Post on 01-Jun-2018
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CHAPTER – 1 INTRODUCTION TO MARKETING
Marketing is one of the most important expect that help any product
to develop and same is the case for Insurance sector and their product.
Insurance is a basically a service which is provided to the people rather
than a physical product therefore it is effected by service marketing.
Almost every marketing textbook has a different definition of the term
“marketing.” The American Marketing Association AMA! uses the
following" “The process of planning and executing the conception# pricing#
promotion# and distribution of ideas# goods# and services to create exchanges
that satisfy individual and organi$ational ob%ectives.”
Some of the main issues of maretin! in"o#"e$ in%#u$e&
Marketers help design products# finding out what customers want and
what can practically be made available given technology and price
constraints.
Marketers distribute products there must be some efficient way to get
the products from the factory to the end&consumer.
Marketers also promote products# and this is perhaps what we tend to think
of first when we think of marketing. 'romotion involves advertising and
much more. (ther tools to promote products include trade promotion store
sales# coupons# and rebates!# obtain in favorable and visible shelf&space# and
obtaining favorable press coverage.
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'(O)ERS O' SER*ICES
*lower of services refer to a well&formed package of total
services with all the supplementary services being well formulated
along with the core services. The various petals of the flower are
•
Information&
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A marketer needs to provide ade,uate information to his
employees and his customers. This information is general information
provided through various communication channels. In the insurance
industry information is provided to the customers with the help of"
o Agents
o -eminars
o eb sites
o 'rint media
o /adio# Television# etc.
• Consu#tan%+&
This is additional customi$ed information provided to the
potential customers by the service provider. In the insurance industryit is provided by company0s staff and agents.
E,am-#e" In 1I2 when a customer enters asking of information about
the policy# he is directed towards the assistant sales manager.
Assistant sales manager will listen to the customer0s re,uirement and
as per his re,uirement list the number of policies that are available.
3e will also ask the customer about the price and limit the number of
options for the customer# so that he can easily choose the policy
without confusion.
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• Or$er tain!&
(rder taking should be done without mistakes. In 1I2 order
taking is generally done by"
o 5y Agents
o (n eb site www.licindia.com!
o 5y Assistant sales manager directly in the office.
Hos-ita#it+&
3ospitality is a very pretty petal# reflecting pleasure at meeting
new customers and greeting old ones when they return. 3ospitality
finds its full expression in face&to&face encounters. In 1I2 customers
directly come in contact with the sales manager. The customers are
treated as guests. The sales managers of 1I2 are given special training
of how to sell the policies to the clients. It is only in 1I2 that acustomer can meet the chairman directly without any appointment.
• Safe ee-in!&
It is in the process and procedures used by marketers to safe
guard and to maintain secrecy. In 1I2 the data of the customers is
very important. They feed the data of the customers in their 'ront
an$ A--#i%ation Pro!ram Soft.are which is connected with all the
branches of 1I2. The data is only available with the sales people and
not shown to any person.
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E,%e-tiona#&
7xceptional service means service over and above customer0s
expectations.
1I2 has the fastest %#aim sett#ement in the .or#$ thereby providing
exceptional service. 1I2 also solves complains of the customers
within 8days.
•Pa+ment&
The payment of premium is normally through che,ues.
2ustomer can make payment in 1I2 through"
o Agents
o 1oans
o
eb siteso -tanding instruction to banks"
In this the account holder will give standing instruction to his bank
to pay the amount of premium every month without his consent on
the given date directly to 1I2.
/i##in!&
The billing should be done in such a way that there are no
mistakes and if there are any they must be immediately rectified. The
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billing should provide break&ups of premium charged# service
charges# etc.
STRATEG0 IMP(EMENTED 'OR MARKETING
5asically there are steps to be followed before selecting a marketing
strategy. These steps are as follows"
12 I$entifi%ation of Tar!et Maret&
The target market is the focus of deciding the promotion
mix. The total number of groups is analy$ed and decision is taken
regarding which segment is to be targeted.
E,am-#e& 1I2 India! has introduced a new life insurance policy
especially for children0s :77;A< A!.
32 Determination an$ Settin! O45e%ti"es&
-ervice marketers employ a range of promotional methods#
so it is essential to ?hat the promotion has to achieve0. It is
necessary to define marketing ob%ectives clearly so that most effective
type of promotion is designed and utili$ed.
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In case of insurance sector# the main ob%ectives of a promotion
campaign will be"
• To make all or maximum population aware of the various
insurance policies of the company.
• To promote the advantages of all the insurance policies.
• To make the people aware of the risks involved and the
importance of taking insurance.
E,am-#e& 1I2 India! conducts seminars and mass marketing
campaigns in order to make the customers aware of insurance and
why it is needed.
62 Messa!e $e"e#o-ment for ri!ht %ommuni%ation effe%t&
The message is an instrument for converting a suspect into a
prospect. To obtain an effective response from the target market# there
is always need to plan an effective message such that promotional
efforts cause"
• 5uilding of brand image
• -ervice awareness
• To provide knowledge for service
• To ensure that customer will have a positive perception for
service promoted
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• To build up preference for service offered
In the insurance sector# 1I2 India! and Met1ife Insurance are
examples of companies who have used promotion mix to promote
insurance.
E2!." 1I2 India! promotes its life insurance policies using the slogan
78in$a!i e saath 4hi9 :in$a!i e 4aa$ 4hi; This creates awareness
of risk of death as well as the importance of insurance. The slogan
creates a positive perception about life insurance in the minds of people.
2 Se#e%tion of -romotion mi,&
There should be a careful blend of promotion mix with the
marketing strategy of the firm and each situation should be
examined for its merits and demerits. The following criteria should
be considered while devising different promotional techni,ues"
(verall marketing ob%ectives
Activities of the competitors
2haracteristic of target customer
2ost effectiveness# etc.
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< P=S O' SER*ICE MARKETING O' INSURANCE
PRODUCT
The 8'0s of service marketing will be discussed below in
respect of Insurance sector and their product. The 8'0s of service
marketing are"
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'roduct mix
'rice mix
'lace mix
'hysical evidence
'eople mix
'rocess mix
'romotion mix
Pro$u%t Mi,
A product is anything that can be offered to a market to satisfy
a want or a need. A product mix is the set of all products and items
that a particular seller offers for sale. In case of insurance sector# the product mix comprises of 1ife and
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The Width of a product mix:
It refers to how many different product lines are available. In
case of insurance sector# there are generally three different product
lines i.e. 1ife Insurance# Marine Insurance and *ire Insurance.
