Unit – 2 Marketing Theory & Concepts in the Insurance Industry

Introduction: Marketing of Insurance Service to achieve increased customer orientation and

generation of profit is called Insurance Marketing. Formulation of an ideal mix for insurance business
is the main focus of Insurance marketing. The core and peripheral services can be improved by
following an appropriate service mix. The marketing concept enables the insurance business to expand
business in the best interest of society as well as the insurance organisation.
Consumer Needs: Consumer need is the basic requirement of a consumer to fulfil the day to day
survival. Consumer needs influence the consumer market to make available the entire set of goods and
services which are demanded regular basis. Is
Reasons behind Consumer Decisions
1. What to buy? – The decision to buy any product is the most important task. Until and unless if a
decision is made a consumer cannot buy anything. The customer has also a make a choice of the
product available in the market. After taking any decision consumers buy a product. Then the consume
takes a decision about which brand to buy. This can be attached with the price and features of the
product.
2. How much to buy? – The next decision the consumer has to make is to how much of the product
to be purchased. It depends on the type of the product to be purchased by the consumer depends on the
availability and frequency of use of the product.
3. Where to buy? – Another decision the consumer has to make is where the product should be bought.
Consumers usually will go a place where the services offered are excellent. Also the other factors like
prices and outlets are being decided by the consumers. The consumer expects a discount on the product.
Many products have different features and therefore after thoroughly examining the purchase is made.
4. When to buy? – The consumer also has to decide the time when the purchase has to be made. This
also is influenced by the availability of the products. Usually the purchase made by a consumer is very
high during the festive season, due to large volume of discount. It is also influenced by opening times,
sale and clearance period, transportation etc for the goods purchased.
5. How to buy? – Under this the consumer has to decide whether to pay cash or by credit payment.
Also the consumer expects the goods purchased to be delivered by the retailer. Also the instalment
facility, online purchase option may boost the sale of the product.
Insurance Customers and their buying patterns
Customer expectations are beliefs about service delivery that serve as standards or reference
points against which performance is judges ed. Because customers compare their perceptions of
performance with these reference points when evaluating service quality, thorough knowledge about
customer expectations is critical to services marketers. There are three important areas to consider:
1. Data Validation: Insurance companies have a lot of data. Customer demographics, addresses,
business and family relationships, assets, financial status and past and present relationships with the
company are all recorded across different areas of the company. But, for most carries, uniting all of
that data into one singular view of the customer is still a vision for the future. Data is going to build
the foundation for your new customer engagement strategy.
2. Analytical Tools: Once the data is cleansed, insurers need a way to glean actionable insights from
all that information. That’s where analytics tools come into play. Once an insurer has enacted and
organized customer data, its time to implement a robust analytics behaviours. By analysing group data,
insurers can identify patterns and tends that can support product development, segmentation and
campaigns. By analysing individual customers, insurers can create a more personal relationship by

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identifying new opportunities, finding policyholders who are at risk of churning and personalizing
communications.
3. Customer Communications: After applying analytics to cleansed data, insurers will be able to
personalize customer communications in a new way. If data is continually analyzed, insurance
companies won’t just be able to customize messaging in the mail, they will be able to personalize web
promotions, emails, phone calls and even social media messages. It helps to build a richer and deeper
relationship with customers. Relationship=Revenue.

The Marketing Mix of Insurance Product: Marketing mix is the combination

of marketing activities to meet the needs of his target market at its best. 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 7 Ps of marketing i.e., the product, its price, place,
promotion, people, process and physical evidence.
1. Product Mix: The formulation of product mix for the insurance business makes it significant. The
purpose of insurance business is to generate profits besides sub serving the social interests. Product is
like a stage on which the entire drama of successful marketing is acted. It is like an engine that pulls
the rest of the marketing programmes. The product development needs a new vision, a new approach
and a new strategy.
The Product Planning and Development should:
a) Give due weightage to the socially and economically backward classes.
b) Maximize the mobilisation of savings by offering lucrative (profitable) schemes.
c) Assign due weightage to interests of investors.
d) Maintain economy in business by promoting cost effectiveness.
e) Act as a trustee of policyholders.
f) Keep in mind the emerging trends in business environment.
g) Improve the quality of customer services.
2. Promotion Mix: Promotion mix for the insurance sector is as follows:
i. Advertisement: Advertisement can be done through the telecast media, broadcast media and
print media. Insurance companies have been making optimal use of all the three kinds. The
telecast media has been the most effective of all in case of the insurance sector. Most of the
companies have their separate advertising section to take care of this aspect. An important
consideration while making the decision as to the selection of media is budgetary constraint.
ii. Publicity: It is a device to promote business without making any payment and therefore it
could be also called as unpaid form of persuasive communication bearing a high rate of
sensitivity. Thus it is necessary to select suitable personnel for this. They should be in particular
taught to deal with people, simple things like talking, greeting etc.
iii. Sales Promotion: Incentive to the users for taking the policy play an important role in
promoting the insurance business. The offering of small gifts during a particular period, the
rebate, discount, bonus can increase business or organisation by leaps and bounds.
iv. Personal Selling: Personal selling in case of the insurance organisations is quite important
considering the existence of the insurance agents spread at all levels. Selection of the agents,
their training is responsibility of the organisation. There is difference in urban and rural market.
Hence the organisations will have to make selections of the rural and urban agents accordingly.

