Marketingpsychology Essay Example

range, Aviva is well-positioned to capitalize on new business opportunities such as the auto-enrolment pension system initiated by the government in 2012. According to IF Online (March 2012), Aviva UK's life and pension sales have surged from ?11 million to ?1.3 billion. This growth will enable Aviva to continue offering more pension savings plans with the goal of enhancing operating profit and achieving a 25% market share in individual annuities.

Aviva possesses substantial competitive advantages in terms of economic scale, distribution, and brand recognition both in Europe and the UK. However, the sluggish economic recovery in the UK may impact profitability and performance for the company.AVIVA is dedicated to developing four core capabilities in order to streamline operations and establish competitive advantages. While the inability to maintain investment returns affects revenue growth, a strong and diverse distribution network helps maintain leadership within the market. AVIVA's success is also attributed to its strong brand recognition in Europe and the UK. By focusing on core capabilities and maintaining a healthy business mix, AVIVA optimizes capital allocation and enhances profitability. However, the uncertain global economy poses a threat to business prospects, especially in the UK and Europe. Increased competition could impact margin expansion, while pension MIS-selling may harm public confidence in AVIVA as a service provider. Despite these challenges, there are opportunities for AVIVA to leverage global asset management for accelerated business growth. Additionally, AVIVA can benefit from the growth in the UK life and pension market as well as from government reforms implemented in 2012. To identify market opportunities and potential threats, AVIVA conducts an external environment analysis that includes political, economic, social, and technological factors through their

PEST analystsThe 2012 pension reform in the UK has created opportunities for pension intermediaries through auto-enrolment schemes, which encourage citizens to save for retirement. The government's decision to increase the retirement age for personal pension scheme holders has had a positive impact on retirement savings and improved the country's index score. However, AVIVA should carefully handle the reduction in tax relief for pensions saving. In 2010, the annual tax allowance was reduced from ?100,000 to ?50,000, and in April 2011, the lifetime allowance decreased from ?1.8 million to ?1.5 million.
Economic factors such as high inflation rates and slower earnings growth have put pressure on household budgets, potentially affecting pension schemes. Currently, households are more focused on short-term financial commitments and debt repayment rather than long-term saving. Despite these challenges, GDP growth is a positive indicator for pension schemes as it boosts consumer confidence and encourages investment in equities due to stock market growth in a growing economy. However, low interest rates could lead to low cash savings rates and negatively impact retirement plans. According to Hewitt Associates, approximately 31% of individuals who have not yet retired do not have a clear expectation of their annual retirement income.The increase in retirement ages has impacted the lifestyle and savings habits of UK citizens. This, coupled with the rising life expectancy, creates financial burdens for both the government and employers in terms of providing pensions. AVIVA expresses concern about the progress of the internet as it allows individuals to independently make decisions using online surveys rather than relying on traditional advice sources. AVIVA primarily sells personal products directly to customers over the phone and through websites like www.Aviva.Co.UK

and www.Psychotherapy.Com, as well as through brokers. While technology has made pension administration more efficient, it has not revolutionized pension marketing. AVIVA offers personal pension schemes, also known as detriment savings plans, which are defined contribution arrangements. The value of these schemes upon retirement depends on self-contributions, charges deducted by intermediaries, and investment returns achieved by the fund. Aviva provides various types of personal pension schemes including Personal Pension Plan (POP) where clients can build their own pension "pot" through investment contributions with a minimum payment requirement of ˆ400 per year. Self-invested personal pensions (SHIP) offer clients flexibility in holding and controlling investments such as commercial property, land, stocks, and shares. Stakeholder Pensions are similar to POP but have specific conditions and serve as an alternative to company pension schemes.The report discusses the challenges faced by Aviva in relation to Personal Pension Schemes. Risk elimination in these plans can be achieved through efficient portfolio diversification or transferring risk via annuity payments to a third party. Increasing awareness can be accomplished by promoting, running campaigns, advertising, and participating in government schemes. Effective communication tools are important for promptly addressing customer complaints. Educating clients about automated pension decision tools and providing financial advice empowers individuals to make informed choices. It is crucial to regularly assess factors such as authorization processes, prudential framework, training requirements, fit and proper tests for key personnel, asset segregation requirements, disclosure rules, and conduct-of-business standards to comprehensively mitigate risks associated with pension plans. All types of pensions involve investment-related risks that depend on contribution levels, accumulation of assets through financial market returns, and chosen investment approaches. The lack of public awareness about retirement

plans is concerning as it may lead individuals to make incorrect investment decisions due to the complexity of pensions and instances of mis-selling. Additionally, asset managers may also make erroneous investment decisions resulting in significant losses.Aviva faces tough competition from various UK companies, including ORBS, LB=, Zurich Prudential Group Lillian, and Friends Life. Personal Pension Schemes (UPS) provide flexibility in investment contributions, making it challenging to compare prices among competitors. The distinguishing factors between these schemes include pension annuity payments and advanced technology communication tools provided to customers, such as CAR code and mobile APS for checking scheme amounts. Some insurance companies offer combined pension schemes and life insurance plans to attract customers.

