Monday, March 4, 2019
Progressive case analysis Essay
Over decades operating in a exceedingly competitive environment, the key strategy that makes continuous tense the big top three in the $165 billion US private passenger car restitution policy persistence is snaping on innovations and guest satisfaction. Established in 1937, from the beginning, modernized come ne ared the food market with an innovative method by providing guests drive-in claims service and the power to make monthly inst wholement applyments. That, on one hand, appealed more opportunities for tidy trades union who could not afford paying insurance in lump sum to prevail their vehicles protected. Besides, it helped modern enter the market with competitive advantage to approach more potential clients. In 1957, by bunking the market in good order and understanding all market segments potential bring ins that had not been realized by competitors, advanced was willing to take risk to enter the bad segment, which admits drivers with unretentive drivi ng records or high risk profiles.This strategy, in turn, augmentd the smart sets sales signifi outhousetly and turned innovative into a study crisscross in the insurance industry. The angry competition of Allstate in the nonstandard market in 1985 and the approval of the Preposition 103 mandating insurance rate cuts of 20% in 1989 caused a crisis at Progressive. The company attempted to reduce appeal by firing 1,300 employees. In addition, the efforts in understanding consumers perception and behaviors facilitated the company to lay down its new strategy called Immediate Response in 1990 with the attempt to construct trust in consumers. The main advantage of this strategy was that it speed claims wreak and enlarged customer satisfaction when accidents occurred. Immediate Response could be considered as one of the major improvements and transitions of Progressive that could help the company improve customer retention. Facing the intense competition, along with launching Im mediate Response, in 1990, Progressive withal focused on diversifying its product term by trail experiment to write standard policies.The endowment in training agents and changing their selling behaviors raised considerably consumers awareness of the companys products in the preferred and standard segments, which consequently ontogenesisd the companys revenues significantly. In addition, the introduction of ExpressQuote in 1993, which provided retells from the top eight local anaesthetic competitors, turned Progressive into a full line supplier. This approach in any cocktail dress helped the company have more chance to sell its products machinately to consumers. The instauration of meshing in 1995 facilitated Progressive to be the first company in the insurance industry selling its products online. This created competitive advantage for Progressive to struggle when the company launched its website to help customers manage their policies as well as increase quoting and policy lotion processes. Progressive has never stopped innovating in its products. The application of GPS (Global Positioning Satellite) devices in 1998 to track customers driving behaviors and the introduction of the new design called TripSense in 2000 helped the company implement usage based charging method.By offering discounts to drivers who got involved into these programs, the company tried to raise consumers awareness of the correlation among driving behaviors and risk of accidents. Customer satisfaction has always been the key careful driving Progressives strategy over time. In 2000, Concierge clutches on was launched to serve customers better in case of accidents. Instead of waiting for their damaged cars fixed, customers were now provided an instant replacement car while the repair was done. That way, Progressive could save time for customers and save storage and rental car cost for the company. Not only that, Progressive continued to introduce full(a) vent Conci erge service, which replaced cars that had been totaled. This strategy did not only help the company reduce turn around time and replacing cars for profitable value but in any case increase customer satisfaction considerably. In the effort to diversify its product line and exploit more benefits from the current customers, in 2000, Progressive started offering householders policies.The purpose was to attract and retain current auto consumers who precious to have their auto and theatre protected from the same insurance provider. However, the strategy confronted the problem of lacking selective information that help create a set advantage. Since 2000 until now, the company has had major changes in many diametrical aspects much(prenominal) as precaution, company organization, discipline applied science, human resources. Among those, it is that Glenn Renwick took over the role of Peter Lewis in the companys executive management put the company in the harder challenge of competi tion. Notably, in 2006, while the insurance market was softening, the strategy to save up the price squiffy causedProgressive some disadvantages. On the some other hand, the fierce competition from strong competitors such as Allstate, State Farm and GEICO, whose advertisement campaigns have been so aggressive that Progressive has to always keep an substance on them and keep improving. II. SWOT Analysis1. StrengthsFirstly, Progressive is among one of the top leading automobile insurance firms in the unify States. It has a strong position in both in-person automobile and commercial automobile markets. Progressives use of risk analysis among all automobile users has enabled it to increase the larger customer acceptance in comparison to its competitors. Secondly, state-of-the-arts use of technology and data is excellent. Progressive was the first insurer to go online. The company invested heavily in information technology. Progressive used head data on drivers to price its po licies and could claim to be industrys first. Progressive used website effectively to help customers get quick and information. Moreover, an online quote is helpful, easy and quick to compare prices when customers shop for home insurance without having to wait for an agent. Thirdly, Progressive had a strong distribution channel. It focused on direct sales and independent agents, which helped to expand its market share in the United States. In addition, progressive used innovative approaches to increase customer satisfaction.Total Loss Concierge level of claims service was designed to provide total auto physical damage losses. Customers could opt for a different car, and pay the divergency if the value of the totaled car was less(prenominal). Fourthly, Progressive has a strong and safe workforce. Progressive has over 28,000 employees. When recruiting, company makes sure that the individuals can embrace technology and are comfortable with change. The company invests a great deal in training. Employees work in claims and are trained with skills related to Progressive careers. 