Insurance companies appear to be taking a page from the food marketers’ handbook. A recent report in Youth Markets Alert describes how insurance companies are expanding their efforts to reach the youngest consumers: kids and teens.  One company, American Family Insurance, is sponsoring the “Clifford the Big Red Dog Be Big” campaign while State Farm has underwritten the Nickelodeon’s “Go Diego, Go Live! Tour.”

These investments are all about educating young consumers on the value of insurance while influencing them with brand messages.  According to Carole Walker of the Rocky Mountain Insurance Information Association, the teen demographic is very important to auto insurance firms. At the time when many teens begin to drive, families may start looking around for a  new carrier. Cost is often a motivating factor as  a teen driver can add 50% to auto premiums. “Teens really trigger shopping among parents,” says Walker.

Recognizing the influence that teens and younger children may have on the parental decision-making process, insurance carriers are putting more money and effort in youth-specific marketing programs. These include:

• 2010 Aflac All-American High School Baseball Classic – sponsorship includes signage and uniforms.
• TV ads promoting a partnership between Geico and Disney is tied to the animated film The Princess and the Frog.
• Kids 15 and under, of South Asian descent, can compete for a $5,000 scholarship in the 2010 MetLife South Asian Spelling Bee.
• Smoke Detectives is State Farm’s game micro-site targeting younger consumers while educating them on the topic of fire safety.

Many of these programs are examples of creative marketing solutions applied to the continuing challenge of getting consumer attention. As new technology becomes available, marketers can develop and deploy new campaigns to effectively promote their brands.

[Source: Insurance Companies Use Education, Mascots, And Live Events To Reach Youth At Every Life Stage. Youth Market Alert. EPMCOM.com. March 2010]

As part of a general trend in new fiscal conservatism, consumers are paying more attention to smaller community banks and engaging with independent advisors to obtain guidance. This trend has come about as consumers seek more control over their financial destiny and hesitate to work with banks or other financial companies that have been deemed ‘too big to fail.’  The most recent Charles Schwab’s Independent Advisor Outlook Study offers a portrait of consumer sentiment and upcoming investment advisor strategies.

In general, independent advisors are recommending that consumers save up to 9% of their income. This strategy will help them achieve their stated goals of:

• Saving money 59%
• Paying down debt 62%

In addition, consumers are seeking specific advice on the following topics:

• Financial planning 56%
• Tax planning/accounting services 38%
• Education on investments/financial matters 38%

Independent advisors believe the following sectors will drive growth in the next 6 months:

• Information technology 44%
• Health care 42%
• Energy 37%
• Consumer staples 24%
• Financials 23%

Look for more independent advisors to be marketing services such as financial education and investment opportunities in exchange traded funds (ETFs) that are heavily weighted in growth sectors such as information technology and health care.

[Source: Independent Advisor Outlook Study. Charles Schwab Corporation. 2 March 2010 Web. 9 March 2010.]

As the lessons learned from the near-collapse of the financial system continue to spread, consumers are feeling the repercussions from the credit card industry. Between June of 2009 and February of 2010, the number of consumers who do not have a credit card grew 52.6%.  Currently, nearly 1 in 3 consumers do not have credit cards.

This change is largely the result of  credit card companies contending with new legislation designed to curb abuses. In addition, marketing practices are changing. Instead of mailing consumers offers for new credit cards, companies are using direct mail to communicate revised features:

• Incentives offered to close cards 8%
• Rate changes to variable from fixed 13%
• Credit limits decreased 12%
• Annual percentage rates increased 38%

The general tightening of the credit markets has led consumers to decrease their use of revolving credit by 13.9%. The amount of revolving credit outstanding recently dropped from $957.3 billion to $866 billion.

Likewise, credit card companies are being more cautious about who they target with their best deals.  In February of this year, only 30% of consumers were notified that their credit limit had been increased. This marked a drop from 33% in June 2009.

The new legislation that went into effect on February 22, the Credit CARD Act, may also affect how credit card companies establish affinity relationships with colleges and universities. Because of these business arrangements, credit card companies had been given contact information on students and alumni along with opportunities to run promotional events on campus. As these practices come under scrutiny, card companies may have to find new sources of contact information for potential new cardholders.

The changes in the financial markets and the new legislation are both prodding credit card companies to find new ways to market their services and to find new ways to generate income.

[Sources: MacDonald, Jay. Once secret credit card-college marketing deals to be revealed, CreditCards.com, 2.25.10;  Credit Card Popularity Drops, MarketingCharts.com, February 2010]

As the economy recovers, traditional lenders are showing the kind of caution for which they’ve long been known when it comes to making loans. This renewed fiscal conservatism shows that they might have learned a difficult lesson during the recession but their hesitation to lend is curbing small business growth. This situation has resulted in a business boom for asset-based lenders.

Asset-based lending differs from traditional lending because it considers “collateral, rather than credit worthiness” when lenders weight the merits of making the loan according to Kyle Stock who writes for the Wall street Journal.  Some might equate this  higher risk financing scenario to a modified form of the pawn-shop business model.  If a business defaults on the loan, the lender seizes equipment or other assets that were put up as loan collateral. In addition, the borrower typically pays higher interest rates for these loans.

About $600 billion in asset-based financing, not including mortgages, was arranged in 2008. This level was an 8.3% jump from the previous year and analysts expect that the final figures for 2009 will show double digit growth.  While many large banks have a presence in this market – think Bank of America and Wells Fargo – many specialty capital lending businesses have opened their doors in the last couple of years. These lenders are all competing for business borrowers, even small firms with revenues under $3 million.

Look for competition to heat up in the asset-based lending sector as small businesses begin to look for new financing alternatives and as lenders market their programs to gain market share.

[Source: Stock, Kyle. Asset-Based Lending Grows in Popularity, Wall Street Journal 2.2.10]