Insurance
Marketing
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. They 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 vis-à-vis the insurance organisatoins. The insurance companies lag
behind most manufacturers in-recognizing the marketing concept in their
organizations. Insurance companies tend towards a strong sales orientation,
since the services they sell, although certainly necessary ones, rarely sell
themselves. Potential policy holders are reluctant to think about the disaster
and death. So they postpone planning for these possibilities unless they are
contacted and influenced by insurance agents. Thus the insuranceowardcompany‟ssales,notmarketing.
Butmutualinthe o modern business world, the marketing concept insists on fixing
of accountability for overall marketing performance.
The
selection of risks (product planning), policy writing (customer service),
rating of actuarial (pricing) and agency management (distribution) –all
marketing activities make up an integrated marketing strategy.
Particularly in the developing countries like ours, the organizational
objectives advocate spreading of insurance services much more widely and in
particular to the rural areas and specially to
the economically backward classes with a view to
reaching all insurable persons. This naturally necessitates an integral
marketing strategy. In other words, market-orientation in place of sales
orientation is need of the hour. Hence the marketing concept in the insurance
business foeuses on the formulation of marketing mix or a control over the
whole group of marketing activities that make up an integrated marketing
strategy.
Market
Segmentation
In the insurance organizations, the task of
formulating the overall marketing strategies cannot be performed efficiently
unless the market is segmented. It was against this background that marketing
studies engineered a sound foundation for segmenting the markets of insurance
business. The market for the insurance business is found vast, the potential
policyholders are in very good number and their needs and requirements are not
identical. The segmentation helps the insurance organisatoins in dividing and
sub-dividing the market into small segments in which the needs and requirements
are found by the large identical.
If the market segmentation is done in a right
fashion, the marketers find it convenient to identify the level of expectation
of users. The main purpose of market segmentation is to know the market. Unless
the insurance companies know the needs and requirements and identify the level
of expectations of the policy holders, it is difficult to formulate a sound
marketing strategy.
Where a large number of users living in the rural
areas, the emergence of a strong rural sector cannot be negated. The
region-wise segmentation simplifies the task of having a microscopic study of
culture, language, likes and dislikes. This helps in making the marketing
decisions creative. It is essential that the insurance organisatoins capitalize
on the available opportunities in the market. They need to increase their
market share. This makes it essential that they succeed in informing, sensing
and persuading the different segments where the potential users are available.
It is not productive to concentrate on only one segment. The insurance
professionals need to business in all the segments, such as rural and urban,
men and women, agricultural and industrial or so. The need of the hour is to
spread the insurance business even to the agricultural sector of the economy.
The segmentation would help insurance professionals
in making the promotional measures creative which would be very much
instrumental in sensitizing he prospects. The advertisement professionals would
make advertisement appeals, messages, campaigns proactive to the receiving
capacity of the target audience. The sales promotion measures can also be
innovated to get a positive response. The personal selling may be effective
since the sales personnel/ agents are supposed to be aware of the needs and
requirements of customers/ users. Thus the segmentation would help marketers in
many ways. The pricing/ fee decision can also be rationalized and the weaker
sections of the society would get substantial benefits. The main thing in
segmentation is receiving the expectations of users/ prospects in a right
fashion and accordingly developing a suitable marketing strategy.
Marketing
Mix for Insurance
The insurance organizations in general and the
public sector insurance organisatoins in particular need to assign due
weightage to the formulation of marketing mix for the insurance business. The
emerging trends indicate that if the insurance organizations delay the process
of formulating a sound marketing mix for their business, there would be a sharp
fall in their market share in the future, which would bring down the rate of
profitability. It is against this background that we go through the problem of
marketing mix for the insurance services. This makes it essential to study the
different submixes 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.
Insurance
Product
The insurance organizations produce or generate
services in different forms. A product is both what a seller has to sell and
what a buyer has to buy. thus any enterprise that has something to sell,
tangible goods or not is selling products. In the insurance business, the
insurance organisatoins are found selling services and therefore, services are their
product. Thus a product is also called a bundle of utilities consisting of
various product features and accompanying services. When an individual or a
company
buys a policy from the insurance organizatio
assistance and advice, the prestige of the insurance organizations, the
facilities of claims and compensations are also bought.
