SUMMER INTERNSHIP REPORT ON

MARKETING STRATEGY OF LIC OF INDIA IN THE GLOBAL SCENARIO.

(title of specialization project)

Submitted in partial fulfillment for the award of the degree of

MASTER OF MANAGEMENT STUDIES

UNIVERSITY OF MUMBAI

Submitted by Mr. Mandar.Vilas.Patole

ROLL NO. M-8140

2017-2019

Under The Guidance of

Name of the Faculty member

Dr. Samadhan Khamkar

DES’s NAVINCHANDRA MEHTA INSTITUTE OF TECHNOLOGY AND

DEVELOPMENT, MUMBAI – 400 028
 CERTIFICATE

This is to certify that the summer internship report titled “MARKETING

STRATEGY OF LIC OF INDIA IN THE GLOBAL SCENARIO” submitted
in partial fulfillment for MMS Degree Examination by Mandar.Vilas.Patole Roll
No.M-8140 is a record of Research work carried out by him/ her during the period
from May 2018 to June 2018 under my guidance, and has been found satisfactory.
This project work is original and not submitted earlier for the award of any degree,
diploma or associateship of any other University / Institution.

Date:

------------------------------ ---------------------------

Dr. Samadhan Khamkar Dr. Samadhan Khamkar

DIRECTOR (PROJECT GUIDE)

 DECLARATION

I hereby declare that this project report submitted by me to the partial fulfillment of
the requirement for the award of MASTER OF MANAGEMENT STUDIES
(MMS) of the University of Mumbai is a bonafide work undertaken by me and it is
not submitted to any other University or Institution for the award of any degree,
diploma/ certificate or published any time before.

Name: Mandar.Vilas.Patole Signature of the student

Roll No. M-8140

Mandar.Vilas.Patole
 ACKNOWLEDGEMENT
This project has been a great learning experience for me. I take this opportunity to
thank Dr. Samadhan Khamkar my internal project guide and my industry mentor
Mr. Sanket Bane whose valuable guidance & suggestions made this project
possible. I am extremely thankful to them for their support. They have encouraged
me and channelized my enthusiasm effectively.

I express my heart-felt gratitude towards my parents Kanchan.Vilas.Patole,

siblings and all those friends who have willingly and with utmost commitment
helped me during the course of my project work.

I also express my profound gratitude to Dr. Samadhan Khamkar, Director of

DES’s Navinchandra Mehta Institute of Technology and Development for giving
me the opportunity to work on the project and broaden my knowledge and
experience.

I would like to thank all the professors and the staff of DES’s NMITD especially
the Library staff who were very helpful in providing books and articles I needed
for my project.

Last but not the least, I am thankful to all those who indirectly extended their co-
operation and invaluable support to me.
 EXECUTIVE SUMMARY

Insurance is an integral part of national economy and a strong pillar of financial

market. Therefore, waves of globalization have also deeply influenced the
insurance market Worldwide. Financial Market Globalization has also been
strongly supported by Globalization of Insurance. With the increase in Trade,
Direct Investment and Portfolio Investment, there has been an ever growing
demand for Insurance services particularly in the emerging markets. Globalization
of Insurance market, as a part of the overall process of liberalization in emerging
and other countries enabled the foreign insurance companies to enter in those
countries and benefited both. Liberalization is the gateway of globalization and
regulates the financial market by reduction of tariff and non-tariff barriers,
abolishment of industrial Licensing and by exercising control over foreign direct
investment. The major purpose of liberalization was to free the large private
corporate sector from bureaucratic controls. Liberalization of insurance industry
has witnessed major structural transformations and growth in life insurance
business. To end the monopoly of the life insurance corporation of India and to
induce a spirit of competition amongst the various insurers and to provide a choice
to the consumers were some of the main motives behind liberalization. In the first
year of insurance market liberalization (2001), ten private companies have
registered under the life insurance category and this number has been increased to
22 in 2010. Today, a public giant LIC is facing direct competition with the rest 23
private life insurers.
SR Description Page
NO. No.

1 INTRODUCTION
1.1 Objectives of the Study
1.2 Limitations of the Study

2 REVIEW OF LITERATURE

3 METHODOLOGY
3.1 Research Design
3.2 Data collection Methods

4 MARKETING MIX FOR LIC

5 CURRENT SCENARIO IN LIFE

INSURANCE MARKET

6 SWOT ANALYSIS OF LIC

7 Product Development Strategies of Life

Insurance Corporation of India
8 COMPONENTS OF LIFE INSURANCE
MARKETING STRATEGIES

