A Study On The Various Marketing Concepts With

Reference To

MARKETING MANAGEMENT - I
PROJECT PART – I, II &III
GROUP NO: 7

Submitted By
MBA (2018-20) Batch – B
Anoop A
Athira Kp
Govind Nv
Joel Philipose Thomas
Rani Chandra
Sherin T Darlyn
Vishnu P R
Submitted To
Assoc. Dean Dr. Thomas Varghese
(Faculty, Department of MBA)
Marketing Management

SAINTGITS INSTITUTE OF MANAGEMENT

Kottukulam Hills, Pathamuttom P.O, Kottayam 686532

Date of Submission: 11/02/2019

 TABLE OF CONTENTS

PAGE

Sl.No. TITLE NO

1 Introduction 1

2 Company Profile 2-3

3 Marketing Environment 4-5

4 Major Government Policies 7-8

5 SWOT Analysis 8-10

6 Consumer Buying Behaviour 10-11

7 STP Analysis Of LIC 11-15

8 Branding Of LIC 15-18

9 Marketing Mix Of LIC 18-25

10 Product Life Cycle (Plc) 25-27

11 Pricing Policies And Strategies 27-29

12 Conclusion 30

13 Key Learnings 30

14 Bibliography 31
INTRODUCTION
Insurance is an integral part of national economy and a strong pillar of financial market. Therefore,
waves of globalization have also deeply influenced the insurance market Worldwide. Financial
Market Globalization has also been strongly supported by Globalization of Insurance. With the
increase in Trade, Direct Investment and Portfolio Investment, there has been an ever growing
demand for Insurance services particularly in the emerging markets. Globalization of Insurance
market, as a part of the overall process of liberalization in emerging and other countries enabled
the foreign insurance companies to enter in those countries and benefited both. Liberalization is
the gateway of globalization and regulates the financial market by reduction of tariff and non-
tariff barriers, abolishment of industrial Licensing and by exercising control over foreign direct
investment. The major purpose of liberalization was to free the large private corporate sector from
bureaucratic controls. Liberalization of insurance industry has witnessed major structural
transformations and growth in life insurance business. To end the monopoly of the life insurance
corporation of India and to induce a spirit of competition amongst the various insurers and to
provide a choice to the consumers were some of the main motives behind liberalization.
The Insurance sector in India is governed by Insurance Act, 1938, the Life Insurance Corporation
Act, 1956 and General Insurance Business (Nationalization) Act, 1972, Insurance Regulatory and
Development Authority (IRDA) Act, 1999 and other related Acts. With such a large population
and the untapped market area of this population, insurance happens to be a very big opportunity
In India.
Today it stands as a business growing at the rate of 15-20 per cent annually. Together with
banking services, it adds about 7 per cent to the country's GDP .In spite of all this growth the
statistics of the penetration of the insurance in the country is very poor. Nearly 70% of Indian
populations are without Life insurance cover and the Health insurance. This is an indicator that
growth potential for the insurance sector is immense in India.
The insurance industry of India consists of 57 insurance companies of which 24 are in life
insurance business and 33 are non-life insurers. Among the life insurers, Life Insurance
Corporation (LIC) is the sole public sector company. Apart from that, among the non-life insurers
there are six public sector insurers. In addition to these, there is sole national re-insurer, namely,
General Insurance Corporation of India (GIC Re). Other stakeholders in Indian Insurance market
include agents (individual and corporate), brokers, surveyors and third party administrators
servicing health insurance claims.
Demographic factors such as growing middle class, young insurable population and growing
awareness of the need for protection and retirement planning will support the growth of Indian
life insurance. The future looks promising for the life insurance industry with several changes in
regulatory framework which will lead to further change in the way the industry conducts its
business and engages with its customers. And since LIC is the sole state company with a chance
to gain profit in future aspects more than others, so that we selected this company.

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 COMPANY PROFILE
Life Insurance Corporation of India (LIC) is an
Indian state-owned insurance
group and investment company headquartered
in Mumbai. It is the largest insurance company in
India The Life Insurance Corporation of India
was founded in 1956 when the Parliament of
India passed the Life Insurance of India Act that
nationalised the private insurance industry in
India. Over 245 insurance companies and
provident societies were merged to create the state owned Life Insurance Corporation.

The Oriental Life Insurance Company, the first company in India offering life insurance coverage,
was established in Calcutta in 1818 by Anita Bhavsar and others. Its primary target market was
the Europeans based in India, and it charged Indians heftier premiums. Surendranath Tagore (son
of Satyendranath Tagore) had founded Hindustan Insurance Society, which later became Life
Insurance Corporation.

Today LIC functions with 2048 fully computerized branch offices, 113 divisional offices, 8 zonal
offices, 1381 satellite offices and the corporate office. LIC’s Wide Area Network covers
113divisional offices and connects all the branches through a Metro Area Network. LIC has tied
up with some Banks and Service providers to offer on-line premium collection facility in selected
cities. LIC’s ECS and ATM premium payment facility is an addition to customer convenience.
Apart from on-line Kiosks and IVRS, Info Centers have been commissioned at Mumbai,
Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities.
With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE
SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The
digitalized records of the satellite offices will facilitate anywhere servicing and many other
conveniences in the future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance
and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued
over one crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955
new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding
period of the previous year.

From then to now, LIC has crossed many milestones and has set unprecedented performance
records in various aspects of life insurance business. The same motives which inspired our
forefathers to bring insurance into existence in this country inspire us at LIC to take this message
of protection to light the lamps of security in as many homes as Possible and to help the people in
providing security to their families.

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 OBJECTIVES OF LIC

 Spread Life Insurance widely and in particular to the rural areas and to the socially and
economically backward classes with a view to reaching all insurable persons in the country and
providing them adequate financial cover against death at a reasonable cost.
 Maximize mobilization of people's savings by making insurance-linked savings adequately
attractive.
 Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose
money it holds in trust, without losing sight of the interest of the community as a whole; the
funds to be deployed to the best advantage of the investors as well as the community as a whole,
keeping in view national priorities and obligations of attractive return.
 Conduct business with utmost economy and with the full realization that the moneys belong to
the policyholders.
 Act as trustees of the insured public in their individual and collective capacities.
 Meet the various life insurance needs of the community that would arise in the changing social
and economic environment.
 Involve all people working in the Corporation to the best of their capability in furthering the
interests of the insured public by providing efficient service with courtesy.
 Promote amongst all agents and employees of the Corporation a sense of participation, pride
and job satisfaction through discharge of their duties with dedication towards achievement of
Corporate Objective.

Mission Vision
”Ensure and enhance the quality of life of "A trans-nationally competitive
people through financial security by providing financial conglomerate of
products and services of aspired attributes significance to societies and Pride
with competitive returns, and by rendering of India."
resources for economic development."

 OPERATIONS

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 MARKETING ENVIRONMENT
LIC have been taken following steps to increase its market environments and retain its dominant
position in the insurance market.

1. PRODUCT DEVELOPMENT

In a competitive market, there is a greater need to provide insurance products that meet the needs
of our customers. LIC therefore offers a wide variety of products, which fulfills the needs of
different segments of the society. As at the end of the financial year 2010-11, the Corporation had
52 products available for sale. During the Year Corporation introduced 5 new plans viz. LIC’s
Pension Plus, LIC’s Endowment Plus, LIC’s Bima Account –I, LIC’s Bima Account –II and LIC’s
Samridhi Plus. As a result of product innovation by private players, LIC’s market share has
gradually reduced in the post liberalisation period. Despite that, the Life Insurance Corporation of
India continues to remain the largest player in the Indian Life Insurance market with a market
share of 71.30% in FY 2011-12.

