The document discusses marketing strategies for insurance products. It describes the 7Ps of marketing for insurance services, which are product mix, price mix, place mix, physical evidence, people mix, process mix, and promotion mix. It provides examples of how Life Insurance Corporation (LIC) of India implements various marketing strategies like targeting specific customer segments, developing awareness campaigns, and promoting policies using slogans.
The document discusses marketing strategies for insurance products. It describes the 7Ps of marketing for insurance services, which are product mix, price mix, place mix, physical evidence, people mix, process mix, and promotion mix. It provides examples of how Life Insurance Corporation (LIC) of India implements various marketing strategies like targeting specific customer segments, developing awareness campaigns, and promoting policies using slogans.
The document discusses marketing strategies for insurance products. It describes the 7Ps of marketing for insurance services, which are product mix, price mix, place mix, physical evidence, people mix, process mix, and promotion mix. It provides examples of how Life Insurance Corporation (LIC) of India implements various marketing strategies like targeting specific customer segments, developing awareness campaigns, and promoting policies using slogans.
Marketing is one of the most important expect that help any product to develop and same is the case for Insurance sector and their product. Insurance is a basically a service which is provided to the people rather than a physical product therefore it is effected by service marketing. Almost every marketing textbook has a different definition of the term marketing. The American Marketing Association (AMA) uses the following: The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. Some of the main issues of marketing involved include: Marketers help design products, finding out what customers want and what can practically be made available given technology and price constraints. Marketers distribute products there must be some efficient way to get the products from the factory to the end-consumer. Marketers also promote products, and this is perhaps what we tend to think of first when we think of marketing. Promotion involves advertising and much more. Other tools to promote products include trade promotion (store sales, coupons, and rebates), obtain in favorable and visible shelf-space, and obtaining favorable press coverage.
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FLOWERS OF SERVICES
Flower of services refer to a well-formed package of total services with all the supplementary services being well formulated along with the core services. The various petals of the flower are
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Information:
A marketer needs to provide adequate information to his employees and his customers. This information is general information provided through various communication channels. In the insurance industry information is provided to the customers with the help of:
o Agents o Seminars o Web sites o Print media o Radio, Television, etc.
Consultancy:
This is additional customized information provided to the potential customers by the service provider. In the insurance industry it is provided by companys staff and agents.
Example: In LIC when a customer enters asking of information about the policy, he is directed towards the assistant sales manager. Assistant sales manager will listen to the customers requirement and as per his requirement list the number of policies that are available. He will also ask the customer about the price and limit the number of options for the customer, so that he can easily choose the policy without confusion.
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Order taking:
Order taking should be done without mistakes. In LIC order taking is generally done by: o By Agents o On Web site (www.licindia.com) o By Assistant sales manager directly in the office.
Hospitality:
Hospitality is a very pretty petal, reflecting pleasure at meeting new customers and greeting old ones when they return. Hospitality finds its full expression in face-to-face encounters. In LIC customers directly come in contact with the sales manager. The customers are treated as guests. The sales managers of LIC are given special training of how to sell the policies to the clients. It is only in LIC that a customer can meet the chairman directly without any appointment.
Safe keeping:
It is in the process and procedures used by marketers to safe guard and to maintain secrecy. In LIC the data of the customers is very important. They feed the data of the customers in their Front and Application Program Software which is connected with all the branches of LIC. The data is only available with the sales people and not shown to any person.
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Exceptional:
Exceptional service means service over and above customers expectations. LIC has the fastest claim settlement in the world thereby providing exceptional service. LIC also solves complains of the customers within 7days.
Payment:
The payment of premium is normally through cheques. Customer can make payment in LIC through: o Agents o Loans o Web sites o Standing instruction to banks: In this the account holder will give standing instruction to his bank to pay the amount of premium every month without his consent on the given date directly to LIC.
Billing:
The billing should be done in such a way that there are no mistakes and if there are any they must be immediately rectified. The billing should provide break-ups of premium charged, service charges, etc.
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STRATEGY IMPLEMENTED FOR MARKETING
Basically there are 4 steps to be followed before selecting a marketing strategy. These steps are as follows:
1. Identification of Target Market:
The target market is the focus of deciding the promotion mix. The total number of groups is analyzed and decision is taken regarding which segment is to be targeted. Example: LIC (India) has introduced a new life insurance policy especially for childrens (JEEVAN ANURAG).
2. Determination and Setting Objectives:
Service marketers employ a range of promotional methods, so it is essential to What the promotion has to achieve. It is necessary to define marketing objectives clearly so that most effective type of promotion is designed and utilized.
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In case of insurance sector, the main objectives of a promotion campaign will be: To make all or maximum population aware of the various insurance policies of the company. To promote the advantages of all the insurance policies. To make the people aware of the risks involved and the importance of taking insurance. Example: LIC (India) conducts seminars and mass marketing campaigns in order to make the customers aware of insurance and why it is needed.
3. Message development for right communication effect:
The message is an instrument for converting a suspect into a prospect. To obtain an effective response from the target market, there is always need to plan an effective message such that promotional efforts cause: Building of brand image Service awareness To provide knowledge for service To ensure that customer will have a positive perception for service promoted To build up preference for service offered
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In the insurance sector, LIC (India) and MetLife Insurance are examples of companies who have used promotion mix to promote insurance.
E.g.: LIC (India) promotes its life insurance policies using the slogan Zindagi ke saath bhi, zindagi ke baad bhi This creates awareness of risk of death as well as the importance of insurance. The slogan creates a positive perception about life insurance in the minds of people.
4. Selection of promotion mix: There should be a careful blend of promotion mix with the marketing strategy of the firm and each situation should be examined for its merits and demerits. The following criteria should be considered while devising different promotional techniques: Overall marketing objectives Activities of the competitors Characteristic of target customer Cost effectiveness, etc.
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7 PS OF SERVICE MARKETING OF INSURANCE PRODUCT
The 7Ps of service marketing will be discussed below in respect of Insurance sector and their product. The 7Ps of service marketing are:
Product mix
Price mix
Place mix
Physical evidence
People mix
Process mix
Promotion mix
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Product Mix
A product is anything that can be offered to a market to satisfy a want or a need. A product mix is the set of all products and items that a particular seller offers for sale. In case of insurance sector, the product mix comprises of Life and Non life insurance policies that are offered to the customer by the company. A companys product mix has certain width, length and depth.
The Width of a product mix: It refers to how many different product lines are available. In case of insurance sector, there are generally three different product lines i.e. Life Insurance, Marine Insurance and Fire Insurance.
Life Insurance: Life insurance is a financial resource for your family and loved ones in case of your death. It is a contract between you and an insurance company in which the company provides your beneficiary with a certain amount of money upon your death. In return, you make periodic payments (premiums) in an amount that depends on medical history, age, gender, and occupation.
General Insurance: The term general insurance essentially applies to the insurance risk that is not life insurance or health insurance risk and so the term covers familiar forms of personal insurance motor vehicle insurance, fire insurance and travel insurance. 11
INSURANCE LIFE INSURANCE Whole Life Policy Limited Payment Life Convertible Whole Life Policy Joint Life Endowment Policy Double Endowment Policy Jeevan Saathi Money Back Policy Annuity Plans Group Insurance Policy GENERAL INSURANCE Fire Insurance Marine Insurance Motor Insurance Business Risk Burglary Insurance 12
The depth of a product mix:
Various products and their different types. In the insurance sector, one policy can be made available in different variations. Some of the examples are as follows:
Life Insurance:
These product mix dimensions permit the company to expand its business. E.g.: It can add new product lines thus widening its product mix.
Whole Life Insurance Whole Life with Profit Policy Limited Payment Whole Life Policy Single Premium Whole Life Policy 13
Price Mix Price is one element in the marketing mix that produces revenue; all the other elements produce costs. Prices are easiest marketing mix elements to adjust; product features, channels and even promotion take more time. Price also communicates to the market the companys intended value positioning of its product or brand.
In the insurance business, the pricing decisions are concerned with the premium charged against the policies, interest charged for defaulting the payment of premiums & credit facilities, commission charged for underwriting & consultancy services.
Premium: Premiums are the periodic payments usually monthly or quarterly that the policy holder pays to the insurance company to purchase and keep a policy in force.
For example in case of life insurance according to the policy it may be the amount payable during the endowment term of the policy or until the death of the life assured whichever is earlier.
Insurance is essentially a matter of sharing risk. A thousand people contribute a certain fixed amount (i.e. premium) and in future if something were to go wrong with any of the mass contributors, the lump sum collected as premiums is used to compensate for the loss.
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The basis on which the insurance company decides the amount of premium to be paid by each person is determined mainly by 3 factors:
Mortality Tables: All insurance companies refer to different mortality tables. These tables differ from country to country. The mortality table indicates the probability of a person dying in a particular age group. For e.g. in an age group of 25-30 years, the probability might be just two, but this probability would increase for a higher age group of 45- 50 years.
Expected Surplus: The premiums collected by the insurer are invested in capital markets. There is a fixed investment pattern for the insurer. Out of the surplus earned on the premiums invested, 95% is distributed to the policyholders and the insurance company retains the balance 5%. If an insurer expects to earn more return on his investment then he would charge more premiums to his investor.
Expenses: An insurance company has to incur expenses in the form of commission to agents, office expense, advertising expense, salaries to employees. These expenses are to be managed by the company in the 5% surplus earning which they earn as mentioned above. In order to meet the above expenses the insurer has to collect more premiums so that there is more surplus from which expenses can be met.
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Place Mix
Place mix can be defined as the Physical distribution i.e. the delivery of goods/ services at the right time at the right place to the customers. Place decisions involve building relationships with the wholesalers, retailers and through these intermediaries building relationships with the customers. Products and services must be at the right place, at the right time in order to be consumed. Probably the best way to perceive place is to think of the flow of products from manufacturer through intermediaries to the consumer or user. This flow can be thought of as a channel used to move goods and services.
Channels: According to Philip Kotler, Channels are sets of interdependent organizations involved in the process of making the product or service available for use or consumption Marketing channel decisions are among the most critical decisions facing the management.
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The channels chosen intimately affect all the other marketing decision In case of insurance sector, the following channel of distribution is followed according to the target market:
CHANNELS Direct Selling Agents Financial Advisors Call Centers Partner Selling Bancassurance Postal Department Selling through Corporate
Direct Selling:
Agents:
The agents are selected and recruited by the development officer of the insurance company. These agents inform the customers about the various insurance policies offered by the company and convince them to buy these policies.
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Financial Advisors:
The financial advisors are also consulted by the customers regarding their financial matters. These advisors suggest their clients to get their goods insured against any calamity or risk. Hence they act as a channel in distribution of insurance.
Bancassurance:
With the evolution of interconnected financial services, banks are converting themselves into one stop financial supermarkets. This has promoted two big classes of financial institutions: banks and insurance companies to combine and deliver an innovative product i.e. Bancassurance. In bancassurance, the insurance products are sold through the banks network of branches.
Call centers:
The people who require insurance call up the call centers. These call centers send their direct marketing agents who go to the customers place and sell the insurance policy.
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Postal Department:
India has an extremely well developed postal network, which is even stronger than the network of banks in the country. Post offices have been established even in the interior parts of the country. Insurance companies can tie up with the postal department to sell and distribute various insurance covers. This would certainly require upfront training costs, as the postal employees in turn need to educate and sell the concept and benefits of insurance to the people in rural areas. Such a tie up with the postal department would open up Indias rural areas, which are largely untapped for insurance sector. This can prove to be a sustainable source of growing revenues.
Selling Through Corporates:
Insurance can be sold through corporates too. E.g.: When a customer purchases a Maruti car, he gets the insurance of the car free from the Maruti Company itself. Thus this is termed as selling insurance through corporates.
