Lic Pro.docx

SUMMER INTERNSHIP REPORT ON MARKETING STRATEGY OF LIC OF INDIA IN THE GLOBAL SCENARIO. (title of specialization project)

Submitted in partial fulfillment for the award of the degree of MASTER OF MANAGEMENT STUDIES UNIVERSITY OF MUMBAI

Submitted by Mr. Mandar.Vilas.Patole ROLL NO. M-8140 2017-2019

Under The Guidance of Name of the Faculty member Dr. Samadhan Khamkar

DES’s NAVINCHANDRA MEHTA INSTITUTE OF TECHNOLOGY AND DEVELOPMENT, MUMBAI – 400 028

CERTIFICATE

This is to certify that the summer internship report titled “MARKETING STRATEGY OF LIC OF INDIA IN THE GLOBAL SCENARIO” submitted in partial fulfillment for MMS Degree Examination by Mandar.Vilas.Patole Roll No.M-8140 is a record of Research work carried out by him/ her during the period from May 2018 to June 2018 under my guidance, and has been found satisfactory. This project work is original and not submitted earlier for the award of any degree, diploma or associateship of any other University / Institution.

Date:

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Dr. Samadhan Khamkar

Dr. Samadhan Khamkar

DIRECTOR

(PROJECT GUIDE)

DECLARATION

I hereby declare that this project report submitted by me to the partial fulfillment of the requirement for the award of MASTER OF MANAGEMENT STUDIES (MMS) of the University of Mumbai is a bonafide work undertaken by me and it is not submitted to any other University or Institution for the award of any degree, diploma/ certificate or published any time before.

Name: Mandar.Vilas.Patole

Signature of the student

Roll No. M-8140 Mandar.Vilas.Patole

ACKNOWLEDGEMENT This project has been a great learning experience for me. I take this opportunity to thank Dr. Samadhan Khamkar my internal project guide and my industry mentor Mr. Sanket Bane whose valuable guidance & suggestions made this project possible. I am extremely thankful to them for their support. They have encouraged me and channelized my enthusiasm effectively.

I express my heart-felt gratitude towards my parents Kanchan.Vilas.Patole, siblings and all those friends who have willingly and with utmost commitment helped me during the course of my project work.

I also express my profound gratitude to Dr. Samadhan Khamkar, Director of DES’s Navinchandra Mehta Institute of Technology and Development for giving me the opportunity to work on the project and broaden my knowledge and experience.

I would like to thank all the professors and the staff of DES’s NMITD especially the Library staff who were very helpful in providing books and articles I needed for my project.

Last but not the least, I am thankful to all those who indirectly extended their cooperation and invaluable support to me.

EXECUTIVE SUMMARY Insurance is an integral part of national economy and a strong pillar of financial market. Therefore, waves of globalization have also deeply influenced the insurance market Worldwide. Financial Market Globalization has also been strongly supported by Globalization of Insurance. With the increase in Trade, Direct Investment and Portfolio Investment, there has been an ever growing demand for Insurance services particularly in the emerging markets. Globalization of Insurance market, as a part of the overall process of liberalization in emerging and other countries enabled the foreign insurance companies to enter in those countries and benefited both. Liberalization is the gateway of globalization and regulates the financial market by reduction of tariff and non-tariff barriers, abolishment of industrial Licensing and by exercising control over foreign direct investment. The major purpose of liberalization was to free the large private corporate sector from bureaucratic controls. Liberalization of insurance industry has witnessed major structural transformations and growth in life insurance business. To end the monopoly of the life insurance corporation of India and to induce a spirit of competition amongst the various insurers and to provide a choice to the consumers were some of the main motives behind liberalization. In the first year of insurance market liberalization (2001), ten private companies have registered under the life insurance category and this number has been increased to 22 in 2010. Today, a public giant LIC is facing direct competition with the rest 23 private life insurers.

SR NO.

Description

1 1.1 1.2

INTRODUCTION Objectives of the Study Limitations of the Study

2

REVIEW OF LITERATURE

3

METHODOLOGY Research Design Data collection Methods

3.1 3.2 4

MARKETING MIX FOR LIC

5

CURRENT SCENARIO IN LIFE INSURANCE MARKET

6

SWOT ANALYSIS OF LIC

7

Product Development Strategies of Life Insurance Corporation of India

8

COMPONENTS OF LIFE INSURANCE MARKETING STRATEGIES

9

SUGGESTIONS

10

CONCLUSION

11

QUESTIONNAIRE

12

REFERENCES

Page No.

1. INTRODUCTION LIFE INSURANCE CORPORATION OF INDIA

On 1st of September 1956, The Life Insurance Corporation of India (LIC) embarked upon its momentous journey in true spirit of serving the people and nation as a whole. Since then it has spearheaded the financial and infrastructure development of the nation. The performance of LIC has been exemplary and it has been growing from strength to strength be it customer base, agency network, branch office network, and the like. LIC has played a significant role in spreading life insurance among the masses and mobilization of people’s money for people’s welfare. Even after the entry of private insurers for almost a decade now, LIC continues to be the frontrunner in the industry in terms of market shareLIC today services its customers through 8 Zonal offices, 113 Divisional Offices, 2048 Branches, 1202 Satellite Offices, more than 1.19 lakh employees and 12.78 lakh agents. Besides life insurance, through its various subsidiaries, it is involved in providing various financial services. Today, a public giant LIC is facing direct competition with the rest 23 private life insurers. As a result of product innovation by private players, LIC’s market share has gradually reduced in the postliberalization period. Despite that, the Life Insurance Corporation of India continues to remain the largest player in the Indian Life Insurance market. Life Insurance Corporation of India operates in 13 countries abroad through its various branches and Joint Venture Companies/ Wholly Owned Subsidiaries. Branch Offices in the U.K., Mauritius & Fiji and operate through Joint Venture Companies in Bahrain, Qatar, Kuwait, U.A.E., Oman, Kenya, Saudi Arabia, and Nepal & Sri Lanka. A wholly owned subsidiary – Life Insurance Corporation (Singapore) Pte. Ltd. has been incorporated in Singapore.

