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Content
5. Consumer analysis
We analyze consumers because; this is the basis for all market strategies like segmenting, targeting, and positioning. Without an understanding of customer, it would be impossible for the market to drive the offer. A consumer’s buying behavior is influenced by cultural, social and personal factor.
5. a. Cultural factor; Culture is fundamental determinant of a person’s needs and behavior. People acquire a set of value, perception and behaviors through his or her family and other institution. Indian people want achievement and success, comfortable efficiency and practicality, freedom and youthfulness. In other word there are multicultural environment in India. Indian loves their family and they want to secure their family from unnatural event. Indian give first preference to his family after than others. They do not want to take loan and they want to invest their money in long-term investment for child education and marriage. When we say about metropolitan city, dependency on old age on son is decreasing. People want to accumulate some fund for old age so ICICI Prudential should concentrate on gratuity or pension plan. Indian people also affected from sub culture. Urban people want to take more insurance comparison than rural (due to high per capita income, insurance awareness, social security, investment purpose, tax saving purpose). Religion also effect on insurance. ICICI Prudential is using this thing very well. They use sinduor and marriage in their advertisement and show that when you marriage from someone, her all liabilities is your liabilities and we will help you in this situation. We will make relation as like as sindur (here means long term stable relationship). In other word ICICI Prudential want to say that we will cover you at every step in life (sorrow or happiness). Consumer behavior is also affected from reference group. Firstly, people see that which insurance is bestseller after that they purchase. They also influence from agent. People do not concentrate on their need due to agent’s influence. Social class also affect on consumer behavior. Lower class does not want insurance. Upper lower class wants insurance for saving purpose. Working and middle class want insurance for protection and saving purpose and lastly, upper class want to purchase insurance for investment tax benefit and saving purpose.
5. b. Social factor; Consumers are also influenced by social factor for example; reference group, family, and social role and status. Consumer behavior is firstly influenced from membership group such as family, neighbor and coworker. Insurance is such type of product where people awareness is very low so people do not very much about insurance. They think, insurance is only tax saving instrument so they fully dependent on agent for taking insurance. When agent say about any product, that time they inquiry from neighbor and co-worker about that product. If any body suggests that, this product and I have also taken this product. Individual think that, this product also best for him. He does not concentrate on his need and requirement. Secondly, he is influenced by information influences. If he goes to purchase insurance, he makes enquiry about this product from his personal sources. He study newspaper and search on Internet and gather all information related product. If he is satisfied from that information, he decides to buy insurance. People also influence from opinion leader, this opinion leader may be Mukhiya, or Surpanch in rural area or this may be any leader, actor or cricket player in urban area. If opinion leader say or advertise about any product, people are influenced from opinion leader because opinion leader keep good position in society. Family and household pattern also influence consumer behavior. Due to less security of individual family, people want to purchase insurance, but in joint family people give less attention in buying insurance. If all family are well earning, there are given less attention on insurance in such family. But if earning member is less and dependent is more in such type of family insurance is very important. Women want more security so women are taking main role in purchase decision where, women influence consumer behavior. 5. c. Personal factor; A consumer decision is also influenced by personal characteristics for example the buyer age and stage in life cycle, occupation and economics circumstances, personality, self-concept, life style and value. When we say about age and life, first is bachelor stage. They are generally young independent and they are in early stage of his carrier and earning. They mostly think that they have no need of insurance because in that time they have no dependent. However, some people have some dream and dependent also. They are in such stage where they can take more risk so they mostly prefer to invest in ULIP. Second stage is newly married. In that stage people need and buying decision is influenced from their future plan and earning capability. If
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they have to plan for purchase flat that time, they will need term insurance. There after stage is one or two children after marriage, they will be influenced from future need. They will accumulate fund for children marriage and education, they can be plan time-to-time vacation. In forth stage, they want to accumulate for retirement. People want to live alone after old age or in peaceful place so they are ready to start saving for old age. Attitude also affect consumer behavior positive attitude (about his life) person will take pension plan because people think that they will live more. But negative attitude person will take life insurance because they worry about their life.
6. Competition analysis
6. a. Threat of intense segment rivalry- Due to high stake of ICICI Prudential position this segment is good for it and second good factor is it’s brand value. But when we say about competition in this market, competition is very tough. We can say that market condition is just like same as oligopoly means a few number of large firm is providing all service partially different along line of quality, feature or services. Each competitor may seek leadership in one of that major attribute and changing a price for that attribute. For example, ICICI Prudential is specialist on to attract high net worth or urban population but LIC has large distribution network so it has specialist in rural segments. But when we say about population growth, economics growth, or government policies insurance segment is very attractive because only 25% insurable person are insured secondly 80% population are under age of 45. Aggressive market condition is in market. Main competitor of ICICI Prudential is LIC Bajaj Allianz HDFC Birla Sun Life LIC has many resources and it has above 50-year experience in insurance field but ICICI Prudential has only 7 to 8 year experience in market. However, due to Prudential experience and ICICI Bank brand value, ICICI prudential has made good position in market. So there is threat as mainly by LIC for ICICI Prudential. Due to this reason price war, advertisement, and new product innovation will be expensive in future.
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6. b. Threat of new entrance- Due to aggressive competition and high entry exit barrier, this is not attractive segment for new player. For entering in insurance field, mandatory capital is 100 crores. Secondly, foreign stake limited with 26%, third Indian company have no experience in insurance business. Exit barrier are also very high because, no company can leave market after entering due to loss because firstly, 100 crores will be lost secondly, their compensation (customer or other company) will be very high or more than deposited money. So in long run, company will try to less their business but they will not leave market. So this is good factor for ICICI Prudential because, where entry or exit barrier are high, profit potential are also high. 6. c. Threat of substitute product- this is not attractive market in view of substitute goods because there is many substitute in market but only service style is different. Different insurance company provide at least same product but presentation is different. In case of lower substitute (means investment purpose) many product in India for example, share, mutual fund, fixed deposit. Substitute place a limit on price and on profit. Bajaj Allianz launch same type of product of ICICI Prudential but in lower price. 6. d. Threat of buyer’s growing power- in India buyer’s growing power are increasing because they have more concentrated or organized towards market. Government has established insurance regulator (IRDA) in India for growing buyer’s barging power. Due to lowest switching, buyers are very price sensitive and buyers have many sources for knowing about different company product. Due to education buyer can analysis that, which product is good for him. So due to growing buyers power this segment is not good for new player. 6. e. Threat of supplier’s growing power- Due to oligopoly market condition insurance company cannot raise price but they can increase their profit from selling more policies in market. In India, supplygrowing power (agent, broker, bancassurance) are growing due to lot of company availability in India and this is not good for ICICI Prudential.
