Project On Customer Behaviour And Marketing Approach.pdf

IDBI Federal Life Insurance Company Ltd.: A study of Target Customer behavior and Marketing approach

By

Sushnato Dutta

June, 2013

IDBI Federal Life Insurance Company Ltd.: A study of Target Customer behavior and Marketing approach

By

Sushnato Dutta

Under the guidance of Mrs.Shanthi Yagyanath ABH, IDBI Federal Life Insurance Co. Ltd

Dr. D.P.Sahoo Professor IMT, Ghaziabad

June, 2013

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Certificate of Approval The following Summer Project Report titled " IDBI Federal Life Insurance Company Ltd.: A study of Target Customer behavior and Marketing approach" is hereby approved as a certified study in management carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite for the award of Post-Graduate Diploma in Management for which it has been submitted. It is understood that by this approval the undersigned do not necessarily endorse or approve any statement made, opinion expressed or conclusion drawn therein but approve the Summer Project Report only for the purpose it is submitted. Summer Project Report Examination Committee for evaluation of Summer Project Report Name

1. Faculty Examiner

Signature

___________________

___________________

2. PG Summer Project Co-coordinator ___________________

___________________

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Certificate from Summer Project Guides This is to certify that Mr. Sushnato Dutta, a student of the Post-Graduate Diploma in Management, has worked under our guidance and supervision. This Summer Project Report has the requisite standard and to the best of our knowledge no part of it has been reproduced from any other summer project, monograph, report or book.

D.P.Sahoo Professor, IMT, Ghaziabad

Mrs.Shanthi Yagyanath Asst. Branch Head, IDBI Federal Life Insurance Co. Ltd. Coimbatore Branch

Date

Date:

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Acknowledgement

With pleasure, I express my sincere gratitude to my Project guide Mrs. Shanthi Yagyanath, ABH at IDBI Federal Life Insurance Co, who spared her valuable time, gave me support to work and complete this project in IDBI Federal Life Insurance Co Ltd., and guided me throughout this project. It would not have been possible for me to complete the project without her timely encouragement and advice at every stage of the project. My deep sense of recognition to Mr. Mahesh for his support and guidance. Thank you sir.

I would like to give special thanks to my Institute faculty Prof. D.P. Sahoo, who ensured that I was going about my project without any issues. Last but not least I would like to thank all my friends who have helped me with their innovative ideas and suggestions.

Sushnato Dutta 12DCP-114

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ABSTRACT The insurance sector in India is a highly competitive sector with many players in the fray. Coupled with lower risk taking tendencies of Indians, the sector can be best described as having cut throat competition. Under these conditions, it is extremely necessary for a player to walk the line according to the customer’s changing needs and demands. Also brand visibility and recognition is a must as most of the investment options are of the nature of long term back up plans for more risky prepositions like stocks, real estate and bullion. Also, a product or brand can’t be everything to everybody and hence must be positioned in the market in such a way that it specifically caters to a select few segments and slowly penetrate into others while retaining the base. Keeping in view the same, this study was designed to analyse and recommend on these two areas regarding the target customer, their behavior and the effectiveness of current marketing approaches and expectations of the customer from IDBI Federal Life Insurance Co. Ltd. The major findings are: 1. The average population is basically risk and uncertainty averse. 2. Age and annual income affect the purchasing and investing decisions of customers. 3. Brand visibility of IDBI Federal is low. 4. Peer recommendation of a product is the ultimate validation of the same and hence must be used for marketing purposes. 5. Customers also value ease of investment fairly highly 6. There is a marked difference in the decisions of those in the last leg of their jobs and the rest. 7. Apart from peer recommendation, the leading channel of advertising comes out to be newspapers

The research methodology used consisted of: 1. Interview of professionals for collecting in depth qualitative data. 6

2. Study of secondary data sources 3. Quantitative descriptive analysis Major quantitative data sources were the random sample responses to the survey comprising mainly of earning persons. 286 quantitative responses were collected in Pune and Kolkata as well as other cities.

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TABLE OF CONTENTS

PAGE NO.

1.

ACKNOWLEDGEMENT

5

ABSTRACT

6

TABLE OF CONTENTS

8

LIST OF FIGURES

10

LIST OF TABLES

11

LIST OF ABBREVIATIONS

12

INTRODUCTION

13

1.1

INDUSTRY PROFILE

13

1.2

COMPANY PROFILE

16

1.3

PRODUCT RANGE

19

1.4

MANAGERIAL PROBLEM UNDER STUDY

21

1.5

BENEFITS TO THE COMPANY

22

1.6

PROBLEM FORMULATION

22

1.7

LITERATURE REVIEW

23

1.7.1

BENCHMARKING

23

1.7.2

INSURANCE

24

2.

