Grand Final

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

MARKETING Almost every marketing textbook has a different definition of the term “marketing”. The American Marketing Association (AMA) uses the following: ‘the process of planning & executing the conception, pricing, promotion, & distribution of ideas, goods, & services to create exchanges that satisfy individual & organization objectives”. From this definition, we see that: •

Marketing involves an ongoing process. The environment is “dynamic”. This means that the market tends to change – what customers wants today is not necessarily what they want tomorrow.

•

Example: Sales of beef are declining in the United States because consumers have become health oriented. Similarly, Tupperware parties are less popular today than they once were because there are fewer housewives who do not work outside the home

•

This process involves both planning & implementing (executing) the plan.

•

Some of the main issues involved include: 1. Marketers help design products, finding out what customers want & what can practically be made available given technology & price constraints.

2. Marketers distribute products – there must be some efficient way to get the product from the factory to the end-consumer.

1

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

3. Marketers also promote product, & this is perhaps what we tend to think of when we think of marketing. Promotion involves advertising - & much more. Other tools to promote products include trade promotion (store sales, coupons, & rebates), obtaining favorable & visible shelf – space, & obtaining favorable press coverage.

4. Marketers also price products to “move” them. We know from economics that, in most cases, sales correlate negatively with price the higher the price, the lower the quantity demanded. In some cases, however, price may provide the customer with a “signal” of quality. Thus, the marketer needs to price the product to:

a) Maximize profit & b) Communicate a desired image of the product. 5.

Marketing is applicable to services & ideas as well as to tangible products.

Example: - accountants may need to market their tax preparation services to consumers.

2

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

MARKETING MIX 7P’s OF SERVICE INDUSTRY

Under the product, we include both goods as well as services with the prime motto of satisfying the customer/users the marketers are supposed to make sincere efforts for merchandising customer benefits &services with the help of the customer oriented marketing decision. This draws our attention to the formulation sound marketing mix. Like the goods manufacturing organizations even the service generating organizations are required to formulate oriented programmers & policies.

Prof. Neil H. Born of the Hayward Business School first introduced the term marketing mix. Marketing mix is the fair combination of product mix, promotion mix, place mix & price mix. The ultimate goal of different mixes is to deliver standard goods & services to the customer/users. All this mixes helps management in making decisions & using innovation in the marketing process, these 4 elements make up what is commonly known as marketing mix or the 4 P’s. The elements of marketing mix combine in different ways just as an ingredients, the professional excellence of marketers play a significant role.

The marketing mix is the planned package of elements that makes up the product or service offered to the market. It is aims to reach target markets & specified objectives. The key issues to consider it as user convenience, user cost & user communication; taking core service & packaging them according to the needs of specific user groups is a priority. Services: user considerations, user cost, user convince, & user communication. The marketing mix is a key concept in marketing, but it needs to be understood thoroughly before strategic decisions are made on its applications.

3

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Is it the magic formula that will put all the rights, whatever the organization, whatever its problems? Not, like all marketing concepts & techniques.

The marketing mix is an integral part of marketing planning that depends on environmental scanning, market research, understanding users, readers & clients, & offering quality product & services. But it is a substantial part of effective marketing strategy, designed to cover all the aspects of the product or service that are important to the customer, or user: how does it answer user needs? Is it attractive? Easy to access? Is it marketed at right price?

The consideration of the interaction of product, price, place & promotion.

Provides a valuable structure in working towards a set of strategies. When this is coupled with substantial market information & used against a background of careful analysis of the micro- & macro – environment then marketing objectives are more likely to be achieved. a)

Product: “Anything that can be offer to the market for attention, acquisition, use or consumption that might satisfy a want or need. In includes physical objects, services, persons, places, organizations & ideas.”

b)

Price: “The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service”.

4

WINSURANCE GIANT ‘SW MARKETING STRATEGIES c)

Promotion: “Activities that communicate the product or service & its merits to target customers & persuade them to buy”.

d)

Place: “All the company activities that make the product or service available to target customers”.

McCarthy’s (1978) classic m0odel of the 4 P’s – How the product or service is best presented, in attributes, price, availability & promotion, to the desired market segment – is a development of a theory put forward initially by Neil Borden (1965).Borden’s mix is now more precisely found in market research &market strategy. Extra ‘P’s have been added to marketing mix considerations for service marketing. 

People: - All people directly or indirectly involved in the consumption of the service, example: employees or other consumers.



Process: Procedure, mechanism & flow of activities by which services are consumed.



Physical Evidence: The environment in which the service is delivered. It also includes tangible goods that help to communicate & perform the service.

THE ADDITIONAL “P” OF RELATIONSHIP MARKETING.

5

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Further more, in the context of relationship marketing (to consumers) or key account management (in industrial marketing), it could be argued to add “Partnerships” as an additional “P” to the marketing mix as well. Main reason for this addition would be the growing focus in marketing towards long-term orientation that needs to be considered in most marketing concepts.

SERVICES A service is a product of human activity aimed to satisfy human needs, which does not constitute a tangible commodity there are many types of services, ranging from heart surgery to road construction, electricity transmission to education, and child care to water purification. Services are important for employment and employment growth. This is because many traditional services, including distribution, education and social services, are labour intensive. In many service sectors it has also proved to more difficult to substitute capital for labour than in manufacturing. The expansion of services has been driven in particular by income related demand shifts, benefiting for example, the Hotel and Tourist resulting

industries;

the

from

new

economic

stimulus

information

and

6

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

communication technologies; and the growing importance of basic infrastructural services, including transport, communication and finance, for wide range of user industries. Services are coming to dominate the economic activities of countries at virtually every stage of development, making services trade liberalization a necessity for the integration of the whole world. 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. Gronroos constructed that the services are product offers consists of 3 levels. The first level is that of basic 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.

FINANCIAL SERVICES/PRODUCTS The term financial services or financial products in a broad sense mean “mobilizing and allocating savings”. Thus it includes all activities involved in the transaction of saving into investment. The financial products can also be called ‘financial Intermediation’. Financial Intermediation is a process by which funds are mobilized from large number of savers and make them available to all those who are in need of it and particularly to corporate customers. Thus, financial services sector is a key area and it is very vital for industrial development. Today, the importance of financial services is gaining momentum all over the world. In these days of complex finance, people expect a financial service company to play a very dynamic role not only as a provider of finance but also a departmental store of finance. Sophistication and innovations have appeared in the arena of financial intermediaries.

7

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Financial Services is a term used to describe a whole family of resources that can be used to help manage income and other assets. It includes basic banking services such as checking and savings accounts, as well as: • Credit and loans for a variety of purposes – to buy a car or home, to pay for education -- and in many formats, including home equity lines of credit, term loans, revolving credit lines, and a wide variety of credit cards. • Insurance – life, property, retirement • Investment – certificates of deposit (CDs), stocks, mutual funds • Money management planning information and advice – online education, community-based programs, on-site brochures, videos, personal financial advisors. • Direct deposit, online bill paying, wire transfers, and many more convenience systems for managing money.

FINANCIAL SECTOR IN INDIA The financial sector is in a process of rapid transformation. Reforms are continuing as part of the overall structural reforms aimed at improving the productivity and efficiency of the economy. The role of an integrated financial infrastructure is to stimulate and sustain economic growth. The US$ 28 billion Indian financial sector has grown at around 15 per cent and has displayed stability for the last several years, even when other markets in the Asian region were facing a crisis. This stability was ensured through the resilience that has been built into the system over time. The financial sector has kept pace with the growing needs of corporate and other borrowers. Banks, capital market participants and insurers have developed a wide range of products and services to suit varied customer requirements. In this era Mutual Fund is also growing many 8

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

companies are offering many types of funds for the customers. The Mutual Fund & financial products are now able to collect the funds for their product. The Reserve Bank of India (RBI) has successfully introduced a regime where interest rates are more in line with market forces. Financial institutions have combated the reduction in interest rates and pressure on their margins by constantly innovating and targeting attractive consumer segments. Banks and trade financiers have also played an important role in promoting foreign trade of the country. Today, the importance of financial products is gaining momentum all over the world. In these days of complex finance, people expect a financial services company to play a very dynamic role not only as a provider of finance but also a departmental store of finance where different varieties of financial products are available for people.

MARKETING OF SERVICES We term marketing a function by which a marketer plans, promote and deliver goods and services to the customers or clients. In the marketing of services, the providers are supposed to influence and satisfy the customers or users. The perception of service marketing focuses on selling the services in the best interest of users and customers. It is concerned with the scientific management of services, which makes possible affair synchronization of the interests of providers as well as users. With the change in the perception of management, we witnessed multi faceted changes with which necessitated an analog change in the concept of service marketing. The services generating organization released the interest of the customers and thereafter they were compelled to assign due weightage to the interests of society in the face of the holistic concept of the management.

