Acme Insurance, Inc

8/3/2019 Acme Insurance, Inc.

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January 2003

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1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2.1.1 Market Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2.1.2 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2.1.3 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2.1.4 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

2.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

2.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

2.4 Service Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3.2 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3.4 Target Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

3.5 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

3.6 Strategy Pyramids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

3.7 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

3.8 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

4.0 Financials, Budgets, and Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Table of Contents


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1.0 Executive Summary

By focusing on its strengths, its present client base, and new value-priced products in thenext year, Acme Insurance plans to increase gross sales by 10% and profit by 15%.

The Keys to Success and critical factors for the next year are, in order of importance:

Identify "Target Markets." Begin the "Insurance Partners" program. Provide small businesses with an affordable basic business package.

Acme Insurance, Incorporated has been profitable, but recently Acme has had a decliningmarket share and this must be addressed. Therefore our goals are:

To re-establish Acme Insurance, Inc. as the market leader in quality and value-priced insurance products in the Smalltown district.

Establish good working relationships with the present insurance markets by meetingwith their decision makers and plotting a mutual plan for success. Get commitmentsfor support and products that Acme can market in the trading area starting April1st, 2003.

Investigate new markets that meet the marketing criteria by committing to small rural brokerage; providing products suitable to the economic and social climate; and plans for the upload and download of insurance policies.

Provide sales incentives to staff to meet sales goals. Complete inspection of all Pilot homeowners within one month before renewal date. Formulate plans to acquire another brokerage.

Acme Insurance, Inc.


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The company's strength lies in the quality and depth of our products and staff. The offices,unlike the competition, are open six days a week. Because of Acme's larger staff, they are

able to service the clients even when a client's broker is busy or out of the office oninspections. The Real Estate division, which is a separate company, helps with marketvalue and replacement cost analysis when required.

The past few years have seen tremendous upheaval in the insurance industry. The numberof players has decreased in both the broker and company communities. The recession hascurtailed insured from properly maintaining their homes and automobiles, and insurancefraud has become a major issue for the entire insurance industry.

Brokers are concerned that in spite of commission reductions, quotas, contractcancellations, and refusal to write new auto business by some markets, they now may findthemselves in competition with some of the traditional broker distribution companies thatare setting up direct marketing facilities and branches. The banks now have announcedthey will open stand alone insurance offices to retail insurance.

In spite of the above, Acme believes that the independent broker will survive. Acme ismore automated than most service industries. Acme is close to the customer, regardless ofsome insurance companies' attempts to sever the traditional broker-client relationship. The

clients, in most cases, still do not care or know which company they are placed with. Theytrust Acme's judgment in selecting the proper coverage and company.

Based on these changes in the goals, outlook, and company culture, Acme anticipates thatthey will be able to make revenues of approximately $750,000 by year three of the planand a net profit of $170,000. The company does not anticipate any cash flow problems.



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2.0 Situation Analysis

The original incarnation of Acme Insurance was created as a sole proprietorship in 1938.Four generations of Smiths have worked at Acme. Acme has built a loyal customer baseselling primarily life and general insurance that includes auto insurance as well as packagesfor small businesses. The business has done well over the years, but the current principalsdesire to take Acme to the next level. The basic market need is a comprehensive insurancebrokerage that has developed clear lines of communication with the client. With bettercommunication, Acme will be able to offer better value to our customers by addressingtheir true needs. The need to establish close, effective relationships with clients is a priority

at Acme and a competitive edge.

2.1 Market Summary

Having operated in the same town for over 64 years, Acme has developed goodinformation about the common attributes of the most prized and loyal customers. This

information will be leveraged to continually collect information about the customers in the"holy grail" of better serving them, meeting their specific needs, and learning the mostefficient and effective means of communicating with them.

Target Markets



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2.1.1 Market Demographics

The profile for Acme Insurance's customer consists of the following geographic,demographic, and behavior factors:

Geographics:

The immediate geographic target is Small town, with a year-round population of13,000, and a summer time population of 25,000.

A 100-mile geographic area is in need of our services.

The total targeted population is 17,876.

Demographics:

Male and Female. For the auto insurance and life insurance products, the ratio ofmale to female is 54:46. For the small business products, the ration changes to64:36 male:female.

The average age of the customer is 54 years old. Only 37% of the customers have attended some college.

The average household income is $34,000. The family composition of the customers is two adults, 3.1 children. The unemployment rate is 8%.

Behavior Factors:

Are a part of a close-knit community. Most social activities are sponsored by social organizations within the community

such as Kiwanis and Rotary.