9 SUGGESTIONS

10 CONCLUSION

11 QUESTIONNAIRE

12 REFERENCES
 1. INTRODUCTION
LIFE INSURANCE CORPORATION OF INDIA

On 1st of September 1956, The Life Insurance Corporation of India (LIC)

embarked upon its momentous journey in true spirit of serving the people and
nation as a whole. Since then it has spearheaded the financial and infrastructure
development of the nation. The performance of LIC has been exemplary and it has
been growing from strength to strength be it customer base, agency network,
branch office network, and the like. LIC has played a significant role in spreading
life insurance among the masses and mobilization of people’s money for people’s
welfare. Even after the entry of private insurers for almost a decade now, LIC
continues to be the frontrunner in the industry in terms of market shareLIC today
services its customers through 8 Zonal offices, 113 Divisional Offices, 2048
Branches, 1202 Satellite Offices, more than 1.19 lakh employees and 12.78 lakh
agents. Besides life insurance, through its various subsidiaries, it is involved in
providing various financial services. Today, a public giant LIC is facing direct
competition with the rest 23 private life insurers. As a result of product innovation
by private players, LIC’s market share has gradually reduced in the post-
liberalization period. Despite that, the Life Insurance Corporation of India
continues to remain the largest player in the Indian Life Insurance market. Life
Insurance Corporation of India operates in 13 countries abroad through its various
branches and Joint Venture Companies/ Wholly Owned Subsidiaries. Branch
Offices in the U.K., Mauritius & Fiji and operate through Joint Venture Companies
in Bahrain, Qatar, Kuwait, U.A.E., Oman, Kenya, Saudi Arabia, and Nepal & Sri
Lanka. A wholly owned subsidiary – Life Insurance Corporation (Singapore) Pte.
Ltd. has been incorporated in Singapore.
1.1 OBJECTIVES OF THE STUDY

1. To know new marketing strategy adopted by LIC Of India to increase the

volume of business.

2. To analyze the growth of Life Insurance Corporation Of India.

1.2 LIMITATIONS OF THE STUDY

1. The researchers could cover only the position of LIC of India in Life Insurance
Industry.

2. The area of the study is kept limited due to the short time and financial position
2. REVIEW OF LITERATURE

Life Insurance in its modern form came to India from England in the year
1818.Oriental Life Insurance Company started by Europeans in Calcutta was the
first Life Insurance Company on Indian soil. All the insurance companies
established during that period were brought up with the purpose of looking after
the needs of European community and Indian natives were not being insured by
these companies. However, later with the efforts of eminent people the foreign life
insurance companies started insuring Indian lives. But Indian lives were being
treated as sub standard lives and heavy extra premiums were being charged on
them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life
insurance companies in the year 1870, and covered Indian lives at normal rates.
Starting as Indian Enterprise with highly patriotic motives, insurance companies
came into existence to carry the message of insurance and social security through
insurance to various sectors of societyThe number of offices of LIC is increasing
year by year, but when we analyze the growth rate of number of offices of LIC in
total Life Insurance industry, there is always a decreasing trend due to cut throat
competition with the market strategies of private sector life insurance
companies.Insurance industry has seen significant growth. Due to low penetration
and huge potential, many foreign and domestic players have entered the sector.
Moreover, several reforms and policy measures have provided a favorable
environment for insurance companies to flourish in the country. The insurance
sector in India is primarily divided into life and non-life, apart from a very small
segment comprising re-insurance. Both the life and non-life insurance segments,
which were nationalized in the 1950s and 1960s, respectively, witnessed an across-
the-board liberalization process in 2000
3. METHODOLOGY

Research methodology is a strategy that guides a research in providing answers to

research questions and for this research survey is being done. Accuracy of the
study depends on the systematic application of the method. The researcher has to
decide the method to be used that helps him to get a desired direction in a
systematic way.

3.1 Research Design:

A research design is a framework or blueprint for conducting the marketing
research project. It specifies the details of the procedures necessary for obtaining
the information needed to structure and/or solve marketing research problem.
Being the study descriptive in nature it will go through theoretical data collections.

3.2 Data collection Methods

There are two methods of data collection- Primary and Secondary data collection.
In primary data collection method , the data is originally collected by researcher
for research purpose and in secondary data collection method, researcher use the
data collected by other researchers.
Primary data collection method was used to collect information from consumers of
life insurance products in which questionnaires were used to conduct the survey.
In secondary data collection method various wedsites were used to collect
information.
 4. MARKETING MIX FOR LIC – Life Insurance Corporation

The insurance companies in private and the public sector needs to assign due
weight age to the formulation of marketing mix for the emerging insurance
business. The emerging trends indicate that if the insurance companies delay the
process of formulating a sound marketing mix for their business, then there would
be a sharp fall in their market share in near future, which would bring down the
rate of profitability. This makes it essential to study the different sub mixes of
marketing such as the product mix, the promotion mix, the price mix, the place
mix, the people, the process and the physical evidence, in relation to the marketing
of insurance.

Product in the Marketing mix of LIC

LIC- Life Insurance has designed several products in accordance with the
requirements of the common people. Insurance is mainly taken out with the
purpose of providing support for the family members in case of death by natural
causes or accident to the breadwinner of the family. LIC- Life Insurance offers its
customers various insurance products such as the following-

 Life Insurance
 Investment Management
 Health Insurance
 Mutual Fund
 Property Insurance
 Home Insurance
 Casualty Insurance
Besides this, various pension plans, annuities, group schemes, special plans and
unit-linked plans are also in place for the benefit of consumers. LIC- Life
Insurance has also launched several products especially for children, senior
citizens, women and handicapped which we will see later in this project. LIC also
has schemes for people who are on the borderline of poverty.