9

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Marketing a service is meant marketing something intangible. It is marketing a promise. It is more selling yourself. We can’t deny the fact the selling of promises complicate the task of marketers since they find it difficult to identify the stage or the time where the services start degenerating or where the promises fall. Of late, we consider marketing as customer satisfaction engineering. There is no doubt that the organizational goal is like making profits, establishing a leadership, innovating the marketing resources are found significant but the focal point is the users satisfaction. In the marketing of services, we go through the number of problems directly or in directly influencing the business index. The problems like market segmentation, marketing information system, behavioral management are studied minutely to simplify the task of formulating a sound mix for marketing, such as product mix, promotion mix, place mix and price mix. It is important to mention that we find “people” an important mix of marketing services.

FINANCIAL PRODUCTS/SERVICES MARKED BY:

The following are the various Financial Products with different Marketing Strategies used to sell the products: 1. POST OFFICE Post office operates as a financial institution. It collects small savings of the people through saving Bank accounts facility. In addition, time deposits and government loans are also collected through post offices certain government securities such as Kisan vikas patra, national saving certificates, etc are sold through post offices. The postal department regularly introduces new schemes in order to collect savings of the people. Postal savings bank schemes were popular in India for a long period as banking facilities were limited and were available mainly in the urban areas up to 1950’s. The popularity of postal saving schemes is now reduced due to the growth of banking and other investment facilities throughout the country. However at present small investors use postal saving facilities for investing their savings surplus money 10

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

for short term due to certain benefits like stable return, security and safety of investment and loan facility against postal deposits. Even tax benefit is one attraction for investment in post office. Investment in postal schemes is as good as giving money to the government for economic development along with reasonable return and tax benefit. Post Office Savings Bank (POSB) has a customer base of more than 11 crore account holders with annual deposits exceeding Rs.70, 000 Crore and a network of 1, 55,000 branches. Marketing strategies:  Personal Selling Through Agents.  Pamphlets & broachers. Marketing Mix of Post Office Products and Services Product

Price/

Place

Promotion

Interest Saving A/c 3.5% National Saving 8%

The distribution of all the The Promotion of the

Certificate Kisan Vikas 10.03%

done through agents and is done mainly

Patras Recurring Deposits Time Deposits

schemes of post office is Schemes of the post office direct from their post Through word of mouth

8%

offices around India

There are about 1,53,256 and the customers other 1yr-6.25% 2yr-6.5%

Branches of post office in promotion tools are adds India

in the newspaper and in

3yr-7.25% Monthly

publicity by the agents

government places like

5yr-7.5% 8%

railways ,etc

Income Scheme PPF 8% Senior Citizen 9% Scheme

Process

People

Physical Evidence

11

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

The Process for the Schemes The People involved in these The

Physical

of the Post Office is more or services is the customers who buy Evidence given by less similar to each other the the product , the distributors i.e. the Post Office to make money which is collected by agents and the Firm i.e. the post tangible its service the customers is put in the Office There are approximately are of two types government

investment

or about More than 1,50,000 Post

given to state as loans, etc and Office

in

India

and

About

 Pass Book  Certificate

in return to their investment 38,94,500 Agents of Post Office the customers get their Interest and about 9,00,000 staff working in on Maturity

Post Office

2. BANKING

A bank is an institution that deals with money and credit. Different people understand the meaning of bank in different ways. For a common man bank means a storehouse where money is stored; for a businessman it is a financial institution and for a day-to-day customer it is an institution where he can deposit his savings. In reality banks are service organisation selling banking services. Banks play an important role in the Economy of any country as they hold the savings of the public. Provide means of payment for goods and services and provide necessary finance for the development of business and trade. The Indian banking system has a large geographic and functional coverage. Presently the total asset size of the Indian banking sector is US$ 270 billion while the total deposits amount to US$ 220 billion with a branch network exceeding 66,000 branches across the country. While commercial banks cater to short and medium term financing requirements, national level and state level financial institutions meet longer-term requirements. This distinction is getting blurred with commercial banks extending project finance.

Banking today has transformed into a technology intensive and customer friendly model with a focus on convenience. The sector is set to witness the

12

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

emergence of financial supermarkets in the form of universal banks providing a suite of services from retail to corporate banking and industrial lending to investment banking. While corporate banking is clearly the largest segment, personal financial services is the highest growth segment.

Marketing strategies: The following are the strategies used by the banks to market its product:  Personal promotion is one of the most preferable option used by the bank to promote the various products, especially the products like saving a/c’s.  The second way used by the bank is conferences that are meetings with various corporate for opening bank account of the company with their bank.  Advertising is another way used by all the banks to promote their products. Like Hum Hein Na…. An Ad Campaign by the well-known Bank Known as ICICI Bank.  The banks to promote various types of products also use publicity and also the banks use various sales promotion methods.

13

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

LIFE INSURANCE

INTRODUCTION Life brings with it many surprises some pleasant and some not so good or shocking That why another name of life is risk or uncertainty, we are always searching for protection safety and security for ourselves and for our dear ones Thanks a million to insurance industry For fulfilling our protection and safety needs Life insurance plan balances our lives

 We need life insurance because: If we alive are alive:  When we are alive we become old by the passage of time…..  When we get old we need money and care…….

14

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

 & If we Die/Expire various questions arise: Who will take care of our family?  What would be our children’s future?  What about their education/ambitions?  Who would pay our loan?  What would be our family’s standard of living?  Who will share our responsibilities? All this questions make us restless and the insurance is the only solution to all the above questions/problems Many people or most of the people in India invest in insurance for tax benefits under section 80c and section 80d. HISTORY OF LIFE INSURANCE IN INDIA The insurance sector in India has come in a full circle from being an open competitive market to nationalization and back to a liberalized market again.

Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost 190 years.

The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. [

Some of the important milestones in the life insurance business in India are •

1912 - The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

•

1928 - The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.

•

1938 - Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.

15

WINSURANCE GIANT ‘SW MARKETING STRATEGIES •

1956 - 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

Market Share of the players iLife Insurance Industry Market Share 2005-06

16

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

1%1% 1%1% 1% 1%1% 2% 3% 2%

8%

7%

71%

LIC ICICI Prudential Bajaj Allianz SBI life HDFC Standard Life Birla Sun Life Max New York Life Reliance Life Aviva Tata AIG Om Kotak ING Vysya Others

In the year 2005-06 the share of LIC was 71% and Bajaj Alliance was on number 2 with 8% of market share and ICICI Prudential was third in the line with 7% market share and SBI Life was having a 2% share

17

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Market Share 2006-07

1% 1% 1% 1% 1% 1% 1% 1% 2%

74%

LIC ICICI Prudential Bajaj Allianz SBI life HDFC Standard Life Birla Sun Life Max New York Life Reliance Life Aviva Tata AIG Om Kotak ING Vysya Others

3%

6%

7%

In the year 2006-07 the Performer were the ICICI Prudential and LIC as LIC increase its share by 3% to 74% and the ICICI Prudential became successful in becoming no 1 in the private life Insurance Industry

18

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

With the private insurers sweated it out for a pie of the Life Insurance cake during FY07, the total new business premium for the insurance sector has grown by 110% to Rs 35,898 crore, beating industry expectations

MARKETING MIX OF LIFE INSURANCE PRODUCT MIX A product is any thing that can be offered to market for attention, acquisition, use or consumption that satisfy a want or need In insurance sector an insurance plan/policy is a product there are different types of product (plan/policy) of insurance that can be classified as 1) Traditional plans 2) Market linked plans 3) Health plans Any product is not made in one level it has many levels like wise insurance has to go under various levels to become a final product these are 1. Basic Product 2. Expected Product 3. Augmented Product 4. Potential Product  Basic Product: -

Safety, Security, Protection, Investment, are the basics

which a insurance plan should provide 19

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

 Expected Product: - Tax Benefit, Easy Claming procedure as well as quick settlement, Withdrawal facility, Facility to take loan, Maturity benefits and Death Benefits for family is the expected facilities which are very necessary for the success of the company  Augmented Product: - Additional Protection Riders like Accidental Death Benefit Rider, Income Benefit Rider, Wavier Premium Rider, Critical Illness Benefit Rider, Term Rider, etc are the benefits helps the customer to select the product/plan, ECS Facility.  Potential Product:- Extended Life Cover, Bonus, Giving statement every quarter incase of ulip products, SMS Facility to Know the policy Details, etc These are the different levels of the product Which a insurance firm keeps in mind and designs a plan /product for offering it to people a different mix is used for fulfilling different needs of the customers and by analyzing different needs of people at different stages different types of plans are designed A different product mix is used for different products