(ife Insuran%e&
1ife insurance is a financial resource for your family and loved
ones in case of your death. It is a contract between you and an
insurance company in which the company provides your beneficiary
with a certain amount of money upon your death. In return# you make periodic payments premiums! in an amount that depends on medical
history# age# gender# and occupation.
Genera# Insuran%e"
The term general insurance essentially applies to the insurance
risk that is not life insurance or health insurance risk and so the term
covers familiar forms of personal insurance motor vehicle insurance#
fire insurance and travel insurance.
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INSURANCE
LIFE INSURANCE
Whole LifePolicy
LimitedPayment Life
Convertible
Whole LifePolicy
Joint LifeEndowmentPolicy
o!bleEndowmentPolicy
Jeevan Saathi
"oney #ac$Policy
Ann!ity Plan%
&ro!'In%!rancePolicy
&ENERAL INSURANCE
FireIn%!rance
"arineIn%!rance
"otorIn%!rance
#!%ine%%Ri%$
#!r(laryIn%!rance
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Whole LifeIn%!rance
Whole Life withPro)t Policy Limited PaymentWhole Life Policy
Sin(le
Premi!mWhole LifePolicy
The depth of a product mix:
;arious products and their different types. In the insurance
sector# one policy can be made available in different variations. -ome
of the examples are as follows"
(ife Insuran%e&
These product mix dimensions permit the company to expand its
business.
7.g." It can add new product lines thus widening its product mix.
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Pri%e Mi,
'rice is one element in the marketing mix that produces
revenueE all the other elements produce costs. 'rices are easiest
marketing mix elements to ad%ustE product features# channels and even
promotion take more time. 'rice also communicates to the market the
company0s intended value positioning of its product or brand.
In the insurance business# the pricing decisions are concernedwith the premium charged against the policies# interest charged for
defaulting the payment of premiums F credit facilities# commission
charged for underwriting F consultancy services.
Premium&
'remiums are the periodic payments usually monthly or
,uarterly that the policy holder pays to the insurance company to
purchase and keep a policy in force.
*or example in case of life insurance according to the policy it may
be the amount payable during the endowment term of the policy or
until the death of the life assured whichever is earlier.
Insurance is essentially a matter of sharing risk. A thousand
people contribute a certain fixed amount i.e. premium! and in future
if something were to go wrong with any of the mass contributors# the
lump sum collected as premiums is used to compensate for the loss.
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The basis on which the insurance company decides the amount of
premium to be paid by each person is determined mainly by 4 factors"
Morta#it+ Ta4#es"
All insurance companies refer to different mortality tables.
These tables differ from country to country. The mortality table
indicates the probability of a person dying in a particular age group.
*or e.g. in an age group of +9&4D years# the probability might be %ust
two# but this probability would increase for a higher age group of 69&
9D years.
E,-e%te$ Sur-#us&
The premiums collected by the insurer are invested in capital
markets. There is a fixed investment pattern for the insurer. (ut of the
surplus earned on the premiums invested# B9G is distributed to the
policyholders and the insurance company retains the balance 9G.
If an insurer expects to earn more return on his investment then he
would charge more premiums to his investor.
E,-enses&
An insurance company has to incur expenses in the form of
commission to agents# office expense# advertising expense# salaries to
employees. These expenses are to be managed by the company in the
9G surplus earning which they earn as mentioned above. In order to
meet the above expenses the insurer has to collect more premiums so
that there is more surplus from which expenses can be met.
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P#a%e Mi,
'lace mix can be defined as the “'hysical distribution i.e. the
delivery of goodsH services at the right time at the right place to the
customers.” 'lace decisions involve building relationships with the
wholesalers# retailers and through these intermediaries building
relationships with the customers. 'roducts and services must be at the
right place# at the right time in order to be consumed. 'robably the
best way to perceive place is to think of the flow of products frommanufacturer through intermediaries to the consumer or user. This
flow can be thought of as a channel used to move goods and services.
Channe#s&
According to 'hilip otler# “2hannels are sets of
interdependent organi$ations involved in the process of making the
product or service available for use or consumption” Marketing
channel decisions are among the most critical decisions facing the
management.”
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The channels chosen intimately affect all the other marketing decision
In case of insurance sector# the following channel of distribution is
followed according to the target market"
CHANNE(S
Jirect -elling Agents
*inancial Advisors
2all 2enters
'artner -elling 5ancassurance
'ostal Jepartment
-elling through 2orporate
Dire%t Se##in!&
• A!ents&
The agents are selected and recruited by the development officer of
the insurance company. These agents inform the customers about the
various insurance policies offered by the company and convince themto buy these policies.
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• 'inan%ia# A$"isors&
The financial advisors are also consulted by the customers regarding
their financial matters. These advisors suggest their clients to get their
goods insured against any calamity or risk. 3ence they act as a
channel in distribution of insurance.
• /an%assuran%e&
ith the evolution of interconnected financial services# banks are
converting themselves into ?one stop financial supermarkets0. This
has promoted two big classes of financial institutions" banks and
insurance companies to combine and deliver an innovative product
i.e. 5ancassurance. In bancassurance# the insurance products are sold
through the banks network of branches.
• Ca## %enters&
The people who re,uire insurance call up the call centers. These call
centers send their direct marketing agents who go to the customer0s
place and sell the insurance policy.
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• Posta# De-artment&
India has an extremely well developed postal network# which is even
stronger than the network of banks in the country. 'ost offices have
been established even in the interior parts of the country. Insurance
companies can tie up with the postal department to sell and distribute
various insurance covers. This would certainly re,uire upfronttraining costs# as the postal employees in turn need to educate and sell
the concept and benefits of insurance to the people in rural areas.
-uch a tie up with the postal department would open up India0s rural
areas# which are largely untapped for insurance sector. This can prove
to be a sustainable source of growing revenues.