RESEARCH PROBLEM

26

3.

RESEARCH DESIGN

27

3.1

METHODOLOGY

27

3.2

SAMPLE OR DATA SOURCES

27

3.3

DATA COLLECTION PROCEDURE

28

3.3.1 INTERVIEW

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3.3.2 SURVEY

30 8

3.4

4.

DATA ANALYSIS AND INTERPRETATION

30

3.4.1 QUALITATIVE DATA ANALYSIS

30

3.4.2 QUANTITATIVE DATA ANALYSIS

32

RESULTS AND CONCLUSION

39

4.1 QUALITATIVE

39

4.2 QUANTITATIVE

39

5.

RECOMMENDATIONS

46

6.

REFERENCES

47

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LIST OF FIGURES

Figure

Particulars

1. Figure 1 Market share of Insurance firms in India

Page No. 16

2. Figure 2 Share of holding companies in IDBI Federal Life Insurance Co. Ltd. 17 3. Figure 3 External influences on buying decision process

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4. Figure 4 Age distribution of respondents

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5. Figure 5 Income distribution of respondents

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6. Figure 6 Recalling advertisement campaign by IDBI Federal Life Insurance Co. Ltd. 37 7. Figure 7 AIDA scores

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LIST OF TABLES

Table No.

Particulars

Page No.

Table 1

Risk, uncertainty and comfort in investment

34

Table 2

Segmentation and comparisons

41

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LIST OF ABBREVIATIONS 1. GDP- Gross Domestic Product 2. LIC- Life Insurance Corporation 3. ICICI- Industrial Credit and Investment Corporation of India 4. SBI- State Bank of India 5. NSE- National Stock Exchange of India Limited 6. SHCIL - Stock Holding Corporation of India Ltd), 7. CARE - Credit Analysis and Research Ltd)

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CHAPTER 1 INTRODUCTION Insurance is a sector that thrives mostly on an individual’s desire to minimize the uncertainties of the future. The uncertainty could be regarding anything ranging from life to commodities, income and various assets (animate or inanimate) In 2011 -12, the Indian economy, in terms of GDP measured a growth rate of 6.5%. A reduced GDP means reduced disposable income amongst general population and hence reduced spending on financial instruments. Thus, in 2011-12, the growth rate of the “Banking, Financial services and Insurance” sector slowed down from 10.4% to 9.6%

1.1 INDUSTRY PROFILE

As already introduced above, insurance means managing risk and uncertainties of the unforeseeable future. As in the case of life insurance, the insured person tries to safeguard against his/her unforeseen demise. This is especially done when they have dependent family members. The insurance company works mainly by collecting premiums from policy holders, investing the money (usually in low risk investments), and then reimbursing the same money along with added benefits when the policy matures or, the person passes away in accordance with the premeditated policy terms . Shorter the probable life span, the higher the premium that person has to pay so as to safeguard his interests. The case is the same for all other types of insurance, including automobile, health and property. The Insurance Act of 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business.

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Life insurance in India was completely nationalized on January 19, 1956, through the Life Insurance Corporation Act. All 245 insurance companies operating then in the country were merged into one entity, the Life Insurance Corporation (LIC) of India. But economic liberalizations of early 90s opened up the market for private players who willingly entered the market seeing immense potential in the huge progressive population. As of September, 2012, there were 52 insurance companies operating in India; of which 24 are in the life insurance and 27 in the non-life insurance business. In addition, General Insurance Corporation (GIC) is the sole national reinsurer. The life insurance industry recorded a negative growth of 1.57% in 2011-12 as compared to the previous fiscal year. Private sector insurers suffered more with a decline of 4.52% (11% growth in previous year) in the premium income, whereas Life Insurance Corporation (LIC) registered a 0.29% decline (9.35% growth in previous year). The insurance sector in India has grown at a fast rate post-liberalization in 1999. In the last decade, total premium grew at a CAGR of 25% and reached a total of $67 billion in 2010. Indian Life insurance industry (contributing 88% of total Life and General insurance premium in India) has emerged as the 9th largest life insurance market in the world. Yet, Insurance penetration (which is the ratio of premium underwritten to GDP) was only at 5.2 % in 2010 – significantly lower than Asian counterparts like South Korea, Taiwan, Japan and Hong Kong which boast an insurance density greater than 10%. This gives interested service providers an excellent opportunity to tap the untapped market. This has resulted in a fast growth of the insurance sector throughout the previous decade. Growth for this sector is being fuelled by the following: 1. Growing population base, 2.