1.1 OBJECTIVES OF THE STUDY 1. To know new marketing strategy adopted by LIC Of India to increase the volume of business. 2. To analyze the growth of Life Insurance Corporation Of India.

1.2 LIMITATIONS OF THE STUDY 1. The researchers could cover only the position of LIC of India in Life Insurance Industry. 2. The area of the study is kept limited due to the short time and financial position

2. REVIEW OF LITERATURE Life Insurance in its modern form came to India from England in the year 1818.Oriental Life Insurance Company started by Europeans in Calcutta was the first Life Insurance Company on Indian soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance companies in the year 1870, and covered Indian lives at normal rates. Starting as Indian Enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of societyThe number of offices of LIC is increasing year by year, but when we analyze the growth rate of number of offices of LIC in total Life Insurance industry, there is always a decreasing trend due to cut throat competition with the market strategies of private sector life insurance companies.Insurance industry has seen significant growth. Due to low penetration and huge potential, many foreign and domestic players have entered the sector. Moreover, several reforms and policy measures have provided a favorable environment for insurance companies to flourish in the country. The insurance sector in India is primarily divided into life and non-life, apart from a very small segment comprising re-insurance. Both the life and non-life insurance segments, which were nationalized in the 1950s and 1960s, respectively, witnessed an acrossthe-board liberalization process in 2000

3. METHODOLOGY Research methodology is a strategy that guides a research in providing answers to research questions and for this research survey is being done. Accuracy of the study depends on the systematic application of the method. The researcher has to decide the method to be used that helps him to get a desired direction in a systematic way.

3.1 Research Design: A research design is a framework or blueprint for conducting the marketing research project. It specifies the details of the procedures necessary for obtaining the information needed to structure and/or solve marketing research problem. Being the study descriptive in nature it will go through theoretical data collections.

3.2 Data collection Methods There are two methods of data collection- Primary and Secondary data collection. In primary data collection method , the data is originally collected by researcher for research purpose and in secondary data collection method, researcher use the data collected by other researchers. Primary data collection method was used to collect information from consumers of life insurance products in which questionnaires were used to conduct the survey. In secondary data collection method various wedsites were used to collect information.

4. MARKETING MIX FOR LIC – Life Insurance Corporation The insurance companies in private and the public sector needs to assign due weight age to the formulation of marketing mix for the emerging insurance business. The emerging trends indicate that if the insurance companies delay the process of formulating a sound marketing mix for their business, then there would be a sharp fall in their market share in near future, which would bring down the rate of profitability. This makes it essential to study the different sub mixes of marketing such as the product mix, the promotion mix, the price mix, the place mix, the people, the process and the physical evidence, in relation to the marketing of insurance.

Product in the Marketing mix of LIC LIC- Life Insurance has designed several products in accordance with the requirements of the common people. Insurance is mainly taken out with the purpose of providing support for the family members in case of death by natural causes or accident to the breadwinner of the family. LIC- Life Insurance offers its customers various insurance products such as the following

Life Insurance



Investment Management



Health Insurance



Mutual Fund



Property Insurance



Home Insurance



Casualty Insurance

Besides this, various pension plans, annuities, group schemes, special plans and unit-linked plans are also in place for the benefit of consumers. LIC- Life Insurance has also launched several products especially for children, senior citizens, women and handicapped which we will see later in this project. LIC also has schemes for people who are on the borderline of poverty.

Place in the Marketing mix of LIC As LIC- Life Insurance is a service industry, the distribution of its products and facilities is done through various channels – direct and indirect. Numerous routes are taken to reach the potential customers. The most important and basic channel member until this date has been the “Insurance agent”. Taking various innovative routes in order to reach the corner that is the farthest and remotest is the objective of the LIC Company. The organization’s channel of distribution consists of agents, brokers, development officers, retail services related to finance, branch office, alliance with banks and distributors, corporate agencies and proper and well-maintained infrastructure. Presently LIC- Life Insurance distributive channel consists of numerous development officials, agents and service branches who are active participants. Presently the number of zonal offices LIC has is 8, 1, 09, 992 satellite offices, 2048 branches and numerous corporate offices. It also has a network of corporate agents, individual agents that are around 13, 37,064, and tie-ups with almost 42 banks.

Price in the Marketing mix of LIC A suitable pricing policy is a very important factor in the successful running of an insurance company as it is the pricing policy that affects the sales volume of a company. Price is actually the valuation that is offered for the product by the offerer. For any LIC- Life Insurance policy, the policyholder has to pay a premium

that is paid either annually, half-yearly, quarterly or monthly. The management takes the decision of fixing the premium of every policy relating to a particular period. A complete market analysis is done and information about various facts are collected like how much money can an individual afford for a particular scheme, and what is the economic and financial condition of the market at that particular time. This data helps Lic in making the fair and reasonable pricing policies. The management also makes pricing decisions about the premium mode, investment return, loan interest and the commissions for agents. If you compare LIC’s products with other insurance products, then you will find that LIC is very much a value for money product. With its excellent brand value, and service quality, a customer can get full value as per the price paid for an LIC product.

