Snow tyres insurance fiasco

There was a 4-hour wait at the only shop in Aberdeen that had snow tyres yesterday. Even though I got to the shop an hour before opening, I still wasn’t first on the queue. Well, I have them now and it’s great because I’ve been having very close encounters as my car dances and swinging left and right when I get into my street. People have been asking me whether the new tyres make a difference and my answer is unequivocally YES! I feel safer and most importantly, my brakes seem to work on the highway.

Snow tyres are safer! (www.fotosa.ru, 2010)

There was one thing that bothered me though. Just before I got my snow tyres, there were emails going back and forth at work that insurance companies were saying that changing to snow tyres was a change to the “standard product” and hence it would cause your premium to go up! In fact, a colleague said his friend’s wife had got into an accident with snow tyres and her insurance wouldn’t pay because she had snow tyres on during the crash! I thought it was bizarre. Needless to say, I called my insurance company to inform them that I was buying snow tyres and (thankfully), they said it was fine. So far I know two insurance companies that don’t mind:

1. Allianz Insurance
2. The guys you get through Lloyds TSB

Please feel free to add to my list.

Another colleague even forwarded this link to confirm that it is indeed a real problem for car owners who want to get snow tyres in the UK. Snow tyres make your car SAFER in the winter, no? You are less likely to have a snow/ice related accident or have I missed something? How strange because the way I see it, these companies have an opportunity to REDUCE insurance  premiums when you get snow tyres. Even charging for “admin” like some insurers are doing, I still think is ridiculous. Ok, it may not part if their business model (Insurance is very transactional) but think about what one insurance company could achieve:

  1. Corporate Social Responsibility brownie points. Promoting safe driving because people will be more inclined to get snow tyres therefore reducing accidents in winter months.
  2. Potential sales volume increase. This is possible because although you are cutting prices, the NUMBER of people switching to insurance companies that reduce premium for snow tyres will INCREASE. Multiply volume by price, you could have REVENUE increase. Premiums can of course go back to normal in the summer.
  3. Steal market share. The insurance business is big business. It is largely an oligopolistic market i.e. few sellers, millions of buyers. So being the first on the scene is everything! It’s a fabulous opportunity to steal market share even just initially, before everyone copies you :-). But there’s a crown for being first. Customers are likely to come to you unless of course, the competitor’s counter-move is better e.g. even lower prices, cash back and whatever they think it takes to push back.

I’m sure there are more benefits of this approach but I have other things to do today. So if you know any insurance people, could you please ask them why they are increasing premiums for changing to snow tyres or refusing to pay out when an accident occurs (an accident that would have been fatal without snow tyres)? I’m intrigued.

What’s in the price?

It’s on countless products in the grocery store: 99p, £9.99 etc. That’s psychological pricing. They want you to think the product is cheaper so you see 99p and you think: ‘Wow, it’s less than a pound! Well, my current problem is quite the opposite.

I have been working on increasing sales of a particular software product through aggressive selling but the efforts are not equalling the results. What I’m finding increasingly shocking is that my customers think the product is too cheap and would rather buy the more expensive products! Actually, it makes sense.

Imagine that after several months of awaiting the iPad, Steve Jobs put a price tag below any net book out there, for instance. The effect would probably NOT be more sales! Loyal Apple customers want quality so a low price may well signal low quality, whether real or perceived. So this is the plight of my product. I want to take a page from other industries like gaming, retail and even the car industry. In gaming, it is becoming popular to get certain games e.g. Tap zoo or Farmville for nothing. Then if the customer wants the accentuate their experience by adding more features or add-ons, they pay. A similar structure applies in the car industry- you get your ride at a base price and then pay a premium for add-ons like sat nav, alloys and heated seats for. This structure keeps the price sensitive customer but still attracts that customer looking for quality and is willing to pay more for it. I do this myself when I go shopping. I don’t like to buy the absolute cheapest item but tend to buy the mid-range. I too associate “cheap” with poor quality. Marketers concur that,

“Many consumers use price as an indicator of quality.” Kotler (2009)

But is this always true? Can a company not enter the market selling at rock bottom prices and go on the win market share? Maybe. It depends I think on the type of market. For instance, if it is highly competitive like retail, price sensitivity becomes very high and many customers will for buy at Asda not Sainsbury based purely on price. Of course, it’s not only price that matters. One should consider customer service, quality, support, ease of returns etc. Also there’s this strange thing about wanting to do what everyone else is doing….. What brands are my friends buying?

