Question

In: Operations Management

GEICO is the number-four U.S. car insurance firm, behind State Farm, Allstate, and Progressive yet its...

GEICO is the number-four U.S. car insurance firm, behind State Farm, Allstate, and Progressive yet its $500 million annual budget for marketing communications is by far the industry’s largest. GEICO uses this budget to great advantage with a wide variety of messages in a variety of media to influence consumers’ attitudes toward its insurance offerings, which include coverage for cars, motorcycles, homes, and recreational vehicles. In a product category in which consumers do not switch from one brand to another without considerable thought, GEICO’s communications give drivers something to think about and steer them toward positive brand attitudes.

The company’s messages use strong arguments focusing on savings and service to get consumers thinking about the cost of car insurance. Some of its comparative messages show exactly how much money a particular consumer saved by switching from a competing insurance company to GEICO, information that enhances the product’s believability. In a variation on this theme, many of its comparative ads say that “fifteen minutes could save you fifteen percent.” This message encourages consumers to calculate how much less they could be paying for car insurance if they were GEICO customers. It also reassures consumers by telling them that making the switch to GEICO will be quick and easy.

Every ad not only mentions the brand name but also gives GEICO’s toll-free phone number or its website (or both)—a call to action for consumers to take the next step and get a free quote, read more about specific types of policies, or contact customer service with just a click or a call, day or night. Messages about GEICO’s high levels of customer satisfaction and brand loyalty have more credibility because they are based on expert sources named on the website: The University of Michigan’s American Customer Satisfaction Index and the Brand Keys Customer Loyalty Engagement Index.

To support its aggressive expansion into motorcycle insurance, GEICO recently set up MyGreatRides.com as a social networking website for motorcycle enthusiasts. The idea is to provide an online forum for motorcycle owners to post upcoming events, exchange views about favorite bike brands, and show off their tricked-out rides. Although the GEICO brand is nowhere to be found on the website, the company sees it as an investment in learning how consumers think and feel about everything related to their bikes, including insurance. “If we can learn more about the needs of motorcycle riders and what kind of service they expect, we think it will help us with our current customers and potential ones,” says GEICO’s director of motorcycle products.

GEICO’s Corporate Community Citizens program fosters positive consumer attitudes through the company’s involvement with local causes and organizations. Not only does GEICO donate money to nonprofit groups all around the United States; its employees also volunteer their time for causes such as Habitat for Humanity home-building projects, Bikers for Tykes motorcycle rally fundraisers, and Big Brothers/Big Sisters activities. One of GEICO’s many auto safety initiatives is the Safety Belt Poster Contest, in which school-age children submit artwork for posters that remind drivers about the importance of buckling up for safety. Local efforts such as these link the GEICO name with worthwhile causes that touch an emotional chord with consumers.

Despite increased competition from its larger rivals, GEICO’s approach to marketing car and motorcycle insurance has been extremely effective. The company currently serves more than 7 million customers and, according to J.D. Power & Associates studies, enjoys high brand awareness as well as the highest new-customer acquisition rate among the major insurers. Watch for GEICO to keep driving toward higher market share by reaching out to car and motorcycle drivers all over the United States.

Does GEICO appear to be using marketing communications to change consumers’ beliefs, change their evaluations, add a new belief, encourage attitude formation based on imagined experience, or target normative beliefs? Explain your answer.

What role does source credibility play in GEICO’s marketing communications?

Do you agree with GEICO’s decision not to show its brand on the MyGreatRides.com website? How do you think this decision is likely to affect the website’s visitors’ attitudes toward GEICO

Solutions

Expert Solution

1. Marketing communication is the means by which companies communicate the messages about their products or services and their brands, to the customers in order to persuade them to make the purchase.

GEICO appears to be using marketing communication in order to change consumer's beliefs. GEICO uses strong messages to in order to persuade consumers that buying a GEICO insurance or switching from other company to GEICO would save consumers as much as 15% of the cost. Also switching process would be quick and easy. Also many of its comparative ads say that “fifteen minutes could save you fifteen percent.” which clears the consumers the amount of savings they will do by being a GEICO customer rather than other companies. Hence, changing consumers' beliefs and adding a new belief on savings. Even many of its ads gives toll free number or a website or both, which helps customers to easily contact them and compare it with other companies, or can get customer service day and night. This will encourage attitude formation of consumers based on imagined experience.

Even GEICO supports many other local social causes and organizations. It donates to non-profit organizations and also spend time for various social causes and activities. It also conducts contests on auto safety initiatives. All these forms a positive attitude of the brand in the mind of customers Thus, GEICO uses variety of messages in variety of media for different purposes.

2. GEICO's high level of customer satisfaction and brand loyalty have been measured by The University of Michigan’s American Customer Satisfaction Index and the Brand Keys Customer Loyalty Engagement Index. Such messages of customer satisfaction and brand loyalty which are based on expert sources are being conveyed to the people which help them gain trust on the company and stay loyal to the brand.

3. GEICO's decision to not show up its brand in the website MyGreatRides.com they launched is fine. The company launched it as a social networking website for motorcycle enthusiasts. It was to get an idea about motorcycle riders' need and the kind of service they expect. This website can help GEICO in considering many matters towards motorcycle riders' need for the safety of their vehicle. And they can then attract new customers or satisfy existing customer needs.

But the website visitors' attitude towards GEICO will not affect much to the brand because the brand name does not show up on the website. As the website visitors do not know who or which company has launched this website, many people for whom GEICO is not on their insurance buying list, will not affect in any positive manner towards the brand. Thus, the website do not help in affecting visitor's attitudes towards GEICO.


Related Solutions

Progressive and State Farm. What types of advertising are being used by these insurance companies? Go...
Progressive and State Farm. What types of advertising are being used by these insurance companies? Go online and review their current advertising campaign, describe their ads, and then indicate if they are using product, institutional, pioneering, or comparative advertising. Support your selection with examples from their ad campaigns. Write up an Advertising Campaign in business report format, generically addressed to the company.
The State Farm Insurance Company boasts that 90% of its customers who make claims are satisfied...
The State Farm Insurance Company boasts that 90% of its customers who make claims are satisfied with the service. To check the accuracy of this declaration, the company conducts a survey wherein customers are asked whether they were satisfied with the quality of service. 153 were satisfied and 24 were not satisfied. Can we infer at the 5% level of significance that the satisfaction rate is less than 90%? (Use 4 decimal places in your initial work for this problem.)...
A car wash firm calculates that its daily production (in number of cars washed) depends on...
A car wash firm calculates that its daily production (in number of cars washed) depends on the number n of workers it employs according to the formula P = 40n − 0.05n2 cars. Calculate the marginal product of labor at an employment level of 50 workers. HINT [See Example 3.] This means that, at an employment level of 50 workers, the firm's daily production will increase at a rate of  cars per additional worker it hires.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT