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CHAPTER 1
MARKETING AND ADVERTISING



Meaning of marketing

Marketing is the process of communicating the value of a product or service to
customers. Marketing might sometimes be interpreted as the art of selling
products, but selling is only a small fraction of marketing. Marketing is about
identifying and understanding your customer and giving them what they want. It's
not just about advertising and promoting your business.

Definition of marketing

Marketing is a human activity directed towards satisfying needs and wants
through exchange process.

MARKETINGMIX
Marketing mix is one of the most fundamental concepts in marketing
management. The marketing mix is often crucial when determining a product or
brand's offering for attracting consumers and for sales promotion, every
manufacturer has to concentrate on four basic elements or components these
are as follows

1. Product

2. Pricing

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3. Distributive channels (place)

4. Sales promotion techniques


DEFINITIONS OF MARKETING MIX

According to Philip Kotler, marketing mix is the mixture of controllable marketing
variables that the firm uses to pursue the sought level sales in the target market.



Service Marketing Mix

The service marketing mix is also known as an extended marketing mix
and is an integral part of a service blueprint design. The service marketing mix
consists of 7 Ps as compared to the 4 Ps of a product marketing mix. The
product marketing mix consists of the 4 Ps which are Product, Pricing,
Promotions and Placement.
These are discussed in my article on product marketing mix the 4 Ps.
The extended service marketing mix places 3 further Ps which include People,
Process and Physical evidence. All of these factors are necessary for optimum
service delivery


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PRODUCT

The product in service marketing mix is intangible in nature. Like physical
products such as soap or a detergent, service products cannot be measured.
Insurance industry is the excellent example. At the same time service products
are heterogeneous, perishable etc. The service product thus has to be designed
with care. Generally service blue printing is done to define the service product.

PRICING
In the insurance business the pricing decisions are concerned with:
i) The premium charged against the policies,
ii) Interest charged for defaulting the payment of premium and credit facility, and
iii) Commission charged for underwriting and consultancy activities.
With a view of influencing the target market or prospects the formulation of
pricing strategy becomes significant. In a developing country like India where the
disposable income in the hands of prospects is low, the pricing decision also
governs the transformation of potential policyholders into actual policyholders.
The pricing in insurance is in the form of premium rates.

PLACE

This component of the marketing mix is related to two important facets --
i) Managing the insurance personnel, and
ii) Locating a branch.
The management of agents and insurance personnel is found significant
with the viewpoint of maintaining the norms for offering the services. This is also
to process the services to the end user in such a way that a gap between the
services- promised and services -- offered is bridged over. In a majority of the
service generating organizations, such a gap is found existent which has been
instrumental in making worse the image problem.
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PEOPLE

Understanding the customer better allows designing appropriate products.
Being a service industry which involves a high level of people interaction, it is
very important to use this resource efficiently in order to satisfy customers.
Training, development and strong relationships with intermediaries are the key
areas to be kept under consideration. Training the employees, use of IT for
efficiency, both at the staff and agent level, is one of the important areas to look
into.

PROCESS

The process should be customer friendly in insurance industry. The speed
and accuracy of payment is of great importance. The processing method should
be easy and convenient to the customers. Installment schemes should be
streamlined to cater to the ever growing demands of the customers. IT & Data
Warehousing will smoothen the process flow.

PHYSICAL DISTRIBUTION

Distribution is a key determinant of success for all insurance companies.
Today, the nationalized insurers have a large reach and presence in India.
Building a distribution network is very expensive and time consuming. If the
insurers are willing to take advantage of India's large population and reach a
profitable mass of customers, then new distribution avenues and alliances will be
necessary. Initially insurance was looked upon as a complex product with a high
advice and service component.


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Promotion

Promotion is one of the market mix elements, and a term used frequently
in marketing. Promotion is a very important concept in marketing .It represents all
of the methods of communication that a marketer may use to provide information
to different parties about the product. Promotion comprises elements such as:
advertising, public relations, personal selling and sales promotion.

Publicity
Free promotion through news stories in newsletters, newspapers,
magazines and television

Sales Promotion
all forms of communication not found in advertising and personal selling,
including direct mail, coupons, volume discounts, sampling, rebates,
demonstrations, exhibits, sweepstakes, trade allowances, samples and point-of
purchase displays In designing a promotional plan, clearly spell out:











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CHAPTER 2
ADVERTISING AND INSURANCE SECTOR

Meaning of advertising

Advertising is nothing but a paid form of non-personal presentation or
promotion of ideas, goods or services by an identified sponsor with a view to
disseminate information concerning an idea, product or service. In Latin,
advertise means to turn the mind toward. Advertising is a form of
communication for marketing and used to encourage or persuade an audience
(viewers, readers or listeners; sometimes a specific group) to continue or take
some new action. The purpose of advertising may also be to reassure employees
or shareholders that a company is viable or successful. The most important
aspects of promotion is advertising. Advertising is an indispensable part of the
marketing strategy of any product or service. A proper advertisement has a great
impact on the sales of the product and that is why companies spend huge
amount of money to make effective advertisements.


DEFINITION OF ADVERTISMENT

According to Wood, "Advertising is causing to know to remember, to do."
According to Richard Buskirk, "Advertising is a paid form of non-personal
presentation of ideas, goods or services by an identified sponsor."

The above definitions clearly reveal the nature of advertisement. This is a
powerful element of the promotion mix. Essentially advertising means spreading
of information about the characteristics of the product to the prospective
customers with a view to sell the product or increase the sale volume.


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BACKGROUND

The earliest forms of advertising would have been through word of mouth.
Advertising for sales, and lost and found was commonly created on papyrus in
ancient Egypt, Greece and Rome. Commercial adverting through wall or rock
paintings that goes back to 4000 BC has been found in many parts of India,
Africa and South America.

Commercial and political advertising displays have been recovered from
the ruins of the ancient Pompeii, a roman city destroyed by the volcano Mount
Vesuvius in 79 AD as education became an apparent need and reading, as well
as printing, developed advertising expanded to include handbills.

In the 18th century advertisements started to appear in weekly
newspapers in England. These early print advertisements were used mainly to
promote books and newspapers, which became increasingly affordable with
advances in the printing press; and medicines, which were increasingly sought
after as disease ravaged Europe. However, false advertising and so-called
"quack" advertisements became a problem, which ushered in the regulation of
advertising content.


The main features of advertise are as under:

It is directed towards increasing the sales of business.
Advertising is a paid form of publicity
It is non-personal. They are directed at a mass audience and nor at the
individual as is in the case of personal selling.
Advertisements are identifiable with their sponsor of originator which is not
always the case with publicity or propaganda.

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Objective / Functions of advertising
The purpose of advertising is nothing but to sell something -a product, a
service or an idea. The real objective of advertising is effective communication
between producers and consumers. The following are the main objectives of
advertising:

Preparing Ground for New Product
New product needs introduction because potential customers have never used
such product earlier and the advertisement prepares a ground for that new
product.
Creation of Demand
The main objective of the advertisement is to create a favorable climate for
maintaining of improving sales. Customers are to be reminded about the product
and the brand. It may induce new customers to buy the product by informing
them its qualities since it is possible that some of the customers may change
their brands.
Facing the Competition
Another important objective of the advertisement is to face to competition. Under
competitive conditions, advertisement helps to build up brand image and brand
loyalty and when customers have developed brand loyalty, becomes difficult for
the middlemen to change it.
Creating or Enhancing Goodwill
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Large scale advertising is often undertaken with the objective of creating or
enhancing the goodwill of the advertising company. This, in turn, increases the
market receptiveness of the company's product and helps the salesmen to win
customers easily.
Informing the Changes to the Customers
Whenever changes are made in the prices, channels of distribution or in the
product by way of any improvement in quality, size, weight, brand, packing, etc.,
they must be informed to the public by the producer through advertisement.
Neutralizing Competitor's Advertising
Advertising is unavoidable to complete with or neutralize competitor's advertising.
When competitors are adopting intensive advertising as their promotional
strategy, it is reasonable to follow similar practices to neutralize their effects. In
such cases, it is essential for the manufacturer to create a different image of his
product.
Barring New Entrants
From the advertiser's point of view, a strongly built image through long
advertising helps to keep new entrants away. The advertisement builds up a
certain monopoly are for the product in which new entrants find it difficult to enter.
In short, advertising aims at benefiting the producer, educating the consumer and
supplementing the salesmen. Above all it is a link between the producer and the
consumer.




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FUNCTIONS OF ADVERTISMENT

It promotes sale of goods and services.
It helps introduction of new product in the market.
It encourages a business firm to do mass production.
It stimulates research and development activities.
It provides revenues to press and other medium of advertisement like
television, newspaper, magazines etc
It builds reputation of the advertiser.

Importance of Advertisement:
Advertising broadens the knowledge of the consumers. With the aid of
advertising, consumers find and buy necessary products without much waste of
time. This speeds up the sales of commodities, increases the efficiency of labor
in distribution, and diminishes the costs of selling.
It is an accepted fact that without market stimulus of heavy advertising,
consumers might have waited another sixty years for the product evaluation that
took place in less than ten years - it took after all over sixty years from the
invention of the safety razor before the first acceptable stainless steel blades
appeared in the market. These words are more than enough to testify the
potentialities of advertising in the field of modern marketing system.

1. Crucial for a launch
Advertising is very crucial for launching (introducing) a new product,
service and/or idea in the market. If advertisement of any concerned product,
service and/or idea is done properly at a right place, through proper media, and
within a specific time constraint, can attract new-customers. This helps to capture
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the market and increase sales of an advertiser. Advertising is also essential for
announcing an upcoming event. Advertising an open invitation maximizes the
chances of event attendance. However, if people are unaware of any such
happening, they may not show up. As a result, the event may not get an
expected response. Hence, advertising contributes to the success of an event.
2. Source of revenue
Advertising is a prime source of revenue for publishers of mass-media like
newspapers, TV channels, magazines, websites, etc. The input cost involved in
processing any valuable information is usually higher than its selling price. A
publisher's cost rises due to various data gatherings and information-processing
activities like research (investigation), professional writing, editing, proof-reading;
publishing in form of printing or digital web hosting, and distribution. Advertising
pays publishers their input costs and in return use their media platform as a
medium to reach maximum people. Indirectly, because of it, customers of
publishers (who are mostly readers and/or viewers) also get an affordable access
(or sometimes even a free access) to high-quality information databases.
3. Sales promotion
Advertising is done to promote goods, services, ideas and/or events.
Advertising is used for the promotion of: Goods falling under categories like
cosmetics, electronics, eatables, stationary, jewelry, textiles, etc. Services
provided under banking, insurance, hospitality, air travel, consultancy, health
care, education, etc
4. Increases sales
Advertising sparks an interest in masses about advertised products and/or
services of its advertiser. This interest creates demand in the market. The
growing demand soon results in higher sales. Eventually, the advertiser fulfills his
main goal of investing in an advertisement. However, to continue with such a
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growth in sales, the advertiser must also maintain a good price-quality ratio along
with regularly continuing his ad campaigns.
5. Maximizes profit
Advertising helps in increasing sales and control the cost borne by the
advertiser. It helps to widen the gap between his sales and incurred cost. With
maximizing sales and lowering cost, the profit of an advertiser grows. Thus,
advertising aids in maximizing the profit of its advertiser.
6. Consumer awareness
Advertising creates awareness by informing consumers.
Awareness: Advertising creates awareness among consumers about an
availability of any specific product and/or service in the market. It attempts to
convey them why an advertised product and/or service is better than other
alternatives currently available in the market.
Information: Advertising informs a consumer, mainly about; various features,
benefits, price and use of an advertised product and/or service. It also gives
information about the brand name or trade-mark used, address of a manufacture
or a service provider, and other relevant details to the consumer.
While creating awareness and supplying relevant information, advertising
ultimately helps a consumer to make a right choice in his or her purchase.

7. Demands creativity
Advertising is impossible without creative thinking. In other words,
creativity is the essence (main ingredient or soul) of advertising. For an
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advertisement to be a success; it must have some fundamental aspects or
characteristics in it. An advertisement (ad) must be:
Creative,
Original,
Not a copied one,
Artistic, and also
Attractive to large masses.

8. Element of marketing mix
Advertising is an important element of marketing mix. It supports sales
promotion. In today's competitive world, it is getting difficult to sale something.
Consumers now-a-days are more cautious and better aware about things they
buy and use. They don't easily break their loyalty towards their favorite goods
and/or service unless and until somethings allure them in unique way and
compels them to at least give a try.

9. Target oriented
Advertising is target-oriented in nature. Target oriented means to focus on
(or target one's attention to) only a specific thing, at one time.In context of
advertising, it means to focus on (target), or deliver attention towards, only a
specific group or class of consumers.

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10. Monitor demand and supply
Advertising, if done repetitively, helps in generating higher demand in the
market for advertised products and/or service. Rising demand must be met with
an equivalent amount of supply of products and/or efficient delivery of services.
Proper care must be taken to monitor the demand and supply function, so that
none of the demands are skipped. If supply is not made at par with an increasing
demand, the market may soon lose confidence and downfall of demand may take
place. If this happens, the sale will fall down, and money spent on advertising
may not be recovered. This may add to losses.
Thus, when advertising results in higher demands, an appropriate supply
must be also ready to compensate it. To see that such compensation is done
properly, the demand and supply function must be well monitored.
11. Builds brand's image
Advertising creates goodwill and helps in building a brand's image in the
market. Repeated advertisements make brands very popular. Generally, people
tend to show a more trustworthy attitude towards advertised brands over non-
advertised ones. Well-known branded products are usually made from high-
quality raw-materials and hence are always preferred by most consumers. This
increases demand for such products. Rise in popularity and building trust
gradually helps to increase the value of the brand. This eventually boosts sales
of such branded products. It also increases the reputation of that entity who owns
these brands.
12. Generates employment
Advertising agencies are constantly in search of newer creative ideas to
cope with the rising demands from their clients (advertisers). Each ad
assignment (project) demands a high-level of mental labour. There are dead
lines within which projects must be completed and submitted. Furthermore, the
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concept of ad must be also welcomed (approved) by the advertiser. Overall, this
creates a huge demand of creative people and thus opens new employment
opportunities in the field of advertising.
Advertising provides employment to deserving candidates who are mainly
creative thinkers, directors, artists, graphic designers, sales representatives and
managers.

BENEFITS OF ADVERTISMENT
TO THE INSURANCE COMPANY
It encourages agents and brokers to sell insurance companies product.
It enhances an insurance companys public image.
It supports introduction of new products.
It influences public and legislative opinion on issues of importance to the
insurance industry.
Establish and maintain your distinct, identity, and brand

TO THE POLICYHOLDER:
Remind customers and potential customer of the benefits of the product
and services.
It predispases customers to be receptive to sales calls.
It provides an opportunity to the customers to compare the merits and
demerits of other companies insurance product.
It helps the customer to know when and were and what are the
procedures in obtaining the policies.



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DIFFERENT CATEGORIES OF ADVERTISING

Advertising can be classified into different categories they are as under:

Personal- In this kind of advertising individual and families buy space in
newspapers and magazines to sell personal belongings like cars, home etc.

Classified advertising The term classified advertising is a type of advertising
usually classified under heading such as job vacant, cars etc.

Manufacturers consumer advertising This refers to high spending repetitive
advertisement on television. it is the way in which large manufacturers
communicate directly with their end users i.e., customer

Service advertising It refers to advertisement of intangibles, like banking
services, insurance service etc.

Industrial (business to business advertising) This kind of advertising of
goods and services for commerce, industry, government and other institutions.
The customers are executives and official taking discussions to purchase such
has a factory equipment, office equipments etc.

Product advertising - Normal characteristics of advertising is to create demand
for product rather then the brand. It refers to advertising of the product, i.e.,
goods and services provided by the organization.

Institutional advertising where the objectives of advertising is to project the
image of the company it takes the firm of institutional advertisement.



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ADVERTISERS

Advertisers refer to an entity that advertises. Advertisers can be classified as
follows:

Consumer advertisers they are those who manufactures consumable goods,
durables or non durables and services

Industrial advertisers These advertisers predominately manufactures market
product for industrial market

Retailers They advertise locally for store patronage.

