Competitive Analysis Xlri Pgpmi
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XLRI, JAMSEHDPUR
A Project Report On Competition Analysis
“Poor firms ignore their competitors; average firm copy their competitors; winning firm lead their competitors.” -Philip Kotler
By Deepanshu Gupta Enrolment No XI09013 PGPMI-2009
INDEX Content
Page no. 3
1.
Objective of the project
2.
Scope of the Project
3
3.
Introduction
4
4.
Research Methodology and Findings
7
5.
Recommendations
10
6.
Bibliography
11
7.
Appendix A : Questionnaire
12
Note: click the hyperlink above to go to the topic.
Deepanshu Gupta, XI09013
Page 2
Objective of the project: To examine the technologies involved in analyzing business & competitive data & information including environmental analysis, industry analysis & competitor analysis.
Scope of the project: “Know your enemy, and in 100 battles you will never be defeated.” -Sun Tsu, from Art of War The insurance industry is as competitive as any, yet sometimes we are negligent in the analysis of our competition. Most companies have concluded that they can’t be “all things to all people”. Every company has certain unavoidable limitations and obstacles. It is in the assessment of this fact that we all need to evaluate ourselves relative to our competitors. Knowing these strengths and weakness enables a company to effectively build its brand and establish its product. We need to make a conscious effort to ask the key question: how do we stack up against our competitor? The answer to this will be constantly changing, so the question should be repeated and discussed often. For evaluating how we measure up the competition, we use certain tools and techniques which is used to define the different criteria of competitor analysis like price, products, policy, customer service, automation etc. Using different tools and techniques, we can define a) the scope and nature of the industry, b) the profile of the competitor, c) the customers and what benefits they expect, and d) the key success factor in the industry. This project can be used by every organization in the insurance industry so as to acknowledge the importance of competitor analysis and different tools and techniques associated with it. This project also gives the overview of customers likes and dislikes and what benefits they expect. It could be used by the companies to build a brand image and establish a product positioning based on the customer profiling.
Deepanshu Gupta, XI09013
Page 3
INTRODUCTION Competition Competition is the combat between parties (individual or group) for a niche or allocation of resources. It arises when two or more parties strive for a goal which cannot be shared. Competition is a term that encompasses the notion of individuals and firms striving for a greater share of a market to sell or buy goods and services.
Competitor Analysis It is an assessment of the strengths and weakness of the current and potential competitors. The analysis provides both and offensive and defensive strategic context through which to identify opportunities and threats. It has two primary activities, 1) obtaining information about competitors, and 2) using that information to predict competitors behaviour. The goal of competitor analysis is to understand: • with which competitor to compete, • competitor’s strategies and planned actions, • how competitor might react to a firm’s action, • how to influence the competitor behaviour to the firm’s own advantage, • how to increase the market share, • how to build the brand image, • how to establish the position of the product in the eyes of the customers etc. Casual knowledge about competitors usually is insufficient in competitor analysis. Rather, competitors should be analyzed systematically, using organized competitor intelligence- gathering to compile a wide array of information so that well informed strategy decision can be made.
Various Tools and Techniques of Competitor Analysis: The various techniques used for competitor analysis are:
1) Competitive Intelligence System – This is an important tool for competitive
analysis. It includes identifying competitive information and setting up the data, collecting, evaluating and analyzing the data, disseminating information and responding, selecting competitors using customer value analysis etc. 2) Porter’s Five Forces Framework : The five forces come from Michael porter’s
famous framework and are: Deepanshu Gupta, XI09013
Page 4
• • • • •
Power of buyers Power of suppliers Threat of substitutes Barriers to entry Competitors
The idea is that change in the market is to come on the basis of one of these five areas. In considering how these “forces” act on your market, we get a picture of issues such as channel conflict, threats from vertical integration in a competitive market. We can also take the view as to how we can affect the competitive situation for our own benefits, rather than statically accepting the status quo. Consequently, it becomes possible to play around with different future competitive scenarios and to use these to test different propositions to try and guess how the market will change. Our strategy can then include contingencies and responses to changes that might affect us, or changes that we might make to the market.
3) Competitor Array- One common and useful technique constructing a
competitors array. In this the industry, competitors, customers, the benefits expected by the customers, key success factor in the industry etc are determined. Using the methodology, a 2-D matrix is formed, which reflect the workings of a company using all the industry best practices.