In the context of formulating the product mix, it is
essential that the insurance organisatoins promote innovation and in the
product portfolio include even those services and schemes which are likely to
get a positive response in the future. In addition, they need to formulate a
sound package that proves to be more motivational. While formulating a package,
the insurance professionals need to assign due weightage to the interests of
rural India. The private sector insurance organisatoins have been found making
their service mix internationally competitive. This makes a strong advocacy in
favour of innovative product strategy for the public sector insurance
organizations.
In view of the above, the following aspects need due
attention of policy makers:
1.
The formulation of product mix should be
in the face of innovative product strategy. The strategies adopted by the
foreign and private insurance companies should be taken into consideration
while initiating the innovation process.
2.
The Data Processing Department is
supposed to collect necessary information related to the changing level of
expectations of prospects so that the senior executives make the product
portfolio productive to the users and profitable to the insurance
organizations.
3.
It is also significant that the
insurance organizations initiate the process of elimination of the services,
schemes not profitable to them. This necessitates a study of the product life
cycle.
4.
The formulation of product strategy
should assign due weightage to the rural segment emerging as a big profitable
segment.
5.
The insurance organisatoins include in
the product portfolio even those policies and schemes which become instrumental
in safeguarding the interests of the weaker sections of the society.
6.
The formulation of a package is also
found important. We find the foreign insurance companies designing a package on
the basis of the needs and requirements of the concerned segment. This would
make the product mix competitive.
7.
There are some of the profitable areas
which till not are found either partially tapped or even totally untapped. The
agents, rural career agents, the branch managers bear the responsibility of
identifying the profitable segments of future and helping the senior executive
in tapping the potential optimally.
8.
A sound product portfolio is the need of
the hour and therefore the regulatory barriers or constraints in activating the
innovation process should be minimized.
Promotion
Mix
In the formulation of marketing mix, the promotion
mix occupies a significant place. In the promotion mix, a number of submixes,
such as the advertising, public relations, sales promotion, word-of-mouth
promotion, personal selling are included.
Advertising
Advertising a paid form of persuasive communications
is found important to promote the insurance business. The advertising
professionals bear the responsibility of making the advertisement slogans,
appeals, campaigns creative so that the process of sensitizing the prospects is
found proactive. The insurance companies advertise through telecast media,
broadcast media and the print media. Among these, telecast media is found to be
more effective in sensitizing process. With the help of audio-visual exposure, the
rate of acceptability
of the messages
can be increased
sizeably. If the
advertising professionals are well aware of the messages creative. The
broadcast media can also be used for that very
purpose. Through the
available big transmission
network and a
well developed system,
the insurance organisatoins are supposed to use even the broadcast
media. Another benefit of this media is to reach the messages even to the
remotest parts of the country. The print media can also be used for promoting
the insurance business. Being economic in nature and impressive in expression,
the print media of late, has been found gaining popularity. The sophistication
in the print technologies has made the media more attractive. It is against
this background that now almost all the organizations assign due weightage to
this. The insurance organizations need to promote the print media since this
would simplify their task of making the appeals effective by using regional
languages.
Publicity
In addition to advertisement, the insurance/
professionals also need to think in favour of publicity since this component of
promotion if used in a right fashion makes our promotional efforts proactive.
The advertisements may be insensitive, but we find publicity effective since
the messages, views, opinions, facts, figures are publicized by media or the
vocal leaders. It is a device to promote business without making any payment
and therefore it is called as an unpaid form of persuasive communication
bearing high rate of sensitivity. Strengthening the public relations activities
is another dimension requiring due attention and the public relations officers
shall beat the responsibility of projecting a positive image of the
organisatoin. The PRO is considered to be professional having the world class
excellence in influencing the prospects, users, others. He/She bears an
important responsibility of informing, sensing and persuading. He/she is found
responsible for managing the sales dialogues. This makes it essential that we
find selection of suitable persons for the said purpose and in addition also
intensify training programmes, refresher courses, capsule courses to educate
and train them in tune with the changing business conditions. The
receptionists, secretaries, front-line-staff publicize the business with their
gesture and posture. They are supposed to know-how to talk, how to initiate,
how to impress and how to conclude. They should look smart and attractive and
should also have quality communicative ability. It is an art which is found
based on certain properties. It is essential to educate and train them properly
so that they, with the help of their dialogues and body communications succeed
in impressing upon the prospects/ users. If they are well aware of the changing
level of expectations of customers, the task is made easier.