7. PROCESS/METHODOLOGY OF STUDY
7. a. Procedure: The procedure that followed enlisted below: Studying the product Decision on objective needed to be work on. Developing Survey instruments
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Getting questionnaire filled through interacting with different age groups, sex, monthly income and occupation. Finally analyzing the data of various areas and trying to study about various influence factors. 7. b. Process adopted: Gaining knowledge about the product: Reading about the product was the first step undertaken. This gave not only in depth knowledge about what is been offered by the insurance but also proved useful while developing the questionnaire. Steps in the Development of the Survey Instruments The main instruments required for survey was a well-developed questionnaire. The questionnaire development took place in a series of steps as described below:
Step 1
Research objectives been transformed into information objectives.
Step 2
The appropriate data collection methods been determined
Step 3
The information required by each objective is being ermined.
Step 4 Step 5
Specific Questions/Scale Measurement format is Question/Scale Measurements been evaluated. developed.
Step 6
Research objectives been transformed into information objectives.
Research objectives been transformed into information objectives.
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Step 7
The number of information needed is being determined.
Step 8
The questionnaire and layout been evaluated.
Step 9
Revise the questionnaire layout if needed
.
Step1 0
The Questionnaire format been finalized.
7. c. Customer Survey: The survey is important tool as clear perception of people about the product can be estimated and known. The need levels of the people regarding the insurance product been observed through survey. It was very useful in knowing about the requirements of the people. Referred to brochures and websites of competitors: To understand the competitors product brochures and websites of various insurance were referred and a competitive analogy of all the rates and necessary features of the Insurance policy is been made. The table is been attached in the Appendix. 7. d. Research Design: A two stage Research been conducted:
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•
Secondary Research:
Collection of data from websites and catalogues to understand the product and the charges of the different Insurance Company.
•
Primary Research:
A Primary Research been conducted: The questionnaire was prepared for the companies and following areas covered: Distribution Channel of Insurance Company Consumer profile Satisfaction level with the current Insurance Company on the basis of return Reason for the selection of specific insurance policy and company Desirable features of the product and risk aptitude 7. e. Sampling Plan: Elements: The target population of the study included the general population above the age of 25 yrs Sampling design and sampling unit are as follows: Target population: Adults meeting qualifications-over 25 years, working class, businessman, personnel having children Sampling frame- Urban class in the Mumbai region Sample size: 50 Sampling unit: urban class personnel Through this we would focus on the following area; To identify critical factor (internal and external) which influence the buying behavior of individual, Why people purchase insurance policy. To know about mindset of people. To analysis of customer perception of the quality of product, so that to take steps to maximization of customer satisfaction.
8. DATA COLLECTIONS
8. a. Data Collection Plan:
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The first of Research consisted of secondary data search from the following sources: Catalogues Websites For the conclusive research, questionnaires been developed on basis of secondary data to gather information on the research objective. I conducted a pilot study to test these questionnaires. In this sample of 10 people picked up from the target population on convenience basis, as to determine the limitation and deficiencies in the questionnaires. The final draft of the questionnaire (see Appendix) was then prepared on basis of the observations from the pilot study. These then finally filled by 50 consumers, for the conclusive study. Finally, the data collected fed into the data analysis software- SPSS, to be analyzed using statistical techniques: frequencies, means, t-tests, Chi square distribution, cross tabs and analysis of variance (ANOVA) etc. 8. b. Types of Primary Data collected: 1) Demographic /Socioeconomic Characteristics: Demographic and socioeconomic characteristics sometimes called “states of being” in that they represent the type of people. The factors on which we are working are age, sex and occupation. Monthly income is also an important parameter but it is difficult to verify. Although the amount of money that an individual earns in a month is an absolute, not a relative quantity but it is a sensitive topic in our society and it is difficult to determine. 2) Attitudes/Opinions: Through the questionnaire we have tried to get hold of individual’s preference, inclination and requirement from the products that the insurance company delivers to the customer. Attitude is an important notion in the marketing literature, since generally it is previewed that the attitudes are relating to the behavior of individual. 3) Awareness/Knowledge: They are used in marketing research refers to what respondents do or do not know about the product. 4) Motivation:
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Through questionnaire have tried to find the hidden need or want of an individual and have tried to find out that why people buy insurance. 5) Behavior: Behavior concerns what subjects have done or are doing. Through made questionnaire I have tried to find out the behavior of the individuals regarding the product and their responses; What do you think about insurance? Why do you have taken insurance police? Your objective to take Insurance cover is for What is he looking for in an insurance policy? Thus, it helps to draw a comparison between the Purchase and the observed behavior of the individuals. 6) Obtaining the Primary Data: The data collection was primarily through communication. Communication involves questioning respondents to secure the desired information, using a data collection instrument called questionnaire. The questions were in writing and so were the responses.
