Description
Brand Awareness is the extent to which a brand is recognized by potential customers, and is correctly associated with a particular product. Expressed usually as a percentage of target market, brand awareness is the primary goal of advertising in the early months or years of a product's introduction.
Contents
Chapter I
Page No.
Introduction Project Profile
Chapter II
2 5 9 11 12 30 31 32 40 80 83 84
Industry Profile Company Profile Product Profile
Chapter III
Literature Review Objectives of Study Limitations of the Study Research Methodology
Chapter IV
Data Analysis
Chapter V
Findings Suggestions Conclusion
Annexure Bibliography
Chapter I Introduction
Project Profile Life insurance industry is considered to be the “sunrise” industry in India. Because of the huge opportunities and challenges it holds. Although it has taken almost a decade for the Indian economic liberalization to reach the insurance industry, it promises to reshape the country’s insurance landscape completely. After years of having to put up with a monopoly, the consumer is now rediscovering the joys of having a choice. In just over a year since the industry was opened up, he has nearly 10 new companies to buy his insurance cover from – OM kotad Mahindra Life, HDFC standard life. ICICI prudential, Max New York Life, Birla Sun Life, SBI Life, ING Vysya Life, Tata AIG Life, Reliance Life and Allianz Bajaj life Insurance are offering their products in the market or are in the process of doing so.
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It happened in banking sector in the nineties, the entry of new private sector banks saw a paradigm shift in the banking business was being done in the country-which made ATMs, credit cards, pre-sanctioned loans and so on a house hold names. Now it’s the turn of the insurance sector to deliver. The Indian insurance market offers tremendous opportunity. It is inadequately tapped and has an enormous potential for life insurance business. There is room for everyone – LIC and the new players. In India, about 30-35 crores people are insurable, of this only 6.5 crores have been introduced to insurance cover by LIC in the last forty years, reflecting a low penetration of around 22-24% and its even lower in Non-metros. The annualised compounded growth of the life insurance industry had been 20.6 Percent in the last 16 years. But with the initiatives of new private players, it is expected to grow at over 30% annually over the next three to four years. The growth is also expected to accelerate after government approves of new distribution systems such as Banc assurance. Competition is hotting up in the life insurance sector to woo new customers. After creating an initial awareness, for their products, the new players in the Indian life-insurance sector are now clearly charting out new
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marketing plans with differentiations to promote their respective products in the overcrowded category. Hence Branding and Positioning have a greater relevance in the financial services market, which faces the problem to securing and retaining customers in an increasingly competitive marketplace. The real task is in knowing customer needs and promoting and positioning one’s brand in a manner, with which the customer can empathise. Probably the best bit of new for the consumer is the revolution on the service front. Gone are the days when monopolies gave them with the takeit-or-leave-it option. The spectrum of choices before him is empowering him in such a way that he will soon be able to dictate the terms of service in the insurance business. Customised products are not a long way from where the life insurance industry stands today. Thus entry of large multinational players with their state-of-the-art technology and global expertise is changing the basic quality parameters of life insurance as a product in the country. And the rising temperature of competition is forcing all players to structure their products in a way that is most attractive to the customer. The life insurance consumer finally has a chance to be the king.The present project aims to measure the changes in attribute of the consumers with the emergence of private sector in the life
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insurance business. The project also focuses on the awareness level, the their confidence they repose on the new players in the insurance market.
Chapter II Industry Profile
Indian Insurance Industry
Insurance industry, as on 1.4.2000, comprised mainly two players: the state insurers: Life Insurers: • Life Insurance Corporation of India (LIC) General Insurers: • General Insurance Corporation of India (GIC) (with effect from Dec ‘2000, a National Reinsurer) GIC has four subsidiary companies, namely (with effect from Dec’2000, these subsidiaries have been de-linked from the parent company and made an independent insurance companies. 1. The Oriental Insurance company Limited 2. The New India Assurance Company Limited 3. National Insurance Company Limited 4. United India Insurance Company Limited.
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Insurance Industry in the year 2000-2001 had 10 new entrants, namely: LIFE INSURERS S.No. Number 1 2 3 4 5 6 7 8 9 10 101 104 105 107 109 110 111 114 116 117 Registration Date of Reg 23.10.2000 15.11.2000 24.11.2000 10.01.2001 31.01.2001 12.02.2001 30.03.2001 Name of the Company HDFC standard Life Insurance Company Ltd. Max New York Life Insurance Co. Ltd. ICICI Prudential Life Insurance Company Ltd. OM Kotak Mahindra Life Insurance Co. Ltd. Birla Sun Life Insurance Company Ltd. Tata AIG Life Insurance Company Ltd. SBI Life Insurance Company Ltd.
02.08.2001 ING Vysya Life Insurance Company Private Ltd. 03.08.2001 Allianz Bajaj Life Insurance Company Ltd. 06.08.2001 Metlife India Insurance Company Pvt. Ltd.
Customer Protection Insurance Industry has Ombudsmen in 12 cities. Each ombudsman is empowered to redross customer grievances in respect of insurance contracts on personal lines where the insured amount is less than Rs. 20 lakes, in
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accordance with the Ombudsman Scheme, Addresses can be obtained from the offices of LIC and other insurers.
Life Insurance – Their Market Share
S.No
1 2 3 4 5 6 7 8 9 10 11 12 13 INSURER TATA AIG OM KOTAK BRILA SUNLIFE MAX NEW YORK ING VYSYA HDFC STANDARD MET LIFE ALLIANZ BAJAJ ICICI PRUDENTIAL SBI AVIVA AMP SANMAR TOTAL LIC GRAND TOTAL T.Premium % of Total Market Share 0.60 0.31 1.12 0.75 0.15 1.11 0.05 0.43 3.41 0.73 0.11 0.04 8.81 91.19 100.00
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Life Insurance – Policies Issued
S.NO INSURER TOTAL NO.OF POLICIES ISSUED FEBRUARY APRILFEBRUARY 6192 78251 3402 23453 6919 43165 5865 60057 1529 15687 13527 96413 1089 8686 9139 69656 31686 183201 2070 10684 2631 11110 1249 12836 85298 613199 2252079 17337002 2337377 17950201
1 2 3 4 5 6 7 8 9 10 11 12 13
TATA AIG OM KOTAK BRILA SUNLIFE MAX NEW YORK ING VYSYA HDFC STANDARD MET LIFE ALLIANZ BAJAJ ICICI PRUDENTIAL SBI AVIVA AMP SANMAR TOTAL LIC GRAND TOTAL
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Company Profile
OM Kotak Mahindra Life Insurance Co.
OM Kotak Mahindra Life Insurance Co. is joint venture between Kotak Mahindra Finance Ltd and Old Mutual Plc. Kotak Mahindra is a financial services group, which has always believed in providing its customers with a ‘lifetime of value’. The Kotak Mahindra group has established itself as one of the India’s largest financial services groups, offering a wide range of financial products and services. With a group net worth of over Rs. 2000crores, it caters to a customer base of over 500,000 and has joint ventures with leading international players – Goldman sachs for Investment Banking and Brokerage, the Ford credit International for Automobile Finance. Kotak Mahindra Finance Ltd. The flagship company of the group enjoys the highest credit rating of FAAA by CRISIL and IND AAA (FD) by FITCH Rating India. With years of expertise in the Indian financial market, Kotak Mahindra is a leader in several of its business-investment banking, retail distribution and car finance. With a distribution network spread across 40
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cities, the group enjoys a widespread reach. It also has offices overseas in New York, London and Duba Old Mutual Co. Plc. Old Mutual has made significant progress through continued development of core business, and through focused acquisitions, it has established a strong foundation to build future business for customer and shareholder value. With 155 years of experience in the life insurance business, Old Mutual plc is today an international financial services group based in London with expanding operation in life assurance, asset management, banking and general insurance. Old Mutual is listed on the London Stock Exchange and also on the south African, Namibian, Malawi and Zimbabwe stock exchanges. In 2000, Old Mutual acquired Gerard group in UK and United Asset Management is US bringing total assets under management to US $ 250 billion (as on 31st December, 2000. Financial Highlights for the years operating profit to US$ 1381 million. The company has the ability to cater to a variety of consumer market segments, and offer a comprehensive and innovative products range catering to all income groups.
