http://www.saarj.com - 185 - Publ i shed by: South Asi an Academi c Research Journal s SAJMMR: S o u t h A s i a n J o u r n a l o f M a r k e t i n g & M a n a g e m e n t R e s e a r c h A STUDY ON THE BENEFITS OF ADVERTISEMENTS ON THE PROMOTION OF PRODUCTS A SPECIAL REFERENCE TO IDBI FEDERAL LIFE INSURANCE COMPANY LTD
DR. S. SUJATHA*; SEEMA**
*Associate Professor, VIT Business School, VIT University, Vellore - 632014 Tamil Nadu, India. **Assistant Professor,
VIT Business School , VIT University, Vellore - 632014 Tamil Nadu, India.
ABSTRACT
With the increase in the growth of players in Insurance sector (both public and private) the insurance companies are finding it difficult to promote their products. This paper tires to study the benefits of advertisement as a tool for promotion of products by Insurance Company. The study is done with special attention to IDBI Federal Life Insurance Company Ltd.
KEYWORDS: Advertisement, Promotion, Benefits, Insurance company, and Products. _____________________________________________________________________________
1. INTRODUCTION Promotion is one of the four elements of marketing mix (product, price, promotion, and place). It is the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyer's purchasing decision. The following are two types of promotion:
South Asian Academic Research Journals http://www.saarj.com - 186 - 1. 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 2. 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. 3. E.g. sponsorship, testimonials, sales promotion, merchandising, direct mail, personal selling, public relations, trade shows The specification of five elements creates a promotional mix or promotional plan. These elements are personal selling, advertising, sales promotion, direct marketing, and publicity. A promotional mix specifies how much attention to pay to each of the five subcategories, and how much money to budget for each. A promotional plan can have a wide range of objectives, including: sales increases, new product acceptance, creation of brand equity, positioning, competitive retaliations, or creation of a corporate image. Fundamentally, however there are three basic objectives of promotion. These are: 1.To present information to consumers as well as others 2.To increase demand 3.To differentiate a product. There are different ways to promote a product in different areas of media. Promoters use internet advertisement, special events, endorsements, and newspapers to advertise their product. Many times with the purchase of a product there is an incentive like discounts, free items, or a contest. This is to increase the sales of a given product. 2. OBJECTIVES OF THE PROJECT The various objectives in doing this study are as follows: To find how effectively advertisements influence a person to buy the life insurance products The find whether insurance companys like IDBI federal needs brand ambassador to reach the customer effectively Identifying the role of advertisements for life insurance products 3. INDIAN INSURANCE MARKET Insurance has had a very long history in India; life insurance was introduced in India with the starting of Oriental life insurance Company in Kolkata in the year 1818. History of insurance can be further divided in three areas a) pre-nationalization, b) nationalization and c) post Nationalization. Life insurance was first nationalized in 1956, followed by general insurance in SAJMMR Volume 2, Issue 7 (July, 2012) ISSN 2249-877X
South Asian Academic Research Journals http://www.saarj.com - 187 - 1973.General insurance corporation of India was set as controlling body, all this was initiated against the economic reforms of 1991.This was followed by many such acts and amendments including insurance regulatory development Act (IRDA) passes in 1999.Private players were encouraged in the insurance sector and they effectively started operations from 2001. 4. INSURANCE MARKET- PRESENT Insurance sector was opened for private players with the starting of the 20 th century. After economic reforms in 1991, economy was liberalized. Since then there has a rampant and dynamic growth in the field of insurance. Most of private players have entered this sector with joint collaborations across the globe. There are now 29 insurance companies operating in the Indian market 14 private life insurers, nine private non-life insurers and six public sector companies. The insurance sector has intensified and companies are formulating survival strategies due to immense competition in a de-tariff scenario. There is pressure from both within the country and outside on the Government to increase the foreign direct investment (FDI) limit from the current 26% to 49%, which would help this sector to expand. 