Se##in! Throu!h Cor-orates&
Insurance can be sold through corporates too.
7.g." hen a customer purchases a Maruti car# he gets the insurance
of the car free from the Maruti 2ompany itself. Thus this is termed as
selling insurance through corporates.
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Ph+si%a# E"i$en%e
'hysical evidence is the environment in which the service is
delivered and where the company and the customers interact and any
tangible goods that facilitate the performance and communication of
the service. -ervices are intangible and heterogeneous. Intangibility
means that services cannot be displayed# physically demonstrated or illustratedE heterogeneity means that consumers cannot be certain
about performance on any given day. It plays a ma%or role in
enhancing customers0 perception of the service ,uality.
+D
Insuran%e
Ser"i%e
Tan!i4#es as Ph+si%a#
E"i$en%es
) 'olicy Jocuments
+ 5rochures
4 'eriodic -tatements
6 /enewal
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Peo-#e Mi,
Em-#o+ees&
7mployees are very crucial because"
). They are the service
+. They are the brand
4. They are the marketers
6. They are the organi$ation in the eyes of the customers.
The various employees involved in providing service to the customer
in insurance sector are"
• Customer ser"i%e re-resentati"es"
They# process insurance policy applications# changes# and
cancellations. They review applications for completeness# compile
data on policy changes# and verify the accuracy of insurance
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company records. They may also process claims and sell new
policies to existing clients.
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Insurance investigators handle claims in which companies
suspect fraudulent or criminal activity# such as suspicious fires#
,uestionable workers0 disability claims# difficult&to&explain accidents#
and dubious medical treatment. Investigators usually perform
database searches on suspects to determine whether they have a
history of attempted or successful insurance fraud.
• Un$er.riters"
=nderwriting is another important management and business and
financial occupation in insurance. =nderwriters evaluate insurance
applications to determine the risk involved in issuing a policy. They
decide whether to accept or re%ect an application# and they determine
the appropriate premium for each policy.
• Insuran%e sa#es a!ents"
About )9 percent of wage and salary employees in the industry are
sales workers# selling policies to individuals and businesses.
Insurance sales agents# also referred to as producers# may work as
exclusive agents# or captive agents# selling for one company# or as
independent agents selling for several companies. Through regular
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contact with clients# agents are able to update coverage# assist with
claims# ensure customer satisfaction# and obtain referrals. Insurance
sales agents may sell many types of insurance# including life#
annuities# property&casualty# health# and disability insurance. Many
insurance sales agents are involved in “cross&selling” or “total
account development#” which means that# besides offering insurance#
they have become licensed to sell mutual funds# annuities# and other
securities.
• (a.+ers&
The insurance industry employs relatively few people in professional
or related occupations# but those who are so employed are essential to
company operations. *or example# insurance companies0 lawyers
defend clients who are sued# especially when large claims may be
involved. These lawyers also review regulations and policy contracts.
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Customers&
'eople mix not only includes employees but also customers. The
customers are to be treated with respect and courtesy. 2ustomer is the
king of the market. -atisfaction of the customer is the primary motive
of the insurance industry as well as all the organisation
Pro%ess Mi,
In case of insurance sector# the process mix includes the various
interactions that take place between the insurance agent and the
customer in the process of selling the policy to the customer till the
settlement of claims.
The following process mix is followed by insurance companies in
case of life insurance"
). The insurance agent calls up the customer and informs him about
the different policies offered by the company and the price mix of
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all the policies. If# the customer seems interested in taking the
policy then# he fixes an appointment with the customer.
+. The insurance agent meets the customer and gives him some
information about the insurance company and also about the
benefits of the policy.
4. The customer is then asked to fill a financial review form */*!
and the agent is asked to find out the standard of living of the
customer so that the insurance company gets a clear picture about
the financial condition of the customer and what kind of policy he
can afford.
6. The insurance company offers various policies but they might not
be suitable for the customer hence# on the basis of his re,uirements
and financial status# the insurance agent suggests two or three
policies to the customer# which will be suitable for him.
9. The insurance agent explains the different policy plans in detail to
the customer i.e. the amount of premium to be paid# the time
interval at which the premium is to be paid# the benefits of each of
the policy etc. A brochure is also provided to the customer wherein
the entire description of all the policies is given.
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@. Then# the insurance agent provides a feedback form to the
customer and asks him to give his feedback regarding the policies
that he has been informed about. This feedback is taken in order to
find out whether the customer is satisfied with the plans of the
policy or whether the company needs to make the policy plans
more attractive so that it may appeal to its future customers.
8. Then# the next appointment is fixed by the insurance agent with
the customer and in this meetingE the customer selects the policy
plan# which appeals to him. The customer is then asked to fill up
the proposal form which contains various details of the payment
and he is asked to make the first premium payment.
. Then# the insurance agent submits the duly filled and signed form
in the insurance office along with the other necessary documents.
7.g." Medical /eports in case of 1ife Insurance.
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B.Then# a reconfirmation is taken by the agent from the customer
that he agrees with the terms and conditions of the policy.
)D.The insurance agent then regularly collects the premium from the
customer whenever the premium becomes due.
Promotion Mi,
?'romotion0 is a descriptive term for the mix of communication
activities# which a service organi$ation carries out in order to
influence the target customers on whom their sales depend. It is an
element in an organi$ation0s marketing mix that serves to inform#
persuade# orH and remind people about an organi$ation or individual
goods# service# image# ideas# community involvement or impact on
the society. It is used in hopes of influencing the recipients feeling#
belief or behaviour through any form of communication.
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The types of promotional methods used in insurance sector are
as follows"
Advertising
'ublic relations
-ales 'romotion
'ersonal -elling
ord of Mouth.
A$"ertisin!&
It is a paid form of non&personal communication. It is used to create
awareness and transmit information in order to gain a response from
the target market. *orms of advertising are as follows"
12 Ne.s Pa-ers an$ Ma!a:ines"
1I2 give ads in the news papers and maga$ines round the year
to continue its brand image and also when new products are
introduced.
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32 E#e%troni% me$ia&
Insurance companies also advertise its services in the
7lectronic media like"
Internet >)e4sites?&
2ompanies like 1I2 www.licindia.com!# I2I2I
www.iciciprudential.com! all have websites from which
people can get the information about their products# prices#
various schemes# and lots of other information. 'eople can also
purchase the product through this website.
