Auto Insurance Competitive Advantage of Progressive

March 17, 2010 at 4:20 pm | Blog

Flo_from_Progressive_InsuranceWhile touting a rather irresistable competitive advantage message, Progressive impels consumers to take control of their insurance prices with a strong marketing message.

FLO: Hi, may I help you?

Customer: Yeah, I’m looking for car insurance that isn’t going to break the bank.

FLO: You’re in the right place! Only Progressive gives you the option to name your price. Here! [hands him a price gun].

Customer: Price gun?

FLO: Mmmhmm.

Customer: So I tell you what i want to pay…

FLO: and we build you a policy to fit your budget!

Customer: Thats cool, uhh… [tags a price with price gun] I feel so empowered!

FLO: Power to the people!

Voiceover: The option to name your price. New and only from Progressive. call or click today.

Progressive’s competitive advantage message is strong enough to prompt customers not only to jump on the option to name their own price –letting Progressive build a policy around that price– but to potentially sacrifice the true safety net of available coverage in the name of a low-cost, minimal auto insurance policy as well.

Giving consumers a sense of empowerment and control with their “name your own price” tagline, Progressive attracts consumers who willingly sacrifice the true value brought to customers through insurance coverage: adequate protection of self, in exchange for a discount.

On one side of the coin, bargain-shoppers seeking instant gratification of a price they feel is within their budget.  On the other side of the coin, the consumer is willing to drop what a smart consumer values: getting the most bang for their buck.

While Progressive lowers prices to compete, consumers attracted to the low-cost policies often sacrifice the true value of smart insuring: protecting their vehicle to the extent where if it were totaled, adequate compensation would be received in order to replace the vehicle.

Liability coverage often takes the backseat and isn’t part of a discounted insurance policy.  Customers excitedly take lowest-cost premiums without considering how they’ll replace or repair their vehicle if impairing damage occurs. This is a sign of an incredibly compelling marketing strategy where Progressive created and touted its competitive advantage through allowing consumers to set prices.

Additionally, if a driver lacking liability coverage rear-ends a vehicle and the accident causes injuries to the other vehicle’s driver and multiple passengers, the offending driver could rack up six digits worth of injury payments.

Minimum auto insurance policies typically cover $5,000 worth of vehicle damage, the remaining costs are out-of-pocket expenses for the offending driver, and that offending driver could very well be a price-focused consumer who wanted to name his own low price through Progressive.

For the price of under $1.00 a day, most policies can be bumped up from minimum coverage to a more comprehensive, truly protective insurance policy option.  Progressive took a competitive position not only against other insurance companies, but in a manner that tests the strength of consumer loyalty over consumer smarts.