Chapter 11 Re-intermediation

Overview Traditional View Distribution Channels Simple very complex Vertical Marketing Systems (VMS) –why necessary?

Electronic View Productivity gains Reduce costs Redefinition (elimination) of distribution channels –McKinsey nurtured this Insurance company’s efforts to implement

E-Commerce The delivery of the policy is selected by the customer Online courses available to the brokers, dealers and agents –pay for courses through the web site Site maximizes security and encryption software –evaluating possible combined solutions (e-commerce with CRM, ERP, SCM)

Business Intelligence Surveyed customers Attitudes toward SST (self service technology) Met with intermediaries Discovery for company Solution –re-intermediation

Customer Relationship Management Two customer groups to focus on –internal customers (brokers, dealers and agents as external sales force) –external customers (end-users; policy holders) Case focuses on both Internal customers –re-intermediation provided electronic supplement to the brokers, dealers, agents

Customer Relationship Management Internal customers (cont.) –Portal to conduct business electronically External customers –Customer communication focus on the web site –Almost 2100 links to the company’s site –Alliances with various groups leading to a referral to broker, agent, dealer

Customer Relationship Management Illustrates the Services Marketing Pyramid (Chapter 10) firm to sales force (internal marketing) –uses web site to recruit sales force –online insurance training external sales to external customers (external marketing) firm to customers (external marketing) using web site for information and sales/lead generation to external sales force

Supply Chain Management Somewhat “blurred” –External sales force is also distribution channel Productivity gains –reduced paperwork –increased broker, dealer, agent convenience for managing the process (24/7 availability) –created more time for sales force to generate more business

Enterprise Resource Management Leveraged the external sales force portal concept Created one for internal employees Reduced routine human resource inquiries –HR staff focused on more complex issues SCM productivity gains lowered the cost of doing business

Value Bubble Evaluated the external marketing site –Site was leveraged during September 11 tragedy External sales force site is in prototype Recognized as differentiator and leader –reinforcing the brand among sales force Engage, Retain and Learn are key stages –portal (internal marketing) and public site (external marketing ) Relate is for the future