NEW PRODUCT DEVELOPMENT The most important component of product Management is The New Product Development as when things are changing the needs of people to take insurance are changing so giving same product to the customer would be very bad for the growth of the of the company A Insurance firm which is growth oriented always looks beyond its existing product or service. And develops there quality services and also develop new products/plans How the Insurance Products are developed in a period of time We can see lots of difference in the life insurance products before when it was started with the plans like term plan, endowment plan Cash back plans, etc going towards Education plans, pension plans, Savings with protection plans, etc And now with Annuity plan, Unit liked insurance plans, etc which has become the reasons of development of insurance sector How service is developed in period of time The services given by the insurance firm to the customer is very important due to intangible feature of insurance the services which were provided to the customer 20

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

previously and now there is a vast difference Before every thing was done manually but now every thing is computerized now a customer is given a pin where he can pay the premium get the claim forms and also can switch in case of ulip plans, Previously only one policy was send to customer now with the policy all the related things like claim form, policy details, etc are sent to customers

before a plan was sold after

that client was not treated properly his quires were not solved his complaints were not considered his other needs related to it were hardly fulfilled but now There call centers were the customer can call and get his tings done and if he has any complain there is a regulatory body were he can file a complaint against the company. As the product basket has increase the related services to the ulip products like quarterly reports Portfolio design, The latest improvements done in services is providing details to the customer with no time in their hand with the newly introduced SMS facility With this facility the customer can see the NAV, policy status and also can use for updating the details with the company

Comparison between the products of LIC and ICICI Prudential life insurance A product for children’s education /Future Particulars/

ICICI

Prudential

Features Product Name Age of child Age of parent Term

Insurance Co. Smart Kid 0 to 12 years 20to 60 years Matures between 22-25years of

Komal Jeevan 0-10 years NA 16-26 years

Sum assured

the Childs age. Term is 10-25 Y Rs.1Lac to Rs.30Lac

Rs.1Lac to Rs.25Lac

Life Assured

Parent

(In multiples of 25000) Child

21

Life LIC

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Death Benefit

SA is paid up front. Child gets Sum Assured + GA the guaranteed payments as chosen

earlier.

All

future

premiums are waived. Death of Child

Option to continue or surrender Death benefit the policy

Survival

Two structures:

Benefits

1)

The SA will be paid as under

When the child reaches his :

critical milestone (Xth, Xllth, a}20% of the SA when LA graduation, post graduation) i.e. attains the age of 18 Years in the years; Term-7, Term-5, b}20% of the SA when LA Term-2 and on maturity. Payouts attains the age of 20 Years as following as a 5 of SA- c}30% of the SA when LA 20%,25%,25%,(30%+GA+VB) 2)

attains the age of 22 Years

Last 4 years before maturity d}30% of the SA when LA

& on Maturity The payouts are attains the age of 24 Years as follows as a % of SA- 25%, Bonus

20%,20%,20% (20%+GA VB) & GA + VB on maturity

Additions Surrender Value

GA

Available after 3 Premiums are Available after 3 Premiums are paid

paid

Free-Look

Available

NA

Period Riders

IBR,ADBR

Term rider benefit

Age of a Parent

30

30

Age of child

4

2

Term illustration Premium

of 22

26

18

18

200000

200000

Payment Term Sum Assured

22

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Premium

12646

14562

Survival

200000

140000

Benefits Paid at intervals Benefits paid on 197428

Rs.210000+Loyalty Benefits

Maturity PRICE MIX

The price is the exchange value for a product or service, expressed in terms of money. The price of the service is the service value attached to it by the service provider and it must respond with the customer perception of value. Price is the only P which generates revenue for the company as it is two sided sword so it should neither be priced high nor low, it should be priced perfectly Pricing is an important tool in the hands of the marketer PRICE IN INSURANCE INDUSTRY In Insurance plan premium which a customer pays for the plan or policy is the price of the plan, it consists of various charges which are named differently in different companies. They are:$ Administrative charges, $ Mortality charges, $ Risk Charges, $ Allocation charges, etc Price in any industry is largely influenced by cost in this the cost of insuring a physically fit person for a specific amount is calculated and decided by the underwriting department of the insurance company this department while designing the product works out with various things like $ Population growth 23

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

$ Inflation $ GDP growth $ Different ratios $ Death Ratio And finally after considering all statistics data it formulates the premium table for the plan in the age wise term wise Below in the table an example is given of a Smart Kid a product of ICICI Prudential. Age/term 20 21 22 23 24 25

10 130.54 130.57 130.59 130.62 130.64 130.67

11 116.86 116.89 116.92 116.95 116.98 117.01

12 105.55 105.58 105.61 105.64 105.67 105.71

13 96.04 96.07 96.10 96.13 96.17 96.22

14 87.93 87.96 88.00 88.04 88.08 88.13

15 81.63 81.67 81.71 81.75 81.80 81.86

The above rates are given for per thousand of sum assured A case were the age is 22 and the term taken is 14 years and the sum assured chosen is 100000 than the premium would be calculated as 88*100000/1000=8800

In this way a basic premium chart is made for calculation of premium but as every person differs from other the risk associated to his life is also different so the price should also be different the following are factors which effects price i.e. premium of a plan from person to person

24

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Factors effecting Pricing Decision  Age,  Sex,  Health:-Height, weight  Habits:-Tobacco, alcohol, any narcotic  Any disease suffering from  In case of female Pregnant or not, other related health problems  Family Health status  Job place (Hazardous E.g. chemical factory)  Job type (Risky e.g. military)  Type of work i.e. indoor or traveling Are the important determinants of a price i.e. premium of an insurance policy/plan The IRDA Insurance Regulatory development Authority is also having an eye on the price fixed by these Insurance firms Demand of the products like High demand of ULIP products also is a major determinant of price in ULIP products In this way the basic premium and after considering all other things i.e. other factors like If job of person is risky or he is over weight or his sugar level is high, other health problem, etc than (XRT) Extra premium is charged than after adding it to the basic premium the final price/premium to be charged is calculated

25

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

PLACE MIX Insurance Distribution Channels Agents Agency has been the traditional way in which insurance was transacted in the Indian market. Agents act as the representatives of insurance companies. In the nationalized era, agents were a very important source of business for the Public Sector Insurance Companies, as broking was not allowed. Agents still hold a very large book of insurance business mainly in the personal lines. Corporate Agents Corporate Agents are corporate entities who acted as representative of insurance companies and procured business on their behalf. However this concept of corporate agency was done away with by the IRDA after broking was introduced in the market Insurance brokers Brokers have been allowed to operate in the market from April 2003. To ensure presence of serious players in the market, IRDA has stipulated a capital requirement of INR 5 million for direct insurance brokers, INR 20million for reinsurance brokers and INR 25 million for composite brokers. The rule for foreign equity participation is applied similarly as for insurance companies. Broking was relatively a late entrant in the market in 2002 when IRDA allowed insurance broking in India. In a very short span of two years, broking has gained good momentum. This is evident from the fact that the number of brokers has increased to 186 within this short span. Prominent Insurance brokers have widened the typical role of an insurance broker, offering various value added services such as Risk Management and Performance manuals. Banc assurance Banc assurance as well is gaining momentum in the Indian market. Insurance

26

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

companies are increasingly using the banking network to improve their distribution system. Distribution in Life Insurance Corporation of India

LIC is the eldest member in the list of life insurer it has a huge network of distribution it has tie ups with several banc assurance and with other Financial Institutions and its own network is to strong it has its corporate office in Mumbai and its seven zonal offices plus 100 divisional offices LIC has more than 2048 branches and its sales force that the agents recruited till now are about 10, 02,149.

27

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Distribution in ICICI Prudential Life Insurance Company ICICI Prudential has one of the largest distribution networks amongst private life insurers in India, having commenced operations in 100 cities and towns in India. The company has seven banc assurance tie-ups, having agreements with ICICI Bank, Federal Bank, South Indian Bank, Bank of India, Lord Krishna Bank and many more, and some co-operative banks, as well as over 150 corporate agents and brokers. It has also tied up with NGOs, MFIs and corporates for the distribution of rural policies and organizations like Dhan for distribution of Salaam Zindagi, a policy for the socially and economically under privileged sections of society. To fuel its continuing growth, ICICI Prudential has expanded its distribution footprint, and has grown both location and branch network by adding around 300 branches over the past nine months. The company’s distribution ramp-up has been matched with an increase in its staff base, which now stands in excess of 15,000 employees across more than 360 locations. In addition, the company has over 175,000 advisors as well as several partners both for distribution and operations.