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Physical Evidence
Physical evidence is the environment in which the service is delivered and where the company and the customers interact and any tangible goods that facilitate the performance and communication of the service. Services are intangible and heterogeneous. Intangibility means that services cannot be displayed, physically demonstrated or illustrated; heterogeneity means that consumers cannot be certain about performance on any given day. It plays a major role in enhancing customers perception of the service quality.
Insurance Service Tangibles as Physical Evidences 1 Policy Documents 2 Brochures 3 Periodic Statements 4 Renewal Notices 5 Business Cards 6 Stationary 7 Calendar, Diaries 8 Letters/Cards 9 Website 20
People Mix
Employees: Employees are very crucial because: 1. They are the service 2. They are the brand 3. They are the marketers 4. They are the organization in the eyes of the customers. The various employees involved in providing service to the customer in insurance sector are:
Customer service representatives: They, process insurance policy applications, changes, and cancellations. They review applications for completeness, compile data on policy changes, and verify the accuracy of insurance company records. They may also process claims and sell new policies to existing clients. Nowadays, these workers are taking on increased responsibilities in insurance offices, such as handling most of the continuing contact with clients.
Marketing and sales managers: These constitute the majority of managers in carriers local sales offices and in the insurance sales agents segment. These employees sell insurance products, work with clients, and supervise staff.
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Claims adjusters, appraisers, examiners, and investigators:
Claims adjusters work for property and liability insurance carriers or for independent adjusting firms. They inspect property damage, estimate how much it will cost to repair, and determine the extent of the insurance companys liability; in some cases, they may help the claimant receive assistance quickly in order to prevent further damage and begin repairs. Adjusters plan and schedule the work required to process claims, which may include interviewing the claimant and witnesses and consulting police and hospital records. In some property-casualty companies, claims adjusters are called claims examiners, but in other companies, a claims examiners primary job is to review claims to ensure that proper guidelines have been followed.
Insurance investigators handle claims in which companies suspect fraudulent or criminal activity, such as suspicious fires, questionable workers disability claims, difficult-to-explain accidents, and dubious medical treatment. Investigators usually perform database searches on suspects to determine whether they have a history of attempted or successful insurance fraud.
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Underwriters: Underwriting is another important management and business and financial occupation in insurance. Underwriters evaluate insurance applications to determine the risk involved in issuing a policy. They decide whether to accept or reject an application, and they determine the appropriate premium for each policy.
Insurance sales agents: About 15 percent of wage and salary employees in the industry are sales workers, selling policies to individuals and businesses. Insurance sales agents, also referred to as producers, may work as exclusive agents, or captive agents, selling for one company, or as independent agents selling for several companies. Through regular contact with clients, agents are able to update coverage, assist with claims, ensure customer satisfaction, and obtain referrals. Insurance sales agents may sell many types of insurance, including life, annuities, property-casualty, health, and disability insurance. Many insurance sales agents are involved in cross-selling or total account development, which means that, besides offering insurance, they have become licensed to sell mutual funds, annuities, and other securities.
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Lawyers:
The insurance industry employs relatively few people in professional or related occupations, but those who are so employed are essential to company operations. For example, insurance companies lawyers defend clients who are sued, especially when large claims may be involved. These lawyers also review regulations and policy contracts. Nurses and other medical professionals advise clients on wellness issues and on medical procedures covered by the companys managed-care plan.
Customers:
People mix not only includes employees but also customers. The customers are to be treated with respect and courtesy. Customer is the king of the market. Satisfaction of the customer is the primary motive of the insurance industry as well as all the organisation
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Process Mix
In case of insurance sector, the process mix includes the various interactions that take place between the insurance agent and the customer in the process of selling the policy to the customer till the settlement of claims.
The following process mix is followed by insurance companies in case of life insurance:
1. The insurance agent calls up the customer and informs him about the different policies offered by the company and the price mix of all the policies. If, the customer seems interested in taking the policy then, he fixes an appointment with the customer.
2. The insurance agent meets the customer and gives him some information about the insurance company and also about the benefits of the policy.
3. The customer is then asked to fill a financial review form (FRF) and the agent is asked to find out the standard of living of the customer so that the insurance company gets a clear picture about the financial condition of the customer and what kind of policy he can afford.
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4. The insurance company offers various policies but they might not be suitable for the customer hence, on the basis of his requirements and financial status, the insurance agent suggests two or three policies to the customer, which will be suitable for him.
5. The insurance agent explains the different policy plans in detail to the customer i.e. the amount of premium to be paid, the time interval at which the premium is to be paid, the benefits of each of the policy etc. A brochure is also provided to the customer wherein the entire description of all the policies is given.
6. Then, the insurance agent provides a feedback form to the customer and asks him to give his feedback regarding the policies that he has been informed about. This feedback is taken in order to find out whether the customer is satisfied with the plans of the policy or whether the company needs to make the policy plans more attractive so that it may appeal to its future customers.
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7. Then, the next appointment is fixed by the insurance agent with the customer and in this meeting; the customer selects the policy plan, which appeals to him. The customer is then asked to fill up the proposal form which contains various details of the payment and he is asked to make the first premium payment.
8. Then, the insurance agent submits the duly filled and signed form in the insurance office along with the other necessary documents. E.g.: Medical Reports in case of Life Insurance.
9. Then, a reconfirmation is taken by the agent from the customer that he agrees with the terms and conditions of the policy.
10. The insurance agent then regularly collects the premium from the customer whenever the premium becomes due.
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Promotion Mix
Promotion is a descriptive term for the mix of communication activities, which a service organization carries out in order to influence the target customers on whom their sales depend. It is an element in an organizations marketing mix that serves to inform, persuade, or/ and remind people about an organization or individual goods, service, image, ideas, community involvement or impact on the society. It is used in hopes of influencing the recipients feeling, belief or behaviour through any form of communication.
The types of promotional methods used in insurance sector are as follows:
Advertising
Public relations
Sales Promotion
Personal Selling
Word of Mouth.
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Advertising:
It is a paid form of non-personal communication. It is used to create awareness and transmit information in order to gain a response from the target market. Forms of advertising are as follows:
1. News Papers and Magazines: LIC give ads in the news papers and magazines round the year to continue its brand image and also when new products are introduced. Normally its ads are published in Times of India.
2. Electronic media:
Insurance companies also advertise its services in the Electronic media like:
Internet (Websites): Companies like LIC (www.licindia.com), ICICI (www.iciciprudential.com) all have websites from which people can get the information about their products, prices, various schemes, and lots of other information. People can also purchase the product through this website.
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Television: Companies like LIC, Met Life India, advertise on television to make people aware of their products and services.
Radio: ICICI Prudential advertises on 92.5 red Fm.
3. Brochures:
Companies provide brochures to the customers so that they can have a look on various schemes and their prices. Eg: LIC have brochures of various schemes that are available different languages i.e. Hindi, Marathi, English, and other regional languages. They provide the brochure of the scheme the customer has chosen, in the language which they understand. Brochure will provide the customer the information like features of the scheme, amount of premium to be paid, rebates (if any), etc.
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4. Hoardings:
LIC put its hoardings where there is a mass flow of people, especially outside the railway station or at the backside of the bus. When Met Life was introduced it has put his hoardings on the side of the train, to target huge number of people
Public relations:
Public relations are helpful for the companies to build their brand image, to maintain good relationship with customers, to make the people aware of its recent happenings, etc. Mediums of Public relations are:
1. Press releases: This helps the company to convey its message to its customers and other people.
2. Seminars: These are held to provide information about the new product launched, position of the company in the market, etc.
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Sales Promotion:
1. Gifts: LIC provides diaries, pens, booklets, etc to its customers.
2. Sponsoring Events: E.g.: Max New York Life Insurance Company has sponsored the recent India-Zimbabwe-New Zealand tri series.
Personal selling:
Agents: It is the most widely used method of promotion by all insurance companies. They recruit, train and motivate the insurance agents to convince the customers to buy insurance policies of that particular company. The agent also collects the monthly premium and settles the claims of the customers.
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Chapter 2 Insurance Businesses
INTRODUCTION
A promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss. Some forms of insurance are required by law, while others are optional. Agreeing to the terms of an insurance policy creates a contract between the insured and the insurer. In exchange for payments from the insured (called premiums), the insurer agrees to pay the policy holder a sum of money upon the occurrence of a specific event. In most cases, the policy holder pays part of the loss (called the deductible), and the insurer pays the rest. Examples include car insurance, health insurance, disability insurance, life insurance, and business insurance.
Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. Insurer is the company that sells the insurance. Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.
Security has always been a universal desire, right from the earliest civilizations. This quest for security has been a major motivating force in the 33
progress of mankind. The early societies looked up to their families for providing this security, which resulted in cohesive units. Gradually, as lifestyles changed and as man progressed into a more modern industrialized setup, this cohesive quality of the family started fading. One had to look for other ways of providing economic security and somewhere along the line was born insurance.
REASONS FOR BUYING INSURANCE PRODUCTS
Ask individuals wanting to buy life insurance, about how they do their tax planning and the first reply will be - insurance policy. Such is the nature of life insurance. It is bought by almost everyone right from the bigwigs of the business world to small retail investors. And most buy it for one core reason - to save tax. But this is not the only reason.
Living too long: Advances in the field of medicine have grown by leaps and bounds over the past few decades. Due to this, life expectancies have gone up. This poses another problem for individuals. It is generally observed that individuals who tend to live way beyond their earning years like say, till the age of 85 or 90, usually face a problem coming to terms with increasing costs of living.
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Fear of passing away early: One is never sure about life. We often come across people claiming that nothing is going to happen to them; that they are too young to pass away. But do they really know what the future holds for them? We can assure you they don't, because the question `What if?' has probably never crossed their minds. We only have to read newspaper headlines about the Tsunami, the earthquake that took place and such other natural calamities to understand how the future can be unpredictable. Individuals need to insure themselves to secure the future of those who are dependent on them; especially so if they happen to be the sole breadwinners. You wouldn't want them to go through hardships or rely on others/relatives, etc. This, in fact, is the prime reason why one should buy an insurance policy.
Painful Existence: Maybe an individual has planned well during his earning years to secure himself financially. He has also designed his financial portfolio in such a way that he is drawing a comfortable monthly income to support his family expenditure. Life insurance can act as the saving grace in two ways. One, by way of a medical rider like the accidental death benefit rider, permanent disability benefit rider, critical illness benefit rider. These riders are taken along with the life insurance plan and help cover the medical expenses.
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Tax benefits: Do we need to elaborate on this any further? Traditionally, life insurance has always been bought more for tax benefits than for what It is actually purported to do; i.e. insure human life. But the role of life insurance in an individual's tax planning cannot, in any way, be undermined. Under the new regime, individuals can now invest up to Rs 100,000 in insurance premium to avail of a deduction from taxable income. The tax sops provided on insurance help `increase' the individual's disposable income and make him consider taking a life insurance plan which he otherwise may not have done.
Investment: The other major persons who invest in Insurance are those who have earned good money in their young age and want to invest in some safe investment scheme which also provides additional benefits like life insurance cover and pension benefits at later stages of life.
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FUNCTION OF INSURANCE
PRIMARY FUNCTIONS:
a) Providing Protection: The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Professor Hopkins observes "Insurance is a protection against economic loss, by sharing the risk with others.
b) Collective bearing of risk: Insurance is a device to share the financial loss of few among many others. Dinsdale opines, insurance is a mean by which few losses are shared among longer people. Similarly, William Bevridge observes, "The collective bearing of risks is insurance." All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid.
c) Provide certainty: Insurance is a device which helps to change from uncertainty to uncertainty. This may the reason that John Magee writes that the function of insurance is to provide certainty. Similarly, Regal and- Miller observe, "Insurance is device whereby the uncertain risks may be made more certain".
