Applying Marketing mix at Bao Minh Insurance Corporation

Highly qualified and experienced, so there is a risk of losing good staff to competitors.

Second, regarding process implementation: process innovation and implementation are often subjective and not really scientific. Therefore, it is necessary to innovate regularly to respond and adapt to the market, only then can we retain customers, ensure stable revenue and growth.

Third, about products: due to increasing competition in the market, with the number of non-life insurance companies increasing with increasingly diverse insurance products. Therefore, if Bao Minh does not change or invest in researching new products, it will fall behind, the insurance products will become outdated, customers will abandon Bao Minh to go to other insurance companies.

Fourthly, about distribution channels: the widespread expansion of distribution channels without selection does not bring about business efficiency. Low revenue will increase business costs, which affects Bao Minh's business efficiency.

Fifthly, regarding pricing: fee reduction needs to determine the appropriate reduction level, avoid racing to reduce fees, high discounts, which only increase revenue but high total costs, making Bao Minh's financial situation not improve and low solvency.

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Sixth, about promotion: annual advertising maintenance is not done regularly, lacks planning and is one-sided, which will lead to low efficiency of advertising activities and waste. Various forms of promotion are still not taken seriously.

And seventhly, about facilities and equipment: although this work has been and is being improved, it still does not meet business requirements. Professionalism and modernity associated with the application of achievements of the 4.0 revolution at Bao Minh's headquarters and 62 affiliated units are not really competitive and do not meet Bao Minh's "self-promotion" requirements.

It is important to emphasize that many wrong decisions in the past led to ineffective marketing mix application, and as a result, the business could not recover capital. For example, Bao Minh contributed capital to Song Da Finance Joint Stock Company (SDF) with a book value of 80 billion VND since 2008. In early 2016, Bao Minh completed the conversion of SDF shares to MBB, recording a financial loss of about 25 billion VND. Bao Minh also invested in Vietnam Growth Investment Fund (VF2) certificates since 2006, with a total loss of more than 7.4 billion VND; invested in Nam Kim Steel Joint Stock Company shares since 2010, with a loss of nearly 8.9 billion VND; entrusted investment of 15 billion VND through Dong A Securities Investment Fund Management Company Limited, after 3 years (2010 - 2013), a loss of nearly 3.6 billion VND [44].

3.4.2.2. Causes

Bao Minh has been operating for 25 years and has focused on applying marketing mix in business, but in reality, Bao Minh has not yet built a suitable marketing strategy. The unit's marketing department has just been established, this department has announced the company's business strategy, in which marketing is mentioned but has not yet reached the level of a marketing mix strategy that is scientific and highly practical. The marketing information system has not been completed, especially information about customers and competitors is still lacking and not timely. This has been pointed out in the section on evaluating factors affecting Bao Minh's marketing mix activities.

It can be said that these weaknesses come from the following reasons: at the Bao Minh Group level (at the business level), there is a lack of an overall marketing strategy, where this strategy must start with assessments of the group's previous marketing activities (before 2014). Assessment of the application of marketing mix elements. Assessment of influencing factors both qualitatively and quantitatively. Challenges in applying marketing mix and forecasting solutions that need to be implemented. At the level of affiliated companies, especially those in important locations such as Ho Chi Minh City, Hanoi, Da Nang, Dong Nai, Hai Phong, etc., there is a need to be proactive in applying marketing mix even though with the specific nature of Bao Minh's insurance business, 62 affiliated units only focus on application without building a marketing mix strategy for their units. Bao Minh lacks all of these factors.

From a certain perspective as mentioned above, Bao Minh has not yet built a complete and updated marketing information system, creating data for building marketing strategies, lacking effective connections between the information system and marketing research (in terms of technology). In addition, the construction of marketing research projects associated with the application of marketing mix is also carried out half-heartedly, that is, when there is a request for a certain issue, a research proposal is proposed. Bao Minh does not have a systematic and scientific marketing research program, that is, this research program needs to be placed in interaction with the business development strategy of the enterprise and Bao Minh's marketing strategy associated with each development period (short-term, medium-term and long-term).

The reporting regime as well as the reliability of reports on periodic marketing activities on a monthly, quarterly and annual basis are still not timely and lack expert assessment.

And the story of the lack of human resources specializing in marketing management is still the most concerning thing. This reflects the low awareness of marketing management in the insurance business of the Group's leaders and the lack of long-term programs to regularly and properly train those specializing in marketing management.

And finally, the financial plan for marketing activities is still passive and does not really fully meet the funding requirements for this activity.

