Name withheld

Progressive Case Write-Up

Facing fierce competition from all sides, Progressive must adapt in order to differentiate
themselves and remain profitable. As shown in the SWOT analysis (see Exhibit 1 below), there
are a multitude of forces that can affect the business landscape for Progressive. A diagnosis of
the dynamics is necessary to ascertain the future guiding policy and cohesive actions that will be
pursued.

Progressive possesses internal strengths that must be utilized to gain leverage on

competitors. As a company that was once known for their nonstandard business, Progressive
holds vast information on a potentially profitable customer base. However, if nonstandard
customers were targeted, Progressive’s focus may become too splintered and hurt the
overarching strategy. Rather, Progressive should work to advance their foothold in direct sales as
mobile and internet usage will continue to rise.

The industry dynamics of Progressive’s business are complex and vary based on the type
of insurance policy. State Farm is the industry leader, with the highest percentage of market
share in three out of the four main types of insurance. However, there is not a high concentration
of market share between the top competitors. For example, in commercial auto insurance, the top
10 companies make up 44.8% of the market. Therefore, brand equity does hold weight as seen
with State Farm, but does not fully dictate consumer preferences.

When considering Porter’s Forces Framework (see Exhibit 2 below), the insurance
industry is not hospitable in a variety of ways. Among the most negative forces are buyer power
and industry competitiveness. Consumers looking to buy insurance are searching for value in
their purchase along with the most affordable option. The power of the buyer remains high
because of their increased willingness to shop around and switch for better rates. In contrast,
there are some positive aspects as seen with complements and supplier power. Owning your own
property is a major American ideal. Additionally, the United States has a much higher rate of
automobile usage compared to other countries. Given this, complements are plentiful. In
addition, supplier power is low because underwriters look to work with a strong brand like
Progressive’s.

When considering potential entrants to the industry and substitutes for the product,
neither are a dominant good or bad force. Complex agency networks that contribute to
economies of scale as well as strong brand identities make it difficult for new entrants to
succeed. Substitutes are limited for insurance, because it would require someone to go without
coverage or use alternative modes of transportation or shelter. In summary, both forces do not
provide a significant benefit or disadvantage to the industry participants.

Furthermore, disruptive events can be a catalyst for Progressive to dramatically shift their
strategies. With PESTEL Framework analysis, various factors are reviewed (see Exhibit 3
below). As a lawsuit looms over Progressive, the company must devote resources to a successful
outcome and reevaluate the Concierge Service. The lawsuit from auto-repair shop owners is the
most significant disruptive event for Progressive in its current state. An increased adoption of
public transportation or alternative methods of transportation is a possible concern. Since
Americans are becoming more aware of the environmental impacts of their ways, there could be
a shift to more eco-friendly options. A multi-product customer focus addresses the concern about
less volume for auto insurance in the following ways. Many homeowners also own a car because
there is less opportunity for other forms of transportation. Whereas in cities with a high
percentage of renters, it is less likely to find car owners.

A push for privacy is an additional disruptive event that concerns Progressive. The usage-
based insurance patents held by the company make up a large portion of their future action plan.
If adoption rates do not improve, one of their most differentiated offerings would become
obsolete. Such an event can be caused in two ways: state or federal legislation that advocates for
consumer privacy or increased awareness among consumers about how companies use and profit
from their data. Any development that could lead to the aforementioned outcome would be
disastrous for Progressive. Consequently, usage-based insurance must not be viewed as the sole
solution for the future.

Moreover, Progressive has committed to both homeowner and auto insurance,

emphasizing its valuable relationship with multi-product customers. Throughout the company’s
history, there has been an inconsistency in regard to homeowner insurance offerings (Exhibit 1).
However, a core point of their current guiding policy centers around homeowner insurance.
Hence, as Progressive further entrenches themselves in the industry, economies of scale will
benefit the brand with improved relationships between agents and customers. Home Advantage
has already grown from 33 to 41 available states for agency customers.