Sales
promotion
Sales
promotion is a temporary device which is adopted only for a particular period.
In the insurance business, the incentives to the policy holders users or to the
agents, rural career agents or even to the insurance personnel for promoting
the business are the sales promotion tools. Incentives to the end users for
taking a policy play an incremental role in promoting the insurance business.
The offering of small gifts during a particular period, the rebate, discount,
bonus can be instrumental in increasing the business
of insurance organizations. It is right to mention
that such incentive to the policy holders/ prospects would be successful in
increasing the business. It is the responsibility of the insurance
professionals that they keep on activating the process of innovation so that
the foreign insurance companies find it difficult to compete with the public
sector insurance organizations.
This makes it clear that incentives to the user/
policyholders as well as to the agents and the rural career agents would be
instrumental in promoting the insurance business, provided the insurance
professionals innovate the same, much earlier than their competitors.
Personal
selling
The personal selling occupies a place of outstanding
significance. This is due to the fact that the insurance business is
substantially influenced by the instrumentality of agents and the rural career
agents. It they are aware of the art of informing, sensing and persuading the
potential policyholders, the task of insurance organisations is simplified
considerably.
Personal selling is based on the excellence of an
individual. This focuses our attention on the ability of an individual to
influence the impulse by activating the persuasion process. This makes it
significant that the agents as well as the rural career agents have certain
outstanding properties or attributes, such as patience, communicative ability,
attractive personality and commitment to the profession. Hence the insurance
organizations are supposed to assign due weightage to the excellence in an
individual who is assigned this responsibility. The need to provide due
incentive to the agents so that they work satisfactorily and keep on moving the
process of informing and persuading the policyholders/ prospects. While
recruiting agents, the insurance professionals need to be careful so that
persons with high communicative ability, an attractive physique and everlasting
patience are assigned the responsibility of acting as an agent. The branch
managers bear the responsibility of managing and developing the agents by
monitoring their contributions to the process of increasing the insurance
business. They are supposed to organize refresher courses to develop the agents
so that the emerging trends in the investment potentials of a command area
vis-à-vis the changing level of expectations of the policyholders/ prospects
are transmitted to them in a right fashion and on time. The personal selling
thus requires an intensive care. It is high time that the Career Agents
Schemes and the Rural Career Agentsare promoted.
Word-of-mouth
promotion
The word-of-mouth communications result into wider
publicity which substantially sensitive the process of influencing the impulse
of users/ prospects of the insurance services. The satisfied group of
customers, the opinion leaders, the social reformists, the popular
personalities acts as word-of-mouth communicators. The insurance organizations
need to assign due weightage to the quality of service made available to the
users. The insurance professionals are also supposed to seek the cooperation of
opinion leaders, vocal persons for promoting the business and for that the
offering of small gifts to them is required essential.
Another dimension of this component of the promotion
mix is to seek the cooperation of users who are satisfied with the services.
They are habitual users and therefore it is natural that they talk to their
friends and relatives about your positive contributions. The advertisements
slogans may be insensitive, even the sales promotion measures may be
ineffective but the positive feelings of your friends and
relations communicated to you can‟t be ineffe the
promotion of any business is the quality of services that you offer to your
users/ customers.
Price
Mix
In the insurance business, the pricing decisions are
concerned with the premium charged against the policies interest charged for
defaulting the payment of premium and credit facilities, commission charged for
underwriting and consultancy services. The formulating of pricing strategies
becomes significant with the viewpoint of influencing the target market or
prospects. It is pertinent that the insurance organisatoins in general and
public sector insurance organizations in particular adopt such a strategy for
pricing that makes it a motivational tool and paves the ways for increasing the
insurance business. This necessitates a new vision for setting premium
structure and paying the bonus and charging the interest.
The insurance organizations prefer to make a mix of
high a low pricing strategy. To be more specific, in the public sector
insurance organisatoins which are instrumental in offering policies, schemes
for the weaker sections, it is pertinent that the pricing strategy is
rationalized to cater to the low paying capacity of the concerned segment.