2. COMPETITION

Private and foreign entrants in the insurance industry have made others difficult to retain their
market. Higher customer aspirations lead to new expectations and forced him or her to move
towards the insurer who provides him the best service in time. It becomes less viable for them
even to maintain the functional networks or competitive standards and services. To survive in the
industry they analyse the emerging requirements of the policyholders /insurers and they are in the
forefront in providing essential services and introducing novel products. Thereby they become
niche specialists, who provide the right service to the right person in the right time. Today, a public
giant LIC is facing direct competition with the rest 23 private life insurers. The major competitors
of this organization are:

 SBI Life Insurance

 Aviva
 HDFC life insurance
 ICICI Prudential, etc

3. INFORMATION TECHNOLOGY

LIC has been a pioneer in using information technology for enhancing the quality of its service to
customers. Being the largest insurer in India, LIC has always explored all the avenues that
technology offers to provide the best of services to its valued customers and other stakeholders.
Today, LIC customers can pay their premium not only in any one of its offices, but also through
LIC’s Premium Payment Gateway on our website through partner Banks like Corporation Bank,
Axis Bank or through associate agencies like AP Online, MP Online, etc. Customers can also use
their Net Banking accounts, Debit Cards and Credit Cards to pay premiums online. LIC reaches
out to its customers through IVRS, Call Centres, Customer Zones, SMS, e-mail, website and now

4
even the Social Networking sites. LIC has also undertaken many other customer-centric initiatives
like Enterprise Document Management System, Portal for Customers, Agents, Development
officers and Employees, etc.

4. CHIEF LIFE INSURANCE ADVISORS (CLIAs)

LIC introduced the above Scheme on 12.04.2008 with an objective of increasing its market
presence through more agents by utilizing capabilities of existing high performing agents for
organizational growth. In order to increase market presence, more number of agents should be in
the field. Understanding this well, the Corporation decided to utilize the capabilities of existing
senior agents for organizational growth by incentivizing them for identifying, training and
mentoring new agents. Retired employees and Financial Service Executives (FSE) are also
allowed to become Chief Life Insurance Advisors under certain conditions.

5. MICRO INSURANCE (MI)

The huge untapped market for insurance is the rural and social sector. Micro insurance is defined
as the protection of low income households against specific perils in exchange for premium
payments proportionate to the likelihood and cost of the risk involved. It provides an opportunity
to the insurance companies to meet their social responsibility as well as secure a strong footing in
the rural market. The active distribution channels for micro insurance in India are NGOs, MFIs,
and SHGs (self-help groups), Micro agents, Cooperative Banks and RRBs (regional rural banks),
and Post Offices.

6. DIRECT MARKETING

In its 3 years of operations, Direct Marketing has successfully established itself as a Value Pioneer.
Through the years, it had striven to take a fresh view of the environment, capture changes, identify
new business opportunities and orchestrate appropriate response. Direct Marketing has achieved
reasonable success in creating a professional and disciplined work force comfortable with
approaching and tapping emerging segments in the market. The channel, through the effective use
of LMS has been able to ensure fast response to queries to successfully position the Corporation
as a responsive organization sensitive to changing customers’ expectations.

7. INDEPENDENT FINANCIAL ADVISORS (IFAs)

IFAs are authorised agents of insurance companies having tie-ups with more than one insurance
company. They are qualified persons or institution who can provide advice on financial products.
Independent financial advisors are commissioned agents whose primary business is the sale of
property and casualty insurance for several insurers. IFA assembles different financial products
in accordance to customer needs and provide value added product by creating customized
financial product. Today, IFA show their significant presence as distribution channel in both life
and non-life insurance business.

5
 MARKETING STRATEGY
PORTER’S 5 MODEL SOLUTIONS
If the competitors come up with the new plans of policy with lower price & higher profits then its
would be a little bit problem for LIC.Bargaining power can be low if the LIC himself start insuring
the companies as well instead of taking a help of Munich Insurance. LIC should maintain and
work on its customer care service more efficiently and treat the clients in proper & disciplined
manner. So as to avoid the fear of moving the clients. Multiple of companies has multiple offers
so the bargaining power is high so to avoid it the LIC Company should maintain and every now
and then recall its advertising, its branding its repositioning the target markets.
OTHER STRATEGIES
The marketing strategy analysis, planning, implementation and management process is described
below. The strategic situation analysis considers market and competitor analysis, market
segmentation, and continuous learning about markets.
Designing marketing strategy examines customer targeting and positioning strategies, marketing
relationship strategies and planning for new products. Marketing program development consists
of product, distribution, price, and promotion strategies designed and implemented to meet the
value requirements of targeted buyers. Strategy implementation and management consider
organizational design and marketing strategy implementation and control.

6
 GOVERNMENT INITIATIVES

The Government of India has taken a number of initiatives to boost the insurance industry. Some
of them are as follows:

 In September 2018, National Health Protection Scheme was launched under Ayushman Bharat
to provide coverage of up to Rs 500,000 (US$ 7,723) to more than 100 million vulnerable
families. The scheme is expected to increase penetration of health insurance in India from 34
per cent to 50 per cent.
 Over 47.9 million famers were benefitted under Pradhan Mantri Fasal Bima Yojana (PMFBY)
in 2017-18.
 The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue
redesigned initial public offering (IPO) guidelines for insurance companies in India, which are
to looking to divest equity through the IPO route.
 IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1) bonds that
are issued by banks to augment their tier 1 capital, in order to expand the pool of eligible
investors for the banks.

However the organization has come to from the very first insurance law passed in 1939. From the
onwards, there has been various rules and laws relating to insurance such as IRDA (2015), Acturial
Rules (2008), etc.

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 SWOT ANANLYSIS
STRENGTHS:
 India’s largest Insurance service provider: LIC currently has pan India operations with
2048 fully computerized branch offices, 8 zonal offices, around 113 divisional offices, 2,048
branches and 1381 satellite offices and corporate offices. The entire country is classified under
54 customer zones and 25 metro-area service hubs based across various cities and towns of
India. Currently, LIC has 1,337,064 individual agents, 242 Corporate Agents, 89 Referral
Agents, 98 Brokers and 42 Banks for selling life insurance to the general public.
 Brand Image: LIC has a strong branding in India. Its tagline Yogakshemam Mahamyaham
which means welfare for all is well recognized. The Economic Time Brand Equity Survey of
the year 2015 voted LIC as the most trusted Insurance provider in India.
 Fund Base: LIC has a huge found base of around 150 billion USD and is also India’s biggest
investor making it immensely powerful in the domain of finance in India.
 A network of Agents: LIC has around 1,337,064 individual agents, 242 Corporate Agents,
89 Referral Agents, 98 Brokers and 42 Banks across India who cover each nook and corner of
the country.

WEAKNESS:
 Culture: LIC has been strongly associated with the government and thus follows a very slack
and slow paced work culture. This works as a weakness when compared to modern-day private
insurance players who are adept at strategy.

8
 Poor advertisement strategy: In comparison to its private counterparts LIC does not spend
too much on advertisement and this shows in the quality of ads that they release.
 Too many restrictions: The Company has a lot of restriction imposed on ti being a
government entity and there is always red tape challenges. This makes decision makingslow
at LIC.
 Labour overheads: LIC has a huge employee’s strength and most of them work from their
own setups. Paying their salaries and managing theme is often a huge challenge for the
company.

OPPORTUNITIES:
 Insurable population –According to ING only 10% of the population is insure which represents
around 30% of the insurable population. This suggests more than 300m people, with the
potential to buy insurance, remain uninsured.
 There will be inflow of managerial and financial expertise from the world’s leading insurance
markets.
 Further the burden of educating consumers will also be shared among many players.