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SECONDARY FUNCTIONS:
a)Prevention of losses: Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses causes lesser payment to the assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured.
b) Small capital to cover larger risks: Hinsdale observes, insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty.
c) Contributes towards the development of larger industries: Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery.
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Chapter -3 Insurance Marketing
Marketing of insurance products have become an important activity in the insurance business. Insurance marketing is found both in the life insurance sector as well as in non-life insurance sector.
Life Insurance Marketing
An Introduction to Life Insurance Marketing
Life Insurance Marketing is one of the most strenuous jobs for those who are involved in the insurance marketing.. It is because of the everlasting conflict between the insurance companies which want to profit the most and the insured person who wants to get as much compensation as possible from the insurance company. Commissions for the Life Insurance companies are very high and they seldom make profits out of the policies. Also the insurance policy needs to be transparent so that the potential customer understands it totally and should not feel that they have been treated unfairly by the insurancecompany.
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Reasons for Life Insurance Marketing
The Life insurance companies were paid very little premiums by young children or healthy people and thus the scope for profit was very small and those who paid high rates of premium were the older beings who died and the Life insurance companies compensate for that. However nowadays the Life insurance premiums are almost the same for an young adult and an old person who just had a major operation.
As the Life Insurance Marketing Companies already deals with this type of a scenario, what one can do is to change the public perception about the Life insurance companies. One can connect himself or herself with companies whose workers need a plan for Life Insurance. One can also go to crowded places and advertise for the Life insurance company. The Life insurance companies also offer fliers and hanging banners. One can also offer free Life check in a reputed place to the insured for at least once. One should always give the life insurance policy holders existing a chance to prefer the marketing techniques that the insurance company is presenting. If the policy holder does this at a regular basis then the company has a high chance of succeeding.
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This is making the competition much tougher for the Life insurance companies as most of the companies offer similar types of premiums and facilities. So it has become very important for the life insurance companies to concentrate on Life Insurance Marketing and attract as many people as possible towards their company.
The Life Insurance Companies prefer to go for Group Life Insurance for a group of people from a particular company or a family so that they get a group of customers and even if they compensate for some of them for various reasons they usually make it up with other's premiums. They also get fewer papers to control and also they provide better facilities for their clients. So to promote this type of policy they need to have social and industrial connections. Life Insurance market helps developing that. Even for other policies like term life insurance and permanent life insurance one needs to be aware of making people realize the profits of the policy by various means provided by marketing agencies.
So before going for a Life Insurance Marketing one actually needs to know the market target and the desires of the people who are actually seen as potential insurance customers.
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Life Insurance Marketing Strategies A very common way to promote a Life insurance company through Life Insurance Marketing is to make the name of the company familiar to others by means of television commercials, handling out pamphlets, hanging banners in populated areas and by providing exciting offers. Telephone marketing is another way of Life Insurance Marketing. One can see the telephone companies send messages about various offers and they even make phone calls. Web Insurance Marketing is another good strategy to promote insurance policies. The pop ups that one sees while using Internet are actually a very effective way of sending messages across the potential insurance customers. One should listen to the existing Life Insurance Policy Holders as well as the potential Life insurance policy holders and listen to what people who actually matters have to say. One common problem that the insured persons face is that the insurance companies do not inform its clients about the hike in the premium rates. These things should be kept in mind. Not only that, a client should be informed about everything related to his policy and the Life insurance company should keep the transparency as much as possible.
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Community Life Insurance Marketing is another different way to get promotion and a high recognition for the Life insurance company. Eminent workers join local community institutions, such as Chamber of Commerce, and by signing up there one can help out various projects that take place. These kinds of activities and social works on behalf of the Life insurance company helps the company to get free publicity as their names are published in news paper and in media also. Doing charity works also helps the Life insurance companies to come across various people who act as volunteers and can act as their potential Life insurance clients. People also like to deal with like minded people and companies and this is how many deals are made. A Life Insurance Company should not charge different Life insurance client different charges for the same policy. This kind of policy gives the Life insurance policy holders the feeling that they are being treated unfairly and also that the Life insurance companies are only looking for profits and not the betterment of customer welfare. When a Life insurance claim is filed, especially for a very big hefty amount, the Life insurance company should help out the policy holder in processing out the paperwork. One should not let bureaucracy enter and make it so difficult for the one making the claim so that he gives his claim .This has always been a common tactic on the insurance company's part to avoid paying claims claimed by the policy holder. This though makes a short term profit for the company but it hurts in the long run as the reputation of the company is hampered severely. 43
People in this Life insurance industry should always try to keep in constant contact with the existing customers as well. The competition in the insurance market is so fierce today that no company wants to loose out on a customer to another company. Clients who are not contacted for a longer period of time normally fail to remain loyal to the insurance company and look for a different Life insurance company. The company can keep the records of the client's birthday and days like anniversary and sent him or her small tokens of love or loyalty at a regular basis. If the company can afford a little more it can send dinner coupons to the Life insurance policy holder. These things play a major role and can be considered as an effective Life Insurance Marketing strategy. May be the most crucial thing in insurance marketing is to always speak about unity and honesty while dealing with a business. A Life Insurance Holder can find so many frauds in various life insurance companies today, that life insurance customers are going for products and services which are trustworthy to them. Feeling safe is about insurances and other things are most important as far as the insurance holder is concerned. So, if a company remains loyal to its customers it will itself do Life Insurance Marketing for itself. So, only by remaining loyal to its customers the company can do a world of good to its reputation.
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Health Insurance Marketing
An Introduction To Health Insurance Marketing Health Insurance Marketing is one of the most difficult jobs in insurance marketing. It is because of the everlasting conflict between the insurance companies which want to profit the most and the insured person who wants to get as much compensation as possible from the insurance company. Commissions for the health companies are very low and they very seldom make profits out of health insurance.