Rising purchasing power,

3. Increased insurance awareness, 4. Increased domestic savings and 14

5. Rising financial literacy. List of Life Insurance companies in India in descending order as per the market share: 1. Life Insurance Corporation of India 2. ICICI Prudential 3. SBI Life Insurance Company Limited 4. Reliance Life Insurance Company Limited - Formerly known as AMP Sanmar LIC 5. Max New York Life Insurance 6. HDFC Standard Life 7. TATA AIG Life Insurance 8. Bajaj Allianz Life Insurance 9. Birla Sunlife 10. MetLife India Life Insurance 11. ING Vysya Life Insurance 12. Kotak Life Insurance 13. Aviva Life Insurance 14. ING Vysya Life Insurance 15. Bharti AXA Life Insurance Co Ltd 16. IDBI Federal Life Insurance Co Ltd As per the IRDA 2011-12 annual report: 1. LIC has a total share of 70% in the total premium collected 2. Private sector companies have only 30% combined. This 30% share is further shared up by the other players as follows:

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Max New York Kotak Mah Met Life 8% 4% 5% Reliance Life Tata AIG 8% 7%

ING Vysya 2% Shriram life 1% Others

Aviva 3%

Birla Sunlife 7%

1% HDFC Standard 8% ICICI Pru 22%

SBI Life 10% Bajaj Allianz 14%

Figure 1 In such a competitive market, differentiation in the services provided becomes necessary for profitable growth. In the new order, innovating across the business lifecycle has become a necessity. The competition in this sector has intensified post reforms.

1.2 COMPANY PROFILE

IDBI Federal Life Insurance Co Ltd is a joint-venture venture of IDBI Bank, Federal Bank and Ageas, a multinational insurance giant based out of Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26% equity each each. Equity holding pattern: 16

Ageas 26%

IDBI Bank 48%

Federal Bank 26%

Figure 2

Having started in March 2008, in just five months of inception IDBI Federal became one of the fastest growing new insurance companies to garner Rs Rs.100 100 Cr in premiums. The company offers its services through a vast nationwide network across the branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. As on January 31st 2011, the company has issued over 2.68 lakh policies.

Sponsors of IDBI Federal Life Insurance Co Ltd IDBI Bank Ltd. Created in 1956 to support India’s industrial backbone, IDBI Bank has since evolved into a powerhouse of industrial and retail finance. Today, it is amongst India’s foremost commercial 17

banks, with a wide range of innovative products and services, serving retail and corporate customers in all corners of the country from 783 branches and 1328 ATMs. The Bank offers its customers a variety of services including project financing, term lending, working capital facilities, lease finance, venture capital, loan syndication, corporate advisory services and legal and technical advisory services to its corporate clients as well as mortgages and personal loans to its retail clients. IDBI Bank was instrumental in sponsoring the development of many key institutions of Indian financial sector like: 1. National Stock Exchange of India Limited (NSE) 2. National Securities Depository Ltd, 3. SHCIL (Stock Holding Corporation of India Ltd), 4. CARE (Credit Analysis and Research Ltd). Federal Bank is one of India’s leading private sector banks, with its main presence in Kerala. It has a strong network of over 739 branches and 797 ATMs spread across India. The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network. In addition to interconnected branches and ATMs, the Bank offers a wide variety of services expected of a modern bank. The Bank has been a pioneer in providing innovative technological solutions to its customers and has won several awards and recommendations. Ageas is an international insurance company with a legacy of more than 180 years. One of the top 20 insurance companies in Europe, Ageas aims to concentrate its business activities in Europe and Asia, which take up the king’s share of the global insurance market. They are grouped around four business segments: Belgium, United Kingdom, Continental Europe and Asia.

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It is an undisputed leader in the Belgian market for individual life and employee benefits, as well as a leading non-life player, through AG Insurance. Internationally Ageas has a strong presence in the UK, where it is the third largest player in private car insurance. Ageas employs more than 11,000 people worldwide and has annual inflows of almost 16 billion Euros. 1.3 PRODUCT RANGE IDBI Federal has a wide range of products ranging from life to non-life insurance products. All the products are as follows: INCOMESURANCE: IDBI Federal Incomesurance Endowment and Money Back Plan is loaded with lots of benefits which ensure that you get Guaranteed Annual Payout along with insurance. Incomesurance Plan is very flexible and allows the policy holder to customize their plan as per their individual and family’s future requirements. Moreover it also allows flexible Premium Payment Period, Payout Period, Payout Options and more. HEALTHSURANCE: This insurance plan offers a host of features and benefits that are designed to help manage the extra financial burden that comes with hospitalization.

CHILDSURANCE: It allows the policyholder to create, build and manage wealth by providing several choices and great flexibility according to specific needs. However, what makes Childsurance unique is its powerful insurance benefits. It allows protecting the holder’s child plan with triple

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insurance benefits so that the wealth-building efforts remain unaffected by unforeseen events.