 Cybersecurity: There are many cases of information threats and breaches in security
systems. Thus at an age where cybersecurity is a threat Insurance policies against this can
prove to be a huge opportunity.
 Online Services: As online services grown people have started looking more into options
like insurance and the awareness levels are also higher than the earlier days. This presents
an opportunity for providers like LIC which are labor intensive to cut down costs by
replacing people with technology.
 Shift from protection to prevention: There is a general shift of trend from protection to
prevention which is a pointer for insurance companies who should now be focusing on risk
prevention than risk mitigation policies.
 More disposable income: Insurance today is seen not as a protection but also as a form of
investment. By capitalizing on this new approach insurance companies can design
new products.

THREATS
 Reorganization of PSU’s:-Since all PSU’s have started to redefine their services to attract
customer’s attention.
 A few foreign Insurance companies have been permitted to increase their number branches
and its entry has taken away some business of the existing companies.

 Competition: With privatization of insurance LIC has lost its older glory and today faces
stiff competition from private insurance players who have brought in more glamour into the
industry.

9
 Change of governments: With every new government the fiscal and monetary policies
change with the result that policies need to be reworked accordingly. This creates a lot of
hassles.
 Technology: Today most financial services make technology an integral; part of their
business through online banking and financial broking services online. However, LIC still
has a lot to achieve in terms of staying abreast with technology.

 CONSUMER BUYING BEHAVIOR

The consumer buying behavior mainly consist of 3 phases:-

1. Customer awareness
2. Purchasing decision
3. Customer retention

 Customer awareness
Generating awareness for life insurance ownership is fundamental to driving increased life
insurance sales. More importantly, however, is the need to generate awareness at the moment
when the need for life insurance is greatest. In particular, it can be beneficial to understand life
events core to each stage of a person’s life. These range from standard events such as marriage
and children to less common ones, including natural disaster and gaining ones’ citizenship. While
all impact purchase behavior, certain events are significantly more impactful in driving consumer
purchase. The most impactful events where a high percent of surveyed buyers indicate importance
include:
o Having Children (43%)
o Buying a Home (35%)
o Change in Financial Situation (33%)
o Marriage (28%)

 Purchasing decision
Though many carriers have increasingly experimented with direct-to-consumer distribution
mechanisms, consultative advice tends to remain a highly-desired element of the purchase process,
with real impact on driving follow-through to purchase. Non-buyers cite a variety of reasons for
not purchasing insurance, including unclear benefits, complexity, and lengthy application process.
Once a middle market consumer buys, ensuring he or she keeps the policy often involves
compelling engagement methods. The most effective life insurance carriers may very well be
those that figure out how to keep their customer’s first policy from lapsing and keep their
customers coming back.

 Customer Retention
Carriers that are able to identify policyholders experiencing a financial change have an
opportunity to retain these consumers by aiding them in navigating these changes. Interpersonal

10
interactions were both preferred and viewed as most helpful, while digital and/or impersonal
channels were viewed as less helpful by those surveyed and less preferred across buyer
populations.

In present Indian market, the investment habits of Indian consumers are changing very frequently.
The individuals have their own perception towards various types of investment plans. The
consumer’s perception towards Life Insurance Policies is positive. It developed a positive mind
sets for their investment pattern, in insurance policies.
The entry of private sector insurance companies into the Indian insurance sector triggered off a
series of changes in the industry. Even with the stiff competition in the market place, it is evident
from the study that the public sector giant LIC dominates the Indian insurance industry. In today‘s
competitive world, customer satisfaction has become an important aspect to retain the customers,
not only to grow but also to serve. Increased competition, wide range of product offerings and
multiple distribution channels cause companies to value satisfied and highly profitable customers.
The major factors playing the role in developing consumer’s perception towards Life Insurance
Policies are Consumer Loyalty, Service Quality, Ease of Procedures, Satisfaction Level, Company
Image, and Company-Client Relationship. Insurance industry has to go ahead. A lot of
opportunities are still waiting

SEGMENTATION, TARGETING & POSITIONING (STP)

ANALYSIS OF LIC

Market Segmentation Of LIC Of India

In recent times the growth and sustainability of LIC insurance market has become the great
challenge before the management .To present products in the best possible light to different target
audiences an intended marketing technique is used called product segmentation.
Market segmentation is the process in marketing of grouping a market i.e. customers into
smaller subgroups. This is not something that is arbitrarily imposed on society. It is derived from
the recognition that the total market is often made up of submarkets called 'segments'. These
segments are homogeneous within i.e. people in the segment are similar to each other in their
attitudes about certain variables4. -because of this intragroup similarity, they are likely to respond
somewhat similarly to a given marketing strategy. That is, they are likely to have similar feeling
and ideas about a marketing mix comprised of a given product or service, sold at a given price,
distributed in a certain way, and promoted in a certain way. Market segmentation is widely defined
as being a complex process consisting in two main phase’s identification of broad, large markets.
$segmentation of these markets in order to select the most appropriate target markets and develop
marketing mixes accordingly.
LIC in India was divided into 2 basic segments

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  Individuals
 Corporate people.
The first segment comprised of individual customers. It is further divided into four sub-segments
 Protection
 Investment
 Savings
 Pension.

 Protection products gives only protection to the different customers from risk. These don’t
provide any savings facility to the policyholder.
 Investment products offer long-term investment growth and insurance cover.
 Savings products like endowment and money back policies provide both protection and
investment benefits.
 Pension policies are products offered to the customers as income during their years of
retirement after they quit their respective jobs.
The corporate segment was divided into three sub-segments
 Protection,
 Statutory Savings
 Pension.
Down the line, LIC catered to both individual and corporate segments. Individual insurance
policies include Endowment Policies, Money Back Policies, Term Assurance Plans, Periodic
Money Back Plans and Joint Life Plans. The corporate policies include group insurance schemes
such as group gratuity schemes, group term insurance schemes, group savings linked insurance
scheme and group leave encashment schemes.
The policies of LIC covers the age group 0-70 can avail the services of LIC. It means LIC has
very vast market segment, children, youngster, working, married, old people.
As individuals it is inherent to differ. Each individual’s insurance needs and requirements are
different from that of the others. LICs Insurance Plans are policies that talk to you individually
and give you the most suitable options that can fit your requirement.

Market segmentation in the organisation

Markets are segmented into different customer groups. Each product or services is tailored to
match the needs of the customer group. The segmentation helps the insurance organization in
dividing the market into small segments where the customer needs are identical. The following
table illustrates market segmentation.
Market segmentation in LIC

 Household sector
Salaried class, Self-employed, Retired employees

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 Industrial sector
Public sector and Private sector

 Trade sector
Smallness and Big business

 Institutional sector
Universities, Colleges, Schools and Institutes

 Region wise
Central zone, Eastern zone, Western zone, Northern zone and Southern zone

 Rural sector
Gender: Men/women, Age: Kids, teens, Youth Grey

Lic Targeting
Targeting involves breaking a market into segments and then concentrating your marketing efforts on
one or a few key segments. Target marketing can be the key to a small business/s success. The beauty of
target marketing is that it makes the promotion, pricing and distribution of your products and more
services easier and more cost effective. Target marketing provides a focus tool of your marketing activities.
Targeting is the actual selection of the segment you want to serve the target market is the group
of people or organizations whose needs a product is specifically designed to satisfy.
LIC mainly targets children who are basically into schooling, people in earning periods and senior
citizens who have got retired from their respective services. It not only targets the urban people
but also the rural people.

Targeting in marketing is important because it’s a part of a holistic marketing strategy. It

impacts advertising, as well as customer experience, branding, and business operations. When
your company focuses on target market segmentation, you can do the following:

 Speaking directly to a defined audience.

 Attract and convert high-quality leads.

 Differentiating brand from competitors.

 Building deeper customer loyalty.

 , Improved products and services.

 Focused.

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 Positioning By LIC

Positioning is a marketing strategy so that people can form a ‘mental image’ of the product in their
minds (relative to other products).

LIC positions itself as the most sort after insurance company providing financial solutions to the
people. It is very popular among the people because it is government owned.