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 v. Word of Mouth Promoting: The word of mouth communication is having snowball effect.
The satisfied group of customers, opinion leaders, the popular personalities act as word of
mouth communicators.
vi. Telemarketing: With the development of satellite communication facilities and with the
expansion of the television network, we find telemarketing gaining popularity the world over.
The insurance organisations in general can use telemarketing for marketing their products.
vii. World Wide Web: In banking as well as insurance, more and more importance is being given
to online facilities. Email is the fastest written mode of communication. Insurance organisation
can promote their products through their websites.
3. Price Mix: In the insurance business, the pricing decisions are concerned with the premium charged
against the policies, interest charged for defaulting the payment of premium, credit facilities,
commission charged for underwriting and consultancy services. The formulation of pricing strategies
became more significant.
The Price Mix decisions are:
a) Making possible cost of effectiveness.
b) Restructuring of premium.
c) Due priority to profit generating investments.
d) Rationalizing or optimizing the social costs.
e) Paving avenues for channelizing the productive investments.
f) Assigning due weightage to the policies meant for the socially and economically backward
classes.
g) Making the ways for maximizing the profit.
4. Place: It is 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. The management of agents and insurance personnel is
found significant. The policy makers make provisions; the senior executives specify the standards and
quality and the branch managers with the cooperation of the front-line staff and others bear the
responsibility of making available the promised services to the end users.
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 with distinctive approach and innovative style.
5. People: People are most important component of marketing mix for the insurance industry.
Professional qualification requirements change as technological develops and evolves. The use of
computers, fax machines, sophisticated telephonic service, e-mailing, internet service have been
throwing a big impact on the perception of quality of service. The front-line-staff as well as branch
managers are required to be given the training facilities so that they in position to make possible an
effective use of the technologies.
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. Instalment schemes should be streamlined to the ever growing demands of the customers.
Information technology and data warehousing will smoothen the process flow. IT will help in serving
large number of customers efficiently and bring down overheads. It can also improve customer service
levels.
7. Physical Evidence: Physical evidence is a term used to describe the physical facility where the
service is produced and/or delivered. It includes facility design, equipment, signage, employee dress,
tangibles, reports and statements. Physical evidence is the environment in which the service is

