>>>>>>HOTEL

The Product Mix

In any organization, we find product the focal point. The hotel services also require a
fair combination of core arid peripheral services. It is right to mention that in almost all
the hotels of same category by and large the core services are found identical and
therefore the peripheralservices divert a close attention where the hotel personnel need
professional excellence. More innovative the peripheral services, more attractions
is the product mix. This makes it essential that hotels and hotel companies assign due
weightage to the formulation of an optimal product mix in which
peripheral services prove to be a point of attraction.
The emerging trends in the socio-economic parlance necessitate an analogous change
in the product mix. With the passage of time, it is quite natural that some of
the services become outdated and therefore, we need to eliminate them. At the same
time, it is essential that we keep our minds open and come to know the latest
developments in the likes and dislikes of the customers, and while including
new services in the product mix, assign due weightage to their preferences. While
formulating the product mix it is pertinent that we make the ways for frequent
innovation. It is also right to mention that frequency in innovation is found essential and
at the same time easier in the context of peripheral services. The hotel professionals
are required to formulate a package that helps in attracting the customers.
Modifications in the existing services by adding a few outstanding properties is found to
be a suitable strategy for the development of product. The generation of idea, the
formulation of concept, the analysis of product cost and the testing of services before
their final commercial launch become significant in the very context. This necessitates
an in-depth study of product life cycle. A hotel manager bears the responsibility of
adding attractions to the product mix and this is possible when they have world class
professional excellence.
While formulating the product mix for the hotel services, it is essential that
cateringmanagement, restaurant and
cafeteria management, management of bedrooms, management of convention halls
are given due weightage. The boarding services are considered to be an important part
of product mix. In addition, the lodging services also become significant. Here it is
essential that facilities like light, water, electricity, ventilation, entertainment, sanitation
arrangement of bed etc. are available to the guests. While formulating the
product mix, the hotelorganizations are required to make possible a fair mix of core and
peripheral services.
The Product Mix for a Hotel will typically include:
Reception: – Welcome, Enquiry and sign posts.
Boarding: – Catering, restaurants and cafeterias.
Lodging: – Bed, room, light, water, sanitation, ventilation and view.
Entertainment: – TV, Dance, music, cultural shows and radio.
Shopping: – shopping arcade, fairs and exhibitions.
Personal Care: – Beauty parlour, hair cutting, gymnasium and jogging.
Communication and transport: – Telephone, news, papers, magazines, reservations
asasand car rentals.
Medicals: – first aid / ambulance.
The product mix of the Regent Mumbai include:
Room:
1. Deluxe room: 400 sq. ft, large, well appointed rooms, with executive desk and
chair and sofa. Rooms feature luxurious marble bathrooms.
2. Executive room: 450 sq ft, spacious bedroom with king bed and large marble
bathroom with separate walk-in shower. Roomy living room area with a sofa, coffee
table, desk and chair.
3. The Regent Suite: located on the top floor. Two bedrooms, each with its own
private bathroom, dining area, office and private living room, and lounge opening
onto a private pool deck overlooking Mahim Bay towards the city.
4. The Presidential Suite: located on the top floor. Two bedrooms each with its own
private bathroom, dining area, and large living and entertainment area, overlooking
the Arabian Sea towards the north.
5. Executive Suite: 700 sq ft, two room suite. Separate bedrooms with king bed and
suite bathroom and living room.
Services:
1. 508 luxurious, executive-sized rooms.
2. The spectacular lobby is destined to become Mumbai’s most popular meeting
point.
3. Five enticing restaurants serving Indian, Chinese and European cuisine.
4. Fully equipped health club, fitness centre and squash courts.
5. Extensive, indoor and outdoor meeting and function space.
Promotion mix
For successful marketing, it is only not sufficient to concentrate on the quality
of services but it is also impact generating that we promote our business in such a way
that the prospects come to know about the quality to be offered to them as hotel
customers. This focuses the attention on innovative promotional measures. The
components like advertisement, publicity, sales promotion, personal selling, word-of-
mouth promotion and telemarketing need due attention of hotel professionals.
