International Referred Research Journal,September ,2011,ISSN-0975-3486, RNI: RAJBIL 2009/30097, VOL-II *ISSUE 24

Research Paper Commerce

P's of Marketing and Life Insurance INDUSTRY -Elements of Benefit

September, 2011

* Desh Deepak Srivastava ** Dr. K. Singh

*-**Dept. of Commerce, B.B.D.P.G.College, Paruiya Asharam, Ambedkarnagar, Dr.R.M.L. AvadhUni.Faizabad A B S T R A C T

Many life insurance company was running before the nationalisation of life insurance corporation in 1956.It provides service to give insurance in India through selling of insurance product to sale any type of product marketing of this is very crucial point .Then there is use of the concept of 4P's of marketing mix is very compulsory .Because of insurance product is service product insurance marketing needs additional 3P's of marketing mix-People,Process,Physical Distribution.To give specific touch in insurance marketing for growth of business .Now in present time of life insurance marketing where hard competition is stand need of one more P-Physical evidence is too important to run in competitive marketI

INTRODUCTION: Wherever there is uncertainty there is risk. We do not have any control over uncertainties which involves financial losses. The risks may be certain events like death, pension, retirement or uncertain events like theft, fire, accident, etc. Insurance is a financial service for collecting the savings of the public and providing them with risk coverage. The main function of Insurance is to provide protection against the possible chances of generating losses. It eliminates worries and miseries of losses by destruction of property and death. When insurance is about human life aspects it is named as life insurance. NOW INTRODUCTION TO LIFE INSURANCE: Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a designated beneficiary a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount at regular intervals or in lump sums. There may be designs in some countries where bills and death expenses plus catering for after funeral expenses should be included in Policy Premium. In the United States, the predominant form simply specifies a lump sum to be paid on the insured's demise.Types of Life Insurance :1. Term insurance policy 2. Whole life policy 3.Endowment policy4. Money back policylic .It also provides capital to the society as the funds accumulated are invested in productive heads. Life Insurance comes under the service sector and while marketing this service, due care is to be takenin quality product and customer satisfaction. While marketing the services, it is also pertinent that they think about the innovative promotional measures.
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It is not sufficient that you perform well but it is also important that you let others know about the quality of your positive contributions.LIFE INSURANCE MARKETING:The term Life Insurance Marketing refers to the marketing of Insurance services with the aim to create customer and generate profit through customer satisfaction. The LifeInsurance Marketing focuses on the formulation of an ideal mix for Insurance business so that the Life Insurance organisation survives and thrives in the right perspective. MARKETING --MIX FOR LIFEINSURANCE COMPANIES: The marketing mix is the combination of marketing activities that an organisation engages in so asto best meet the needs of its targeted market. The Insurance business deals in selling services andtherefore due weight-age in the formation of marketing mix for the Insurance business is needed.The marketing mix includes sub-mixes of the 7 P's of marketing i.e. the product, its price, place,promotion, people, process &physical distribution .One more Pphysical attraction or evidence is help in growth of insurance business and maintain a signage touch to every insurance company.so frist ,abovementioned 7 P's and also 8th P can be used for marketing of life Insurance products, in the following manner:1PRODUCT: A product means what we produce. . A product is both what a sellerhas to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore services are their product. A service is a bundle of features and benefits. However these benefits have relevance to a specific target market. Hence while developing a service package it is important that the package of benefits in the service offer must have a customer perspective. The first level is that of basic
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International Referred Research Journal,September ,2011,ISSN-0975-3486, RNI: RAJBIL 2009/30097, VOL-II *ISSUE 24