Brand Equity

LIC has done a good job in reinforcing its brand image of the ‘folded hands’ to the people. It is
readily trusted by the people as it is one of the oldest insurance player in the country. Its tagline
“ZINDAGI KE SAATH BHI ZINDAGI KI BAAD BHI” has gained popularism not only in urban
but also in rural areas.

The slogan of LIC is “Yogakshemam Vahamyaham” which translates from Sanskrit to “Your
welfare is our responsibility”. The literal translation from Sanskrit to English is “I carry what you
require”. The slogan, written in Devanagiri script, is found below the hands holding the lamp.

Marketing Policies and Practices of the LIC

A well- planned marketing approach is very essential for the effective functioning of any service
organisation. A consumer-oriented marketing policy is essential to achieve its goals. The need for
developing a consumer based marketing approach was recognized by the LIC very late. Until
1982, the LIC was purely a sales organisation and its marketing approach was oriented to the
needs of the corporation than to the needs of the consumer. As branch offices were acting as mere
business procuration centers and division offices dealing with the servicing aspect, there had been
delay in servicing the policyholders. There was no clear-cut market segmentation policy in the
LIC targeting the specific needs of various customer groups.
The LIC started adopting marketing approach since 1982. The first step towards this was
decentralization of LIC operations up to the branch level. Almost all aspects of policy servicing
are now entrusted with branch offices as a result of the decentralization process that enabled to
avoid delays in policy servicing and moving closer to the customers. While the marketing
functions as identifying the prospective customers and motivating them to take policies, policy
registration, policy servicing, sales force management, settlement of claims, etc., are entrusted to
the branch offices. Functions like market research, advertising and publicity, and marketing
planning are reserved to the corporate office. The reorganization scheme of the LIC provides that
“the basic change in the concept of the organisation from a sales organisation to a marketing
organisation requires a scientific approach to its sales techniques. The marketing policies of the
LIC have been defined in this light as given below.
“As a national organisation (the LIC has) to provide optimal financial security, through life
insurance, as extensively as possible, to diverse populations in urban and rural areas, with different

14
 occupations and sources of income and in high, middle and low income levels, more especially,
the economically weaker sections”.
To achieve the objectives listed above, the goals are spelt out as follows:

(i) Bringing about a marketing approach at different tiers of the organisational hierarchy.

(ii) Better penetration into rural areas and market segments of urban and rural areas that were
hitherto inadequately explored.

(iii) Offering adequate range of products suitable for different segments of people.

(iv) Improving customer satisfaction

 by ensuring need- based selling

 by evolving standards of performance for different aspects of servicing

 by devising appropriate procedures and systems, and

 by enhancing the commitment to service on the part of agents and employees

(v) Developing a dynamic field organisation

 with a good geographical spread over all parts of the country

 capable of selling and servicing with knowledge, skill and responsiveness to the customers’
needs

 with a low rate of interest, and

 with increasing productivity levels

(vi) Improving cost effectiveness by

 ensuring a high rate of conservation of business

 lowering procuration and servicing costs

 optimizing the product mix

 higher productivity in the field and in the office, and

 by improving the quality of supervision and control over personnel and practices.

Branding in LIC

Till mid-1980s, the LIC was promoting Life Insurance as a generic product. The brand that lays
stress on the quality of the product itself, instead of highlighting the name of the manufacturing
company or the company that distributes the product, is known as the Generic Brand. The most
successful branding of a service was the one by the LIC’s “Jeevan” prefix for the different plans,

15
one of the best branding exercises in the Indian Market. While launching Jeevan Mitra and Jeevan
Saathi in 1985, the Corporation toyed with the idea of branding these products for better
recognition in the minds of consuming publics.
The LIC has not yet developed any mascot that could penetrate the minds of the customers. On
the other hand, other companies e.g. Allianz Bajaj, have imaginatively conceived “Care” as the
brand message. Research study by “Future Brands”, a UK- based research agency, reveals that the
traditional ideas that marketers have about brands is fast changing, particularly amongst the
younger generation that has unlimited access to information. The younger generation relies
more on advertisement gimmicks than on the utility of the brands. In short, the brand should
have consistency, i.e., ability to stay in the market and adapt to the changes. In the era of a
deregulated environment and Information Technology, one can’t just rely on brand image alone.
A big player like the LIC, being an established player, has a very big advantage. Another
advantage of a well- known brand is that it comes in handy, if and when the organisation wants to
diversify. In such a case, care should be exercised by the organisation to see that the reverse does
not happen.
The truth is that a good brand image also cannot pull an organisation too long. It has to be
supplemented by other positive images like continued improvements in product quality, servicing
standard and marketing methods, value additions and fulfilment of the needs of the customer. The
brand today is to thrive in a global market, a “Borderless world”. It is believed that the world
population is growing more homogeneous in their tastes, due to the advantages of fast
communication and travel and will thus increasingly respond to global brands. A Global brand
thus helps in economy of standard practicing, label promotions and advertising. Even when a
company has promoted its global brand name worldwide, it is difficult to standardize the brand
associations in all countries. Branding is a must in the modern scenario and companies need to
develop brand polices for the individual product chains in their lines.
Finally, it should be remembered that a good brand image has little meaning to a dissatisfied
customer. It takes a few seconds to leave a customer displeased, and make him leave the fold,
while years of sustained efforts can only create a loyal customer and make the organisation
trustworthy, and retain an old customer.

Branding Strategies
Branding strategies are increasing recently to enhance the market share of the product. The brand
is vocationalised as name and mark. Brand identity may itself increase margins and profits by
enhancing the perception of quality. Brand strategies involve decisions of individual names,
blanket family and company trade name. The strategy searches for the best name for each new
product. The LIC has been successfully using them. There are five choices of brand strategy: line
extensions, brand extensions, multi-brands, new brands and co-brands.

Line Extensions
Line extensions introduce additional items in the same product under the same brand name. Many
companies are now introducing branded variants. It is a specific brand line for a specific distributor

16
to distinct product offerings. It suits the different requirements of the customers but too many lines
may confuse the customers. A balanced number of lines has a positive side. Jeevan Saral of the
LIC has been the brand line extension to cover higher amount, smooth return liquidity, and
flexibility. It has partial withdrawal facility, flexible term, term rider and accident benefit options
and auto cover. On death, 250 times of monthly premium is payable along with return of premium
and loyalty addition as per conditions applicable on Maturity when Sum Assured and loyalty
addition are payable. It makes life smooth sailing.

Brand Extension
Here, the existing brand name is used to launch new products. The LIC has used the ‘Jeevan Shree’
for new products such as Jeevan Rekha and Jeevan Sneha. The rise of Corporate Branding is
extending the product brand. The medical benefits have been demanded by customers since long;
so, the LIC has extended its brand to milled Jeevan Bharati and Asha-Deep II. The policyholder
during the policy-period gets 50 per cent of the sum assured in case of suffering from specified
disease. Premiums are waived thereafter. Payment of 10 per cent of the sum assured is paid
thereafter annually at the anniversary of the policy. The remaining 50 per cent sum assured is paid
at the maturity. If the policyholder is dead before maturity, the balance is paid with accrued bonus.
Jeevan Bharati is an assurance for the benefits of ladies and the newly born children. Under this
policy, the new born is given 50 per cent of the sum assured or Rupees one lac whichever is less,
for congenial illness rider benefits. The payment of maturity claim may be made under annuity to
give benefits of pension.

Multi Brands
Additional brands are exercised in the same product category. Hindustan Lever Ltd. India has
different brand names for washing soaps. Similarly, the LIC has Jana Shree Multi- brands wherein
children get scholarship of insured members of the group insurance. The company can catch a
large number of customers by multi- brands but each brand may obtain only a small market share.
Some brand names may be practically non-existing. The purpose of multi -brands is to reach the
same target market or distinct target markets. The Jan Shree policy is helping a large number of
houses living below poverty line, such as rikshapullers, milk-sellers, farmers and so on. Children
up to two only of the insured parents can get scholarship of ` 100 p.m. from Class 9 to Class 12.
The multi- brands have been very successful. The Government of India is helping the weaker
sections through the LIC through the Jan Shree policy.