Chapter 3 Summary

Chapter 3 presents and analyzes the current status of marketing mix application at Bao Minh with 4 contents:

The first content provides an overview of the history of Bao Minh's establishment and development, including its organizational structure, operating model, business areas, and financial resources. Bao Minh's business situation in recent years, especially from 2014 to present, is analyzed through specific data on sales, capital contribution structure, market share and profit, and annual growth rate. It is noteworthy that the revenue of marine insurance, personal insurance, and reinsurance product groups has had a high growth rate in recent years.

The second content is to analyze the current status of marketing mix application at Bao Minh. The 7P model includes products, pricing, distribution, promotion, human resources, operating procedures, means and facilities. This 7P system is applied and upgraded by Bao Minh in association with each different development period, thereby contributing to increasing sales and positioning the Bao Minh brand in the Vietnamese insurance market.

The third content is to evaluate the effectiveness of applying marketing mix at Bao Minh. Bao Minh's successes in this issue are identified through evaluation criteria such as increasing sales, increasing the number of customers, while pointing out the limitations and causes of these limitations.

The fourth content is through qualitative analysis and quantitative combination to clarify the factors affecting the application of marketing mix. Obviously, the application of marketing mix is greatly influenced by factors from inside and outside the enterprise. Bao Minh's success in applying marketing mix in the past time is partly due to their good exploitation of positive impacts and limiting negative impacts from the economic environment, customers, competition, socio-politics, corporate governance and corporate risk management...

Chapter 4

BUSINESS STRATEGY AND SOLUTIONS TO IMPROVE MARKETING MIX APPLICATION AT BAO MINH

Below will focus on analyzing two main contents: 1) Bao Minh's business strategy and 2) Solutions to improve the application of marketing mix at Bao Minh. Because business strategy is the orientation and basis for Bao Minh to build and apply marketing mix.

4.1. Bao Minh's business strategy

The basis of building a business strategy (SWOT)

Identify more clearly the strengths, weaknesses, opportunities and challenges of Bao Minh in the future and this is one of the important bases for building Bao Minh's business strategy, including the marketing mix strategy, Bao Minh's managers have used the SWOT tool to clarify these issues. It should be noted that when analyzing and evaluating Bao Minh's opportunities and challenges, it is referring to the development trends of the insurance market or forecasting the development trends of this market in the future. Correctly identifying these trends (including opportunities and challenges) on the basis of firmly grasping its strengths and weaknesses will help Bao Minh Group gain advantages in business.

Strengths

Finance

- Strong capital, ranked in the top 5 of non-life insurance.

- Low financial leverage, high return on investment (ROI).

- High return on assets (ROA).

Infrastructure

- Experienced and innovative management team.

- SAP's advanced insurance software, BEST, centralizes insurance policy issuance and compensation operations.

- Technical support from strategic investors

Market

- Strong and reputable brand in Vietnam

- Have a traditional customer base and relationships with key customers

- The 3rd largest insurance company in the non-life insurance sector.

The four components of SWOT: strengths, weaknesses, opportunities and threats are shown below:

- One of the largest companies in the field of health, accident, and fire insurance, with a nationwide network of branches.

- Full range of non-life insurance services

Weaknesses (WEAKS)

Finance

- High loss ratio compared to top 4 competitors

- High loss ratio in health and accident insurance, motor insurance, property risk insurance and CAR and EAR insurance...

- High sales costs and commission costs.

Infrastructure

- Revenue growth is lower than that of top 5 competitors in the market, losing market share to competitors.

- Lack of product development strategy, unprofessional application of marketing mix.

Market

- Inconsistent business strategy and policies (centralization and decentralization, human resource strategy). Lack of dynamic business culture, ineffective management of transition process.

- Changing insurance software leads to delays in issuing claims and long compensation periods, which has reduced revenue. Insurance product prices are not linked to risks due to lack of insurance pricing skills. Employees are not motivated to work because of inconsistent human resource policies, losing talent to competitors.

- Lack of experienced and professional management teams at all levels in key business activities.

- Lack of a complete and systematic customer database.

Opportunities:

Finance

- Bao Minh has the ability to improve its profit situation by focusing on high-profit customers.

- Centralizing the claim issuance process helps reduce loss rates (vehicles, goods, assets).

- Potential growth in investment income due to the development of Vietnam's financial market

Infrastructure

- Successful application of insurance business software will significantly enhance the efficiency of Bao Minh's main business.

Market

- The non-life insurance market is expected to grow at 18% in 5

next year

- Huge potential in retail areas such as health insurance, motor insurance, insurance for small and medium enterprises and households.