HOMESURANCE: IDBI Federal Homesurance Protection Plan provides full insurance cover for properties even under construction, thus ensuring that the beneficiary gets the full sanctioned amount in case of any unfortunate event. It also has an innovative fixed period cover for those who would aim to prepay their loans early. WEALTHSURANCE: The Wealthsurance Milestone Plan enables the policyholder to save and build wealth to meet their financial goals. This Plan comes with a wide range of 13 investment options and 7 insurance benefits - all packaged with a low charge structure and flexibility.

BONDSURANCE: Bondsurance is designed for customers looking for guaranteed returns

which will not get affected by financial market

conditions. It offers

guaranteed return on investment along with life

insurance cover.

MICROSURANCE: IDBI Federal Microsurance Plan is a one of its kind insurance plan

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which can be very useful for various Micro Financial Institutions and NGOs, wherein not only the members but even the member’s family gets an insurance cover.

TERMSURANCE: IDBI Federal Termsurance Protection Plan offers the unique Increasing Cover option that automatically increases the cover every year without increasing the premium.

LOANSURANCE: Loansurance is a cost-effective way to ensure that the outstanding debt is settled in the unfortunate event of death of the insured member. This term assurance plan provides cover to a person directly liable for loan repayment (and the partners, in case of a partnership), as per the benefit schedule.

1.4 Managerial Problem under study During the course of initial selling phase, I came across a variety of prospective consumers who had varied degrees of willingness to accept the product. But a common pattern also was emerging. Some of which were: 1. Lack of brand awareness of IDBI Federal Life Insurance Co. Ltd. 2. Constant comparison with LIC 3. Different behavioural and perceptive patterns across various demographic groups. 4. Lack of trust All these factors together fired the extreme need for proper segmentation of various customer bases and hence different approach for each of them. 21

The current selling techniques of referrals and cold calls are tried, tested and well exploited but a few more options can be exercised so as to extract maximum benefits from each of the marketing activities. 1.5 Benefits to the company Knowing the target and its weaknesses is half the battle won. By bringing out the various traits and preference patterns, the marketing approach has to be streamlined and modified according to the target market needs. It is well known that one approach can’t be used for all. Unfortunately this is the norm nowadays and before approaching a customer, knowing his preferences is a wise idea. Through this research, I will try to bring out certain shortcomings of the company regarding their marketing or managerial activities. 1.6 Problem Formulation: •

Being a new player in the market, the company needs a strong brand awareness campaign as it is pitted against a heavyweight i.e. LIC

•

How to approach a prospective client and what to expect from them.

•

Why a person may or may not buy your product.

•

Awareness of financial instruments in India varies from section to section. Increasing this awareness level in certain areas might increase the customer base of IDBI Federal.

•

Today, a huge section of the population avoids financial instruments due to low income and mistrust. Tapping this market may give volume and result in economies of scale for the company.

Therefore, the objectives would be:


To differentiate the consumers/prospective consumers into identifiable segments




To ascertain the strengths and weaknesses of each segment




Formulate differential strategies for each segment

The final question is: 22

1. What is the brand awareness of IDBI Federal Life Insurance Co. Ltd? 2. What is the general attitude of different segments

1.7 Literature Review:

1.7.1

Consumer Behaviour:

Consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. Nowadays it is absolutely necessary to modify and present the products according to consumer needs because in the era of open markets and perfect competition, if you don’t do it someone else will and you will lose out.

Categories that Effect the Consumer Buying Decision Process A consumer, making a purchase decision will be affected by the following three factors: 1. Personal: This is an absolutely personal decision due to personal traits like demographic characteristics 2. Psychological: This effect is basically a reaction to the emotions that a particular product or its marketing evokes 3. Social: The social structure and acceptance level determines the decision process

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The marketer must be aware of these factors in order to develop an appropriate Marketing mix for its target market.

Figure 3

1.7.2 Benchmarking Benchmarking is the procedure of comparison of attributes against pre set standards or existing practices. For benchmarking, a specific indicator is required. This indicator basically acts as a scale or measurement unit and could be anything from efficiency, effectiveness, mileage, cost per unit etc etc. In the current study, thee suggested benchmarking types are:

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1. Process Benchmarking: To observe and investigate business processes for identifying the best business practices. 2. Functional Benchmarking: To focus on one specific function. 3. Best -in-class Benchmarking: The best competitor has to be studied. 4. Performance benchmarking - Allows the initiator firm to assess their competitive position by comparing products and services with those of target firms.