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2.1.3 Market Trends

The past few years have seen tremendous upheaval in the insurance industry. The numberof players has decreased in both the broker and company communities. The automobileproduct has, in the mind of the public, become unaffordable, unavailable, and impossible tounderstand. The recession has curtailed insured from properly maintaining their homes andautomobiles, and to exacerbate the situation, many clients have turned to wood heat andstarted doing their own repairs and maintenance that may have increased the number andseverity of claims. Insurance fraud has become a major issue for the entire insuranceindustry.

The traditional close relationship with our companies has been strained. Brokers areconcerned that in spite of commission reductions, quotas, contract cancellations, andrefusal to write new auto business in some markets, they now may find themselves incompetition with some of the traditional broker distribution companies that are setting updirect marketing facilities and branches. The banks, even though thwarted by the federalgovernment in its last budget to retail insurance from their premises, will continue pressureon the government and now have announced they will open stand alone insurance officesto retail insurance.

In spite of the above, Acme believes that the independent broker will survive. Acme ismore automated than most service industries. Acme is closer to the customer, regardlessof some insurance companies' attempts to sever the traditional broker-client relationship.The clients, in most cases, still do not care or know which company Acme places themwith. They trust our judgment in selecting the proper coverage and company for them.

The new federal government is close to adopting a new automobile contract that hopefullywill make it affordable, understandable, and available to the clients. A profitable automobile



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2.1.4 Market Growth

In 2001, the national insurance market was a $43 billion industry. Insurance sales areforecasted to grow at 6% for the next four years. Insurance is a part of life in the Canada.Some insurance is required such as automobile. Other insurance such as life and home isnot required but is a very sensible way of reducing risk. Within Canada, 87% of thepopulation have some form of insurance. Because of the large rate of adoption and itsmandatory nature in some segments, the insurance industry will be a growth industry foryears to come.

000%

002%

004%

006%

008%

Target Market Growth



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2.2.2 Weaknesses

A limited number of people inhabiting Smalltown. The high costs of switching current insurance consumers from a competing firm to

Acme. The struggle to stay ahead on the technological adoption curve in a small, rural

community.

2.2.3 Opportunities

Participation within a growth industry. Increased sales through an expansion of the current service offerings. As the company continues to grow, the ability to decrease fixed costs over a

growing customer base.

2.2.4 Threats

Competition from local brokerages that respond to Acme's superior offerings. A significant slump in the economy that will likely have a correlated effect on the

industry. A single of series of huge, unexpected, traumatic events that put significant strain

on the financial health of the insurance industry as a whole.



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Power."

Strengths - Price. Weakness - A still untried, unknown quantity.

Group Plans - Teachers, Public Employees

Strength - Group pricing. Weakness - Very little obviously, since we insure very few of the professions.

2.4 Service Offering

Acme Insurance is committed to providing professional sales and service for its insurancecustomers. Acme has established what they consider to be an excellent reputation in ourarea, and are the largest multi-line insurance broker in our trading area.

Acme Insurance provides home, automobile, and business insurance in the Smalltowndistrict. Acme takes pride in knowing that for over 50 years they have helped clients to findthe best coverage at the right price that suits their needs and expectations. In the event ofa claim, the clients know that Acme is there to provide help and counsel to ensure a fast,speedy claim settlement.

Like other independent brokers, Acme issues binders and new policies, endorsements andprocess renewals.



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2.6 Critical Issues

Acme Insurance is an established, family business that is pursuing new growth strategies.The critical issues that we face are:

Pursue controlled growth that dictates that payroll expenses will never exceed salesrevenue.

Constantly monitor customer satisfaction, ensuring that the growth strategy willnever compromise service and satisfaction levels.

3.0 Marketing Strategy

1. Emphasize service and support.2. Build a partnership business based on account selling.3. Focus on senior, claims-free personal lines business and the profitable, well-run,

small family business.

4. Target small, non-franchise business that does not have access to group insuranceplans.5. Investigate acquiring other brokerages in the area.

3.1 Mission

Acme Insurance's mission is to provide the finest level of insurance services. We exist to



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3.4 Target Marketing

The market consists of senior citizens, lower-income young families (many of who are onsocial assistance) and the small, family-run business (many of which are seasonal andbased on the tourist trade).

Acme is cautious about encouraging business from lower income prospects since they tendto have wood heat, homes in poor repair, and many attempt to install and repair their ownplumbing, wiring, and heating systems.

3.5 Positioning

Acme Insurance is being positioned as a comprehensive, personal insurance broker servingclients through close, personal service. Acme will serve all of Smalltown, which is a widelydispersed, rural community. Acme will leverage our competitive advantages which consistsof the following:

Knowledgeable industry participants- Having established the company in 1938,Acme has amassed a huge amount of industry knowledge based in empiricalexperience. Having significant experience provides the entire company with a vastamount of industry knowledge that Acme is able to leverage and offer as value tothe clients.