9. DATA INTERPRETATION GENERAL CONCLUSION
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reason to purchase insurance
saving 10%
investment 12%
tax saving 26% security 52%
investment
tax saving
security
saving
Finding:-52 % people say that main reason is to purchase insurance is family security 26 % people purchase insurance for tax saving, 12 % buy insurance for investment and lastly 10% buy it for discipline saving. So majority think/buy insurance for security (52%). objective behind it
social relaxation 6% cover liabilities 34%
life stage needs 40% fear 20%
social relaxation
life stage needs
fear
cover liabilities
Finding:-40% votes has come for life stage need, here people think that insurance is goods tools for fulfilling time to time need due to compulsory saving (i.e. Child education), some people invest in insurance for cover liabilities, means if a individual faces 3D’s (death,
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deceases, disability) that time who will pay EMI/loan. So 34% votes has comes for cover liabilities, only 20% people buy insurance due to fear; means insurance awareness is increasing, In India because approx 74% people are thinking about life stage need and cover liabilities. Only 6% people agree that insurance give social relaxation.
criteria of satisfaction on the basis of income
dissatisfied 13%
very satisfied 10%
not much satisfied 28% satisfied 49%
very satisfied
satisfied
not much satisfied
dissatisfied
Finding:-Out of 100% people 10% have very satisfied from the return of their policy and 49% are only satisfied. On the other hand , 28% people are not much satisfied from their policy return and 13% people fell dissatisfaction. So for the attraction of 41% of people, Insurance Company have to need to concentrate that, how to give/increase return to the policy holder.
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criteria for selecting insurance company
100% no of people in % 80% 60% 40% 20% 0% realibility service income policy scheme 6 2 4 6 age 25-30
2 6
2 4 6
30-35 2
4 2 3
35-40 4 2 3
2 2 5
40-45
2 2 4
45-60 2 realibility service income policy scheme
2 2 5 2 4
Finding:-Here all age of people give preference to choose insurance company on the basis of policy scheme firstly, and then second selection base is income, third chosen criteria is service and last criteria of chosen of insurance company is reliability and creditworthiness. So on the basis of this survey we can say that people mainly give importance of chosen an insurance company is what type of policy Scheme Company has, means policy fulfill individual need or not.
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investment age/income
100% 90% 80% 70%
0 1 1
0 3 0 6
1 1 0 1
0 3 2 1 0 1 0 2
% of people
60% 50% 40% 30% 20% 10% 0%
3 5 2 1 1
25-30 0 1 1 3 2 1 1 30-35 0 3 0 6 5 2 5
4
4
2 5 1 1
35-40 1 1 0 1 4 1
1 1
40-45 0 3 2 4 2 1 1
1
45-60 1
other equity pension insurance mutual fund gold real estate
0 1 0 0 1
age
1
Finding:-Today mainly insurance company provide facility of insurance and pension, and in this survey all age group give preference to invest in insurance and pension due to discipline saving (incomesaving=consumption) and post tax benefit. Then they give preference to mutual fund due to earn income from market at the low risk then they give preference to real estate, equity, gold and other. After age of 45 then do not want to invest in equity due to high risk. So we can say that; due to low risk and stable income instrument, people give to prefer investment in insurance and pension.
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purpose for buying life insurance
for opposite circumstances 23%
for old age saving 23%
for fullfillment of different needs 25% for family needs 29%
for old age saving
for family needs
for fullfillment of different needs
for opposite circumstances
Finding:-People invest in insurance due to four reason i.e. old age saving, family needs, time to time for fulfillment of different need, and lastly for opposite circumstances. In this survey, people first purpose to investment in insurance is family need (29%), then second purpose is fulfillment of different needs (25%), and lastly they give equal important to old age saving and opposite circumstance (i.e. disability and deceases).
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which type of policy is popular amoung people
45-60
3
1 7 6 5 4 1 1 1 6 1 3
w hole life endow nment ULIP epuity
40-45
age
35-40
30-35
25-30
1
0 2
4
4 6 8 no of people 10 12 14 16
Finding:-Above graph show that majority of people have invested in whole life insurance plan, after that endowment and ULIP is popular among people. People are giving last preference to invest in equity. Means till now in India people take less risk. They firstly give preference to family and security of money after that return.
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which factor is more important
6 5
no of customer
4 3 2 1 0
25-30 2 3 1 1
30-35 5 5
35-40 3 2 2
40-45 3 5 1 1
45-60 2 2 2
brand policy scheme relationship service
1
1
age
Finding:-For time of buying insurance policy mainly peoples (all age group) consider two things equally, first brand and second policy scheme, after that they give preference to relationship and they think about service. In another word policy scheme do main role in selection of insurance company (above mention) and policy scheme.
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where people like to purchase policy
Series1
25
24
20
15
14
no of peole
10
5
4
broker agent direct company other channel
0
distibution channel
Finding: - Out of 42 people, 24 people give preference to purchase from agent (more than half people), another 14 person give preference to buy insurance direct from company, and lastly 4 people would like to buy insurance through broker. With the help of above chart we can say that agent or tied agency is most popular distribution channel in insurance field.
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mode which people prefer to pay premium
100% 90% 80% 70% % of people 60% 50% 40% 30% 20% 10% 0% 2 to 3 Lakhs p.a 3 to 5 lakhs p.a 5 to 7 lakhs p.a income 7 to 10 lakhs p.a abobe 10 lakhs monthly half yearly annually single premium
Finding:-When we say about premium mode, all income groups give preference to pay premium in annual mode, after that half yearly premium pay mode is their second option, third option is monthly premium, and lastly very few person (above 10 lakhs) want to pay premium in single mode.
Insurance buying decision influence by
brand & advertisment 24%
family 41%
professonal & trade union 14%
friends & neighbour 21%
professonal & trade union brand & advertisment
family
friends & neighbour
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Finding:-In insurance mostly people’s buying decision (41%) influence by their family, means they take insurance according to their family needs in another word they insurance is taken because after death of earning person family don’t feel insecure. After that their buying decision influence from brand and advertisement (24%), due to advertisement insurance awareness ratio increase in India. Lastly they influence from friends & neighbor (21%), and professional & trade union (14%). most influence factor in taking insurance
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25 20
no of people
15 10 5 0
13
3 death 13 disabilities 3
factor
3 diseases 3 all 24
Series1
Finding:-Out of 43 people, 24 people think that 3D’s (death, diseases, disabilities) do main role in taking insurance, or all 3 factor are most influence factor in taking insurance. After that 13 people believe that only death factor is most important influence factor, which does main role in buying insurance. Only few people think that disabilities and diseases also influence buying behavior separately.
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some factor, which increase attractiveness of insurance
other 15% bonus 12%
return depend on market 22%
guarenteed bonus 51%
bonus
guarenteed bonus
return depend on market
other
Finding:-51 % people think that guaranteed bonus could increase attractiveness of insurance among public, and 49% people think that bonus and return, which depend on market can also increase attractiveness insurance among people.