ADVERTISMENT IN INSURANCE
Insurance is a fast-paced field with a wealth of opportunities to offer
motivated professionals and talented salespeople, and having the right personal
skills coupled with a great attitude and the proper credentials can make for a
great beginning to a successful career in insurance. But there are other
components necessary for launching or improving an effort in selling insurance,
no matter the specific type or line involved.
Among these, insurance advertising is a central necessity that can make
or break a campaign, no matter how great or well-prepared its other elements
may turn out to be. Understanding advertising as a standalone concept can be
helpful in the quest to gain an advantage in the insurance world, but being able to
apply advertising principles to insurance while staying up to date on the newest
trends and ideas in both fields are sure ways to realize productive advertising
campaigns.
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Insurance advertising has typically based its primary methodologies and
attributes on the type of insurance that is being sold. Because emotional content
is an important part of selling insurance, it's imperative to have a good idea of the
feelings and thoughts associated with different types of plans.
People interested in purchasing disability or final expense insurance
probably won't be as responsive to overly-enthusiastic, unsympathetic
advertising, whereas those shopping for business insurance likely don't wish to
focus on worst-case scenarios, but rather have a positive spin put on the aspects
of the plan or package they're considering. There is ample market research
available for studying the emotional triggers and associations involved with
different types of insurance, though local surveys may be of use to especially
ambitious agents.










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CHAPTER 3
TYPES OF ADVERTISMENTUSED IN INSURANCE
Virtually any medium can be used for advertising. Commercial advertising
media can include wall paintings, billboards, street furniture components, printed
flyers and rack cards, radio, cinema and television adverts, web banners, mobile
telephone screens, shopping carts, web popups, skywriting, bus stop benches,
human billboards and forehead advertising, magazines, newspapers, town criers,
sides of buses, banners attached to or sides of airplanes ("logojets"), in-flight
advertisements on seatback tray tables or overhead storage bins, taxicab doors,
roof mounts and passenger screens, musical stage shows, subway platforms
and trains, elastic bands on disposable diapers, doors of bathroom stalls, stickers
on apples in supermarkets, shopping cart handles (grabertising), the opening
section of streaming audio and video, posters, and the backs of event tickets and
supermarket receipts. Any place an "identified" sponsor pays to deliver their
message through a medium is advertising.

TELEVISION ADVERTISMENT
A television advertisement or television commercial is a span of television
programming produced and paid for by an organization that conveys a message .
it is the latest and fast growing medium of advertising it makes appeal through
both eyes and ears

ADVANTAGES
Television permits you to reach large numbers of people on a national or
regional level in a short period of time.
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Independent stations and cable offer new opportunities to pinpoint local
audiences.
Television being an image-building and visual medium, it offers the ability
to convey your message with sight, sound and motion.
DISADVANTAGES
Targeting your market is difficult.
These can an inappropriate medium for some businesses.
It is difficult to find items that are appropriate for certain businesses.
Longer lead time in developing the message and promotional product
Possibility of saturation in some items and audience.
Wrong choice of product or poor creative or poor creative may cheaper the
image of advertiser.

NEWSPAPER
It refers to daily publication containing news and opinions about current
events and feature articles. Newspapers are one of the traditional mediums used
by businesses, both big and small alike, to advertise their businesses.
ADVANTAGES
Allows you to reach a huge numbers of people in a given geographic area.
One has the flexibility in deciding the ad size and placement within the
message.
Ad can be as large as necessary to communicate as much of a story as
you care to tell.
Exposure to the ad is not limited; readers can go back to your message
again and again if so desired.
Free help in creating and producing ad copy is usually available.
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Quick turn-around help your ad reflect the changing market conditions the
ad you decide to run today can be in your customers hand in one to two
days.
DISADVANTAGES
Ad space can be expensive.
Poor photo reproduction limits creativity.
Newspapers are a price oriented medium; most ads are for sales.
Ads have a short shelf life, as newspapers are usually read once and
then discarded.
Newspapers are a highly visible medium so your competitors can quickly
react to your prices.
With the increasing popularity of the internet, newspaper faces declining
readership and market penetration. A growing number of readers now
skip the print version of the newspaper (and hence the print ads) and
instead lead the online version of the publication.

MAGAZINES
Magazines or periodical are an excellent medium of advertisement when a
high quality of printing and colors is desired in an advertisement
ADVANTAGES
Allows a better targeting of audiences, as one can chose magazines
publication that caters to your specific audience or whole editorial
content specializes in topic of interest to your audience.
High reader involvement means that more attention will be paid to the
advertisements.
Better quality paper permit better color reproductive and four-color ads.
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The smaller page (generally 81/2 by 11inches) permits even small ads
to standout.

DISADVANTAGES
Long lead times means that one has to make plans weeks or months in
advance.
The slower lead time hightens the risk of the ad getting overtaken by
events.
There is limited flexibility in terms of ad placement and format.
Space and ad layout cost are higher.
Examples: Life Insurance Corporation uses this medium vastly to advertise their
product.
RADIO
Radio is ancient yet unique, growing and pervasive medium. Radio is
with its audience when one wakes up in the morning, goes to jog, commutes to
and from jobs, at workstations and goes to bed. It can be broadcasted to highly
targeted audience.

ADVANTAGES
Radio is a universal medium enjoyed by people at one times or another
during the day at home, at work, and even in the car.
Gives the business personality through the creations of campaigns using
sound & voices.
Free creative help is often available
Rates can generally be negotiable.
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During the past ten years, radio rates have seen less inflation that those for
other media.

DISADVANTAGES
Because radio listeners an spread over many stations, one may have to
advertise simultaneously on several stations to reach your targets
audience.
Listeners cannot go back to the ads to go over important points.
Ads are an interruption in the entertainment because of this, a radio ad
may require multiple exposures to break through he listeners tune-out
factor and ensure message retention.
Radio is a background medium. Most listeners are doing something else
while listening, which means that the ad has to work hard to get their
attention.
Examples: Bharti Axa life insurance effectively uses this medium.

WORD OF MOUTH ADVERTISMENT
Word of mouth or viva voce is the passing of information from person to
person by oral communication. Oral tradition is cultural material and traditions
transmitted by word of mouth through successive generations. Word-of-mouth
depends on the extent of customer satisfaction with the product or service. It
lies on the added credibility of person-to-person communication, a personal
recommendation.
Word-of-mouth advertising is important for every business, as each happy
customer can steer dozens of new ones your way. And it's one of the most
credible forms of advertising because a person puts their reputation on the
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line every time they make a recommendation and that person has nothing to
gain but the appreciation of those who are listening.
ONLINE ADVERTISING
Online marketing, also known as online advertisement, internet marketing,
online marketing or e-marketing, is the marketing and promotion of products
or services over the Internet. Online advertising is a form of promotion that
uses the Internet and World Wide Web to deliver marketing messages to
larger audience. Online advertising is a form of promotion that uses the
Internet and World Wide Web to deliver marketing messages to attract
targeted customers.
OUTDOOR ADVERTISMENT
DIRECT MAIL ADVERTISMENT
Advertising mail, also known as direct mail, junk mail, or ad mail, is the
delivery of advertising material to recipients of postal mail. The delivery of
advertising mail forms a large and growing service for many postal services,
and direct-mail marketing forms a significant portion of the direct marketing
industry. Some organizations attempt to help people opt out of receiving
advertising mail, in many cases motivated by a concern over its negative
environmental impact. Numerous polls have found that Americans consider
advertising mail to be intrusive.
POINT OF PURCHASE ADVERTISMENT
It refers to advertising that is built around impulse purchasing and that
utilizes display designed to catch a shopper's eye particularly at the place where
payment is made, such as a checkout counter. There are various types of point-
of-purchase displays, including window displays, counter displays; floor stands
display bins, banners of any kind, and all types of open and closed display cases.
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Generally, these displays are created and prepared by the manufacturer for
distribution to wholesalers or retailers who sell the manufacturer's merchandise.
Often, a manufacturer will discount the cost of merchandise or in some other way
compensate the retailer for using a point-of-purchase display.
SELECTING THE ADVERTISING MEDIUM
Advertising media selection is the process of choosing the most cost-
effective media for advertising, to achieve the required coverage and number of
exposures in a target audience. For the purpose of choosing the appropriate
medium or media of advertisement in insurance following factors should be taken
into consideration
NATURE OF PRODUCT- Nature of product plays a vital role. In case of
insurance nature of product can be classified depending on different types of
policies. Like in case of health insurance television advertising is more effective
than any other medium because detailing of the cause is possible.
NATURE OF MARKET- Nature of market can be determined by various
factors like geographical region, size of population. The market can be either
local or national. Outdoor advertising is more suitable for local market and
newspapers are most suitable for advertising insurance product on national level.
LIFE OF ADVERTISING- Outdoor advertising magazines and direct mail have
suffientlly longer life but the life of newspaper, radio and television advertising is
very short unless they are repeated occasionally. So considering these factors
also an advertising medium has to be selected by the insurance company.
FINANCIAL CONSIDERTION The cost of advertising media is a very important
consideration and it should be considered in relation to
The amount of funds available.
The circulation of media.
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CHAPTER 4
PLANNING OF ADVERTISMENT CAMPAIGN