New Brands and Co-brands

New brands may be introduced when none of its current brands is appropriate; co-branding is also
useful in dual branding, i.e., two or more well- known brands are combined together. It may be
ingredient co-branding, company co-branding, multiple-sponsor co-branding. The LIC has been
successful in issuing co-brand products by having new brands of the existing brands. For example,
Children’s Deferred Assurance has been extended to make co-brands such as Komal Jeevan and
Jeevan Kishore. Komal Jeevan is a Money- back policy for children and Jeevan Kishore provides
life cover from the age of 7 years. New Jeevan Akshay, New Jeevan Shree and Annual Jeevan
have been cobrands of their existing brands with some simplicity and uniqueness.

17
New brands have been added by the LIC by introduction of Varishtha Pension Bima Yojana, Asha
Deep, Bima Nivesh and New Prabhat. The LIC has issued ‘Dhanavarsha’ as its brand equity.
Several schemes in this series have been launched with assurances on returns. Monthly income
option has been there. The Dhanavarsha scheme is closed now as market players have not been
favourable.

The LIC has been gaining the benefits of brand equity. Today, life insurance means the LIC in the
mind of a majority of the population. But the LIC has to effort hard as the brand equity may not
sustain long in the age of competition. The market share of the LIC has declined from 89 per cent
to 82. It has to revive its brand equity by extending delighted services to the policyholders. There
is need of continued improvements in product quality, servicing standards, value addition and
fulfilling of the customer’s needs.

MARKETING MIX OF LIC

The marketing mix (also known as the 4 Ps) is a foundation model. The marketing mix has been
defined as the "set of marketing tools that the firm uses to pursue its marketing objectives in the
target". Thus the marketing mix refers to four broad levels of marketing decision, namely:
product, price, promotion, and place. Marketing practice has been occurring for millennia, but
marketing theory emerged in the early twentieth century. The contemporary marketing mix, or the
4 Ps, which has become the dominant framework for marketing management decisions, was first
published in 1960. The correct arrangement of marketing mix by enterprise marketing managers
plays an important role in the success of corporate marketing: (1) develop strengths and avoid
weaknesses (2) strengthen the competitiveness and adaptability of enterprises (3) make the
internal departments of the enterprise work closely together.

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Product in the Marketing mix of LIC

LIC- Life Insurance has designed several products in accordance with the requirements of the
common people. Insurance is mainly taken out with the purpose of providing for the family
members in case of death by natural causes or accident to the breadwinner of the family. LIC-
Life Insurance offers its customers various insurance products such as the following-

 Life Insurance
 Investment Management
 Health Insurance
 Mutual Fund
 Property Insurance
 Auto Insurance
 Home Insurance
 Casualty Insurance
 Liability Insurance
 Credit Insurance

Besides this, various pension plans, annuities, group schemes, special plans and unit-linked plans
are also in place for the benefit of consumers. LIC- Life Insurance has also launched several
products especially for children, senior citizens, women and handicapped. LIC also has schemes
for people who are on the borderline of poverty.

The products offered by the LIC are referred to as policy or plan. The main purpose of offering
an LIC policy is insurance coverage to the life of individuals. However, certain associated benefits
like savings, income tax relief, financing for personal and housing needs, social security in the
form of pension, welfare aspect in the form of education, medical benefits, performance of
marriage, etc., are also included in the total package of product offered to different segments of
customers. The product decisions of the LIC are related to issues as product lines, product mix,
features of each LIC plan, and life span of LIC plans, product development process and
performance of LIC plans, and the product concept

Product & Brand Mix Strategies

Product mix strategies include width, length, depth and consistency. Width indicates how many
different product lines are there in the organisation. The life insurance provision is the primary
product line of the LIC, which has been extended to include many benefits of investment,
education and marriage provisions, old age pensions, periodical returns, etc., to denote the width
of life insurance product line. The length of the product mix includes the total number of lines in
the mix. The total number of tables of the LIC reveals the length. The depth of the product mix
refers to the number of items within each product line. The whole life policy is divided into whole
life limited policy, convertible whole life policy and so on. Consistency refers to the relationship
between the company’s various product lines, in terms of common use, distribution outlets, etc.
Life insurance has consistency with bank deposits, pension provisions and death claims. It has

19
 been extended to serve the customers through loans and surrender value provisions. It is related
to product mix decision, i.e., entry and expansion of the market. Product mix sometimes means
altering product policy at the product item level, i.e., what products to add, modify, or drop.
Product mix strategy is a dynamic phenomenon as the market changes every time. It maximizes
sales growth, sales stability and profit.
Product Mix Strategies have been divided into four categories using two factors for analysis i.e.
related product and same brand. The LIC has adopted them as under.
a) Related Product and Same Brand: The whole life policy is the brand and the related products
are limited whole life, convertible whole life, and so on. Similarly, endowment brand has
different related products such as limited endowment, and anticipated endowment. The related
product and the same brand could not increase faster than the other products.

b) Unrelated Product and Same Brand: Under this strategy, the brand is the same but products
are not closely related, as under endowment policy brand. There are multi-purpose policy,
money back policy and so on. The money back policy could not be sold at greater speed than
other products.

c) Related Product and Different Brand: Under this strategy, the product remains the same but
brands are different. The LIC has issued different brands (Policies) for the same product of
Children’s Endowment Assurance. Jeevan Kishore, Jeevan Komal, etc., are the different brands
of the one product, i.e., children’s endowment. Under children’s product, the different forms
of policies, i.e., Marriage Educational Annuity and Children’s Money Back, have increased.
Similarly, under new products for children benefits, Jeevan Kishore and Jeevan Chaya have
increased by more than three times.

In this classification, children’s policies have been related products and the different brands are
Marriage/Educational Annuity, Money Back, Jeevan Kishore, Jeevan Chaya, and so on.
d) Unrelated Product and Different Brand: Under this strategy, the brands and products are
different. They are unrelated. The LIC has recently launched different products apart from
insurance, such as Mutual Funds, Housing Loan, and so on. There are different brands such as
LIC Mutual, LIC loan, Jeevan Rekha, Bima Plus, and so on.

Place in the Marketing mix of LIC

As LIC- Life Insurance is a service industry, the distribution of its products and facilities is done
through various channels – direct and indirect. Numerous routes are taken to reach the potential
customers. The most important and basic channel member until this date has been the “Insurance
agent”. Taking various innovative routes in order to reach the corner that is the farthest and
remotest is the objective of the LIC Company. Physical distribution of the service products, which
in this case is funds and support at the right time and place is an important factor of marketing
policy of LIC- Life Insurance Company.

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The organization’s channel of distribution consists of agents, brokers, development officers, retail
services related to finance, branch office, alliance with banks and distributors, corporate agencies
and proper and well-maintained infrastructure. Presently LIC- Life Insurance distributive channel
consists of numerous development officials, agents and service branches who are active
participants. Presently the number of zonal offices LIC has is eight, divisional offices are 109,
satellite offices is 992, branches is 2,048 and numerous corporate offices. It also has a network of
corporate agents that are 242, individual agents that are 1,337,064, referral agents that are79,
brokers that are 98 and tie-ups with 42 banks.

Price in the Marketing mix of LIC

A suitable pricing policy is a very important factor in the successful running of an insurance
company as it is the pricing policy that affects the sales volume of a company. Price is actually
the valuation that is offered for the product by the offerer. For any LIC- Life Insurance policy, the
policyholder has to pay a premium that is paid either annually, half-yearly, quarterly or in some
cases monthly. The management takes the decision of fixing the premium of every policy relating
to a particular period.

