Marketing Chapter 8

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Kathlaen
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101057
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Marketing Chapter 8
Updated:
2011-09-12 20:59:38
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marketing distribution
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Distribution Systems and Strategies
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  1. Personal Selling Distribution System
    Distribuition system where commissioned or salaried sales reps sell by oral & written presentations to customers.
  2. Third-Party Distribution System
    A distr. system where financial institutions or other org's distribute to their own customers insurance products issued by other co's.
  3. Direct Response Distribution System
    A type of distr. system where co's communicate directly w/customers to do the sales process.
  4. Distribution Channel
    Network consisting of specific ppl, institutions, or communication methods that are used to connect co's to their customers.
  5. Agent
    Independent sales rep or co employee who is authorized under the terms of an agency contract to act on behalf of an issuing ins co.
  6. Principal
    An ins co or other party that authorized an agent to act on its behalf.
  7. Agency Contract
    Written agreement b/t agent & principl that defines agents role/responsibilities and descreibes agents compensation. In Canada, producer agreement.
  8. Errors and Omissions (E&O) Insurance
    Ins that protects producer against financial liability for any negligent acts or mistakes but doesnt cover a producer for intentional acts or wrongdoings.
  9. Affilitated Agent
    Agent who sells products of a single co.
  10. Independent Agent
    An agent who doesnt have an exclusive contract w/one co. or obligations to sell 1 co's products exclusively and may submit apps to any insurer with which the agent has an agreement.
  11. Career Agent
    Agent under full time contract w/one co. AKA agency building agent.
  12. Field Force
    Collective term for career agents.
  13. Field Office
    Office where career agents work.
  14. Multiple-Line Agent
    Agent who distributes life ins, health ins, annuities, property/casualty for a group of financially iterrelated or commonly managed ins co's.
  15. Home Service Agent
    A career agent who sells specified products, typically low face amt whole life w/monthly prems, and provides policyowner svc in an assigned geographic territory. AKA debit agent.
  16. Personal Production General Agent (PPGA)
    Commissioned salesperson who is an independent contractor, not housed in a field office, and engages primarily in personal production (new policy sales).
  17. Broker
    INdependent agent without exclusive contract. AKA agent-broker.
  18. Producer Group
    Org. of independent ins producers that negotiates compensation, product, and service agreements w/ins co's.
  19. Salaried Sales Representative
    A co employee paid a salary for making sales & providing sales support. AkA salaried sales agent.
  20. Group Representative
    A salaried sales rep trained in marketing & servicing group products.
  21. Financial Planner
    A professional who analyzes customers personal financial circumstances & goals and prepares a program, usually in writing, to meet the customers financial goals, like retirement/college planning.
  22. Independent Life Broker
    Salesperson licenced to sell ins but not under contract with any insurer. AKA life broker.
  23. Producer Licencing Model Act
    A model law specifying the requirements an individual must meet to be licensed as an ins producer.
  24. Resident Producer
    An ins producer who resides w/in a particular state and is issued a resident license by the state licensing authority.
  25. Nonresident Producer
    An insurance producer who resides in another state and is issued a nonresident license by the state licensing authority.
  26. First-Year Commission
    A sales commission equal to a stated % of the amount of the premium the insurer receives during the first policy year.
  27. Renewal Commission
    A sales commission paid to a producer on policies sold that remain in force equal to a stated % of each premium paid for a specified number of years after the first policy year.
  28. Annualized
    A method of calculating & paying for first year commissions that a co owes a producer in a lump sum, as if the entire first years premium had already been paid, regardless of the actual mode of payment the applicant chose.
  29. Vested Commission
    A sales commission guaranteed payable to producer whether or not the producer represents the co. when the commission becomes due, even if the producer resigns or is fired.
  30. Nonvested Commission
    Sales commission payable only if producer still represents the co when the commission becomes due.
  31. Conditionally Vested Commission
    A commission that becoms vested after the producer attains a certain age or number of years of svc with the co.
  32. Service Fee
    Paid to producer after the renewal commissions have ceased, usually sm % like 1 or 2% of premiums payable.
  33. Deposit Based Commission Schedule
    A commission schedule where commission %s paid to producers are based only on new premium payments.
  34. Asset Based Commission Schedule
    A commission schedule where %'s payable on sales are based on the accumulated value and growth of a product's funds. AKA trail commission schedule.
  35. Advance
    A loan made to a producer in anticipation of future commission earnings.
  36. Fixed Subsidy Plan
    A financing plan that pays the producer a flat dollar amount in addition to commissions earned during a specified period.
  37. Variable Subsidy Plan
    Commissions are multiplied by a predetermined % to determine the producers compensation
  38. Salary Plan
    Financing plan where insurer or agency pays producer a monetary amount for work performed during a specified period of time in lieu of part or all of the commissions actually earned during that time.
  39. Expense Analysis
    The process of finding which marktng costs are associated with which mktng activities to help managers evaluate if a cost is worth the value of the activity provides.
  40. Overriding Commission
    Sales commission on new & renewal business generated by a particular field office or group of agents. AKA override.
  41. Unit Supervisor
    A sales manager responsible for recruiting, training and supervising some or all of an agency's producers.
  42. Wholesaler
    A sales intermediary appointed by insurer to promote the insurer's products to 3rd party distributors & support market development.
  43. Intermediary
    A person or entity who sells & services financial products on behalf of a financial services co.
  44. Security
    A document or certificate representing either an ownership interest in a business or an obligation of indebtedness owed by a business, gov't, or agency.