Place in the Marketing mix of LIC

As LIC- Life Insurance is a service industry, the distribution of its products and
facilities is done through various channels – direct and indirect. Numerous routes
are taken to reach the potential customers. The most important and
basic channel member until this date has been the “Insurance agent”. Taking
various innovative routes in order to reach the corner that is the farthest and
remotest is the objective of the LIC Company. The organization’s channel of
distribution consists of agents, brokers, development officers, retail services related
to finance, branch office, alliance with banks and distributors, corporate agencies
and proper and well-maintained infrastructure. Presently LIC- Life Insurance
distributive channel consists of numerous development officials, agents and service
branches who are active participants. Presently the number of zonal offices LIC
has is 8, 1, 09, 992 satellite offices, 2048 branches and numerous corporate offices.
It also has a network of corporate agents, individual agents that are around 13,
37,064, and tie-ups with almost 42 banks.

Price in the Marketing mix of LIC

A suitable pricing policy is a very important factor in the successful running of an

insurance company as it is the pricing policy that affects the sales volume of a
company. Price is actually the valuation that is offered for the product by the
offerer. For any LIC- Life Insurance policy, the policyholder has to pay a premium
that is paid either annually, half-yearly, quarterly or monthly. The management
takes the decision of fixing the premium of every policy relating to a particular
period.

A complete market analysis is done and information about various facts are
collected like how much money can an individual afford for a particular scheme,
and what is the economic and financial condition of the market at that particular
time. This data helps Lic in making the fair and reasonable pricing policies. The
management also makes pricing decisions about the premium mode, investment
return, loan interest and the commissions for agents. If you compare LIC’s
products with other insurance products, then you will find that LIC is very much a
value for money product. With its excellent brand value, and service quality, a
customer can get full value as per the price paid for an LIC product.

Promotions in the Marketing mix of LIC

The promotional strategy of LIC- Life Insurance is very simple and

straightforward. Its main aim is to inform the consumers about its various latest
policies and about its brand. In order to fulfill this it has taken steps like personal
selling, exhibitions, demonstrations at events, advertising about new schemes on
television or in leading newspapers. Bags, diaries calendars are distributed as gifts
and incentives to the policyholders. Advertisements are shown on televisions,
newspapers, billboards as promotional activities.

A mobile van for publicity roams across the rural areas creating awareness about
the company, It also puts tents or umbrellas at prime places or near busy areas or
near corporate areas like bkc etc to promote their new or upcoming products. LIC-
Life Insurance has its own website and webpage where all the detailed information
about every possible query is supplied to satisfy the consumers. The majority of
advertising is driven towards insurance which can be purchased by the common
man so as to increase the reach of the company and at the same time, the sale of the
product. Thus, product introduction and product retention in the mind of the
customers is the major objective of promotions by Life Insurance Corporation.

5. CURRENT SCENARIO IN LIFE INSURANCE MARKET

Many players have joined insurance industry creating a tough competition to LIC.
LIC has been reorganizing itself in order to perform better than the new players.
On the basis of total premium income, the market share of LIC has declined
marginally from 70.10 per cent in 2016-17 to 69.78 per cent. Accordingly, the
market share of private insurers has raised marginally from 29.90 per cent in 2016-
17 to 30.22 per cent. The market share of private insurers in first year premium
was 31.15 per cent in 2016-17. The same for LIC was 68.85 per cent. However, in
renewal premium, LIC had a greater share of 70.49 per cent when compared to
29.51 per cent share of private insurers.
6. SWOT ANALYSIS OF LIC

Strength

 It ranks first amongst the insurance companies.

 After sales service, long term plans hold the most importance.
 Provides employment to more than 13,37,064 people
 Has around 2048 branches across India and 10,00,000 agents.

Weakness

 Since it is government-owned, therefore ther is very little innovation.

 It becomes difficult to manage the huge workforce in the times of economic
crises.
 Heavy management expenses and administration costs.

Opportunity

 Effective service can be provided to the rural sector with more use of
technology.
 It can involve good brand proportion.
 There has to be proper implementation of the government schemes.
 Insurable population according to ING is only around 10% which is insured
which represents around 30% of total insurable population. This suggests
 around 300 million people with the potential to buy insurance remains
uninsured.

Threats

 It poses threat since the government policies keep changing.

 Threats from private sector as the private sector is expanding at a greater
pace
PORTER’S FIVE FORCES OF LIC

1. BARGAINING POWER OF CUSTOMERS

2. THREAT OF SUBSTITUTE PRODUCTS
3. BARGAINING POWER OF SUPPLIERS
4. COMPETITIVE RIVALRY WITHIN AN INDUSTRY
5. THREAT OF NEW ENTRANTS

CUSTOMER SATISFACTION

Customer satisfaction refers to the phenomenon which shows how much the
customers are satisfied with the product or the services provided by the agencies.

CUSTOMER SATISFACTION OF LIC :

It encourage face-to-face dealing with the customers.

It includes responding to the messages promptly and keeping all the clients well-
informed.

It is readily approachable and amicable in this tough competition with the other
insurance players.

The customer service policy must be clearly stated and well-defined.

MARKETING ENVIRONMENT

Macro-environment :The company and all the other rival companies operate in a
large macro environment that shapes the opportunities and pose threat to the
company. Major forces are :

Demographic

Since literacy and education increases employability, higher earning jobs also
bring the change in perception about the need for insurance.

Economic

Inflation rate: High inflation reduces the insurance business particularly life
insurance quota, because the real value of money decreases with increase in
inflation rate.

