Chapter 6, Problem 6.13MA

Summary Introduction

Case summary:

Company U is a financial service company that was originated in the year 1922 by 25 officers from the army who came insure their automobile that was with higher risk. The company has more than nine million members as customers and 25,000 employees. The company always remains in the top 10 automobile companies and provides the various insurance services.

The niche marketing strategy is followed by the company and their target is always active and former military people. The company also provide insurance for the potential customers. The active duty personnel as per December 31, 2014 was 1,361,755. The population was totaled to 21 million at the end of 2014.

Characters in the case:

• Company U

Adequate information:

• The average cost of the life insurance is $700
• The chain ratio method in the Appendix 3 has the 3 variables for estimating the demand that is used by the total market. The three variables are as follows:

1. 1. 1. The number of prospective buyers
   2. 2. The quantity bought by an average buyer for a year
   3. 3. The average unit price

Introduction:

Classifying the market into various smaller sections based on the buyer’s different needs and wants, characteristics, and behaviors is called market segmentation. This would help to reach buyers with various marketing strategies or product mixes. Marketing segmentation can be classified into “geographic, psychographic, demographic, and behavioral variables”.

To compute: The market potential for the life insurance in the military market