The advertising agency in charge of the campaign must study the
marketing plan to know, the direction of the company is taking the strategic
decisions for the future, before working on advertising campaign. Some
advertising agencies are involved by some companies in preparing their
marketing plans also.
The planning of an advertising campaign involves the following procedure:

1. APPRAISAL OF ADVERTISING OPPORTUNITY:
The advertising is planned the advertisers must determine whether
the advertiser has a role to play in a particular marketing situation. To
evaluate advertising opportunities is really difficult task. The below
mentioned condition are to be considered to evaluate the advertising
opportunities.
Presence of a favorable primary demand trend must be there. If
consumer likes to purchase the basic product category the insurance
company advertising that product will succeed. If the trend of the product
is declining than advertising cannot reverse the trend and therefore it
wont succeed.
Eg: The unit link plan offered by LIC of India (money plus policy) has
more advertising prospects rather than their traditional product.
There should be good chance of product differentiation. Product
differentiation provides opportunity to consumers to prefer one brand over
another by distinguishing unique or exclusive qualities.
E.g. AVIVA life insurance has variety of products to offer to their
customers which increases their scope of advertising.
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Powerful emotional buying motives must be present. An advertising
message that touches the core of what the consume really wants if likely
to succeed.
E.g. Max New York Life Insurance child plus plans
There must be hidden qualities in the insurance product. Like in case of
Life Insurance their can is the concept of bonus on the policies taken. This
works as a surprise package.
Adequacy of funds is another important condition for appraising the
advertising opportunities of an insurance company. High advertising
budget obviously increases the scope of advertising.
E.g.- the Bharti Axa Life Insurance has a very high advertising budget.

2. Analyzing the market

The second step in planning process is to analyze the market
closely the target market for the product. Once the target market of
consumer is known an advertising campaign to suit those people may be
designed.
The target audience is the rural area so advertise should be
designed in such a manner that the people in rural areas are convinced
with the product and its benefit. IFFCO- TOKIO Rural Insurance Schemes
are advertised to connect to the mentality to people residing in rural areas.

3. Determining advertising objectives
In the absences of objectives nothing can be planned. The ultimate
advertising objectives are to increase the share of the market of the
insurance companys product. The ultimate responsibility for determining
the long range advertising objectives and short term advertising or
marketing goals should rest with the management of the company
controlling the advertising functions.

28

4. Establishing budget and necessary control system
Once the advertising objectives are determined the fund necessary
to achieve the objectives must be provided for. A large sum is being spent
on advertising in the modern insurance business. In order to spent sum
on advertising wisely a specific amount of money is assigned to various
department.

5. Developing the strategy
Having laid down the objectives of advertising an appropriate strategy is to
be developed to achieve these objectives. Advertising strategy is creativity
applied to knowledge for

a. Selecting Media The media selection process can be described as
matching the audience for specific medium with the media. A large portion
of the budget appropriations is spent for the use of media as
recommended by the advertising agency.

b. Creating advertising message advertising message are at the core
of advertising planning. It can be held the value of excellent message is
many times greater than a mediocre message. Creating of an effective
advertising message is one of the primary functions of the advertising
agency. An effective advertising message must answer the following
questions
what business goal does the company seeks to accomplish ?
how do those people now thinks, feel, and believe our product, the
company and its competition?
What kind of people do we now sell to and what kind of people should the
Insurance company sell to?
What kind of thought do we put into the minds of those people to make
them feel, think, believe and do what the company wants?
What tone of voices will get those people to hear and believe the?
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6. Co-ordinating advertising with other promotional method
Advertising to be fully effective, needs active support from the channels of
distribution and other non advertising components.
E.g ICICI prudential life insurance had a tie up with movie cheeni kum to
promote their life insurance policy. The punch line of the advertisement is
jeete raho was used quite often in the movie.

7. Evaluating advertising result as soon as the campaign is under way it is
advisable to be tested within the stimulated market environment. there are two
types of testing :
a. Pre-testing Pre-testing is done before an may influence the buying of
media and the creative steps yet to come. The goal of pre-testing is to
eliminate the errors or weakness up the campaign before considerable sums
of money are invested in the effort.
b. Post-testing The main objective of post-testing is to learn from the
weakness and success of the existing campaign and use such knowledge in
planning the future campaign more effective. The purpose of finding the most
effective way of achieving the end. Strategy issues arises in two major areas
of advertising.










30

CHAPTER 5
ADVERTISING STRATEGIES

Insurance companies need to advertise their products and there
organization on the whole to make their products reach the consumers. The job
of advertising the product is a specialized one that requires lots of professional
skills. An insurance company cannot do this job individually. So it hands over the
responsibility of creating and making and advertisement to the advertising
agency
Advertising services provide a way for an insurance company to inform the
public about a product or service they want to sell. Advertisers hire
establishments, such as ad agencies or marketing companies, to sell a clients
product or service to the most likely buyers. Advertising services can include
consulting, creating, and producing the actual ads; media placement and account
handling.
The goal of advertising is to target the segment of a population who has a
special need for a particular product or service and finding ways to provide that
product or service in the most effective means available. The function of
advertising and marketing companies is to professionally promote individual
business and organization. Advertising agencies and marketing firms are
dedicated to the development of the most innovative and effective means of
business promotion available.
When life insurance is being talked of, it is one of the hottest picks in the
insurance industries. Keeping this in the view, insurance companies try to pull
crowds towards life insurance and go for different advertisement technique to
attract people.
Life insurance companies are employing new means to advertise
themselves and their products. A most obvious but expensive form of advertising.
Effective and continuous advertising is one of the important functions of any
successful business. It is imperative that the products or services of any
insurance business receive the proper exposure, and the way to achieve
31

exposure is through advertising. Whether it is on the national or local level ,
advertising campaigns are necessary to let people know about an insurance
companys business. A most obvious but expensive form of advertising is the
advertisement being employed by them on the television . a huge number of
people are glued to the television ,so insurance companies target this medium on
a prime basis ; they build distinct advertisements that arrest the attraction of the
viewers , thus putting a mark on them about the importance of life insurance and
what they have to offer. Television advertisements are very effective since target
audience both see and listen to what is being told at the same time.
Advertising about life insurance in news paper is also an effective way to
advertise and market the agency since the companies try to build brand name
recognition for themselves.
An advertisement for health insurance should be promising for the viewers
otherwise it would be mere failure. If the health insurance advertising company or
companies are successful in convincing the audience about there past
successful records and able to introduce different flexible possible for the well
being of different range of customer, success in inevitable. The policyholder must
be acquainted with the risk involved if any.
We may sometimes find a health insurance ad on wed page we surf. This kind of
advertising by the ad agencies is all right until it doesnt pose any integrity
questions, because, health insurance is a sensitive matter. Health insurance
advertisements campaigns not only help the masses for giving them a secured
life but also to built a nation with greater life expectancy. The advertisers
basically count on the important or the highlighting factors to make their ads. The
ad basically revolves around the USP (unique selling point) of the insurance
product
So these firms lay there advertisements in movie halls when people are
out with their family to watch a film, typically coming up when viewers are sitting
in their seats waiting for their movies to start life insurance companies are also
finding different innovative ways of advertising their product. They are distribution
newsletters so as to reach target customer in person. These firms are also
32

advertising life insurance through their business stationery and supplies. They
distribute stuffs like pen, paperweight, calendar, etc with their names embarked
on their stuffs. These firms are also employing online advertisements on popular
web portals. Along with publicizing their brand names, the life insurance
companies also keep reminding people about the importance of getting life
insurance.
Health insurance advertisement is a best way to propagate the idea of
insurance among the general public. The main aim of insurance company is to
advertise health insurance effectively by all possible means. Now days most
advanced methods are being used to advertise for health insurance.
Advertising for health insurance in television, newspaper and radio is very
effective. Although its cost a bit for health insurance television advertisement, it is
most powerful tool for large scale or wide spread campaign. Advertising health
insurance must be carefully dealt with because of the sensitive issues involved in
spite of it being a business. An ad for health insurance must appeal to the
audience in a positive manner.