Deepanshu Gupta, XI09013
Page 5
4) Competitor Profiling - The strategic rationale of competitor profiling is
powerfully simple. Superior knowledge of rivals offers a legitimate source of competitive advantage. The raw material of competitive advantage consists of offering superior customer value in the firm’s chosen market. Profiling facilitates this strategic objective in three important ways. First, profiling can reveal strategic weaknesses in rivals that the firm may exploit. Second, the proactive stance of competitor profiling will allow the firm to anticipate the strategic response of their rivals to the firm’s planned strategies, the strategies of other competing firms, and changes in the environment. Third, this proactive knowledge will give the firms strategic agility. Offensive strategy can be implemented more quickly in order to exploit opportunities and capitalize on strengths. Similarly, defensive strategy can be employed more deftly in order to counter the threat of rival firms from exploiting the firm’s own weaknesses.
5) Media Scanning - Scanning competitor's ads can reveal much about what that
competitor believes about marketing and their target market. Changes in a competitor's advertising message can reveal new product offerings, new production processes, a new branding strategy, a new positioning strategy, a new segmentation strategy, line extensions and contractions, problems with previous positions, or value migrations within the industry. It might also indicate a new pricing strategy such as penetration, price discrimination, price skimming, product bundling, joint product pricing, discounts, or loss leaders. It might also indicate a new distribution strategy. Little of this intelligence is definitive : additional information is needed before conclusions should be drawn. By knowing the competitor's media buy, media selection, frequency, reach, continuity, schedules, and flights, the manager can arrange his own media plan so that they do not coincide. 6) Subjective Assessment using questionnaire- Subjective assessment tells the
evaluator how the users feel about the product or the company. The usual method of assessment is to used a standardised opinion questionnaire to avoid criticisms of subjectivity. 7) Usability test- The performance, accuracy, recall and emotional responses of
the products of the competitors are compared with companies own product. 8) Interviews – Interviews can be conducted to know the customer views and
what they expect from the companies. It makes the research more comprehensive as it can remove closed and leading questions. Deepanshu Gupta, XI09013
Page 6
9) SWOT analysis – It is used to find out the strength, weakness, opportunities
and threats of a company with respect to the competitor. It takes care of the internal factors such as strength and weakness of the companies compared to its competitors and external factors such as opportunities and threats that gives an edge over the competitor. 10)PEST analysis – In this type of analysis, we study the political, economic,
socio-cultural and technological factors that affect the competition.
Research Methodology and Findings: To study the competition and the environmental and industry factors that affects the competition between the various players in the insurance industry, I adopted the following research methodologies and their findings : 1) Subjective
Assessment
using
Questionnaire
and
interviews: I have done a quantitative research in which the primary source of information was the questionnaire filled and interview given by the people. The questions were designed in an easily understandable way so that the respondents may not have any difficulty in answering them. I have used it to find out what the people feel about the various insurance companies, their products & policies and the services provided by these companies. The main aim for drafting the questions in the questionnaire was to find out I.
How much the people know about various companies in the insurance industry?
II.
What is the brand image in the eyes of the people?
III.
How much the advertisements are important in selling the policies to the people?
IV.
Which is the best channel to sell the products?
V.
What is the trust level of the people for different companies?
VI.
Which type of product people will like to buy?
VII.
What are the things that the people like insurance companies to provide?
Deepanshu Gupta, XI09013
Page 7
The motive for drafting this questionnaire was to find out where do the companies stand in the competitive insurance industry. I have taken a sample size of 30. Half of the sampling was done online using e-mail in some of the big cities like Bangalore, Hyderabad and Delhi/Noida. The rest half was done at Jamshedpur. By this way, it was easier to find out what is the perspective of the people in big cities versus that of small town. Different age group and people with different job profile were sampled to provide a comprehensive study. Using the questionnaire, the sample was studied and inferences were made on the whole population. Questionnaire attached in appendix A.