Close personal customer relationships- The business model is based on the staffdeveloping close, communicative relationships with clients. The stronger and moreopen the relationship is, the more value and higher level of service that can be



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also encourage the clients to contact Acme about reviewing their coverages and promoteother products and services Acme provides.

A third method of communication will be several insurance workshops that are offeredthroughout the year to the Smalltown community. The purpose of the workshops is multi-fold. One aim is the education of the consumer to the different services that the insuranceindustry and insurance brokers offer. Primarily, the goal of the seminars is to introducecustomers to Acme, the services provided, Acme's in-depth knowledge, and care forcustomers. Some of the seminars will be targeting seniors, others will be address a generalaudience.

3.7 Marketing Mix

Acme Insurance's marketing mix is comprised of the following approaches to pricing,distribution, advertising and promotion.

Pricing- The customers are especially sensitive to value. Acme must ensure that our priceand service are perceived to be good value to the client.

Our markets must offer several payment options to our clients that are convenient to theclient, not just to the company. Example - payment on insured's preferred day of month,not on the company's, and accepting payment by credit or debit card. Many insureds areon a fixed income and receive their income on a set day of each month or a paycheck on aparticular day.

Acme is seeing the commercial markets now moving toward basic coverage and limitingthe "bells and whistles," all-risk products available to only those clients who have modern,



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Customer Service- The reality of the insurance brokerage industry is that the service isthe product. Insurance is a commodity-like purchase and it is the service of the broker thatdistinguishes providers. With this important fact recognized, Acme strives to provide thehighest level of customer service.

3.8 Marketing Research

While the most recent rendition of the marketing plan was being completed, Acmeconducted primary market research. The market research that Acme collected was in the

form of questionnaires. Theses were given to current as well as prospective customers.

The goal of the questionnaires was to collect insight and perspective from our targetcustomers. The forms were designed by a graduate student in the statistics department.An expert was employed to ensure the validity of the forms. A total of 200 forms werehanded out and 68 were returned completed. The results of the surveys were that some ofthe originally held assumptions were confirmed. Additionally, there were many differentbeliefs/ perspectives that were unexpected but observed in the surveys. Overall, thequestionnaires were a valuable form of primary market research that has been

instrumental in the completion of this marketing plan.

4.0 Financials, Budgets, and Forecasts

This section will offer a financial overview of Acme Insurance as it relates to the marketingactivities. Acme will address break-even analysis, sales forecasts, expenses forecasts, and



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Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $6.546

Assumptions:Average Percent Variable Cost 70%Estimated Monthly Fixed Cost $6.500

4.2 Sales Forecast

Acme wants to emphasize the benefit of dealing with professionals who live and work in theclient's area. Acme knows their needs and their problems and has a local reputation toprotect, unlike an out-of-town market. If the out-of-town broker fails to provide propercover or advice, they lose one client. Acme could stand to lose many if the public perceivesa professional failure on our part. This theory is validated by the masse exodus of Andersenclients after the Enron scandal and during the Justice Department's investigation.

Competitive prices for our identified target markets. Discounts of up to 25% for claim-freeseniors who renew their home insurance with Acme.

Careful inspection and the judicious use of deductibles and warranties for insureds usingwood stoves should help alleviate company concerns about solid fuel heating devices.Competitive pricing is not an important factor to attract business because competition isvery limited for primary wood heat houses in our area. This may provide a chance to pickup all of the insured's business because, in many instances, they contact Acme after beingtold by their previous broker that, in spite of their claim-free status, the broker doesn'twant their house insurance.



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Table: Sales Forecast

Sales Forecast2003 2004 2005

SalesSenior Citizens $222.107 $246.550 $2.255.789Lower Income Families $237.383 $239.009 $245.443Total Sales $459.490 $485.559 $2.501.232

Direct Cost of Sales 2003 2004 2005Senior Citizens $155.475 $172.585 $1.579.052Lower Income Families $166.168 $167.306 $171.810Subtotal Direct Cost of Sales $321.643 $339.891 $1.750.862

4.3 Expense Forecast

Marketing expenses are to be budgeted so that they are higher during the parts of the yearwhen more insurance is sold. There is an increase in sales of personal insurance during thesummer months and sometimes continuing into the fall. There is an increase in businesssales during the first quarter of the year. The marketing expenses will correspond with this

sales trend.

$1000,0

$1200,0

Monthly Expense Budget



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5.0 Controls

The purpose of Acme Insurance's marketing plan is to serve as a guide for theorganization. The following areas will be monitored to gauge performance:

Revenue- monthly and annual. Expenses- monthly and annual. Customer satisfaction. New customers as a percent of overall revenue.