5. TYPES OF INSURANCE 1. Life Insurance - Insurance guaranteeing a specific sum of money to a designated beneficiary upon the death of the insured, or to the insured if he or she lives beyond a certain age. 2. Health Insurance - Insurance against expenses incurred through illness of the insured. 3. Liability Insurance - This insures property such as automobiles, property and professional/business mishaps. 6. CHALLENGES FACED BY INSURANCE INDUSTRY THREAT OF NEW ENTRANTS: The insurance industry has been budding with new entrants every other day. Therefore the companies should carve out niche areas such that the threat of new entrants might not be a hindrance. There is also a chance that the big players might squeeze the small new entrants. POWER OF SUPPLIERS: Those who are supplying the capital are not that big a threat. For instance, if someone as a very talented insurance underwriter is presently working for a small insurance company, there exists a chance that any big player willing to enter the insurance industry might entice that person off. POWER OF BUYERS: No individual is a big threat to the insurance industry and big corporate houses have a lot more negotiating capability with the insurance companies. Big corporate clients like airlines and pharmaceutical companies pay millions of dollars every year in premiums. SAJMMR Volume 2, Issue 7 (July, 2012) ISSN 2249-877X
South Asian Academic Research Journals http://www.saarj.com - 188 - AVAILABILITY OF SUBSTITUTES: There exist a lot of substitutes in the insurance industry. Majorly, the large insurance companies provide similar kinds of services be it auto, home, commercial, health or life insurance. 7. COMPANY PROFILE IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, Indias premier development and commercial bank, Federal Bank, one of Indias leading private sector banks and Ageas, a multinational insurance giant based out of Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26% equity each. IDBI Federal endeavors to deliver products that provide value and convenience to the customer. Having started in March 2008, in just five months of inception we became one of the fastest growing new insurance companies to garner Rs 100 Cr in premiums. The company offers its services through a vast nationwide network across the branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. As on January 31st 2011, the company has issued over lakh 2.68 lakh policies with over Rs 14, 230 Cr in Sum Assured. 8.PROMOTIONAL STRATEGIES ADOPTED IN IDBI FEDERAL Following are the main ways in which IDBI Federal life Insurance company ltd promotes its products/services and creates awareness in the market. 8A.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). 8B.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. 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 lakh. 8C. PAMPHLETS: Pamphlets are distributed across India at least 5 times in a month without any cost. Its done to create maximum awareness about the products/services. 8D. MAGAZINES: There is no specific magazine in which advertisement is given. Its 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. 8E. TELEVISION: Mainly, the advertisement is shown on cricket channels, Star channels. The main promotions were done during FEB & MARCH to: Highlight the tax benefits SAJMMR Volume 2, Issue 7 (July, 2012) ISSN 2249-877X
South Asian Academic Research Journals http://www.saarj.com - 189 - To combat competition as all the insurance companies would advertise during this time at a great frequency. Also the company will soon start displaying their advertisements on Satellite TV like SUN network, etc. 8F. DISTRIBUTORS: 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. 