Findings of subjective assessment: •
•
• •
• •
•
•
100% of the people knew about LIC and about 80%(24 out of 30) of them were having LIC insurance policies. ICICI Prudential and Bajaj Allianz were next. About 87% (13 out of 15) in big cities and 60% (9 out of 15) in small towns knew about ICICI Prudential. Out of these, only 44% (13 out of 30) bought insurance policies of ICICI Prudential. This percentage was more in big cities than in small towns. Bajaj Allianz was little behind with about 63% (19 out of 30) awareness level. SBI Life is another major insurance company about which people are aware. None of the advertisements were very effective. People remembered ICICI Prudential “Jeete Raho” and HDFC Standard Life FatherDaughter talk of going to moon advertisement. However, This percentage was very low. Only 7 out of 30 people, remembered the ads. People remembered the “Jeete Raho” puchline of icici’s ad. People trusted LIC the most. SBI Life and ICICI Prudential followed next. When asked, what is the most important thing people wanted from the insurance industry – immediate claim settlement, better returns, tax benefits, added riders and better service – this was the sort that people wanted in that order. The most favoured product were endowment, term, investment, health, protection and ULIP, in descending order. The most important channel for awareness of people by insurance product was from sales representative/agents. Other important channels were, friends and colleagues and from TV. Number of males buying the policy was more than that of women. People who bought or were ready to buy more number of policies were from the age group 20 to 44 years. About 74%(23 out of 30) were from this age group.
Deepanshu Gupta, XI09013
Page 8
•
People who were at manager or professional level bought most number of products. Business men were the next.
2) Porter’s Five Force Framework -
I have made porter’s five force framework with reference to ICICI Prudential Life Insurance Company and its competitors. The basis of designing this framework was secondary research using media scanning etc.
POTENTIAL ENTRANTS DLF PRAMERICA LIFE, STAR UNION DAI-CHI LIFE, FUTURE GENERALI LIFE, SRIRAM
SUBSTITUTES JEEVAN ASTHA (LIC), UNIT PLUS (SBI LIFE), NEW CAPITAL GAIN (BAJAJ ALLIANZ) etc.
INDUSTRY COMPETITORS LIC, BAJAJ ALLIANZ, SBI LIFE, RELIANCE LIFE, HDFC STANDARD LIFE, BIRLA SUN LIFE,
BUYERS SWITCHING TO DIFFERENT INVESTMENT SECTORS FOR BETTER RETURNS, UNDIFFERENTIATED Deepanshu Gupta, XI09013
Page 9
SUPPLIERS GROWING POWERS BANKS, CA ARE IMPORTANT CHANNELS TO REACH THE CLIENT. HIGH BARGAINING POWER
Findings from the Porter’s Five Force Theory: A segment like insurance sector is very attractive because it is in the growing stage of its life cycle. So, there are lots of aggressive competitors. As the number of competitors are less at this time which makes this industry most attractive for new players. There is not much threat for the existing players from the new entrants because entry barrier is high for foreign companies, because of restriction imposed by government. When we consider substitute products this segment is unattractive because there are many actual and potential substitutes. If new product is brought it becomes obsolete as every competitor copies it very soon with added features. Here Service point of view matters rather than the products. Buyers have great bargaining power in this segment because there are many competitors to provide similar products at cheaper prices. This is what makes this industry more competitive in terms of products and services.
Recommendations: •
In terms of awareness, LIC is the leader, the reason being it was established about five decades ago. Perspective is changing now. People have started recognizing private companies. Companies should spend more money on advertisements. Agents play a crucial role here. Agents should be given more responsibility so that he/she can make more people aware about the company.
•
Advertisement should be more creative and shown very often so that the people don’t forget the advertisement. It should be more of a reminder and persuasive advertisement.
•
As LIC and SBI are backed up by government so the people trust these companies more. The private companies should create more trust by providing better services, better returns and timely claim settlement.
•
Companies should come up with more creative products which comes with protection as well as investment. People still take insurance as investment option but not a need for their security. This belief has to be changed and the
Deepanshu Gupta, XI09013
Page 10
people should be shown the importance of other products like pension plan, health care plan etc. •
People from the middle age group buy the insurance most. Newly married people should be targeted. This is the segment which is potentially very strong. This is the segment which will take child education, health care, pension, investment, protection plans for themselves and their families.
•
Most of the working professional buy insurance. We should provide more options and added riders so that they buy even more. They should be provided online use option as these people don’t have time. It will be more convenient for them to use internet rather than dealing with agents or doing it on their own.