10. CONCLUSIONS Questionnaire Analysis
The important factor, which has been recognized from the data, collected analysis regarding the life insurance buying behavior of individual are that, people give most important to their security, so other factors (saving, investment and tax saving) increases attractiveness of insurance among people. Due to security reason, term insurance is very popular among people. Insurance give help to fulfill life stage need i.e. child marriage and education. People think that insurance is good financial tool to face influence and accumulating fund (due to compulsory saving). Mindset is changing, now people take insurance according to their need and not due to their fear, they understand their needs. So due to this reason now people first concentrate on policy scheme and brand, when they are going to choose Insurance Company and policy. Whole life policy is popular due to family need, endowment policy is popular due to life stage need (money back policy) and ULIP is popular due to old age saving and fulfill different life stage need. In insurance,
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relationship and service is also important, so mostly people want to buy insurance direct from company and agent, because agent and brand fulfill relationship and service need. Premium mode also influences buying behavior of customer. Every income group likes annual and half yearly mode. Insurance buying decision is mainly influenced by family. Due to brand and advertisement (aggressive) people are aware about insurance and they are changing their mindset towards it. Now people know that it is important for everyone and it gives us protection from 3d’s (death, disabilities, and diseases), approx 80% people accept this fact. More than half of the people agree that guarantee bonus will increase the attractiveness of insurance, because in India people do not take more risk and more important they want to secure towards safety of their money. Network reach and visibility of Insurance is a very important criterion for the customer while buying an insurance policy. We can also conclude from our analysis that network reach in terms of Branches is directly proportional to the market share in case of Private Players.
11. Recommendation
1) Insurance policy gives good return but it cannot compete with other financial tools (i.e. equity). So this is basic need to increase return in the field of insurance sector. 2) Due to AIG (it was going to be insolvent) and deflation financial environment, mostly people think that LIC is better than other private insurance company (due to Government protection). So in this time private company needs to know that how to win people’s belief. 3) There are lot of alternative distribution channel in insurance industry, but due to less awareness of the people they do not know/like to buy insurance from such type of alternative channel i.e. bancassurance, NGO’s. So there is some need to increase awareness of such type of alternative channel among public. 4) Policy scheme is main factor to choose insurance company. If insurance companies give more concentration on policy scheme then they can compete with another financial tool in better way (i.e. equity and mutual fund). 5) In India people think that insurance is tax saving and protection tool, and not investment tool. If insurance company increase awareness among public, that insurance is good alternative
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saving and investment tool, this will do work as a value added service which will increase penetration of India. 6) Now only product knowledge is not sufficient for selling insurance, some thing should be added up in training program (age/front liner) i.e. human behavior, CRM, knowledge of another financial tools, communication program, and especially how to improve way of delivery. 7) In insurance, process is too much time taking, when we compare to other financial tools, so process work should be less, effective and flexible. 8) People are not much aware of alternative policy scheme (health, diabetics), so there are need to increase awareness of such type of policies among people. 9) Mostly, people are not satisfied from the post service of insurance companies due to dependence on agents or no knowledge about process, so there should be need to increase awareness about self service and awareness among people by training and advertisement. 10) Insurance is long term contract and saving tool, after a time people feel less interested towards it, so time to time motivation is important that they are doing a good job.
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Survey of life insurance buying behaviors Name:______________________________________ Occupation: 4.Retired 1. Service 2. Business . Age……..
.3 Self employed b. 3 to 5 Lac/p.a
Income category: a. 2 to 3Lac /p.a c. 5 to 7Lac/p. a d. 7 to 10Lac /p.a e. Above 10Lac /p.a
Q1. What do you think about insurance? Ans. ……………………………………………………………………. Q2. Why do you have taken insurance police? a. Investment b. tax saving c. security d. discipline saving d. cover liabilities
Q3. Your objective to take Insurance cover is for a. Social relaxation b. life stage needs c. fear
Q4. Which criteria do you apply for selecting insurance company? a. Policy scheme b. income c. service d. reliability Q5. Are you satisfied with the return on investment, which you are getting from your policy? 1. 2. 3. 4.
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Very satisfied
satisfied
not much satisfied
dissatisfied d. insurance
Q6. Where do you have invested in? a. real estate b. gold c. mutual fund e. pension g. equity h. other
Q7.which type of insurance policy do you want to entertain with increase in return? a. whole life policy (5 to 6 % low risk) b. endowment (9% moderate) c. ULIP (>15% high risk) d. equity (very high risk) Q8. What is your purpose for buying insurance policy? a. for old age saving b. for your family needs c. time to time for fulfill different need d. for opposite circumstances Q9. What is the importance of your family in your life? 1. 2. 3. 4. very important important some what not very Important important 5. not at all important
Q10. How will you prefer to buy insurance policy? a. Through broker b. direct from company c. through agent d. other (bancassurance etc.) Q11. What will you more attract in insurance? a. bonus b. guaranteed bonus c. return depend on market d. other (if other please specify)-…………………………………. Q12. Which will give you preference in buying a insurance policy? a. brand b. policy scheme c. relationship (agent) d. service Q13. What mode would you prefer to pay premium? a. single premium b. annually c. half yearly d. monthly
Q14. In buying insurance policy, your decision is influenced by a. family b. friends & neighbors c. professional & trade union group d. brand & advertisement Q15. Amongst the following which one is most important for which you would be tempted to secure or take insurance?
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a. death
b. disability
c. diseases
d. all
Q16. Your experience with your existence insurance company Answer……………………………………………………………………… …………………………………………………………………………… Q17. Your suggestion (to improve insurance sector) Answer……………………………………………………………………… …………………………………………………………………………….. Q18. Would you like to receive a summary report of this survey. No, thank you Yes, Send to my email address…………………… Address:______________________________________________________ ____
Signature-……………..