8G. LOCAL EVENTS: The overall costs associated with such events totals to Rs. 2,00,000 per annum such events are mainly conducted in Apartments, Schools, etc. Building an engagement process around the solution being offered gives an additional boost to this cause. Spelling Bee was a specially created spelling contest created to connect with children. The engagement started with the spelling contest for kids and gave their IRMs a natural opening for a discussion with parents about financial planning for their childrens future needs like education. This is a sort of channel marketing which IDBI Federal had adopted to create awareness as well as to educate the future generation about the company and the importance of saving. Also IDBI Federal involved them in developing their business by joining hands with SAMHITA, a community development organization based out of Bhopal which works towards bringing financial literacy to the underprivileged population in Madhya Pradesh. They believe that such financial literacy among the under banked population will help bring a holistic change in the way people perceive and understand financial products and their utility at various stages in their life. This will ultimately help bring them closer to financial inclusion 9. RESEARCH METHODOLOGY The type of research is Descriptive research. It relies on both Primary data and Secondary data. The primary data is collected using the questionnaire which is specifically gathered for current study. It tends to be Quantitative in nature that is to say in the form of numbers that can be quantified and summarized. Thus, descriptive research is useful in research conclusions and decision making. 9A. POPULATION AND SAMPLE The research population comprised of Government employees, Self-employed, Private employees, retired people, home-makers, College students. The Sample Size was restricted to 150 above the age group of 20 which comprised of mainly people from Chennai. The type of sampling used for the research is Simple random sampling where the population has an equal chance of being selected 10. DATA COLLECTION TOOLS 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. SAJMMR Volume 2, Issue 7 (July, 2012) ISSN 2249-877X
South Asian Academic Research Journals http://www.saarj.com - 190 - 11. DATA ANALYSIS TOOLS Data collection is done through questionnaire. The SPSS software is used to analyze the data. Different types of graphs & Charts have been used to illustrate the findings diagrammatically. They are, Bar graphs Pie Chart Line Chart Area chart 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. 12. DATA ANALYSIS In the questionnaire i have considered three important factors to find the importance of promotional strategies. They are, Psychological factors Sources that influence the people to purchase the insurance product Features influencing the people to purchase an insurance product Thus, these factors help in finding how effectively they influence a person in purchasing a insurance product. 12A. MEDIA
South Asian Academic Research Journals http://www.saarj.com - 191 - Out of 150 samples collected for the survey 94 people(62.7%) have chosen TV as the most used media followed by Newspaper(37 people, 24.7%) and Internet(19 people 12.7%). Out of 150 people not even one preferred Radio. This shows that Television is the best media to promote the products. This will help the company to reach end users easily. 12B. BRAND
FIGURE 2 BRAND Out of 150 samples collected 84 people (56%) have said that brand is most important, 65 have said that brand is important (43.3%) and one person said brand is least important. This shows brand is most important for the people.
South Asian Academic Research Journals http://www.saarj.com - 192 - 12C. PRODUCT AWARENESS
FIGURE 3. PRODUCT AWARENESS Among the 150 samples collected 85 said that product awareness is most important followed by Important 57 people, Moderate 7 people and not important 1 person. 12D. LOW PREMIUM AND RETURNS
South Asian Academic Research Journals http://www.saarj.com - 193 - Out of 150 samples collected 82 have said low premium and returns are most important, 56 have said its important and 12 have said it is moderate. 12E. SECURITY
FIGURE 5 SECURITY Among the 150 samples collected 120 said security is most important, 23 said its important, 5 said its moderate and 2 of them said it is not important. 12F. ADVERTISEMENTS
South Asian Academic Research Journals http://www.saarj.com - 194 - Out of 150 people 6 have said it is most important, 12 have said it is important, 46 have said moderate, 46 of them said it is not important and 40 chose least important. 12G. TAX BENEFIT
FIGURE 7 TAX BENEFIT Out of 150 samples collected 100 of them said tax benefit is most important, 38 said its important, 9 of them said it is moderate, 2 of them said not important and 1 person said it is least important. 12H. DEATH BENEFIT
South Asian Academic Research Journals http://www.saarj.com - 195 - Among 150 samples 47 said it is most important, 86 said it is important, 15 chose moderate and 2 of them said it is not important. 12I. LIFE INSURANCE ADVERTISEMENT
