Abhishek GhatakXavier Institute of Management

&EntrepreneurshipBatch 19

Primary Objective: To find out the various promotional strategies

being presently implemented by IDBI Federal Life Insurance Co. Ltd and to find out the effectiveness of these promotional strategies.

To find out whether celebrity endorsement would help IDBI Federal in any way

Secondary Objective: An attempt to suggest new promotional strategy

or an efficient way which would enhance the consumer awareness about the company by strengthening the present promotional strategies

The three important products that were given to us were-

Lifesurance Incomesurance Childsurance

It is a fixed term non-linked participating endowment plan that provides the twin benefits of long term savings & life cover.

Benefits of Lifesurance: On maturity of this policy we get- Maturity sum insured, Vested guaranteed additions, Vested reversionary bonuses (if

any), Terminal bonus (if any) In case of Death Benefit we get- Death sum insured, Vested guaranteed benefits, accrued till the date of death,

Vested reversionary bonuses, accrued till the date of death, Interim bonus (if any), Terminal bonus (if any)

In case of Accidental death benefit we get- In case of unfortunate event of accidental death of the life insured beneficiary gets

additional payout up to the end if policy term. It is equal to the maturity sum insured & is paid out in addition to the death benefit.

Tax Benefit- Deduction under Sec 80 C: The premium that we invest in Lifesurance is eligible for

deduction under Sec 80 C of the Income Tax Act up to the limit of Rs 100000. Tax free benefit under Sec 10(10D): The maturity benefit as well as the death benefit

that we receive is tax free under Sec 10(10 D) of the Income Tax Act. 1961

The important features of this products are- Guaranteed annual payouts for crucial milestones: It gives annual payouts

either in the last 3 or 5 years of the policy, depending on the policy term. Future premiums waived off in case of an unfortunate event. Plan continuation: Even in the event of death, the guaranteed annual

payouts & bonuses will be paid on their respective due dates. Two tax benefits: It provides for tax deductions under section 80C on the

premiums we pay & tax free maturity amount under Sec 10(10D) of the Income Tax Act, 1961.

Policy term: Minimum policy tern is 10 years & the maximum is 25 years. The guaranteed annual payouts are given for 3 years for policy term of 10 to 14 years & 5 years for policy term of 15 to 25 years.

Premium payment term: We can choose a premium payment term which is either equal to or 5 years less than the policy term

The important features of this product are: Incomesurance has a limited premium paying term of 5 years. This is

ideal for people who are looking to pay for a short duration only. Annual payouts are guaranteed at the end of each year from 6th to

10th year. For these 5 years we will receive guaranteed annual payouts which are defined percentage of annual premium. This percentage depends on the age of the client.

In case of death of the life insured during the policy term, nominee gets the death sum assured, which is highest of:

10 times of annualized premium 105% of all premiums paid Maturity sum assured Tax benefits of Sec 80C & 10(10D)

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 facility, and Commission charged for underwriting and consultancy activities

The premium rates are revised if there are any significant changes in any of these factors: 

Mortality (deaths in a particular area): When deciding upon the pricing strategy the average rate of mortality is one of the main considerations. In a country like South Africa the threat to life is very important as it is played by host of diseases.

Expenses: The cost of processing, commission to agents, reinsurance companies as well as registration are all incorporated into the cost of installments and premium sum and forms the integral part of the pricing strategy.

Interest: The rate of interest is one of the major factors which determine people’s willingness to invest in insurance. People would not be willing to put their funds to invest in insurance business if the interest rates provided by the banks or other financial instruments are much greater than the perceived returns from the insurance premiums

This component of the marketing mix is related to two important facets:

Managing the insurance personnel, and Locating a branch. While recruiting agents, the branch managers need to prefer

local persons and provide them training and conduct seminars. In addition to the agents, the front-line staff also needs an

intensive training program to focus mainly on behavioral management.

