AFLAC - Video Case 12 » Integrated Marketing...

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Unformatted text preview: Video Case 12 » Integrated Marketing Communications: Advertising, Sales Promotions, and Public Relations Case in Point: AFLAC AFLAC (American Family Life Assurance Company), the Columbus, Georgia insurer, was nearly unknown in the United States just 3 years ago. Now, nearly everyone knows the name. Thanks to that unflappable, curmudgeonly duck, 89 percent of us recognize the brand. The lighthearted advertising campaign took an unlikely insurance company from being virtually unknown to being one of the most recognizable brands in recent history. Advertising Strategy In the video, the AFLAC manager said she thought that maybe the company was taking a risk. After all, humor can backfire. What if people had seen the television commercials and thought, “How stupid!” or “A life insurance company should be more serious than that.” The ads made fun of the company’s name and also made it clear the company knew you didn’t know who it was. This isn’t the typical path to establishing brand equity. How much of a risk was it really? The ad agency had done its homework. Its research indicated that no one had heard of the company (no surprise) and that the name AFLAC meant nothing to potential customers. Even the creatives attested to being unable to remember the company’s name. For goodness sake, this was AFLAC’s client! The agency kept repeating the name over and over: AFLAC, AFLAC, AFLAC, eventually adding the goofy duck intonation. Thus was born the little avian mascot. Repetition is the first rule in creating memory in advertising. It is a practice that connects a name to the associations or attrib— utes of a product featured in an ad. The AFLAC name is now connected to the duck that quacks it, and to the insurance stories I told by the human actors and narrators in the ad spots. If you think only the serious customer thinking of buying insurance is listening. think again. A recent study showed that even “tweens” (kids ages 8 to 13) now know the name AFLAC. The other top-five TV ads recognized by this young segment include Geico. Pepsi, Old Navy, and M&Ms. Talk about great lifetime customer value potential—these young people aren’t ready to buy supplemental insurance, but they’ll have strong familiarity with the brand when they’re ready to buy. Who Is Buying? AFLAC sells B2B as well as BZC, with more than $10 billion in annual sales. It has to offer better value and quality than com- petitors to get business customers to choose it for their company coverage. AFLAC needs to have these strengths but also brand recogni- tion to sell to consumers. Most of us make weekly grocery lists that include things like milk, bread, frozen burritos, or so on, but most of us aren’t thinking, “Gee, I need to go buy some supple- mental insurance.” However, the TV commercial and that darned duck might prompt you to think about it. Maybe you do need some supplemental insurance. Maybe you can do better than your current policy. You’re not buying because of the duck, exactly, but you sure know AFLAC’s'name because of it. The sales force now has a tangible representative that opens the door in terms of name recognition. Other insurers have typ- ically sought symbols that express the security that insurance represents—for example, the Traveler’s “umbrella,” All-State’s “You’re in good hands,” Prudential’s “rock” (strength, solidity), Merrill-Lynch’s “bull” (strength, a good market economy), and Met—Life’s “Snoopy” (hmm). The salespeople need these symbols to help communicate what it is the insurance company can do for the buyers they’re trying to persuade. Insurance is not a search good (like a pair of socks you know you’ll like or not when you look at them because you can immediately assess their size, look, price, feel). Nor is it an experience good (like a dinner at a restaurant or a movie that you can’t really judge until after you’ve consumed it). Instead, it’s a credence purchase whose quality you can’t be sure of even after you’ve bought it. Will the insurance cover you should you need it? The hope is that you never have to find out. So insurance companies use symbols to say “We’re strong” and “We’ll make you feel secure.” The video also alluded to how the duck campaign created fast growth, perhaps too fast to accommodate. The field organi- zation has to coordinate sales and maintain helpful customer service staff to see sales through and to get policies started. In a sense, the salespeople might have been selling more than the company could handle while still providing quality service. A related phenomenon in many industries is that CEOs want more justification when their sales and marketing executives buy more expensive customer relationship or sales force manage- ment software packages. Yet it is true that a good computer sys- tem, like AFLAC’s SmartApp, would help sales agents in the field. Using their laptops, the salespeople can transmit policy applications to headquarters electronically. The system may soon be paperless, which makes the field agents more efficient and saves the company dollars in the long run. International Business Is AFLAC a global company? Well, yes and no. It sells in coun- tries other than the United States. In fact, most of its sales are from outside the United States. However, its international busi- ness is actually concentrated in Japan, where AFLAC brings in 70 percent of its operating earnings and has 80 percent of its $38 billion in assets. Obviously, AFLAC is big in Japan, where it’s the largest for- eign insurer and the second most profitable company after IBM. Japan is a health-obsessed consumer market (think about the news reports showing everyone on a crowded train wearing cot— ton surgical masks to ward off colds), seemingly perfect for an insurance company. This windfall of business came because, well, AFLAC got lucky. In 1974, Japan’s Ministry of Finance handed AFLAC one of the rare licenses awarded to foreign firms. At the time, the big Japanese insurance companies didn’t think there would be much of a market in such a niche business. Big mistake. AFLAC now insures 25 percent of Japan’s citizens. AFLAC should do well in the future there as well, if you consider Japan's rapidly aging population. Brands and Insurance Branding is relatively new to the insurance industry. As insur— ance companies struggle to establish their own identities with business and consumer customers, some companies will stay conservative. Others, like AFLAC, think a little humor can never hurt. It may even help break through today’s media clutter. Questions for Discussion 1. What other industries, products, or brands have used humor to help position themselves in the marketplace? Do you think the strategies have worked? Where wouldn’t humor work? 2. Now that AFLAC is a widely known brand name, do you think the company should drop the duck? What else might it feature? 3. What do you think the sales force’s reaction was when it first saw the duck? Is it necessary for a sales force to buy into a campaign, or can it be shown later that a campaign is working? ...
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This note was uploaded on 11/15/2010 for the course MKTG 380 taught by Professor Robbins,j during the Spring '08 term at Winthrop.

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AFLAC - Video Case 12 » Integrated Marketing...

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