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Product Profile
At present, OM Kotak Mahindra Life Insurance Co. is offering four life insurance products, namely kotak Endowment plan, Kotak Money Back Plan, Kotak Term assurance Plan, Kotak Insurance bond ( a single Premium Plan). All these plans are available in combinations with additional benefits packages to match every individual’s needs. For each plan category, an individual can choose from among four benefit packages namely, • Economy: Basic Plan, with no additional benefits • Protection: Basic Plan along with cover against accidental risk – Accidental Death Benefit, Accidental Permanent Total/Partial Disability Benefit, Waiver of premium • Health: Basic Plan along with cover against health related riskscritical Illness, Hospital Cash Benefit. • Total: Basic Plan with cover against both accidental and health related risks i.e. Both Protect & health pack. These packages are structured keeping in mind the varying needs of Insurance and the value- add that to much the flexibility for the
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policyholder. These benefits can be attached to all the plans offered by OM Kotak Mahindra Life Insurance Co.
Chapter III Literature Review
Life is too precious, but full of uncertainties. While one goes about carefully planning his life, one never knows what plans life has for him. Man suffers from a sense of insecurity arising out of either the hazards of dying too soon leaving his family Members in Financial insecurity, or leaving his family members in financial provision for a decent living. The age-old concept of community or family living, wherein in times of necessity, the economic needs of a family or members of the family were taken care of by the others in the community or in the family had gradually faded away. What is noticeable is the disintegration of joint family system, and formation of nuclear families. Thus the present day socio-economic scenario leads to the inevitable basic need for the life insurance. It is an essential service, which any Welfare state must make available to its people. Life Insurance in India made its debut well over 100 years ago. But strangely enough even its silent features were not widely understood.
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Life Insurance – An Intangible product Life Insurance is a device or plan of spreading a possible financial loss over a large number of persons, which is too heavy to be conveniently borne by an individual. It seeks to reduce the financial uncertainties arising from the natural contingencies- old age and death. It is a guarantee given by one (Insurer) to another (Insured) whereby the former undertakes to pay a sum of money to the latter (or nominee is case of death) on the happening of the event insured against. Life insurance is a peculiar product. It is quite different from other commercial products. First, what life insurance sells, is not a tangible product but an intangible one at present – a promise to perform in future when this obligation is met, i.e., the insured event takes place, the money whose presence can be felt, replaces the promise. With this amount the insured person or his dependents can meet obligations on account of food, clothing and shelter. Secondly, life insurance product continues to exist over a long period of time and for making its service available, the insured person has to go on paying the purchasing price (premium) throughout the term of the policy. This ensures that the benefits already accrued under sale are not lost.
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Finally, the seller has not only to sell his but also to keep the contract in force by continuous and efficient servicing. Approach to Life Insurance Life Insurance is considered to be the “Sunrise” industry due to the greater growth potential for the new entrants, as the government has opened the iron gates to the private participants in Life insurance; the scenario presents both challenges and opportunities to both the new entrants and as well as to the established life Insurance corporation of India. Evolution of approach Although LIC has enjoyed a monopoly position in the industry, there exists a huge untapped market in both urban as well as rural areas of India. The reasons for this low level of penetration can be very simple, i.e., The LIC was adopting the product approach, then shifted to selling approach and now as LIC is feeling the heat with the marketing efforts or thrust given by the new entrants and now the LIC has started quickly adopting the marketing approach in selling its policies. Marketing approach to Life Insurance Insurance and for that matter, life insurance is a personalized service oriented industry. Hence it should provide services that satisfy the
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customer’s needs and wants. The marketing approach in relation to life insurance refers basically to four steps: 1. Research to determine customers’ financial insecurity 2. Design new services or innovative old ones 3. Market services to the customer for whom they were researched and designed at a profit; 4. In doing so satisfy the customer’s needs.
Marketing approach of Life Insurance
1.Identify the customers’ future Financial needs 7. Forecasting and research on future Market needs for insurance 2. Develop appropriate Insurance Plans to meet the Needs
6. Policy Servicing
3. Determine the Premium For each plan developed
5. Opening of branches, appointments
4. Personal Selling through
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Of agents and sales team leaders
agents; advertising
Life Insurance Marketing Strategy System Marketing Objectives
Marketing Strategy
Market Segmentation
Marketing Mix
Marketing Organisation
Marketing Research
Planning & Control
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Customer Behaviour
Market Analysis
Product
Price
Promotion
Distribution
Policy Servicing
The objective of the marketing process is profitable sales of services that satisfy customers’ financial requirements and needs. I put emphasis on customer’s need satisfaction, at a profit to the life insurance marketer. The marketing approach to life insurance services is presented in above flow diagram. It starts and concludes with identifying and satisfying customers’ needs stages 2 through 6 of the process is called the marketing mix. A marketing mix is a term used to describe a blend of decision about: • Product • Place • Promotion • Price
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Because of the tremendous importance of customer service, Policy Servicing in case life insurance has been treated as a separate ‘P’. The marketing strategy for Life Insurance Company includesA very clear definition of marketing objectives; • A very clear definition of target customer; • The development of a marketing mix to satisfy the customers at a profit; • Planning for each of the ‘source” market and each of the ‘use’ markets; • Organization and administration. The entire element together with marketing research and their relationship with insurance with insurance company objectives suggested the overall life insurance marketing strategy. The development of an appropriate marketing mix implies first the recognisation of target market. The traditional market for life insurance was the salaried white – collar workers of institution. with a shift from the product and selling concepts to marketing concepts, the insurance companies appear to have begun to analyse market opportunities and to develop new target markets thorough market segmentation. At present, the Life insurance sector divides the market in to four broad segments viz.,
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Segment I: Professional and managerial group Segment II: Regular income group Segment III: Self Employed group Segment IV: Agricultural Labour group
Emerging Scenario In Life Insurance It happened in banking sector. And now it’s the turn of the insurance sector to feel the heat of competition. In the nineties, the entry of new private sector banks saw a paradigm shift in the way banking business was being done in the country – who ever heard of car loans being hawked in local market, or of ATMs, or of pre-sanctioned loans and so on till the new players came along and changed the face of Indian banking. It’s the same things now with insurance. About time too. For two years after the insurance sector was opened up the action remained low key. The new players were busy finding their feet, awareness of insurance in the country was low and LIC, woken from its slumber, showed it own no walkover. The result was that is was the state-owned LIC, rather than customer, that benefited from the increased competition.
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The aggressive marketing drive launched by the new players increased awareness of insurance products; and this coupled with the initial hesitation in dealing with relatively unknown names saw LIC’s Business grow at a scorching pace. The new players, moreover, were hesitant to offer new products. Their pricing too tended to be conservative. Not surprisingly, customer opted in large number to stick with an old tried name rather than risk trying out a new one. In such a situation, something had to give. Either the new players had to offer a price advantage that the existing monopoly players could not match. And this is what has happened. HDFC standard life insurance has set the ball rolling by slashing premium rates on its term insurance cover by 40% And as with housing finance where a reduction in the lending rate by one company was the trigger for all others to follow suit, or telecom where Bharti’s announcement of a reduction in tariffs was the signal for BSNL and MTNL to do likewise, chances are consumers will see a flurry of rate cuts. Insurance companies will now be compelled to pare costs, update actuarial tables and focus on delivery. For a public that has long been at the receiving end in the matter of insurance, this is certainly good news.