Technological

More innovative channels like e-banking, e-premium payments, should be

introduced.

Political and legal

IRDA act, 1999: bill allowed for 26% for an equity participation in the insurance
sector.
CONSUMER BUYING BEHAVIOR ABOUT LIC

First, let us know what influences consumer buying behaviour.

They are:-

 Cultural factors
 Social Factors, and
 Personal factors

Cultural factors:

-LIC is a trusted brand in India and is totally owned by the government.

-There can be unnatural events like death, sudden crisis, etc.

Social Factors:

-LIC focuses on both the reference group and family status of the people.

-In joint families, there is less stress on buying behaviour.

Personal factors:

-LIC has different insurance plans according to the needs of the people concerning
their age, lifestyle, values, personality and wealth.
Key psychological process:

-LIC has always motivated the customers by its influential insurance plans and its
offers. People has a perception of buying LIC because it is government-owned and
is considered number one in paying claims.

SEGMENTATION, POSITIONING AND TARGETTING

Segmentation:

LIC in India was divided into 2 basic segments: individuals and corporate people.
The first segment comprised of individual customers. It is further divided into four
sub-segments – protection, investment, savings and pension.

Protection products gives only protection to the different customers from risk.
These don’t provide any savings facility to the policyholder.

Investment products offer long-term as well as short term investment growth and
insurance cover.

Savings products like endowment and money back policies provide both
protection and investment benefits.

Pension policies are products offered to the customers as income during their
years of retirement after they quit their respective jobs.

The corporate segment was divided into three sub-segments – protection, statutory
savings and pension.
Down the line, LIC catered to both individual and corporate segments. Individual
insurance policies include Endowment Policies, Money Back Policies, Term
Assurance Plans, Periodic Money Back Plans and Joint Life Plans. The corporate
policies include group insurance schemes such as group gratuity schemes, group
term insurance schemes, group savings linked insurance scheme and group leave
encashment schemes.

Positioning:

Positioning is a marketing strategy so that people can form a ‘mental image’ of the
product in their minds.

LIC positions itself as the most friendly as well as reliable insurance company
providing financial solutions to the people. It is very popular among the people
because it is government owned.

Targeting:

Targeting is the actual selection of the segment market you want to serve. The
target market is the group of people or organizations for whom a product is
specifically designed to satisfy their needs.

LIC mainly targets children who are basically into schooling, people in earning
periods and senior citizens who have got retired from their respective services. It
not only targets the urban people but also the rural people.
BRAND EQUITY

LIC has done a good job in reinforcing its brand image of the ‘folded hands’ to the
people. It is readily trusted by the people as it is one of the most oldest insurance
player in the country. Its tagline “ZINDAGI KE SAATH BHI ZINDAGI KI
BAAD BHI” has gained popularism not only in urban but also in rural areas.

The slogan of LIC is “Yogakshemam Vahamyaham” which translates from

Sanskrit to “Your welfare is our responsibility”. The literal translation from
Sanskrit to English is “I carry what you require”. The slogan, written in Devanagiri
script, is found below the hands holding the lamp.
7. Product Development Strategies of Life Insurance Corporation of
India

“Change is the need of the society” LIC of India offers certain special plans like
Micro insurance (MI) plans like AamAadmiBimaYojana, JanshreeBimaYojana
and ShikshaSahjogYojana. In Micro insurance LIC of India offers insurance
policies for people below poverty line (BPL). It is a low premium policy where
government of India also contributes a proportion of total premium. The Micro
Insurance policies are sold through a specialized well placed distribution channel
comprising of NGOs and Camps at rural areas.

Marketing Strategies Adopted by LIC of India

In order to facilitate their consumers expediently LIC of India has adopted wide-
ranging marketing strategies to acquire each frequency and impact onto the top
most of life insurance coverage. This section of the research study will focus on the
diverse marketing strategies adopted by LIC of India to reduce the competitive
pressure and uphold their first position in the Indian life insurance market.
NEW MARKETING STRATEGY

LIC have been taken following steps to increase its market competitiveness and
retain its position in the insurance market.

1. PRODUCT DEVELOPMENT

In a competitive market, there is a greater need to provide insurance products that

meet the needs of customers. LIC therefore offers a wide variety of products,
which fulfills the needs of different segments of the society. As at the end of the
financial year 2016-17, the Corporation have many of the products available for
sale. During the Year Corporation introduced 5 new plans viz. LIC’s Pension Plus,
LIC’s Endowment Plus, LIC’s Bima Account –I, LIC’s Bima Account –II and
LIC’s Samridhi Plus. As a result of innovation by private players, LIC’s market
share has gradually reduced in the postliberalisation period. Despite that, the Life
Insurance Corporation of India continues to remain the largest player in the Indian
Life Insurance market with a market share of 71.30% in FY 2016-17.

2. COMPETITION

Participation of private and foreign beginners in the insurance industry have made
lic difficult to retain their market. Higher customer desires lead to new
expectations and forces him or her to move towards the insurer who provides one
with the best service in time. It becomes less feasible for them even to
maintain the functional networks or competitive standards and services.
To survive in the industry they analyse the growing requirements of the
policyholders /insurers and they are in the forefront in providing necessary services
and introducing new required products. Thereby they become job specialists, who
provide the right service to the right person in the right time. Today, a public giant
LIC is facing direct competition with the rest 23 private life insurers.