Te#e"ision"
2ompanies like (IC9 Met (ife In$ia9 advertise on television to
make people aware of their products and services.
Ra$io&
ICICI Pru$entia# advertises on B+.9 red *m.
62 /ro%hures&
4D
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2ompanies provide brochures to the customers so that they can
have a look on various schemes and their prices. 7g" 1I2 have
brochures of various schemes that are available different
languages i.e. 3indi# Marathi# 7nglish# and other regional
languages. They provide the brochure of the scheme the
customer has chosen# in the language which they understand.
5rochure will provide the customer the information like
features of the scheme# amount of premium to be paid# rebates
if any!# etc.
2 Hoar$in!s&
(IC put its hoardings where there is a mass flow of people#
especially outside the railway station or at the backside of the bus. hen
Met (ife was introduced it has put his hoardings on the side of the train# to
target huge number of people
4)
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Pu4#i% re#ations&
'ublic relations are helpful for the companies to build their brand
image# to maintain good relationship with customers# to make the people aware of its recent happenings# etc. Mediums of 'ublic
relations are"
). Press re#eases"
This helps the company to convey its message to its customers and
other people.
+. Seminars"
These are held to provide information about the new product
launched# position of the company in the market# etc.
Sa#es Promotion&
12 Gifts&
1I2 provides diaries# pens# booklets# etc to its customers.
32 S-onsorin! E"ents&
7.g." Max
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Persona# se##in!&
A!ents&
It is the most widely used method of promotion by all insurance
companies. They recruit# train and motivate the insurance agents to
convince the customers to buy insurance policies of that particular
company. The agent also collects the monthly premium and settles
the claims of the customers.
Cha-ter – 3 Insuran%e /usinesses
INTRODUCTION
A promise of compensation for specific potential future losses in
exchange for a periodic payment. Insurance is designed to protect the
financial well&being of an individual# company or other entity in the case of
44
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unexpected loss. -ome forms of insurance are re,uired by law# while others
are optional. Agreeing to the terms of an insurance policy creates a contract
between the insured and the insurer . In exchange for payments from the
insured called premiums!# the insurer agrees to pay the policy holder a sum
of money upon the occurrence of a specific event. In most cases# the policy
holder pays part of the loss called the deductible!# and the insurer pays the
rest. 7xamples include car insurance# health insurance# disability insurance#
life insurance# and business insurance.
Insurance# in law and economics# is a form of risk management
primarily used to hedge against the risk of a contingent loss. Insurance is
defined as the e,uitable transfer of the risk of a loss# from one entity to
another# in exchange for a premium. Insurer is the company that sells the
insurance. Insurance rate is a factor used to determine the amount# called the
premium# to be charged for a certain amount of insurance coverage. /isk
management# the practice of appraising and controlling risk# has evolved as adiscrete field of study and practice.
-ecurity has always been a universal desire# right from the earliest
civili$ations. This ,uest for security has been a ma%or motivating force in the
progress of mankind. The early societies looked up to their families for
providing this security# which resulted in cohesive units. >radually# as
lifestyles changed and as man progressed into a more modern industriali$ed
setup# this cohesive ,uality of the family started fading. (ne had to look for
other ways of providing economic security and somewhere along the line
was born insurance.
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REASONS 'OR /U0ING INSURANCE PRODUCTS
Ask individuals wanting to buy life insurance# about how they
do their tax planning and the first reply will be & insurance policy.
-uch is the nature of life insurance. It is bought by almost everyone
right from the bigwigs of the business world to small retail investors.
And most buy it for one core reason & to save tax. 5ut this is not the
only reason.
• (i"in! too #on!"
Advances in the field of medicine have grown by leaps and
bounds over the past few decades. Jue to this# life expectancies have
gone up. This poses another problem for individuals. It is generally
observed that individuals who tend to live way beyond their earning
years like say# till the age of 9 or BD# usually face a problem coming
to terms with increasing costs of living.
• 'ear of -assin! a.a+ ear#+"
(ne is never sure about life. e often come across people
claiming that nothing is going to happen to themE that they are too
young to pass away. 5ut do they really know what the future holds for
them e can assure you they donNt# because the ,uestion Ohat ifN
has probably never crossed their minds. e only have to read
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newspaper headlines about the Tsunami# the earth,uake that took
place and such other natural calamities to understand how the future
can be unpredictable.
Individuals need to insure themselves to secure the future of
those who are dependent on themE especially so if they happen to be
the sole breadwinners. Kou wouldnNt want them to go through
hardships or rely on othersHrelatives# etc. This# in fact# is the prime
reason why one should buy an insurance policy.
•
Painfu# E,isten%e"Maybe an individual has planned well during his earning years
to secure himself financially. 3e has also designed his financial
portfolio in such a way that he is drawing a comfortable monthly
income to support his family expenditure. 1ife insurance can act as
the saving grace in two ways. (ne# by way of a medical rider like the
accidental death benefit rider# permanent disability benefit rider#
critical illness benefit rider. These riders are taken along with the life
insurance plan and help cover the medical expenses.
• Ta, 4enefits&
Jo we need to elaborate on this any further Traditionally# life
insurance has always been bought more for tax benefits than for what
It is actually purported to doE i.e. insure human life. 5ut the role of
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life insurance in an individualNs tax planning cannot# in any way# be
undermined. =nder the new regime# individuals can now invest up to
/s )DD#DDD in insurance premium to avail of a deduction from taxable
income. The tax sops provided on insurance help OincreaseN the
individualNs disposable income and make him consider taking a life
insurance plan which he otherwise may not have done.
• In"estment"
The other ma%or persons who invest in Insurance are those who
have earned good money in their young age and want to invest insome safe investment scheme which also provides additional benefits
like life insurance cover and pension benefits at later stages of life.