28

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

PROMOTION MIX Insurance is a service which needs a good support of promotion. A promotion encourages the sales a promotion mix is a combination of various things which create awareness among the customers it consist of various tools as follows 1. Advertising 2. Sales Promotion 3. Personal Selling 4. Word of Mouth Communication 5. Public Relation and Publicity 6. Sponsorship 7. Direct Marketing Off the above seven all are used by the insurance industry the important

one

are

advertising,

sales

promotion,

word

of

mouth

communication, but the advertisement is the expensive tool of promotion and effective too

LIFE insurance advertising on television between January and November 2004 registered a rise of 84 per cent over the corresponding period in 2003. The total amount spent up to November was Rs 257.5 crore (Rs 139.7 crore). Life Insurance

29

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Corporation of India was the biggest spender, accounting for 27 per cent of the ad spend by insurance firms. According to data from AdEx India, a unit of TAM Media Research, the amount spent on advertising in the second half of 2004 (up to November), was lesser than the first half. From 2000 to 2003, there has been a 353 per cent increase in the add spends. ICICI Prudential Life Insurance has been the second big spender (with 25 per cent of the share). Tata AIG Life Insurance was the third largest spender but accounted for only 9 per cent; Dabur CGU and Max New York 8 per cent each. Other companies' share collectively stood at 23 per cent. Some of these companies are SBI Life, MetLife India and Kotak Mahindra Old Mutual.

Insurance Sector Advertising on the new phase Insurance advertising, which is worth over Rs 300 crore now, is set to enter a new phase from August this year and Consumers may no longer be lured by attractive ads and tall promises

.

Almost all insurance companies are working on last-minute changes in the fine print of their existing ads, both on their corporate brands as well as product- specific advertisements. This follows the insurance regulator's strong directive to insurers to come up with clear and fair communication without misleading consumers on various 'latent intricacies' of insurance communication.

.

The genre of insurance ads have changed over time in the way marketers have tried to position life insurance as a category, shifting from corporate brand recall to introducing solutions. Today life insurance is not associated with death and despair as much as it is with hope and security, which is getting reflected in insurance advertising.

30

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

ICICI Prudential Life Insurance Company Advertising Over the last few months, ICICI Prudential has been advertising in outdoor, TV and press. The company launched a corporate television campaign – Saat Phere – which took the emotions and thoughts of initial Sindoor corporate film a few steps further. The film highlights the strength of promises that a husband makes to his wife, through the depiction of everyday situations, and then goes on to emphasise that ICICI Prudential will stand by the husband to help him fulfill 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,” said Bhatia. After the hugely successful Chintamani (retirement) and Saat Phere (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. DIRECT MAMRKETING Other initiatives included tie-up with the Dabbawalla Organisation in Mumbai for a direct marketing exercise, to talk to the customer through a non-cluttered route, and thereby have a higher impact. The direct mailer was about ICICI Prudential’s retirement solutions and the tax benefits that one can avail of buy investing in any of these. About 100,000 direct mailers were attached to the ‘dabbas’, in areas such as Churchgate, Bandra and Andheri where there are mostly office-goers,”

31

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

OTHER THINGS FOR PROMOTION 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, we have also entered into alliances with telecom companies, as well as companies like BPCL and Dominos to increase the awareness the company the company also put stalls at various fairs and exhibitions, etc

Some important Logos of the Life Insurance Industry

32

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

33

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

34

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

PEOPLE MIX The true strength of any company lies with its people especially in service industry like insurance. As it is the industry with emotions people are the most important part of the organization People in any organization can be classified as in service triangle which consist of  Firm/ Management  Employees  Customers

Firm/ Management

Employees

Customers

The most intangible thing on earth can be called as insurance and also the most difficult thing to sell. If a person can sell insurance than he can sell any thing, it

35

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

is not sold as it is; a lot of efforts are required as a whole process by the people where all the three categories are involved. A firm formulates a plan according to the needs of the consumer by doing surveys and market research and designs a insurance plan /policy than this policy is sold by the sales force with help of other employees i.e. back office and others and finally the product i.e. policy reach the customer

Employees are one of the most important factors for the success of the insurance sector. At different stages different types of employees are evolved with the service $ Planning Staff $ Selling Staff $ Operations Staff $ Training Staff

Employees in Insurance Industries

TRAINING STAFF

PLANNING STAFF

SELLING STAFF

The best way for success is to firm is to Employee right people Develop them with proper training Give them a proper blend of authority and responsibility

36

OPERATIONS STAFF (back office)

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

And promote team work among them Provide them proper support system And see the results in way of dedicated skillful employees and a firm i.e. the management which can retain its employees an develops them must be a strong management And with this strong management having a vast vision and dedicated and skillful employees the firm can reach the top in the market

Customers Percentage of the loyal customers of the company

In the recent survey conducted by business world to gauge the loyalty and confidence that customers have in their company, placed ICICI Prudential right at the top of the heap of private life insurance. While LIC enjoys the confidence of two out of every three of its customers, ICICI Prudential enjoys the confidence of one out of two of its customers. What this means is that ICICI Prudential has a Base of loyal customers. Of 50% which is not bad

37

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

PROCESS MIX

Process refers to how a service is provided or delivered to a customer. This is the processes involved in providing a service and the behavior of people, which can be crucial to customer satisfaction. The way the insurance service is deliver can have an impact on the way the firm is perceived. Smart insurance firms set out processes and set themselves targets to ensure a high quality of service to customers. The following are the requirements of a good insurance process  Customer friendly  Speed and accuracy in payment i.e. claim settlement  Method should be easy and convenient  Installment schemes should be streamlined to cater to the ever growing demands of the customers  Efficient IT and data warehousing system  Technology not only be efficient but also cost effective

38

WINSURANCE GIANT ‘SW MARKETING STRATEGIES



The life insurance process starts with the planning dept when plans the policy that manufacturing then comes the process to deliver It starts with the 1. Agency and administration Here the sales force is recruited by the operation that is generally agents or also called as insurance advisors they are formally given training and are licensed by IRDA the regulatory body of insurance and a contract is signed between the firm and agent further this admin also looks for this sales force for their commission renewal commission, etc. 2. Sales This section looks for the sales of the company training is provided to the sales force and they do sales for the company and they receive the commission for the same this dept also includes the call center service which answers to the quires of the customers

39

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

3. Policy set up This dept looks after the underwriting of the policy when a sales person brings a form i.e. policy it is submitted to the operations than the policy is checked and under writing is done on the policy to the access the risk associated after that the policy is finally issued to the customer by this department 4. Premiums Fund applications, refunds of the rejected cases bank charges; etc things are taken car in this process 5. Policy changes Customer do require some services after buying the policy that to make changes in the add to reallocate the funds, to change the mode of payment, etc in this process a customer is given service to make changes in their policies

6. Policy benefits This process looks that all the benefits that the customer is given in the policy if required by the customer can be utilize by him that can be benefits like withdrawal, surrender, loans, maturities, etc 7. Death claims This process looks for the set up the claim process and for settlement for the claims of the customers after making the review of the case the good will of the company is largely depends on the working of the claim settlement department the tax component is also looked after in this process while settlement of the claims

40

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Physical Evidence Unlike a product a service cannot be experienced before it is delivered, which makes it intangible, this therefore means that potential customers perceive greater risk when deciding whether or not to use a service. To reduce the feeling of risk, thus improving success, it is often vital to offer potential customer the change to see what a service would be like. This is done by providing physical evidence. This physical evidence has a greater importance in insurance as it is the most intangible service on the earth, but as a marketing mix element it can be used for building corporate image and identity. For making the insurance service tangible many types of physical evidences are used the many and the very important in it is the policy document which is the proof that the customer is the owner of that policy. Physical Evidence include all the efforts taken by the service provider to tangibles their services, they include 1) Physical facilities 2) Physical environment 3) Social settings 1) Physical facilities:In Insurance the Physical facilities given to the customer are the branches available of the company i.e. building where a customer can come and solve their quires, etc The physical evidence include the essential and the peripheral evidence the essential evidence are the technical facilities without which the service cannot be delivered in insurance the essential evidence are the services operations department which process the application and sends the policy to the customer i.e. Policy document is very important. And also sending the renewal payment receipts to the customer in time is important

41

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

For the customer satisfaction the quality and standard of the operations department to send the policy to the customer and with proper details and with the fastest way is very important And the peripherals are the brochures, pamphlets, electronic beneficiary statement, e-mail facility, SMS facility, call center facility, though services can be performed without these items, still they can be used to enhance the corporate image and influences the customer’s purchase decision. 2) Physical environment:Another factor which influences the customer to buy the insurance policy is the physical environment this factor is very much less used because the prospect to whom policy is to be sold very rarely comes to the branch or spoke location of the company many a times the advisor or the agents goes to the prospect for making a customer and selling the policy but even rare but this adds to the buying decision of the customer when a customer comes to the office for the meeting for understanding the features of a policy the physical evidence office i.e. Ambience, space, décor of the office influences the customer it gives him a feeling that money is in professional hands 3) Social settings:The social settings has a great and wide importance in the insurance industry the appearance of the service personnel is the major aspect of the social settings that influence the consumer attitude about the service personnel The appearance of a person that a advisor or agent who is in front with the customer is very much important he should be well groomed, well dressed, and should be friendly in his approach most important he should have knowledge about the insurance industry other products, etc he should be confident It is rightly said that the sales in insurance takes palace 50% by the name of company, product features, etc and the remaining 50% buy the social settings of the agent or advisor

42

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

MUTUAL FUND INDUSTRY

Mutual Fund Industry in India The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470 billion in March 1993 and till April 2004; it reached the height of 1,540 billion.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry.