2. Weaknesses angiotensin converting enzyme of the weaknesses of progressive is operation set downs. Lewiss principle hire the best and pay the most with the purpose to pay at the top end of industry pay scales for good employees performance can increase companys expenses. In addition, this can create competitive pressures among the employees, which could result in negativism in the company. The otherweakness of progressive is its inability to create brand awareness. Its competitors like GEICO, State Farm and Allstate were better able to create customer awareness through advertisement campaigns. The company needs to focus on building a better brand awareness if it wants to increase its market share in the auto insurance industry. Another weakness of progressive is its failure to cope with pressure associated with competition from its competitors. Big players like, State Farm, Allstate an d GEICO have created competitive pressure directly to Progressive.For example, Allstates low cost social organisation caused Progressive crisis and 1,300 employees fired Furthermore, progressives difficulty to smooth management transition is another weakness. When Peter Lewis stepped down as president in 2000 and Glenn Renwick took up the post, company went through some tough times. Renwicks purpose to raise insurance rate affected growth and profits adversely. 3. Opportunities macrocosm has and will create great opportunities for growth. Greater innovation can add Progressive the chance to get more unique products and serve in order to meet customers needs better. Many innovative services such as Express Quote, Concierge Service have helped the Company to serve and conform to clients better. Furthermore, the firm was in top CIO Magazines CIO-100 list in recognition of its innovative practices and products. In addition, its website usually rated as the best one, facilitates to accesses information more easily.Moreover, Internet is another area that has potential for growth. The development of Internet offers Progressive the chance to expand their business and access directly to customers. They also can market to a much broader user for relatively less price.Homeowner Insurance is another area that offers opportunity for growth for progressive. In 2000, progressive started offering homeowners policies. However, the company was unable to generate enough data to have pricing advantage so they cancelled the entire curtain raising in 2002. Now, with the advent of technological advancement progressive could once again explore this area to generate more revenue in the future. ane other area that provides great opportunity for expansion and growth is acclivitous markets. Emerging markets like China, India, Russia and Brazil are expanding at the rate of knots. Although at that place are various risks factors associated with doing business in these countries, t here are also greater rewards that come with it. 4. ThreatsOne of the panics Progressive faces is intense competition from its competitors. The insurance markets in the US are more and more competitive with a large number of players supplying a broad range of products and services. Progressive Corporation has to face fierce competition with these players. The three biggest rivals of the Corporation include State Farm, Allstate, and GEICO. State Farm was number one in the personal auto insurance industry with a market share of 18% in 2006 and also the leading home insurer. The follower is Allstate, the split second largest player I both personal auto and homeowners industries with market shares of 11%-12% in each in 2006. Moreover, GEICO was the fourth largest personal auto insurer with a market share of 6.7% in the same year. The other threat Progressive face is changing rules and regulations. Insurance regulations vary considerably among different States of the United States. Thi s varying regulation has great impact on the firms operation. For example, the Proportion 103 was passed on November 8, 1988 in California, which mandated rate cuts of 20% in 1989. Due to this Proportion, the company had to pay out $50 million to 260,000 policyholders.The benefit was seriously affected, along with the strong reduction of market share in California market. Increasing nature natural disasters is another threat that affects all insurance companies including Progressive. Natural disasters cause damage to both house and vehicle, which increases expense for the company. As predication, major climate changes are likely to occur in the coming decades. Therefore, insurers have a risk of facing with a slew toward higher losses due to more claims relating to natural disasters. Reduction in insurance place and use of sophisticated data mining techniques are other threats to progressive. While insurance rates are softening, Progressive is indomitable to hold prices firm. This decision could make the customers get away to other insurers, whose rates are lower. Everyone was usingsophisticated data mining techniques and focusing on better claim support. This reduces the chance of being distinguished from other suppliers. III. RecommendationsInnovation has historically proven to be a vital bastard for progressive insurance. Therefore, the company should continue to put more weight on innovation. An innovation offers the company a chance to improve its products and services whereby it can gain competitive advantage over its competitors. Progressive should also invest money in advertising in order to increase customer awareness. Progressive already has a larger customer base, but if it wants to contend with the industry giants like Allstate and State Farm, it needs to invest more in advertisement to attract and engage more customers. Developing and expanding the companys market in foreign countries is one-area progressive insurance needs to focus on if they are to reduce financial risks. Expanding the market in other countries enables progressive to maintain a stable finances in case the U.S economy goes down. Furthermore, progressive needs to work on new lines of products and services if they are to thrive in a highly competitive industry. In addition, expanding business to other areas like providing financial services or home security systems provides Progressive Corporation with opportunity to diversify its income sources.