3. INFORMATION TECHNOLOGY

LIC has been the first firm in using information technology for enhancing the
quality of its service to customers. Being the largest insurer in India, LIC has
always discovered all the avenues that technology offers to provide the best of
services to its valued customers and other stakeholders. Today, LIC customers can
pay their premium not only in any one of its offices, but also through LIC’s
Premium Payment Gateway on their website through partner Banks like
Corporation Bank, Axis Bank or through associate agencies like APOnline,
MPOnline, etc. Customers can also use their Net Banking accounts, Debit Cards
and Credit Cards to pay premiums online. LIC reaches out to its customers through
Call Centres, Customer Zones, SMS, e-mail, website and now even the Social
Networking sites. LIC has also undertaken many other customer-centric initiatives
and schemes like Enterprise Document Management System, Portal for
Customers, Agents, Development officers and Employees, etc. All LIC offices and
Training Centres have been connected to a Wide Area Network for more than 10
years now. Today Central Office, Zonal Offices, Zonal Training Centres and the
113 Divisional Offices are connected through high definition Video-Conferencing.
In order to protect its IT infrastructure from external threats, LIC has also installed
the latest IT Security products in its setup. To keep pace with changes in the
business environment and the technology platforms, LIC have also set up the
infrastructure necessary for the on-line sale of policies.

4. CHIEF LIFE INSURANCE ADVISORS (CLIAs)

LIC introduced the above Scheme on 12.04.2008 with an objective of increasing

its market presence through more agents by using capabilities of existing high
performing agents for organizational growth. In order to increase market presence,
more number of agents should be in the field. Understanding this, the Corporation
decided to utilize the capabilities of existing senior agents for organizational
growth by providing them with incentives for identifying, training and mentoring
new agents. Retired employees and Financial Service Executives (FSE) are also
allowed to become Chief Life Insurance Advisors under certain conditions. More
than 1,47,200 agents were being supervised by the CLIAs as on 31.03.2012.

5. MICRO INSURANCE (MI)

The huge untapped market for insurance is the rural and social sector. Micro
insurance is defined as the protection of low income households against specific
dangers in exchange for premium payments proportionate to the likelihood and
cost of the risk involved. It provides an opportunity to the insurance companies to
meet their social responsibility as well as secure a strong footing in the rural
market. The active distribution channels for micro insurance in India are NGOs
and SHGs (self-help groups), Micro agents, Cooperative Banks and RRBs
(regional rural banks), and Post Offices. The NGOs have been identified as main
delivery channels by most of the insurance companies. These have a large network,
catering to huge number of clients.

6. DIRECT MARKETING

Direct Marketing has successfully established itself as a Value Pioneer. Through

the years, it had striven to take a fresh view of the environment, capture changes,
identify new business opportunities and appropriate response. Direct Marketing
has achieved reasonable success in creating a professional and disciplined work
force comfortable with approaching and hitting emerging segments in the market.
The channel, through the effective use of technology has been able to ensure quick
response to queries to successfully position the Corporation as a responsive
organization sensitive to changing customers’ expectations.

7. BANCASSURANCE AND ALTERNATIVE CHANNELS

(B&AC)

Under Bancassurance, at present LIC have tie-ups with 8 PSU Banks, 4 Private
Banks and 33 Co-op Banks under Corporate Agency agreement. These Banks
obtain New Business for LIC through their Branch Outlets. The share of Banks in
the total business of B&AC in the year 2016-17 was 77% in Policies while
Corporate Agents contributed 8% & 22% respectively. In the current year, there is
large growth in Bancassurance Premium.
8. HEALTH INSURANCE

During 2016-17, 67,668 Health Insurance Policies were sold for a Premium
Income of Rs.58.02 crore. LIC settled an amount of Rs. 8.38 crore towards health
insurance claims under 5,096 lives.LIC started Health Insurance Division in 2007-
08, to knock the vast potential for Health Insurance Business and to plan Health
Products and Services. The first product ‘Health Plus’ was launched in February,
2008 and the second product ‘Health Protection Plus’ in April, 2009. Both are
Unit Linked Health Insurance policies providing for hospitalization and major
surgery cover for 49 specified surgeries. The plans also have a facility of
withdrawal.

9. INDEPENDENT FINANCIAL ADVISORS (IFAs)

IFAs are authorised agents of insurance companies having tie-ups with more than
one insurance company. They are qualified and skilled experts or institution who
can provide advice on financial products. Independent financial advisors are
commissioned agents whose primary business is the sale of property and casualty
insurance for several insurers. IFA assembles different financial products in
accordance to customer needs and provide value added product by creating
customized financial product. Today, IFA show their vital presence as distribution
channel in both life and non-life insurance business.
10) INTERNATIONAL OPERATIONS