The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling.

43

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Overview: The one investment vehicle that has truly come of age in India in the past decade is mutual funds. Today, the mutual fund industry in the country manages around Rs 100,000 crore of assets, a large part of which comes from retail investors. And this amount is invested not just in equities, but also in the entire gamut of debt instruments. Mutual funds have emerged as a proxy for investing in avenues that are out of reach of most retail investors, particularly government securities and money market instruments. History: The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. 1. First Phase - 1964-87: Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was delinked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management.

44

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

2. Second Phase - 1987-1993 (Entry of Public Sector Funds): Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under management.

3. Third Phase - 1993-2003 (Entry of Private Sector Funds): With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.

45

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

4. Fourth Phase - since February 2003: This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29, 835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

46

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Major players & their Market share Assets under Management (AUM) of Some of the Major Players on the Indian Mutual Fund Scene as at the end of Aug-2007 (Rs in Lak): Sr. No. 1.

AssetMmanagement Company

AUM Rs (in Lacks) 663075.8

ABN AMRO Mutual Fund

2. 3.

BIRLA SUN LIFE MUTUAL FUND HDFC MUTUAL FUND

2705849.11 4087149.23

4.

HSBC MUTUAL FUND

1716617.57

5. 6. 7. 8. 9. 1 0. 11 . 1 2. 1 3. 1 4. 1 5.

ING VYSYA MUTUAL FUND PRUDENTIAL ICICI MUTUAL FUND STATE BANK OF INDIA MUTUAL FUND TATA MUTUAL FUND KOTAK MAHINDRA MUTUAL FUND UNIT TRUST OF INDIA MUTUAL FUND

871400.1 5061189.31 2204932.07 1994898.76 1922570 4169856.76

RELIANCE MUTUAL FUND

6759765.06

STANDARD CHARTERED MUTUAL FUND

1546463.68

FRANKLIN TEMPLETON INDIA MUTUAL FUND MORGAN STANLEY MUTUAL FUND INDIA

2999214.31

LIC MUTUAL FUND

1281126.39

47

336030.16

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Market share (Asset Under Management) of Mutual fund Industry Category wise

15%

18%

3%

28%

29% 7%

Bank sponsored Institution (LIC) Private Indian Private Foreign Private J V Predominantly Indian Private J V Predominantly Foreign

Marketing Mix of Mutual Fund Industry PRODUCT MIX

48

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

A PRODUCT IS ANY THING THAT CAN BE OFFERED TO MARKET FOR ATTENTION, ACQSITION USE OR CONSUMPTION THAT SATISFY A WANT OR NEED In case of Mutual Fund Industry, the product mix comprises of various types of funds that are offered to the customer by the companies. Subject to the SEBI regulations, an AMC is free to design its schemes/product to suit the needs of the various types of investors. Mutual Fund in India presently offers more than 400 products/ services/ options/ plans across various categories. The product mix of the Mutual Fund Co. includes all different product lines a company innovates to cater to the needs such as financial objective, risk tolerance, return expectations, etc. The product line of a fund might easily include many different schemes. In today's competitive scenario, it has become very necessary for an AMC to provide it’s customer with a wide variety of schemes & the best performance to attract them. Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and return expectations etc. The info below gives an overview into the sting types of schemes in the Industry.

Any product is not made in one level it has many levels like wise mutual fund has to go under various levels to become a final product these are 1. Basic Product 2. Expected Product 3. Augmented Product 49

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

4. Potential Product  Basic Product: - Protection, Investment, growth Good returns are the basics which a mutual fund scheme should provide  Expected Product: - Tax Benefit, liquidity, Partial Withdrawal facility i.e. partial selling of units, Better Returns, is the expected facilities which are very necessary for the success of the Mutual fund scheme  Augmented Product:-Insurance Cover, Higher dividends, high Growth, E-pin facility, Sending quarterly or half yearly details to the customer are the benefits helps the customer to select the Mutual fund scheme, .  Potential Product:-Selling New Scheme at a discount price Providing other Portfolio services SMS Facility to Know the Mutual fund scheme Details, etc These are the different levels of the product Which a AMC should keeps in mind and designs a Scheme for offering it to people a different mix is used for fulfilling different Purpose of the customers and by analyzing different Purpose of people at different stages different types of plans are designed, New Product Development The most important component of product Management is The New Product Development as when things are changing the Purpose i.e. objective of people to take buy Mutual fund are changing so giving same product to the customer would be very bad for the growth of the of the company An AMC which is growth oriented always looks beyond its existing product or service. And develops there quality services and also develop new products/Schemes Development of the Mutual fund scheme over a period of time Initially the first scheme launched was Unit scheme 1964, then the public sector like LIC, GIC, Canbank mutual fund other than UTI came with their schemes

50

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

which were not so much growth oriented and diversified but when private sector entered in the industry they came up with different and a wide variety of schemes for the public and they had not stop their product development hence now we different types of schemes like Equity, Debt, Balanced, MNC Opportunity i.e. offshore funds, Commodity, Gold funds, Sector Funds, Index Funds, Unit Linked Plans, Liquid Funds, Income Funds, etc Development of the services given by Mutual Fund industry Before when the mutual fund was introduced in the economy the service provided by them was not satisfactory the procedures of sending application and receiving Scheme documents was very lengthy and time consuming and if a person A wish to sell his units to a person B than also it was not a easy job to transfer the units or sell the units back to the company but as a time has passed the service delivered by the AMC to the unit holders have improves now every thing is computerized one can buy, sell, its units partially and wholly through the demat A/c with a very less period of time he gets his cheque if he sells his units and now the AMC sends the quarterly or half yearly reports of the growth of the funds to their unit holders which help them a lot in their decision making

51

Fund

ICICI

Prudential ICICI Prudential Tax Plan

Name

WINSURANCE Flexible Income Plan GIANT ‘SW

Type

STRATEGIES Open-ended MARKETING Income Fund Open-ended Equity Linked Saving

Investment

Scheme 10 - 100% = Money market and Equity & Equity related instruments

Pattern

Debentures

with

residual upto 90% & Debt, Money Market

maturity of less than 1 year. 0 to and Cash upto 10%. 90% = Debt instruments with Investment

maturity more than 1 year. To generate income through To seek to generate long-term capital

Objective

investments in a range of debt appreciation from a portfolio that is instruments and money market invested predominantly in equity and instruments maturities

of with

various equity related securities a

maximizing

income

maintaining

the

view

to

while optimum

balance of yield, safety and Options

liquidity. Cumulative

and

Dividend Growth & Dividend

Reinvestment (Daily & Weekly Default

Frequencies) Dividend Reinvestment

Option Application

Fortnightly frequency. Rs 5000/- (plus in multiples of Rs.500/- (plus in multiples of Re. 1)

Amount Min.

Re 1) Rs.500/-

Additional

thereof

Investment Portfolio

Quarterly

Quarterly

Disclosures Entry Load

Nil

(i) For investments of less than Rs. 5

and

in

with Dividend Reinvestment

multiples Rs.500/- and in multiples thereof

Crores : Entry load at 2.25% of applicable NAV.(ii)For investments of Exit Load

Rs. 5 crores and Above : Nil Investments made: (a) before Nil July 24, 2006 - Nil (b) on or after July 24, 2006 - 0.50% of the

applicable NAV,

if

the

redemption is made within one month

from

the

date

of

investment. Investment made on or after March 28,522007 0.25% of the applicable NAV, if

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

PRICE MIX The price is the exchange value for a product or service, expressed in terms of money. The price of the service is the service value attached to it by the service provider and it must respond with the customer perception of value. Price is the only P, which generates revenue for the company. While pricing a great care should be taken as, it is two-sided sword so it should neither be priced high nor low it should be priced according to the situation. Pricing is an important tool in the hands of the marketer

Price in mutual fund industry In Mutual Fund Industry, the entry load and the exit load, which a customer pays for the Scheme, is the price of the Mutual fund scheme, the price factor also includes the various charges, which can are called as Recurring Expenses.

