Critically examine the marketing strategy of the company discussed in the case.
What will be an ideal response?
The marketing strategy of Capital Insurance involves decisions regarding product, price, promotion, and distribution. In terms of product, Capital Insurance decided to offer all the services of the financial firm it was buying, called Fortis. They were to offer all of Fortis’ existing investments, develop new “Capital” mutual funds and other investment instruments. It was also recommended that Capital do away with Fortis’ business unit abroad and invest in new product development for the securities market. In terms of price, it was recommended that Capital remain in the existing pricing framework, and be a low cost leader by a small fraction for the first several quarters. Furthermore, their mutual funds and other financial instruments were priced far below those of other major financial services firms. Subsequently, Capital would slowly integrate new “Capital” mutual funds into existing “Capital” products and raise their prices. For promotion and advertising, it was recommended that Capital select and obtain the securities industries most talented individuals to persuade institutional investors to invest in Capital. The estimated cost of recruiting and hiring this talent would approach $50 million per year for 2 years, then $20 million for the next 2 to 3 years. This recommendation was based directly on the market share goal. Capital relied on world of mouth, television, promotional events, vacation resorts, specialized periodicals, and political fund-raisers as promotional avenues. Lastly, since the distribution of financial services is executed electronically through IT infrastructures, Capital would have to integrate the IT infrastructure of Fortis into their own system. This was estimated to take 2 to 3 years and cost $100 million to $200 million dollars.
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