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delivered and where the firm and the customer interact and any tangibles commodities that facilitate
performance or communication of the service.
Market Segmentation: Market segmentation is the process of dividing a broad consumer
or business market, normally consisting of existing and potential customers, into sub-groups of
consumers based on some type of shared characteristics like common needs, common interests, similar
lifestyles or even similar demographic profiles. The overall aim of segmentation is to identify high
yield segments – that is, those segments that are likely to be the most profitable or that have growth
potential – so that these can be selected for special attention.
Segmentation of Insurance Market
Insurance is an intangible service to consumers, where they essentially buying security and
peace of mind. Insurance protects them against unexpected damage of their motor vehicle and financial
loss.
Significance of Segmentation to the Insurance Business
1. Market segmentation is very important to an insurance organisation. In insurance business, the
prime focus is on the policyholder. Insurance marketing aims at transforming the prospects into
policyholders. Market segmentation enables the insurance marketer to identify the level of
expectations of the policyholders.
2. Insurance organisations capitalize on the available opportunities in market. They need to
increase their market share constantly. Market segmentation in insurance business helps in
informing, sensing and persuading the different segments where the potential users are
available.
3. The insurance professionals can do business in all segments, such as rural and urban, men and
women, agricultural or industrial and so on. Segmentation makes it possible to spread the
insurance business even to the agricultural sectors of the economy which is predominantly
rural-based.
4. With market segmentation, the insurance organsizations become aware the changing needs and
requirements of the rural sector and shape their services accordingly.
5. Knowing and understanding the market is considered significant to the insurance professionals
since the segmentation process helps them in scanning the changing needs and requirements of
the rural sector.
6. A study of segmentation would help insurance professionals in formulating a sound marketing
strategy. The product mix based on market segmentation would be competitive. All the
prospects would have additional attraction in using the services.
7. The segmentation would help insurance professionals in making the promotional measures
creative. It would be instrumental in sensitizing the prospects. The advertisement professionals
would make advertisement appeals, messages and campaigns proactive to the receiving
capacity of the target audience.
8. The pricing decision can also be rationalized and the weaker sections of the society would get
substantial benefits.
In view of the above, it is appropriate to say that segmentation is very important to insurance
professionals. It transforms the prospects into users.
Segmentation of Existing and Prospective Customers: Markets are segmented into different
customer groups. Each product or service is tailored to match the needs of the customer group. The
segmentation helps the insurance organisation in dividing the market into small segments where the
customer needs are identical.

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 In the insurance organizations, the task of formulating the overall marketing strategies cannot
be performed efficiently unless the market is segmented. The market for the insurance business is
found vast, the potential policyholders are in very good number and their needs and requirements are
not identical. The segmentation helps the insurance organisatoins in dividing and sub-dividing the
market into small segments in which the needs and requirements are found by the large identical.

Types of Insurance Customer Segmentation

Insurance customer segmentation refers to dividing your target audience based on different matrices.
This allows you to create a more targeted marketing strategy for each group. Insurance customer
segmentation helps reach out to potential clients and relate to their needs accordingly.
Insurance customer segmentation can be divided into four main types:
1. Segmentation Based on Demographic Data:
Customer segmentation can be conducted on the metric of demographic data, splitting your target
audience based on age, sex, race, family size, education, income, religion, and more. Demographic-
based segmentation is one of the most common types of insurance customer segmentation and allows
insurance agents to obtain the necessary data quickly. You can collect data through different methods,
including customer surveys, analyzing social media profiles, using third-party data providers, or using
data management tools.
2. Segmentation Based on Geographical Data
Insurance customer segmentation based on geographic data includes dividing your target audience into
groups based on location. This can help insurance agents understand the kind of insurance a potential
client requires. While the most common method of segmentation based on geography includes division
based on state or city, insurance agents can go one step ahead and divide their target audience based
on the characteristics of their location. This includes climate, population density, traffic, accidents, and
more.
3. Segmentation Based on Personality Traits
One of the most effective insurance customer segmentation is based on personality traits. Such data
includes customer interest, lifestyle, values, and other information on their personality. Such
segmentation helps insurance agents create a targeted ad campaign and service package tailored to a
particular customer. This increases lead generation and customer retention.
4. Segmentation Based on Business Companies
While individual customer segmentation is vital to creating marketing campaigns and reaching out to
individual customers, insurance agencies also look at the characteristics of a company to divide
different businesses into groups. The data collected on such companies can include the industry type,
revenue, location, employees, equipment, and more. Such segmentation is more common for business-
to-business (B2B) companies that want to market to different companies.

Benefits of Insurance Customer Segmentation

Customer segmentation is a crucial marketing strategy for insurance agencies. Some of the major
benefits of insurance customer segmentation include the following:
• Targeted Marketing Campaigns:
Dividing customers into groups allows insurance agencies to create and launch targeted marketing
campaigns to engage an audience and improve customer satisfaction.
• Improved Product Development:
Customer segmentation helps insurance agencies develop services and packages based on customer
needs, appealing to the customer base and improving the company's reputation.
• Improves Customer Retention:

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By dividing your customers based on specifics and creating a targeted approach to customer
satisfaction, insurance agencies can provide value and improve customer experience. This helps
improve customer retention and even gives you chances to upsell.

Conclusion
Insurance customer segmentation has become a crucial part of insurance marketing. While collecting
data on your target audience and dividing customers based on that data used to be time-consuming,
new tools in the digital insurance community have allowed insurance agencies to quickly and
effectively carry out customer segmentation.

