehensive Holiday Insurance, Sure Save Travel Insurance and Aussie travel cover. Aussie travel cover was established in 1982 and is one of the established travel insurance products in the country. They offer pre departure medical advice, assistance in case of emergency and claims settlement in 10 days. Sure Save is one of the most flexible and Innovative travel insurance in Australia. They offer various insurance plans on the basis of the budget of the customers and the coverage is allotted on the basis of the activities that are planned. They believe that their products should be unique. Competitive Holiday Insurance was in service for the past 30 years and has insured many travellers. The policies that are set forward by them allows customers to make a choice as far as the covering factors are concerned (Travel Insurance Australia, 2012)

3           Segmentation and Market Profile

This is a way in which a large market is divided into small groups so that the groups will have a common behaviour. There have remained a huge number of methods for segmenting the consumer market. some of the common features are that of geographic factors, demographic profiles, psychographic attitudes, behavioural situation and prices (Kotler & Keller, 2011) though these are valuable means of segmentation, I prefer to suggest segmentation on a different play form. More importance should be given to the needs and the requirements of the customers and hence should be segmented on the basis of their priorities. This can also mean that the insurance should be chosen on the basis of the various plans that are suggested. The divisions can be done on the basis of coverage, cost, technology, health and wellness and preventive care.

3.1         Segmentation

Segmentation 1(Cost): these are the largest segment of people who desires to coverage over all the aspects at a very cheap cost. They demand too much and are not satisfied with the basic services that are given to them (Carr & Modini, 2011)

Segmentation 2 (Coverage): these are people who are willingly ready to pay for their part of pie and demands trust from the providers (Carr & Modini, 2011)

Segmentation 3 (Technology): This is a segment that is highly concentrated on technology. They want every option to be delivered online. They are ready to trust the insurer also required cheap costs (Carr & Modini, 2011)

Segmentation 4 (Trustworthy): These are customers who take a life time to change their loyalty from one person to another. They are concerned about fulfilling the requirements, but never about claiming attention (Carr & Modini, 2011)

Segmentation 5 (Preventive care): they are highly disconnected with the operations of the country. This also means that they are customers who do not request more (Carr & Modini, 2011)

Here it can be said that the market is divided on the basis of the psychographic attitudes and on the basis of the behavioural grounds that they depict (Kotler and Keller, 2011).

3.2         Target Profile

Among the various segmented market it can be said that only few can be targeted. It would be easier to establish relationship once the customers are chosen and the target is defined. the customer who can be most favourable for the nature of the product that are served by Easy travel insurance would be people who are into technology, who are now switchers in case of using the service, who are formally in to preventive care and also the ones who looks up for ore coverage. It is very difficult to satisfy a client when their target is only on cost and not on the nature of the service that is delivered to them. It is easier to handle people who have normal expectations and who is dedicated. The technological people are the easiest to be contacted through as Easy Travel insurance is an online company. Though differentiated marketing should be adapted for differentiated marketing there are chances that such customers acquired once will last for a life time. People who are taking it for wellbeing and preventive health care will keep their expectations minimal and can be satisfied with the minimum of efforts.

4           Challenges and Recommendations

4.1         Challenges

It can be said that none of the tasks that are allotted for the customers are challenge free. It will be extremely difficult to access the customers of middle age and upper middle age as the company is into online marketing. Most of the travellers tend to go straight to the travel agencies and takes insurance from there. This means there is a high requirement for intermediaries irrespective of the various efforts that are taken by the company. There is high level of challenge when the clients apply for claims that are not reasonable. Rejecting these claims even on the basis of rules and regulations is produces bad will for the company. There are various different products that are proposed for the customers and that are used by them. Managing the sales of insurance through online is very difficult and attracting customers to the product is one of the main challenges. Determining the adequate mix of product and pricing will be a challenge for the Easy travel insurance. There are different regulations that have come up for online sales and regulations on terms of accountancy and transparency. Cross selling the insurance whenever there is a travel booking transaction is an option that can be chosen and this is a challenge and an opportunity at the same time.

4.2         Recommendations

Social media marketing is at its peak now and it s highly required for any company to participate in this marketing. This also means that there should be active participation in YouTube, face book and twitter along with other forms of database marketing and transactional marketing. It can be seen that China is one of the most relevant inbound markets for Australia, which mean Easy Travel Insurance should set in more strategies to set their mark and position themselves for Chinese.  The potential of China to supply clients for Easy travel insurance is immense and this is one reason why they have to target on this market.

Marketing online should include adequate distribution channels for ensuring a delivery and also accurate translations in case there is a misunderstanding between the customer and the Customers and customer’s requirements are to be understood and responded. This is a way in which the trust of the customer can be gained. It is recommended to support multiple channel sales, a flexibility in the purchase options firm. Will only increase the customer base and that is highly required by the company. There will be high requirement for pricing structures and various packages and the customer should be given the will to choose the product that is required by him/her. There should be high level of transparency and accountability in the firm. This will help the firm in gaining trust and confidence of the client.

The strategies that should be adapted can be summarised into two. They are increasing brand awareness and increasing the product revenue. One of the options that can be adapted to hers is multi channel sales and partnership programs with tourism coordinators and the sites that arrange tickets. There should also be active communication among the clients and active usage of interaction marketing, electronic marketing, database marketing and transaction marketing.

5           Conclusion

China is a prospective market as far as Easy Travel Insurance is concerned. They are modern and have developed over the time which is why the standards of their expectation from the serving company will also be high. From analysing the country profile it was found that China is a highly promising market with consumers who are into outbound tourism. Competitive advantage can only be gained through better service of customers and there is a tight competition from the peers for the firm. Innovation in Marketing and relationship marketing are two different ways to establish competitive advantage.

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