As gauged from the results of the study, proper benchmarking standards would be suggested. 1.7.3 Insurance Insurance is in simple terms a way of reducing the risk associated with uncertainty of the future. This uncertainty is reduced by paying premiums and claiming compensation along agreed lines in case of any eventuality.

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Chapter 2 Research Problem The whole research that is being conducted is based on the product called Incomesurance. The reasons behind focusing the study on a particular product are as follows: 1. The sales connection of our internship with Incomesurance. 2. Availability and accessibility of sample population for systematic analysis. 3. Scope and duration of project constrains the studying of the huge insurance sector as a whole. Incomesurance aims to target the salaried class, so we can safely assume that they are our target customers. A qualitative study has been planned to ascertain the following: 1. Segmentation of the market (Salaried class is the market) 2. Customer perception of the product 3. Identifying the types of customers we are supposed to deal with. 4. Forming a brief character description and hence strategizing a different approach for each of the segments Segmentation is necessary as a full out marketing strategy can not only consume valuable resources but also result in dilution of brand value. If one thing is available to everyone without any change in its value or at least perception, it becomes a general product. To avoid these problems, segmentation is necessary. But for the segmentation to take place, a systematic interview process is to be carried out throughout a sizeable heterogeneous sample population so that we can have a rough hang of the population while discussing and implementing strategies.

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Chapter 3 Research Design The research was designed to collect necessary data from the sample population in step wise fashion. Also the two stage process ensured formation of segments as a hypothesis and vindication of the hypothesis through extensive surveys. 3.1 Methodology For the same an extensive market research programme was carried out in two stages: 1. Interview and evaluation of sample population for the purpose of segmentation. 2. Survey (Both online and door to door) to help in target setting of target segments and also to collect a heterogeneous data for cross checking against the assumed hypothesis. The two different methods will produce qualitative as well as quantitative data that will help in the following ways: 1. Qualitative data will help in looking at the physical and emotional side of the prospective consumers and at the same time quantitative data will pin point at various aspects of our research in accordance to the existing scenario. 2. Both kinds of data will cross check against each other. This methodology involves extensive field exposure at both the levels and data was collected on the basis of pure interviews as well as during sales calls so they are based very much on the views and perceptions of the end consumers and free of any bias. 3.2 Sample or data sources All the data that has been collected are primary data collected through personal endeavours on and off the field. Sample for interviews: 1. Professionals in Pune 2. Professionals in Kolkata Sample for survey: 27

1. Professionals on the internet (Those who were personally invited by email or invited in professional groups) 2. Professionals in Pune ( From whom data was collected personally) 3.3 Data collection procedure As already stated, data collection happened in two stages for both the qualitative and quantitative data. The two stages for data collection were: 1. Interviews 2. Survey Below are the detailed data collection procedures for both the stages. 3.3.1 Interview For the interview purpose, the following questions were asked: 1. What is your age? 2. What is your salary? 3. At this level of your career, at what salary would you think that you have gone up by a level? (This question is important for setting different income brackets) 4. What are your biggest needs and drivers for investment? That too if required? (Open ended question) 5. Your perception and evaluation of various investment options available? (Open ended question) 6. Your views about Insurance? (Open ended question) These questions were designed to bring out a marked trend regarding similarities or dissimilarities of different individuals being interviewed. The initial target was to interview more than 100 professionals from all walks of life but the scope and time constraints made it possible to interview only 100 professionals from all walks of life and different backgrounds. 28

Though the results that were achieved were pointing towards a clear differentiation of segments. For the segmentation purpose, the following parameters would be considered: 1. Understanding of the different investment options: A policy or a financial instrument can be sold or not sold to a person based upon his or her understanding of money and investment. This plays a significant part in targeting a consumer as we can easily talk to those who have a basic idea of the option they have in their hands.

2. Risk aversion: A person who is risk averse is more likely to invest in traditional plans than in market related plans. In some cases, this risk aversion may also lead to extreme investment behavior where the investor refuses to invest in private sector instruments. 3. Work experience: Work experience is a vague indication of age and experience with financial situations. The more mature a person is in these areas, the better is his understanding and easier it is to convey the different benefits being provided. 4. Income: A person’s income lets him or her decide on the various expenses he or she would be making. Generally the relation is higher the income, higher the expenses. 5. Disposable income: Disposable income is another indicator of the ability of a particular person to invest 6. Existing investments: Existing investments play a big role in determining the propensity of a person to invest in newer instruments.

