Below-Price Segmentation

below-price segmentation

----expand ratio above-immediate-operating expense more

2

offeren high service for customer

things different compare to other insurer when setting a premium

price (on finer level)

drivers history

continuously search of new opportunities

Company did a more detailed risk estimation by using tracking mileage, time of day and where driving occurred along with driver history.

fast reliable service with high educated staff, which was highly paid-High costs for workforce

High satisfaction with Immediate Response

Fast service

They paid high cost for workforce as they needed fast reliable service with high educated staff, which was highly paid

There are barriers to customer acceptance like paying 4 to 5 times higher premiums while driving at night, cost of installing GPS transponder etc and they haven't tried in bigger cities also in Texas, they got exemption on state regulation and expansion would require seeking approval from insurance commissioners from every state.

tradeoffs

They would lose one part of consumer segment who like to go for weekend drives, late night drive and all as they would be charged more as per the model. Higher expense ratio but increase of customer satisfaction with launch of immediate response vehicles.

Decrease in premium written per person by about 25% due to increase of risk free rider segment.

Increase of expensse ratio-High costs for workforceUniversity of Georgia (Terry College of Business) rank 50

below-price