Another important dimension to the Place Mix is related to the location of the insurance branches. While locating branches, the branch manager needs to consider a number of factors, such as smooth accessibility, availability of infrastructural facilities and the management of branch offices and premises

There are two types of promotion: Above the line promotion: promotion in mass media (e.g. TV, radio,

Newspapers, internet, mobile phones) in which the advertiser pays an advertising agency to place the advertisement.

Below the line promotion: All other promotion. Much of this is intended to be subtle enough for the consumer to be unaware that promotion is taking place e.g. sponsorship, testimonials, sales promotion, merchandising, direct mail, personal selling, public relations, trade shows

The basic objective of promotion is to: To present information to consumers as well as others To increase demand To differentiate a product

Commercial Ads Print Ads Events Personal Selling Word of mouth Viral Marketing

The following are the aspects which are covered by advertising

Pervasiveness: Advertising permits the seller to repeat a message many times it also allows the buyer to receive and compare the messages of various competitors .large scale advertising says something positive about the sellers’ size, power and success.

Amplified Expressiveness: Advertising provides opportunities for dramatizing the company and its products through the artful use of print, sound and color.

Impersonality: the audience does not feel obligated to pay attention or respond to advertising. Advertising is a monologue in front of, not a dialog with the audience

Sales promotion tools offer three distinctive benefits Communication: they gain attention and may lead the

customer to the product Incentive: They incorporate some concession,

inducement, or contribution that gives value to the customer.

Invitation: They include a distinct invitation to engage in the transaction now

The appeal of public relations and publicity is based on three distinctive qualities:

High Credibility: News, stories and features are more authentic and credible to readers than ads.

Ability to catch buyers off guard: Public relations can reach prospects that prefer to avoid salespeople and advertisements.

Dramatization: Public relations have the potential for dramatizing a company or product

Events and experiences reach out to the customer and can be used for brand- building as well as selling products. There are many advantages to events and experiences.  

Relevant: A well chosen event or experience can be seen as highly relevant because the customer gets personally involved.

Involving: Given their live, real time quality, events and experiences are more actively engaging for customers.

Implicit: Events are an indirect “soft sell”.

Word of mouth marketing also takes many forms, online or offline. Three noteworthy characters are:

Credible: Because people trust others they know and respect, word of mouth can be highly influential.

Personal: Word of mouth can be very intimate dialogue that reflects personal facts, opinions and experiences.

Timely: It occurs when people want it to and when they are most interested, and it often follows noteworthy or eventful events or experiences

Personal selling is the most effective tool at later stages of the buying process, particularly in building up buyer preference, conviction and action. Personal selling has three distinctive qualities:

Personal interaction: Personal selling creates an immediate and interactive episode between two or more persons. Each party is able to observe the others reaction.

Cultivation: Personal selling also permits all kinds of relationships to spring up, ranging from a matter of fact selling relationship to a deep personal friendship.

Response: The buyer may feel under some obligation for having listened to the sales talk

Newspaper: IDBI Federal has attained notice through many articles and advertisements published in various national and regional newspapers in India like the Economic Times, Times of India, The Hindu , Samachar Jagat, Vir Arjun, Meghalaya Guardian etc. IDBI Federal spends around Rs 1040 per sq.cm for promotional activities through newspapers. They position the ads and articles in such a way that it catches the eye of the reader as soon as they start reading the newspaper (See appendix for the articles).

Hoardings: IDBI Federal has also tried making their potential customer aware of their products and policies through billboards and hoardings by positioning them in strategic locations throughout the nation. As of now, the total number of hoardings which are put up in Hyderabad region counts to a good 17 number. The total expenses spent by the company for this promotional activity is Rs 4 lacs.

Pamphlets: Pamphlets are distributed across India at least 5 times in a month without any cost. It’s done to create maximum awareness about the products/services.