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Tax Ends And Life Begins The three main reasons why Indians have traditionally bought life insurance are tax, tax and tax. Followed in exponentially diminishing order of motivation by saving investment and risk coverage. The union budget has effectively inverted the hierarchy of needs. For LIC and the 11 new insurance brands that have crowded the market over the past 15 months, it’s a new ball game. Says Birla Sun life CEO Nani Javeri “life insurance will finally be sold for what it is. It will be marketing led business from now on.” The marking zing is already evident from the language heard in the upscale office of the new life Insurance companies. Marketing chiefs recruited from FMCG majors life Hindustan Lever, Cadburys and Marico talk in terms of buying triggers, Vanilla products and alternative distribution channels. They use pizza toppings as an analogy to explain the riders that go with a policy and come up with some dazzling it sight on the average Indians attitude to life and death. And they are determined to turn life insurance in to a wholesome, mainstream financial product, like any other. “It a cultural challenge,” says Raj Raman, senior vice president at Tata AIG life insurance, “we are a people who believe in karma and reincarnation. We don’t plan ahead for death and end up with more
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insurance on our cars than on our lives. Of all the financial products it’s insurance that people feel the least need for.” In order to create this need, the life insurance brands have been notching up ads spends which is one of the highest as a percentage of income. In a business where credibility and trust are of the essence, most of the initial expenditure has been on corporate brand building. After all, when he’s signing a deal that stretches over 20 years or more, the customer has to be convinced the company will be around and will pay up when the time coms. Says Anuroop Tony Singh, CEO of Mx New York life “Fortunately, the general mistrust of financial products in the Indian consumer’s mind does not extend to insurance.” As the new insurance brands spreads their geographical networks in the year ahead, industry ad spends are likely to peak. with an annual ad budget of Rs 15 crores on a premium income of Rs 13 crores OM KOTAK MAHINDRA LIFE INSURANCE Co. is currently one of the biggest spenders, with an award winning national television campaign that features a young man meeting an older, relaxed version of himself and getting “thank you” for investing in Life insurance. The campaign is meant to position the brand in the minds of the young set – the company’s main target segment her too have sought to position and differentiate them.
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But it’s an acknowledged fact the world over that insurance is a push product, sold rather than bought and there are limits to what advertising and promotion can do. Says Birla Sun life chief financial officer peter askers, “advertising can create brand awareness, but it not enough to make people buy. The uninsured may feel a twinge of guilt seeing an advertisement reminding them of their responsibility to their families, but forget and carry on.” Which is where the hard selling insurance sales and comes in. Alternatively designated “financial adviser or consultant” by the new insurance company, he’s the soul of industry. Not withstanding those unkind jokes from American talk show hosts equating hell with being locked in a cell with a life insurance salesman. In India, the insurance salesman earlier had a pleasant UPS: tax saving today, he will be required to talk about death and disability, present statistics on morality and work out net present values of the potential customer’s future earning in order to put monetary values on his life. all very stressful. Says TATA AG’s Raman, “buying insurance is an emotional decision, but the buyer would prefer to thing of it as a rational one. for the agent, the first sales pitch has to be emotional, them back by numbers.
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The idea is to make the prospect think of death, but leave him with a warm and happy felling at the close of the deal. That requires some talent and it’s no wonder that the number and experience of its workforce measure the strength of an insurance company. At last count LIC had 8 lakh agents, followed by ICICI prudential with 8000the new companies have been recruiting and training fresh graduates voluntary retirees, former housewives and executives who prefer risk of variable commission to a fixed salary, but going has been difficult high performing LIC agents or not motivated to switch to private companies because they would stand to loose policy renewal commissions, which are substantial. But there’s nothing stopping a successful agent switching jobs within the private sector. OM KOTAK MAHENDIRA Life Insurance Co., for example has budgeted for 25 per cent attrition every year. Says managing director shivaji Dam. “If the attrition rate goes 5% higher, it could easily set a company’s breakeven back by a year. The biggest problem we all facing is getting good agents.” OM Kotak, Biral sun life and other have equipped the agents with laptop computers fitted with customized life insurance software that incorporates ready presentation for their products. All the agents have to do
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his feed in key data and software presents a choice of insurance solution. This is fairly important, given that most of the new companies have several products, each with numerous riders, making for hundreds of permutations and combinations. Consider Birla Sun Life’s unit linked life insurance product. The company offer three kinds of products, each of which gives the investor the option of being a protector, builder or enhancer with varying proportions invested in equity, infrastructure bonds, money market instruments corporate bonds and government securities. A product designed by sun life financial of Canada, the policy gives the holder flexibility of choosing how he wants the company to invest his money. Such transparent investment linked policies constitute the major portion of the market in the west and south East Asia, but require high involvement. This is where the pizza analogy comes in why LIC’s menu has always had standard, Prepackaged, Sub-branded Pizzas, the private players are inviting customers to choose their own toppings. On the flip side the new insurers are also working on fine tuning pricing even as they slash premium rates, the new joint ventures are assessing mortality risk more closely. For example: Heavy smokers and
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abnormally obese customer will soon be and asked to pay higher premiums while super healthy people may get a discount. Then there’s gender based pricing-since women livelonger they should naturally be eligible for lower premiums. All this will lend a dash of sophistication of life insurance but LIC chairman Ramamurthy is not sure it will work: “The products introduced by the new players are too complex for the Indian market. The agents don’t understand it and as a result, can sell it.” In its monopolist heydays, LIC’s own sales were heavily weighted on tax incentives. It has traditionally sold 50% of its policies in the last quarter of the financial year and estimated 60% of the Rs. 50,000 crores premium income it collected in 2001-2002 was from this who will go on a claim a tax rebate. Post budget, LIC has slashed growth projections. Last year, it sold 240 lakh new policies, registering an 80% growth. This year, it expects no more than 10%. That still a massive sum, considering the corporation has 13 crore policies and 95% market share. None of the private players speak of taking on LIC in terms of total market share, but are out of compete in selected areas.
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OM Kotak, for example intends to focus Maharashtra and Gujarat, where the Kotak Mahindra brand is strongest. All the players intend to hard sell in the Metros, where hi-tech service, commands a premium. Says ICICII prudential life marketing chief Saugata Gupta, which sold 1 Lac policies and logged a premium income of Rs. 35 crore last year “ LIC is huge just like SBI is huge. It didn’t step the private banks from making a big difference did it? In that markets we’ve entered, we’ve captured 5% of market share.” Mean while, LIC is building on its advantage in terms of reach. The broad base will allow some amount of cross subsidy, especially for the one shot premium assured return product, which are basically Fixed deposits with life insurance as an odd on. LIC’s reach in rural areas is also expected to sustain growth in the post budget era. Says executive director of LIC. There are a large number of agriculturists who do not pay tax and buy policies as a saving instrument. And then there are the high net worth individuals who are not motivated by the tax savings. The high value policy segment is still ours.” A measure of the growth of the private life insurance companies over the past year is the added equity they have pumped in. But even the largest ICICI prudential, has equity capital of under Rs. 200 crores, not enough for it so risk insuring subhash Ghai.
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The private players certainly face a challenge as they strive towards breakeven in the years to come. Life insurance Premia in India amount to 1.6% of gross domestic products as compared to 8% in developed countries. When the industry was opened to competition, the annual growth figure projected by CII was 18% though this was accompanied by a rider that tax incentives needed to remain in place. Now the industry will have to achieve targets without the tax incentives in place. HDFC Standards life appointed actuary Nick Taket Says,” If we are to break even in the sixth year, each of us needed to sell a million policies a year with an annual premium income of Rs. 10000 each. The counter balance LIC’s network of company 1495 branches in 89 cities, the private companies are counting an alternative distribution channels being opened up to them in the coming year. In Europe life insurance is sold predominantly through banks. In the UK, strick consumer protection laws have made selling through agent unfeasible. In order to tailor an optimal life insurance solution the seller here is required to collect such a vast amount of background information on the client that individual could not handle it. In India, banks like ICICI, HDFC and SBI are already seeding some of their business of their life insurance ventures through their branches.
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Once the insurance regulator gives them the singnal, they can train bank staff to sell insurance. Bank can conveniently bundle insurance with loans, with a USP that one of the prime functions of the life insurance is to take care of unsettled debts that survivors would be burdened with. HDFC has even worked a deal with Indian bank and Union bank, to leverage their network for selling insurance in rural areas. Says BSI life’s Krishnamurthy, which ahs recruited only 800 agents so far “our whole business model is built on bank insurance. While they await the green signal from the insurance regulatory and development authority for alternative distribution, the insurance companies are putting some hi-tech service system in place. In the coming years, Policyholders will be able to deposit their premium through ATMS any where in the country and even through the Internet. Days HDFC standard life marketing chief Parkaj Seith” We’re going to fully leverage the HDFC connection in the years to come.” Mean while Birla Sun life has started leveraging its Birla group connection in a novel way. Tapping in to the groups manufacturing operations far flung areas, it has managed to reach remote villages to meet the IRDA’s requirement that 7% policies sold be in rural areas by the second year of operations. Says associate director Anjana Grewan “We’ve already
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met the target. Out of the 25000 policies we’ve sold this year, 2000are in villages. Of course these three years endowment policies are for annual premiums of less that Rs.200 and are meant to be a social service rather than serious business. The serious business will be in convicing one’s insurance policies even without the tax breaks and high assured and return that’s where all the higher gear marketing efforts will now be directed.