•
Companies should stress more on immediate claim settlement. The companies should introduce “on the spot” settlement or reduce the time of claim settlement to few days. One creative idea is to provide a part of the settlement money on the spot and later pay the rest.
•
Agents should be made more reliable in the eyes of the people by giving them proper training. This is important as they are the first hand contact with the customers.
•
Banks and CA’s which play a major role in providing business to the companies should be taken well care of by providing them with different opportunities which will help to increase their as well as the companies profit. This can be a hike in the commission they receive. Bancassurance should be started as people trust banks more than the insurance companies..
•
Number of women buying the policies is very low. Companies should bring such products that the women may find useful. If the companies follow these recommendations, they will have more opportunity to get an edge over their competitors.
Bibliography: 1) Marketing Management by Keller and kotler
2) Marketing Research by Kress 3) Marketing Strategies for Competitive Advantage by Adcock 4) http://en.wikipedia.org/ 5) www.netmba.com
Deepanshu Gupta, XI09013
Page 11
6) www.managementhelp.org 7) www.usabilitynet.org 8) www.siliconindia.com 9) www.naukarihub.com
Appendix A: Questionnaire We are conducting a survey about insurance and would like to know your views and opinions. Would you mind spending a few minutes helping us by completing this questionnaire? Q1. Do you buy insurance at all? (Yes/No) ________ Q2. Which brands of insurance are you aware of? (grade from 1 to 6, 6 – I know very well, 1- I am not aware of) Deepanshu Gupta, XI09013
Page 12
LIC ICICI Prudential Life Insurance Co Ltd HDFC Standard Life Insurance Co Ltd Reliance Life Insurance Co Ltd Birla Sun Life Insurance Co Ltd Bajaj Allianz Life Insurance Co Ltd SBI Life Insurance Co Ltd Max New York Life Insurance Co Ltd Metlife Insurance Co Ltd Aviva Life Insurance Co Ltd Kotak Mahindra Old Mutual Life Insurance Co Ltd Q3. Which insurance can you recall having seen or heard advertising for in the past month? (yes/No) LIC ICICI Prudential Life Insurance Co Ltd HDFC Standard Life Insurance Co Ltd Reliance Life Insurance Co Ltd Birla Sun Life Insurance Co Ltd Bajaj Allianz Life Insurance Co Ltd SBI Life Insurance Co Ltd Max New York Life Insurance Co Ltd Metlife Insurance Co Ltd Aviva Life Insurance Co Ltd Kotak Mahindra Old Mutual Life Insurance Co Ltd Q4. Describe the advertisement and name the insurance company associated with it, you remember best?
Q5. Which companies policy product would you like to buy (In which company do you trust)? LIC ICICI Prudential Life Insurance Co Ltd HDFC Standard Life Insurance Co Ltd Reliance Life Insurance Co Ltd Birla Sun Life Insurance Co Ltd Bajaj Allianz Life Insurance Co Ltd SBI Life Insurance Co Ltd Max New York Life Insurance Co Ltd Metlife Insurance Co Ltd Aviva Life Insurance Co Ltd Kotak Mahindra Old Mutual Life Insurance Co Ltd Q6. What do you want from your insurance company (product)? (arrange from 1 to 5 according to your priority, 1 – very important, 5 – not very much important) Deepanshu Gupta, XI09013
Page 13
Better returns Better customer service Tax benefits Immediate claim settlement Added Riders (Premium waiver) Q7. Which of the following products would you like to buy for yourself and your family? (Tick the appropriate box) Endowment Plan Pension Plan Health Plan Critical care plan Child Education Plan Unit linked insurance plan Term plans Whole Life Plans Protection plans Investments plans Q8. How do you find out information about insurance? TV General Newspaper and magazines Special magazines Direct Mails Leaflets From friends and colleagues From Sales Representatives/Agents From Exhibitions and seminars Others (Please Specify) We would like to know a little more about you to help us understand how different people like different products and services. Q9. Are you...? Male Female Q10. How old are you?
Deepanshu Gupta, XI09013
Page 14
20-24 25-34 35-44 45-54 55-64 65+ Q11. Which of these best describes your job? Managerial Professional Clerical Skilled Traders Manual Workers Retired Unemployed Home maker Others (Please Specify) Thank you for taking part in this survey. All your answers will be treated confidentially.