POSITIONING: Positioning is a marketing concept that outlines what a business should do to

market its product or service to its customers. In positioning, the marketing department creates an
image for the product based on its intended audience. This is created through the use of promotion,
price, place and product. The more intense a positioning strategy, typically the more effective the
marketing strategy is for a company.
1. Positioning in Advertisements: Advertisements are usually the first places in business position
themselves. For example, a cosmetics marketing department must determine who they are targeting
and what consumer need is being met. If the intended target is teenagers, if the cosmetics line is trying
to help teenage girls overcome acne issues, the person in the ad might be one of a younger. To note the
importance of positioning, the same type of advertisement might not work if the intended audience of
the cosmetics line was older.
2. Positioning in Sales Locations: Reaching the customer is not simply a matter of advertising, it is
also a matter of choosing the right channels for distribution. If a majority of your target market lives
in an urban area with only public transportation available to them, having your product in rural areas
where a private automobile is needed for transport would not equal sale success. Place or position your
product or service as close to the target market as possible.
3. Positioning through Price: It should be noted that there is a large amount research on the
psychology of pricing in marketing. Simply put, the price of an item tells the buyer more about the
item than most realize. Many associate a higher price with higher quality and the opposite with a lower
price. Additionally, if a product is positioned as a good alternative to high-priced brands, the marketing
department must price it in the middle of the market to avoid a comparison to the cheapest products.
Competitive Positioning: Competitive positioning is about defining how you will “differentiate” your
offering and create value for your market. Competitive advantages give a company an edge over its
rivals and an ability to generate greater value for the firm and its shareholders. The more sustainable
competitive advantage, the more difficult to its competitors.
How to achieve competitive advantage in Insurance industry?
1. Cheapest doesn’t cut it: Price will always be important, of course it will, but there are other, more
innovative, ways to achieve a competitive advantage in the insurance industry. In-depth market-led
customer service is becoming key. Brokers wanting to remain competitive in a market where premiums
are increasingly expensive should focus more on advising clients about the best scope and terms of
cover, with regular communication and data-led insights. They should delight the customer at the
onboarding stage and continue to offer them vital data and insights through the policy term.
2. Boost your know-how: Competitive insurance brokers can have much better conversations with
clients by building their know-how and understanding of:
• Key issues impacting the underwriter

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 • Their specialist industry
• Each client’s situation
• Technical terms, contracts, and risks
3. Get friendly with your underwriters: The commercial lines insurance brokers with a competitive
advantage tend to have fostered good relations with underwriters to ensure they get fast and favourable
quotes. This includes taking time to understand what’s happening in each underwriter’s world. Like
any business, having a good relationship with your contact and developing a solid track record of
excellent conduct will keep you front of mind. The hard market makes it even more important in the
relationship building/maintenance between underwriter and broker.
4. Target underinsurance in your specialist sector: Underinsurance is a massive threat in the current
market, and can leave companies significantly exposed. Challenges such as war in Ukraine, inflation
and more extreme weather could mean companies unwittingly have much less cover than they need in
policies from property and asset insurance to key person cover. One example of this is a policy that
covers the company for a pre-agreed insured sum in the incidence of a fire but has not taken into
account how double-digit inflation has increased the cost of materials.
5. Grow your customer service: Competitive commercial insurance brokers build their reputation as
trusted advisers with a continuously proactive approach throughout the policy term. Don’t go silent
for 12 months until it’s time for renewal. Keep in touch with clients to find out if there have been any
relevant changes. Customer service is more than simply reacting when your client needs something.
The level of customer service that you need to achieve to remain competitive in a hard market is
proactive as well.
Using data and insights to inform them of events that might affect their policies, such as new
regulations or legal amendments, will showcase your value and engender the kind of trust and
relationships that will be beneficial, come renewal
6. Digitalization: Digitalization is reshaping the insurance industry: Digitalization is a powerful
driving force, changing the insurance environment radically. Customers expect insurance companies
to use web and mobile applications as channels for their continuous engagement throughout the whole
customer journey. Furthermore, customers request more self-service opportunities; personalized
products/services; and a consistent approach based on a high service level across all sales and
communication channels.