Advertisement
Advertisement is a paid form of communication that helps in informing, sensing and
persuading the prospects or users. While advertising, it is significant that the
hotel professionals make possible a productive use of print media, broadcast media
and telecast media. In the face of potentials, requirements and the intensity of
competition, there is a need to select media for promoting our messages and slogans.
Of late, there is a significant development in the print media since sophistication in the
printing technologies has made ways for offset printing, screen- printing and laser
printing. These devices are found efficacious in attracting the prospects. There are a
number of plus points in the print media. It is possible to be descriptive while
advertising. We are in a position to attract the attention of prospects by displaying
attractive scenes, events, landscape, comforts, costs etc. To be more specific when we
have advanced print devices we find enough scope for using print media for
advertising. In this context, it is pertinent that the hotel professionals advertise sensibly,
intelligently and for that seek the co-operation of advertising professionals who can
simplify and sensitize the process. Another plus point that we find in the print media is
related to economy. We find it economic and therefore the promotion budget is not to
be non-optimal.
The services of advertising professionals would make possible creativity in the
advertisement messages and appeals. While selecting the media for advertisement, it
is significant that we keep in our minds the magazines, newspapers preferred by the
target audience. The magazines, newspapers preferred by women and teens should
be given due weightage since in a majority of the cases, the decisions regarding a
particular tour hotel are taken by them.
Of late, the telecast media is considered to be the most sensitive but expensive media
of advertisement. In the world of marketing communication, top position is assigned to
the telecast media because scope for audio-visual exposure makes ways for
sensitising the prospects in a right fashion. It is against this ground that we find hotels
advertising through TV.
In view of the above, it is right to observe that out of all the media, print media is found
to be the most effective media for hotel advertisements. It is due mainly to fact that in
the print media, the advertisers get an opportunity to display facts and figures which
may be very much instrumental in convincing and persuading the prospects. The fact
cannot be denied that while using print media, the materials used for advertising are
found of world class, such as quality papers, quality print, quality photographs,
attractive scenes or so. The use of quality materials paves avenues for attractions.
Publicity
Another dimension of promotion known as an unpaid form of persuasive
communication also plays an incremental role in promoting the hotel business. While
publicizing, the hotelprofessionals play a significant role by managing the media
personnel for publishing news items related to the hotel. Public relations activities thus
become instrumental in the process of publicizing. The British Institute of Public
Relations has defined it as the deliberate, planned and sustained effort to establish and
maintain mutual understanding between an organization and the public.
The vast majority of hoteliers welcome publicity not only because it is free but because
they know that most people buy a magazine or a newspaper to read the articles, news
and editorials, rather than the advertisements unless they are looking for a product or
are interested in booking a holiday or a restaurant or a convention hall or a wedding
hall.
In the hotel business, there are a number of events which should be transmitted to the
local press, such as the appointment of a new chef, list of cocktails, menus for certain
functions held at hotel, particulars of certain important conferences or exhibitions to be
held, menus for special days of the year, photographs of staff dressed up for special
days and well-known people staying in the hotel. There are a number of hotels doing a
lot of charitable work and helping in organizing charitable fund-raising events too.
In the public relations, the activities range from a press release to newspaper and
magazines, especially to create the interest of prospects in a holiday age in a good
resort of a country. The holiday package tours and trips on familiarity with a tour spot,
organized by tour operators for the travel agents to help them in enriching their
knowledge and making the travelling decisions. The “wine and cheese parties”
organized by the British Airways to launch not required Seychelles as a new resort or
other such functions with the motto of enriching the knowledge of the prospects. There
are a number of media sources available for publicity.