A complete market analysis is done and information about various facts are collected like how
much money can an individual afford for a particular scheme, and what is the economic and
financial condition of the market at that particular time. This data helps in making the fair and
reasonable pricing policies. The management also makes pricing decisions about the premium
mode, premium level, investment return, loan interest and the commissions. If you compare LIC
products with other insurance products, then you will find that LIC is very much a value for money
product. With its excellent brand value, and service quality, a customer can get full value as per
the price paid for an LIC product.

Promotions in the Marketing mix of LIC

The promotional strategy of LIC- Life Insurance is very simple and straightforward. Its main aim
is to inform the consumers about its various policies and about its brand. In order to fulfill this it
has taken steps like personal selling, exhibitions, demonstrations at events, advertising and new
schemes. Bags, diaries calendars are distributed as gifts and incentives to the policyholders.
Advertisements are shown on televisions, newspapers, billboards as promotional activities.

A mobile van for publicity roams across the rural areas creating awareness about the company.
LIC- Life Insurance has its own website and webpage where all the detailed information about
every possible query is supplied to satisfy the consumers. The majority of advertising is driven
towards insurance which can be purchased by the common man so as to increase the reach of the
company and at the same time, the sale of the product. Thus, product introduction and product
retention in the mind of the customers is the major objective of promotions by Life Insurance
Corporation.

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Marketing Life Insurance in Rural Areas

The census of 2001 shows that the rural sector in India comprises 72 per cent of the population
and generates 26 per cent of the GDP. Thus, the rural sector is important both politically and
economically. Naturally, rural insurance has been emphasized since the nationalization of life
insurance business. The government followed a three-pronged strategy for life insurance. Firstly,
it targeted the rural wealthy with regular individual policies. Secondly, it offered group policies
to those who could not afford individual policies. Thirdly, for the very poor, it offered
government-subsidized policies. For nonlife insurance in the rural sector, the government has
actively pursued specific strategies such as crop insurance and the insurance of farm implements
such as tractors and pumps.
It was noted in the section on regulation that, after five years of operation, every private sector life
insurance company has to achieve a certain proportion of their business in the rural sector. It is a
variable and rising proportion, with at least 15 per cent of business in the rural sector after five
years. For the Life Insurance Corporation of India (LIC), the requirement is 18per cent.

Definition of Rural Sector

The term “rural sector” is confusing because not all government bodies use the same definition.
Under the “Obligations of Insurers to Rural Social Sectors” of the Insurance Regulatory and
Development Authority Act, 1999, the IRDA defines the rural sector as follows. “Rural sector”
shall mean any place as per the latest census which has: (i) a population of not more than 5000;
(ii) a density of population of not more than 400 per square kilometer; and (iii) at least 75 per cent
of the male main working population is engaged in agriculture. After the opening up of the
insurance sector, the IRDA issued a new definition for the rural sector in the year 2000 to identify
the rural areas of India for the life insurers as per the new census. The formal definition of the
rural sector is the one, which is not urban. The Urban sector is defined to include all locations
with municipality, corporation, notified town areas and all other locations specifying the criteria,
(1) a minimum population of five thousand, (2) at least 75 per cent of male workforce engaged in
non-agricultural activities, and (3) a population density of over 400 people per sq. km.

LIC and Rural Life Insurance Market in India

The Indian life insurance market is growing faster than most developed markets. India, along with
other Asian economies like South Korea and Japan, has a double-digit growth figure in the
industry. The public sector Life Insurance Corporation of India (LIC) is still the dominant force
in the market, but its market share is slowly and steadily eroding. From being a monopoly for
close to 45 years, the corporation is today facing the greatest challenge of its existence from the
private sector which today has a combined market share of slightly over 25 per cent of India’s life
insurance market.
The Indian life insurance market can be divided into urban and rural markets. These two segments
are diverse in nature and have distinguishing characteristics. The economic growth of the two has
not been the same. A wide disparity exists in the per capita income and literacy rate, among other
things, in these two sectors. The ratio of rural Indian population is very high and it has growing
insurance needs. From insurance perspective, it shows that the rural population has low reach and

22
the urban markets are rapidly getting saturated, so that the future growth potential lies in the rural
areas.
The Indian life insurance market has significant potential on account of low insurance penetration,
combined with low expenditure on life insurance.
In spite of insurance reforms paving the way for private participation, the insurance sector is still
under-penetrated. India accounts for 16 per cent of the world population, but only accounts for
1.68 per cent of the world life insurance market in the year 2006. Insurance penetration or
premium volume as a share of a country’s GDP for the year 2005 stood at 2.53 per cent and
accounted for 4.1 per cent of GDP in 2006-07, which shows an upward movement from 1.2 per
cent in 1999-2000. This growth rate happens to be far better than in its counterpart, China, where
insurance business accounts for only 1.75 of the GDP. However, this status quo is set to change
and the level of penetration will tend to rise as income increases.
Even now, the Indian insurance customer views life insurance product as a means to perk up
finances and avail tax benefits. The non-life coverage is largely considered unnecessary and a
waste of money. Even essential insurance products like health insurance are perceived similarly.
However, the increase in per capita income together with the rising middle-class populace is said
to double the insurance market in the next five to six years. Some of the customer segments which
show tremendous potential and opportunity to the insurers are: the up-market or modern,
traditional and rural and semi-educated segments. Against this background, this paper highlights
the growth of insurance in individual policy, role of LIC in rural insurance, and reasons for the
slow growth of LIC in rural India. The present study is based on secondary data.

Role of LIC in the Rural Insurance

The LIC has been able to establish itself as a vibrant organisation playing an important role in the
lives of people in the hundreds and thousands of hamlets dotting the rural landscape of the country.
Its proclamation, therefore, that “we know India better” is not without substance. The LIC can
also lay claims, more than any other organisation, to be deriving its strength and inspiration from
the trust its policyholders in rural areas have reposed in it. Having recognized immense insurance
potential, the LIC has concentrated on the rural sector. During 2003-04, of the 264.56 lakh policies
marketed, as many as 62.20 lakh policies were marketed in the rural sector. The LIC has also
taken a number of measures to professionalize the rural career agents and as on March 31, 2004,
there are as many as 53,037 rural career agents. Further, the promotional expenditure of the LIC,
which stood at ` 3791.13 lakh in 1999-2000 rose to ` 9659.66 lakh in 2003-04. In the rural
areas, along the dusty roads, the LIC is painting the walls and adopting folklores so as to market
insurance plans to rural customers like never before. The new players, on the other hand, have not
paid much attention to tap the rural market. In fact, they focused only on meeting the regulatory
requirements rather than improving the business in rural areas.

Organisation of Advertising and Publicity in LIC

The LIC has set up publicity sections at various levels to look after and coordinate the advertising
and publicity activities. At central office level, a separate section for publicity has been established
under the marketing department that supervises the advertising activities at the national level and

23
 frames broad guidelines on the advertisement budgets of various zones of the LIC and issues
guidelines on the advertising activities to be taken up by zonal offices.

At the zonal office, a separate publicity wing is established under the control of marketing
department that looks after the advertising and publicity activities at the zonal level. The publicity
wing of the zonal office issues advertisements in regional languages and provides guidelines to
divisional offices.
At the divisional level, a publicity officer looks after the advertising and publicity activities in the
divisional area. He concentrates on the advertising activities in the divisional area through proper
media like hoardings, wall writings, public parks maintenance, transit advertising and other
activities that are suitable to the area.
The advertising of the LIC is mainly undertaken by the central office and to some extent by the
zonal and divisional offices. The policy and budget of advertising is decided at the central office.
The zonal and divisional offices advertise in their respective areas in regional languages within
their budget limits.
The LIC uses the following media in its advertising and promotional activities.
 Newspaper advertisements (Announcing the opening of a branch, detailing new
schemes/services offered, announcing the setting up of new divisions, informing about the
performance and working of the LIC, informing about special revival campaigns, educating
the policyholders about different services offered by the LIC, informing about the working of
grievance redressal cell)

 TV advertisements (Sponsoring of network programmes in TV, TV advertisements at national

level undertaken by central office and advertisements in regional languages undertaken by
zonal offices)

 Radio advertisements (interviews with the officials on insurance, brief description of the LIC
by officials)
 Setting up of hoardings at prominent places exhibiting detailing of the financial services
offered.