Portfolio Management: Portfolio management is the art and science of making decisions
about investment mix and policy, matching investments to objectives, asset allocation for individuals
and institutions and balancing risk against performance.
Insurance portfolio management is the process of managing multiple, potentially overlapping
insurance policies, with an eye to minimizing insurance costs while ensuring adequate coverage. By
studying the contracts associated with insurance policies, we can avoid overlaps and ensure there are
no gaps in coverage.
Need for Portfolio Management
a) Portfolio management presents the best investment plan to the individuals as per their income,
budget, age and ability to undertake risks.
b) Portfolio management minimizes the risks involved in investing and also increases the chance
of making profits.
c) Portfolio managers understand the client’s financial needs and suggest the best and unique
investment policy for them with minimum risks involved.

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 d) Portfolio management enables the portfolio managers to provide customized investment
solutions to clients as per their needs and requirements.
Types of Portfolio Management
1. Active Portfolio Management: As the name suggests, in an active portfolio management
service, the portfolio managers are actively involved in buying and selling of securities to
ensure maximum profits to individuals.
2. Passive Portfolio Management: In a passive portfolio management, the portfolio manager
deals with a fixed portfolio designed to march the current market scenario.
3. Discretionary Portfolio Management Services: In discretionary portfolio management
services, an individual authorizes a portfolio manager to take care of his financial needs of his
behalf. The individual issues money to the portfolio manager who in turn takes care of all his
investment needs, paper work documentation, filing and so on. In discretionary portfolio
management, the portfolio manager has full rights to take decisions on his client’s behalf.
4. Non-discretionary Portfolio Management Services: In non-discretionary portfolio
management services, the portfolio manager can merely advice the client what is good and bad
for him but the client reserves full right to take his own decisions.
Core Competencies: A core competency is a concept in management theory introduced by,
C.K.Prahlad and Gary Hamel. It can be defined as “a harmonized combination of multiple resources
and skills that distinguish firm in the marketplace”. Core competencies must be rare or difficult to
imitate .
Core Competencies are those cross-functional processes that are key to your success. For an
insurance company, core competencies might include: customer acquisition including underwriting,
claim processing, and customer service. For manufacturing, core competencies might include: product
development, procurement of raw materials, manufacturing process, and distribution.
Core Competencies of Insurance Product
1. Influence: Guide business clients' decisions and actions, even without direct positional authority.
2. Enabling change: Drive change with purpose and intent instead of just "letting it happen."
3. Leadership: Make the key mind-set shifts and adopt the behaviors that enable excellence.
4. Consensus building: Resolve power struggles, dissolve resistance to change and garner needed
support through persuasion, trust-building and rapport.
5. Business acumen: Understand the business environment: challenges, responsibilities and
pressures.
6. Communication: Effectively interact with people by listening, developing empathy, using
diplomacy, sharing your expertise and dealing with emotions.
7. Strategic focus: Operate from a consolidated view of clear, finite priorities rather than fighting
fires.
8. Organizational understanding: Step out of IT and understand the factors that influence your
projects, including key stakeholders and their power levels, connections, relationships and previous
histories with each other.
9. Problem solving: Work through complexities with respectful negotiation/conflict management
skills.

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10. Project management: Balance the "art" of project management (relationship-building) with the
"science" (tools and methodologies).
11. Technical understanding: Continually educate yourself and clients on how the business can
differentiate itself through technology-enabled capabilities.
12. Client orientation: Build a service strategy that is dedicated to the client's best interests, and be
ready to answer the question, "What's in it for me?"

Internal Auditing: Internal auditing is an independent, objective assurance and consulting

activity designed to add value and improve an organisation’s operations.
An internal audit is the examination, monitoring and analysis of activities related to a
company’s operations, including its business structure, employee behaviour and information systems.
Audits are important components of a company’s risk management as they help to identify issues
before they become substantial problems. A daily, weekly, monthly or annual internal audit assesses
the effectiveness of a company’s internal control system and helps to uncover evidence of fraud, waste
or abuse. Some departments may be audited more frequently than others.
Internal Audit in Practice of Insurance Companies: Internal audit is important even for the
insurance companies. It focus on the particular significance of control mechanisms, including internal
audits, on the relationship between the internal auditing function and the effectiveness of insurance
company management. The principal role of the internal auditing is to support business operations by
evaluating processes of risk management and internal control.
Internal Auditing mainly involve:
a) Risk management
b) Responding to changing business factors
c) Assessment of management systems and prevailing practices.
Insurers pointed to the following key areas to be monitored by internal audits:
a) Business goals support for their implementation.
b) Business productivity.
c) Staff qualifications and skills better utilisation.
d) Consultancy on programmes implementing changes.
e) Indication of change areas.
f) Reducing the risk of fraud.
g) Consultancy on launching new products and entering new markets.
h) Comparison with other insurers or other similar businesses.
i) Continuation of business monitoring.