Deepanshu Gupta, XI09013
Page 15
A Project Report On Competition Analysis
“Poor firms ignore their competitors; average firm copy their competitors; winning firm lead their competitors.” -Philip Kotler
By Deepanshu Gupta Enrolment No XI09013 PGPMI-2009
INDEX Content
Page no. 3
1.
Objective of the project
2.
Scope of the Project
3
3.
Introduction
4
4.
Research Methodology and Findings
7
5.
Recommendations
10
6.
Bibliography
11
7.
Appendix A : Questionnaire
12
Note: click the hyperlink above to go to the topic.
Deepanshu Gupta, XI09013
Page 2
Objective of the project: To examine the technologies involved in analyzing business & competitive data & information including environmental analysis, industry analysis & competitor analysis.
Scope of the project: “Know your enemy, and in 100 battles you will never be defeated.” -Sun Tsu, from Art of War The insurance industry is as competitive as any, yet sometimes we are negligent in the analysis of our competition. Most companies have concluded that they can’t be “all things to all people”. Every company has certain unavoidable limitations and obstacles. It is in the assessment of this fact that we all need to evaluate ourselves relative to our competitors. Knowing these strengths and weakness enables a company to effectively build its brand and establish its product. We need to make a conscious effort to ask the key question: how do we stack up against our competitor? The answer to this will be constantly changing, so the question should be repeated and discussed often. For evaluating how we measure up the competition, we use certain tools and techniques which is used to define the different criteria of competitor analysis like price, products, policy, customer service, automation etc. Using different tools and techniques, we can define a) the scope and nature of the industry, b) the profile of the competitor, c) the customers and what benefits they expect, and d) the key success factor in the industry. This project can be used by every organization in the insurance industry so as to acknowledge the importance of competitor analysis and different tools and techniques associated with it. This project also gives the overview of customers likes and dislikes and what benefits they expect. It could be used by the companies to build a brand image and establish a product positioning based on the customer profiling.
Deepanshu Gupta, XI09013
Page 3
INTRODUCTION Competition Competition is the combat between parties (individual or group) for a niche or allocation of resources. It arises when two or more parties strive for a goal which cannot be shared. Competition is a term that encompasses the notion of individuals and firms striving for a greater share of a market to sell or buy goods and services.
Competitor Analysis It is an assessment of the strengths and weakness of the current and potential competitors. The analysis provides both and offensive and defensive strategic context through which to identify opportunities and threats. It has two primary activities, 1) obtaining information about competitors, and 2) using that information to predict competitors behaviour. The goal of competitor analysis is to understand: • with which competitor to compete, • competitor’s strategies and planned actions, • how competitor might react to a firm’s action, • how to influence the competitor behaviour to the firm’s own advantage, • how to increase the market share, • how to build the brand image, • how to establish the position of the product in the eyes of the customers etc. Casual knowledge about competitors usually is insufficient in competitor analysis. Rather, competitors should be analyzed systematically, using organized competitor intelligence- gathering to compile a wide array of information so that well informed strategy decision can be made.
Various Tools and Techniques of Competitor Analysis: The various techniques used for competitor analysis are:
1) Competitive Intelligence System – This is an important tool for competitive
analysis. It includes identifying competitive information and setting up the data, collecting, evaluating and analyzing the data, disseminating information and responding, selecting competitors using customer value analysis etc. 2) Porter’s Five Forces Framework : The five forces come from Michael porter’s
famous framework and are: Deepanshu Gupta, XI09013
Page 4
• • • • •
Power of buyers Power of suppliers Threat of substitutes Barriers to entry Competitors
The idea is that change in the market is to come on the basis of one of these five areas. In considering how these “forces” act on your market, we get a picture of issues such as channel conflict, threats from vertical integration in a competitive market. We can also take the view as to how we can affect the competitive situation for our own benefits, rather than statically accepting the status quo. Consequently, it becomes possible to play around with different future competitive scenarios and to use these to test different propositions to try and guess how the market will change. Our strategy can then include contingencies and responses to changes that might affect us, or changes that we might make to the market.
3) Competitor Array- One common and useful technique constructing a
competitors array. In this the industry, competitors, customers, the benefits expected by the customers, key success factor in the industry etc are determined. Using the methodology, a 2-D matrix is formed, which reflect the workings of a company using all the industry best practices.