'UNCTION O' INSURANCE
PRIMAR0 'UNCTIONS&
a? Pro"i$in! Prote%tion"
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The primary function of insurance is to provide protection
against future risk# accidents and uncertainty. Insurance cannot check
the happening of the risk# but can certainly provide for the losses of
risk. 'rofessor 3opkins observes PInsurance is a protection against
economic loss# by sharing the risk with others.”
b! Co##e%ti"e 4earin! of ris&
Insurance is a device to share the financial loss of few among
many others. Jinsdale opines# insurance is a mean by which few
losses are shared among longer people. -imilarly# illiam 5evridge
observes# PThe collective bearing of risks is insurance.P All the
insured contribute the premiums towards a fund and out of which the
persons exposed to a particular risk is paid.
c! Pro"i$e %ertaint+&
Insurance is a device which helps to change from uncertainty to
uncertainty. This may the reason that :ohn Magee writes that the
function of insurance is to provide certainty. -imilarly# /egal and&
Miller observe# PInsurance is device whereby the uncertain risks may
be made more certainP.
SECONDAR0 'UNCTIONS&
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a!Pre"ention of #osses&
Insurance cautions individuals and businessmen to adopt
suitable device to prevent unfortunate conse,uences of risk by
observing safety instructionsE installation of automatic sparkler or
alarm systems# etc. 'revention of losses causes lesser payment to the
assured by the insurer and this will encourage for more savings by
way of premium. /educed rate of premiums stimulate for more
business and better protection to the insured.
b! Sma## %a-ita# to %o"er #ar!er riss&
3insdale observes# insurance relieves the businessmen from security
investments# by paying small amount of premium against larger risks
and uncertainty.
c! Contri4utes to.ar$s the $e"e#o-ment of #ar!er in$ustries&
Insurance provides development opportunity to those larger industries
having more risks in their setting up. 7ven the financial institutions
may be prepared to give credit to sick industrial units which have
insured their assets including plant and machinery.
Cha-ter @6 Insuran%e Maretin!
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Marketing of insurance products have become an important activity in the
insurance business. Insurance marketing is found both in the life insurance
sector as well as in non&life insurance sector.
(ife Insuran%e Maretin!
An Intro$u%tion to (ife Insuran%e Maretin!
1ife Insurance Marketing is one of the most strenuous %obs for those who are
involved in the insurance marketing.. It is because of the everlasting conflict
between the insurance companies which want to profit the most and the
insured person who wants to get as much compensation as possible from the
insurance company. 2ommissions for the 1ife Insurance companies are very
high and they seldom make profits out of the policies. Also the insurance
policy needs to be transparent so that the potential customer understands it
totally and should not feel that they have been treated unfairly by the
insurancecompany.
Reasons for (ife Insuran%e Maretin!
The 1ife insurance companies were paid very little premiums by young
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children or healthy people and thus the scope for profit was very small and
those who paid high rates of premium were the older beings who died and
the 1ife insurance companies compensate for that. 3owever nowadays the
1ife insurance premiums are almost the same for an young adult and an old
person who %ust had a ma%or operation.
As the (ife Insuran%e Maretin! 2ompanies already deals with this
type of a scenario# what one can do is to change the public perception about
the 1ife insurance companies. (ne can connect himself or herself with
companies whose workers need a plan for 1ife Insurance. (ne can also go to
crowded places and advertise for the 1ife insurance company. The 1ife
insurance companies also offer fliers and hanging banners. (ne can also
offer free 1ife check in a reputed place to the insured for at least once. (ne
should always give the life insurance policy holders existing a chance to
prefer the marketing techni,ues that the insurance company is presenting.
If the policy holder does this at a regular basis then the company has a high
chance of succeeding.
This is making the competition much tougher for the 1ife insurance
companies as most of the companies offer similar types of premiums and
facilities. -o it has become very important for the life insurance companies
to concentrate on (ife Insuran%e Maretin! and attract as many people as
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possible towards their company.
The 1ife Insurance 2ompanies prefer to go for >roup 1ife Insurance for a
group of people from a particular company or a family so that they get a
group of customers and even if they compensate for some of them for
various reasons they usually make it up with otherNs premiums. They also get
fewer papers to control and also they provide better facilities for their
clients. -o to promote this type of policy they need to have social and
industrial connections. 1ife Insurance market helps developing that. 7ven
for other policies like term life insurance and permanent life insurance one
needs to be aware of making people reali$e the profits of the policy by
various means provided by marketing agencies.
-o before going for a (ife Insuran%e Maretin! one actually needs to
know the market target and the desires of the people who are actually seen
as potential insurance customers.
(ife Insuran%e Maretin! Strate!ies
• A very common way to promote a 1ife insurance company through
(ife Insuran%e Maretin! is to make the name of the company familiar
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to others by means of television commercials# handling out pamphlets#
hanging banners in populated areas and by providing exciting offers.
• Telephone marketing is another way of 1ife Insurance Marketing. (ne
can see the telephone companies send messages about various offers and
they even make phone calls. eb Insurance Marketing is another good
strategy to promote insurance policies. The pop ups that one sees while
using Internet are actually a very effective way of sending messages
across the potential insurance customers.
• (ne should listen to the existing 1ife Insurance 'olicy 3olders as well
as the potential 1ife insurance policy holders and listen to what people
who actually matters have to say. (ne common problem that the insured
persons face is that the insurance companies do not inform its clients about
the hike in the premium rates. These things should be kept in mind.
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7minent workers %oin local community institutions# such as 2hamber of
2ommerce# and by signing up there one can help out various pro%ects that
take place. These kinds of activities and social works on behalf of the 1ife
insurance company helps the company to get free publicity as their names
are published in news paper and in media also. Joing charity works also
helps the 1ife insurance companies to come across various people who act
as volunteers and can act as their potential 1ife insurance clients. 'eople
also like to deal with like minded people and companies and this is how
many deals are made.
• A 1ife Insurance 2ompany should not charge different 1ife insurance
client different charges for the same policy. This kind of policy gives the
1ife insurance policy holders the feeling that they are being treated
unfairly and also that the 1ife insurance companies are only looking for
profits and not the betterment of customer welfare.
• hen a 1ife insurance claim is filed# especially for a very big hefty
amount# the 1ife insurance company should help out the policy holder in
processing out the paperwork. (ne should not let bureaucracy enter and
make it so difficult for the one making the claim so that he gives his
claim .This has always been a common tactic on the insurance companyNs
part to avoid paying claims claimed by the policy holder. This though
makes a short term profit for the company but it hurts in the long run as
the reputation of the company is hampered severely.