Reasons for Health Insurance marketing The health insurance companies were paid very little premiums by young children or healthy people and thus the scope for profit was very small and those who paid high rates of premium were the older people who often get ill and the health insurance companies compensate for that. However nowadays the health insurance premiums are almost the same for a healthy young adult and an old person who just has had a major operation.
As the Health Insurance Marketing Companies already deal with this type of a scenario, one can have an alternative view of the health insurance companies. One can be associated with companies whose workers need a plan for health. One can also go to crowded places and advertise for the health insurance company. For the purpose of advertisement the health insurance companies offers fliers and hanging banners.
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They also offer free health checks in reputed places to the insured. One should always give the life insurance policy holders, existing or potential, a chance to understand the gifts and opportunities the insurance company is presenting to make them comfortable and make them feel that they care for the clients. If this is done regularly by the company then there are high chances of success in attracting customers on the part of the company.
This has invited tough competition for the health insurance companies as most of the companies offer similar types of premiums and facilities. So it has become very important for the life insurance companies to focus on Health Insurance Marketing and attract as many people as possible towards their company.
It is hence mandatory for one to know about the market target and the desires of the customers before going for health insurance marketing. The confusion about the way a Health Insurance Marketing conductor can draw the potential Insurance holder's attention evaporates fast if he knows his targets and aims clearly. So, it is important to conduct a survey and then aim at attracting people.
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Health Insurance Marketing Strategies A very common way to promote a health insurance company through Health Insurance Marketing is by making the name of the company familiar to others by means of television commercials, handling out pamphlets, hanging banners in populated areas and by providing exciting offers. Telephone marketing is another way of Health Insurance Marketing. One can see the telephone companies send messages about various offers and they even make phone calls. Web Insurance Marketing is another good strategy to promote insurance policies. The pop ups that one sees while using Internet are actually a very effective way of sending messages across the potential insurance customers. One should listen to the existing Health Insurance Policy Holders as well as the potential health insurance policy holders and listen to what people who actually matters have to say. One common problem that the insured persons face is that the insurance companies do not inform its clients about the hike in the premium rates. This things should be kept in mind. Not only that a client should be informed everything related to his policy and the health insurance company should keep the transparency as much as possible.
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A Health Insurance Company should not charge different health insurance client different charges for the same policy. . This kind of policy gives the health insurance policy holders the feeling that they are being treated unfairly and also that the health insurance companies are only looking for profits and not the betterment of customer welfare. When a health insurance claim is filed, especially for a very big hefty amount, the health insurance company should help out the policy holder in processing out the paperwork. One should not let bureaucracy enter and make it so difficult for the one making the claim so that he gives his claim .This has always been a common tactics on the insurance company's part to avoid paying claims claimed by the policy holder. This though makes a short term profit for the company but it hurts in the long run as the reputation of the company is hampered severely. Community Health Insurance Marketing is another way to get promotion and a high recognition for the health insurance company. Eminent workers join local community institutions, such as Chamber of Commerce, and by signing up there one can help out various projects that take place. These kinds of activities and social works on behalf of the health insurance company helps the company to get free publicity as their names are published in news paper and in media also. Doing charity works also helps the health insurance companies to come across various people who act as volunteers and can act as their potential health insurance clients. People also like to deal with like minded persons and companies and this is how many deals are made. 48
Insurance Agency Marketing The basic of an Insurance Agency Marketing is to increase the impact of an insurance company's business as much as possible. Insurance Agency Marketing is used to make the project work and profit as much as possible. Every insurance company has its own Insurance Agent Marketing budget and the company employs its Insurance Marketing Agent accordingly. Some choose cheap agencies and some choose Insurance Agency Marketing who are renowned in the market better known as branded agencies.
Most of the big insurance companies prefer branded agents because the bigger ones have better resource and better employees than the smaller ones. It is important to choose a suitable Insurance Agency Marketing because more than anything else the insurance products would be sold on the basis of itspresentation.
Any customer today gives special emphasis on proper information. Most of the Insurance customers or the potential insurance holders are well informed today and that is why Insurance Agency Marketing should depend mainly on the media that provide information. So the marketing agency should concentrate on providing information in the media like news paper, television magazines and through Internet as well. This is a very easy and cheap way to make people aware of one's company. Another way the Insurance Agency Marketing can go on which is by employing good salesman who can work as individual agent for the company.
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Chapter 4 Recent Strategies
Strategies adopted by the players in the market
Gone were the days when the customers were forced to take up the kind of products whatever coming from LIC's and GIC's stables. But now, the customer has been portrayed as the king and to his delight, the products are redesigned and customized suiting his need taking into account his paying capacity and multiple benefits. Let us look at the strategies adopted by the players in the market.
Shift in the product portfolio
Earlier the entire industry was revolving around investment and savings oriented plans. As the interest rates are moving southwards, all the players are deliberately focusing on selling pure risk covers in an effort to capture the new customers. The premium on such products is low as it covers only the risk aspect and does not factor in investments or savings. Even the market leader LIC has withdrawn some of the products, which are positioned, on the assured returns platform. Though the share of the term plans in the product portfolio is quite negligible, the shift towards the term products is already visible. Typically a term plan does not provide anything by way of maturity, unlike money back or endowment policies.
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Value For Money (VFM)
The sea change since the sector opened up has been on the way the basic products have been packaged innovatively, often tailor made to provide a bundle of benefits to the customers. This is possible through the introduction of riders, which have added value to the risk cover at minima Riders are nothing but add-ons coming along with the base policies for a slightly additional premium. Riders have become the major instruments for the organizations to lure the customers away from the competitors.
Tapping the Niche Markets
Private insurers are concentrating much on designing attractive products by investing heavily on research, studying life expectancy and health statistics across age groups, income levels, professionals and regions on their own instead of relying on data with state insurers. The products are designed with a technical team of actuaries and a product development team working closely together to target the niche market.