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3.3.2 Survey The survey was floated on the internet for disseminating it to a large number of public over the internet so that it can overcome the possible limitations that occurred during the qualitative data collection only over two geographical areas. In principle, Pune and Kolkata have a cosmopolitan population due to presence of many industries. The survey was at first prepared using google docs and the link was sent to professionals via emails and professional group discussions. To also include people from various walks of life, door to door surveys were conducted on pen and paper. Random people were approached and asked to respond to the survey questions. The results provide some conclusive proofs which are discussed in the following sections under relevant titles. 3.4 Data analysis and interpretation 3.4.1 Qualitative data analysis As discussed in the methodology, the people interviewed on the basis of the questions posed to them clearly show formation of distinctive segments with marked differences from each other. This analysis made use of the Grounded Theory as well as Case Study approach for collection and analysis of data. Analysing the interviews, the following segments have come up: 1. The Beginners: Profile analysis: New to the professional world and looking forward to consolidation of their position both socially and professionally. Highly optimistic about saving and investment yet depend a lot on their seniors (parents, boss, college seniors etc) for advice. They come under

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the income bracket of up to 6 lakhs p.a. Work experience varies from 0 to 5 years. Age limit is 22 to 28

2. The Crossovers Profile analysis: Professionals who have matured into reliable entities in their respective fields of work. Highly optimistic about investments and more willing to take risks. They prefer playing it safe and have a minimum fallback plan just in case their risks don’t pay off. Most of the people in this age group also start understanding the value of money and hence investment. A starting point for having a family, this segment also thinks on lines of savings for family and future but still avoid big investments. They come in the income bracket of 6 to 10 lakhs p.a. and work experience varies from 5 to 10 years. Age bracket is 28 to 35 years 3. The Achievers Profile analysis: Professionals who have reached a level in their lives where they can cool their heels for a time. This segment looks for ease of options and retains the risk taking habits of the crossovers up to some extent. But family and other responsibilities tend to make this segment increasingly more risk averse. Professional peers are a big source of inspiration for this segment. But this segment looks forward to investing in big amounts and hence is ripe for approach. But many of them already have investments from their previous stages so count tends to be low. Income bracket for this segment is 10 to 18 lakhs. Work Experience is 10 to 25 years and age is between 35 to 50 years.

4. The Desperate Fliers Profile analysis: Professionals who have spent their lifetime looking after their own needs and now aspire to provide for their children. They go for term based plans and many of them opt for pure Life Insurances too. This segment suffers from a realization of ending innings and often look for assured investment options that are safe, guarantee income and provide liquidity. The age bracket for this segment is 50 to 60 years .Income bracket is 18 lakhs and above. 31

5. The underachievers Profile analysis: This segment is an amalgamation of those professionals who come under the low income group. Surprisingly, their behavior is same across the ages and is somewhat similar to the beginners but a few factors like lower literacy and higher sense of insecurity make them absolutely suspicious about such investments. Yet, the amount of peer trust is very high in this segment and hence peer referrals work wonders. If they do invest, their instrument of choice is Post office RDs and at the most LIC. But this untapped market may sway in favour of any instrument that might demand a premium of Rs. 5000 or less p.a. and at the same time with flexibility of payment options. This segment is low income with income ceiling of 2 lakhs p.a.

3.4.2 Quantitative data analysis The quantitative data collected was analysed on the basis of the step by step questions posed to the respondents and the responses recorded. Since the quantitative data was gained from online as well as door to door approaches, they provide additional insights too. The following is the step by step analysis of each and every question and the corresponding responses. Before that, a few important data regarding the survey: 1. Sample Size: 286 2. Scope: Salaried professionals throughout India The following are the question wise analysis: 32

1. What is your age? This question served two purposes at the same time: a. It helped ascertain the age distribution of the sample b. It acted as an ice breaker so that the respondent could reply at ease without any bias. The age distribution of the respondents was as follows: 51 to 60 years 8% 36 to 50 years 12% 28 to 35 years 5% 22 to 28 years 75%

Figure 4 This age distribution truly reflects the consistent census reports which claim that India is a young country. Indeed it is!!! 2. What is your present Annual Income? Annual income also indicates the likelihood or at least the approachability of the subject. The following income profile shows a few revealing facts

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Figure 5 It should be noted that the category of “below Rs. 2 lakhs” are the ones who could be approached. If proper efforts are made then hi considerably. 3. For good returns from an investment, how much of the following attributes are you ready to endure?