service package which includes core service, facilitating services and supporting services. The 2nd level is that of an augmented service offering where accessibility interaction and customer participation is given equal importance in delivering the service product .the third level is that of the market communication of the service offering as in its absence the augmentation service package doesn't have any relevance to the customer.In India, the Life Insurance Corporation of India (LIC) and 22 the Private players( icicipru life insurance,bajajAllianz,met life, birla,etc. are offering life insurance services to the users. Apart from offering life insurance policies, they also offer underwriting and consulting services.When a person or an organisation buys an lifeInsurance policy from the insurance company, he not only buys a policy, but along with it the assistance and advice of the agent, the prestige of the insurance company and the facilities of claims and compensation.It is natural that the users expect a reasonable return for their investment and the Life insurancecompanies want to maximize their profitability. Hence, while deciding the product portfolio or theproduct-mix, the services or the schemes should be motivational. The Group Insurance scheme isrequired to be promoted, the Crop Insurance is required to be expanded and the new schemes andpolicies for the villagers or the rural population are to be included. 2. PRICING: A particular product or service is acceptable to the customer at a particularprice and if the price ids increased it is likely that the same product or service might become less acceptable to the customer. Service pricing follows the principles and practices of pricing of goods and therefore they are either cost based or market based.Following aspects should be taken into consideration while pricing services:1. Demand fluctuations should be successfully handled 2. Service prices should be based on costs so as to take into account the tangible clues 3. Service pricing should be such as to provide value addition and quality indication 4. The pricing strategy should cope up with the degree of competition.But the life insurance business the pricing decisions are concerned with: i) The premium charged against the policies,ii) Interest charged for defaulting the payment of premium and credit facility, andiii) Commission charged for underwriting and consultancy activities.With a view of influencing the target market or prospects the formulation of pricing strategy becomes significant. In a developing country like India where the disposable income in the hands of prospects is low, the pricing decision also governs the transformation of potential policyholders into actual policyholders.The strategies may be high or low pric-