Promotions in the Marketing mix of LIC The

promotional strategy of

LIC-

Life

Insurance

is

very

simple

and

straightforward. Its main aim is to inform the consumers about its various latest policies and about its brand. In order to fulfill this it has taken steps like personal selling, exhibitions, demonstrations at events, advertising about new schemes on television or in leading newspapers. Bags, diaries calendars are distributed as gifts and incentives to the policyholders. Advertisements are shown on televisions, newspapers, billboards as promotional activities. A mobile van for publicity roams across the rural areas creating awareness about the company, It also puts tents or umbrellas at prime places or near busy areas or near corporate areas like bkc etc to promote their new or upcoming products. LICLife Insurance has its own website and webpage where all the detailed information

about every possible query is supplied to satisfy the consumers. The majority of advertising is driven towards insurance which can be purchased by the common man so as to increase the reach of the company and at the same time, the sale of the product. Thus, product introduction and product retention in the mind of the customers is the major objective of promotions by Life Insurance Corporation.

5. CURRENT SCENARIO IN LIFE INSURANCE MARKET Many players have joined insurance industry creating a tough competition to LIC. LIC has been reorganizing itself in order to perform better than the new players. On the basis of total premium income, the market share of LIC has declined marginally from 70.10 per cent in 2016-17 to 69.78 per cent. Accordingly, the market share of private insurers has raised marginally from 29.90 per cent in 201617 to 30.22 per cent. The market share of private insurers in first year premium was 31.15 per cent in 2016-17. The same for LIC was 68.85 per cent. However, in renewal premium, LIC had a greater share of 70.49 per cent when compared to 29.51 per cent share of private insurers.

6. SWOT ANALYSIS OF LIC Strength 

It ranks first amongst the insurance companies.



After sales service, long term plans hold the most importance.



Provides employment to more than 13,37,064 people



Has around 2048 branches across India and 10,00,000 agents.

Weakness 

Since it is government-owned, therefore ther is very little innovation.



It becomes difficult to manage the huge workforce in the times of economic crises.



Heavy management expenses and administration costs.

Opportunity 

Effective service can be provided to the rural sector with more use of technology.



It can involve good brand proportion.



There has to be proper implementation of the government schemes.



Insurable population according to ING is only around 10% which is insured which represents around 30% of total insurable population. This suggests

around 300 million people with the potential to buy insurance remains uninsured.

Threats 

It poses threat since the government policies keep changing.



Threats from private sector as the private sector is expanding at a greater pace

PORTER’S FIVE FORCES OF LIC 1. BARGAINING POWER OF CUSTOMERS 2. THREAT OF SUBSTITUTE PRODUCTS 3. BARGAINING POWER OF SUPPLIERS 4. COMPETITIVE RIVALRY WITHIN AN INDUSTRY 5. THREAT OF NEW ENTRANTS

CUSTOMER SATISFACTION Customer satisfaction refers to the phenomenon which shows how much the customers are satisfied with the product or the services provided by the agencies.

CUSTOMER SATISFACTION OF LIC : It encourage face-to-face dealing with the customers. It includes responding to the messages promptly and keeping all the clients wellinformed. It is readily approachable and amicable in this tough competition with the other insurance players. The customer service policy must be clearly stated and well-defined.

MARKETING ENVIRONMENT Macro-environment :The company and all the other rival companies operate in a large macro environment that shapes the opportunities and pose threat to the company. Major forces are : Demographic Since literacy and education increases employability, higher earning jobs also bring the change in perception about the need for insurance. Economic Inflation rate: High inflation reduces the insurance business particularly life insurance quota, because the real value of money decreases with increase in inflation rate. Technological More innovative channels like e-banking, e-premium payments,

should be

introduced. Political and legal IRDA act, 1999: bill allowed for 26% for an equity participation in the insurance sector.

CONSUMER BUYING BEHAVIOR ABOUT LIC First, let us know what influences consumer buying behaviour. They are:

Cultural factors



Social Factors, and



Personal factors

Cultural factors: -LIC is a trusted brand in India and is totally owned by the government. -There can be unnatural events like death, sudden crisis, etc.

Social Factors: -LIC focuses on both the reference group and family status of the people. -In joint families, there is less stress on buying behaviour.

Personal factors: -LIC has different insurance plans according to the needs of the people concerning their age, lifestyle, values, personality and wealth.

Key psychological process: -LIC has always motivated the customers by its influential insurance plans and its offers. People has a perception of buying LIC because it is government-owned and is considered number one in paying claims.

SEGMENTATION, POSITIONING AND TARGETTING Segmentation: LIC in India was divided into 2 basic segments: individuals and corporate people. The first segment comprised of individual customers. It is further divided into four sub-segments – protection, investment, savings and pension. Protection products gives only protection to the different customers from risk. These don’t provide any savings facility to the policyholder. Investment products offer long-term as well as short term investment growth and insurance cover. Savings products like endowment and money back policies provide both protection and investment benefits. Pension policies are products offered to the customers as income during their years of retirement after they quit their respective jobs. The corporate segment was divided into three sub-segments – protection, statutory savings and pension.

Down the line, LIC catered to both individual and corporate segments. Individual insurance policies include Endowment Policies, Money Back Policies, Term Assurance Plans, Periodic Money Back Plans and Joint Life Plans. The corporate policies include group insurance schemes such as group gratuity schemes, group term insurance schemes, group savings linked insurance scheme and group leave encashment schemes.

Positioning: Positioning is a marketing strategy so that people can form a ‘mental image’ of the product in their minds. LIC positions itself as the most friendly as well as reliable insurance company providing financial solutions to the people. It is very popular among the people because it is government owned.

Targeting: Targeting is the actual selection of the segment market you want to serve. The target market is the group of people or organizations for whom a product is specifically designed to satisfy their needs. LIC mainly targets children who are basically into schooling, people in earning periods and senior citizens who have got retired from their respective services. It not only targets the urban people but also the rural people.