However the insurance organisatoins would be required to think in favour of a
high pricing strategy for the affluent section of the society. The motive is to
make the premium structure commercially viable so that the insurance
organizations succeed in having a sound product portfolio besides fuelling
development orientation.
The
pricing decisions make it essential that the insurers keep in their minds the
nature of policy vis-à-vis the segment to which the prospects belong. The
insurance executives bear the responsibility of managing the pricing decisions
in such a way that a rational premium structure is possible. There are number
of factors influencing the rate of premium, such as the positive developments
in the socio- economic environment, growing healthcare facilities, rising
standard of living of the masses, increasing
discretionary income, increasing rate of literacy,
attitudinal change in investors or so. The investment decisions of insurance
organisatoin are also found instrumental in influencing the costs.
Price
Mix
Another component of the marketing mix is related to
the place decisions. While locating branches, the branch managers need to
consider a number of factors, such as smooth accessibility, availability of
infrastructural facilities and the management of branch offices and premises.
In addition, it is also significant that the branch managers assign due
weightage to the safety provision. The places found of vulnerable nature should
not be selected for the location of branch offices-à-vis and the safety of
insurance personnel and cash need due attention. The management of offices
makes it significant that the branch managers are particular to the office
furnishing, civic amenities and facilities, parking facilities and interior
office decoration. The foreign insurance companies are found serious to
this component of place management which helps them
in attracting the users. Besides, the management of premises is also an
important component since of late the management experts make a strong advocacy
in favour of aesthetic management for generating the work culture and
motivating the users. The plantation, gardening, dustbin, drains, sign posts
are some of the important facets which makes your premises attractive and
healthy.
In view of the above, it is right to opine that the
place management of insurance branch offices needs a new vision, a distinct
approach and an innovative strategy. This is essential to make the work place
conducive, attractive, proactive to the generation of efficiency or so. The motives
are to offer the promised services to the end users without any distortion and
making the branch offices a point of attraction. The branch managers need
professional excellence to make place decision productive.
People
The
management scientists make a strong advocacy in favour of managing the
insurance personnel since they identify people as an important component of the
marketing mix. This focuses our attention on the development of insurance
professionals. The use of computers, micro-computers, fax machines,
sophisticated telephonic services, e-mailing, internet and intranet services
have a big impact on the perception of quality of services. This makes it
essential that the insurance organisatoin also think in favour of developing
personnel in line with the development and use of information technologies.This
gravitates attention on the education and training facilities to the insurance
personnel. The front-line-staff as well as the branch manages are required to
be given the training facilities so that they are in a position to make
possible an effective use of the technologies. The insurance organisatoins bear
the responsibility of developing the credentials of their employees. the senior
executives while recruiting, training and developing the insurance personnel
make it sure that employees serving the organisation
have
a high behavioral profile in which empathy has been given due place.
The marketing management of an organisation plays a
contributory role in fuelling the processes of qualitative-cum-quantitative
improvements. The different mixes are required to be innovated to cater to the
changing needs and requirements of the different categories of users. The
product mix necessitates a fair synchronization of core and peripheral
services, the product portfolio is required to be made optimal, the packages
need due attention in the formulation process, the new services are required to
be incorporate, the unprofitable services or schemes are required to be
eliminated and the effective fulfillment of development needs require world
class insurance professionals who by making their decision innovative are found
successful in having a sound product mix. In addition, the promotion decisions
also need a new vision, a distinct approach mix. In addition, the promotion
decision also need a new vision, a distinct approach and an new strategy. The
sophistication in the process of advertising, the creativity in advertisement
messages and slogans, the well managed public relation activities, the
innovative tools of sale promotion, the word-of-mouth communications, the
personal selling, and the telemarketing need due attention of marketing
executives. The premium, bonus, commission policies need to be made rational
and the place decision require due weightage. The management of insurance
personnel requires an overriding priority and the physical attractions of
insurance professionals are to be given due weightage.
In view of the above, it is right to opine that the
marketing practices need a new look, an innovative approach and the
conceptualization of the holistic concept of management. The defined principles
of social or societal marketing if practiced in a right fashion would pave
avenues for the blending of three important considerations, such as
profit-generation, customer-satisfaction and social-orientation. It is in this
context that the public sector insurance organizations need to realize gravity
of the situation and to assign an overriding priority to the management of
marketing activities.
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