Anyway, for my dear product, I will need to roll my sleeves up and do the following to arrive at a plausible pricing strategy.

Segmentation analysis. Classify my customers. What is their behaviour and attitude towards my product? Who among them are promoters? Are their any detractors that will not repurchase or refer others to me? Why? Does it have anything to do with price or is there much more? How can detractors become promoters?

Competition analysis. Look at what the competition is charging and then evaluate market share distribution. How low is my price compared to the average price paid by customers?  Is it really about price or is the competiton actually just…better (ouch!)?

Communication, communication, communication. I can’t increase price without telling the customers why. And it has to be done right! There are a dozen ways to do this e.g. through sales ads, conferences, press releases, exhibition, free trials etc. Most importantly, there has to be an internal positioning statement that tells employees what space in the market this product is occupying. This bit is tough. It will also cost MONEY……. There has to be a budget in place, maybe based on % increase in sales anticipated from the price increases but they are other ways (Kotler et al (2009) has some ideas).

Engaging the team. People are your assets. If they don’t engage and empathise with customers to make this happen, you’re screwed. I’m screwed. Incentivise, give bonuses whatever- just make it happen. Many times it’s a chicken and egg scenario. People don’t want to put in the effort because they don’t believe it will yield great results. But if they don’t put in the efforts, there will be NO great results!

Determining the perfect price... (freedigitalphotos.net, 2010)

Premature Preliminary thoughts are:

It may be that I need to hold back some features from the standard product and then sell them separately as add-on features like my gaming pals. This is what I’m really pondering at this moment. See? You’ve got me going on and on and on. Business addict! 😉

Related authors:

Kotler et al (2009); Marketing Management

Farris et al (2006); Pricing Strategies (in Marketing Metrics: 50+ Every Executive Should master)

Heskett et al (1994); Service profit chain

I have got great gift ideas for men that you can steal from

What could be inside for him this christmas? (freedigitalphotos.net, 2010)

So I’ve always had a real problem buying presents for men. I never know what to get! Beyond boxers, handkerchiefs and shirts…I’m kinda stuck. It’s worse if its a man who seems to have everything ! I’ve got men in my life: my husband, my dad, my brother (and my son but I already know he wants Super Mario Galaxy video games… or rather Santa knows….) To get something “creative” for my men, I’ve done some research. I am known to be a practical gift-giver but this year I don’t want to give a hot water bottle again (hehehe!) or a DIY kit. My top choices for men’s gifts are:

10. Boxers (I know- basic but he can never have too many)

9. Massaging chair (beats you having to do it!)
8. Gaming chair (around £120 but much cheaper ones exist, depends on what you’re trying to encourage here)
7. Topgear box set (Ebay is the place to get these at a bargain, £10 tops)

6. A subscription to GQ or What CAR? (there’s currently a christmas gift offer on Whatcar.magazine.co.uk)

5. Topgear ticket (shockingly, these are free try BBC website!)

4. Turntable to play those oldies (£80/Boysstuff.co.uk)

3. Personalized items e.g. Mug, t-shirts (something from the kids like”World’s greatest dad” will soften him up 😉 )
2. Tickets to a game in the new year e.g football (do him one better n buy two tickets so he can take his friend).
1. A really cool jacket….

The best websites (UK only) are Boysstuff.co.uk, NeXT, Asos, Oxfam, Boots just to name a few. I’m sure similar outlets in the US and the rest of Europe will have an assortment of choices. I hope this helps!

Happy holidays- over and out:-)

Winter just got better!