Thrust to the rural markets
Thanks to the norms stipulated by the regulator IRDA, all the players have turned their eyes towards the rural market. The rural obligation on part of the new private insurance companies is incremental in nature. It goes from 5% to 15% over the period of 5 years for life insurance and from 2% to 5% in case of general insurance.
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MODERN MARKETING APPROACH
INTRODUCTION The Insurance sector plays a vital role in the economic development of our nation. It acts as a mobilize of savings, financial intermediary, promoter of investment activities, stabilizer of financial markets and a risk manager. India is still an under-insured country in the world. It is at the 18th position among Life Insurance markets and 28th in Non-Life Insurance markets in the world. This indicates that there is a huge potential, yet to be explored. MODERN MARKETING APPROACH Marketing strategies for insurance in the emerging scenario could be understood in terms of the following steps: R >>>>>> STP>>>>>MM>>I>>>> C Here, R = Market Research STP = Segmentation, targeting, positioning MM = Marketing Mix I = Implementation C = Control Having done market research and finalizing on segmentation, targeting and positioning the strategy would focus on the marketing mix namely, Product, Price, Place and Promotion.
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While determining the implementation methodology, the four characteristics viz. Intangibility, Inseparability, Perishability and Variability gives rise to certain unique requirements that deserve careful attention while formulating the marketing strategy for insurance. After implementation, the insurers should concentrate on the effective control that would enhance their business.
In India Insurance is sold and not bought. The agents / Advisors by using various strategies sell the product by convencing the customers. This approach to selling their products requires understanding of concepts and principles borrowed from the fields of psychology, communications, and sociology and needs a lot of personal commitments and self discipline from the seller. The commitments referred are: Finding and understanding the needs of the customers. Partnering with the customers. Helping the customers to achieve his business and other objectives by the purchase of the product or service. Believing that your products / services are a great fit with your customers needs, and Believing in yourself and your ability to help the customers in solving their problems.
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PUNCH LINES AND LOGOS WHICH ARE ALLOTTED BY SOME COMPANIES:
It helps to create awareness about the brand among the target audience. It also helps the company to convey its message to the customer.
Brand Positioning: Tag Line LIC Zindagi ke saath bhi, zindagi ke baad bhi Oriental Insurance Prithvi, Agni, Jal, Aakash, Sabki suraksha hamare paas Max New York Your partner for life ICICI Lombard Business Uninterrupted Birla Sunlife Your dreams, our commitment ING Vyasya Adding life to insurance ICICI Prudential We cover you at every step in life. Aviva Kal par control Royal Sundaram Beyond Expectations Bajaj Allianz Haske Jeeyo Yaar
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Chapter -5
MARKETING TRIANGLE FOR INSURANCE
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Company:
The company makes various promises to its customers through External Marketing. The external marketing function relates to anything that is communicated to the customer before the service is delivered. There are many factors beyond the traditional marketing mix that communicate to the customers in case of LIC. The Marketing Mix i.e. the product, price, place and promotion of LIC is been already explained the 7 Ps. However, the important role of Agents in LIC cannot be neglected.
Agents:
LIC is a kind of organization where Agents play one of the most prominent roles. No customer could get an insurance policy without the help of an Agent. So in the above diagram the Agents are considered on the both the levels (Company & Employee level) as per their role.
External Marketing is generally undertaken by the Company whereby the Company makes certain promises to the Customer through Marketing Mix. But LIC is an exception. Here even the Agents sometimes work as the Company itself i.e. they themselves carry out External Marketing and commit certain promises to its potential customers.
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Employees:
The agents and the development officers act as the front-line staff and they are in direct contact with the potential or existing customers. They are the ones who keep or satisfy the promises made by the company. The marketing of insurance basically comes under concept selling. The agents are thus given various incentives, rewards, commissions and all the necessary training required.
As regards incentive, they receive PLI (Productivity Linked Incentive), which is based on the increase in premium amount and the sums assured by the agent. They are also given extra commissions in case of policies, which are of high value. There are normal promotions for any good work done on a regular basis. The agents generally work under the training and guidance of their respective development officers.
These incentives provided to the Agents and other employees are a part of Internal Marketing. Internal Marketing relates to meeting the needs of the employees so they can meet the needs of their customer. As explained above, the company tries to meet the needs of the employees or try to motivate them through their needs there by satisfying customer needs.
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Consumers:
The consumers are the policyholders. Apart from the routine life insurance policies other services like housing finance, mutual funds, pension and group insurance. Thus the range of consumers is far and wide.
The employees of the Company need to convince the Customers through Interactive Marketing. Interactive Marketing is nothing but implementation of a marketing policy that is founded on direct interactive contact with the customer or the desired customer. It is done through different types of Employee-Customer communication, Customer Oriented Programmes, after sales services etc.
As explained earlier, the LIC Agents try to convince the customers to get the appropriate policy provided by the Company. Word of mouth promotion and Personal Approach is one of the major aspects of Interactive Marketing in any Insurance Company.
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MARKET SEGMENTATION
According to Philip Kotler Market segmentation is the sub- division of a market into homogenous sub-sets of customer where any sub-set may conceivably be selected on a market target to be reached with a distinct marketing mix
Thus market segmentation is the process that segments a market into smaller sub-markets called segments. Segmentation is normally performed along with demographic, geographic, psychographic, and behavioural variables;
Demographic variables describe characteristics of populations and include age, gender, race, education, occupation, income, religion, marital status, family size, children, home ownership, socioeconomic status, and so on.
Geographic variables include various classifications of geographic areas, for example, zip code, state, country, region, climate, population, and other geographical census data. Note that this information can come from national census data.
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Psychographic variables describe life style, personality, values, attitudes, and so on.
Behavioural variables include product usage rate and end, brand royalty; benefit sought, decision making units, ready-to-buy stage, and so on. This information can be extremely useful for marketing purposes.