ing keeping in view the level or standard of customers or the policyholders.1-The pricing in life insurance is in the form of premium rates. The three main factors used fordetermining the premium rates under a life insurance plan aremortality,,expense ,interest.The premium rates are revised if there are any significant changes in any of these factors.o Mortality (deaths in a particular area):When deciding upon the pricing strategy the average rate of mortality is one of the main. In a country like South Africa the threat to life is very important as it is played byhost of diseases but in india it is less then South Africa.o Expenses: The cost of processing, commission to agents, reinsurance companies as well as registration are allincorporated into the cost of instalments and premium sum and forms the integral part of thepricing strategy.o Interest:The rate of interest is one of the major factors which determines people's willingness to invest in Life Insurance. People would not be willing to put their funds to invest in Life Insurance business if theinterest rates provided by the banks or other financial instruments are much greater than the perceived returns from the insurance premiums.Pricing objectives:The pricing of services is greatly influenced by the basic service characteristics. However in setting price objectives several factors in relation to the overall marketing strategy of the corporation should be consideredPlanned market position for the service product: Gitlow suggested that price not only influences the market position but also affect the customers perceptual positioning. It is therefore important to keep market or customer position . Product life cycle: the stage of life cycle of the life insurance product is of utmost importance. Also you have to consider the elasticity of demand i.e. whether the demand is sensitive to the change in price or notCompetition: competition should be studied both from the point of interbrand and also from the viewpoint of the brand that provides the same need satisfaction. For e.g. LIC is facing competition from other private players but also from therailways faster trains on the same routes during convenient timings .Strategic role of pricing: Lastly it is important to understand the strategic role of pricing in your overall marketing strategy. 3. PLACE: This component of the marketing mix is related to two important facets - (a)Managing the Life Insurance personnel, and (b) Locating a branch office.The management of agents and insurance personnel is found significant with the viewpoint ofmaintaining the norms for offering the services. This is also to process the services to the end userin such a way that a gap between the services- promised and services -- offered is bridged over. In amajority of the service generating organizations, such a gap is found
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existent which has beeninstrumental in making worse the image problem.The transformation of potential policyholders to the actual policyholders is a difficult task that depends upon the professional excellence of the personnel. The agents and the rural career agents acting as a link, lack professionalism. The front-line staff and the branch managers also are found not assigning due weight-age to the degeneration process. The insurance personnel if not managed properly would make all efforts insensitive. Even if the policy makers make provision for the quality upgrading the promised services hardly reach to the end users. It is also essential that they have rural orientation and are well aware of the lifestyles of the prospects or users. They are required to be given adequate incentives to show their excellenceWhile recruiting agents, the branch managers need to prefer local persons and provide them training and conduct seminars. In addition to the agents, the front-line staff also needs an intensive training programme to focus mainly on behavioural management. given proper attention. Therefore place is important but other than place what is more important is wide distribution of policies through banks directly. It is known as Bancassurance. It is a term used to describe the partnership or relationship between a bank and an insurance company whereby the insurance company uses the bank sales channel in order to sell insurance products. By selling insurance policies bank earns a revenue stream apart from interest. It is called as feebased income. This income is purely risk free for the bank since the bank simply plays the role of an intermediary for sourcing business to the insurance company.So, ICICI Bank uses bancassurance to distribute policies to its customers. ICICI Prudential Life has one of the largest distribution networks amongst private life insurers in India. It has a strong presence across India with 1,960 branches (including 1,096 micro-offices) and an advisor base of over 230,000 (as on December 31, 2009).ICICI Prudential has 6 bancassurance partners having tie-ups with ICICI Bank, Jalgaon Peoples Coop Bank, Ratanagiri District Central Co-op Bank, BalliaKshetriya Co-operative Bank ,Renuka Nagrik Sahakari Bank, Bhandara Urban Co-operative Bank.Mostly all private life insurance companies are using bancassurance model. Other than this all ICICI Prudential Life Insurance offices are at significant locations. Now LIC also use banccassurance through their bank agent and Fses -central Bank, Uco ,Indian Overseas Bank,Lucknow Khetriya Grameen Bank,Dena Bank Etc. 4. Promotion: The Life Insurance services depend on
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effective promotional measures. In a country like India, the rate of illiteracy is very high and the rural economy has dominance in the national economy. It is essential to have both personal and impersonal promotion strategies. In promoting insurance business, the agents and the rural career agents and banks play an important role. Due attention should be given in selecting the promotional tools for banks,agents and rural career agents and even for the branch managers and front line staff. They also have to be given proper training in order to create impulse buying. IMPERSONAL COMMUNICATIONAdvertising and Publicity, organisation of conferences and seminars,incentive to policyholders are. Arranging Kirtans, exhibitions, participation in fairs and festivals, rural wall paintings and publicity drive through the mobile publicity van units would be effective in creating the impulse buying and the rural prospects would be easily transformed into actual policyholders.Here is a life insurance promotion through ICICI PRU husband to help him fulfil all these promises. The TV campaign has also been extended to outdoor."The company has also undertaken press and internet campaigns to inform customers about benefits of some of its products, particularly retirement solutions, through the Chintamani campaign. "After the hugely successful Chintamani (retirement) and SaatPhere (corporate) campaigns, ICICI Prudential Life Insurance also introduced some innovations in the category, such as: having a tax planner by the name of Chintamani on radio, who would answer consumer's queries about the role of insurance in financial planning.In addition to advertising, the company has also initiated several activities to raise consumer awareness about life insurance and ICICI Prudential. "It includes seminars - ICICI Prudential regularly holds consumer awareness meets on 'the need for retirement planning' in different cities such as Pune, Aurangabad, Coimbatore, Nagpur, Bangalore and Mangalore. These are very well attended and have contributed significantly towards increasing awareness about the category and the company. Apart from this, it also entered into alliances with telecom companies.Now above these 4 P's when inter related with 3 P's of marketing mix.then it help to service marketing- life insurance marketing let's see these5. PEOPLE:Understanding the customer better allows to design appropriate products. Being a service industry which involves a high level of people interaction, it is very important to use this resource efficientlyin order to satisfy customers. An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them
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appropriately in the delivery of their service is essential if the organisation wants to obtain a form of competitive advantage. Consumers make judgments and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, aptitude, and service knowledge to provide the service that consumers are paying for.. To look on this we see ICICI Prudential has good number of talented people in their organization . The people strategy of ICICI Prudential is "To build a committed team with a culture of innovation, learning and growth. The Human Resource Function at ICICI Prudential drives the people strategy of the business. With its initial focus on operational excellence to deliver benefits and services to staff members, HR is now committed to building capability through state of the art processes. A robust performance management system, compensation system and a segmented training architecture enable it to deliver value to the organization. The company provides an enabling environment to foster growth and learning for their employees.Every member of the ICICI Prudential team is committed to 5 core values:* Integrity* Customer First * Boundaryless* Ownership * PassionThese values shine forth in all we do, and have become the keystones of our success. 6. PROCESS: The process should be customer friendly in Life insurance industry. The speed and accuracy of payment is of great importance. The processing method should be easy and convenient to the customers. Instalment schemes should be streamlined to cater to the ever growing demands of the customers. IT & Data Warehousing will smoothen the process flow. IT will help in servicing large no. of customers efficiently and bring down overheads. ( the product describes the features provided by the insurer like maturity bonus, claims allowed etc. These features vary from product to product), sum assured (the amount for which the client is covered), term (number of years for which the client is to be covered) and premium amount (instalment amount to be paid by the client to the insurer). The agent who brings this proposal is termed as a base/ servicing agent for the proposal.The proposal will go through various stages of approval &risk evaluation by the "Central Processing Centre" of the ICICI Prudential. Upon final approval, a legal agreement, termed as policy, between the insurer and the client is prepared whereby the insurer covers the client for the sum assured. The client is also entitled for some additional benefits, if any, depending on the features of the product taken in the policy. The base agent gets a commission for the policyThe client pays a premium at regular intervals. These subsequent premiums are termed as renewal premiums. The base agent gets a