BRAND EQUITY LIC has done a good job in reinforcing its brand image of the ‘folded hands’ to the people. It is readily trusted by the people as it is one of the most oldest insurance player in the country. Its tagline “ZINDAGI KE SAATH BHI ZINDAGI KI BAAD BHI” has gained popularism not only in urban but also in rural areas. The slogan of LIC is “Yogakshemam Vahamyaham” which translates from Sanskrit to “Your welfare is our responsibility”. The literal translation from Sanskrit to English is “I carry what you require”. The slogan, written in Devanagiri script, is found below the hands holding the lamp.

7. Product Development Strategies of Life Insurance Corporation of India “Change is the need of the society” LIC of India offers certain special plans like Micro insurance (MI) plans like AamAadmiBimaYojana, JanshreeBimaYojana and ShikshaSahjogYojana. In Micro insurance LIC of India offers insurance policies for people below poverty line (BPL). It is a low premium policy where government of India also contributes a proportion of total premium. The Micro Insurance policies are sold through a specialized well placed distribution channel comprising of NGOs and Camps at rural areas.

Marketing Strategies Adopted by LIC of India In order to facilitate their consumers expediently LIC of India has adopted wideranging marketing strategies to acquire each frequency and impact onto the top most of life insurance coverage. This section of the research study will focus on the diverse marketing strategies adopted by LIC of India to reduce the competitive pressure and uphold their first position in the Indian life insurance market.

NEW MARKETING STRATEGY LIC have been taken following steps to increase its market competitiveness and retain its position in the insurance market.

1. PRODUCT DEVELOPMENT In a competitive market, there is a greater need to provide insurance products that meet the needs of customers. LIC therefore offers a wide variety of products, which fulfills the needs of different segments of the society. As at the end of the financial year 2016-17, the Corporation have many of the products available for sale. During the Year Corporation introduced 5 new plans viz. LIC’s Pension Plus, LIC’s Endowment Plus, LIC’s Bima Account –I, LIC’s Bima Account –II and LIC’s Samridhi Plus. As a result of innovation by private players, LIC’s market share has gradually reduced in the postliberalisation period. Despite that, the Life Insurance Corporation of India continues to remain the largest player in the Indian Life Insurance market with a market share of 71.30% in FY 2016-17.

2. COMPETITION Participation of private and foreign beginners in the insurance industry have made lic difficult to retain their market. Higher customer desires lead to new expectations and forces him or her to move towards the insurer who provides one with the best service in time. It becomes less feasible for them even to

maintain the functional networks or competitive standards and services. To survive in the industry they analyse the growing requirements of the

policyholders /insurers and they are in the forefront in providing necessary services and introducing new required products. Thereby they become job specialists, who provide the right service to the right person in the right time. Today, a public giant LIC is facing direct competition with the rest 23 private life insurers.

3. INFORMATION TECHNOLOGY LIC has been the first firm in using information technology for enhancing the quality of its service to customers. Being the largest insurer in India, LIC has always discovered all the avenues that technology offers to provide the best of services to its valued customers and other stakeholders. Today, LIC customers can pay their premium not only in any one of its offices, but also through LIC’s Premium Payment Gateway on their website through partner Banks like Corporation Bank, Axis Bank or through associate agencies like APOnline, MPOnline, etc. Customers can also use their Net Banking accounts, Debit Cards and Credit Cards to pay premiums online. LIC reaches out to its customers through Call Centres, Customer Zones, SMS, e-mail, website and now even the Social Networking sites. LIC has also undertaken many other customer-centric initiatives and schemes

like Enterprise Document Management System, Portal for

Customers, Agents, Development officers and Employees, etc. All LIC offices and Training Centres have been connected to a Wide Area Network for more than 10 years now. Today Central Office, Zonal Offices, Zonal Training Centres and the 113 Divisional Offices are connected through high definition Video-Conferencing. In order to protect its IT infrastructure from external threats, LIC has also installed the latest IT Security products in its setup. To keep pace with changes in the

business environment and the technology platforms, LIC have also set up the infrastructure necessary for the on-line sale of policies.

4. CHIEF LIFE INSURANCE ADVISORS (CLIAs) LIC introduced the above Scheme on 12.04.2008 with an objective of increasing its market presence through more agents by using capabilities of existing high performing agents for organizational growth. In order to increase market presence, more number of agents should be in the field. Understanding this, the Corporation decided to utilize the capabilities of existing senior agents for organizational growth by providing them with incentives for identifying, training and mentoring new agents. Retired employees and Financial Service Executives (FSE) are also allowed to become Chief Life Insurance Advisors under certain conditions. More than 1,47,200 agents were being supervised by the CLIAs as on 31.03.2012.

5. MICRO INSURANCE (MI) The huge untapped market for insurance is the rural and social sector. Micro insurance is defined as the protection of low income households against specific dangers in exchange for premium payments proportionate to the likelihood and cost of the risk involved. It provides an opportunity to the insurance companies to meet their social responsibility as well as secure a strong footing in the rural market. The active distribution channels for micro insurance in India are NGOs and SHGs (self-help groups), Micro agents, Cooperative Banks and RRBs (regional rural banks), and Post Offices. The NGOs have been identified as main

delivery channels by most of the insurance companies. These have a large network, catering to huge number of clients.

6. DIRECT MARKETING Direct Marketing has successfully established itself as a Value Pioneer. Through the years, it had striven to take a fresh view of the environment, capture changes, identify new business opportunities and appropriate response. Direct Marketing has achieved reasonable success in creating a professional and disciplined work force comfortable with approaching and hitting emerging segments in the market. The channel, through the effective use of technology has been able to ensure quick response to queries to successfully position the Corporation as a responsive organization sensitive to changing customers’ expectations.