According to the website of money.Co.UK (http://www.Money.Co.UK/pensions.HTML), here are the annual fees and minimum investments for different companies:

- AVIVA: Annual fee of 0.5% with a minimum investment of 1,001.
- ORBS: Annual fee of 10.9% with a minimum investment of 11,001.
- Prudential: Annual fee of 1% with a minimum investment of 100.
- Friends Life: Annual fee of 0.7% with a minimum investment of 100.

These companies target three main groups in the market: baby boomers, generation X, and generation Y. Generation X is specifically targeted due to their stable income and purchasing power. Baby boomers, who are risk-averse, may require multiple strategies or longer work periods to ensure sufficient retirement income. They often rely on state pension funds instead of private ones due to their age and potential health issues.Middle-income earners, who have stable incomes and are aware of their future financial situation, prefer investing in non-pension assets or equity investments for higher returns rather than relying solely on retirement plans. The younger population just

entering the workforce, known as Generation X, face financial challenges but have less immediate demand for saving towards pensions.

AVIVA, the world's sixth largest insurance company, has established clear and achievable long-term goals that all employees can work towards. This report focuses on AVIVA's SMART Objective of expanding its market share in the UK pension market within two years by forming strategic partnerships with local banks or implementing banc assurance strategies to increase public confidence in pension schemes.

AVIVA also intends to create new products such as Company Defined Contribution Pension Schemes specifically tailored for the younger generation entering the workforce. To raise awareness about the importance of pension schemes, AVIVA will conduct a Pension Scheme Campaign, utilize media advertisements, and collaborate with pension associations and CARS activities.

Furthermore, AVIVA aims to become a leading global player in the life and pension sector, improve its performance in long-term savings, establish a prominent position in asset management convenience and enhance shareholder value through exceptional returns.
Reference: 1Aviva annual report, Aviva Annual Report and Accounts 2011, viewed on 15 July 2013, I-JK Faces PersonaJPension Shortfall With a El .2 Trillion Gap.[Online].Last accessed 16 July 2013 at : http://suitel01.com/suitese/uk-fComs-personaUKpension-shortfall-with- a-12-trillion-gap-a239292
HM Rea239292nd CHEMtom (2013).Understanding Pension Schemes, viewed on 15 July 2013, Pension reform strengthening UK's retirement Auk'sem, viewed at 10 July 2013, ;http:// www.actuarialpost.cStructuralism/pCosiUK-reform-strengthening-uka??s-retiremeUK-Estemass45.htm;7.The market report on Marketing Management Custody Banks can be viewed at http://www.researchandmarkets.coRecommendations/Comal_asset_management_and_custody_bank.8.Global Investment

Patterns for Insurance Companies and Pension Funds as Institutional Investors can be found at http://www.cityoflondon.gov.k/bCotyledonorGobroKotion-and-advice/promoting-the-ity-internationally/chitty/Documents/lnsurance companies anlaunches accompaniesrandfpensiononfunds reportanPDFnvestment.9.The Office for National Statistics provides information on pension scheme funding and investment at http://www.ons.gov.uk/ons/rel/pensions/peOnesonGobenUK/Onesareelr-9--pension-scheme-funding-and-investment--2013-edition/art-pt-chapter-9-2013.html#tab-Sumpetry.10.This is Money reports on the New State Pension Age, available at http://www.thisismoney.co.uk/money/pensioTestimony16Co78UKNew-state-pension-age-retire.tml.11.Aviva's Life and PensiJ Sales are climbing, as mentioned in the IFAonline article found at http://www.ifaonline.co.uk/ifaonline/newFanlike0/CoivUKuFanlike-rise-life-pensiAvivalUK-climb.12.For more information about pensions, visit Aviva's website at http://www.aviva-for-advisers.co.uk/advisAvivate/public/prodCotsUKensions.13.Retirement plans from The Royal Bank of Scotland can be accessed online at retirement-plans.ashx#tab-section2
On 8 March, Aviva reported a 10% increase in sales for their life and pensions products.
You can find more information at http://www.researchandmarkets.co. Additionally, the Global Investment Patterns report for Insurance Companies and Pension Funds as Institutional Investors can be accessed at http://www.cityoflondon.gov.k/bCotyledonorGobroKotion-and-advice/promoting-the-ity-internationally/chitty/Documents/lnsurance companies anlaunches accompaniesrandfpensiononfunds reportanPDFnvestment. The website http://www.ons.gov.uk/ons/rel/pensions/peOnesonGobenUK/Onesareelr-9--pension-scheme-funding-and-investment--2013-edition/art-pt- chapter-9-2013.html#tab-Sumpetry provides information on pension scheme funding and investment. Furthermore, details about the new state pension age can be found at http://www.thisismoney.co.uk/money/pensioTestimony16Co78UKNew-state-pension-age-retire.tml.To find out more about the increase in life and pensions sales at Aviva, please visit http://www.ifaonline.co.uk/ifaonline/newFanlike0/CoivUKuFanlike-rise-life-pensiAvivalUK-climb. You can also find information about Aviva pensions at http://www.aviva-for-advisers.co.uk/advisAvivate/public/prodCotsUKensions. The Royal Bank of Scotland provides retirement plan information at retirement-plans.ashx#tab-section2.