- Vietnamese customers are increasingly aware of the need for insurance.

- Young population with rising income.

- With economic recovery, Vietnam is emerging as an attractive destination market for investment growth in the insurance industry.

The challenges (THREATS)

Finance

- Bao Minh's profits may decrease due to loss ratio, sales costs and commissions may increase if control is not effective.

- Volatile financial markets can increase investment risks and ROI may be affected.

Infrastructure

- Delay or failure to complete the implementation of insurance software (BEST project)

- Applying insurance software is not enough to solve human resource difficulties affecting operations.

Market

- Vietnamese customers' demand for insurance is still low.

- Bad practices in Vietnam such as paying high commissions to customers or increasing insurance fraud.

- High moral hazard in health insurance and motor insurance.

- Unstable macroeconomic factors such as trade deficit, exchange rate, interest rate and rising labor cost.

Details of strengths and weaknesses associated with Bao Minh's marketing strategy

Market and customers

Strengths

- The non-life insurance sector is forecast to grow strongly in the period 2020 - 2025.

- Property insurance will grow in 2020 – 2025.

- Health insurance, export credit insurance, small business and household insurance have high growth potential.

- Vietnamese customers gradually understand the need for insurance Weaknesses

- The market is still small compared to the region.

- Poor penetration of non-life insurance.

- Vietnamese customers' demand for insurance is still low.

- High loss rates are partly due to fraud and an inconsistent legal system.

- The local business of the insurance industry is different from the world.

Competitors and partners in the market

Strengths

- Foreign insurance companies seek investment opportunities and partners in Vietnam. Banks are a new distribution channel for insurance products.

Weaknesses

- 20 new competitors are expected to enter the non-life insurance market between now and 2025, so competitive pressure will increase.

- Competition will not only be based on relationships, commissions, insurance prices, but also on service quality and product innovation.

Macro environment

Strengths

- High GDP growth

- High FDI capital

- Increase import and export, especially after the CPTPP agreement officially comes into effect.

- Government support for insurance sector (fishing boats, clean agriculture).

- Increased disposable income Weaknesses

- Unpredictable changes in monetary policy, bank interest rates are increasingly low.

- Trade deficit.

- Increase staff costs.

- The legal system and law enforcement are unstable.

Product research and development

Strengths

- Full range of products: compared to small competitors, Bao Minh has a full range of services. Most of Bao Minh's products have been standardized thanks to centralization. Standardized products help minimize legal and financial risks.

- New products: In addition to traditional insurance solutions, Bao Minh has begun to provide new insurance services that other large insurance companies have not yet done, such as export credit insurance or cargo liability insurance.

- Comment: Although the above are Bao Minh's strengths, it will not guarantee a competitive advantage over leading competitors, because they also provide similar products.

Weaknesses

- Lack of professional market research department: Although the marketing department is responsible for market research, there is a lack of skills and human resources.

Human and financial resources have been and are barriers to regular market and competitor research and assessment, with market research largely limited to collecting data from secondary sources.

- Lack of appropriate product development initiatives: Insurance product development requires constant coordination between the marketing department and the underwriting department.

- Lack of professional product development team: Since the main responsibility of the business department is to assess risks to issue insurance policies, the personnel in this department find it difficult to focus on product development. The marketing department, due to its limited ability in product development, currently plays a modest role in product development and has little coordination with the business department to come up with new product development initiatives.

Promotion

Strengths

Strong and reputable brand: Established and successfully operating in Vietnam since 1994, Bao Minh has built a strong and reputable brand with Vietnamese customers, especially in the South.

Weaknesses

The humble role of the marketing department:

- Currently, the marketing department consists of 7 people and mainly focuses on branding, advertising and promotion, which is only part of marketing activities. The marketing department also manages agents but is not effective because agents are recruited and have regular relationships with the sales team, not with the marketing department.

- Lack of reliable customer database: Because Bao Minh has only applied insurance software since 2010, the company still does not have a complete and reliable customer database for marketing activities. This is one of the obstacles in increasing the effectiveness of marketing activities.

- Lack of financial resources for marketing: Due to concerns about increased costs, the marketing budget is not consistent with the increase in insurance premiums.

- Lack of appropriate advertising goals and marketing strategies: Bao Minh has not set specific goals or marketing strategies to achieve those goals. Distribution

Strengths

Large network of branches and agents

- Existing customer base and close relationship with customers. Operating in the market for many years, Bao Minh has succeeded in building a large customer base and has good relationships with customers in different market segments.