Deepanshu Gupta, XI09013
Page 5
4) Competitor Profiling - The strategic rationale of competitor profiling is
powerfully simple. Superior knowledge of rivals offers a legitimate source of competitive advantage. The raw material of competitive advantage consists of offering superior customer value in the firm’s chosen market. Profiling facilitates this strategic objective in three important ways. First, profiling can reveal strategic weaknesses in rivals that the firm may exploit. Second, the proactive stance of competitor profiling will allow the firm to anticipate the strategic response of their rivals to the firm’s planned strategies, the strategies of other competing firms, and changes in the environment. Third, this proactive knowledge will give the firms strategic agility. Offensive strategy can be implemented more quickly in order to exploit opportunities and capitalize on strengths. Similarly, defensive strategy can be employed more deftly in order to counter the threat of rival firms from exploiting the firm’s own weaknesses.
5) Media Scanning - Scanning competitor's ads can reveal much about what that
competitor believes about marketing and their target market. Changes in a competitor's advertising message can reveal new product offerings, new production processes, a new branding strategy, a new positioning strategy, a new segmentation strategy, line extensions and contractions, problems with previous positions, or value migrations within the industry. It might also indicate a new pricing strategy such as penetration, price discrimination, price skimming, product bundling, joint product pricing, discounts, or loss leaders. It might also indicate a new distribution strategy. Little of this intelligence is definitive : additional information is needed before conclusions should be drawn. By knowing the competitor's media buy, media selection, frequency, reach, continuity, schedules, and flights, the manager can arrange his own media plan so that they do not coincide. 6) Subjective Assessment using questionnaire- Subjective assessment tells the
evaluator how the users feel about the product or the company. The usual method of assessment is to used a standardised opinion questionnaire to avoid criticisms of subjectivity. 7) Usability test- The performance, accuracy, recall and emotional responses of
the products of the competitors are compared with companies own product. 8) Interviews – Interviews can be conducted to know the customer views and
what they expect from the companies. It makes the research more comprehensive as it can remove closed and leading questions. Deepanshu Gupta, XI09013
Page 6
9) SWOT analysis – It is used to find out the strength, weakness, opportunities
and threats of a company with respect to the competitor. It takes care of the internal factors such as strength and weakness of the companies compared to its competitors and external factors such as opportunities and threats that gives an edge over the competitor. 10)PEST analysis – In this type of analysis, we study the political, economic,
socio-cultural and technological factors that affect the competition.
Research Methodology and Findings: To study the competition and the environmental and industry factors that affects the competition between the various players in the insurance industry, I adopted the following research methodologies and their findings : 1) Subjective
Assessment
using
Questionnaire
and
interviews: I have done a quantitative research in which the primary source of information was the questionnaire filled and interview given by the people. The questions were designed in an easily understandable way so that the respondents may not have any difficulty in answering them. I have used it to find out what the people feel about the various insurance companies, their products & policies and the services provided by these companies. The main aim for drafting the questions in the questionnaire was to find out I.
How much the people know about various companies in the insurance industry?
II.
What is the brand image in the eyes of the people?
III.
How much the advertisements are important in selling the policies to the people?
IV.
Which is the best channel to sell the products?
V.
What is the trust level of the people for different companies?
VI.
Which type of product people will like to buy?
VII.
What are the things that the people like insurance companies to provide?
Deepanshu Gupta, XI09013
Page 7
The motive for drafting this questionnaire was to find out where do the companies stand in the competitive insurance industry. I have taken a sample size of 30. Half of the sampling was done online using e-mail in some of the big cities like Bangalore, Hyderabad and Delhi/Noida. The rest half was done at Jamshedpur. By this way, it was easier to find out what is the perspective of the people in big cities versus that of small town. Different age group and people with different job profile were sampled to provide a comprehensive study. Using the questionnaire, the sample was studied and inferences were made on the whole population. Questionnaire attached in appendix A.
