DM Insurers Maintain Branding Edge

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Insurance companies have been slow to recognize the benefits of branding while consumer product marketers have long used this powerful tool to peddle everything from designer jeans to breakfast cereal.

With competition at an all-time high in the financial services industry, branding is gaining attention as insurers battle for market share with a much broader range of investment-related products, such as variable annuities.

Perhaps the biggest factor in the growing role of branding as a marketing technique is the rise of direct marketing channels to sell insurance and investment products.

In building strong brand identities, insurance companies that have traditionally sold direct to the consumer, such as Geico, which does a heavy volume of business in auto insurance, and life and personal lines carriers USAA and Colonial Penn, seem to have an advantage over insurers that have relied on insurance agents to generate business.

Direct marketing, combined with advertising, should prove to be effective in branding campaigns for insurance products that are "sold," such as whole life insurance and annuities. Branding already is very important for products that are "bought," such as auto insurance, homeowner policies and term life insurance.

When a consumer surfs the Web looking for financial products, the instant credibility of a brand name can drive the split-second buying decision. This is particularly true for personal insurance and savings products, which are difficult to differentiate in features or price.

Compared with the array of product-related brand names and slogans familiar to consumers, the number of insurers with instantly recognizable brand names and logos is quite limited. Prudential, of course, has relied on its Rock of Gibraltar symbol for more than a century to project an image of financial strength and MetLife has effectively used the characters from the Peanuts comic strip to deliver the message "Get Met. It Pays." Companies like SunAmerica, Axa, AFLAC, John Hancock and Northwestern Mutual also have reached out to consumers with recent advertising campaigns

In direct marketing, Geico has been an industry pacesetter in conveying an image and visibility in its DM efforts that are consistent with its advertising. Colonial Penn has been achieving solid results in generating consumer queries with a toll-free number campaign. And Direct Line, the largest direct personal lines marketer in the United Kingdom, has had phenomenal success in branding with its red telephone icon.

But many insurers have had only limited success in leveraging their brands, and some have yet to start the process of building brand recognition.

Years ago, when life insurance was sold, not bought, and companies looked to their agency force to bring new prospects into the fold, branding was arguably less important as a marketing technique.

Because today's sophisticated consumers are assuming more responsibility for making their own investment decisions, their ability to recognize brands quickly has become crucial. Aside from the few household names in insurance, DM insurers are

ahead of the rest of the industry in capitalizing on the consumer recognition they have built through foregoing agent intermediaries.

Given the rapid pace of change in the financial services industry, branding could play a critical role in helping insurers hold on to valuable customers who are besieged on all fronts with offers from old and new competitors. Brand loyalty, of course, can be sustained only if a company continues to provide quality products and solid customer service.

Insurers' use of branding is expected to increase, especially as they develop new marketing and selling channels. Locked in a competitive battle to win customer loyalty and capture market share, companies inevitably will incorporate branding into their overall marketing strategies. However, a company that is committed to building a brand must use all the resources at its command to make sure that image delivers the message it wants to convey -- including direct marketing.

As insurers look to a future competitive field that is even more ruthless and demanding than today's, brand recognition could make all the difference in giving market-savvy companies a competitive edge.

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