53

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

These all price/charges which a customer or a buyer pays is for the following expenses of the AMC

$ Marketing Expenses $ Operational/ Administrative Expenses $ Fund Managers fees $ Commission for distributors $ Miscellaneous Expenses, etc Price in any industry is largely influenced by cost in this the cost of managing the funds and providing with him timely services is decided at the starting point i.e. when the scheme is introduced

There are four basic kinds of costs associated with owning mutual funds: Management Fees These are paid to the company that manages the investment portfolio Distribution Fees These are paid to the broker or adviser that sells the fund and services the account. In some cases, it's a straight up-front sales commission ("load") or a surrender fee you pay when you sell the fund. But other funds – "no-loads" – may charge an annual "12b-1 fee." It seems small compared with a sales commission – except that it nicks you year after year after year. (In still other cases, the fund manager simply uses part of its management fee to pay for marketing and distribution. You thought that hefty fee was going to a team of brilliant analysts, but some of it was going to pay brokers or buy ads.) Transaction Costs

54

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

These are incurred by the fund as it buys and sells securities. Trading costs money, and it comes out of your money. There are brokerage commissions, of course. (And they are not always rock bottom. Sometimes, to keep its reported management fee low, a fund will pay for investment research with what are called "soft dollars" – higher commissions than they might otherwise have to pay.) Beyond commissions, there are spreads. With a Picasso, a gallery that would sell it to you for ten million might buy it from you for only five. With 10,000 shares of a stock, the spread between "bid and ask" prices will be much smaller – but meaningful nonetheless. And there's another aspect to this. If you or I want to trade 500 shares of stock, it rarely "moves the market." What we add to the supply (if we're selling) or demand (if we're buying) is insignificant. But what if, like a mutual fund, we were trying to buy or sell 200,000 shares – let alone in a hurry? We might sell the first 5,000 shares at 50, but have to accept as little as 49 or 48, on average, to move them all. Buying, we might find that our demand for these shares had bid their price up to 51 or 52 by the time we had gotten them all. Mutual fund managers are generally sensitive to this, of course, and attempt to trade cheaply and wisely. But the same Mark Carhart quoted above found that, on average, a fund with 100% annual turnover give up nearly 1% in transaction costs. A fund with 25% turnover would give up only a quarter as much. A fund with 300% turnover – three times as much. Transaction costs are not incorporated in a fund's "total expense ratio." They are taken directly out of shareholder assets. Taxes The fund itself does not pay taxes. Shareholders who own the fund in taxable accounts pay taxes on dividends and capital gains distributed by the fund. And there's reason to think that many fund managers don't worry too much about this. Indeed, because they know shareholders feel good when they get distributions, some will actually realize gains unnecessarily, just to have something to distribute. This may be good marketing, but it's bad financial strategy.

55

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

PLACE MIX /PHYSICAL DISTRIBUTION Distribution in marketing mix is concerned chiefly with two main issues: accessibility and availability. Place or distribution is important element of the marketing mix, which focuses on providing services to the ultimate customer at the nearest place possible. Physical distribution is the delivery of mutual funds to customers at right time and at the right place. Types of Distribution channels: The following are the various types of Distribution channels used by the Mutual Fund companies.

Types of Distribution channel

Direct Marketing

Distribution Companies

56 Banks & NBFC’S

Post Offices

Individual Agents

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

1. Distribution Companies: Availing of the services of established distribution companies is a practice accepted by mutual funds internationally. This practice evolved with a view to circumvent the huge administrative mechanism required to support a large direct sales force. Instead of having to deal with several individual distributors, a fund can interact with the distribution company that has several employees or sub-brokers under it. A distribution company usually manages distribution for several funds simultaneously and receives commission for its services. Many private funds have preferred to adopt this practice because of its sophisticated nature and because they benefit from the specialist knowledge and established client contacts of these marketing firms. In India, there are few large distribution companies in addition to a few hundred smaller ones. The following can be the Distribution Companies: a. Banks and NBFC’s: In developed countries, banks are important marketing vehicles for mutual funds, given that banks themselves have large depositor/client base of their own. Over the past years, we have seen the opening up of this new channel in India. Several banks (private, public & foreign) are involved in fund distribution by providing services similar to those of distribution companies, on a commission basis. Some non-banking companies also provide such services. Most funds now

57

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

use this channel. An increasing use of bank networks for mutual fund distribution has been a major recent development.

b. Post Offices: Many mutual fund companies have begun tie-ups with Post Offices for distribution of their schemes. This opens up yet another channel for fund distribution, one that will cover possibly the widest geographical area. 2. Individual Agent as Distributors: Use of agents has been the most widely prevalent practice for distribution of funds over the years. By definition, an agent acts on behalf of a principal- in this case, the mutual fund. An agent is essentially a broker between a fund and the investor. In India, we also have unique system whereby a broker has a number of sub-brokers working under him. The vast sub-broker network ensures a larger geographic coverage than otherwise.

The Mutual Fund agents are not exclusive but usually sell other financial products as well. The system has the advantage that the distributor has a broader knowledge of financial services available, and is therefore potentially in a position to act as investment advisors. Investors expect the right kind of the recommendations from the agent. From the perspective of the mutual funds themselves, such multi-product distributors mean loss of exclusivity in the marketing of their particular products. However, the drawback can be converted into a benefit for the funds, if the agents are properly trained in their role and responsibility as financial advisors to investors.

3. Direct Marketing:

58

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Direct marketing means that the mutual funds sell their own products without the use of any intermediaries. Usually, this takes the form of the sales officers and employees of the AMC approaching the investors and accepting their contribution directly. However, in India independent individual distributors may really be treated as a direct marketing channel, in this sense that they do not form a well-knit, independent and organized single entity and act more liked fund’ agency force. Other channels like the distribution companies or banks or even stockbrokers are clearly distinct and independent intermediaries. Direct marketing by the funds themselves accounts for a very small percentage of mutual fund sales. Many AMCs require that investments into any of their scheme be routed only through registered brokers and they do not accept direct subscriptions from investors.

Mutual funds often use their employees to mobilized funds from high net worth individuals and institutional investors. In case of short/medium term investment in liquid and/or income funds targeted at companies, funds often resort to direct marketing.

The greatest challenge in the mutual fund distribution is the choosing the right channels, convicting them to work as partners, the higher the number of channels, the greater the company’s Market coverage and rate of growth of its sales. The place does not only means creating the distribution agents, but also having support office for these distribution agents at proper places which can be easily assessable by these distribution agents so that they can easily submit the application form with these offices The new innovation in place has came out for the individual agents because organization like NJ Fundz Network, J P Morgan, etc are developed to help them by reducing there burden to register with all the AMU’s now they can get themselves register with all only by registering to one organisation, by this the Agents are increasing very fast.

59

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

abc

9/14/2007

1

PROMOTION MIX A promotion encourages the sales a promotion mix is a combination of various things which create awareness among the customers it consist of various tools as follows 1)

Advertising

2)

Sales Promotion

3)

Personal Selling

4)

Word of Mouth Communication

5)

Public Relation and Publicity

6)

Sponsorship

7)

Direct Marketing

60

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Word Of Mouth Communication

Sales Promotion

Promotio n Mix Tools

Direct Marketing

Advertisement

Sponsorship

Public Relation & Publicity

Personal Selling

Off the above seven all are used by the Mutual fund industry the important

one

are

advertising,

sales

promotion,

word

of

mouth

communication, and the sales promotion but the advertisement is the expensive tool of promotion and effective too The expresses for making add concept and other related expenses are very high, but there is a restriction on these expenses that an AMC can not go beyond 1% of the total expected collection through the fund

MARKETING STRATEGIES ADOPTED BY THE MUTUAL FUNDS:

The present promotion/marketing strategies of mutual funds can be divided into following main headings: 1. Direct marketing 2. Selling through intermediaries. 61

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

3. Joint Calls Following is the detail of strategies used by the Mutual Fund companies to market the various products and schemes: 1. Direct Marketing: This constitutes 20 percent of the total sales of mutual funds. Some of the important tools used in this type of selling are:

a. Personal Selling: In this case the customer support officer or Relationship Manager of the fund at a particular branch takes appointment from the potential prospect. Once the appointment is fixed, the branch officer also called Business Development Associate (BDA) in some funds then meets the prospect and gives him all details about the various schemes being offered by his fund. The conversion rate in this mode of selling is in between 30% - 40%.

b. Telemarketing: In this case the emphasis is to inform the people about the fund. The names and phone numbers of the people are picked at random from telephone directory. Some fund houses have their database of investors and they cross sell their other products.