Life Insurance Corporation of India operates in 13 countries abroad through its

various branches and Joint Venture Companies/ Wholly Owned Subsidiaries.
Branch Offices in the U.K., Mauritius & Fiji and operate through Joint Venture
Companies in Bahrain, Qatar, Kuwait, U.A.E., Oman, Kenya, Saudi Arabia, Nepal
& Sri Lanka. A wholly owned subsidiary – Life Insurance Corporation (Singapore)
Pte. Ltd. has been incorporated in Singapore and they are in the process of
applying for an operating license. Their Foreign Units collectively procured a First
Premium Income (FPI) of around Rs. 349 Crores thereby registering a growth of
15.69%. The Total Net Premium Income (TPI) of their units was around Rs. 1,247
Crores. LIC (International) Bahrain and LIC Fiji are market leaders in their
respective geographies.
8. COMPONENTS OF LIFE INSURANCE MARKETING
STRATEGIES

“Effective marketing strategies are vital for the survival and growth of companies
in the rapidly changing business environment. The success or failure in today’s
competitive market is depending on the marketing strategies that they could adopt
with all effectiveness , Life Insurance is no exception to this rule. The problem is
still more serious with the Life Insurance sector as they have to promote strategies
to sell more products as the products of insurance sectors are push products people
do not easily or willingly buy them.

The entry of foreign players brings tremendous pressure on the profitable, efficient
and socially responsible public Insurance company that is lic of india. Private
players have now created vast opportunity for the specific category of
professionals and the demand for qualified, skilled, expertise knowledgeable
people has increased. Foreign and private Insurance players are ready to capture
the market by providing the products and services at cheaper rates and also
offering unbundled innovative products with a variety of benefits and up to the
mark services, quick services leading to cut throat competition in the existing India
Insurance sector.

It is observed that 80 percent of LIC’s business is processed by its ill- trained agent
force, whereas the foreign players, with the domestic partner’s strong brand value,
can test the unconventional distribution channels like brokers, the internet, the
banking distribution system, etc. It is also observed that the public sector
insurances concentrate on sale of policies without concentrating much on the
service needs of their policyholders. As a result many of the individuals remain
under insured.The LIC of India has to compete with foreign and private players by
adopting effective marketing strategies. The term strategy is used in business to
describe how an organization is going to achieve its objectives and mission.
Marketing strategies provide concepts and processes for gaining competitive
advantages by delivering superior customer value. A successful organization
requires to develop competitive marketing strategies. Marketing strategy implies
development of an action plan to achieve the marketing objectives. Marketing
strategies involve skill and effort on the part of the management to evolve tools
and techniques, which are understood and accepted throughout the organization in
furtherance of the marketing cause. It has been observed that most profitable
businesses have well thought out and well executed strategies. Whereas the least
profitable businesses have no appropriate strategy, a poorly conceived strategy, or
a strategy that the organization cannot successfully execute.

According to Granroos, marketing strategy in the case of services may consist of

1. Traditional External Marketing

2. Internal marketing

3. Interactive marketing.

Traditional external marketing consists of the usual four P’s viz, Products, Price,
Place and Promotion of marketing mix.

Internal marketing implies that the service firm must effectively train and
motivate its customer friendly employees as well as all the supporting service
personnel to work as a team to provide customer satisfaction.

Interactive marketing emphasizes that the perceived services quality is highly

dependent on the quality of buyer seller interaction. It describes the skill of
employees in handling customer contact and covers delivery of the product in a
most satisfying manner.

Designing an initial marketing strategy for introducing the product into the market,
the marketing strategy statement consists of three parts:

a) The first part describes the target market the planned product positioning the
sales, market shares; and the profit goals for the first few years,

b) The second part outlines the product’s planned price, distribution and marketing
budget for the first year and

c) The third part describes the planned long run sales, profit goals and marketing
mix strategy.

Marketing strategy is the set of controllable variables and their levels that the life
insurance companies use to influence the target market. It means any variable
under the control of the life insurance companies that can influence the level of
customer response.

The term insurance marketing refers to the marketing of insurance service with the
motto of customer-orientation and profit-generation. The insurance marketing
focuses on the formulation of an ideal mix for the insurance business so that the
insurance organizations survive and thrive in a right perspective. The quality of
services can be improved by formulating a fair mix of the core and peripheral
services. The marketing concept in the insurance business is concerned with the
expansion of insurance business in the best interest of society and the insurance
organizations. The concept of marketing as co-creating value is considered to be a
very significant one this viewpoint is very new and may take some time to be
absorbed into the mainstream of the life insurance sector. It is therefore practical to
consider some of the more conventional approaches to services marketing.
However, there are some considerations that still apply to the marketing of services
just as conventional marketing has been underpinned by the four P’s, financial
services marketing too has a marketing mix which consists of seven P’s.

PRODUCT STRATEGY

The product strategy in the financial services is of the outmost importance, since
the customer is initially attracted to the product only. The benefits of the financial
services must be of value to the customer.

A Company‟s primary objective is to develop products that satisfy the customer‟s

needs. The company‟s existence is in trouble if it does not deliver need satisfying
product / service. The concept of product extends the applicability of marketing
principles to insurance marketing. “A product is anything that can be offered to a
market for attention, acquisition, use or consumption that might satisfy a want or
need. It includes physical objects, services, persons, places, organizations and
ideas.” Philip Kotler describes insurance products as unsought (consumer) goods.
“These are consumer goods that the consumer does not know about or knows about
but does not normally think of buying.”