5.1 Implementation Milestones

The following milestones identify the key marketing programs. It is important toaccomplish each one on time and on budget.

Table: Milestones

Milestones

Advertising Start Date End Date Budget Manager DepartmentMarketing Plan Completion 1.1.2003 1.2.2003 $0 John Smith DepartmentAdvertising Campaign #1 1.2.2003 4/31/2003 $1.800 John Smith DepartmentAdvertising Campaign #2 1.5.2003 1.8.2003 $2.250 John Smith DepartmentPublic Seminar #1 1.3.2003 25.4.2003 $225 John Smith DepartmentPublic Seminar #2 1.5.2003 30.6.2003 $225 John Smith DepartmentPublic Seminar #3 1.7.2003 30.9.2003 $195 John Smith DepartmentName me 1.1.2003 15.1.2003 $0 ABC Department



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5.2 Contingency Planning

Difficulties and Risks

Problems generating new business. The constant need for the highest level of training and recruitment of employees. Significant market penetration of telephone/Internet based insurance brokers.

Worst Case Risks May Include

Growth at a rate that exceeds current revenue. Having to liquidate equipment to cover liabilities. Significant regulatory changes in the insurance industry.



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Academic Version

Appendix Table: Sales Forecast

Sales ForecastOca ub Mar Nis May Haz Tem Au Eyl Eki Kas Ara

SalesSenior Citizens 0% $17.652 $12.343 $15.456 $16.000 $18.776 $20.997 $21.554 $20.887 $21.667 $23.445 $17.665 $15.665Lower Income Families 0% $18.767 $11.836 $17.679 $17.122 $19.887 $21.665 $22.543 $21.778 $22.766 $24.667 $21.008 $17.665Total Sales $36.419 $24.179 $33.135 $33.122 $38.663 $42.662 $44.097 $42.665 $44.433 $48.112 $38.673 $33.330

Direct Cost of Sales Oca ub Mar Nis May Haz Tem Au Eyl Eki Kas AraSenior Citizens $12.356 $8.640 $10.819 $11.200 $13.143 $14.698 $15.088 $14.621 $15.167 $16.412 $12.366 $10.966Lower Income Families $13.137 $8.285 $12.375 $11.985 $13.921 $15.166 $15.780 $15.245 $15.936 $17.267 $14.706 $12.366Subtotal Direct Cost of Sales $25.493 $16.925 $23.195 $23.185 $27.064 $29.863 $30.868 $29.866 $31.103 $33.678 $27.071 $23.331

Appendix

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Academic Version

Appendix Table: Contribution Margin

Contribution MarginOca ub Mar Nis May Haz Tem Au Eyl Eki Kas Ara

Sales $36.419 $24.179 $33.135 $33.122 $38.663 $42.662 $44.097 $42.665 $44.433 $48.112 $38.673 $33.330Direct Cost of Sales $25.493 $16.925 $23.195 $23.185 $27.064 $29.863 $30.868 $29.866 $31.103 $33.678 $27.071 $23.331Other Variable Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------

Total Cost of Sales $25.493 $16.925 $23.195 $23.185 $27.064 $29.863 $30.868 $29.866 $31.103 $33.678 $27.071 $23.331

Gross Margin $10.926 $7.254 $9.941 $9.937 $11.599 $12.799 $13.229 $12.800 $13.330 $14.434 $11.602 $9.999Gross Margin % 30,00% 30,00% 30,00% 30,00% 30,00% 30,00% 30,00% 30,00% 30,00% 30,00% 30,00% 30,00%

Marketing Expense Budget Oca ub Mar Nis May Haz Tem Au Eyl Eki Kas AraAdvertisements $600 $450 $750 $850 $400 $450 $550 $600 $800 $900 $200 $225Printed Material $400 $0 $0 $0 $0 $400 $0 $0 $0 $0 $0 $0Other $100 $125 $100 $125 $50 $65 $80 $90 $50 $25 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Sales and Marketing Expenses $1.100 $575 $850 $975 $450 $915 $630 $690 $850 $925 $200 $225Percent of Sales 3,02% 2,38% 2,57% 2,94% 1,16% 2,14% 1,43% 1,62% 1,91% 1,92% 0,52% 0,68%

Contribution Margin $9.826 $6.679 $9.091 $8.962 $11.149 $11.884 $12.599 $12.110 $12.480 $13.509 $11.402 $9.774Contribution Margin / Sales 26,98% 27,62% 27,43% 27,06% 28,84% 27,86% 28,57% 28,38% 28,09% 28,08% 29,48% 29,32%

Appendix

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Documents

Acme Insurance, Inc