WORK OF AN ADVERTISING AGENCY

A unique aspect of advertising is the advertising agency, which in most
cases makes the creative and media decisions. It often supplies supportive
market research and is involved in the total marketing plan. Full advertising
services often began with defining and advertisers target audience, or the
demographic profile of consumers most likely to buy their type of product.

These statistics usually include age group, gender, education level,
location, job type, income and family living situation. Knowing these facts better
enables agencies to come up with a plan to sell the product to a specific
audience. This up-front work eliminates wasting time and money advertising to
people who would not be interested in the product. After determining the
33

consumer profile, a campaign concept is created and in- house or sub-contracted
agency employees use advertising services expertise to decide which media best
reaches the client customers. Media time or spaces purchased by the agency for
the advertiser. Media planners and buyers determine the best television and/or
radio channels, internet sites, or periodicals that will support the campaigns goals
of reaching customer. Todays media choices are more numerous than ever
because of the prevalence of Internet use.

Another advertising service that my be offered is the creative work
performed to produce the advertising. Art directors, graphic designers,
photographer and copywriters are a few of the key players on a print ad creative
team, with broadcast media requiring producers, directors, scriptwriters, video
editors, and camera operators. Behind the scenes, other advertising services
staffs finds and book talent for ads and commercials, voice talent, models, and
actors. Coordinating all aspects of an advertisers account, an account executive
keeps abreast of the campaigns progress and communicates details and statues
to the advertisers. The agency has all round skills and experience.

However there are certain drawbacks of advertising agencies. They
generally lack specific knowledge if business. They cannot devote all their time
on the insurance companys project. They are expensive.

CREATIVE THEMES OF ADVERTISING IN INSURANCE:

PRESTIGE: These themes very effectively in the insurance advertise. It
presents the concept of self respect. This theme can be used to show how
by having a particular insurance policy one can be self dependent.

E.g the HDFC Standard Life Insurance works on these theme with its
punch line of Sar Uthake Jiyo.

34

Health this theme is very useful in advertising of health insurance
scheme. Such kind of ads shows the effect of sudden physical
contingencies to promote their policies.
E.g. ICICI Lombard Health Insurance Policy.

Comfort this scheme is used in advertising of pension plans. This
concept shows that by the virtue of having a retirement policy of a
particular insurance company one can have a comfortable life after
retirement. E.g. AVIVA Pension Plus Plan.

Parental affection this scheme can be effectively used in advertising of
child plans.
E.g. Max NewYork Life Insurance Child Plus Plan.

Fear this scheme is used effectively to advertise life insurance product.
This theme explains about the uncertainties of life and its consequences.
E.g. the Life Insurance Corporation of India uses the theme.

Using endorser in advertising an endorser can be used to advertise a
product. Endorsers usually are a celebrity in its own right. He or she can
be an actor, politician any famous sport personality etc. the consumers
now a days are much influenced are in a way of such celebrities and when
they get to see their favorite celebrity using a particular product, they get
very much influenced to see that product themselves a research from
market evaluators determine the likeable personality and celebrity based
on various surveys and there popularity in general. Based on these
studies, they approach an endorser usually known as a brand
ambassador to endorse there product.
E.G AVIVA Life Insurance as Sachin Tedulkar as its Brand ambassador.


35


5.4 STRAGIES ADOPTED BY DIFFFERENT INSURANCE COMPANIES

Recently the one that made an impact recently was the full-page ad
for Apollo Munich health Insurance. The promise of an uncomplicated
insurance is likely to resonate only too well with consumers.
Recently, Bharati Axa General Insurance took a similar stance
attempting to re-position competitive offers as insensitive towards the
consumer. The advertisement outlined the promise of cashless facility
and no medical checkups upto 55 years of age as the justification for the
claim. Such promises ( in fact similar promises) get a mention in the press
ad, which eventually creates more impact.
Bajaj Allianz has launched its latest advertising innovation on child
insurance plans. For the first time on television, Bajaj Allianz will display its
Groovy kids innovation in promoting child insurance during the India-
Australia match in Hyderabad in 2 slots for 10 seconds each. It is a media
innovation, showing a father and son duo, which takes the campaigns
central idea into the field and breaks away from the clutter through an
activity within the match, as opposed to a usual commercial break. The
innovation, showcasing the son endorsing his father on planning his
future, is designed to take the central promotion campaign to an all
together new level. Mr Mehrotra further added, the campaign provokes
parents to start planning their childrens education. Bajaj Allianz offers a
host of insurance plans specifically suited to help parents plan their childs
higher education, marriage and provide funds for contingencies. Our super
Agent is key custodian and friendly advisors who provide excellent service
and information to the customer for their future and insurance planning.
This is the first time an insurance brand has taken the media
innovation route to its product offering directly on to a platform as broad
based as a cricket match.
36

M. Suresh (GM Sales of HDFC Standard Life) said, Stemming from
the idea of being different and backed by research on what a consumer
truly looks for, we came up with the theme of self-respect. khuddari is
something that has been ingrained in us by our parents and this is the
genesis of our campaign. We have in fact taken it to a higher level and
talked about financial independence. The biggest asset in life is ones
existence and the most significant need that one has to cater to is financial
independence. so the thought process behind the campaign was that an
individual should be able to live with dignity at various stages of life.
Keeping in mind this basic concept of the company the advertisers gave it
the tag line Sar Uthake Jiyo , there by satisfying the khuddari (self-
respect) pre-requisite.
Reliance Life Insurance has entered into a tie up with the movie
three idiots and is using the thought All is Well and to promote both the
movie and all advertises of their product. The campaign, spanning
television, radio and outdoor, talks about Reliance Life Insurances
assurance of taking care of its consumers financial worries and enabling
them to live life to the fullest.
The Birla Sunlife Insurance Company has two ads, which show the
lives of the two cricketers the story of their glory and success, as well as
the low points of their careers. The source of their wealth and fame is
always dependent on their performance in the field a wrong shot from
their bat could get them down. While dealing with this uncertainty, the
cricketer understands and brings out the need for insurance.
The positioning of Jab tak balla chalega came in before the four
cricketers Yuvraj Singh, Virender Sehwag, Suresh Raina and Rohit
Sharma were roped in as brand ambassadors. With the coining of the
tagline, it was thought that cricketers would be best suited for the
communication endorsement.

37

CHAPTER 6
IRDA REGULATION WITH REGARDS TO ADVERTISING
IN INSURANCE
OVERVIEW
These guidelines issued are intended to protect the interest of the insuring public,
enhance their level of confidence on the nature of sales material used and
ultimately encourage fair business practices. They are considered as the
minimum standards to be adhered to, in addition to compliance with the IRDA
(Insurance Advertisement Disclosure) regulations, 2000 (herein after referred to
as Advertisement Regulation) and the code of conduct prescribed by the
Advertisement Standard Council of India (ASCI) and any other regulations as
applicable. These guidelines reinforce extant regulations on all promotional
communications with policyholders/prospective policyholders or targeted market
segment with the objective of soliciting insurance business or otherwise.

CATEGORIES OF ADVERTISEMENT
For the purpose of these guidelines an advertisement may be classified into two
types:
1. Institutional advertisement: this is advertisement of any nature which is not,
either directly or indirectly, intended to solicit the insurance business, but only
promotes the brand image of the insurance companies and/or its intermediaries
and may contain the registered name, address, toll free number, logo or
trademark thereof. Advertisement issued in any mode including those that
highlight sponsorship fall under these categories
38

2. Insurance advertisement: any advertisements issued with the specific
purpose of soliciting insurance business, and/or to influence the choice, opinion
or behavior of the prospective policyholder will fall under this category.
Advertisement, for this purpose, means insurance. Advertisement as defined in
a advertisement regulation and is classified as under:
Invitation to Inquire: this is an advertisement which highlight the basic
features of insurance/insurance products issued through recognized
marketing media in any mode to create a desire to inquire further about
them.
Invitation to Contract: this is an advertisement containing the detailed
information regarding the insurance/insurance product mainly to induce
the public to purchase, increase, modify, reinstate or retain a policy.

