Reference no: EM131811035

MARKETING QUESTION

AFLAC: Marketing Research Quacks a Duck AFLAC Incorporated sells supplemental health and life insurance. In the United States, AFLAC is known for its policies that “pay cash” to supplement or replace a policyholder’s income when an accident or sickness prevents the policyholder from working. In 1989, the Columbus, GA, American Family Life Assurance Company adopted the acronym AFLAC. At that point, the company had very little brand recognition; the name AFLAC meant nothing to potential customers. To boost brand recognition, AFLAC undertook extensive marketing research and emerged with the symbol of the duck. As of 2014, AFLAC boasts 90 percent brand recognition. This is so high that it actually rivals Coke, the company with the highest brand recognition at 95 percent. Even children (ages 8 to 13) are familiar with the AFLAC name, ranking it in popularity close to Pepsi, Old Navy, and M&M’s. This is important, because as children grow up and start to buy insurance, the AFLAC name will be at the front of their minds. Marketing research was at the forefront of the campaign. First, the decision was made to simply try to use ads to increase brand recognition rather than sell insurance. This decision came from focus groups and survey research that found customers would think that they did not need whatever type of insurance was being advertised, whether it be for life, health, home, or so on. Instead, research indicated that customers would respond to insurance ads better if they simply raised the recognition of the brand. Then, salespeople would do the job of educating potential customers about the need for different types of insurance products. After the decision was made to just raise brand awareness with ads, a specific campaign had to be created. Again, marketing research played a major role. From the start it was decided that the ads that tested the best were going to be the ads that would be used. The research said that respondents viewing the ads preferred the AFLAC duck much more than any other test ad viewed. But where did the duck come from? During the ad development process, one of the ad agency (the Kaplan Thaler Group) researchers just began to say the word “AFLAC” over and over again. Eventually, it was noticed that this word, said a certain way, sounded like a quacking duck. The risk in this choice was that AFLAC was making fun of the fact that no one knew about the brand name, and humor in advertising does not always appeal to people who want a more serious tone from their insurance company. What if the people had seen the television commercial and thought, “How stupid!” or “A life insurance company should be more serious than that,”? Therefore, the duck commercials were tested against alternatives in experimental design situations. The test audiences loved the duck commercials and rated them the most memorable out of all the possibilities (which was AFLAC’s main objective). Thus, the duck was born. The campaign has been nothing but a success. Not only has AFLAC’s brand recognition soared, but the company’s sales have as well. Before the duck campaign, AFLAC’s annual sales were growing in the 10 to 15 percent range. Post duck, AFLAC’s sales were growing at an annual rate of 20 to 24 percent. Surprisingly, the growth is not limited to the United States. In fact, 70 percent of AFLAC’s profits are from clients in Japan. The duck is now a world phenomenon, and AFLAC has marketing research to thank. Conclusion The case describes the crucial role of marketing research in designing the right advertising campaign and the resulting impact on brand recognition. The extraordinary growth in AFLAC’s name recognition within just a few years of the launch of a new advertising campaign speaks volumes about the marketing research that was conducted to test the duck commercials.

If Aflac wants to forecast the demand for supplemental health and life insurance, what type of research design should be adopted and why?