Illustration, copy and the spoken word are the primary publicity to media, which are
grouped into the following heads:
 Printed Publicity
 Advertising Publicity
 Projected Publicity
 Structural Publicity
 Personal Publicity
Thus it is right to say that public relations activities occupy a significant place in the
promotion mix of hotel companies. In the hotel companies, the tour operators, travel
agents explore opportunities for educating the masses. In this context, it is important
that hotel companies are getting the best co-operation from media and for which the
Public Relations Officers or the marketers or the contact personnel bear the
responsibility of developing rapport with them, organizing for them lunch or dinner,
offering to them small gifts and influencing them to write in favour. You spend nominal
amount but get big coverage, which help you substantially, if not at present of course in
future.
Sales Promotion
In almost all the organizations, we feel the need of offering incentives for promoting the
business. Like other organizations, the hotels and hotel companies also offer incentives
to the users vis-à-vis to the personnel and organizations evincing interest in promoting
the business. Sales promotion is considered as a temporary device to increase the
business with certain objectives. It is a short term activity seeking to boost sales during
peak demand periods to make it sure that the firm obtains its market share and helps
launch a new product or support an ailing or modified services. These facts make it
clear that sales promotion is complementary to advertising. Sales promotion and
advertising objectives do not conflict but reinforce one another.
The tools of sales promotion are directed at the hotel staff, tour operator and travel
agents and guests or clients. There is a three-tier arrangement for sales promotion in
the hotel business. There are a number of incentives offered to them. In addition, some
of the hotels also offer concessional travelling and accommodation facilities, especially
to their staff. Besides, there are also cases of organizing sales contests.
Tools of sales promotion.
The tour operators and travel agents are also given the incentives. There are give-
away and concessional accommodation facilities for them. Besides, the guests or
clients are also offered incentives. They are allowed off-season discount and a number
of small gifts, specially the habitual guests for the purpose of keeping on the business.
The following tools of sales promotion are used for all the three heads instrumental in
promoting the hotel business.
1.
1. Brochure: It is a device to stimulate customers and motivate them to visit
a hotel and avail of the benefits offered by the management of the hotel. It is a
detailed publication helping hotel companies in promoting their business. It is
also called as a pamphlet bound in the form of a booklet. It describes and
illustrates the services made available by hotels. We find brochure different to
folder in size and contents as well. It requires careful planning of the layout,
colour and paper used for publishing the contents. The brochures are supposed
to focus on the theme and messages of promotion areas. The guests, clients
get detailed in information from the brochure.
2. Folder: Folders are the most commonly used sales promotion tools. In this
respect, it is essential that folders have an impressive appearance in totality. The
particulars are required to be in brief but clear. It is a single piece of illustrated paper
that is found less voluminous than the brochure. The folders are usually printed on a
single sheet of paper and then folded. The quality of paper and printing used for
publication are found significant to make folders more attractive. The hotels can use
folders for promoting the business.
3. Packaging: it is known as an attractive wrapper of product. When we talk about
packaging in the hotel industry, our emphasis is on the outer cover and internal layout
of brochures and leaflets. It is a final persuasive move on the part of hotels and hotel
companies. The materials used for packaging are required to be attractive.
4. Attraction leaflets: This is exclusively meant for presenting a view of the different
theme parks, museums, amusement parks, outstanding points of attraction in the
hotels or so.
5. Merchandising: It is found helpful in promoting mass-market. This tool is found
significant to restaurants and bars. The merchandising involves displaying of foodstuffs
and drinks in the right location. The restaurants and bars are required to place their
important items at such point where the guest and clients get an opportunity to have a
close view of special drinks or special menu.
6. Direct Mail Materials: The sales letters are found to be a direct mail material that
can either be used alone or in combination with brochures and folders.
7. Display Materials: In the materials to be displayed at sensitive points are posters,
dispensers, exhibits etc. We can use these materials in the offices of the travel agents,
tour operators or at the places where tourists come, such as tourists’ spots, resorts,
airports, and railway and bus stations.