Objectives of Study
• To study the brand awareness of OM Kotak Mahindra life insurance in chennai • To focus on the customer perception of Private Life Insurance. • To ascertain the Market Potential for the OM Kotak Mahindra life insurance co. in chennai • To understand the market trend of the Private Life Insurance
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• To bring out the investors preference towards the various investment avenues.
Limitations of the Study
Any research study will be restricted in scope by certain inherent limitations that are participated by the choice of the research design, sampling procedure and respondent selection. This study has the following limitations. 1. Even though the market survey was conducted in different places of chennai it may not reflect the real opinions of the investors. 2. There was a language problem between the researcher and the respondents
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3. Because of time constraints, the sample size is restricted to 200, which may not reflect the original market. 4. Since the market study was restricted to chennai city, majority of findings are applicable only to the city and cannot be generalized. 5. The samples may behave or give opinions differently at different times because of their psychological temperament. This will affect the survey.
Research Methodology
Fundamental to the success of any formal marketing research project is a sound research design. A good research design has the characteristics, viz., problem definition, specific methods of data collection and analysis, time required for research project, and estimate of expenses to be incurred. The function of a research design is to ensure that the required data are collected and they are collected accurately and economically. A research design is purely and simply the framework or plan for a study that guides the collection and analysis of data. It is a blueprint that is
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followed in completing a study. It resembles the architect’s blueprint (map) for constructing a house. It may be worthwhile to mention here that a research design is nothing more than the framework for the study ensures that: (1) the study will be relevant to the problem, and (2) the study will employ economical procedures. In the present chapter, an attempt is made to discuss various aspects of exploratory and descriptive research designs. The third form of designs (experimental) shall be taken up for discussion in the succeeding chapter. Various other designs like historical, simulation, panel research, retail audit,
image research, omnibus surveys, trade research, etc., have also been discussed in this chapter.There is never a single standard and correct method of carrying out a piece of research. Therefore, do not wait to start your research until you find out the proper approach. Because there are many ways to tackle a problem - some good, some bad, but probably several good ways. There is no single perfect design. A research design is not like the solution to a problem in algebra.There are three basic types of research designs, viz., (i) exploratory, (ii)descriptive, and (iii)causal, the former two
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of these three are discussed in the ensuing text. The causal research design is discussed in the succeeding chapter of this book. Three important points about research designs are: (1) The design of investigation should stem from the problem; (2) Whether the designs are productive in a given problem setting depends on how imaginatively they are applied. An understanding of the basic designs is needed so that they can be modified to suit purposes; and (3) The three basic designs can be looked at as stages in the continuous process. Exploratory or formulate studies are often seen as the initial step in the continuous research process. It is shown here that these three research designs are not mutually exclusive and a combination of all the three could be used in the successful completion of a marketing research project. We start with the exploratory and go to causal through the descriptive design. Alternatively, we can select any of these research designs and take the help of the other two designs if the problem in question needs. Exploratory Research Design All marketing research projects must start with exploratory design. this is a preliminary phase and is absolutely essential in order to obtain a
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proper definition of problem at hand. The major emphasis is on the discovery of ideas and insights. For example, a soft drinks firm might conduct an exploratory study to generate possible explanations. The exploratory study is particularly helpful in breaking broad and vague problem into smaller, more precise sub-problem statements, hopefully, in the form of specific hypotheses. In a nutshell, we can say that exploratory studies help in formulating hypotheses for the further research. Importance of Exploratory Research Design Exploratory study can be used to establish priorities in studying the competing explanations of the phenomenon. The exploratory design is primarily used to define research problems whereas the descriptive and experimental designs are used to find solutions to these. The exploratory study is also used to increase the analyst’s familiarity with the problem under investigation. The exploratory study may also be used to clarify concepts. In sum, an exploratory design is used for any or all of the following purposes: 1. Formulating a problem for more precise investigation or for developing hypotheses; 2. Establishing priorities for further research;
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3. Gathering information about the practical problems for carrying out research on particular conjectural statements; 4. Increasing the analyst’s familiarity with the problem; and 5. Clarifying the concepts. In general, exploratory research design is appropriate for any problem in which a very little knowledge is available. Exploratory study is characterised by flexibility and informality, Formal design is conspicuous by its absence in exploratory studies. Exploratory studies rarely used detailed (structured) questionnaires. These do not involve probability-sampling plans. Ingenuity, judgment and good luck play a part in such studies. Notwithstanding the flexibility, the research experience has demonstrated that (i) literature surveys, (ii) experience surveys, and (iii) analysis of selected cases, are particularly productive in exploratory research design. In the following text, we take up for detailed discussion each method of exploratory study: 1. Literature Surveys One of the most economical and quickest ways to discover hypotheses is the work of others, through a literature search. For this purpose, a large volume of published data are pose, a large volume of published and
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unpublished data are available which can be scanned in a relatively small period of time. More useful sources of such information are books, newspapers, government documents, trade journals, professional journals, and so on. These are available in libraries: company records such as those kept for accounting and sales analysis purposes: reports of those kept for accounting and sales analysis purposes: reports of previous research projects conducted: and data collected by trade associations related to the area of interest. For example, problem for research in particular soft Drinks Company may be sales are off, why?” For solving it, secondary data from the above sources can be analysed. These data may not be sufficient to solve the problem completely but will be of great help to provide a direction to further research. 2. Experience Surveys Individually with expertise, knowledge, and ideas about research subject may be questioned. Such people include top executives, sales managers, other relevant people of the company in question and companies making similar product: salesman, wholesalers, retailers who handle the product or related products; and consumers who have used product of the type in question or have had an occasion to need such a product. This
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process does not include a scientifically conducted statistical survey. Rather, it reflects an attempt to get all available information from the people who have some particular knowledge of subject under investigation. Unfortunately, because of limited experience with the problem to hand, lack of ability as observers, inability to express their ideas, and the most individuals are unable to give new insights into the marketing problem. Therefore, if time and effort are to be used economically, it is necessary to single out those individuals who are more imaginative and articulate in giving opinions. Despite the desire to find those individuals who have ideas, it is important not to concentrate the investigation only among the better educated and more articulate persons. Since the objective of an exploratory research is to find new ideas, it is important to give respondents the maximum possible freedom of response.
3. Analysis of Selected Cases Usual pattern for exploratory research is the arbitrary selection of few extreme examples and thorough analysis of these. In some instances, detailed and intensive case analysis of a few selected individuals or organisations may particularly be helpful in gaining ideas about possible
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relationships. Case studies are characterised by intensive study. Emphasis is placed on understanding the subject of investigation as a whole. A case study is regarded as a microscopic view of a company’s problem from its historical and social perspective. For example, if the research goal is to determine the reason for varying sales productivity, the firm may wish to examine case histories of several of its best and worst sales people. The research goal in this case would be to determine if, for example, there were significant educational or age variations between highly productive and highly unproductive sales personnel. An exploratory research provides pattern of investigation, a relatively low-cost and low-risk form of a research that may pay very high dividends. The main benefit is a more clear picture of the problem. In India, most of the researches such as market surveys to know the brand preferences, attitudinal studies of consumers, buyers behaviour, market or sales potential, consumer awareness, etc., are of exploratory nature. Such projects are sponsored by big companies such as Hindustan lever. Proctor & Gamble, Lakme, Ponds, etc.
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Descriptive Research Design Descriptive research design is also called explanatory design. This is the one that simply describes something such as demographic characteristics of consumers who use the product. The descriptive study is typically concerned with determining frequency with which something occurs or how two variables vary together. This study is typically guided by an initial hypothesis. For example, an investigation of the trends in consumption of soft drinks with respect to socio-economic characteristics such as age, sex, ethnic group, occupation, family income, educational level, geographic location, and so on: would be covered under a descriptive study.