GUIDELINES TO ADVERTISEMENT
These guidelines are to be complied with by
All the insurers (life insurers, non-life insurers and health insurers).
The insurance intermediaries.
COVERAGE: these guidelines apply to advertisements, issued through all
recognized marketing media, in any mode including printed material, radio,
television, e-mails, hosting on the internet and any other audio/visual electronic
media.
General Requirements are ( Dos )
Communications are clear, fair and not misleading whatever is the mode
of communication. They should use material and design (including paper
size, color, font type and font size, tone and volume) to present the
information legibly and in an accessible manner.
39

Sales material and advertisement are comprehensible in the light of the
complexity of the product being sold.
Brand names of the product as proposed in the File and Use application
are adhered to.
When issued in vernacular languages, the mandatory disclosure are also
in the same vernacular language.
(Donts ):
The design, content or format shall not disguise, obscure or diminish the
significance of any statement, warning or other matter which an
advertisement should contain as required by these guidelines.
Use or denigrate names, logos, brand names, distinguishing marks,
symbols etc, which may be similar to those already used by others in the
market that may lead to confusion in the market place.

SPECIAL GUIDELINES TO INVITATION OF CONTRACTS.
Doss : advertisement should ensure that :
Any expression of opinion of the insurers is a fair and honest
representation.
Any statement of fact, promise or projection disclose all the relevant
assumptions ; and indicates in a clear and prominent way significant
limitations / criteria on which any special offer are available.
Where attention is drawn to insurers past financial performance it should
indicate that the past performance is not an indication of future
performance.

40

The content should necessarily include:
The nature of the insurance contract and there type of the product.
The risks involved ; the limitation and exclusions of the contract;
Illustrations, which indicate the exact costs and projections (e.g., disclose
date of NAV);
The commitment of the insurer and policyholder under the contract (e.g.
the minimum amount to be invested; minimum and/ or maximum sum
assured; lock-in period; the reasonable safety norms to be adopted in
case of non-life insurance products etc.,)

ADVERTISING THROUGH AND OTHER ELECTRONIC MEDIUM:

INTERNET
In case of communications on/through internet an insurer should ensure
that the recipients/viewers have the opportunity to view the full text of the
relevant key features; terms and conditions; any other applicable risk
information required by these guidelines and they shall not be hidden awy
in the body of the text. It shall be easily obtained, before any application
form is offered. In case of e-mails communications there should be a
provision to unsubscribe from the mailing list.
Insurers should take an undertaking from the prospective policyholders
that they have read the entire text, features, disclosures, terms and
conditions, etc., while applying for insurance on-line.
Mandatory provision of a helpline or help number to further provides all
information that a policyholder would reasonably expect.
Insurers should provide hard copy of the necessary information on
request.
41


TELEPHONIC INTERACTIVE MODE:
Promotional activities through Cold- calls shall be preferably by a licensed
intermediary. In case it is done other than license intermediary,
responsibility of compliance with advertisement regulation and the
guidelines vests with the insurer/ intermediary that has outsourced this
activity.
The telephone caller shall take necessary steps to ensure that they do not
introduce into the privacy of the receivers. They should disclose their
identity and proceed to converse only after permission.
A reference on the access to full information about the available products
and the importance of financial need analysis along with the contact
phone numbers, which can provide such information, shall be placed
before closing the call.
Every insurer shall facilitates an access to do not call registry with the
contact numbers of the persons who wish not to be contacted, which
should be referred to, before every call.
Draw attention to favorable tax treatment without stating that they are
subject to changes in the taxes laws.
Highlight the positive financial condition of the parent (or promoting
partner) company without mentioning the financial condition of the insurer
and/or indicate that the assets of parent company can be banked upon
when desired.
Disclose benefits partially without disclosing the corresponding limitations/
conditions/ implications.
Indicate that acceptance of risk and/or settlement of claims is liberal and
generous without intent to do so.
42

Use ambiguous words or phrases which are likely to exaggerate the
underlying benefits of the policies or plans and/ or capable of limiting the
actual exclusions or the limitations of the underlying benefits of the plan.
Denigrate or damage the reputation of the competitors or the industry.

Mandatory disclosure in invitation to inquire:
Every advertisement in the nature of invitation to inquire should disclose
the following statement for more details on risk factors, terms and conditions
please read sales brochure carefully before concluding a sale.

6.6 JOINT SALE ADVERTISING (JS)
Any insurance advertisement brought out jointly by an insurer either with its
corporate agent or with a micro-insurance agent would fall under this category.
These could relate to promotional activities where the logo/trademark/trade
names of the participating parties are displayed jointly.
Joint sale advertisements in the nature of insurance advertisements can
be released only after obtaining prior approval from the Authority. Every
application for approval shall carry a certificate from the Appointed Actuary
that it presents the same features of the product as cleared under file and
use.
The contents of these guidelines will apply in mutandis to all the JS
advertisements, as applicable. These guidelines super cede the circular
IRDA/ADVT/2004 dated 6
th
December 2004 regarding Product Co-
branded with Corporate Agents/Broker.
43

BRANDING WITH THIRD PARTIES (THIRD PARTY FOR THIS PURPOSE
SHALL MEAN ANY INDIVIDUAL/ ASSOCIATION /ENTITY OTHER THEAN
INSURANCE INTERMEDIEARY)
Branding can be used on any advertisement of insurance
company/intermediary only when it does not urge the prospect or a
policyholder to purchase, renew, increase, retain or modify a policy of
insurance.
An exemption is however, given to insurance schemes sponsored/
subsidized by Central/ State government (s) in which case branding is
permissible in any category of advertisements.
The bonus vests with the insurer as to the compliance requirements of
time, in such cases.
RATING/ RANKING/ AWARDS
Any claim of rating/ award should be based only on those declared by
entities which are independent of the insurance company and its affiliates.
Insurance company and its affiliates should not however, procure services
from such independent entities so as to get a rating/award.
Source of such rating/ award is to be disclosed conspicuously and legibly
in such advertisements.
No claim of ranking by an insurance company, as regards its position in
the insurance market, based on any criteria (like premium income or
number of policies or branches or claims settlements etc., ) is permissible
in any of the advertisements.



44

OTHER IMPORTANT GUIDELINES
Mandatory disclosure as specified by advertisement regulation and
applicable guidelines as may be specified from time to time should be
clear, conspicuous and legible and should find at least 10% of the total
space utilized for the advertisement in print/visual mode with a minimum
print equivalent to font Times New Roman No.7. In case of audio mode,
these disclosures should be spelt for at least 10% of the total time slot of
the advertisement.
All the advertisements should carry a unique identifiable reference number
Where material is filed with the Authority
in accordance with the advertisement regulations, in other than English /
Hindi language, true translation of the same in English / Hindi duly certified
by an Authorized officer of the insurer, is to be enclosed.
In Unit Linked business, advertisements should also adhere to the
advertisements inconsistent with the provisions of these guidelines should
be withdrawn within 2 months of the guidelines coming into force