8. Competition and Exhibition: There are organization of competition and exhibition
for promoting the business.
9. Special Officer: There is also a provision for special offer for all, such as users,
travel agents, tour operators, hotel personnel.
The aforesaid tools of sales promotion help hotels and hotel companies in increasing
the business. The hotel personnel need professional excellence to make the tools of
sales promotion productive.
THE REGENT, Mumbai, has a sales promotion strategy such as THE REGENT
ADVANTAGE CARD system. Under this scheme, card owner is entitled to a free meal
on the purchase of a meal from any of the hotel’s restaurant. The card owner also gets
various discounts such as 10% discounts in the THE REGENT’s Beauty Parlour, 30%
discount on the suite room. This discounts are maximum for 10 persons on the food
and beverage items also.
Word-of-mouth Promotion
Word-of-mouth promotion is very much instrumental in sensitising the prospects. In the
hotel industry, it is much more significant that the satisfaction of users is give top
priority. Of course, there are a number of components to promote sale but it is right to
mention that other constituents may be ineffective but the word-of-mouth can’t. The
word-of-mouth promoters are those who are satisfied with the services of hotels or are
motivated to motivate the prospects. We can’t deny the fact that one bad meal would
often do more damage by word- of-mouth than fifty good meals. The hotel guests take
a good meal for granted but don’t forget to narrate to their friends and relatives about a
bad meal or the bitter experiences of menu-fatigue. This speaks of the fact that word-
of-mouth promotion can show more negative effects and therefore the hotels and hotel
companies need to assign due weightage to this component of the promotion mix. Of
course, the dissatisfied group of users is free to complain to the hotel management but
often they don’t act. We find them close-mouthed and stiff-lipped till they make a good-
bye and after going back they try their best to think twice before coming to that hotel
again. Moreover they start narrating to their friends and relatives their bitter
experiences of menu fatigue even without taking a rest. It is against this background
that high-level functions, refined behaviour and world-class services by the hotel
personnel carry some meaning. These services pave the ways for oral communication
and recommendation. The persons acting as word-of-mouth promoters are also called
the hidden salesforce.
Price Mix
Pricing decisions are found critical, challenging and chaotic. Of course, no marketing
mix is found so much critical as pricing. Pricing is not only the outcome of the
marketing forces. It conveys something to customers even about the quality of a
product. There are a number of variables influencing the pricing decisions of an
organization.
The pricing decisions are beset with many problems. No doubt in it that fixing the hotel
tariffs is just like pricing other goods and services. At the same time, it is also right to
mention that the hotel professionals need more excellence while fixing the hotel tariffs
since the services are found of perishable nature. In addition, the seasonal fluctuation
in demand and increasing intensity of competition also complicate the task of
professionals. They need world-class excellence while making strategical and tactical
pricing decisions.
Pricing decisions are found important in both strategic and tactical sense. In the tactical
sense, it plays an outstanding role. This is due to the inseparability and perishability of
the hotel products. This is also due to the inability of the service engineering
organizations to carry over unsold stocks as a buffer to cope with future demand as
found in the goods manufacturing organizations. Also known as price deregulation,
tactical pricing is found instrumental in promoting the hotel business. Experiences show
that in the hotel industry, it is found to be a major selling tool. There are a number of
ways for practicing and benefiting from this tool:
 Seasonal Discounts Found applicable in the hotel industry. Customary to charge
lower prices, specially during the off-season.
 Trade Discounts Found applicable in the hotel industry as tour operators and
travel agents are offered discounts.
 Special Discounts In the hotel industry, we find special function room rates for
overnight convention.
Pricing for Room Tariffs
Here, we go through the guidelines for fixing reasonable room tariffs. While fixing room
tariffs, it is essential that we assign due weightage to the price structure to be adopted.