Findings of subjective assessment: •
•
• •
• •
•
•
100% of the people knew about LIC and about 80%(24 out of 30) of them were having LIC insurance policies. ICICI Prudential and Bajaj Allianz were next. About 87% (13 out of 15) in big cities and 60% (9 out of 15) in small towns knew about ICICI Prudential. Out of these, only 44% (13 out of 30) bought insurance policies of ICICI Prudential. This percentage was more in big cities than in small towns. Bajaj Allianz was little behind with about 63% (19 out of 30) awareness level. SBI Life is another major insurance company about which people are aware. None of the advertisements were very effective. People remembered ICICI Prudential “Jeete Raho” and HDFC Standard Life FatherDaughter talk of going to moon advertisement. However, This percentage was very low. Only 7 out of 30 people, remembered the ads. People remembered the “Jeete Raho” puchline of icici’s ad. People trusted LIC the most. SBI Life and ICICI Prudential followed next. When asked, what is the most important thing people wanted from the insurance industry – immediate claim settlement, better returns, tax benefits, added riders and better service – this was the sort that people wanted in that order. The most favoured product were endowment, term, investment, health, protection and ULIP, in descending order. The most important channel for awareness of people by insurance product was from sales representative/agents. Other important channels were, friends and colleagues and from TV. Number of males buying the policy was more than that of women. People who bought or were ready to buy more number of policies were from the age group 20 to 44 years. About 74%(23 out of 30) were from this age group.
Deepanshu Gupta, XI09013
Page 8
•
People who were at manager or professional level bought most number of products. Business men were the next.
2) Porter’s Five Force Framework -
I have made porter’s five force framework with reference to ICICI Prudential Life Insurance Company and its competitors. The basis of designing this framework was secondary research using media scanning etc.
POTENTIAL ENTRANTS DLF PRAMERICA LIFE, STAR UNION DAI-CHI LIFE, FUTURE GENERALI LIFE, SRIRAM
SUBSTITUTES JEEVAN ASTHA (LIC), UNIT PLUS (SBI LIFE), NEW CAPITAL GAIN (BAJAJ ALLIANZ) etc.
INDUSTRY COMPETITORS LIC, BAJAJ ALLIANZ, SBI LIFE, RELIANCE LIFE, HDFC STANDARD LIFE, BIRLA SUN LIFE,
BUYERS SWITCHING TO DIFFERENT INVESTMENT SECTORS FOR BETTER RETURNS, UNDIFFERENTIATED Deepanshu Gupta, XI09013
Page 9
SUPPLIERS GROWING POWERS BANKS, CA ARE IMPORTANT CHANNELS TO REACH THE CLIENT. HIGH BARGAINING POWER
Findings from the Porter’s Five Force Theory: A segment like insurance sector is very attractive because it is in the growing stage of its life cycle. So, there are lots of aggressive competitors. As the number of competitors are less at this time which makes this industry most attractive for new players. There is not much threat for the existing players from the new entrants because entry barrier is high for foreign companies, because of restriction imposed by government. When we consider substitute products this segment is unattractive because there are many actual and potential substitutes. If new product is brought it becomes obsolete as every competitor copies it very soon with added features. Here Service point of view matters rather than the products. Buyers have great bargaining power in this segment because there are many competitors to provide similar products at cheaper prices. This is what makes this industry more competitive in terms of products and services.
Recommendations: •
In terms of awareness, LIC is the leader, the reason being it was established about five decades ago. Perspective is changing now. People have started recognizing private companies. Companies should spend more money on advertisements. Agents play a crucial role here. Agents should be given more responsibility so that he/she can make more people aware about the company.
•
Advertisement should be more creative and shown very often so that the people don’t forget the advertisement. It should be more of a reminder and persuasive advertisement.
•
As LIC and SBI are backed up by government so the people trust these companies more. The private companies should create more trust by providing better services, better returns and timely claim settlement.
•
Companies should come up with more creative products which comes with protection as well as investment. People still take insurance as investment option but not a need for their security. This belief has to be changed and the
Deepanshu Gupta, XI09013
Page 10
people should be shown the importance of other products like pension plan, health care plan etc. •
People from the middle age group buy the insurance most. Newly married people should be targeted. This is the segment which is potentially very strong. This is the segment which will take child education, health care, pension, investment, protection plans for themselves and their families.
•
Most of the working professional buy insurance. We should provide more options and added riders so that they buy even more. They should be provided online use option as these people don’t have time. It will be more convenient for them to use internet rather than dealing with agents or doing it on their own.