  45. Securities & Exchange Commission (SEC)
    federal agency over securities industry
  46. Broker-Dealer
    A type of financial institution that buys & sells securities either for itself or for customers & provides info and advice to custoemrs about buying/selling sec's.
  47. Securities Broker
    Person or entity in business of buying/selling securities for the account of another.
  48. Securities Dealer
    Person or entity in business of buying/selling securities for the account of itself.
  49. Insurance Co. Broker-Dealer
    Registered ins co. or subsidiary of an ins co that sells variable ins products and securities and typically also provides specialized financial planning & investment svcs. AKA insurance brokerage.
  50. Proprietary Product
    Product developed & managed by the co. itself.
  51. Nonproprietary Product
    A product developed by another ins co.
  52. Financial Industry Regulatory Authority (FINRA)
    Nongov'tal self regulatory org. empowered by the SEC to license, investigate, regulate securities dealers & their representatives.
  53. Registered Representative
    A business associate of a FINRA member engaed in the investment banking or securities business, including soliciting the sale of securities or training securities salesppl, and has satisfied FINRA regulation requirements. AKA registered person.
  54. Registered Principal
    A registered rep. who is an owner, partner, officer, manager or director of a FINRA member and is actively engagted in managing the members investment banking or securities business, including solicitation, conduct of business, or supervision of registered reps or other principals. AKA registered person.
  55. Gramm-Leach-Bliley (GLB) Act
    A law by Congress in '99 that removed many regulatory barriers for financial institutions. AKA Financial Services Modernization Act (FSMA).
  56. Bank Insurance
    The distribuiton of ins products to bank customers via a bank affiliated insurer or ins agency.
  57. Platform Employee
    Front line bank employee that handles customer svc issues and sells traditional bank products like checking accts, but is also licensed and trained to sell insurance.
  58. Home-Office-To-Home-Office Arrangement
    An arrangement to distribute nonproprietary products in which an ins co enters into an agreement w/another ins co to distribute specific products or product lines issued by that co.
  59. Brokerage General Agency Arrangement
    An arangement to distribute nonproprietary products in which an insurance co enters into an agreement to allow its affiliated agents to sell products offered thru an independent general agent, known as a brokerage general agent.
  60. Brokerage General Agent (BGA)
    An independent general agent who is under contract to a number of insurers.
  61. In-House Brokerage Agency Arrangement
    An arrangement to distribute nonproprietary products in which a co establishes its own brokerage agency, rather than using an outside agency, to solicit distribution agreements w/other insurers to sell those insurers' products.
  62. Direct Mail
    communication channel, mails sales materials directly to a mailing list of prospective customers in an identified target market.
  63. Invitation to Contract
    A direct mail communication designed to solicit and close a sale.
  64. Invitation to inquire
    A direct mail communication designed to generate interest in a product and give customers a way, ie postcard or toll free number, to request & receive more info.
  65. Mail Kit
    A direct mail package of sales materials that customers receive.
  66. House List
    In direct mail, a co ownd list of names of ppl who have shown interest in the co's products or who have been referred by the co's current customers.
  67. Response List
    In direct mail, a list from another co with names of ppl who have bought products from the other co via direct response mktng.
  68. Compiled List
    In direct mail, a list of names & addresses from sources like directories, newspapers, trade show registrations, property tax rolls, voter lists, and other rosters.
  69. Fulfilment Kit
    A package of materials designed to fulfill a customers request when the customer responds to either an invitation to inquire or an invitation to contract.
  70. Telemarketing
    Use of phone to produce sales.
  71. Outbound Telemarketing
    Telemarketing that occurs when a co rep or mechanized system phones customers in the co's target markets with the intent to generate sales.
  72. Inbound Telemarketing
    Telemarketing that occurs when a co provides customers w/a toll free number to use when calling about products or placing orders.
  73. Search Engine Marketing (SEM)
    The practice of advertising & marketing websites by means of search engines.
  74. Search Engine
    A website that allows visitors to search for content on the internet by inputting key words or topics and getting a numbered list of sites with those words or pertaining to those topics.
  75. Search Engine Optimization
    A method of search engine marketing by means of designing web pages so they meet search engine criteria for relevance for common key words & phrases resulting in as high a rank as possible in search results for targeted keywords.
  76. Sponsored Link
    A method of search iengine marketing that involves paying a search engine to be listed at the top of the search results page for certain key words.
  77. Aggregator
    Internet intermediary that lists products from several different co's on a single website.
  78. Click-Through Rate
    A measure of the number of ppl who visit a co's website by means of a particular lead generation technique, usually expressed as the % of the total number of times that an advertisement, targeted email, or other web mktng material is seen that directly results in a visit to the advertisers website.
  79. Distribution Intensity
    The number of distribution channels an insurer uses in a particular target market.
  80. Intensive Distribution
    The level of distribution intensity that involves a co using as many distri channels as possible to sell products in a given market.
  81. Selective Distribution
    The level of distribution intensity that involves the use of only a few distr channels relative to the # of prospects in a given market.
  82. Exclusive Distribution
    Using one distr channel to sell products in a given market.
  83. Channel Conflict
    Friction in or b/t channels that results when the goals/behavior of one channel or channel member are at odds with another.
  84. Channel Cannibalism
    Sales from a new distr channel displace sales from an existing distr channel.
  85. Horizontal Conflict
    Channel conflict from friction b/t 2 or more channels or 2 or more channel members at the same level in a single channel.
  86. Dual Distribution
    Use of multiple distr channels to distribute the same product to the same target market.
  87. Vertical Conflict
    A form of channel conflict from friction b/t an issuing co. and members of its distribution channels.

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