7. BANCASSURANCE AND ALTERNATIVE CHANNELS (B&AC) Under Bancassurance, at present LIC have tie-ups with 8 PSU Banks, 4 Private Banks and 33 Co-op Banks under Corporate Agency agreement. These Banks obtain New Business for LIC through their Branch Outlets. The share of Banks in the total business of B&AC in the year 2016-17 was 77% in Policies while Corporate Agents contributed 8% & 22% respectively. In the current year, there is large growth in Bancassurance Premium.

8. HEALTH INSURANCE During 2016-17, 67,668 Health Insurance Policies were sold for a Premium Income of Rs.58.02 crore. LIC settled an amount of Rs. 8.38 crore towards health insurance claims under 5,096 lives.LIC started Health Insurance Division in 200708, to knock the vast potential for Health Insurance Business and to plan Health Products and Services. The first product ‘Health Plus’ was launched in February, 2008 and the second product ‘Health Protection Plus’ in April, 2009. Both are Unit Linked Health Insurance policies providing for hospitalization and major surgery cover for 49 specified surgeries. The plans also have a facility of withdrawal.

9. INDEPENDENT FINANCIAL ADVISORS (IFAs) IFAs are authorised agents of insurance companies having tie-ups with more than one insurance company. They are qualified and skilled experts or institution who can provide advice on financial products. Independent financial advisors are commissioned agents whose primary business is the sale of property and casualty insurance for several insurers. IFA assembles different financial products in accordance to customer needs and provide value added product by creating customized financial product. Today, IFA show their vital presence as distribution channel in both life and non-life insurance business.

10) INTERNATIONAL OPERATIONS Life Insurance Corporation of India operates in 13 countries abroad through its various branches and Joint Venture Companies/ Wholly Owned Subsidiaries. Branch Offices in the U.K., Mauritius & Fiji and operate through Joint Venture Companies in Bahrain, Qatar, Kuwait, U.A.E., Oman, Kenya, Saudi Arabia, Nepal & Sri Lanka. A wholly owned subsidiary – Life Insurance Corporation (Singapore) Pte. Ltd. has been incorporated in Singapore and they are in the process of applying for an operating license. Their Foreign Units collectively procured a First Premium Income (FPI) of around Rs. 349 Crores thereby registering a growth of 15.69%. The Total Net Premium Income (TPI) of their units was around Rs. 1,247 Crores. LIC (International) Bahrain and LIC Fiji are market leaders in their respective geographies.

8. COMPONENTS OF LIFE INSURANCE MARKETING STRATEGIES “Effective marketing strategies are vital for the survival and growth of companies in the rapidly changing business environment. The success or failure in today’s competitive market is depending on the marketing strategies that they could adopt with all effectiveness , Life Insurance is no exception to this rule. The problem is still more serious with the Life Insurance sector as they have to promote strategies to sell more products as the products of insurance sectors are push products people do not easily or willingly buy them. The entry of foreign players brings tremendous pressure on the profitable, efficient and socially responsible public Insurance company that is lic of india. Private players have now created vast opportunity for the specific category of professionals and the demand for qualified, skilled, expertise knowledgeable people has increased. Foreign and private Insurance players are ready to capture the market by providing the products and services at cheaper rates and also offering unbundled innovative products with a variety of benefits and up to the mark services, quick services leading to cut throat competition in the existing India Insurance sector. It is observed that 80 percent of LIC’s business is processed by its ill- trained agent force, whereas the foreign players, with the domestic partner’s strong brand value, can test the unconventional distribution channels like brokers, the internet, the banking distribution system, etc. It is also observed that the public sector insurances concentrate on sale of policies without concentrating much on the service needs of their policyholders. As a result many of the individuals remain under insured.The LIC of India has to compete with foreign and private players by

adopting effective marketing strategies. The term strategy is used in business to describe how an organization is going to achieve its objectives and mission. Marketing strategies provide concepts and processes for gaining competitive advantages by delivering superior customer value. A successful organization requires to develop competitive marketing strategies. Marketing strategy implies development of an action plan to achieve the marketing objectives. Marketing strategies involve skill and effort on the part of the management to evolve tools and techniques, which are understood and accepted throughout the organization in furtherance of the marketing cause. It has been observed that most profitable businesses have well thought out and well executed strategies. Whereas the least profitable businesses have no appropriate strategy, a poorly conceived strategy, or a strategy that the organization cannot successfully execute. According to Granroos, marketing strategy in the case of services may consist of 1. Traditional External Marketing 2. Internal marketing 3. Interactive marketing. Traditional external marketing consists of the usual four P’s viz, Products, Price, Place and Promotion of marketing mix. Internal marketing implies that the service firm must effectively train and motivate its customer friendly employees as well as all the supporting service personnel to work as a team to provide customer satisfaction. Interactive marketing emphasizes that the perceived services quality is highly dependent on the quality of buyer seller interaction. It describes the skill of

employees in handling customer contact and covers delivery of the product in a most satisfying manner. Designing an initial marketing strategy for introducing the product into the market, the marketing strategy statement consists of three parts: a) The first part describes the target market the planned product positioning the sales, market shares; and the profit goals for the first few years, b) The second part outlines the product’s planned price, distribution and marketing budget for the first year and c) The third part describes the planned long run sales, profit goals and marketing mix strategy. Marketing strategy is the set of controllable variables and their levels that the life insurance companies use to influence the target market. It means any variable under the control of the life insurance companies that can influence the level of customer response. The term insurance marketing refers to the marketing of insurance service with the motto of customer-orientation and profit-generation. The insurance marketing focuses on the formulation of an ideal mix for the insurance business so that the insurance organizations survive and thrive in a right perspective. The quality of services can be improved by formulating a fair mix of the core and peripheral services. The marketing concept in the insurance business is concerned with the expansion of insurance business in the best interest of society and the insurance organizations. The concept of marketing as co-creating value is considered to be a very significant one this viewpoint is very new and may take some time to be

absorbed into the mainstream of the life insurance sector. It is therefore practical to consider some of the more conventional approaches to services marketing. However, there are some considerations that still apply to the marketing of services just as conventional marketing has been underpinned by the four P’s, financial services marketing too has a marketing mix which consists of seven P’s.