45

CHAPTER 7
CASE STUDY
Life Insurance Marketing in India the Changing Advertising &
Promotion Norms
In early 2002, India's state owned insurer, Life Insurance
Corporation (LIC), announced tie-ups with Corporation Bank, Oriental
Bank of Commerce, Bank of Punjab and Nedungadi Bank for sale of its
products through their branches. The aim of the tie-ups was to diversify
LIC's distribution channels and increase product penetration. Industry
observers were not surprised by this move. They felt that LIC had no
option but to explore new channels of distribution to maintain its position
as the market leader.
The liberalization of the Indian insurance industry in 2000 led to the entry of
private insurance companies with MNC as their partners. Reaching anywhere
near LIC's vast network, built over decades, was going to be extremely tough
for the new players.
Consequently, private insurers decided to rely on aggressive advertising and
promotional measures and use hitherto untried distribution channels. Private
insurers began exploring the various distribution channels available instead of
concentrating on individual agents, a channel LIC had been using for decades.
To minimize cost, these companies tied up with established financial services
companies and used their distribution network instead of setting up their own
network.
According to insurance industry observers, distribution was expected to emerge
as one of the key factors for the success of private insurers in India. They also
felt that insurance intermediaries and new distribution channels would become
46

the strongest drivers of growth for the insurance sector and that multi-channel
distribution would become the norm. With even LIC adapting these new channels
of distribution, the distribution of insurance products/services seemed all set to
undergo a radical overhaul.
The 'Indian Life Assurance Companies Act' was passed in 1912; this was
followed by the Indian Insurance Companies Act, 1928. These acts allowed the
government to collect data regarding life and non-life businesses conducted by
both Indian and foreign insurance companies. Later, the 1928 act was amended
and a new act, the 'Insurance Act' was passed in 1938. By the mid-1950s, 154
Indian insurers, 16 foreign insurers and 75 provident societies were operating in
the country. The life insurance business was concentrated in urban areas and
was confined to the higher strata of society. In 1956, the management of these
companies was taken over by the Government of India. LIC was formed in
September 1956 through the LIC Act 1956, with a capital of Rs 50 million. One of
the main objectives of forming LIC was to make insurance cover available to a
large number of people, particularly to the lower segments of society.
In 1972, the government took over management control of 106 private general
insurance companies and formed the General Insurance Corporation (GIC). Over
the years, LIC expanded its network all over the country and became one of the
largest corporations in India. LIC had seven zonal offices, 100 divisional offices,
2,048 branch offices and army of agents totaling 6,28,031. Growth in Indian
insurance industry was minimal in the 1960s and 1970s because of low savings
and the low level of literacy. In addition, the insurance industry lacked sufficient
funding and infrastructure. However, changes in the economy in the 1980s, such
as growth in the rate of industrialization, improvement in infrastructure, the capital
markets, increase in the savings rate and substantial capital formation resulted in
tremendous growth in the life insurance industry.

47

Over the years, LIC launched several group insurance and social security
schemes to enhance its reach in the rural areas. In the early 1990s, the
government felt it necessary to reform the industry, provide better coverage to
the citizens and to increase the flow of long-term financial resources to finance
the growth of infrastructure. In 1993, the Indian government set up the Malhotra
Committee to suggest reforms in the industry. The committee, which submitted
its report in 1994, recommended opening of the insurance sector to private
players, improving service standards, and extending insurance cover to larger
sections of the population. Various labor unions and political parties in the
country opposed the committee's suggestions.

They felt that the entry of private players would lead to job cuts by the
nationalized players to make them more competitive. There were a host of other
arguments against these reforms. As a result, the government decided to restrict
foreign stake in insurance companies to only 26%, which was well below the
51% required by the Insurance Bill for controlling the management of the
company. Though one of LIC's basic objectives was to 'provide insurance cover
to all Indians,' insurance penetration in India remained very low. According to
reports, only 65 million people were covered by insurance. R N Jha, LIC's former
Executive Director, commented in his book, Insurance in India, "Insurance
coverage has been extended only to about 25% of the insurable population in 40
years". In other words, the insurance market in India was largely untapped.
However, the fact remained that more than 75% of the Indian insurable
population was untapped. According to industry observers, one of the main
reasons for the low insurance penetration was the poor distribution and
marketing strategies adopted by LIC. Prior to liberalization, due to its monopoly
status, LIC seemed to have had no strategically devised distribution strategies in
place. It depended entirely on individual agents, which it had trained over the
years to distribute its products. LIC made no efforts to use other distribution
48

channels (Refer Exhibit I for various distribution channels for selling life
insurance).
LIC's agents were not well qualified for their work. Prior to liberalization of the
Indian insurance industry, no minimum qualification was laid down for people
who wanted to become insurance agents. Agents generally acted like brokers;
they cared more for their commissions than the needs of the customer. As a
result, they did not make the effort to educate customers about the insurance
products being offered.
To distribute insurance products, LIC employed a large number of marketing
people as 'Development Officers'. These officers employed and trained a number
of agents. Development Officers received bonuses from the business generated
by their agents, in addition to their salary.
Consequently, LIC ended up paying bonuses and commissions twice for every
new policy and subsequent renewal of premiums to both agents and
Development Officers. It was reported that after only a few years of recruitment
of agents, Development Officers earned huge amounts as commissions. Despite
this, the attrition rate among the agents was very high, largely because LIC
selected the wrong kind of people in the first place.
LIC's bid to implement strict incentive schemes and 'career agent' type of
distribution failed due to the powerful Union of Development Officers. However,
with the entry of new players, the insurance market changed dramatically.
Analysts commented that the private insurers seemed all set to make the
industry market-driven, wherein technical expertise and service excellence would
be the key success factors. The private companies, to make their presence felt
and expand their reach, experimented with new distribution channels.

49

According to analysts, it not only helped insurance companies increase market
penetration and premium turnover, it also helped banks increase their Return on
Assets (ROA annual earnings divided by total assets). This was because, even
with a constant asset base, bancassurance contributed to enhanced ROA
through fee income. (Refer Table III for various bancassurance agreements).
Allianz Bajaj Life Insurance (Allianz Bajaj) planned to build a multi-channel
distribution network, which included agents, corporate agents and strategic
alliances with banks, Bajaj Auto network and other direct marketing initiatives. In
late 2001, it signed a Memorandum of Understanding (MOU) with Standard
Chartered Bank for an exclusive bancassurance distribution agreement.
According to reports, Standard Chartered was to act as the corporate agent for
the company, and the partnership was expected to leverage the bank's 60
branches across the country
Standard Chartered Finance (a subsidiary of Standard Chartered Bank) was also
expected to market Allianz Bajaj's products. Companies such as HDFC Standard
Life, ICICI Prudential Life, and SBI Life insurance planned to leverage the branch
network of their parent companies, HDFC, ICICI Bank and SBI respectively, for
distributing their products.
Reaching out to the bank's existing customers would be very easy for the
insurance companies as the banks already had a well-established relationship
with their customers.
Since SBI had a network of over 9,000 branches, SBI stood to gain a lot by
utilizing the bancassurance channel. It was reported that by the end of 2001, 21
branches of SBI were distributing SBI-Cardiff's group policies.
Many analysts believed that bancassurance would play a very important role in
India because banks were familiar with the target customers' needs, had a strong
service delivery mechanism, good quality administration, complete integration of
insurance and bank products and services, qualified personnel and an organized
50

tracking system for reporting on agents' time and the results of bank referrals.
However, it was also pointed out that the partnership between insurers and
banks could run into problems.
The most common problems that partners could face were inefficient manpower
management, lack of sales culture within the bank, lack of branch personnel's
involvement, insufficient product promotions, failure in integrating marketing
plans of both bank and insurance company, limited database expertise of the
bank and inadequate incentives to the bank personnel involved in sales of
insurance products. Despite the growing thrust on bancassurance, most of the
players believed that individual agents would continue to play a major role in the
Indian insurance industry.
According to Anuroop Singh, CEO, Max New York Life, the new distribution
channels would not be able to completely replace individual agents. He said,
"Over 90% of the life insurance schemes the world over are sold through
individual agents. Agents will be the primary channel of distribution in India and
so we have invested substantially in training our life insurance agent advisers
here." Max New York worked towards making the quality of its agents its main
differentiating factor. The company adopted the career agent system instead of
LIC's general agent system. Max New York paid attention to the agent selection
process so as to recruit the best talent available. The selection process
comprised four stages screening, psychometric tests, career seminars and final
interview. Agents were trained in the various products the company offered and
the insurance needs of the customers so that they were in a position to offer
them sound advise.
The training covered 152-hours, instead of the mandatory 100 hours stipulated
by IRDA. The program involved modules on understanding the consumer psyche
and the financial market, and developing selling skills and the right attitude.
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Commenting on the need for training agents, Mr. Debashis Sarkar, senior vice
president, marketing, Max New York, said, "Internal employees are all opinion
shapers and indirect brand-builders and brand promise needs to be replicated
down the chain at every customer touch point.
The company also made training an ongoing process, and ensured that the
training program addressed the needs of agents through development of skills
and knowledge through a program spreading over 500 hours over two years.
HDFC Standard Life decided to rely on individual consultants and corporate
agents for distributing its products. According to company sources, individual
consultants were expected to play a key role in the sales process. The company
therefore invested 20 man-months in developing training programs for
consultants.
The company also trained its consultants through institutions approved by IRDA.
In addition, HDFC Standard Life tied up with corporate agents all over country. It
had already tied up with HDFC and some other banks to distribute its products.
To increase its coverage in rural areas, HDFC Standard Life held talks with
NGOs that were involved with HDFC's housing schemes in rural areas.
Birla Sun Life announced the appointment of Village Extension Workers (VEWs)
who would help create awareness about insurance in villages. Generally, these
VEWs were from social improvement projects promoted by the Aditya Birla
Group of companies. Each VEW was put in charge of a cluster of 10-15 villages.
Many other major private insurers were laying emphasis on the recruitment and
development of quality agents to enhance their brand image in the market and
attract customers. LIC ran an advertisement campaign that featured one of its
most successful agents to highlight its belief in the individual agent system.
Meanwhile, the Government of India opened up yet another avenue for
distributing insurance products in August 2002: brokers (Refer Exhibit II). Foreign
brokerage firms were also allowed, but only through a tie-up with an Indian
52