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doc_940647584.doc
Brand Awareness is the extent to which a brand is recognized by potential customers, and is correctly associated with a particular product. Expressed usually as a percentage of target market, brand awareness is the primary goal of advertising in the early months or years of a product's introduction.
Contents
Chapter I
Page No.
Introduction Project Profile
Chapter II
2 5 9 11 12 30 31 32 40 80 83 84
Industry Profile Company Profile Product Profile
Chapter III
Literature Review Objectives of Study Limitations of the Study Research Methodology
Chapter IV
Data Analysis
Chapter V
Findings Suggestions Conclusion
Annexure Bibliography
Chapter I Introduction
Project Profile Life insurance industry is considered to be the “sunrise” industry in India. Because of the huge opportunities and challenges it holds. Although it has taken almost a decade for the Indian economic liberalization to reach the insurance industry, it promises to reshape the country’s insurance landscape completely. After years of having to put up with a monopoly, the consumer is now rediscovering the joys of having a choice. In just over a year since the industry was opened up, he has nearly 10 new companies to buy his insurance cover from – OM kotad Mahindra Life, HDFC standard life. ICICI prudential, Max New York Life, Birla Sun Life, SBI Life, ING Vysya Life, Tata AIG Life, Reliance Life and Allianz Bajaj life Insurance are offering their products in the market or are in the process of doing so.
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It happened in banking sector in the nineties, the entry of new private sector banks saw a paradigm shift in the banking business was being done in the country-which made ATMs, credit cards, pre-sanctioned loans and so on a house hold names. Now it’s the turn of the insurance sector to deliver. The Indian insurance market offers tremendous opportunity. It is inadequately tapped and has an enormous potential for life insurance business. There is room for everyone – LIC and the new players. In India, about 30-35 crores people are insurable, of this only 6.5 crores have been introduced to insurance cover by LIC in the last forty years, reflecting a low penetration of around 22-24% and its even lower in Non-metros. The annualised compounded growth of the life insurance industry had been 20.6 Percent in the last 16 years. But with the initiatives of new private players, it is expected to grow at over 30% annually over the next three to four years. The growth is also expected to accelerate after government approves of new distribution systems such as Banc assurance. Competition is hotting up in the life insurance sector to woo new customers. After creating an initial awareness, for their products, the new players in the Indian life-insurance sector are now clearly charting out new
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marketing plans with differentiations to promote their respective products in the overcrowded category. Hence Branding and Positioning have a greater relevance in the financial services market, which faces the problem to securing and retaining customers in an increasingly competitive marketplace. The real task is in knowing customer needs and promoting and positioning one’s brand in a manner, with which the customer can empathise. Probably the best bit of new for the consumer is the revolution on the service front. Gone are the days when monopolies gave them with the takeit-or-leave-it option. The spectrum of choices before him is empowering him in such a way that he will soon be able to dictate the terms of service in the insurance business. Customised products are not a long way from where the life insurance industry stands today. Thus entry of large multinational players with their state-of-the-art technology and global expertise is changing the basic quality parameters of life insurance as a product in the country. And the rising temperature of competition is forcing all players to structure their products in a way that is most attractive to the customer. The life insurance consumer finally has a chance to be the king.The present project aims to measure the changes in attribute of the consumers with the emergence of private sector in the life
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insurance business. The project also focuses on the awareness level, the their confidence they repose on the new players in the insurance market.
Chapter II Industry Profile
Indian Insurance Industry
Insurance industry, as on 1.4.2000, comprised mainly two players: the state insurers: Life Insurers: • Life Insurance Corporation of India (LIC) General Insurers: • General Insurance Corporation of India (GIC) (with effect from Dec ‘2000, a National Reinsurer) GIC has four subsidiary companies, namely (with effect from Dec’2000, these subsidiaries have been de-linked from the parent company and made an independent insurance companies. 1. The Oriental Insurance company Limited 2. The New India Assurance Company Limited 3. National Insurance Company Limited 4. United India Insurance Company Limited.
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Insurance Industry in the year 2000-2001 had 10 new entrants, namely: LIFE INSURERS S.No. Number 1 2 3 4 5 6 7 8 9 10 101 104 105 107 109 110 111 114 116 117 Registration Date of Reg 23.10.2000 15.11.2000 24.11.2000 10.01.2001 31.01.2001 12.02.2001 30.03.2001 Name of the Company HDFC standard Life Insurance Company Ltd. Max New York Life Insurance Co. Ltd. ICICI Prudential Life Insurance Company Ltd. OM Kotak Mahindra Life Insurance Co. Ltd. Birla Sun Life Insurance Company Ltd. Tata AIG Life Insurance Company Ltd. SBI Life Insurance Company Ltd.
02.08.2001 ING Vysya Life Insurance Company Private Ltd. 03.08.2001 Allianz Bajaj Life Insurance Company Ltd. 06.08.2001 Metlife India Insurance Company Pvt. Ltd.
Customer Protection Insurance Industry has Ombudsmen in 12 cities. Each ombudsman is empowered to redross customer grievances in respect of insurance contracts on personal lines where the insured amount is less than Rs. 20 lakes, in
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accordance with the Ombudsman Scheme, Addresses can be obtained from the offices of LIC and other insurers.
Life Insurance – Their Market Share
S.No
1 2 3 4 5 6 7 8 9 10 11 12 13 INSURER TATA AIG OM KOTAK BRILA SUNLIFE MAX NEW YORK ING VYSYA HDFC STANDARD MET LIFE ALLIANZ BAJAJ ICICI PRUDENTIAL SBI AVIVA AMP SANMAR TOTAL LIC GRAND TOTAL T.Premium % of Total Market Share 0.60 0.31 1.12 0.75 0.15 1.11 0.05 0.43 3.41 0.73 0.11 0.04 8.81 91.19 100.00
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Life Insurance – Policies Issued
S.NO INSURER TOTAL NO.OF POLICIES ISSUED FEBRUARY APRILFEBRUARY 6192 78251 3402 23453 6919 43165 5865 60057 1529 15687 13527 96413 1089 8686 9139 69656 31686 183201 2070 10684 2631 11110 1249 12836 85298 613199 2252079 17337002 2337377 17950201
1 2 3 4 5 6 7 8 9 10 11 12 13
TATA AIG OM KOTAK BRILA SUNLIFE MAX NEW YORK ING VYSYA HDFC STANDARD MET LIFE ALLIANZ BAJAJ ICICI PRUDENTIAL SBI AVIVA AMP SANMAR TOTAL LIC GRAND TOTAL
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Company Profile
OM Kotak Mahindra Life Insurance Co.
OM Kotak Mahindra Life Insurance Co. is joint venture between Kotak Mahindra Finance Ltd and Old Mutual Plc. Kotak Mahindra is a financial services group, which has always believed in providing its customers with a ‘lifetime of value’. The Kotak Mahindra group has established itself as one of the India’s largest financial services groups, offering a wide range of financial products and services. With a group net worth of over Rs. 2000crores, it caters to a customer base of over 500,000 and has joint ventures with leading international players – Goldman sachs for Investment Banking and Brokerage, the Ford credit International for Automobile Finance. Kotak Mahindra Finance Ltd. The flagship company of the group enjoys the highest credit rating of FAAA by CRISIL and IND AAA (FD) by FITCH Rating India. With years of expertise in the Indian financial market, Kotak Mahindra is a leader in several of its business-investment banking, retail distribution and car finance. With a distribution network spread across 40
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cities, the group enjoys a widespread reach. It also has offices overseas in New York, London and Duba Old Mutual Co. Plc. Old Mutual has made significant progress through continued development of core business, and through focused acquisitions, it has established a strong foundation to build future business for customer and shareholder value. With 155 years of experience in the life insurance business, Old Mutual plc is today an international financial services group based in London with expanding operation in life assurance, asset management, banking and general insurance. Old Mutual is listed on the London Stock Exchange and also on the south African, Namibian, Malawi and Zimbabwe stock exchanges. In 2000, Old Mutual acquired Gerard group in UK and United Asset Management is US bringing total assets under management to US $ 250 billion (as on 31st December, 2000. Financial Highlights for the years operating profit to US$ 1381 million. The company has the ability to cater to a variety of consumer market segments, and offer a comprehensive and innovative products range catering to all income groups.