PRODUCT STRATEGY The product strategy in the financial services is of the outmost importance, since the customer is initially attracted to the product only. The benefits of the financial services must be of value to the customer. A Company‟s primary objective is to develop products that satisfy the customer‟s needs. The company‟s existence is in trouble if it does not deliver need satisfying product / service. The concept of product extends the applicability of marketing principles to insurance marketing. “A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organizations and ideas.” Philip Kotler describes insurance products as unsought (consumer) goods. “These are consumer goods that the consumer does not know about or knows about but does not normally think of buying.” In the service industry (including insurance), products are generally intangible in nature. So service differentiation plays a key role in the successful marketing of services. Without the quality of service being recognized and sought by customers, it is difficult to sell a product either to a new customer or to an existing one. In the present competitive environment, this service differentiation assumes greater significance. After the opening up of the life insurance to the private sector, the

LIC of India have been putting in more efforts to continuously innovative products offered and the quality of service rendered are going to dominate the market. In insurance marketing, the differences between products and services have to be considered before chalking out the strategies. Services are quite different from product, where it is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. In insurance marketing products may or may not be tied to a physical product. Banking, medical and professional services, health care, private education, transportation, insurance are a few examples of service industries. There are certain characteristics of services such as intangibility, inseparability, variability, and perishability that pose special challenges for marketers. Based on the product characteristics, marketers have classified products on the basis of durability, tangibility and usage (industrial or consumer). Each product type will have an appropriate marketing mix strategy. The LIC of India, over a period of 55 years, introduced several innovative products. A few of them are traditional products that have been continued from prenationalization days. Life Insurance Corporation of India’s product mix includes whole life policies, endowment policies, term insurance plans, money back policies, children policies, joint life policy, women policy, plans for handicapped dependents, pension plans, unit linked insurance plans, health plan & health protection plus and micro insurance. In a competitive market, there is a greater need to provide insurance products that meet the needs of customers. The LIC of

India therefore offers a wide variety of products, which fulfills the needs of different segments of the society .

PRICE STRATEGY The price is an important aspect of the marketing of financial services in the competitive market. Every customer wants to pay less and buy more. The customers pay for their financial services either directly or indirectly, although pricing is highly competitive factor. Price is the mean of setting the exchange value between two parties. Price, in marketing mix terms, covers all aspects of pricing such as discount pricing, extended credit, list price, and payment period Woodruffe and

Kandampully

describes ―Pricing in service organizations is less influenced by cost, but more by customers perceptions of quality, satisfaction, and value. The actual pricing of a service is thus often determined by matching the customer’s perception of value. With this pricing method, pricing is considered as a marketing mix variable, thereby considered together with the other marketing mix variables before a marketing program is put together. There are three basic marketing price strategies which service companies can attend, the strategies are competition–based, cost– based, and demand–based pricing strategies. Pricing in life insurance is somewhat complex as compared to the pricing strategies of other financial products. The price (premium) for a life insurance product is determined by expected claim costs, investment income, administrative costs, and fair profit loading. The claims cost is based on the mortality rate realized on different age groups. The Actuary on considerations that depend on the experience of the insurer in the past and his assessment of the trends in the future decides the premium rates. Pricing in today’s insurance business environment requires actuaries to be knowledgeable in an everexpanding group of issues because of the nature of diversified products. In case of

life insurance, there is limited scope to use price as a strategic weapon. In pricing strategy, Premium charged, mode of premium payment, grace period available to pay premium (extra days allowed for remitting premium), interest for delayed payment of premium, rebate/discount on premium for annual and half yearly can be more used as a strategic tools.

PROMOTION STRATEGY It refers to the marketing strategies which help in promoting the financial services in the market. Promotion in financial services may spell out the advantages of a particular service provider over its rivals, as the sector is highly competitive and differentiation between products and providers is difficult to establish. The promotional mix is a term used to describe the set of tools that a business can use to communicate effectively the benefits of its products or services to its customers. Market communication performs three basic roles in marketing–to inform, to persuade, and to remind. Traditional promotion employs a variety of methods–including advertising, sales promotion, public relation, and personal selling–to attract the attention of existing and potential customers, and to inform them of the products, services, and special offers made available by the firm. Each of the categories of promotion mix has now become familiar in many areas of services marketing. In case of life insurance services, promotion is done through a mix

of advertising, personal selling, and sales promotion. Promotion

communicates with the potential market so as to persuade the prospective customers to try a new insurance product. Online advertising is one marketing tool that is worth the money. As the Internet takes on more power and influence all of the time, having a web presence will put an insurance company on the cyber map

and get it noticed. Block line advertising in trade journals, industry publications and periodicals is the way to go. Television ads and print ads are excellent forms of insurance marketing. All life insurance companies have started using PR tools to make better image about them in the minds of general public. Personal selling is extremely labour intensive but is the best form as far as insurance is concerned, dealing with one customer at a time. In promotion strategy, effectiveness of advertisement (TV, Radio, Newspaper, etc), personal canvassing of development officers and agents, periodical agents and policyholders meet, intimation of new policies through various correspondence (premium Intimation letter, loan intimation letter, intimation of maturity of policy), reminders (premium intimation letter), educating policyholders who visit the LIC branch offices (regarding products, premium payments, savings, income, investment etc) agent’s approach to policyholders (more professional approach, quickly handles queries, good communication skills, solving problems) .