• 'eople in this 1ife insurance industry should always try to keep in
constant contact with the existing customers as well. The competition in
the insurance market is so fierce today that no company wants to loose out
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on a customer to another company. 2lients who are not contacted for a
longer period of time normally fail to remain loyal to the insurance
company and look for a different 1ife insurance company. The company
can keep the records of the clientNs birthday and days like anniversary and
sent him or her small tokens of love or loyalty at a regular basis. If the
company can afford a little more it can send dinner coupons to the 1ife
insurance policy holder. These things play a ma%or role and can be
considered as an effective (ife Insuran%e Maretin! strategy.
• May be the most crucial thing in insurance marketing is to always
speak about unity and honesty while dealing with a business. A 1ife
Insurance 3older can find so many frauds in various life insurance
companies today# that life insurance customers are going for products and
services which are trustworthy to them. *eeling safe is about insurances
and other things are most important as far as the insurance holder is
concerned. -o# if a company remains loyal to its customers it will itself do
1ife Insurance Marketing for itself. -o# only by remaining loyal to its
customers the company can do a world of good to its reputation.
Hea#th Insuran%e Maretin!
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An Intro$u%tion To Hea#th Insuran%e Maretin!
3ealth Insurance Marketing is one of the most difficult %obs in insurance
marketing. It is because of the everlasting conflict between the insurance
companies which want to profit the most and the insured person who wants
to get as much compensation as possible from the insurance company.
2ommissions for the health companies are very low and they very seldom
make profits out of health insurance.
Reasons for Hea#th Insuran%e maretin!
The health insurance companies were paid very little premiums by young
children or healthy people and thus the scope for profit was very small and
those who paid high rates of premium were the older people who often get
ill and the health insurance companies compensate for that. 3owever
nowadays the health insurance premiums are almost the same for a healthy
young adult and an old person who %ust has had a ma%or operation.
As the 3ealth Insurance Marketing 2ompanies already deal with this type of
a scenario# one can have an alternative view of the health insurance
companies. (ne can be associated with companies whose workers need a
plan for health. (ne can also go to crowded places and advertise for the
health insurance company. *or the purpose of advertisement the health
insurance companies offers fliers and hanging banners.
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They also offer free health checks in reputed places to the insured. (ne
should always give the life insurance policy holders# existing or potential# a
chance to understand the gifts and opportunities the insurance company is
presenting to make them comfortable and make them feel that they care for
the clients. If this is done regularly by the company then there are high
chances of success in attracting customers on the part of the company.
This has invited tough competition for the health insurance companies as
most of the companies offer similar types of premiums and facilities. -o it
has become very important for the life insurance companies to focus on
3ealth Insurance Marketing and attract as many people as possible towards
their company.
It is hence mandatory for one to know about the market target and the
desires of the customers before going for health insurance marketing.
The confusion about the way a 3ealth Insurance Marketing conductor can
draw the potential Insurance holderNs attention evaporates fast if he knows
his targets and aims clearly. -o# it is important to conduct a survey and then
aim at attracting people.
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Hea#th Insuran%e Maretin! Strate!ies
• A very common way to promote a health insurance company through
3ealth Insurance Marketing is by making the name of the company
familiar to others by means of television commercials# handling out
pamphlets# hanging banners in populated areas and by providing exciting
offers.
• Telephone marketing is another way of 3ealth Insurance Marketing.
(ne can see the telephone companies send messages about various offers
and they even make phone calls. eb Insurance Marketing is another
good strategy to promote insurance policies. The pop ups that one sees
while using Internet are actually a very effective way of sending messages
across the potential insurance customers.
• (ne should listen to the existing 3ealth Insurance 'olicy 3olders as
well as the potential health insurance policy holders and listen to what
people who actually matters have to say. (ne common problem that the
insured persons face is that the insurance companies do not inform its
clients about the hike in the premium rates. This things should be kept in
mind.
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• A 3ealth Insurance 2ompany should not charge different health
insurance client different charges for the same policy. . This kind of policy
gives the health insurance policy holders the feeling that they are being
treated unfairly and also that the health insurance companies are only
looking for profits and not the betterment of customer welfare.
• hen a health insurance claim is filed# especially for a very big hefty
amount# the health insurance company should help out the policy holder in
processing out the paperwork. (ne should not let bureaucracy enter and
make it so difficult for the one making the claim so that he gives his
claim .This has always been a common tactics on the insurance companyNs
part to avoid paying claims claimed by the policy holder. This though
makes a short term profit for the company but it hurts in the long run as
the reputation of the company is hampered severely.
• 2ommunity 3ealth Insurance Marketing is another way to get
promotion and a high recognition for the health insurance company.
7minent workers %oin local community institutions# such as 2hamber of
2ommerce# and by signing up there one can help out various pro%ects that
take place. These kinds of activities and social works on behalf of the
health insurance company helps the company to get free publicity as their
names are published in news paper and in media also. Joing charity works
also helps the health insurance companies to come across various people
who act as volunteers and can act as their potential health insurance
clients. 'eople also like to deal with like minded persons and companies
and this is how many deals are made.
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Insuran%e A!en%+ Maretin!
The basic of an Insuran%e A!en%+ Maretin! is to increase the impact of
an insurance companyNs business as much as possible. Insuran%e A!en%+
Maretin! is used to make the pro%ect work and profit as much as possible.
7very insurance company has its own Insurance Agent Marketing budget
and the company employs its Insurance Marketing Agent accordingly. -ome
choose cheap agencies and some choose Insuran%e A!en%+ Maretin! who
are renowned in the market better known as branded agencies.
Most of the big insurance companies prefer branded agents because the
bigger ones have better resource and better employees than the smaller ones.
It is important to choose a suitable Insuran%e A!en%+ Maretin! because
more than anything else the insurance products would be sold on the basis of
itspresentation.
Any customer today gives special emphasis on proper information. Most of
the Insurance customers or the potential insurance holders are well informed
today and that is why Insuran%e A!en%+ Maretin! should depend mainly
on the media that provide information. -o the marketing agency should
concentrate on providing information in the media like news paper#
television maga$ines and through Internet as well. This is a very easy and
cheap way to make people aware of oneNs company. Another way the
Insuran%e A!en%+ Maretin! can go on which is by employing good
salesman who can work as individual agent for the company.