Sometimes people belonging to a particular profession are also

contacted through phone and are then informed about the fund. Generally the conversion rate in this form of marketing is 15% - 20%.

c. Direct mail: This one of the most common methods followed by all mutual funds. Addresses of people are picked at random from telephone directory, business directory,

62

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

professional directory etc. The customer support officer (CSO) then mails the literature of the schemes offered by the fund. The follow up starts after 3 – 4 days of mailing the literature. The CSO calls on the people to whom the literature was mailed. Answers their queries and is generally successful in taking appointments with those people. It is then the job of BDA (Business Development Associates) to try his best to convert that prospect into a customer.

d. Advertisements in newspapers and magazines: The funds regularly advertise in business newspapers and magazines besides in leading national dailies. The purpose is to keep investors aware about the schemes offered by the fund and their performance in recent past.

e. Advertisement in TV/FM Channel: The funds are aggressively giving their advertisements in TV and FM Channels to promote their funds. f. Hoardings and Banners: In this case the hoardings and banners of the fund are put at important locations of the city where the movement of the people is very high. The hoarding and banner generally contains information either about one particular scheme or brief information about all schemes of fund. The best example is while going to international Airport Mumbai we come across various hoardings and banners.

2. Selling through intermediaries:

63

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Intermediaries contribute towards 80% of the total sales of mutual funds. These are the people/ distributors who are in direct touch with the investors. They perform an important role in attracting new customers. Most of these intermediaries are also involved in selling shares and other investment instruments. They do a commendable job in convincing investors to invest in mutual funds. A lot depends on the after sale services offered by the intermediary to the customer. Customers prefer to work with those intermediaries who give them right information about the fund and keep them abreast with the latest changes taking place in the market especially if they have any bearing on the fund in which they have invested.

Regular Meetings with distributors:

Most of the funds conduct monthly/bi-monthly meetings with their distributors. The objective is to hear their complaints regarding service aspects from funds side and other queries related to the market situation. Sometimes, special training programmes are also conducted for the new agents/ distributors. Training involves giving details about the products of the fund, their present performance in the market, what the competitors are doing and what they can do to increase the sales of the fund.

3. Joint Calls: This is generally done when the prospect seems to be a High Net Worth Investor. The BDA and the agent (who is located close to the HNI’s residence or area of operation) together visit the prospect and brief him about the fund. The conversion rate is very high in this situation, generally, around 60%. Both the fund and the agent provide even after sale services in this particular case.

 Meetings with HNI’s:

64

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

This is a special feature of all the funds. Whenever a top official visits a particular branch office, he devotes at least one to two hours in meeting with the HNI’s of that particular area. This generally develops a faith among the HNI’s towards the fund.

PEOPLE In service industry like Mutual Fund the true strength lies with its people, as it is the industry with Money Management, People are the most important part of the organization People in any organization can be classified as in service triangle which consist of  Firm/ Management  Employees  Customers

65

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Firm/ Management

Employees

Customers

The mutual fund also all the three kinds are their firm/ management customers and the employees of the firm, for the successful growth of AMC a firm must have a strong Management Good finance Trained and motivated employees and the loyal customers if all the things are achieved the success is in the hands of the company In Mutual Fund sector, the customer needs to be guided in a lot of matters, which is possible only with the help of the service provider. The position in the eyes of the customer will be perceived by appearance, attitude and behavior of the customer contact employees. Not only does the customer contact employee influence the customer’s perception but also the customer base of the organization does so. In the mutual fund industry for the distribution of the mutual fund from the producer till the consumers various kinds of people are involved without which the delivery process could not have been possible these people are

Ρ

Sponsor

Ρ

Custodian

Ρ

Fund manger

66

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Ρ

Broker

Ρ

Depository participants

Ρ

Transfer agents

Ρ

Auditor

Ρ

Legal advisor

Ρ

Marketing department

Ρ

Operations department, etc

PROCESS Process refers to how a service is provided or delivered to a customer.

67

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

In Mutual fund process is the very important part of marketing mix the over all process of the mutual fund should be fast accurate, and should be easy for the consumers as well as the distributors This is the processes involved in providing a service and the behavior of people, which can be crucial to customer satisfaction. Smart AMC’s set out processes and set themselves targets to ensure a high quality of service to customers. The following are the requisites of a Mutual Fund process  Method should be easy and convenient  Speed and accuracy in payment  Friendly for the Customers and Distributors  Installment schemes should be streamlined to cater to the ever growing demands of the customers  Efficient IT and data warehousing system  Technology not only be efficient but also cost effective as the cost is ultimately bared by the customer Let’s take for example the process for application for a particular fund from Fund Company. Now this mainly involves following things: 1. The company provides Offer document to the investors with a description of the procedure for purchase of units with respect to the required application form, permissible places of payments, minimum subscription required (for new applications and additional units). 2. The funds appoint “registrars” for the purpose of accepting the request for new subscriptions and redemptions from the investors. Investors and distributors need to know which registrar or center would be the most conveniently located for them. 3. The key Information Memorandum contains the application form to be filled by the investors. The form is generally distributed through many distributors such as agents or banks and can also picked up by directly from the offices of

68

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

the Asset management company. Some funds permit the investors to apply through the internet, instead of filling up a physical application form. 4. The application form has to be accompanied by payment of the amount to be invested. The mode of payment is usually by cheque, demand draft or cash (in certain cases). Investors are also now required to submit the photocopy of the PAN (Permanent account Number) with the application form. 5. Once the investors submit the application form then the units of the funds are allocated to the investors with in 40 working days. The units are allocated as per the NAV of the fund on the day of allotment. 6. And finally the documents i.e. physical evidence is sent to the customers the investors of the mutual fund scheme.

The process should be as simple as it can be, so that the customer is able to understand what steps he should follow to invest in Mutual Fund, and also how he can easily get back his money with good returns.

Physical Evidence Physical Evidence is termed as the social environment along with the tangible cues. Unlike a product a service cannot be experienced before it is delivered, which

69

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

makes it intangible, this therefore means that potential customers perceive greater risk when deciding whether or not to use a service. To reduce the feeling of risk, thus improving success, it is often vital to offer potential customer the change to see what a service would be like. This is done by providing physical evidence.

Physical evidence include all the efforts taken by the service provider to tangibilise their services, they are: a. Physical facilities, and b. Physical environment. c. Social settings

The following is the detail coverage of all efforts taken by the service provider to tangibilise their product:

a. Physical facilities:

On the basis of physical evidence like building, furniture, equipment, stationery, etc the investor’s forms an impression about the fund company. Physical evidence includes essential evidence and peripheral. Essential evidence is the technical facilities without which the service delivery is not possible. In mutual fund industry the essential facilities include the technical facilities through which the daily subscription of the mutual fund scheme is done and the very important calculating NAV and giving the information of the same to the consumer The peripheral evidence can actually change hands during the services transaction, they include stationary, brochures, account statement, E-pin i.e. internet id where he can get all information and can buy and sell, though services can be performed without these items, still they can be used to enhance the corporate image of an Asset Management Company.

b. Physical environment:

70

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

Another factor influencing consumer expectations of service quality and satisfaction of service quality and satisfaction is the physical setting or the service environment within which the services take place. The important elements of physical settings are like no of offices, branches, etc of the fund company. This is the good marketing tool. As many a time’s customers are attracted towards the appearance of the office of a company. They make a perception that if the office is good then the service will be good. This happens with big customers like big companies which invest crores of money in the funds so the Fund companies should also give importance to the physical evidence.

c. Social settings The social settings has a great and wide importance in the Mutual Fund industry The appearance of the service personnel is the major aspect of the social settings that influence the consumer attitude about the service personnel The appearance of a person that agent who is in front with the customer is very much important he should be well groomed, well dressed, and should be friendly in his approach most important he should have knowledge about the insurance industry other products, so that he can give the advice according to the needs of the customer and can help him to invest in the best fund which suits his investment objective and he should be very much confident while taking to the customer as its confidence win the customer confidence about the company and the scheme.

It is rightly said that the sales in Mutual Funds sales takes palace 50% by the name of company, product features, etc and the remaining 50% buy the social settings of the agent.

AN EXTRA P IN MUTUAL FUND MARKETING MIX

Performance

71

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

The performance is an act of performing or doing something successfully; using knowledge as distinguished from merely possessing it. In Mutual fund Industry the performance is the most important thing, performance of fund means good returns and the return is the only thing for which investors invest in the fund. Many investors feel that a simple way to invest in mutual funds is to just keep investing in award winning funds a fund company gets award on various categories like consistent performance, risk adjusted returns, total returns and protection of capital. Consistent return really focuses on risk. If someone is afraid of negative returns, consistency will be a more important measure than total return i.e. growth in NAV as well as dividend received. Various investors have different measure to measure the fund performance. Fund prospectuses will clearly tell investors that "past performance is no indicator of the future", but, on the other hand, many analysts will tell that sustained performance over a reasonably long period of time is a good criteria. There is truth in both points of view. While past performance reflects the success of the fund manager, the broad investment strategy and related factors, it serves as no guarantee that the strategy will work equally well in the future. A change in the external environment could necessitate a change in investment strategy too. Again, past successes could imply that the probability of future successes is respectably high. So it's one of those issues where investors have to rely partly on information and partly on intuition. The fund company can take benefit of the past performance and can sell the product by reflecting the past performance of the other products of the company. So it can be used as one type of marketing tool.