This question was designed to ascertain the risk taking/av respondents. Most literatures and publications describe Indians as risk averse. Hence, people in India mostly rely on instruments that are reliable and low risk

The results are tabulated as follows:

Attribute

Risk

Uncertainty

2.34375

The plan being presented by an unknown person

2.40625

Liquidity

3.171875

Payment Options

3.484375

Table 1

The technique used here is the five point Likert scale. A five point Likert scale gives the respondent a chance to give an unbiased response. As per the Likert scale used in this particular question, the below illustration will help in clearing up a few doubts: Likert scale for Tolerance 1______2______3______4______5 As we can see, any value below 3 is indication of somewhat low tolerance level and above 3 tends to be higher. As we can see from the table above, the average of the samples pertaining to risk taking and uncertainty is somewhat at lower tolerance levels (below 3). Whereas when provisions are sought for ease of consumers, the tolerance suddenly becomes high. 4. Whenever you hear about Insurance, which two companies come to your mind? This question had been deliberately left as open ended to ascertain two things: 1. To gauge the brand awareness of different brands 2. Knowledge of life insurance instruments. And the analysis gives some excellent results on the lines of higher market shares.

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The analysis of this shows that higher the brand awareness, higher is the market share of the product. 5. How much do you prefer insurance over other instruments like shares, gold, FD etc? The likert scale has been again used in this case. Likert scale for preferance 1______2______3______4______5

Result of the survey using Likert scale again shows us the sample average which is 2.83 i.e. on the low preference side. Thus insurance is surely not an instrument of choice for investment purposes amongst Indians. 6. What is your preferred channel of communication regarding Insurance and allied products? This question aims at directly asking the customer as to how they would prefer to be intimated regarding latest offers. The result could be used for a marketing approach in selling insurance policies. But as it is, the prevalent strategy in the insurance sector is push strategy and selling concept where the product is shoved at the consumer at our own terms and not according to the consumer’s needs. The response for the question was intended to encompass all the preferred channels of communication and not just one, so most of the respondents gave multiple answers. By analyzing the responses, the following could be ascertained: 1. Peer referral is the most widely preferred channel of communication. 2. Newspaper follows closely followed by magazines and TV commercials. 3. Cold calling is the most unpopular channel. 7. Can you recall any advertisement campaign by IDBI Federal Life Insurance? This was a real life testing of the marketing efforts of IDBI Federal Life Insurance Company. The results are as follows:

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Yes 23%

No 77%

Figure 6

Only 23% remember an ad campaign by IDBI Federal Life Insurance Company. This is a big wakeup call for the firm and may be held accountable for the low brand awareness compared to the other brands. It also reaffirms the classic belief that awareness brings business. 8. View our website through the link below and rate the following attributes on a scale of 1 to 5? 1being the least and 5 the highest score. The website is a gateway and first impression of the company. It can either make or break business. So the respondents were shown the website and were asked to rate the website on the basis of AIDA (Attention Interest Desire Action Action) plan. The following is the graphical representation of the average of the sample population against Likert scale.

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Action inducing

Desire Creating Interest generating Attention seeking

1

2

3

4

5

Figure 7 It could be seen that the website scores fairly in getting the consumer’s attention and generating interest but scores lowly on the desire and action front.

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Chapter 4 Results and Conclusion 4.1 Qualitative 1. The Beginners: Analysis: If adviced correctly or attracted with investment options of lower dimension (Below Rs. 10000 p.a.) this segment feels much more comfortable. Also, backing up investment options through elders increases the chances of conversion 2. The Crossovers Analysis: If played on their risk taking tendencies correctly then a complete set of plans can be sold to them. Plans which offer higher flexibility and liquidity are more attractive to them. 3. The Achievers Analysis: Large volume on single sales is possible. Since peers are important for this segment, penetration marketing is a good practice. 4. The Desperate Fliers Analysis: If presented with an option which can give guaranteed returns on a time bound basis, this segment will go for the same. Time and returns are of essence for this segment 5. The underachievers Analysis: Though financially weak, this segment exists of a huge chunk of population as is lucrative because of its numbers. Ignoring the same is not advisable.

4.2 Quantitative The above analysis presents a general view of the sample which can be an indicator of the population as a whole. But to achieve aggressive targets and maximise profits, IDBI Federal Life Insurance Company Ltd. Should identify target segments and focus on its marketing strategies accordingly. For the same purpose we can see that though the relatively small sample size is not that much reliable but a clear trend emerges from the various data collected. 39

The results have been summarised in the following table and very clearly shows that most of our segmentation done under qualitative research is validated. But it also throws up some unexpected results. The table is as follows on the following page. The segments highlighted by green are the probable target segments. They have been chosen as such because: 1. Similar preferences 2. They match our qualitative profiling 3. Responses are conducive to investment

40

S. No.

Questions

Sample

Average of segments (Based on Income)

Below Rs.2 lac

1

What is your

Rs.2 lac to Rs.6 lac

22 to 28 22 to 28

age?

years

years

Rs.6

Rs.10

Rs.

lac to

lac to

18 lac

Rs.10 l

Rs.18 l

and

ac

ac

above

36 to 50 years

51 to 60 51 to 60 years

years

What is your 2

present Annual

x

x

x

x

x

Income For

Risk

Average of segments (Based on Age)

22 to 28 years

x

28 to 35year s

36 to 50 51 to 60 years

years

x

x

x

Rs.6

Rs.10

Rs.