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Cha-ter – Re%ent Strate!ies
Strate!ies a$o-te$ 4+ the -#a+ers in the maret
>one were the days when the customers were forced to take up the kind of
products whatever coming from 1I2Ns and >I2Ns stables. 5ut now# the
customer has been portrayed as the king and to his delight# the products are
redesigned and customi$ed suiting his need taking into account his paying
capacity and multiple benefits.
1et us look at the strategies adopted by the players in the market.
Shift in the -ro$u%t -ortfo#io
7arlier the entire industry was revolving around investment and savings
oriented plans. As the interest rates are moving southwards# all the players
are deliberately focusing on selling pure risk covers in an effort to capture
the new customers. The premium on such products is low as it covers only
the risk aspect and does not factor in investments or savings. 7ven the
market leader 1I2 has withdrawn some of the products# which are
positioned# on the assured returns platform. Though the share of the term
plans in the product portfolio is ,uite negligible# the shift towards the term
products is already visible. Typically a term plan does not provide anything
by way of maturity# unlike money back or endowment policies.
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*a#ue 'or Mone+ >*'M?
The sea change since the sector opened up has been on the way the basic
products have been packaged innovatively# often tailor made to provide a
bundle of benefits to the customers. This is possible through the introduction
of riders# which have added value to the risk cover at minima /iders are
nothing but add&ons coming along with the base policies for a slightly
additional premium. /iders have become the ma%or instruments for the
organi$ations to lure the customers away from the competitors.
Ta--in! the Ni%he Marets
'rivate insurers are concentrating much on designing attractive products by
investing heavily on research# studying life expectancy and health statistics
across age groups# income levels# professionals and regions on their own
instead of relying on data with state insurers. The products are designed with
a technical team of actuaries and a product development team working
closely together to target the niche market.
Thrust to the rura# marets
Thanks to the norms stipulated by the regulator I/JA# all the players have
turned their eyes towards the rural market. The rural obligation on part of the
new private insurance companies is incremental in nature. It goes from 9G
to )9G over the period of 9 years for life insurance and from +G to 9G in
case of general insurance.
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MODERN MARKETING APPROACH
INTRODUCTION
The Insurance sector plays a vital role in the economic development of our
nation. It acts as a mobili$e of savings# financial intermediary# promoter of
investment activities# stabili$er of financial markets and a risk manager.
India is still an under&insured country in the world. It is at the )th position
among 1ife Insurance markets and +th in
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hile determining the implementation methodology# the four characteristics
vi$. Intangibility# Inseparability# 'erishability and ;ariability gives rise to
certain uni,ue re,uirements that deserve careful attention while formulating
the marketing strategy for insurance. After implementation# the insurers
should concentrate on the effective control that would enhance their
business.
In India Insurance is sold and not bought. The agents H Advisors by using
various strategies sell the product by convencing the customers.
This approach to selling their products re,uires understanding of concepts
and principles borrowed from the fields of psychology# communications# and
sociology and needs a lot of personal commitments and self C discipline
from the seller.
The commitments referred are"
• *inding and understanding the needs of the customers.
• 'artnering with the customers.
• 3elping the customers to achieve his business and other ob%ectives by
the purchase of the product or service.
• 5elieving that your products H services are a great fit with your
customer0s needs# and
• 5elieving in yourself and your ability to help the customers in solving
their problems.
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PUNCH (INES AND (OGOS )HICH ARE A((OTTED
/0 SOME COMPANIES&
It helps to create awareness about the brand among the target
audience. It also helps the company to convey its message to the
customer.
/ran$ Positionin!& Ta! (ine
1I2 Lindagi ke saath bhi# $indagi ke baad bhi
(riental
Insurance
'rithvi# Agni# :al# Aakash# -abki suraksha hamare
paas
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Cha-ter @B
MARKETING TRIANG(E 'OR INSURANCE
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Com-an+&
The company makes various promises to its customers through 7xternal
Marketing. The external marketing function relates to anything that is
communicated to the customer before the service is delivered. There are
many factors beyond the traditional marketing mix that communicate to the
customers in case of 1I2.The Marketing Mix i.e. the product# price# place and promotion of 1I2 is
been already explained the 8 '0s. 3owever# the important role of Agents in
1I2 cannot be neglected.
A!ents&
1I2 is a kind of organi$ation where Agents play one of the most
prominent roles.
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2ompany itself i.e. they themselves carry out 7xternal Marketing and
commit certain promises to its potential customers.
Em-#o+ees&
The agents and the development officers act as the front&line staff and
they are in direct contact with the potential or existing customers. They are
the ones who keep or satisfy the promises made by the company. Themarketing of insurance basically comes under concept selling. The agents
are thus given various incentives# rewards# commissions and all the
necessary training re,uired.
As regards incentive# they receive '1I 'roductivity 1inked
Incentive!# which is based on the increase in premium amount and the sums
assured by the agent. They are also given extra commissions in case of
policies# which are of high value. There are normal promotions for any good
work done on a regular basis. The agents generally work under the training
and guidance of their respective development officers.
These incentives provided to the Agents and other employees are a
part of Internal Marketing. Internal Marketing relates to meeting the needs
of the employees so they can meet the needs of their customer. As explained
above# the company tries to meet the needs of the employees or try to
motivate them through their needs there by satisfying customer needs.
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Consumers&
The consumers are the policyholders. Apart from the routine life
insurance policies other services like housing finance# mutual funds# pensionand group insurance. Thus the range of consumers is far and wide.
The employees of the 2ompany need to convince the 2ustomers
through Interactive Marketing. Interactive Marketing is nothing but
implementation of a marketing policy that is founded on direct interactive
contact with the customer or the desired customer. It is done through
different types of 7mployee&2ustomer communication# 2ustomer (riented
'rogrammes# after sales services etc.
As explained earlier# the 1I2 Agents try to convince the customers to
get the appropriate policy provided by the 2ompany. ord of mouth
promotion and 'ersonal Approach is one of the ma%or aspects of Interactive
Marketing in any Insurance 2ompany.