In the service industry (including insurance), products are generally intangible in

nature. So service differentiation plays a key role in the successful marketing of
services. Without the quality of service being recognized and sought by customers,
it is difficult to sell a product either to a new customer or to an existing one. In the
present competitive environment, this service differentiation assumes greater
significance. After the opening up of the life insurance to the private sector, the
LIC of India have been putting in more efforts to continuously innovative products
offered and the quality of service rendered are going to dominate the market.

In insurance marketing, the differences between products and services have to be

considered before chalking out the strategies. Services are quite different from
product, where it is any act or performance that one party can offer to another that
is essentially intangible and does not result in the ownership of anything. In
insurance marketing products may or may not be tied to a physical product.
Banking, medical and professional services, health care, private education,
transportation, insurance are a few examples of service industries. There are certain
characteristics of services such as intangibility, inseparability, variability, and
perishability that pose special challenges for marketers.

Based on the product characteristics, marketers have classified products on the

basis of durability, tangibility and usage (industrial or consumer). Each product
type will have an appropriate marketing mix strategy. The LIC of India, over a
period of 55 years, introduced several innovative products.

A few of them are traditional products that have been continued from pre-
nationalization days. Life Insurance Corporation of India’s product mix includes
whole life policies, endowment policies, term insurance plans, money back
policies, children policies, joint life policy, women policy, plans for handicapped
dependents, pension plans, unit linked insurance plans, health plan & health
protection plus and micro insurance. In a competitive market, there is a greater
need to provide insurance products that meet the needs of customers. The LIC of
India therefore offers a wide variety of products, which fulfills the needs
of different segments of the society .
PRICE STRATEGY

The price is an important aspect of the marketing of financial services in the

competitive market. Every customer wants to pay less and buy more. The
customers pay for their financial services either directly or indirectly, although
pricing is highly competitive factor.

Price is the mean of setting the exchange value between two parties. Price, in
marketing mix terms, covers all aspects of pricing such as discount pricing,
extended credit, list price, and payment period Woodruffe and Kandampully
describes ―Pricing in service organizations is less influenced by cost, but more by
customers perceptions of quality, satisfaction, and value. The actual pricing of a
service is thus often determined by matching the customer’s perception of value.

With this pricing method, pricing is considered as a marketing mix variable,

thereby considered together with the other marketing mix variables before a
marketing program is put together. There are three basic marketing price strategies
which service companies can attend, the strategies are competition–based, cost–
based, and demand–based pricing strategies. Pricing in life insurance is somewhat
complex as compared to the pricing strategies of other financial products.

The price (premium) for a life insurance product is determined by expected claim
costs, investment income, administrative costs, and fair profit loading. The claims
cost is based on the mortality rate realized on different age groups. The Actuary on
considerations that depend on the experience of the insurer in the past and his
assessment of the trends in the future decides the premium rates. Pricing in today’s
insurance business environment requires actuaries to be knowledgeable in an ever-
expanding group of issues because of the nature of diversified products. In case of
life insurance, there is limited scope to use price as a strategic weapon. In pricing
strategy, Premium charged, mode of premium payment, grace period available to
pay premium (extra days allowed for remitting premium), interest for delayed
payment of premium, rebate/discount on premium for annual and half yearly can
be more used as a strategic tools.

PROMOTION STRATEGY

It refers to the marketing strategies which help in promoting the financial services
in the market. Promotion in financial services may spell out the advantages of a
particular service provider over its rivals, as the sector is highly competitive and
differentiation between products and providers is difficult to establish.

The promotional mix is a term used to describe the set of tools that a business can
use to communicate effectively the benefits of its products or services to its
customers. Market communication performs three basic roles in marketing–to
inform, to persuade, and to remind. Traditional promotion employs a variety of
methods–including advertising, sales promotion, public relation, and personal
selling–to attract the attention of existing and potential customers, and to inform
them of the products, services, and special offers made available by the firm.

Each of the categories of promotion mix has now become familiar in many areas of
services marketing. In case of life insurance services, promotion is done through a
mix of advertising, personal selling, and sales promotion. Promotion
communicates with the potential market so as to persuade the prospective
customers to try a new insurance product. Online advertising is one marketing tool
that is worth the money. As the Internet takes on more power and influence all of
the time, having a web presence will put an insurance company on the cyber map
and get it noticed. Block line advertising in trade journals, industry publications
and periodicals is the way to go.

Television ads and print ads are excellent forms of insurance marketing. All life
insurance companies have started using PR tools to make better image about them
in the minds of general public. Personal selling is extremely labour intensive but is
the best form as far as insurance is concerned, dealing with one customer at a time.
In promotion strategy, effectiveness of advertisement (TV, Radio, Newspaper, etc),
personal canvassing of development officers and agents, periodical agents and
policyholders meet, intimation of new policies through various correspondence
(premium Intimation letter, loan intimation letter, intimation of maturity of policy),
reminders

(premium intimation letter), educating policyholders who visit the LIC branch
offices (regarding products, premium payments, savings, income, investment etc)
agent’s approach to policyholders (more professional approach, quickly handles
queries, good communication skills, solving problems) .

PLACE OR PHYSICAL DISTRIBUTION STRATEGY

Place is another important element of marketing mix. Place refers to the location
where the product or service is available to the customer, including distribution
channels. Place contributes an important factor in the marketing of services. In
case of life insurance, it is a combination of decisions regarding channels of
distribution. The emerging new opportunity for life insurance companies towards
integration of the financial services industry is bancassurance.