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Product Profile
At present, OM Kotak Mahindra Life Insurance Co. is offering four life insurance products, namely kotak Endowment plan, Kotak Money Back Plan, Kotak Term assurance Plan, Kotak Insurance bond ( a single Premium Plan). All these plans are available in combinations with additional benefits packages to match every individual’s needs. For each plan category, an individual can choose from among four benefit packages namely, • Economy: Basic Plan, with no additional benefits • Protection: Basic Plan along with cover against accidental risk – Accidental Death Benefit, Accidental Permanent Total/Partial Disability Benefit, Waiver of premium • Health: Basic Plan along with cover against health related riskscritical Illness, Hospital Cash Benefit. • Total: Basic Plan with cover against both accidental and health related risks i.e. Both Protect & health pack. These packages are structured keeping in mind the varying needs of Insurance and the value- add that to much the flexibility for the
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policyholder. These benefits can be attached to all the plans offered by OM Kotak Mahindra Life Insurance Co.
Chapter III Literature Review
Life is too precious, but full of uncertainties. While one goes about carefully planning his life, one never knows what plans life has for him. Man suffers from a sense of insecurity arising out of either the hazards of dying too soon leaving his family Members in Financial insecurity, or leaving his family members in financial provision for a decent living. The age-old concept of community or family living, wherein in times of necessity, the economic needs of a family or members of the family were taken care of by the others in the community or in the family had gradually faded away. What is noticeable is the disintegration of joint family system, and formation of nuclear families. Thus the present day socio-economic scenario leads to the inevitable basic need for the life insurance. It is an essential service, which any Welfare state must make available to its people. Life Insurance in India made its debut well over 100 years ago. But strangely enough even its silent features were not widely understood.
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Life Insurance – An Intangible product Life Insurance is a device or plan of spreading a possible financial loss over a large number of persons, which is too heavy to be conveniently borne by an individual. It seeks to reduce the financial uncertainties arising from the natural contingencies- old age and death. It is a guarantee given by one (Insurer) to another (Insured) whereby the former undertakes to pay a sum of money to the latter (or nominee is case of death) on the happening of the event insured against. Life insurance is a peculiar product. It is quite different from other commercial products. First, what life insurance sells, is not a tangible product but an intangible one at present – a promise to perform in future when this obligation is met, i.e., the insured event takes place, the money whose presence can be felt, replaces the promise. With this amount the insured person or his dependents can meet obligations on account of food, clothing and shelter. Secondly, life insurance product continues to exist over a long period of time and for making its service available, the insured person has to go on paying the purchasing price (premium) throughout the term of the policy. This ensures that the benefits already accrued under sale are not lost.
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Finally, the seller has not only to sell his but also to keep the contract in force by continuous and efficient servicing. Approach to Life Insurance Life Insurance is considered to be the “Sunrise” industry due to the greater growth potential for the new entrants, as the government has opened the iron gates to the private participants in Life insurance; the scenario presents both challenges and opportunities to both the new entrants and as well as to the established life Insurance corporation of India. Evolution of approach Although LIC has enjoyed a monopoly position in the industry, there exists a huge untapped market in both urban as well as rural areas of India. The reasons for this low level of penetration can be very simple, i.e., The LIC was adopting the product approach, then shifted to selling approach and now as LIC is feeling the heat with the marketing efforts or thrust given by the new entrants and now the LIC has started quickly adopting the marketing approach in selling its policies. Marketing approach to Life Insurance Insurance and for that matter, life insurance is a personalized service oriented industry. Hence it should provide services that satisfy the
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customer’s needs and wants. The marketing approach in relation to life insurance refers basically to four steps: 1. Research to determine customers’ financial insecurity 2. Design new services or innovative old ones 3. Market services to the customer for whom they were researched and designed at a profit; 4. In doing so satisfy the customer’s needs.
Marketing approach of Life Insurance
1.Identify the customers’ future Financial needs 7. Forecasting and research on future Market needs for insurance 2. Develop appropriate Insurance Plans to meet the Needs
6. Policy Servicing
3. Determine the Premium For each plan developed
5. Opening of branches, appointments
4. Personal Selling through
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Of agents and sales team leaders
agents; advertising
Life Insurance Marketing Strategy System Marketing Objectives
Marketing Strategy
Market Segmentation
Marketing Mix
Marketing Organisation
Marketing Research
Planning & Control
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Customer Behaviour
Market Analysis
Product
Price
Promotion
Distribution
Policy Servicing
The objective of the marketing process is profitable sales of services that satisfy customers’ financial requirements and needs. I put emphasis on customer’s need satisfaction, at a profit to the life insurance marketer. The marketing approach to life insurance services is presented in above flow diagram. It starts and concludes with identifying and satisfying customers’ needs stages 2 through 6 of the process is called the marketing mix. A marketing mix is a term used to describe a blend of decision about: • Product • Place • Promotion • Price
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Because of the tremendous importance of customer service, Policy Servicing in case life insurance has been treated as a separate ‘P’. The marketing strategy for Life Insurance Company includesA very clear definition of marketing objectives; • A very clear definition of target customer; • The development of a marketing mix to satisfy the customers at a profit; • Planning for each of the ‘source” market and each of the ‘use’ markets; • Organization and administration. The entire element together with marketing research and their relationship with insurance with insurance company objectives suggested the overall life insurance marketing strategy. The development of an appropriate marketing mix implies first the recognisation of target market. The traditional market for life insurance was the salaried white – collar workers of institution. with a shift from the product and selling concepts to marketing concepts, the insurance companies appear to have begun to analyse market opportunities and to develop new target markets thorough market segmentation. At present, the Life insurance sector divides the market in to four broad segments viz.,
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Segment I: Professional and managerial group Segment II: Regular income group Segment III: Self Employed group Segment IV: Agricultural Labour group
Emerging Scenario In Life Insurance It happened in banking sector. And now it’s the turn of the insurance sector to feel the heat of competition. In the nineties, the entry of new private sector banks saw a paradigm shift in the way banking business was being done in the country – who ever heard of car loans being hawked in local market, or of ATMs, or of pre-sanctioned loans and so on till the new players came along and changed the face of Indian banking. It’s the same things now with insurance. About time too. For two years after the insurance sector was opened up the action remained low key. The new players were busy finding their feet, awareness of insurance in the country was low and LIC, woken from its slumber, showed it own no walkover. The result was that is was the state-owned LIC, rather than customer, that benefited from the increased competition.
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The aggressive marketing drive launched by the new players increased awareness of insurance products; and this coupled with the initial hesitation in dealing with relatively unknown names saw LIC’s Business grow at a scorching pace. The new players, moreover, were hesitant to offer new products. Their pricing too tended to be conservative. Not surprisingly, customer opted in large number to stick with an old tried name rather than risk trying out a new one. In such a situation, something had to give. Either the new players had to offer a price advantage that the existing monopoly players could not match. And this is what has happened. HDFC standard life insurance has set the ball rolling by slashing premium rates on its term insurance cover by 40% And as with housing finance where a reduction in the lending rate by one company was the trigger for all others to follow suit, or telecom where Bharti’s announcement of a reduction in tariffs was the signal for BSNL and MTNL to do likewise, chances are consumers will see a flurry of rate cuts. Insurance companies will now be compelled to pare costs, update actuarial tables and focus on delivery. For a public that has long been at the receiving end in the matter of insurance, this is certainly good news.