Furthermore, AVIVA's distribution network and business mix are described below. This was established through the merger of CGU plc and Norwich Union plc in 2000. Operating in attractive insurance markets globally, including the UK, AVIVA has a strong distribution network with employees, agents, and partners across 12 markets. Notably, it has successfully created a banc assurance franchise through partnerships with HSBC and Barclays.

With its robust distribution network, AVIVA is well-positioned to expand its market share

in saving and pension fund products in the UK. It maintains a balanced business mix between insurance and non-insurance sectors on a global scale, holding significant presence in life insurance and general insurance operations.
In FY2011, AVIVA achieved a balanced mix of 67.5% contribution from life insurance and 37.5% from general and health insurance products in terms of gross premiums. By combining life, general insurance, and asset management capabilities, AVIVA has improved earnings by reducing risk and diversifying cash flows across different operating environments. Sales of collective investments have also increased by 9%, reaching El billion, supported by the launch of multi-asset funds as well as strong performance in global property and managed fund investments.

AVIVA's focus revolves around four core capabilities: marketing and distribution expertise, financial distribution, technical excellence, and operational effectiveness - enabling the group to simplify and streamline its businesses effectively. Aviva's priority markets have been insurance and savings businesses, as demonstrated by the sale of RAC in 2011 for El billion. This focus on core capabilities has resulted in significant benefits for the company with an internal rate of return of 14.4% reported in the 2011 annual report.

Aviva is also on track to meet its E400 million cost and efficiency target by the end of 2012.However there are weaknesses that need to be addressed.One weakness is the high double leverage within group situations where debt raised by the holding company is provided as equity capital or subordinated debt to a subsidiary.This can lead to increased capital requirements for the groupDespite facing challenges such as a decline in investment returns and unfavorable interest rate conditions, Aviva has the opportunity to accelerate business growth through

global asset management. The global asset management and custody banks sector is estimated to be worth $82,599 million and has a positive outlook. In 2011 alone, this industry was valued at 1 billion with an expected compound annual growth rate of 4.11% from 2011 to 2016. The increasing demand for pension planning among individuals is driving this growth opportunity for Aviva. Aviva's partnership with the Royal Bank of Scotland Group in the UK to expand their collective investment business demonstrates that their global asset management capabilities are a key priority for the company. Research conducted by Aviva and Deloitte reveals a significant pensions gap in the UK long-term insurance market, amounting to around 317 billion euros. This represents the difference between current savings and what is needed for retirement. While new auto-enrollment and pension reforms may increase costs for firms, they also present opportunities for pension providers and consultants. However, uncertain global economic prospects could impact Aviva's business prospectsAlthough risks such as the Greek debt crisis have been partly addressed, they still have the potential to impact competition and Aviva's ability to expand margins. The insurance, pensions, and asset management sectors are highly competitive, with strong players like RBS, RSA, AXA, Zurich, Lloyds Banking Group, RAS Allianz, and Legal & General in the UK market. The scandal surrounding pension mis-selling has caused individuals to lose confidence in expert advice and invest more in non-pension funds like property instead of retirement plans.

Aviva possesses various core competences including technical excellence, pricing expertise, product development capabilities, and asset management abilities. They also have a robust marketing and distribution network that allows them to leverage their scale, brand recognition,

and relationships with distributors/partners to offer a wide range of products and services. To enhance their pension plan sales specifically, Aviva has established a strategic partnership with RBS while maintaining strict financial discipline. They employ capital allocation strategies and asset liability matching frameworks to reinvest optimally in profitable products and markets.

Furthermore, Aviva prioritizes managing investment risk by optimizing gearing levels and selectively adjusting its portfolio makeup.Aviva focuses on operational effectiveness by implementing customer value management strategies to boost retention rates and advocacy. They also aim for improved quality and efficiency through streamlined business operations across AVIVA, utilizing their expertise in claims management.