 Setting up of welcome boards at railway stations, airports, bus stations etc

 Distribution of brochures detailing the policy guidelines, activities and objectives of the LIC.

 Distribution of leaflets and booklets giving information about the various schemes.

 Display of newsletters, bulletins at the branch premises, banners announcing new schemes,
calendars, etc., to customers.

 Maintenance of public parks at important places.

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 Wall writing in prominent places exhibiting the details of the financial services and schemes
offered.

 Transit advertising

The LIC, along with advertising, uses publicity to promote its business and makes publicity
through field publicity vans, film shows, participation in village fairs and exhibitions, cattle
shows and indigenous media like lectures and bhajan mandalis. Another media of advertising
in rural areas is meetings organised for settlement of death claims wherein the concerned
branch managers with the assistance of agents and development officers arrange public meeting
and invite the important personalities of the village and hand over the cheque to the legal heirs
of the deceased. The officials of the LIC explain the importance of life insurance at this stance
to the gathering

Determinants of Customer Satisfaction in Life Insurance

Pre-sale services: 1 . Cost (premium),

2 . Risk protection,
Selection of Policy, 3 . Savings,
Explanation of 4 . Income-tax
product benefits, The Product benefits,
Product knowledge, Feature s 5 . Return,
Financial advice, 6 . Safety and,
Assistance in filling 7 . Liquidity
forms and,
Attentiveness to
customers

Customer

The Agent’s The Office

Services Services

Post-sale services: 1 . Tangibility,

2 . Accessibility,
1 . Agent’s visit, 3 . Competence,
2 . Reviewing further insurance needs, 4 . Communication,
3 . Assistance in premium notice, 5 . Assurance,
4 . Assistance in premium 6 . Responsiveness,
remittance, 7 . Reliability,
5 . Assistance in policy documents 8 . Empathy,
9 . System and procedure

Source: Rajan.M.P (2009), Marketing Of Life Insurance by LIC India

25
 PRODUCT LIFE CYCLE
Product Conception
Like other products and services, insurance product life-cycle management begins when a
company comes up with an idea for a new life and annuity product and develops a concept for it.
Companies determine the target market, using their store of data to anticipate customer needs and
how the proposed product might fit those needs. Because the insurance market is so segmented,
life and annuity products generally are tailored to specific ranges. A policy that emphasizes its
ability to cover the cost of higher education, for example, would be conceived as being geared
toward parents at the age when research shows they begin worrying about paying for those costs.
The policies might be rolled out in test markets as a proof-of-concept exercise to show there’s
enough potential in the idea to move forward.
Managing Growth
Once an insurance company determines that a new life or annuity policy is viable, it looks to
develop sales via an aggressive marketing campaign and continued refinement of the product to
meet demonstrated needs. By collecting the data from its existing customer base, it can determine
the demand factors and target its marketing more efficiently. If it’s an affordable policy designed
as an introduction to life insurance for college-aged students, a company might seek to market on
campuses. If it’s an annuity with a similar strategy of introducing new customers to the market, a
company also might target customers just under the usual age range for such products. As the
target market becomes more familiar with the products, sales can be expected to rise.
Reaching Maturity
Insurance is a competitive business, and competitive advantages tend not to linger. As other
agencies see a new product from a rival company is gaining traction, they can be expected to
develop something similar to market to their own customers. This crowds the market and leads to
both costs and innovative pressures. One agency might elect to offer introductory policies at a
lower cost, while others may add elements to their offerings that are difficult for others to match.
Growth slows or stops as more and more of the target market commits to a policy, and marketing
strategies may become more focused on getting customers to switch providers rather than
introducing them to the concept.
Decline Phase
As the market changes and the providers increase, the popularity of a policy will decline. As the
initial group of customers ages out of the target market, insurance companies may find that the
next group has different needs and expectations that require a new product to serve them. This
serves as a signal for an agency to focus on changing the existing products to meet these needs or
developing new offerings to better serve the market.
Client Management
Both life and annuity needs change over time, and an insurance agency must be conscious of
remaining on top of the differing needs of its customers to ensure that their business relationship
doesn’t end when the clients’ need for that particular policy does. A young couple with two young

26
children, for example, has different life insurance needs than a couple pondering retirement whose
children are grown. The former likely will be more concerned with the affordability and the
amount of coverage, making sure that the family is protected if something happens to either part
of the couple. The latter may instead be focused on tax advantages, ease of passing the money
down to heirs or accessing some of the funds to help maintain their lifestyle

Pricing Policies and Strategies

Many service providers offer a range of services at various price levels to meet the needs of
different target segments who may have different levels of spending power. The LIC offers its
products/plans at different premiums depending upon the amount of sum assured as well as the
age of the potential policyholders. The with- profit plans are relatively high priced compared to
without- profit plans. Pricing decisions are highly complex as far as service organisations are
concerned, especially for the LIC, due to the fact that multiple factors are to be considered while
fixing premium rates. An actuary of a life insurance company is the person who certifies that the
premium rates charged by the company are adequate and fair, determines the value of its net
liability and ensures that the value of its assets are sufficient not only to cover the value of the net
liability but also to satisfy the solvency margin requirements. The pricing actuary has to satisfy
the needs and requirements of different functional units, such as marketing, agency, claims,
finance, underwriting, investment and legal. Striking a balance among the demands of various
functional units is a herculean task. The major issues related to pricing of LIC policies are
discussed below.
Factors Influencing Premium Rates/ Pricing Assumptions
The determination of premium scale is the basis of a Life Insurance Company. The main business
of a Life Insurance Company is to collect, from its policyholders, premiums which, when
supplemented with interest, should be adequate to meet all the operating costs and benefits payable
under its policies, at all times- good or bad. When life insurance business was nationalised in
1956, it was decided to adopt the premium rates of Oriental Government Security Life Assurance,
Limited, with a reduction of one rupee per thousand sum assured or 5 per cent of the premium,
whichever was lower. Pricing involves making assumptions in order to assess the eventual costs
of liabilities (under insurance contacts) of a life insurer. The actuary draws on several principles
in setting assumptions for pricing insurance contract, having regard to the management of risk and
the return on capital. The assumptions themselves give rise to risks which need to be managed.
The most important factors/assumptions that are taken as the basis for determination of premium
rates are:-
 Demographic assumptions
 Investment return / rate of interest
 Expenses and commission/operational expenses
 Inflation of expenses
 Withdrawals

27
  Bonus (for Participating Policy Contracts)
 Profit and other contingency margins
 Taxation, competition, consistency etc
 Mortality rates

 Morbidity rates (accident, disability, critical illness rates)

Mode of Payment of Premium
The LIC offers different modes of payment of premium as yearly, half- yearly, quarterly and
monthly. Under monthly mode, an additional charge of 5 percent on the annual premium is made
to cover the extra cost of collection and also the loss of interest. In the case of salaried employees,
an option to choose Salary saving scheme (SSS) under which premiums are deducted by the
employer and remitted to the corporation is provided. Here, the additional charge of 5 per cent of
the premium applicable for monthly mode of payment is waived. When premiums are paid yearly
or half- yearly, a reduction of 75 paise and 50 paise respectively will be allowed in the annual
premium per thousand sum assured.