The average room rate should not be much higher than the competitive hotels
otherwise the market will not welcome it. A hotel may also adopt a policy to give high
pay roll to provide a higher standard of services that the customers are ready to pay.
There are some common factors considered by the hotel management and the public:
 Current charges prior to a review
 the established inflationary effect on cost
 the general economic situation
 the emerging trends in currency exchange and
 the intensity of competition.
Right averages and average room rates are the two important aspects to be taken into
consideration while fixing hotel tariffs. The following are the economic criteria on room
tariffs:
 The total amount of net operating costs (after contribution from the food and
beverage departments). Net operating costs, net operating cost plus rent (if payable)
net operating cost plus interest and net operating cost plus a target return on capital.
 This helps in calculating the total room sales and to achieve various levels of
profits with the assumption that room department cost ratios, staff numbers and staff
standards are known
  On the basis of the above, a schedule should be produced as per the average
room rates required in order to break even and/or to achieve the profit targets at
various occupancy levels.
 Budgets on room sales are to be planned based on sales mix taking into account
the different sources of business.
 After this, based on the current quoted tariffs, it is possible to calculate the
different sources of business, must/not be exceeded if the average rate required is
to be achieved.
The most expensive suite of THE REGENT, Mumbai, i.e. ‘king suite’ is for Rs. 45000 +
20% taxes and the ‘Normal Suite’ is for Rs. 15000 + 20% taxes. In each room they are
providing facilities such as T.V., computers, telephones, etc. the major difference
behind this price variation is the different quality of services provided by the hotel such
as better quality shampoo, bed sheets, and the décor of the room.
Pricing for Food and Beverage
In a majority of the hotels, there are three or four types of rooms but so far as the
menus are concerned we can have dozen of dishes. There are some of the important
points to be considered in the process:
 Do you find that your guests are eating in the hotel restaurant or coffee shop
where the competitive restaurants are very close to the hotel. Generally a proportion
does eat in but a significant proportion goes out.
 Where a hotel has two or more restaurants, they compete with each other and
help splitting the market down the middle rather than offering a true price.
 The business in the function room.
Pricing for Function
Restaurants can get more business because the food, services or atmosphere is
unique or just a little better than the competitors. But this aspect is found more
complicated for function room services. Most of the functions are fairly routines that
make it difficult to produce a gastronomic experience. In addition, this aspect is found
more competitive specially on the price front. Payroll is found to be a major cost on
functions. Unless we move to the self-service (buffet style) functions, the payroll would
remain an important dimension. A number of hotels are found fixing a staff standard for
functions based on their style of hotel or one waiter to a table of ten people or one
waiter to two tables. Yet, we find payroll more expensive.
Place Mix
The problems hotels experience in reaching new customers lead them to use third
parties as intermediaries. This costs money in the form of commissions, of course, but
then so does advertising.
Let us consider the various means by which hotels and their customers can be brought
together .
Direct individual sales
This is the simplest method. The would-be guest chooses a hotel and then contacts it
by letter, telephone or some other medium. The only parties involved are the hotel and
the customer. Of course, the customer has to find out about the hotel first. This
involves some kind of advertising or promotion. Typical methods include mentions in
guidebooks, local accommodation brochures or directories such as the motoring
organization handbooks.
One of the main problems with direct contact is that the customer is usually located a
considerable distance from the hotel. This means that he has to place a long distance
telephone call in order to make a booking, and might have to repeat this several times
In order to obtain a room at a particularly busy period. This costs money and (what is
often worse) often takes a good deal of time.
However, not all travellers bother or are able to arrange accommodation in advance,
and a hotel can always appeal directly to these. Roadside advertisements are
examples of this approach.
Direct group sales
Many direct bookings are actually made on behalf of groups of one sort or another.
Some of these are relatively small, such as sports clubs outings, overnight functions
and the like, but others can be very large, such as major conferences. These are
sometimes arranged by specialist agencies, but quite often the organizer prefers to
deal with the hotel directly.