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Reference: Books; Marketing Research Marketing and Management Sales Management Customer Relationship Management Class Notes
Web site; www.google.com www.wikipedia.com
www.iciciprulife.com www.pgpmiflyhigh.com www.marketresearch.com www.irda.org
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We analyze consumers because; this is the basis for all market strategies like segmenting, targeting, and positioning. Without an understanding of customer, it would be impossible for the market to drive the offer. A consumer’s buying behavior is influenced by cultural, social and personal factor.
5. a. Cultural factor; Culture is fundamental determinant of a person’s needs and behavior. People acquire a set of value, perception and behaviors through his or her family and other institution. Indian people want achievement and success, comfortable efficiency and practicality, freedom and youthfulness. In other word there are multicultural environment in India. Indian loves their family and they want to secure their family from unnatural event. Indian give first preference to his family after than others. They do not want to take loan and they want to invest their money in long-term investment for child education and marriage. When we say about metropolitan city, dependency on old age on son is decreasing. People want to accumulate some fund for old age so ICICI Prudential should concentrate on gratuity or pension plan. Indian people also affected from sub culture. Urban people want to take more insurance comparison than rural (due to high per capita income, insurance awareness, social security, investment purpose, tax saving purpose). Religion also effect on insurance. ICICI Prudential is using this thing very well. They use sinduor and marriage in their advertisement and show that when you marriage from someone, her all liabilities is your liabilities and we will help you in this situation. We will make relation as like as sindur (here means long term stable relationship). In other word ICICI Prudential want to say that we will cover you at every step in life (sorrow or happiness). Consumer behavior is also affected from reference group. Firstly, people see that which insurance is bestseller after that they purchase. They also influence from agent. People do not concentrate on their need due to agent’s influence. Social class also affect on consumer behavior. Lower class does not want insurance. Upper lower class wants insurance for saving purpose. Working and middle class want insurance for protection and saving purpose and lastly, upper class want to purchase insurance for investment tax benefit and saving purpose.
5. b. Social factor; Consumers are also influenced by social factor for example; reference group, family, and social role and status. Consumer behavior is firstly influenced from membership group such as family, neighbor and coworker. Insurance is such type of product where people awareness is very low so people do not very much about insurance. They think, insurance is only tax saving instrument so they fully dependent on agent for taking insurance. When agent say about any product, that time they inquiry from neighbor and co-worker about that product. If any body suggests that, this product and I have also taken this product. Individual think that, this product also best for him. He does not concentrate on his need and requirement. Secondly, he is influenced by information influences. If he goes to purchase insurance, he makes enquiry about this product from his personal sources. He study newspaper and search on Internet and gather all information related product. If he is satisfied from that information, he decides to buy insurance. People also influence from opinion leader, this opinion leader may be Mukhiya, or Surpanch in rural area or this may be any leader, actor or cricket player in urban area. If opinion leader say or advertise about any product, people are influenced from opinion leader because opinion leader keep good position in society. Family and household pattern also influence consumer behavior. Due to less security of individual family, people want to purchase insurance, but in joint family people give less attention in buying insurance. If all family are well earning, there are given less attention on insurance in such family. But if earning member is less and dependent is more in such type of family insurance is very important. Women want more security so women are taking main role in purchase decision where, women influence consumer behavior. 5. c. Personal factor; A consumer decision is also influenced by personal characteristics for example the buyer age and stage in life cycle, occupation and economics circumstances, personality, self-concept, life style and value. When we say about age and life, first is bachelor stage. They are generally young independent and they are in early stage of his carrier and earning. They mostly think that they have no need of insurance because in that time they have no dependent. However, some people have some dream and dependent also. They are in such stage where they can take more risk so they mostly prefer to invest in ULIP. Second stage is newly married. In that stage people need and buying decision is influenced from their future plan and earning capability. If
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they have to plan for purchase flat that time, they will need term insurance. There after stage is one or two children after marriage, they will be influenced from future need. They will accumulate fund for children marriage and education, they can be plan time-to-time vacation. In forth stage, they want to accumulate for retirement. People want to live alone after old age or in peaceful place so they are ready to start saving for old age. Attitude also affect consumer behavior positive attitude (about his life) person will take pension plan because people think that they will live more. But negative attitude person will take life insurance because they worry about their life.
6. Competition analysis
6. a. Threat of intense segment rivalry- Due to high stake of ICICI Prudential position this segment is good for it and second good factor is it’s brand value. But when we say about competition in this market, competition is very tough. We can say that market condition is just like same as oligopoly means a few number of large firm is providing all service partially different along line of quality, feature or services. Each competitor may seek leadership in one of that major attribute and changing a price for that attribute. For example, ICICI Prudential is specialist on to attract high net worth or urban population but LIC has large distribution network so it has specialist in rural segments. But when we say about population growth, economics growth, or government policies insurance segment is very attractive because only 25% insurable person are insured secondly 80% population are under age of 45. Aggressive market condition is in market. Main competitor of ICICI Prudential is LIC Bajaj Allianz HDFC Birla Sun Life LIC has many resources and it has above 50-year experience in insurance field but ICICI Prudential has only 7 to 8 year experience in market. However, due to Prudential experience and ICICI Bank brand value, ICICI prudential has made good position in market. So there is threat as mainly by LIC for ICICI Prudential. Due to this reason price war, advertisement, and new product innovation will be expensive in future.
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6. b. Threat of new entrance- Due to aggressive competition and high entry exit barrier, this is not attractive segment for new player. For entering in insurance field, mandatory capital is 100 crores. Secondly, foreign stake limited with 26%, third Indian company have no experience in insurance business. Exit barrier are also very high because, no company can leave market after entering due to loss because firstly, 100 crores will be lost secondly, their compensation (customer or other company) will be very high or more than deposited money. So in long run, company will try to less their business but they will not leave market. So this is good factor for ICICI Prudential because, where entry or exit barrier are high, profit potential are also high. 6. c. Threat of substitute product- this is not attractive market in view of substitute goods because there is many substitute in market but only service style is different. Different insurance company provide at least same product but presentation is different. In case of lower substitute (means investment purpose) many product in India for example, share, mutual fund, fixed deposit. Substitute place a limit on price and on profit. Bajaj Allianz launch same type of product of ICICI Prudential but in lower price. 6. d. Threat of buyer’s growing power- in India buyer’s growing power are increasing because they have more concentrated or organized towards market. Government has established insurance regulator (IRDA) in India for growing buyer’s barging power. Due to lowest switching, buyers are very price sensitive and buyers have many sources for knowing about different company product. Due to education buyer can analysis that, which product is good for him. So due to growing buyers power this segment is not good for new player. 6. e. Threat of supplier’s growing power- Due to oligopoly market condition insurance company cannot raise price but they can increase their profit from selling more policies in market. In India, supplygrowing power (agent, broker, bancassurance) are growing due to lot of company availability in India and this is not good for ICICI Prudential.