Dimensions of Pricing
The pricing policy is decided from customer, marketer and society’s angles.

a) Customer’s Dimensions

Customers see the prices from the buying behaviour. They value the prices for deriving
benefits. Customers are conscious about the prices. They have their own angles of viewing
prices, i.e., the price is a quality symbol or price is excessively high. Rich people do not bother
about price. Sometimes, brand name is more important than price. Buyers have ranges of
acceptable prices and do not like price levels beyond that. Purchasers are accustomed to a
standard price. Price has become symbol of quality. If the price is high, people regard it as a
quality product. In insurance, this has been accepted by the customers. There are different life
insurance products having different premium (price). People are ready to pay higher prices if
the products meet their needs. Children’s Money Back and Jeevan Kishore of the LIC are
being widely purchased by the people.

b) Market’s Dimension

Pricing is decided with other marketing mix elements. It is highly related to promotion, place
and product. The prices are the control mechanism for market expansion. The market forces
are the deciding factors of price fixation. Life insurance is least influenced by the market
forces because it is the seller’s market. Life insurance is sold and not bought. The company
fixes the prices at which buyers may purchase the product or not. Previously, prices were
used to overcome the competition, but, now, non-price competition is more effective for
facing the challenges of competition. Price war is nonexistent in insurance business. The
marketer uses psychological pricing for the benefits of children.

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c) Societal Dimension

Prices are influenced by various social issues. The costs of production and distribution are to be
recovered in the form of price. The margin is reduced to meet the social requirements of the
people. Consumerism has taken place in India. The Life insurance industry is prone to Consumer
Protection Act. 1986. The LIC has introduced New Jan Raksha Policy for the benefits of society
at large and policyholders in particular.

Methods for Payment of Premium

With the opening up of the insurance industry, many private companies are offering insurance
products at competing costs coupled with product attributes. To enable the proponents to take a
well-informed decision, the IRDA had mandated that all insurance companies should provide a
premium calculator on their websites for easy verification by proponents and to crosscheck the
veracity of the statements of the insurance agents or advisors regarding the price and the cost
benefit. As the payment of premium by the proposer is the sine qua non for the commencement
of risk in a valid contract of insurance, the IRDA has laid down the manner in which a proponent
can tender the premium to the insurer for a fresh policy or for the renewal of a contract. Presently,
the following are the approved methods, and the IRDA may from time to time approve other
methods too. Section 64VB of the Indian Insurance Act 1938 was amended to facilitate the
payment of premium by alternative modes. These modes constitute the following:
Cash-Any recognized banking negotiable instrument such as Cheques, including Demand Drafts,
Pay Orders, and Banker’s Cheques drawn on any scheduled bank in India, Postal Money Orders,
Credit or Debit Cards held in one’s name, Bank Guarantees or Cash Deposits, Internet, E-transfer,
and Direct Credits via standing instructions of the proposer or the policyholder or the life insured
through bank transfers.

Pricing Strategies
The insurer tries to plan the pricing strategy for achieving the organizational objectives. All the
factors are properly evaluated to arrive at a suitable pricing policy. The price strategies are
formulated to provide guidelines and policies for the development of specific plans for pricing a
product or line of products. It includes the variability of prices, use of price lining, price stability,
pricing related to the product life cycle, and the use of psychological pricing. The first step in
deciding pricing strategies is selection of the target markets to decide on one or several important
segments with promising sales potential. The consumers’ behaviour, i.e., their buying motives,
location, sensitivity to price, prior attributes about the insurer and so on, are properly evaluated to
arrive at correct pricing strategies. The insurers conduct extensive investigation into competitors’
success and failure to assign price role in the marketing mix. The pricing strategies may be
classified as Market Entry Strategies, Consumer Related Strategies, Product Mix Pricing
Strategies, Discount Strategies, Geographical Pricing Strategies, Promotional Pricing Strategies,
Price Change Strategies, Competitive Pricing Strategies, Product Cycle Pricing Strategies, and so
on.

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 CONCLUSION
The insurance marketing scenario has undergone radical change over the years. The advent of
liberalization and direction of national and international economies in this direction highlights the
growing importance of marketing in insurance.
Today, with the advent of liberalization of insurance industry in India, the competitive landscape
of the industry has undergone dramatic changes. The insurance companies need to become more
agile by realigning their business strategies in line with the demands of the detariffing and highly
competitive scenario of the near future. Liberalization has transformed the scenario of the
insurance industry in India. Along with the competitive environment, it has enabled better
allocation of resources together with creation of wealth and prosperity for the individual, the
community and the country. The consumers have abundant opportunity to select the best product
for the best price and can also have a choice from a wide range of customized products in the
competitive market.
The LIC started adopting marketing approach since 1982. The first step towards this was
decentralization of LIC operations up to the branch level. Almost all aspects of policy servicing
are now entrusted with branch offices as a result of the decentralization process that enabled to
avoid delays in policy servicing and moving closer to the customers. While the marketing
functions as identifying the prospective customers and motivating them to take policies, policy
registration, policy servicing, sales force management, settlement of claims, etc., are entrusted to
the branch offices. Functions like market research, advertising and publicity, and marketing
planning are reserved to the corporate office. The reorganization scheme of the LIC provides that
“the basic change in the concept of the organisation from a sales organisation to a marketing
organisation requires a scientific approach to its sales techniques
“As a national organisation (the LIC has) to provide optimal financial security, through life
insurance, as extensively as possible, to diverse populations in urban and rural areas, with different
occupations and sources of income and in high, middle and low income levels, more especially,
the economically weaker sections”.

Key Learnings
 Learned about Insurance Sector in India and who all the key players in the market.
 Learned about business environment of a firm.
 By doing SWOT Analysis of LIC we understand about, how a company survives in the
market and also about market potential and consumer buying process.
 Got an overview about STP of LIC and learned the importance of STP for a firm.
 Learned about branding strategies, pricing strategies, Product Life Cycle.
 In short we learned lots of marketing strategies terms, concepts, techniques etc…

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BIBLIOGRAPHY
 Websites

o https://www.irdai.gov.in
o https://www.wikipedia.org/
o https://www.ibef.org/
o https://www.scribd.com/
o https://www.slideshare.net/
o https://www.licindia.in/

 Reports

o LIC Annual Report -2017-18

o Appi, Reddy. V. (1998). Marketing of Life Insurance Services, Print Well Publishers, Jaipur.
o Sadhak, H. (2009). Life Insurance in India; Opportunities, Challenges and Strategic
Perspective, Response Books, New Delhi.
o Sumninder, Kaur. Bawa. (2007). Life Insurance Corporation of India, Regal Publications,
New Delhi.
o Life Insurance Corporation of India. (1970). Saga of Security: Story of Indian Life Insurance
1870-1970, Patki, Bombay.
o Rao, B.S.R. (1976). Functioning of The LIC- An Appraisal, Institute for Financial
Management and Research, Madras.
o Srivastava, D. C., Ed, Srivastava, and Shashank, Ed. (2001). Indian Insurance Industry:
Transition and Prospects, New Century Publications, Delhi.
o Debabrata, Mitra., and Amlan, Ghosh. (2010). Life Insurance in India: Reforms and Impacts,
Abhijeet Publications, Delhi.
o Radha, Krishna. G. (2008). Marketing of Insurance Services in India, The ICFAI University
Press.
o Khanna, P. K., and Amit, Arora. (2013). Insurance Marketing, Black Prints, Newdelhi.
o Hari, Govind. Mishra. (2010). Marketing Management Techniques of LIC India, RBSA
Publishes, Jaipur.
o Biswasroy, P. K., and Venkateswara, Rao. (2008). Marketing Life Insurance Business,
Discovery Publishing House, Newdelhi.
o Malhotra, R. N. (1994). Report of Committee on Reforms in the Insurance Sector, Ministry
Of Finance, Government of India.

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