The main goal for Progressive to successfully challenge Geico is to further expand their
ecosystem. It allows the company to go beyond insurance policies. Thus, buyer power will be
combated and Progressive can embody more than the rates they offer. If this is pursued,
Progressive will differentiate their brand significantly. In addition, the company will improve
their public perception which generally is negative towards insurance. Further, higher premiums
could be justified by the additional services and benefits of holding a policy with Progressive.
The proliferation of the Progressive ecosystem ought to be the primary focus of the company.

Both multi-product customers and usage-based insurance also fit into the overall strategy.
Special offerings and discounts could be provided to multi-product customers. For example,
Progressive can offer a one-time complimentary Concierge Service. A robust ecosystem makes it
more difficult for customers to switch, incentivizing long term policies (Exhibit 1). Unique
programs and offerings such as Name Your Price, Snapshot, and the Concierge Service provide
Progressive with a distinct competitive advantage. Regarding advertising, Progressive would do
best to maintain their current budget. A consistent contribution to advertising is advised since
there has been success in the past as shown by “Flo.” GEICO holds the advantage in marketing
with a reported 79% unaided brand awareness and over double advertising spend compared to
Progressive (see Exhibit 4 below). However, as prior mentioned, brand image is limited in its
capabilities. Nevertheless, additional resources would be better utilized elsewhere on possible
pivot points of leverage. To conclude, it would be beneficial for Progressive to maintain their
current strategy while considering disruptive events, and carefully expanding their product
ecosystem.
Exhibit 1: Progressive - SWOT Analysis
Strengths
● Usage-based insurance patents
● Robust knowledge of nonstandard
insurance customers
● Direct selling advantages
Opportunities
● Rising internet and mobile usage
● Homeownership rates may rise with an
economic expansion
Exhibit 2: Porter’s Forces Framework
Weaknesses
● Inconsistent strategy with homeowners
insurance throughout company history
● Relatively low brand awareness and
affinity
● Shorter policy life expectancy
Threats
● Legal action against Concierge Service
program
● Price elasticity is high in the insurance
industry
● Negative perceptions of the insurance
industry overall
Exhibit 3: PESTEL Analysis

Exhibit 4: Measured Advertising - Insurance Industry

 UCONN MGMT -4900 - CASE WRITE-UP FEEDBACK
Student: Name Withheld
Case: Progressive
Criteria and evaluation of criteria
Criteria Weak submission Mediocre Good submission Outstanding
submission submission
Quality of writing Sloppily written, Weak writing, Some issues, but Flawless writing
appears rushed significant overall well
grammar or written
language issues
Interpretation of Major mis- Meaningful Minor Clear
facts of case interpretations or misinterpretations misinterpretations understanding of
errors or errors facts and
implications
evident
Depth of analysis Simply stating Superficial Evidence of Clear evidence of
facts from case; analysis, largely independent independent
not answering simply analysis derived analysis, leveraging
questions regurgitating facts from facts in case; strategy
from case and in-depth, frameworks and
briefly answering thoughtful answers theory
questions to questions
Case No evident Some Recommendations Recommendations
recommendations recommendations recommendations logical and logical and
supported by supported by
understanding of strategic reasoning
facts
Application Not evident Vaguely referenced Referenced in text Clearly referenced
quantitative and in text and used
qualitative
frameworks

Overall grade: Withheld

Overall:
 Very well done. You’ve articulated critical business issues, and developed a clear
recommendation based on the facts of the case. Terrific job!
 Your write-up is an integrated analysis, where you’ve answered all the discussion questions
throughout your write-up. Well done.
 You’ve included a SWOT framework and referenced this in your analysis. You’ve articulated a
view of industry attractiveness using Porter’s Forces. You’ve also considered external
developments utilizing a PESTEL framework. I also notice Rumelt’s thinking incorporated into
your work.
Additional growth opportunities:
 Is buyer power a negative force? While the individual consumer can switch companies, they are
required to keep insurance, and each individual consumer doesn’t hold much sway on a
company with millions of policyholders.