PLACE OR PHYSICAL DISTRIBUTION STRATEGY Place is another important element of marketing mix. Place refers to the location where the product or service is available to the customer, including distribution channels. Place contributes an important factor in the marketing of services. In case of life insurance, it is a combination of decisions regarding channels of distribution. The emerging new opportunity for life insurance companies towards integration of the financial services industry is bancassurance. Bancassurance prospects in India are really bright because huge banking infrastructure across urban, semi–urban and rural India and life insurers are using

this channel very wisely. New distributors like stockbrokers, financial planners, general agents, and financial institutions etc. involve lower distribution costs, variable as opposed to fixed expenses, lower front–end commission costs, and the opportunity of selling the products in conjunction with other investment–related products. Strategy of worksite marketing is more useful in case of marketing of pension and health plans. The widespread diffusion of the Internet has created an explosion in the growth of electronic channels, including direct channels (that is, individual company web sites), electronic markets, or electronic intermediaries over which multiple buyers and sellers do business, and other cybermediaries. However, consumers have not shown a marked preference for purchasing insurance product via the Interne. The traditional system of ―agents is the dominating one in India and this will continue to be a major distribution channel for insurers, since this system has core roots in rural sector.

PEOPLE STRATEGY People, process, and physical evidence are the three ―Ps, which are especially applicable to services marketing mix. These three elements are highly interrelated with each other. People are the main critical resource in any organization, particularly service organization. Because of the simultaneity of production and consumption in services, the service staff occupies the key position in influencing customer’s perceptions of service quality. Recruiting the right staff and training them appropriately in the delivery of their service is essential, if the service provider wants to obtain a form of competitive advantage. Life insurance companies have to give more attention in training and development of their employees and agents. Building strong relationship with their agents as well as the customers will help in meeting customer’s needs and serving them efficiently.

Satisfaction depends on the nature of interaction between customers and the people representing insurance companies. Training the employees and agents to introduce new products and use of information technology for efficiency both at staff and agent level are the key areas to look into. People are the most important element of any services. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are altered to meet the individual needs of the person consuming it. People have an important role in service delivery, they are relied upon to deliver and maintain transactional marketing and people play an important part in the customer relationship.

PROCESS STRATEGY This refers to means through which the service is created and consumed (or even co-produced). The more easy and friendly process will be implemented. The consumer plays a significant role in the process or creation of the financial services. A process is the method and sequence of actions in the service performance. Unlike goods, services are processes. Services are the end results of deeds, acts, performances, and activities performed by the firms employees alone or in conjunction with various equipments, machinery, facilities, and so on. In assessing process, customers evaluate whether the service follows a production–line approach or whether the process is a customized one in which the customer is given personalized attention since services are intangible and therefore described in words by people, companies have to be really clear in defining the service process. The risks of relying on words alone in describing services are the

oversimplification of the service, incompleteness of the description, subjectivity of different readers and the biased interpretation of the words used to describe the service. This process involved in life insurance industry should be customer friendly. The speed and accuracy of payment is of vital important. The process methodology of life insurers should be such that it provides total ease and convenience to the customers. Badly designed and poor processes lead to slow and inefficient delivery and make it difficult for insurance employees and agents to do their job well. Consequently it will result in low productivity and service failures.

PHYSICAL EVIDENCE STRATEGY The physical evidence is defined as the environment in which the service is delivered and where the service provider and the customers interact, and any tangible commodities that facilitate performance or communicate the service. According to Zeithaml and Bitner (20031 ), to evaluate services before its purchase and to assess their satisfaction with the service after it is bought, customers tend to rely on tangible cues, or physical evidence. The appearance of building, landscaping, interior furnishing, equipments, printed materials, and other visible cues all provide tangible evidence of a firm„s service quality. This sort of physical evidence provides excellent opportunities for a service firm to send clear and consistent marketing messages regarding the firm„s purpose the intended market segment, and the nature of the service (Bitner, 19922 and 19963 ). In case of insurance business, apart from office environment, materials such as brochures, policy documents, and periodic statements are the tangibles, which will influence the customers. Insurance companies and intermediaries need to manage all these physical evidences

carefully as they can have a profound impact on the impression of the customers. Although all insurance companies provide similar essential service, the differences that do exist are the physical evidence. The service firm must recognize the importance of physical evidence and the role it is likely to play in overall marketing strategy of the firm. The reasons why physical evidence management cannot be left to chance include its role in service packaging, service differentiation, facilitation in the service creation and delivery, and customer and employee socialization a traditional means of overcoming the intangibility of most services by providing some element of tangible evidence

LIC have recently developed some new policies to differentiate itself from its competitors and lic have been using these newly developed policies as a marketing tool to capture the market. The newly developed policies by lic are as followed.

1) New Jana Raksha Plan This is an Endowment plan suitable for people in rural areas. After payment of atleast two years premiums risk is covered for the next 3 years even if premiums are not paid. Agriculturists who depend on the

nature find this policy very

attractive.

2) Marriage Endowment or Education Annuity Plan

This is an Endowment Assurance policy. If death occurs during the period of insurance no immediate payment is made. Payment in lump sum (in case of marriage Endowment) and in half-yearly installments over a period of 5 years (for Education Annuity) from date of maturity only is payable. And even several attractive benefits are available on maturity.