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Tax Ends And Life Begins The three main reasons why Indians have traditionally bought life insurance are tax, tax and tax. Followed in exponentially diminishing order of motivation by saving investment and risk coverage. The union budget has effectively inverted the hierarchy of needs. For LIC and the 11 new insurance brands that have crowded the market over the past 15 months, it’s a new ball game. Says Birla Sun life CEO Nani Javeri “life insurance will finally be sold for what it is. It will be marketing led business from now on.” The marking zing is already evident from the language heard in the upscale office of the new life Insurance companies. Marketing chiefs recruited from FMCG majors life Hindustan Lever, Cadburys and Marico talk in terms of buying triggers, Vanilla products and alternative distribution channels. They use pizza toppings as an analogy to explain the riders that go with a policy and come up with some dazzling it sight on the average Indians attitude to life and death. And they are determined to turn life insurance in to a wholesome, mainstream financial product, like any other. “It a cultural challenge,” says Raj Raman, senior vice president at Tata AIG life insurance, “we are a people who believe in karma and reincarnation. We don’t plan ahead for death and end up with more
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insurance on our cars than on our lives. Of all the financial products it’s insurance that people feel the least need for.” In order to create this need, the life insurance brands have been notching up ads spends which is one of the highest as a percentage of income. In a business where credibility and trust are of the essence, most of the initial expenditure has been on corporate brand building. After all, when he’s signing a deal that stretches over 20 years or more, the customer has to be convinced the company will be around and will pay up when the time coms. Says Anuroop Tony Singh, CEO of Mx New York life “Fortunately, the general mistrust of financial products in the Indian consumer’s mind does not extend to insurance.” As the new insurance brands spreads their geographical networks in the year ahead, industry ad spends are likely to peak. with an annual ad budget of Rs 15 crores on a premium income of Rs 13 crores OM KOTAK MAHINDRA LIFE INSURANCE Co. is currently one of the biggest spenders, with an award winning national television campaign that features a young man meeting an older, relaxed version of himself and getting “thank you” for investing in Life insurance. The campaign is meant to position the brand in the minds of the young set – the company’s main target segment her too have sought to position and differentiate them.
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But it’s an acknowledged fact the world over that insurance is a push product, sold rather than bought and there are limits to what advertising and promotion can do. Says Birla Sun life chief financial officer peter askers, “advertising can create brand awareness, but it not enough to make people buy. The uninsured may feel a twinge of guilt seeing an advertisement reminding them of their responsibility to their families, but forget and carry on.” Which is where the hard selling insurance sales and comes in. Alternatively designated “financial adviser or consultant” by the new insurance company, he’s the soul of industry. Not withstanding those unkind jokes from American talk show hosts equating hell with being locked in a cell with a life insurance salesman. In India, the insurance salesman earlier had a pleasant UPS: tax saving today, he will be required to talk about death and disability, present statistics on morality and work out net present values of the potential customer’s future earning in order to put monetary values on his life. all very stressful. Says TATA AG’s Raman, “buying insurance is an emotional decision, but the buyer would prefer to thing of it as a rational one. for the agent, the first sales pitch has to be emotional, them back by numbers.
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The idea is to make the prospect think of death, but leave him with a warm and happy felling at the close of the deal. That requires some talent and it’s no wonder that the number and experience of its workforce measure the strength of an insurance company. At last count LIC had 8 lakh agents, followed by ICICI prudential with 8000the new companies have been recruiting and training fresh graduates voluntary retirees, former housewives and executives who prefer risk of variable commission to a fixed salary, but going has been difficult high performing LIC agents or not motivated to switch to private companies because they would stand to loose policy renewal commissions, which are substantial. But there’s nothing stopping a successful agent switching jobs within the private sector. OM KOTAK MAHENDIRA Life Insurance Co., for example has budgeted for 25 per cent attrition every year. Says managing director shivaji Dam. “If the attrition rate goes 5% higher, it could easily set a company’s breakeven back by a year. The biggest problem we all facing is getting good agents.” OM Kotak, Biral sun life and other have equipped the agents with laptop computers fitted with customized life insurance software that incorporates ready presentation for their products. All the agents have to do
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his feed in key data and software presents a choice of insurance solution. This is fairly important, given that most of the new companies have several products, each with numerous riders, making for hundreds of permutations and combinations. Consider Birla Sun Life’s unit linked life insurance product. The company offer three kinds of products, each of which gives the investor the option of being a protector, builder or enhancer with varying proportions invested in equity, infrastructure bonds, money market instruments corporate bonds and government securities. A product designed by sun life financial of Canada, the policy gives the holder flexibility of choosing how he wants the company to invest his money. Such transparent investment linked policies constitute the major portion of the market in the west and south East Asia, but require high involvement. This is where the pizza analogy comes in why LIC’s menu has always had standard, Prepackaged, Sub-branded Pizzas, the private players are inviting customers to choose their own toppings. On the flip side the new insurers are also working on fine tuning pricing even as they slash premium rates, the new joint ventures are assessing mortality risk more closely. For example: Heavy smokers and
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abnormally obese customer will soon be and asked to pay higher premiums while super healthy people may get a discount. Then there’s gender based pricing-since women livelonger they should naturally be eligible for lower premiums. All this will lend a dash of sophistication of life insurance but LIC chairman Ramamurthy is not sure it will work: “The products introduced by the new players are too complex for the Indian market. The agents don’t understand it and as a result, can sell it.” In its monopolist heydays, LIC’s own sales were heavily weighted on tax incentives. It has traditionally sold 50% of its policies in the last quarter of the financial year and estimated 60% of the Rs. 50,000 crores premium income it collected in 2001-2002 was from this who will go on a claim a tax rebate. Post budget, LIC has slashed growth projections. Last year, it sold 240 lakh new policies, registering an 80% growth. This year, it expects no more than 10%. That still a massive sum, considering the corporation has 13 crore policies and 95% market share. None of the private players speak of taking on LIC in terms of total market share, but are out of compete in selected areas.
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OM Kotak, for example intends to focus Maharashtra and Gujarat, where the Kotak Mahindra brand is strongest. All the players intend to hard sell in the Metros, where hi-tech service, commands a premium. Says ICICII prudential life marketing chief Saugata Gupta, which sold 1 Lac policies and logged a premium income of Rs. 35 crore last year “ LIC is huge just like SBI is huge. It didn’t step the private banks from making a big difference did it? In that markets we’ve entered, we’ve captured 5% of market share.” Mean while, LIC is building on its advantage in terms of reach. The broad base will allow some amount of cross subsidy, especially for the one shot premium assured return product, which are basically Fixed deposits with life insurance as an odd on. LIC’s reach in rural areas is also expected to sustain growth in the post budget era. Says executive director of LIC. There are a large number of agriculturists who do not pay tax and buy policies as a saving instrument. And then there are the high net worth individuals who are not motivated by the tax savings. The high value policy segment is still ours.” A measure of the growth of the private life insurance companies over the past year is the added equity they have pumped in. But even the largest ICICI prudential, has equity capital of under Rs. 200 crores, not enough for it so risk insuring subhash Ghai.
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The private players certainly face a challenge as they strive towards breakeven in the years to come. Life insurance Premia in India amount to 1.6% of gross domestic products as compared to 8% in developed countries. When the industry was opened to competition, the annual growth figure projected by CII was 18% though this was accompanied by a rider that tax incentives needed to remain in place. Now the industry will have to achieve targets without the tax incentives in place. HDFC Standards life appointed actuary Nick Taket Says,” If we are to break even in the sixth year, each of us needed to sell a million policies a year with an annual premium income of Rs. 10000 each. The counter balance LIC’s network of company 1495 branches in 89 cities, the private companies are counting an alternative distribution channels being opened up to them in the coming year. In Europe life insurance is sold predominantly through banks. In the UK, strick consumer protection laws have made selling through agent unfeasible. In order to tailor an optimal life insurance solution the seller here is required to collect such a vast amount of background information on the client that individual could not handle it. In India, banks like ICICI, HDFC and SBI are already seeding some of their business of their life insurance ventures through their branches.
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Once the insurance regulator gives them the singnal, they can train bank staff to sell insurance. Bank can conveniently bundle insurance with loans, with a USP that one of the prime functions of the life insurance is to take care of unsettled debts that survivors would be burdened with. HDFC has even worked a deal with Indian bank and Union bank, to leverage their network for selling insurance in rural areas. Says BSI life’s Krishnamurthy, which ahs recruited only 800 agents so far “our whole business model is built on bank insurance. While they await the green signal from the insurance regulatory and development authority for alternative distribution, the insurance companies are putting some hi-tech service system in place. In the coming years, Policyholders will be able to deposit their premium through ATMS any where in the country and even through the Internet. Days HDFC standard life marketing chief Parkaj Seith” We’re going to fully leverage the HDFC connection in the years to come.” Mean while Birla Sun life has started leveraging its Birla group connection in a novel way. Tapping in to the groups manufacturing operations far flung areas, it has managed to reach remote villages to meet the IRDA’s requirement that 7% policies sold be in rural areas by the second year of operations. Says associate director Anjana Grewan “We’ve already
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met the target. Out of the 25000 policies we’ve sold this year, 2000are in villages. Of course these three years endowment policies are for annual premiums of less that Rs.200 and are meant to be a social service rather than serious business. The serious business will be in convicing one’s insurance policies even without the tax breaks and high assured and return that’s where all the higher gear marketing efforts will now be directed.