7. PROCESS/METHODOLOGY OF STUDY
7. a. Procedure: The procedure that followed enlisted below: Studying the product Decision on objective needed to be work on. Developing Survey instruments
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Getting questionnaire filled through interacting with different age groups, sex, monthly income and occupation. Finally analyzing the data of various areas and trying to study about various influence factors. 7. b. Process adopted: Gaining knowledge about the product: Reading about the product was the first step undertaken. This gave not only in depth knowledge about what is been offered by the insurance but also proved useful while developing the questionnaire. Steps in the Development of the Survey Instruments The main instruments required for survey was a well-developed questionnaire. The questionnaire development took place in a series of steps as described below:
Step 1
Research objectives been transformed into information objectives.
Step 2
The appropriate data collection methods been determined
Step 3
The information required by each objective is being ermined.
Step 4 Step 5
Specific Questions/Scale Measurement format is Question/Scale Measurements been evaluated. developed.
Step 6
Research objectives been transformed into information objectives.
Research objectives been transformed into information objectives.
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Step 7
The number of information needed is being determined.
Step 8
The questionnaire and layout been evaluated.
Step 9
Revise the questionnaire layout if needed
.
Step1 0
The Questionnaire format been finalized.
7. c. Customer Survey: The survey is important tool as clear perception of people about the product can be estimated and known. The need levels of the people regarding the insurance product been observed through survey. It was very useful in knowing about the requirements of the people. Referred to brochures and websites of competitors: To understand the competitors product brochures and websites of various insurance were referred and a competitive analogy of all the rates and necessary features of the Insurance policy is been made. The table is been attached in the Appendix. 7. d. Research Design: A two stage Research been conducted:
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•
Secondary Research:
Collection of data from websites and catalogues to understand the product and the charges of the different Insurance Company.
•
Primary Research:
A Primary Research been conducted: The questionnaire was prepared for the companies and following areas covered: Distribution Channel of Insurance Company Consumer profile Satisfaction level with the current Insurance Company on the basis of return Reason for the selection of specific insurance policy and company Desirable features of the product and risk aptitude 7. e. Sampling Plan: Elements: The target population of the study included the general population above the age of 25 yrs Sampling design and sampling unit are as follows: Target population: Adults meeting qualifications-over 25 years, working class, businessman, personnel having children Sampling frame- Urban class in the Mumbai region Sample size: 50 Sampling unit: urban class personnel Through this we would focus on the following area; To identify critical factor (internal and external) which influence the buying behavior of individual, Why people purchase insurance policy. To know about mindset of people. To analysis of customer perception of the quality of product, so that to take steps to maximization of customer satisfaction.
8. DATA COLLECTIONS
8. a. Data Collection Plan:
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The first of Research consisted of secondary data search from the following sources: Catalogues Websites For the conclusive research, questionnaires been developed on basis of secondary data to gather information on the research objective. I conducted a pilot study to test these questionnaires. In this sample of 10 people picked up from the target population on convenience basis, as to determine the limitation and deficiencies in the questionnaires. The final draft of the questionnaire (see Appendix) was then prepared on basis of the observations from the pilot study. These then finally filled by 50 consumers, for the conclusive study. Finally, the data collected fed into the data analysis software- SPSS, to be analyzed using statistical techniques: frequencies, means, t-tests, Chi square distribution, cross tabs and analysis of variance (ANOVA) etc. 8. b. Types of Primary Data collected: 1) Demographic /Socioeconomic Characteristics: Demographic and socioeconomic characteristics sometimes called “states of being” in that they represent the type of people. The factors on which we are working are age, sex and occupation. Monthly income is also an important parameter but it is difficult to verify. Although the amount of money that an individual earns in a month is an absolute, not a relative quantity but it is a sensitive topic in our society and it is difficult to determine. 2) Attitudes/Opinions: Through the questionnaire we have tried to get hold of individual’s preference, inclination and requirement from the products that the insurance company delivers to the customer. Attitude is an important notion in the marketing literature, since generally it is previewed that the attitudes are relating to the behavior of individual. 3) Awareness/Knowledge: They are used in marketing research refers to what respondents do or do not know about the product. 4) Motivation:
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Through questionnaire have tried to find the hidden need or want of an individual and have tried to find out that why people buy insurance. 5) Behavior: Behavior concerns what subjects have done or are doing. Through made questionnaire I have tried to find out the behavior of the individuals regarding the product and their responses; What do you think about insurance? Why do you have taken insurance police? Your objective to take Insurance cover is for What is he looking for in an insurance policy? Thus, it helps to draw a comparison between the Purchase and the observed behavior of the individuals. 6) Obtaining the Primary Data: The data collection was primarily through communication. Communication involves questioning respondents to secure the desired information, using a data collection instrument called questionnaire. The questions were in writing and so were the responses.
9. DATA INTERPRETATION GENERAL CONCLUSION
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reason to purchase insurance
saving 10%
investment 12%
tax saving 26% security 52%
investment
tax saving
security
saving
Finding:-52 % people say that main reason is to purchase insurance is family security 26 % people purchase insurance for tax saving, 12 % buy insurance for investment and lastly 10% buy it for discipline saving. So majority think/buy insurance for security (52%). objective behind it
social relaxation 6% cover liabilities 34%
life stage needs 40% fear 20%
social relaxation
life stage needs
fear
cover liabilities
Finding:-40% votes has come for life stage need, here people think that insurance is goods tools for fulfilling time to time need due to compulsory saving (i.e. Child education), some people invest in insurance for cover liabilities, means if a individual faces 3D’s (death,
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deceases, disability) that time who will pay EMI/loan. So 34% votes has comes for cover liabilities, only 20% people buy insurance due to fear; means insurance awareness is increasing, In India because approx 74% people are thinking about life stage need and cover liabilities. Only 6% people agree that insurance give social relaxation.
criteria of satisfaction on the basis of income
dissatisfied 13%
very satisfied 10%
not much satisfied 28% satisfied 49%
very satisfied
satisfied
not much satisfied
dissatisfied
Finding:-Out of 100% people 10% have very satisfied from the return of their policy and 49% are only satisfied. On the other hand , 28% people are not much satisfied from their policy return and 13% people fell dissatisfaction. So for the attraction of 41% of people, Insurance Company have to need to concentrate that, how to give/increase return to the policy holder.