Groups are so important as a source of business that they are an exception to the
usual rule that it is not worth the hotel’s while to try to contact the customer directly for
some face-to- face selling.
Travel agents
There are two main types:
1 Retail agents These are the common and familiar high Street agents who sell direct
to the public. Their main business is to arrange holidays for their customers, including
hotel accommodation.
2 Company agents Some city centre agencies specialize in business house travel,
while organizations such as major multinational companies are so big that it is worth
their while to have their own travel agency to handle all their business. Sometimes they
buy one outright, sometimes they simply invite a small agency to specialize in their
business. Either way, the agency is likely to handle a lot of valuable bookings. It
receives the usual commission, though some of its profits are likely to be passed on to
its parent company or major client.
[
Travel agents make their money from commissions received on the sale of tickets and
bookings. Since tickets are fixed in price, the mechanism is simple. The agency carries
a stock of blank tickets and simply remits the money less the commission to the carrier
after it sells one.
Group Tour Operators
These include the familiar names whose brochures you will find in any retail travel
agent. Many of the larger ones have their own retail out lets. In all, they sell an
enormous number of holiday ‘packages’ and book a comparable amount of space at
hotels.
This category also includes a vast number of smaller operators of various sorts. Some
undertake ‘speciality’ work, arranging battlefield or birdwatching tours, safaris, ski trips
and the like. Others specialize in arranging conferences. One of the fastest growing
sectors is that of incentive travel, usually arranged by a company for its clients or its
successful sales staff. This is a specialized field, and it has attracted its own full-time
companies that provide a range of consultancy and administrative services.
Group tour operators do not receive commission because they are not introducing
clients but rather booking the space themselves. They make their money from the
difference between the cost of the separate elements of the ‘package’ (transport, food,
accommodation, entertainment, etc.) and the price they are able to charge for it as a
whole.

>>>>>>>>>>>>>>.Insurance

Marketing Mix in Insurance Industry (7 P's) - 1 Week Ago

Q. Services Marketing Mix for Insurance (15 marks)
⇒→ INTRODUCTION:
Wherever there is uncertainty there is risk. We do not have any control over
uncertainties which
involves financial losses. The risks may be certain events like death, pension, retirement
or
uncertain events like theft, fire, accident, etc.
Insurance is a financial service for collecting the savings of the public and providing
them with risk
coverage. The main function of Insurance is to provide protection against the possible
chances of
generating losses. It eliminates worries and miseries of losses by destruction of property
and death.
It also provides capital to the society as the funds accumulated are invested in
productive heads.
Insurance comes under the service sector and while marketing this service, due care is
to be takenin quality product and customer satisfaction. While marketing the services, it
is also pertinent thatthey think about the innovative promotional measures. It is not
sufficient that you perform well butit is also important that you let others know about the
quality of your positive contributions.
The creativity in the promotional measures is the need of the hour. The advertisement,
publicrelations, word of mouth communication needs due care and personal selling
requires intensive care.
→ INSURANCE MARKETING:
The term Insurance Marketing refers to the marketing of Insurance services with the aim
to createcustomer and generate profit through customer satisfaction. The Insurance
Marketing focuses onthe formulation of an ideal mix for Insurance business so that the
Insurance organisation survivesand thrives in the right perspective.
→ MARKETING –MIX FOR INSURANCE COMPANIES:
The marketing mix is the combination of marketing activities that an organisation
engages in so as
to best meet the needs of its targeted market. The Insurance business deals in selling
services and
therefore due weightage in the formation of marketing mix for the Insurance business is
needed.
The marketing mix includes sub-mixes of the 7 P’s of marketing i.e. the product, its price,
place,
promotion, people, process & physical attraction. The above mentioned 7 P’s can be
used for
marketing of Insurance products, in the following manner:
1.PRODUCT:
A product means what we produce. If we produce goods, it means tangible product and
when we
produce or generate services, it means intangible service product. A product is both
what a seller
has to sell and a buyer has to buy. Thus, an Insurance company sells services and
therefore
services are their product.
