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Federated Insurance: Targeting Small Businesses1
Targeting customers, Federated Insurance offers clients and prospects a program of complete insurance protection, covering the spectrum from commercial property and casualty insurance and life and disability insurance to group health insurance. Since its founding over a century ago, the market plan for the company has centered on a clear-cut strategy: provide the highest quality, best-value service available to selected businesses.
Based in Owatonna, Minnesota, with regional offices in Atlanta and Phoenix, Federated has 2600 employees and operates in 48 states. Consistent with its heritage and original market plan, the company specializes in business insurance for selected industries:
- Auto dealers and auto parts wholesalers
- Building contractors (for example, electrical and plumbing-heating-cooling)
- Equipment dealers (for example, agricultural, lawn, and garden)
- Funeral services
- Jewelers
- Machine shops
- Petroleum marketers and convenience stores
- Tire dealers
Cultivating Business Relationships
Marketing representatives at Federated can tailor insurance protection to meet virtually all of a business owner’s insurance needs: property, casualty, health, retirement, and more. They also provide quality risk management services that respond to the specific needs of business owners. The goal here is to help customers develop procedures and practices that can reduce losses and improve worksite safety conditions.
Federated enjoys a strong reputation among SMB customers, as the following testimonials demonstrate:
One of the things Federated does very well is that they have focus. It is not about selling insurance, it is about taking care of your customers, and the businesses that do best are the ones that take care of their customers.
[Tim Smith, President, Bob Smith BMW, Calabasas, California]
I’ve had friends who are in businesses that jump insurance companies all the time and they are price shopping. They don’t realize the relationship that you have to build with an insurance company. It is such a close relationship, but yet so secure. With Federated, we don’t worry—we don’t have to.
[Greg Nesler, President, Rochester Plumbing and Heating, Rochester, Minnesota]
1“About Federated: Our History and Mission,” accessed at http://www.federatedinsurance.com on July 10, 2008.
each question required 80 words
By directing attention to particular types of businesses (for example, convenience stores or auto dealers), Federated emphasizes macrosegmentation. To further sharpen strategy, suggest possible ways that particular macrosegments could be broken down further into meaningful microsegments.
In buying insurance, some SMB customers just want the lowest priced option for each type of insurance, whereas others want value-added services (for example, risk management guidance) and a complete, integrated insurance solution. How should Federated respond to customers who are strictly focused on price? In your view, what are the points of difference that Federated should illuminate in the customer value proposition?