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MARKET SEGMENTATION
According to 'hilip otler “Market segmentation is the sub-
division of a market into homogenous sub-sets of customer where
any sub-set may conceivably be selected on a market target to bereached with a distinct marketing mix”
Thus market segmentation is the process that segments a market
into smaller sub&markets called segments. -egmentation is normally
performed along with demographic# geographic# psychographic# and
behavioural variablesE
• Demo!ra-hi% "aria4#es describe characteristics of populations
and include age# gender# race# education# occupation# income#
religion# marital status# family si$e# children# home ownership#
socioeconomic status# and so on.
• Geo!ra-hi% "aria4#es include various classifications of
geographic areas# for example# $ip code# state# country# region#
climate# population# and other geographical census data.
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• Ps+%ho!ra-hi% "aria4#es describe life style# personality# values#
attitudes# and so on.
• /eha"ioura# "aria4#es include product usage rate and end# brand
royaltyE benefit sought# decision making units# ready&to&buy stage# and so
on. This information can be extremely useful for marketing purposes.
Criteria of effe%ti"e se!mentation&
• Measurable& si$e# purchasing power characteristics of the segment must
be measurable
• -ubstantial & The segment must be substantial enough to earn profit
• Accessible& The segment must be accessible
• Jifferential& The segment must be conceptually distinguishable and
respond differently to different marketing mix
@)
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• Actionable& 7ffective programme must be formulated for serving the
segment
Insuran%e Maret Se!mentation&
In insurance industry# profiling is very important in determining
premium rates. Typically# insurers collect every information available.
3owever# analy$ing thoroughly is not feasible since the number of variables
is normally large.
The starting point is thus mass marketing. In mass marketing# the
seller engages in the mass production# mass distribution and mass promotion
of one productH service for all buyers. A niche on other hand is a more
narrowly defined group seeking a distinctive mix of benefits.
In terms of target customers# insurance products can be broadly
classified into products that can be used to indemnify perils that are faced by
a few individuals or industries. These can be termed as mass market and
niche market products. Also# in terms of product complexity# insurance
products can be categori$ed into low complexity and high complexity
products.
(o. %om-#e,it+ -ro$u%ts& These are simple products with a standard set
of covered risks# perils and ha$ards.
@+
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Hi!h %om-#e,it+ -ro$u%ts& They have a large number of riders and
warranties and do not indemnify certain causes of loss.
IMPORTANCE O' SEGMENTATION IN INSURANCE&
• 3elps to understand the need and the re,uirement of the
policyholder and accordingly helps to cater i.e. the needs and the
re,uirement rural sector is different from the urban sector
• -egmentation helps in having a microscopic study of culture
language# likes and dislikes. This helps in marketing decision
which indirectly helps to cater all segments like rural F urban#
men F women# agriculture and industrial.
• -egmentation helps to make promotional measures more creative
like advertisements# personal selling# pricingHfee decision.
-egmentation helps to cover maximum policy holder. It helps to
identify profitable segment and helps in formulating attractive
packages.
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• Many successful insurance companies will recogni$e the Internet?s
potential as a powerful marketing tool.
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It has entered the banking consortia of over 9D corporates for providing
working capital finance# trade services# corporate finance and merchant
banking. It is also providing sophisticated product structures in areas of
foreign exchange and derivatives# money markets and debt trading and
e,uity research.
)ho#esa#e 4anin! ser"i%es
5lue&chip manufacturing companies in the Indian corp to small F mid&si$ed
corporates and agri&based businesses. *or these customers# the 5ank
provides a wide range of commercial and transactional banking services#
including working capital finance# trade services# transactional services# cash
management# etc. The bank is also a leading provider of for its to corporate
customers# mutual funds# stock exchange members and banks.
Retai# 4anin! ser"i%es
The ob%ective of the /etail 5ank is to provide its target market customers a
full range of financial products and banking services# giving the customer a
one&stop window for all hisHher banking re,uirements. The products are
backed by world&class service and delivered to customers through the
growing branch network# as well as through alternative delivery channels
like ATMs# 'hone 5anking#
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ithin this business# the bank has three main product areas & *oreign
7xchange and Jerivatives# 1ocal 2urrency Money Market F Jebt
-ecurities# and 7,uities. These services are provided through the bankNs
Treasury team. To comply with statutory reserve re,uirements# the bank is
re,uired to hold +9G of its deposits in government securities. The Treasury
business is responsible for managing the returns and market risk on this
investment portfolio.
3J*2 5A
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• 'erformance of agent is based on the lead generation and the lead
conversion made via follow& ups# no. of policies sold.
• They have no co& branding strategy.
AIS /ANK
Axis 5ank 1imited# formerly =TI 5ank#
is a financial services firm that had begun
operations in )BB6# after the >overnment
of India allowed new private banks to be
established. The 5ank was promoted %ointly by the Administrator of the
-pecified =ndertaking of the =nit Trust of India =TI&I!# 1ife Insurance
2orporation of India 1I2!# >eneral Insurance 2orporation 1td.#
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• Axis has more than insurance products.
• Advertisement is done through banners# brochures etc
•
Axis bank has tie&ups with Max C
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Marketing of Insurance can be useful for companies who want
sell the policies# increase profit share# market share.
Thus it is clear# that insurance sector is booming and is one of
the most dynamically growing sectors of the Indian chapter.
>rowth potentials are tremendous# and in era of cutthroat
competition# the best marketer can reach to di$$ying heights.
/I/(OGRAPH0
5ooks
-ervice Marketing by /avi -hankar
Insurance by M. :. Mathew
Marketing in -ervices by 'hilip otler
)e4#io!ra-h+
ebsites
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www.wikipedia.com
www.hdfc.com
www.axis.com
www.google.com
Anne,ure
uestionnaires
). 3ow many insurance products do you have in your organi$ation
+. hich advertisement promotional methods are used hich one is
best
4. hat are segmentation criteria for marketing insurance product
6. hat kind of hierarchy is maintained at marketing level
8D
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9. Jo you provide any special training to an insurance agent
@. 3ow do you analy$e their performance
8. hat is overall percentage advertisement expenditure
. Jo you have any co&branding strategy If yes which is other
company