Insurance Product Differentiation: “Product differentiation is a strategy to create

distinctions among similar products”.
In the broadest sense, Product differentiation involves a firm using different marketing mix
activities, such as product features and advertising, to help consumers perceive the product as being
different and better than competing products. The perceived differences may involve physical features
or non-physical ones such as image or price.
In a narrow sense, Product differentiation involves a firm selling two or more products with
different features targeted to different market segments”.

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 An insurer can use marketing promotions like advertising or personal selling to create the
impression that there is a difference between his products and those of his competitors. So insurance
is not exempted from the trend towards product differentiation. Life insurers have tried to identify and
classify the different markets available to create a variety of products to meet the needs of the potential
customers and to suit their income group.
Products differentiations of Life Insurance Policies: Products differentiations of life insurance
policies are:
1. Term insurance: Term plans are the most basic form of life insurance. They provide life cover with
no savings / profits component. They are the most affordable form of life insurance as
premiums are cheaper compared to other life insurance plans. Term insurance plans provide
pure risk cover, which explains the lower premiums. A fixed sum of money – the sum assured
– is paid to the beneficiaries if the policyholder expires over the policy term. If the policyholder
survives, there is no pay out.
2. Endowment Plans: Endowment plans differ from term plans in one critical aspect i.e., maturity
benefit. Unlike term plans which pay out the sum assured, along with profits, only in case of
an eventuality over the term, endowment plans pay out the sum assured under both scenarios
– death and survival. However, endowment plans charge higher fees, reflected in premiums for
paying out sum assured along with profits, in either scenario death or maturity.
3. Unit linked insurance plans (ULIP): ULIPs differ from traditional endowment plans in certain
areas. As the name suggests, performance of ULIP is linked to markets. Individuals can choose
the allocation for investments in stock/debt markets. The value of the investment portfolio is
captured by the Net Asset Value. There are many similarities between ULIPs and mutual funds.
ULIPs differ in one area, they are a combination of investment and insurance, while mutual
funds are a pure investment avenue.
4. Whole Life Policy: A whole life insurance policy covers a policyholder over his life. The main
features of a whole life policy is that the validity of the policy is not defined so the individual
enjoys the life cover throughout his life. The policyholder pays regular premiums until his
death, upon which the corpus is paid out to the family. The policy expires only in case of an
eventuality as there is no pre-defined policy tenure.
5. Money Back Policy: A money back policy is a variant of the endowment plan. It gives periodic
payments over the policy term. To that end, a portion of the sum assured is paid out at regular
intervals. If the policy holder survives the term, he gets the balance sum assured. In case of
death over the policy term, the beneficiary gets the full sum assured.

The Life Cycle of Insurance Products:

1. 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
2. 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.

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3. Reaching Maturity: Insurance is a competitive business, and competitive advantages tend not to
longer. As other agencies see a new product from a rival company is gaining attraction, 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.
4. 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.
5. 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 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
.
SWOT Analysis: SWOT is an acronym for Strengths, Weaknesses, Opportunities and
Threats. It is the most effective tool for audit and analysis of the overall strategic position of the
business and its environment. Its key purpose is to identify the strategies that will create a firm specific
business model that will best align an organisation’s resources and capabilities to the requirements of
the environment in which the firm operates.
An overview of SWOT
Strength: Strengths are the qualities that enable us to accomplish the organisation’s mission. These
are the basis on which continued success can be made and continued/sustained.
Weaknesses: Weaknesses are the qualities that prevent us from accomplishing our mission and
achieving our full potential. These weaknesses influence on the deterioration of organisation success
and growth.
Opportunities: Opportunities are presented by the environment within which our organisation
operates. These arise when an organisation can take benefit of conditions in its environment to plan
and execute strategies that enable it to become more profitable. Organisation can gain competitive
advantage by making use of opportunities.
Threats: Threats arise when conditions in external environment jeopardise the reliability and
profitability of the organisation’s business. Threats are uncontrollable. Examples of threats are –
changing technology, increasing competition, price wars, reduction in profits etc.

VEENA L, M.COM, KSET, PGDHRM 11

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VEENA L, M.COM, KSET, PGDHRM 12