Objectives of Study
• To study the brand awareness of OM Kotak Mahindra life insurance in chennai • To focus on the customer perception of Private Life Insurance. • To ascertain the Market Potential for the OM Kotak Mahindra life insurance co. in chennai • To understand the market trend of the Private Life Insurance
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• To bring out the investors preference towards the various investment avenues.
Limitations of the Study
Any research study will be restricted in scope by certain inherent limitations that are participated by the choice of the research design, sampling procedure and respondent selection. This study has the following limitations. 1. Even though the market survey was conducted in different places of chennai it may not reflect the real opinions of the investors. 2. There was a language problem between the researcher and the respondents
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3. Because of time constraints, the sample size is restricted to 200, which may not reflect the original market. 4. Since the market study was restricted to chennai city, majority of findings are applicable only to the city and cannot be generalized. 5. The samples may behave or give opinions differently at different times because of their psychological temperament. This will affect the survey.
Research Methodology
Fundamental to the success of any formal marketing research project is a sound research design. A good research design has the characteristics, viz., problem definition, specific methods of data collection and analysis, time required for research project, and estimate of expenses to be incurred. The function of a research design is to ensure that the required data are collected and they are collected accurately and economically. A research design is purely and simply the framework or plan for a study that guides the collection and analysis of data. It is a blueprint that is
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followed in completing a study. It resembles the architect’s blueprint (map) for constructing a house. It may be worthwhile to mention here that a research design is nothing more than the framework for the study ensures that: (1) the study will be relevant to the problem, and (2) the study will employ economical procedures. In the present chapter, an attempt is made to discuss various aspects of exploratory and descriptive research designs. The third form of designs (experimental) shall be taken up for discussion in the succeeding chapter. Various other designs like historical, simulation, panel research, retail audit,
image research, omnibus surveys, trade research, etc., have also been discussed in this chapter.There is never a single standard and correct method of carrying out a piece of research. Therefore, do not wait to start your research until you find out the proper approach. Because there are many ways to tackle a problem - some good, some bad, but probably several good ways. There is no single perfect design. A research design is not like the solution to a problem in algebra.There are three basic types of research designs, viz., (i) exploratory, (ii)descriptive, and (iii)causal, the former two
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of these three are discussed in the ensuing text. The causal research design is discussed in the succeeding chapter of this book. Three important points about research designs are: (1) The design of investigation should stem from the problem; (2) Whether the designs are productive in a given problem setting depends on how imaginatively they are applied. An understanding of the basic designs is needed so that they can be modified to suit purposes; and (3) The three basic designs can be looked at as stages in the continuous process. Exploratory or formulate studies are often seen as the initial step in the continuous research process. It is shown here that these three research designs are not mutually exclusive and a combination of all the three could be used in the successful completion of a marketing research project. We start with the exploratory and go to causal through the descriptive design. Alternatively, we can select any of these research designs and take the help of the other two designs if the problem in question needs. Exploratory Research Design All marketing research projects must start with exploratory design. this is a preliminary phase and is absolutely essential in order to obtain a
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proper definition of problem at hand. The major emphasis is on the discovery of ideas and insights. For example, a soft drinks firm might conduct an exploratory study to generate possible explanations. The exploratory study is particularly helpful in breaking broad and vague problem into smaller, more precise sub-problem statements, hopefully, in the form of specific hypotheses. In a nutshell, we can say that exploratory studies help in formulating hypotheses for the further research. Importance of Exploratory Research Design Exploratory study can be used to establish priorities in studying the competing explanations of the phenomenon. The exploratory design is primarily used to define research problems whereas the descriptive and experimental designs are used to find solutions to these. The exploratory study is also used to increase the analyst’s familiarity with the problem under investigation. The exploratory study may also be used to clarify concepts. In sum, an exploratory design is used for any or all of the following purposes: 1. Formulating a problem for more precise investigation or for developing hypotheses; 2. Establishing priorities for further research;
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3. Gathering information about the practical problems for carrying out research on particular conjectural statements; 4. Increasing the analyst’s familiarity with the problem; and 5. Clarifying the concepts. In general, exploratory research design is appropriate for any problem in which a very little knowledge is available. Exploratory study is characterised by flexibility and informality, Formal design is conspicuous by its absence in exploratory studies. Exploratory studies rarely used detailed (structured) questionnaires. These do not involve probability-sampling plans. Ingenuity, judgment and good luck play a part in such studies. Notwithstanding the flexibility, the research experience has demonstrated that (i) literature surveys, (ii) experience surveys, and (iii) analysis of selected cases, are particularly productive in exploratory research design. In the following text, we take up for detailed discussion each method of exploratory study: 1. Literature Surveys One of the most economical and quickest ways to discover hypotheses is the work of others, through a literature search. For this purpose, a large volume of published data are pose, a large volume of published and
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unpublished data are available which can be scanned in a relatively small period of time. More useful sources of such information are books, newspapers, government documents, trade journals, professional journals, and so on. These are available in libraries: company records such as those kept for accounting and sales analysis purposes: reports of those kept for accounting and sales analysis purposes: reports of previous research projects conducted: and data collected by trade associations related to the area of interest. For example, problem for research in particular soft Drinks Company may be sales are off, why?” For solving it, secondary data from the above sources can be analysed. These data may not be sufficient to solve the problem completely but will be of great help to provide a direction to further research. 2. Experience Surveys Individually with expertise, knowledge, and ideas about research subject may be questioned. Such people include top executives, sales managers, other relevant people of the company in question and companies making similar product: salesman, wholesalers, retailers who handle the product or related products; and consumers who have used product of the type in question or have had an occasion to need such a product. This
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process does not include a scientifically conducted statistical survey. Rather, it reflects an attempt to get all available information from the people who have some particular knowledge of subject under investigation. Unfortunately, because of limited experience with the problem to hand, lack of ability as observers, inability to express their ideas, and the most individuals are unable to give new insights into the marketing problem. Therefore, if time and effort are to be used economically, it is necessary to single out those individuals who are more imaginative and articulate in giving opinions. Despite the desire to find those individuals who have ideas, it is important not to concentrate the investigation only among the better educated and more articulate persons. Since the objective of an exploratory research is to find new ideas, it is important to give respondents the maximum possible freedom of response.
3. Analysis of Selected Cases Usual pattern for exploratory research is the arbitrary selection of few extreme examples and thorough analysis of these. In some instances, detailed and intensive case analysis of a few selected individuals or organisations may particularly be helpful in gaining ideas about possible
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relationships. Case studies are characterised by intensive study. Emphasis is placed on understanding the subject of investigation as a whole. A case study is regarded as a microscopic view of a company’s problem from its historical and social perspective. For example, if the research goal is to determine the reason for varying sales productivity, the firm may wish to examine case histories of several of its best and worst sales people. The research goal in this case would be to determine if, for example, there were significant educational or age variations between highly productive and highly unproductive sales personnel. An exploratory research provides pattern of investigation, a relatively low-cost and low-risk form of a research that may pay very high dividends. The main benefit is a more clear picture of the problem. In India, most of the researches such as market surveys to know the brand preferences, attitudinal studies of consumers, buyers behaviour, market or sales potential, consumer awareness, etc., are of exploratory nature. Such projects are sponsored by big companies such as Hindustan lever. Proctor & Gamble, Lakme, Ponds, etc.
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Descriptive Research Design Descriptive research design is also called explanatory design. This is the one that simply describes something such as demographic characteristics of consumers who use the product. The descriptive study is typically concerned with determining frequency with which something occurs or how two variables vary together. This study is typically guided by an initial hypothesis. For example, an investigation of the trends in consumption of soft drinks with respect to socio-economic characteristics such as age, sex, ethnic group, occupation, family income, educational level, geographic location, and so on: would be covered under a descriptive study.
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