•
Companies should stress more on immediate claim settlement. The companies should introduce “on the spot” settlement or reduce the time of claim settlement to few days. One creative idea is to provide a part of the settlement money on the spot and later pay the rest.
•
Agents should be made more reliable in the eyes of the people by giving them proper training. This is important as they are the first hand contact with the customers.
•
Banks and CA’s which play a major role in providing business to the companies should be taken well care of by providing them with different opportunities which will help to increase their as well as the companies profit. This can be a hike in the commission they receive. Bancassurance should be started as people trust banks more than the insurance companies..
•
Number of women buying the policies is very low. Companies should bring such products that the women may find useful. If the companies follow these recommendations, they will have more opportunity to get an edge over their competitors.
Bibliography: 1) Marketing Management by Keller and kotler
2) Marketing Research by Kress 3) Marketing Strategies for Competitive Advantage by Adcock 4) http://en.wikipedia.org/ 5) www.netmba.com
Deepanshu Gupta, XI09013
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6) www.managementhelp.org 7) www.usabilitynet.org 8) www.siliconindia.com 9) www.naukarihub.com
Appendix A: Questionnaire We are conducting a survey about insurance and would like to know your views and opinions. Would you mind spending a few minutes helping us by completing this questionnaire? Q1. Do you buy insurance at all? (Yes/No) ________ Q2. Which brands of insurance are you aware of? (grade from 1 to 6, 6 – I know very well, 1- I am not aware of) Deepanshu Gupta, XI09013
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LIC ICICI Prudential Life Insurance Co Ltd HDFC Standard Life Insurance Co Ltd Reliance Life Insurance Co Ltd Birla Sun Life Insurance Co Ltd Bajaj Allianz Life Insurance Co Ltd SBI Life Insurance Co Ltd Max New York Life Insurance Co Ltd Metlife Insurance Co Ltd Aviva Life Insurance Co Ltd Kotak Mahindra Old Mutual Life Insurance Co Ltd Q3. Which insurance can you recall having seen or heard advertising for in the past month? (yes/No) LIC ICICI Prudential Life Insurance Co Ltd HDFC Standard Life Insurance Co Ltd Reliance Life Insurance Co Ltd Birla Sun Life Insurance Co Ltd Bajaj Allianz Life Insurance Co Ltd SBI Life Insurance Co Ltd Max New York Life Insurance Co Ltd Metlife Insurance Co Ltd Aviva Life Insurance Co Ltd Kotak Mahindra Old Mutual Life Insurance Co Ltd Q4. Describe the advertisement and name the insurance company associated with it, you remember best?
Q5. Which companies policy product would you like to buy (In which company do you trust)? LIC ICICI Prudential Life Insurance Co Ltd HDFC Standard Life Insurance Co Ltd Reliance Life Insurance Co Ltd Birla Sun Life Insurance Co Ltd Bajaj Allianz Life Insurance Co Ltd SBI Life Insurance Co Ltd Max New York Life Insurance Co Ltd Metlife Insurance Co Ltd Aviva Life Insurance Co Ltd Kotak Mahindra Old Mutual Life Insurance Co Ltd Q6. What do you want from your insurance company (product)? (arrange from 1 to 5 according to your priority, 1 – very important, 5 – not very much important) Deepanshu Gupta, XI09013
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Better returns Better customer service Tax benefits Immediate claim settlement Added Riders (Premium waiver) Q7. Which of the following products would you like to buy for yourself and your family? (Tick the appropriate box) Endowment Plan Pension Plan Health Plan Critical care plan Child Education Plan Unit linked insurance plan Term plans Whole Life Plans Protection plans Investments plans Q8. How do you find out information about insurance? TV General Newspaper and magazines Special magazines Direct Mails Leaflets From friends and colleagues From Sales Representatives/Agents From Exhibitions and seminars Others (Please Specify) We would like to know a little more about you to help us understand how different people like different products and services. Q9. Are you...? Male Female Q10. How old are you?
Deepanshu Gupta, XI09013
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20-24 25-34 35-44 45-54 55-64 65+ Q11. Which of these best describes your job? Managerial Professional Clerical Skilled Traders Manual Workers Retired Unemployed Home maker Others (Please Specify) Thank you for taking part in this survey. All your answers will be treated confidentially.
Deepanshu Gupta, XI09013
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