3) Whole Life Policies The risk is covered for the entire life of the policyholders. That is why, they are known as whole life policies. The policy money and bonus are payable only to the nominee or the beneficiary upon the death of the policyholder. These policies can be issued either on profit basis or non- profit basis.

i. Whole Life Policy Premiums are payable for a period of 40 years or up to the age 80 of the life assured whichever is higher. Insurance money is payable on death, whenever that occurs. Once the policy owner reaches the age of 80 (provided at least 40 years premium has been paid), the policy will be treated as matured and insurance money will be paid to the life assured.

ii. Whole Life Policy - Limited payment is a variation of the Pure Whole Life policy except that premiums are payable for a limited period at the choice of the insured.

iii. The Whole Life Policy- Single Premium This is the best form of life assurance for family provision since it enables the Life Assured to pay the premium during the ordinarily and most productive years of life.

4) Women Policy Jeevan Bharati It is exclusively for women encouraging them to save for SAFETY & SECURITY. This is like a money Back plan with 15 & 20 years term where 20% of the sum assured is paid at the end of every 5 years and on maturity, the balance sum assured will be paid along with Reversionary Bonus & Final Additional Bonus if any. Apart from the above, this plan offers following 3 optional Riders by payment of additional premium, 1. Accident Benefit Rider, 2. Critical illness Rider & 3. Congenital Disability Benefit Rider

5) Plans for Handicapped Dependents Currently two plans are available to purchase for handicapped dependent. They are:

1. Jeevan Adhar : The benefits under the plan are for the handicapped dependant which are partly in lump sum and partly in the form of an annuity. 2. Jeevan Vishwas : Is an Endowment Assurance plan designed for the benefit of handicapped dependents.

6) Jeevan Arogya A unique non-linked Health Insurance plan which provides health insurance cover against certain specified health risks and provides you with timely support in case of medical emergencies and helps you and your family remain financially independent in difficult times.

7) Micro Insurance Still a vast majority of people in rural and urban areas remained uninsured particularly those who are in lower income states and cannot afford insurance at normal price. In order to cover a large section of uninsured, particularly among the vulnerable sections of society, a new product ranged at a cheaper price was required to be launched and that ideal product was “micro insurance”. 1. Jeevan Madhur –It is a simple savings related life insurance plan where you may pay premiums regularly at weekly, fortnightly, monthly, quarterly, half-yearly or yearly intervals over the term of the policy. 2. Jeevan Mangal – It is a term assurance plan with return of premiums on maturity, where you may pay the premiums either in lump sum or regularly at

Yearly, Half Yearly, Quarterly, Monthly, fortnightly or weekly intervals over the term of the policy. 3. Jeevan Deep - It is a simple savings related life insurance plan with Guaranteed Additions where you may pay premiums either in lumpsum or regularly at monthly, quarterly, half-yearly or yearly intervals over the term of the policy.

9. SUGGESTIONS As per the findings there are some suggestions which should be followed by LIC to retain its reliable position with private sector life insurance companies in the life insurance industry:1. LIC should strive to increase its business by issuing more & more policies in order to retain its market share in the competitive scenario. 2. LIC should adopt new marketing strategies as well as make advertisement to promote & aware about its policies to the consumers. 3. LIC should concentrate on agents‟ training to make them updated as per market requirements & professionalism to tackle the queries of customers & doubts raised in their mind by other Life Insurance competitors of the market. 4. LIC should also open more number of offices & authorized collection centers to make its objectives achieved in true way to spread the life insurance business in every corner of the country & to reach among the customers. 5. As Private Insurance companies capture the market now-a-days, therefore, LIC should launch different kinds of plans with more facilities, so that it can increase its income amount, especially premium amount. 6. Secured investments should be made continuously by LIC of India.

10. CONCLUSION After privatization, insurance industry has seen significant growth. Due to low penetration and huge potential, many foreign and domestic players have entered the sector. Many players have joined insurance industry posing a tough competition to LIC. LIC has been reorganizing itself in order to perform better than the new players. LIC offers a wide variety of products, which fulfills the needs of different segments of the society. As at the end of the financial year 2016-17, the Corporation had 52 products available for sale. The performance of LIC has been exemplary and it has been growing

to strength be it customer base, agency

network and branch office network. LIC continues to remain the largest player in the Indian Life Insurance market with a market share of 71.30% in FY 2016-17.

11. QUESTIONNAIRE 1. How do you rate LIC? a) Excellent b) Very Good c) Good

Excellent Very Good Good

2. How do you rate the marketing strategies of LIC? a) Excellent b) Very Good c) Good

Excellent Very Good Good

3. How do you come to know about lic’s new policies? a) Television b) Newspapers c) Agents

Television Newspapers Agents

4. How do you rate the Investment Plans of LIC? a) Excellent b) Very Good c) Good

Excellent Very Good Good

5. Are you satisfied with your LIC Agent? a) Yes b) No

Yes No

6. Reasons for Investing in LIC? a) Future Planning b) Income Tax Savings c) Brand Name

Future Planning Income Tax Savings Brand Name

7. Does advertisement help you to take decision regarding insurance product and company? a) Yes b) No

Yes No

8. How will you rate advertisements of LIC? a) Excellent b) Very Good c) Good

Excellent Very Good Good

9. Which advertisement of insurance company influences you most? a) LIC b) ICICI c) HDFC Life

LIC ICICI HDFC Life

12. REFERENCES 1. Kulkarni.S.J and Sagar. P.N (2011) “Recent Trends in Marketing Strategy of LIC of India”. Feb. 2011. 2. Sonika Chaudhry and Priti Kiran(2011) “ Life Insurance Industry in India Current Scenario” International Journal of Management and Business Studies September 2011, page no. 146-150 and 158-164.

3. www.licindia.com 4. www.irdaindia.org 5. www.bimadeals.com/life-insurance-india 6. www.insuringindia.com