In November 2007, a small plane flew over the headquarters of Progressive Corp. pulling a huge banner featuring a big caveman and the word "GEICO." It wasn't enough that GEICO had recently surpassed Nationwide and Farmers Insurance in market share and was now threatening to overtake Progressive as the nation's third- largest auto insurer. Now GEICO was "buzzing" Progressive's 6,000-employee headquarters. GEICO was spending over $600 million a year on marketing (twice that of Progressive) and the GEICO gecko and cavemen had become advertising sensations. Progressive management decided to "get back to the basics." They decided the company would reexamine its core competency, rethink the marketing mix, and reestablish its competitive advantage. Progressive offers a portfolio of insurance policies with lower profit margins designed to attract more customers, more revenues, and more market share. The company chose to give up margin to gain customers, concentrating on long-term benefits. Progressive's core competency is assessing risk. The company has always been good at pricing strategy and predicting exactly who is likely to have an accident and cost the company money. A key part of Progressive's market strategy is to tell consumers the company will shop around for them. Progressive believes that the easier a company makes it to buy insurance, the more likely the customer is to purchase the insurance. Therefore, the strategic objective is three-pronged: competitively priced insurance rates, excellent customer service, and the practice of giving customers comparison rates from other insurance companies. Until the late 1990s Progressive had been sold through independent insurance agents. However, lack of brand recognition and limited policy offerings were reducing agency sales. As a result, beginning in 1997, Progressive offered online interactive customer services through which customers could look up their policy information, get quotes, check the status of claims, make online payments, and create and update personal account information. Personal Progressive was innovative and timed perfectly to customer demands. By 2005, the Internet was the most significant source of new business for Progressive. In 2008, Progressive bought the naming rights to Jacobs Field (The Jake), home of the Cleveland Indians. And then, along came Flo in a heavy dose of clever television ads. Her overly perky and sarcastic persona, her retro style, and her bright red lipstick catch the customers' attention. It seems Progressive has found a pretty good competitor to GEICO's legendary gecko and cavemen. The cheery but deceptively sharp Flo has become the face of Progressive insurance. From the heavenly setting where customer dreams of low prices and high service come true to Flo herself, a connection is made. Flo is a genuine listener. She asks a question. She waits for the answer. And then she serves up a customized, cost-saving insurance solution from Progressive. Flo takes us back in time with her style and carries the message of painless online transactions with her "easy peasy" humor. Flo is old enough to be trusted and young enough to be "cool." Flo is an emotionally comforting persona offering rational insurance benefits. In the Brand Keys Customer Loyalty Index for insurance brands, Progressive moved from #5 in 2009 to #2 in 2010. 1. Identify and describe the major variables in Progressive's marketing mix. 2. Do you think Progressive is successful in building an emotional connection with the consumer? Explain. 3. Do you think Progressive's marketing strategy serves the broader corporate strategic objective? Explain. 4. In what ways do you think Progressive demonstrates competitive advantage?