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criteria for selecting insurance company
100% no of people in % 80% 60% 40% 20% 0% realibility service income policy scheme 6 2 4 6 age 25-30
2 6
2 4 6
30-35 2
4 2 3
35-40 4 2 3
2 2 5
40-45
2 2 4
45-60 2 realibility service income policy scheme
2 2 5 2 4
Finding:-Here all age of people give preference to choose insurance company on the basis of policy scheme firstly, and then second selection base is income, third chosen criteria is service and last criteria of chosen of insurance company is reliability and creditworthiness. So on the basis of this survey we can say that people mainly give importance of chosen an insurance company is what type of policy Scheme Company has, means policy fulfill individual need or not.
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investment age/income
100% 90% 80% 70%
0 1 1
0 3 0 6
1 1 0 1
0 3 2 1 0 1 0 2
% of people
60% 50% 40% 30% 20% 10% 0%
3 5 2 1 1
25-30 0 1 1 3 2 1 1 30-35 0 3 0 6 5 2 5
4
4
2 5 1 1
35-40 1 1 0 1 4 1
1 1
40-45 0 3 2 4 2 1 1
1
45-60 1
other equity pension insurance mutual fund gold real estate
0 1 0 0 1
age
1
Finding:-Today mainly insurance company provide facility of insurance and pension, and in this survey all age group give preference to invest in insurance and pension due to discipline saving (incomesaving=consumption) and post tax benefit. Then they give preference to mutual fund due to earn income from market at the low risk then they give preference to real estate, equity, gold and other. After age of 45 then do not want to invest in equity due to high risk. So we can say that; due to low risk and stable income instrument, people give to prefer investment in insurance and pension.
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purpose for buying life insurance
for opposite circumstances 23%
for old age saving 23%
for fullfillment of different needs 25% for family needs 29%
for old age saving
for family needs
for fullfillment of different needs
for opposite circumstances
Finding:-People invest in insurance due to four reason i.e. old age saving, family needs, time to time for fulfillment of different need, and lastly for opposite circumstances. In this survey, people first purpose to investment in insurance is family need (29%), then second purpose is fulfillment of different needs (25%), and lastly they give equal important to old age saving and opposite circumstance (i.e. disability and deceases).
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which type of policy is popular amoung people
45-60
3
1 7 6 5 4 1 1 1 6 1 3
w hole life endow nment ULIP epuity
40-45
age
35-40
30-35
25-30
1
0 2
4
4 6 8 no of people 10 12 14 16
Finding:-Above graph show that majority of people have invested in whole life insurance plan, after that endowment and ULIP is popular among people. People are giving last preference to invest in equity. Means till now in India people take less risk. They firstly give preference to family and security of money after that return.
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which factor is more important
6 5
no of customer
4 3 2 1 0
25-30 2 3 1 1
30-35 5 5
35-40 3 2 2
40-45 3 5 1 1
45-60 2 2 2
brand policy scheme relationship service
1
1
age
Finding:-For time of buying insurance policy mainly peoples (all age group) consider two things equally, first brand and second policy scheme, after that they give preference to relationship and they think about service. In another word policy scheme do main role in selection of insurance company (above mention) and policy scheme.
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where people like to purchase policy
Series1
25
24
20
15
14
no of peole
10
5
4
broker agent direct company other channel
0
distibution channel
Finding: - Out of 42 people, 24 people give preference to purchase from agent (more than half people), another 14 person give preference to buy insurance direct from company, and lastly 4 people would like to buy insurance through broker. With the help of above chart we can say that agent or tied agency is most popular distribution channel in insurance field.
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mode which people prefer to pay premium
100% 90% 80% 70% % of people 60% 50% 40% 30% 20% 10% 0% 2 to 3 Lakhs p.a 3 to 5 lakhs p.a 5 to 7 lakhs p.a income 7 to 10 lakhs p.a abobe 10 lakhs monthly half yearly annually single premium
Finding:-When we say about premium mode, all income groups give preference to pay premium in annual mode, after that half yearly premium pay mode is their second option, third option is monthly premium, and lastly very few person (above 10 lakhs) want to pay premium in single mode.
Insurance buying decision influence by
brand & advertisment 24%
family 41%
professonal & trade union 14%
friends & neighbour 21%
professonal & trade union brand & advertisment
family
friends & neighbour
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Finding:-In insurance mostly people’s buying decision (41%) influence by their family, means they take insurance according to their family needs in another word they insurance is taken because after death of earning person family don’t feel insecure. After that their buying decision influence from brand and advertisement (24%), due to advertisement insurance awareness ratio increase in India. Lastly they influence from friends & neighbor (21%), and professional & trade union (14%). most influence factor in taking insurance
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25 20
no of people
15 10 5 0
13
3 death 13 disabilities 3
factor
3 diseases 3 all 24
Series1
Finding:-Out of 43 people, 24 people think that 3D’s (death, diseases, disabilities) do main role in taking insurance, or all 3 factor are most influence factor in taking insurance. After that 13 people believe that only death factor is most important influence factor, which does main role in buying insurance. Only few people think that disabilities and diseases also influence buying behavior separately.
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some factor, which increase attractiveness of insurance
other 15% bonus 12%
return depend on market 22%
guarenteed bonus 51%
bonus
guarenteed bonus
return depend on market
other
Finding:-51 % people think that guaranteed bonus could increase attractiveness of insurance among public, and 49% people think that bonus and return, which depend on market can also increase attractiveness insurance among people.