Up to 6

lac to

lac to

18 lac

lac

Rs.10 l

Rs.18 l

and

ac

ac

above

2.8

2.5

2.9

2.8

2.0

2.0

2.8

4.7

2.3

2.2

2.3

2.1

2.3

2.5

2.0

3.3

2.3

4.0

2.3

2.2

good returns 3

from an invest ment,

Uncert ainty (of the amount of

41

how

return)

much of the

The

followi

plan

ng

being

attribu

present

tes are

ed by

you

an

ready

unkno

to

wn

endure

person

2.4

2.0

2.5

2.8

1.8

2.7

2.4

3.3

2.5

2.2

3.2

2.9

3.2

3.0

3.5

3.0

3.2

3.0

2.9

3.6

3.5

3.4

3.6

3.5

2.5

3.3

3.6

3.3

3.0

3.0

? Liquidi ty ( Ease of convers ion to cash) Payme nt Option

42

s Whenever you hear about 4

LIC

LIC

LIC

LIC

LIC

No

No

clear

clear

prefer

prefere

ence

nce

LIC

LIC

LIC

LIC

LIC

Insurance, which ICICI

two companies come to your

ICICI

mind?

and Bajaj

ICICI

Allianz

No ICICI

ICICI

clear prefere

No ICICI

clear prefere nce

nce

How much do you prefer insurance over 5

other

2.8

2.2

3.0

3.1

2.0

3.7

2.7

4.7

2.8

3.0

Peer

Peer

Peer

Peer

Peer

Peer

Peer

Peer

Peer

Peer

instruments like shares, gold, FD etc? [] What is your preferred 6

channel of communication regarding Insurance and

referral referral referral ,

,

,

referr al,

referral referral ,

,

Newspa Newspa Newspa Magaz Newspa Newspa pers

pers

pers

ines

pers

pers

referral referral referral referral ,

,

,

,

Newspa Newspa Newspa Newspa pers

pers

pers

pers

43

allied products?

Can you recall any 7

advertisement campaign by

No

No

No

No

Yes

No

No

Yes

No

No

3.1

2.6

3.1

3.8

2.5

2.3

3.0

4.0

3.6

2.6

3.1

2.7

3.1

3.3

2.8

3.3

3.1

3.7

3.0

3.0

2.7

2.4

3.0

2.9

2.0

2.0

2.8

4.0

2.0

2.2

IDBI Federal Life Insurance? View

Attenti

our

on

website seeking

8

throug

Interes

h the

t

link

generat

below

ing

and

Desire

rate

Creatin

the

g

44

followi ng attribu tes on a scale of 1 to 5? 1 being the

Action inducin

2.5

2.3

2.8

2.4

1.8

1.3

2.7

3.0

1.6

1.8

g

least and 5 the highest score. Table 2

45

Chapter 5 Recommendations The following are the recommendations suggested for IDBI Federal Life Insurance Company Limited based on the results of the qualitative and quantitative research: 1. Targeting the segments that have an income of below 2 lacs and up to 10 lacs will give optimum results. 2. The product (Incomesurance) has to be positioned as a low risk, sure returns back up plan for risky and high returns investments. A direct clash with established brands will result in comparison over a whole range of products. 3. Marketing efforts have to be increased through peer recommendations (referrals) and newspapers as customers find them very reliable. 4. Unfortunately, these target segments are the ones who have no recollection of any IDBI Federal Marketing activities, so we are losing out on valuable market share due to lack of visibility. Another reason to beef up the marketing activities 5. Benchmarking against LIC and ICICI for best instrument and operational practices is a good idea as customer aspirations are gauged against these two giants mainly.

46

Chapter 6 References Books •

Bogan, C.E. and English, M.J. (1994:). Benchmarking for Best Practices: Winning through Innovative Adaptation. New York: McGraw-Hill

•

Kotler, Philip & Keller, L. Kevin (2012). Marketing Management 14e. Pearson Education Limited 2012

•

Zikmund, W.G.; Babbin, Barry J.; Carr, Jon C. and Griffin, Mitch (2013), Business Research Methods, South-Western CENGAGE Learning, USA.

Article in a Newspaper •

Brooks Peter (2011), Indian investors are less risk taking compared to Hong Kong, Taiwan and Indonesia: Peter Brooks, Barclays Wealth,The Economic Times, Jul 8

Websites •

www.idbifederal.com

•

www.policybazaar.com

47