commission on the renewal premium also.The client may come back with some alterations to the policy viz. increase/decrease in sum assured, increase/decrease of the term of policy etc. The insurer will make the relevant changes to the policy and will issue endorsements stating the alterations made and their effect on the policy During the term of the policy, the client can submit claims. The insurer makes payment against the claim after verification. Depending on the type of claim the policy is either terminated or is kept in force.At the end of the term of the policy, the client gets the sum assured as part of the maturity benefit under life insurance policies. In addition to this the client will get the maturity bonus and any other benefits depending on the product feature. 7. PHYSICAL DISTRIBUTION: Distribution is a key determinant of success for all insurance companies. Today, the nationalized insurers have a large reach and presence in India. Building a distribution network is very expensive and time consuming. If the insurers are willing to take advantage of India's large population and reach a profitable mass of customers, then new distribution avenues and alliances will be necessary.Initially life insurance was looked upon as a complex product with a high advice and service component. Buyers prefer a face-to-face interaction and they place a high premium on brand names and reliability. As the awareness increases, the product becomes simpler and they become off-the-shelf commodity products. Today, various intermediaries, not necessarily life insurance companies, are selling insurance.

For example.The financial services industries have successfully used remote distribution channels such as telephone or internet so as . Finance companies and banks can emerge as an attractive distribution channel forinsurance in India. In India also, banks hope to maximize expensive existing networks by selling a range of products. It is anticipated that rather than formal ownership arrangements, a loose network
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of alliance betweeninsurers and banks will emerge, popularly known as bancassurance.My point of view that in li marketing mix one P is added because it is a player to play a role to strength life insurance marketing in the mid or till to policy matured with service like providing policy status,knowledge of other services to customer where he is.In service industry role ofphysical evidence is like care taker that have all response to save cared person and he keeps him neat and clean. A example -If you walk into a restaurant your expectations are of a clean, friendly environment. Every insurance customer want to know about their policies it is possible only through phycial evidence that policies status is provide by the companies time to time through agent . Through the figure and description we know use of term in life insurance marketing. Physical Evidence -Where is the service being delivered? Physical Evidence is the element of the service mix which allows the consumer again to make judgments on the organisation. If you walk into a restaurant your expectations are of a clean, friendly en-

vironment. On an aircraft if you travel first class you expect enough room to be able to lay down! Like this in Life Insurance marketing Physical evidence is an essential ingredient of the service mix, consumers will make perceptions based on their sight of the service provision which will have animpact on the organisations perceptual plan of the service.includes facility design, equipment signage, employee dress, tangibles, reports and statements. Signage personifies the insurance company. It gives a identity by which users recognize the company. A signage depicts the company's philosophy and policy. CONCLUSION: From above discussion that in marketing of life insurance 7P's have a important role to make business of insurance without these or lose any one all marketing strategies is insufficient to make insurance sales.but if insurance industry consider to 8th one physical evidence it make more sale because of signage advantage which customer want this time,customer behaviour is to gain more facility .

R E F E R E N C E
* Life Insurance-b.p. Agarwal, Sahitya Bhawan ,Agra.* Element Of Insurance-bal Chandra Srivastava,Sahitya Bhawan Agra.* Goggle Website. * www.licofindia.co.in* Maggines -business Today * News Papers * Www.thelermarketing.net * Www.iciciprulife.com/
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