In India, the Life Insurance Corporation of India (LIC) and the General Insurance
Corporation (GIC)
are the two leading companies offering insurance services to the users. Apart from
offeringlife
insurance policies, they also offer underwriting and consulting services.
When a person or an organisation buys an Insurance policy from the insurance
company, he notonly buys a policy, but along with it the assistance and advice of the
agent, the prestige of theinsurance company and the facilities of claims and
compensation.
It is natural that the users expect a reasonable return for their investment and the
insurance
companies want to maximize their profitability. Hence, while deciding the product
portfolio or the
product-mix, the services or the schemes should be motivational. The Group Insurance
scheme is
required to be promoted, the Crop Insurance is required to be expanded and the new
schemes and
policies for the villagers or the rural population are to be included.
The Life Insurance Corporation has intensified efforts to promote urban savings, but as
far as ruralsavings are concerned, it is not that impressive. The introduction of Rural
Career Agents Schemehas been found instrumental in inducing the rural prospects but
the process is at infant stage and
requires more professional excellence. The policy makers are required to activate the
efforts. It
would be prudent that the LIC is allowed to pursue a policy of direct investment for rural
development.
Investment in Government securities should be stopped and the investment should be
channelizedin private sector for maximizing profits. In short, the formulation of product-
mix should be in theface of innovative product strategy. While initiating the innovative
process it is necessary to takeinto consideration the strategies adopted by private and
foreign insurance companies.
2.PRICING:
In the insurance business the pricing decisions are concerned with:
i) The premium charged against the policies,
ii) Interest charged for defaulting the payment of premium and credit facility, and
iii) Commission charged for underwriting and consultancy activities.
With a view of influencing the target market or prospects the formulation of pricing
strategy
becomes significant. In a developing country like India where the disposable income in
the hands of
prospects is low, the pricing decision also governs the transformation of potential
policyholders into
actual policyholders.
The strategies may be high or low pricing keeping in view the level or standard of
customers or the
policyholders.
The pricing in insurance is in the form of premium rates. The three main factors used for
determining the premium rates under a life insurance plan are mortality, expense and
interest. The
premium rates are revised if there are any significant changes in any of these factors.
• Mortality(deaths in a particular area):
When deciding upon the pricing strategy the average rate of mortality is one of the main
considerations. In a country like South Africa the threat to life is very important as it is
played by
host of diseases.
• Expenses:
The cost of processing, commission to agents, reinsurance companies as well as
registration are all
incorporated into the cost of installments and premium sum and forms the integral part of
the
pricing strategy.
• Interest:
The rate of interest is one of the major factors which determines people’s willingness to
invest in
insurance. People would not be willing to put their funds to invest in insurance business
if the
interest rates provided by the banks or other financial instruments are much greater than
the
perceived returns from the insurance premiums.
3.PLACE:
This component of the marketing mix is related to two important facets –
i) Managing the insurance personnel, and
ii) Locating a branch.
The management of agents and insurance personnel is found significant with the
viewpoint of
maintaining the norms for offering the services. This is also to process the services to
the end user
in such a way that a gap between the services- promised and services – offered is
bridged over. In a
majority of the service generating organizations, such a gap is found existent which has
been
instrumental in making worse the image problem.
The transformation of potential policyholders to the actual policyholders is a difficult task
that
depends upon the professional excellence of the personnel. The agents and the rural
career agents
acting as a link, lack professionalism. The front-line staff and the branch managers also
are found
not assigning due weightage to the degeneration process. The insurance personnel if
not managed
properly would make all efforts insensitive. Even if the policy makers make provision for
the quality
upgradation, the promised services hardly reach to the end users.