Criteria of effective segmentation:
Measurable- size, purchasing power characteristics of the segment must be measurable
Substantial - The segment must be substantial enough to earn profit
Accessible- The segment must be accessible
Differential- The segment must be conceptually distinguishable and respond differently to different marketing mix
Actionable- Effective programme must be formulated for serving the segment
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Insurance Market Segmentation:
In insurance industry, profiling is very important in determining premium rates. Typically, insurers collect every information available. However, analyzing thoroughly is not feasible since the number of variables is normally large. The starting point is thus mass marketing. In mass marketing, the seller engages in the mass production, mass distribution and mass promotion of one product/ service for all buyers. A niche on other hand is a more narrowly defined group seeking a distinctive mix of benefits. In terms of target customers, insurance products can be broadly classified into products that can be used to indemnify perils that are faced by a few individuals or industries. These can be termed as mass market and niche market products. Also, in terms of product complexity, insurance products can be categorized into low complexity and high complexity products.
Low complexity products: These are simple products with a standard set of covered risks, perils and hazards.
High complexity products: They have a large number of riders and warranties and do not indemnify certain causes of loss.
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IMPORTANCE OF SEGMENTATION IN INSURANCE:
Helps to understand the need and the requirement of the policyholder and accordingly helps to cater i.e. the needs and the requirement rural sector is different from the urban sector
Segmentation helps in having a microscopic study of culture language, likes and dislikes. This helps in marketing decision which indirectly helps to cater all segments like rural & urban, men & women, agriculture and industrial.
Segmentation helps to make promotional measures more creative like advertisements, personal selling, pricing/fee decision. Segmentation helps to cover maximum policy holder. It helps to identify profitable segment and helps in formulating attractive packages.
Many successful insurance companies will recognize the Internets potential as a powerful marketing tool. Not only might this reduce costs for insurance companies, but it also could enable many clients to turn to the Internet first to get information on their policies, obtain quotes, or submit claims.
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Chapter - 6 Surveys and Analysis
HDFC BANK
HDFC Bank Ltd. is a major Indian financial services company based in India, incorporated in August 1994, after the Reserve Bank of India allowed establishing private sector banks. The Bank was promoted by the Housing Development Finance Corporation, a premier housing finance company (set up in 1977) of India. HDFC Bank has 1,725 branches and over 4,232 ATMs, in 779 cities in India, and all branches of the bank are linked on an online real-time basis. It is one of the Big Four banks of India, along with State Bank of India, ICICI Bank and Punjab National Bankits main competitors.
Business focus
HDFC Bank deals with three key business segments. - Wholesale Banking Services, Retail Banking Services, Treasury. It has entered the banking consortia of over 50 corporates for providing working capital finance, trade services, corporate finance and merchant banking. It is also providing sophisticated product structures in areas of foreign exchange and derivatives, money markets and debt trading and equity research.
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Wholesale banking services
Blue-chip manufacturing companies in the Indian corp to small & mid-sized corporates and agri-based businesses. For these customers, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of for its to corporate customers, mutual funds, stock exchange members and banks.
Retail banking services
The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to customers through the growing branch network, as well as through alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile Banking. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as well. The Bank launched its credit card business in late 2001. The Bank is well positioned as a leader in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.
Treasury
Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. These services are provided through the bank's Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.
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HDFC BANK LTD has branches in 33 States
Andra Pradesh Rajasthan Maharashtra Kerala Punjab Arunachal Pradesh West Bengal Pondicherry Assam Uttaranchal Orissa Bihar Uttar Pradesh New Delhi Chandigarh Tripura Nagaland Dadra & Nagar Haveli Tamil Nadu Mizoram Daman & Diu Sikkim Meghalaya Delhi Goa Haryana Jammu & Kashmir Gujarat Himachal Pradesh Jharkhand
Findings: HDFC has more than 10- 12 products of insurance Advertisement is done through paper, hoardings, statements, T.V, walk-in to branches, personal guidance. HDFC provides special training to insurance agent Performance of agent is based on the lead generation and the lead conversion made via follow- ups, no. of policies sold. They have no co- branding strategy.
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AXIS BANK Axis Bank Limited, formerly UTI Bank, is a financial services firm that had begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the Specified Undertaking of the Unit Trust of India (UTI-I), Life Insurance Corporation of India (LIC), General Insurance Corporation Ltd., National Insurance Company Ltd. The bank changed its name to Axis Bank in April 2007 to avoid confusion with other unrelated entities with similar name. Branch Network The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. At the end of September 2010, The Bank has a very wide network of more than 1281 branches and Extension Counters (as on 31st December, 2010).The Bank has a network of over 5303 ATMs (as on 31st December, 2010).Axis Bank one of the largest private sector financer in India for Agriculture loans wiz Retail Agri, Commodity & Corporate Agri Findings: Axis has more than 8 insurance products. Advertisement is done through banners, brochures etc Axis bank has tie-ups with Max Newyork Life insurance co. They do not provide any special training to insurance agent. The agents are trained and appointed by Max- Newyork Life insurance which has tie-ups with Axis Banks. Then the agents are sent to various branches of Axis bank for selling insurance products. 66
CONCLUSION
Marketing of Insurance is essential ingredient for selling insurance product. Insurance product is intangible. Insurance company uses different marketing measures to convince the customers and increase market shares. Private company are using various 7ps to sell product. Private players are successfully market their products. After privatisation marketing is essential for all private companies. Life Insurance Companies as well as 16 private players they advertise their products through Agents, Television etc. Marketing of Insurance can be useful for companies who want sell the policies, increase profit share, market share. Thus it is clear, that insurance sector is booming and is one of the most dynamically growing sectors of the Indian chapter. Growth potentials are tremendous, and in era of cutthroat competition, the best marketer can reach to dizzying heights.
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BIBLOGRAPHY Books Service Marketing by Ravi Shankar Insurance by M. J. Mathew Marketing in Services by Philip Kotler