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I had an epiphany the other day while watching TV. I came to conclude that there must be only one guy who is paying too much for his car insurance. Because consider this:

• o State Farm can save you up to 40% on your car insurance.
• o Geico can save you up to 40% on your car insurance.
• o AARP members save hundreds on car insurance.
• o Progressive can save you money on your car insurance.
• o Allstate can save you money on your car insurance.

Seeing a theme here? When everyone says they can save you money on car insurance, can anyone really?

State Farms newest ads have left the “good neighbor” theme and are going on price (with some service undertones).

I recognize that auto insurance is a competitive marketplace, and I recognize that it’s price sensitive. Nevertheless it is dangerous to position your brand as cheaper than the next guy, regardless of what industry you’re in.

Here’s why:

1. Positioning on price creates a race to the bottom. Your margins will be increasingly sacrificed in the name of revenue.
2. Innovation (which is fueled by profit) suffers.
3. Branding on price encourages the customer to think of your product as the same as everyone elses. In essence, you commoditize your product.
4. Like any brand positioning, only one company can really own “price.”

In auto insurance, I would argue that price is owned by either Geico (who started as discount insurance for government employees with really good driving records) or Progressive (who invented the online comparison shopping model, which was brilliant).

But now Allstate (which owns the word security, as in “you’re in good hands with…”) and State Farm (which owns the phrase personal service, as in “good neighbor”) are now joining this race to the bottom. The ads (with the exception of Geico’s) all run together and the distinctions are blurred.

Whatever you sell, do everything you can to avoid positioning on price. It’s not a stable place to plant your flag…

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