It is also essential that they have rural orientation and are well aware of the lifestyles of
the
prospects or users. They are required to be given adequate incentives to show their
excellence.
While recruiting agents, the branch managers need to prefer local persons and provide
them
training and conduct seminars. In addition to the agents, the front-line staff also needs
an intensive
training programme to focus mainly on behavioral management.
Another important dimension to the Place Mix is related to the location of the insurance
branches.
While locating branches, the branch manager needs to consider a number of factors,
such as
smooth accessibility, availability of infrastructural facilities and the management of
branch offices
and premises. In addition it is also significant to provide safety measures and also
factors like office
furnishing, civic amenities and facilities, parking facilities and interior office decoration
should be
given proper attention.
Thus the place management of insurance branch offices needs a new vision, distinct
approach andan innovative style. This is essential to make the work place conducive,
attractive and proactive forthe generation of efficiency among employees. The branch
managers need professional excellenceto make place decisions productive.
4.PROMOTION:
The insurance services depend on effective promotional measures. In a country like
India, the rate
of illiteracy is very high and the rural economy has dominance in the national economy.
It is
essential to have both personal and impersonal promotion strategies. In promoting
insurance
business, the agents and the rural career agents play an important role. Due attention
should be
given in selecting the promotional tools for agents and rural career agents and even for
the branch
managers and front line staff. They also have to be given proper training in order to
create impulse
buying.
Advertising and Publicity, organisation of conferences and seminars, incentive to
policyholders are
impersonal communication. Arranging Kirtans, exhibitions, participation in fairs and
festivals, rural
wall paintings and publicity drive through the mobile publicity van units would be
effective in
creating the impulse buying and the rural prospects would be easily transformed into
actual
policyholders.
5.PEOPLE:
Understanding the customer better allows to design appropriate products. Being a
service industry
which involves a high level of people interaction, it is very important to use this resource
efficiently
in order to satisfy customers. Training, development and strong relationships with
intermediaries are
the key areas to be kept under consideration. Training the employees, use of IT for
efficiency, both
at the staff and agent level, is one of the important areas to look into.
6.PROCESS:
The process should be customer friendly in insurance industry. The speed and accuracy
of payment
is of great importance. The processing method should be easy and convenient to the
customers.
Installment schemes should be streamlined to cater to the ever growing demands of the
customers.
IT & Data Warehousing will smoothen the process flow.
IT will help in servicing large no. of customers efficiently and bring down overheads.
Technology can
either complement or supplement the channels of distribution cost effectively. It can also
help to
improve customer service levels. The use of data warehousing management and mining
will help to
find out the profitability and potential of various customers product segments.
7. PHYSICAL DISTRIBUTION:
Distribution is a key determinant of success for all insurance companies. Today, the
nationalized
insurers have a large reach and presence in India. Building a distribution network is very
expensive
and time consuming. If the insurers are willing to take advantage of India’s large
population and
reach a profitable mass of customers, then new distribution avenues and alliances will
be necessary.
Initially insurance was looked upon as a complex product with a high advice and service
component.
Buyers prefer a face-to-face interaction and they place a high premium on brand names
and
reliability. As the awareness increases, the product becomes simpler and they become
off-the-shelf
commodity products. Today, various intermediaries, not necessarily insurance
companies, are selling
insurance. For example, in UK, retailer like Marks & Spencer sells insurance products.
The financial services industries have successfully used remote distribution channels
such as
telephone or internet so as to reach more customers, avoid intermediaries, bring down
overheads
and increase profitability. A good example is UK insurer Direct Line. It relied on
telephone sales and
low pricing. Today, it is one of the largest motor insurance operator.
Technology will not replace a distribution network though it will offer advantages like
better
customer service. Finance companies and banks can emerge as an attractive
distribution channel for
insurance in India. In Netherlands, financial services firms provide an entire range of
products
including bank accounts, motor, home and life insurance and pensions. In France, half of
the life
insurance sales are made through banks.