FIGURE 9 LIFE INSURANCE ADVERTISEMENT Among the 150 samples collected 145 of them answered that they have seen the life insurance advertisement and 5 of them said they have not. 12J. PSYCHOLOGICAL FACTORS PRICE
South Asian Academic Research Journals http://www.saarj.com - 196 - Out of 150 people 87 said that price is more affecting, 56 of them said that it is affecting, 5 of them said it is moderate and 2 of them said it is not affecting. 12K. CELEBRITY ENDORSEMENTS
FIGURE 11 CELEBRITY ENDORSEMENTS Out of 150 samples collected 2 of them said its most affecting, 8 of them said its affecting 17 said its moderate 26 said its not affecting and 97 said it is least affecting. 12L. BENEFIT
South Asian Academic Research Journals http://www.saarj.com - 197 - Among 150 samples collected 132 said benefit is most affecting factor, 13 said it is affecting, 3 said it is moderate, 2 said it is not affecting and 1 said it is least affecting. 12M.TV COMMERCIAL
FIGURE 13 TV COMMERCIAL Out of 150 samples collected 105 said Message is most important followed by creativity (44 people) and celebrity endorsements (1 person). 12N. SOURCES INFLUENCING PURCHASE OF INSURANCE POLICY ADVERTISEMENT
South Asian Academic Research Journals http://www.saarj.com - 198 - Among 150 persons 30 have said it is most influential, 49 have said influential, 54 of them said moderate, 13 of them answered Not influential and 4 of them said least influential. 12O. PROMOTIONS(SCHEMES, DISCOUNTS)
FIGURE 15 PROMOTIONS Out of 150 samples collected 62 said most influential, 72 said influential, 11 of them answered moderate, 4 of them said not influential, and 1 person answered least influential. 12P. WORD OF MOUTH
South Asian Academic Research Journals http://www.saarj.com - 199 - Among 150 samples 111 said it is most influential, 25 said it is influential, 7 said it is moderately influential, 4 said its not influential and 3 said it is least influential. 12Q. INTERNET
FIGURE 17 INTERNETS INFLUENCE 82 of them answered that internet is least influential while buying an insurance policy followed by not influential (19 people), moderate (19 people) influential (14 people), most influential (16 people). 12R. BRAND AMBASSADOR
South Asian Academic Research Journals http://www.saarj.com - 200 - Out of 150 samples collected 36 of them answered yes and 114 of them answered no, which shows that brand ambassadors are not important to endorse insurance products. 12S. ADVERTISEMENTS ROLE
FIGURE 19 ADVERTISEMENTS ROLE 72 of them agreed that advertisements play major role for insurance products.74 of them were moderate and 4 of them disagree the statement. 12T. PRODUCTS POPULARITY
South Asian Academic Research Journals http://www.saarj.com - 201 - Among the 150 samples collected 132 of them answered that they will look for products popularity while buying an insurance policy and 18 of them answered no. 13. FINDINGS After analysis it is found that, Television for entertainment and gaining information. So it is the best media for promotion. People dont give more importance for 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 dont need a brand ambassador to endorse the product. After the analysis it is found that advertisements help the insurance companies to reach the end users easily. But still the advertisements must be more clear and creative because there is heavy competition in the market. The companys must use other promotion strategies like conducting more events and experience, publicity etc. that would help in reaching the end users effectively. 14. CONCLUSION Insurance sector was opened for private players with the starting of the 20 th 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 focussed 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. REFERENCES BOOKS 1. George Belch & Michael Belch(2006),6 th edition, Advertising & Promotion, Tata McGraw Hill SAJMMR Volume 2, Issue 7 (July, 2012) ISSN 2249-877X
South Asian Academic Research Journals http://www.saarj.com - 202 - 2. Philip Kotler, Keller, Koshy, Jha, 13 th edition, Marketing Management, Pearson Education 3. Donald R Cooper / Pamela S. Schinder, 9 th edition, Business research methods, McGraw Hill 4. Ramaswamy and Namakumari,4 th edition, Marketing Management, Macmillan Publication 5. Wells, Burnett, Morairty, 6 th Edition, Advertising Principles & Practices, Pearson Education WEB REFERENCES 1. Annual Report IRDA 2. www.idbifederal.com 3. www.emeraldinsight.com 4. www.scribd.com 5. www.wikipedia.org 6. www.irda.com