partner and a 26% cap on equity. IRDA planned to finalize regulations by
September 2002 and issue licenses to four categories of brokers - direct general
insurance broker, direct life insurance broker, reinsurance broker, composite
broker, and insurance consultant.What Lies Ahead
After the decision to allow brokerage firms was announced, many Indian and
foreign firms expressed their interest in entering the Indian insurance market.
HSBC Bank announced its intention to set up an insurance brokerage firm in
India.
The Tatas also planned to enter the insurance brokerage business, focusing on
both corporate and retail clients (reportedly through a strategic partnership with
the Hong Kong based Jardine Matheson group).
As marketing, distribution and technical superiority were expected to be the
decisive factors for success in the Indian insurance sector in the future, the new
players seemed to have a good chance.
With the growing popularity of new distribution channels in the Indian insurance
market, Private insurers hoped to effectively leverage the strengths of the new
distribution channels. The above belief was strengthened by the emergence of
another new channel the Internet. According to reports, in 2001, around 12% of
the insurance products were sold through the Internet, and this figure was
expected to grow as Internet penetration increased.
Because of increasing competition in a crowded market, private insurers were
trying to leverage every possible medium. According to analysts, in the not-too-
distant future, even departmental stores, ATMs, Internet kiosks and
supermarkets would be selling insurance



53

SURVEY

Life Insurance Corporation of India is a public sector giant in the life
insurance industry in India. For almost five decades LIC is monolithic company in
the life insurance sector. Since nationalization LIC has built up a vast network of
2048 branches, 109 divisions.

The largest life insurance company in India, Life Insurance Corporation is
fully owned by the government. It provides individual life insurance, group
insurance and pension plans. Today the company is on the Internet and is
utilizing Information Technology in servicing its clients.

Survey analysis

A sample survey was conducted of 3o people about there preference of LIC over
other insurance company. The following are the result of the survey conducted.

1. Which method of advertising do you find attractive (rank
them).
10- Highest 1- least attractive

TV. Internet
Radio Mobile/sms
Newspaper Pam plates
Magazines Direct mail
Hoardings Transits ads


54




Most of the people prefer TV as a more attractive advertising and the least
attractive advertising goes to the transits ads. Because nowadays, people are
more influenced by watching television.

2. Do you feel that advertisement influences people to buy
insurance?

a) Always. b) Sometimes.
c) Occassionaly d) Never.



30%
8%
8%
12%
22%
8%
5%
4%
2% 1%
Ratings
TV
Newspaper
Hoardings
Mobile/sms
Radio
Pam plates
Magazines
Direct mail
Internet
Transits ads
55




Most of the people say sometime insurance advertisement influence to buy
insurance. Few of them says they never get influenced by the advertisement.


3. Which age group get most influenced by advertising?


a) 1-15 yrs. b) 16-30 yrs. c) 31-45 yrs.
d) 46-60 yrs e) 61-75yrs f) 75yrs & above.




30%
51%
10%
8%
Always
Sometimes
Occassionaly
Never
56




Age group of 16-30 years get most influenced by advertising whereas the age
group of 61-75 years are less influenced but the least age group is 75 & above
years.

4. How do you find ads in insurance sector?

a) Rational b) emotional c) both.




18%
50%
22%
7%
3% 0
1-15 yrs
16-30 yrs
31-45 yrs
46-60 yrs
61-75 yrs
75 yrs & above
57


Most of the people feel that advertisement gives emotional appeal whereas some
of the people think that ads sometimes give rational appeal.



5) Reasons for success of advertisement of insurance company.

a) Brand ambassador b) catchy tagline c) creative ads
d) good copy e) product in formation
f) more frequency of ads



Most of the people say that success of the advertisement depends on the
creative ads whereas few of them say frequency of ads and product information
is the reason for success.



18%
13%
40%
10%
8%
8%
Brand Ambassador
Catchy Tagline
Creative ads
Good Copy
product in formation
more frequency of ads
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6) Do u remember advertisement of any insurance company?

a) Yes b) No c) cant say

If yes, mentioned along with name of company





Most of the people remember the advertisement of insurance company. Few
people are confused about the advertisements.

Most of the people who said yes remember the ad of LIC, ICICI Prudential life
insurance, Bharti AXA.









59


7) Which companys advertisement do you find most influential?

a) LIC b) ICICI Prudential c)Bajaj Allianz d) HDFC Standard
e) Bharti AXA insurance f) Max new York g)Kotak mahindra





Many people feel the ad of LIC is more influential than any other insurance
company mentioned above.


8) Do you remember the tagline of LIC?

a) Yes b) No c) cant say
If Yes, mention it below:


40%
15%
8%
8%
10%
12%
7%
LIC
ICICI Prudential
Bajaj allianz
Hdfc Standard
Bharti AXA
Max new york
Kotak mahindra
60



Many people say yes that they remember the tagline of LIC .
Jeewan ke saath bhi Jeewan ke baad bhi
Whereas some people are confused about the tagline.


9) Is LIC really able to compete in advertising with other private company.

a) yes b) no c) Cant say




Most of the people think that LIC advertisement is able to compete with other
private players.But there are less number of people who are not sure about it.
50%
35%
25%
yes
No
can't say
60%
30%
10%
Yes
No
Can't say
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10) Rate the advertisement of LIC (1-10)






Maximum number of people rate LICs ad between 10 to 8.Whereas minimum
number of people gave less rating between 5 to 3

Conclusion:

From the overall analysis it was observed that there are more number of
people who are most influenced by the advertisement of LIC. Most of the ads are
creative and emotional that gives a strong appeal to attract people.

LIC is able to compete with private insurance companies, being a public
undertaking. This survey gives the clear indication that advertisement plays a
vital role in insurance sector.


70%
30%
Highest rating
Lowest rating
62

CHAPTER 8
CONCLUSION

Advertising in the insurance sector has become an integral part for the
growth in insurance business. The basic objective of advertising in case of
insurance sector is to make consumer aware about different products available in
the market. It helped in product differentiation on the part of the customers and it
also makes it easy and convenient for the customer to buy desired kind of
product.

From this project we refer that there is a lot of scope for advertising in
insurance we also see that with growth in use of advertisement in insurance will
grow to great heights.

Advertising is a form of communication for marketing and used to
encourage or persuade an audience (viewers, readers or listeners; sometimes a
specific group) to continue or take some new action. The purpose of advertising
may also be to reassure employees or shareholders that a company is viable or
successful.

The most important aspects of promotion is advertising. Advertising is an
indispensable part of the marketing strategy of any product or service. A proper
advertisement has a great impact on the sales of the product and that is why
companies spend huge amount of money to make effective advertisements.







63


BIBLOGRAPHY

BOOKS

Wilmshurst John, The fundamental of advertising, butterworth
publication 2000.
Chandra Jagdish, Advertisement management, Omega Publication
2008.

WEBSITES
www.advertisingindia.com
www.advertisingjournal.com