Last week at my daughter’s nursery, I bumped into one of the other mum’s who was wearing a STUNNING black winter coat. I have an eye for these things and I couldn’t keep my eyes off her. I’d never spoken to her before (I’m not in the clique) but I worked up the courage to say, ‘My, my, where did you get that coat?? It’s gorgeous.’ She proceeded to tell me that it was from a store near where she lived and that she had bought the last one. Damn! Fortunately, she was a darling and told me the designer for good measure: Betty Barclay.

I tried really hard to get the image of the coat out of mind. But there was no way, I was hooked! The coat has a wet look to it, a quilted surface and a hood with faux fur. It was glorious (I’m still mesmerised!). Anyway, I started my quest for the coat using the trusting Google.com. I put in ‘Betty Barclay’ and it came up with several web links. Hmm…’I’ll click on this one.’ I thought to myself. Nope, no black wet look coat. The thing is I had never heard of Betty Barclay before this enchanting encounter so I wasn’t sure what to expect. There were a few online stockists but only one actually had the jacket. So, after what felt like hours (it was probably about 20 minutes actually), I stumbled onto TheHouseDesignerWear.co.uk. They had it!!! But wait… I just went from a size 10 to 12 in the last 6 months….They only have it in 10 and 16. Deflated.

Betty Barclay Wet look Faux fur jacket (The House Designer Wear, 2010)

Feeling courageous, I called the contact number on the web site. What a lovely customer service lady! Even though they didn’t have my size, she offered to call another store and call me back after checking for it. She even offered to put it on the website and call me immediately so that I can purchase it. Did I mention that this coat is £260? Extravagant, even for me. Anyway, the coat was completely sold out in size 12 as the nice customer service lady later informed me.

Then the next phase of my search started (thanks to Google again). I started to look for jackets that resembled the Betty Barclay one. I confess that I didn’t have to look far. I found one on asos.com before I could say ‘Black Wet look jacket with hood’! And there it sat, prettier and CHEAPER than I had imagined! Yay!! It was a £100 and looked like it was worth much more. Long live Asos.com :-). Even better, they had it in size 12 (it eased my irritation about gaining weight). The designer is Vero Moda. Alas, it was ‘Add to Cart’ – no questions asked. Excellent!

Front view of a beautiful jacket (Asos.com, 2010)

I got a real buzz from my search. Now I think I might enjoy looking for clothes that resemble big designer brands and buying them at a bargain. LOOK magazine is filled with such grand searches. Hmm, there may even be a small business opportunity. Steady now…. Anyway, it was all in a day’s work (well, a couple of days) and now I am fiercely looking forward to winter. Happy shopping for your winter jackets if you haven’t already done so (remember you can have more than one 😉 ). NEXT and Debenhams also have many great jackets of different styles. Tis the season to be merry……K’s got a new coat (doing silly “bubble n’ shuffle” dance from the 80s)…la-la-la-la-la-la… ;-).

Check out the back (Asos.com, 2010)

Here we go

I fell in love with the world of business twice.

The first time was when I was eight years old, eager to sell a cardigan that I had successfully knitted. I didn’t make very much on the cardigan but this first sale gave me enough of a buzz to ignite a curious thirst for the answer to the question: what makes people buy? Or more appropriately, what will make people definitely NOT buy?

Becoming an addict was inevitable when I met with business again
in my working life. I love the buzz created in satisfying customer needs (and exceeding their expectations) as they go through different stages of their business lifecycle. What I find fascinating, is the obvious need to change tactic as customers change. I say
obvious but it is not so obvious or rather, it rarely happens that a
business changes its tactic (and previously held beliefs about consumers). The larger (and more global the company), the harder
it is. It’s like trying to turn the Titanic around in the middle of its
course! Practically impossible.

As I continue my journey through my current MBA studies, there is
no doubt that I will make observations that have perhaps been
made before. However, it will be from my point of view (which has
to different, right?). It will be from the eyes of a full time mother, wife and employee. A person who is taking on the whole world and
seeing immense possibilities in business. Some of it will be just a
dream but hopefully one business idea turning into reality will be
enough. It will make my addiction worthwhile. Welcome to My Business Addiction…..

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