Today, Mutual Fund Industry is growing faster than any other industry in India. So far India is concerned many domestic as well as foreign companies are trying to increase the AUM and more customer base by introducing new NFO’s every month. There are many companies introducing NFO frequently. These companies take the advantage of stock market buoyancy. Companies show performance to the customers through intermediaries and marketing channels.

72

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

There are many Fund houses that try the strategy of selling by showing their past performance: Like  Reliance sells by saying that they have a largest AUM than any other company in Mutual Fund industry.  Sundaram promote by showing the awards they get as better performer. Recently,  Tata started the same promotion strategy i.e. for selling the Asia fund they are showing their performance they have given for the infrastructure funds.

• Performance

The performance is the most important factor for the mutual fund industry. Any fund house not performing well will have close down his shutters. When we talk 73

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

about the performance of the funds of UTI and RELIANCE most of the time Reliance has been better than the UTI. When we compare the Reliance and UTI there has been a difference in the performance of the funds of the both companies. Let’s take the same scheme funds of Reliance and UTI. (Aug – 31 update).

Scheme 1

Reliance Cap Mutual Fund ---- Reliance Banking Fund - (D)

Scheme 2

UTI-II Mutual Fund ---- UTI-Banking Sector Fund (D)

Scheme 1 Details

NAV

1 Week 1 Month 3 Month 6 Month 1 Year 3 Year 5 Year

Aug 29, 2007 Aug 03, 2007 Jun 05, 2007 Mar 05, 2007 Sep 05, 2006 Sep 05, 2004

47.67 48.43 44.10 33.63 31.62 17.04 N.A.

Scheme 2 Return (%) 4.52 2.89 12.99 48.14 57.56 43.00 N.A.

NAV 23.57 24.57 23.22 18.75 16.43 8.71 N.A.

In the table when we see Reliance has always been a better performer in term of returns. While the UTI has not performed well the reason for the poor performance is that the AMC i.e. problem is that it has too many funds. This was not only one fund

74

Return (%) 4.47 0.24 6.05 31.30 49.86 41.40 N.A.

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

there are many Fund Schemes in which the performance of UTI is not satisfactory. As customer always wants performance, if you can perform you can get the Maximum AUM in the industry.

Besides this UIT-I In February 2004 has sought the permission of SEBI to prematurely close 7 assured plans. Among these schemes are four long-term full assurance schemes with remaining maturities ranging between 18 and 22 years. These schemes were launched with an assured return of 13-14%. However due to the present market conditions the schemes are getting returns much below what has been promised. This has been partly due to the fact that some of the investments made by UTI have turned into Non Performing Assets. While when we talk about Reliance, Reliance has always given the better returns to the customers. This is the reason why Reliance is NO.1. In AUM.

Over all it can be stated that Reliance has always been a better performer in terms of most of the schemes as compared to UTI.

75

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

SUGGESTIONS

Financial products are the services which make the proper ultilisation of funds according to the individual different needs like insurance, tax planning, growth, protection, etc. Marketing of these services should be done with Proper care as the people of India that the investors are not very much aware about the various financial products their pros and cons. The process of marketing financial products should stick to the highest ethical and professional standards.

Moreover the use of sophisticated technology should be encouraged so that the customer service can be improvised and the regulation of the Government should try to stop Scamps and ghotaalaas and should see that any of there activity should not come in the way of the development of the financial sector in India.

“LIFE INSURANCE” is the important part of the Indian financial system, it is the very first option of the Indian investor for tax planning. A person should buy the insurance only if he needs not if his brother or his friend has taken the agency and he should identify his core need then select the product accordingly and a person should take an insurance cover of 10 to 20 times of his current annual income

The penetration of the Life Insurance industry is only 4.1% of GDP. It is the big challenge to penetrate for the industry which can be converted into opportunity by following appropriate measures:

* Private players should be encouraged to take part as it has been witnessed that with the few how in 5 years the market has developed now adding numbers in the list of insurance company’s would be better for the sector. The 76

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

services given to the customers should be improved by using Integrated Logistics Systems and IT development and innovation in the products and services rendered by the company The new insurance products and their benefits should be made aware to the customers; the awareness can be increased by various tools of promotion and by increasing the distribution Channel and by increasing Channel partners and Banc assurance “MUTUAL FUNDS” have become so much of a mainstream investment alternative in India that the time has come to pay serious attention to best practices in their back offices Although Both SEBI and mutual funds have set such high standards in the regulations there are lot many things which a mutual fund industry have to do for making the M F investment the better investment avenue for the Indians

Mutual funds, should solicit money from investors, not with assurances of returns but with assurances of professional management and good practices. The process of investment management must stick to the highest ethical and professional standards for investors to get the required comfort in the fund. Following are the suggestion to the mutual fund industry to increase their market share and create the awareness about the mutual funds: 1.

Tapping the up coming market: Semi Urban Market as there is a lot of opportunity. Most of the Mutual Funds are operating in the metros and big cities as per their present branch office locations. If they have to increase their market size they have to open more distribution centers at the various urban and semi-urban markets

2.

To create the awareness: To increase the awareness about the different products and benefits of Mutual Funds, Various Promotional tools can be used and for the better penetration of the mutual fund in the capital market The awareness can be increased in the following ways: * For making the children aware the concept should be shown in the

cartoon films or through technology the children generally pass their time.

77

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

The awareness can be increased by making the benefits of the mutual fund clear in the Movies and in the T.V. Programs of Star plus which are watched in every Indian House. 3.

To provide some kind of curriculum: To provide some kind of curriculum at the school/college level to create awareness regarding Mutual Fund and by sponsoring shows in which there are games related to mutual funds and by doing campus selection in the colleges.

4. Attention to cost: There is great attention to the fees paid to service providers to deliver these services, but little attention to the actual expenses on postage, courier, (unnecessary) fact sheets, news-letters, miscellaneous communications and balance sheets sent to investors who really make no use of them. The cost of such paper unnecessarily sent, together with associated courier and postages, can often be substantial, and is ultimately charged to the assets of the fund. Investors in mutual funds are currently over serviced, and are flooded with unnecessary information. Many of them would rather earn a few rupees more on their investment than get an unnecessary report this can be avoided by putting a option in the offer document about the reports send by the company by explaining them the benefit of cost on the other side the interested of them that may be 25-35% should be given and further all the reports can be made available on the company’s site

The time has come for the industry to examine what services and information is really desired by the investor, and target delivery in a precise manner. In a low interest rate scenario, even a 0.1 per cent improvement in yield with reduction of expenses will be appreciated by an investor.

78

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

CONCLUSION

The financial sector in India is growing rapidly. The life style as well as the income of people in India has risen which has made the Financial Sector to innovative products and specially the mutual funds and the life insurance industry these both are very much supportive to the development of the financial sector the financial system in India the Insurance segment and the Mutual Fund Together have a corpus of over Rs. 5, 60,000 crore of savings. They play a crucial role in the capital market, while providing security to people. The risk appetite of the consumers in India is growing, now people invest in risk bearing instruments, this has brought up new opportunities for the Mutual Funds companies to come up with different financial products & because of this the insurance has come up with ULIP products. The mutual funds industry and the Insurance Industry are growing rapidly. The AUM of all the companies is increasing on the same side the competition has also increased in the mutual fund industry, Where as in Insurance the Premium has increased very high, the total increase in the premium this year was about 110%.and also the numbers to the 16 companies sooner this would be 25 in the next financial year which has made the companies to go for the various types of promotion strategies. The companies are coming up with different types of ads through which the customers are attracted. The mutual funds industry is coming up with various types innovative products like global funds this funds will invest in the international markets. This means the companies are also trying to attract investors by providing innovative products. And the Insurance is also adopting the same theory of marketing the goods they are also innovating the products like for diabetes and for cancer, etc and also by providing

79

WINSURANCE GIANT ‘SW MARKETING STRATEGIES

ulip products where the customers gets the benefit of both the things high returns and also security and protection.

BIBLIOGRAPHY

1. Books Magazines and publications: •

Services Marketing

•

Indian Financial System

•

Business India articles.

•

The Insurance Times

•

The DNA Money Newspaper

•

The Economic Newspaper

2. Webliography •

www.google.com

•

www.mutualfundsindia.com

•

www.amfiindia.com

•

www.mfmarketnews.com

•

www.indiainfoline.com

•

www.etstrategicmarketing.com

•

www.hdfcinsurane.com

•

www.irdaindia.org

•

www.licindia.com

•

www.iciciprulife.com

•

www.marketresearch.com

•

http://www.iloveindia.com/finance/indian-mutual-funds/kotakmahindra.html

•

http://www.iloveindia.com/finance/indian-mutual-funds/reliance.html

•

www.utimf.com/

80