Magazines: There is no specific magazine in which advertisement is given. It’s given in magazines depending upon their sales and reputed magazines like Outlook, Money, etc. The advertisement is given every month at least once in any magazine

Mainly, the advertisement is shown on cricket channels, Star channels. The main promotions were done during FEB & MARCH to:

Highlight Tax benefits. To combat competition as all the Insurance companies would

advertise during this time at a great frequency. The complete cost of making a commercial which includes all the

equipments, actors, etc is approximately Rs. 20 lacs. The company has tie-up with Ogilvy and Mather as its advertising agency along with Equinox (TLG) as its media partner. The life of usage of a single television commercial is 2 years. Mainly the ads are shown in between TV serials and cricket matches to gain attention of the consumers.

A strong network of distributors and parent advisors also helps a lot in promoting products/services of IDBI Federal by word of mouth.

A Viral campaign is also run on the Internet by wherein flash videos of working of products are explained in a very humorous manner. The same is shown on www.bosskaboss.com

For the study an extensive market research program was carried out in two stages:

1. Interview 2. Survey (Both online and door to door)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

The research population comprised of government employees, self-employed, private employees, retired people. The Sample

Size was restricted to 150 above the age group of 20 which comprised of mainly people from Mumbai & Delhi. The type of

sampling used for the research is simple random sampling where the population has an equal chance of being selected.

All the data that has been collected are primary data collected through personal endeavors on and off the field.

Sample for interviews:1. Professionals in Mumbai

2. Professionals in Delhi

Sample for survey:1. Professionals on the internet (Those who were personally invited

by email or invited in professional groups)2. Professionals in Mumbai (From whom data was collected

personally)

The questions are designed in the easily understandable way in the topic “Study of Promotional Strategies for Life Insurance Products With Reference To IDBI Federal”

Data collection is done through questionnaire. Different types of graphs & Charts have been used to illustrate the findings diagrammatically. They are,

  Bar graphs Pie Chart Line Chart Area chart Likert Scale  These charts and graphs help to illustrate the output in the

diagrammatic way. Thus, the data is interpreted with the help of graphs and charts and the findings have been arrived

The qualitative analysis (interview process) is done through interview which involves of following questions & analysis is given below: 

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)

The quantitative analysis is done by means of questionnaire. 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, Delhi & Mumbai 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.

After analysis of the responses collected from the respondents the following observations, conclusions & recommendations were made:

Television for entertainment and gaining information. So it is the best media for promotion.

People don’t give more importance to the advertisements while compared to brand, tax benefit, death benefit, security and low premium.

It is found that people are least bothered about the celebrity endorsements.

The message and creativity is important for insurance product.

The promotional efforts and word of mouth is most influencing while compared to internet.

Advertisements play a major role in influencing a person to buy an insurance policy.

Insurance companies don’t need a brand ambassador to endorse the product.

The research is confined to a certain parts of Delhi & Mumbai due to time constraints and does not necessarily shows a pattern applicable to all of Country. Also the sample size might not be appropriate.

Some respondents were reluctant to divulge personal information which can affect the validity of all responses.

In a rapidly changing industry, analysis on one day or in one segment can change very quickly.

The environmental changes are vital to be considered in order to assimilate the findings.

Insurance sector was opened for private players with the starting of the 20th century, after economic reforms in 1991, economy was liberalized. Since then there has a rampant and dynamic growth in the field of insurance. The insurance sector has intensified and companies are formulating survival strategies due to immense competition in a de-tariff scenario. This study was focused on the role and impact of advertisement in the promotional strategies of various products adopted by Insurance sectors. The study reveals the advertisements are the major strategy that helps the insurance companies to promote their products.

As it is evident from the findings that for insurance companies advertisements play a major role in promotion of their products, several different ways of advertising are recommended which can enhance their product sales & build a larger customer base. Some of them can be-

Agency Mascot Emergency information wallet cards Host a window etching event Harnessing the power of Facebook Host seminars Apart from all these there are many more ways to enhance the

marketing & advertising of insurance products which are explained in detail later