10. CONCLUSIONS Questionnaire Analysis
The important factor, which has been recognized from the data, collected analysis regarding the life insurance buying behavior of individual are that, people give most important to their security, so other factors (saving, investment and tax saving) increases attractiveness of insurance among people. Due to security reason, term insurance is very popular among people. Insurance give help to fulfill life stage need i.e. child marriage and education. People think that insurance is good financial tool to face influence and accumulating fund (due to compulsory saving). Mindset is changing, now people take insurance according to their need and not due to their fear, they understand their needs. So due to this reason now people first concentrate on policy scheme and brand, when they are going to choose Insurance Company and policy. Whole life policy is popular due to family need, endowment policy is popular due to life stage need (money back policy) and ULIP is popular due to old age saving and fulfill different life stage need. In insurance,
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relationship and service is also important, so mostly people want to buy insurance direct from company and agent, because agent and brand fulfill relationship and service need. Premium mode also influences buying behavior of customer. Every income group likes annual and half yearly mode. Insurance buying decision is mainly influenced by family. Due to brand and advertisement (aggressive) people are aware about insurance and they are changing their mindset towards it. Now people know that it is important for everyone and it gives us protection from 3d’s (death, disabilities, and diseases), approx 80% people accept this fact. More than half of the people agree that guarantee bonus will increase the attractiveness of insurance, because in India people do not take more risk and more important they want to secure towards safety of their money. Network reach and visibility of Insurance is a very important criterion for the customer while buying an insurance policy. We can also conclude from our analysis that network reach in terms of Branches is directly proportional to the market share in case of Private Players.
11. Recommendation
1) Insurance policy gives good return but it cannot compete with other financial tools (i.e. equity). So this is basic need to increase return in the field of insurance sector. 2) Due to AIG (it was going to be insolvent) and deflation financial environment, mostly people think that LIC is better than other private insurance company (due to Government protection). So in this time private company needs to know that how to win people’s belief. 3) There are lot of alternative distribution channel in insurance industry, but due to less awareness of the people they do not know/like to buy insurance from such type of alternative channel i.e. bancassurance, NGO’s. So there is some need to increase awareness of such type of alternative channel among public. 4) Policy scheme is main factor to choose insurance company. If insurance companies give more concentration on policy scheme then they can compete with another financial tool in better way (i.e. equity and mutual fund). 5) In India people think that insurance is tax saving and protection tool, and not investment tool. If insurance company increase awareness among public, that insurance is good alternative
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saving and investment tool, this will do work as a value added service which will increase penetration of India. 6) Now only product knowledge is not sufficient for selling insurance, some thing should be added up in training program (age/front liner) i.e. human behavior, CRM, knowledge of another financial tools, communication program, and especially how to improve way of delivery. 7) In insurance, process is too much time taking, when we compare to other financial tools, so process work should be less, effective and flexible. 8) People are not much aware of alternative policy scheme (health, diabetics), so there are need to increase awareness of such type of policies among people. 9) Mostly, people are not satisfied from the post service of insurance companies due to dependence on agents or no knowledge about process, so there should be need to increase awareness about self service and awareness among people by training and advertisement. 10) Insurance is long term contract and saving tool, after a time people feel less interested towards it, so time to time motivation is important that they are doing a good job.
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\
Survey of life insurance buying behaviors Name:______________________________________ Occupation: 4.Retired 1. Service 2. Business . Age……..
.3 Self employed b. 3 to 5 Lac/p.a
Income category: a. 2 to 3Lac /p.a c. 5 to 7Lac/p. a d. 7 to 10Lac /p.a e. Above 10Lac /p.a
Q1. What do you think about insurance? Ans. ……………………………………………………………………. Q2. Why do you have taken insurance police? a. Investment b. tax saving c. security d. discipline saving d. cover liabilities
Q3. Your objective to take Insurance cover is for a. Social relaxation b. life stage needs c. fear
Q4. Which criteria do you apply for selecting insurance company? a. Policy scheme b. income c. service d. reliability Q5. Are you satisfied with the return on investment, which you are getting from your policy? 1. 2. 3. 4.
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Very satisfied
satisfied
not much satisfied
dissatisfied d. insurance
Q6. Where do you have invested in? a. real estate b. gold c. mutual fund e. pension g. equity h. other
Q7.which type of insurance policy do you want to entertain with increase in return? a. whole life policy (5 to 6 % low risk) b. endowment (9% moderate) c. ULIP (>15% high risk) d. equity (very high risk) Q8. What is your purpose for buying insurance policy? a. for old age saving b. for your family needs c. time to time for fulfill different need d. for opposite circumstances Q9. What is the importance of your family in your life? 1. 2. 3. 4. very important important some what not very Important important 5. not at all important
Q10. How will you prefer to buy insurance policy? a. Through broker b. direct from company c. through agent d. other (bancassurance etc.) Q11. What will you more attract in insurance? a. bonus b. guaranteed bonus c. return depend on market d. other (if other please specify)-…………………………………. Q12. Which will give you preference in buying a insurance policy? a. brand b. policy scheme c. relationship (agent) d. service Q13. What mode would you prefer to pay premium? a. single premium b. annually c. half yearly d. monthly
Q14. In buying insurance policy, your decision is influenced by a. family b. friends & neighbors c. professional & trade union group d. brand & advertisement Q15. Amongst the following which one is most important for which you would be tempted to secure or take insurance?
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a. death
b. disability
c. diseases
d. all
Q16. Your experience with your existence insurance company Answer……………………………………………………………………… …………………………………………………………………………… Q17. Your suggestion (to improve insurance sector) Answer……………………………………………………………………… …………………………………………………………………………….. Q18. Would you like to receive a summary report of this survey. No, thank you Yes, Send to my email address…………………… Address:______________________________________________________ ____
Signature-……………..
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Reference: Books; Marketing Research Marketing and Management Sales Management Customer Relationship Management Class Notes
Web site; www.google.com www.wikipedia.com
www.iciciprulife.com www.pgpmiflyhigh.com www.marketresearch.com www.irda.org
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