Bancassurance prospects in India are really bright because huge banking

infrastructure across urban, semi–urban and rural India and life insurers are using
this channel very wisely. New distributors like stockbrokers, financial planners,
general agents, and financial institutions etc. involve lower distribution costs,
variable as opposed to fixed expenses, lower front–end commission costs, and the
opportunity of selling the products in conjunction with other investment–related
products. Strategy of worksite marketing is more useful in case of marketing of
pension and health plans. The widespread diffusion of the Internet has created an
explosion in the growth of electronic channels, including direct channels (that is,
individual company web sites), electronic markets, or electronic intermediaries
over which multiple buyers and sellers do business, and other cybermediaries.
However, consumers have not shown a marked preference for purchasing
insurance product via the Interne. The traditional system of ―agents is the
dominating one in India and this will continue to be a major distribution channel
for insurers, since this system has core roots in rural sector.

PEOPLE STRATEGY

People, process, and physical evidence are the three ―Ps, which are especially
applicable to services marketing mix. These three elements are highly interrelated
with each other. People are the main critical resource in any organization,
particularly service organization. Because of the simultaneity of production and
consumption in services, the service staff occupies the key position in influencing
customer’s perceptions of service quality. Recruiting the right staff and training
them appropriately in the delivery of their service is essential, if the service
provider wants to obtain a form of competitive advantage. Life insurance
companies have to give more attention in training and development of their
employees and agents. Building strong relationship with their agents as well as the
customers will help in meeting customer’s needs and serving them efficiently.
Satisfaction depends on the nature of interaction between customers and the people
representing insurance companies. Training the employees and agents to introduce
new products and use of information technology for efficiency both at staff and
agent level are the key areas to look into.

People are the most important element of any services. Services tend to be
produced and consumed at the same moment, and aspects of the customer
experience are altered to meet the individual needs of the person consuming it.
People have an important role in service delivery, they are relied upon to deliver
and maintain transactional marketing and people play an important part in the
customer relationship.

PROCESS STRATEGY

This refers to means through which the service is created and consumed (or even
co-produced). The more easy and friendly process will be implemented. The
consumer plays a significant role in the process or creation of the financial
services.

A process is the method and sequence of actions in the service performance.

Unlike goods, services are processes. Services are the end results of deeds, acts,
performances, and activities performed by the firms employees alone or in
conjunction with various equipments, machinery, facilities, and so on. In assessing
process, customers evaluate whether the service follows a production–line
approach or whether the process is a customized one in which the customer is
given personalized attention since services are intangible and therefore described
in words by people, companies have to be really clear in defining the service
process. The risks of relying on words alone in describing services are the
oversimplification of the service, incompleteness of the description, subjectivity of
different readers and the biased interpretation of the words used to describe the
service. This process involved in life insurance industry should be customer
friendly. The speed and accuracy of payment is of vital important. The process
methodology of life insurers should be such that it provides total ease and
convenience to

the customers. Badly designed and poor processes lead to slow and inefficient
delivery and make it difficult for insurance employees and agents to do their job
well. Consequently it will result in low productivity and service failures.

PHYSICAL EVIDENCE STRATEGY

The physical evidence is defined as the environment in which the service is

delivered and where the service provider and the customers interact, and any
tangible commodities that facilitate performance or communicate the service.
According to Zeithaml and Bitner (20031 ), to evaluate services before its purchase
and to assess their satisfaction with the service after it is bought, customers tend to
rely on tangible cues, or physical evidence. The appearance of building,
landscaping, interior furnishing, equipments, printed materials, and other visible
cues all provide tangible evidence of a firm„s service quality. This sort of physical
evidence provides excellent opportunities for a service firm to send clear and
consistent marketing messages regarding the firm„s purpose the intended market
segment, and the nature of the service (Bitner, 19922 and 19963 ). In case of
insurance business, apart from office environment, materials such as brochures,
policy documents, and periodic statements are the tangibles, which will influence
the customers. Insurance companies and intermediaries need to manage all these
physical evidences
carefully as they can have a profound impact on the impression of the customers.
Although all insurance companies provide similar essential service, the differences
that do exist are the physical evidence. The service firm must recognize the
importance of physical evidence and the role it is likely to play in overall
marketing strategy of the firm. The reasons why physical evidence management
cannot be left to chance include its role in service packaging, service
differentiation, facilitation in the service creation and delivery, and customer and
employee socialization a traditional means of overcoming the intangibility of most
services by providing some element of tangible evidence

LIC have recently developed some new policies to differentiate itself from its
competitors and lic have been using these newly developed policies as a marketing
tool to capture the market. The newly developed policies by lic are as followed.

1) New Jana Raksha Plan

This is an Endowment plan suitable for people in rural areas. After payment of
atleast two years premiums risk is covered for the next 3 years even if premiums
are not paid. Agriculturists who depend on the nature find this policy very
attractive.

2) Marriage Endowment or Education Annuity Plan

This is an Endowment Assurance policy. If death occurs during the period of
insurance no immediate payment is made. Payment in lump sum (in case of
marriage Endowment) and in half-yearly installments over a period of 5 years (for
Education Annuity) from date of maturity only is payable. And even several
attractive benefits are available on maturity.

3) Whole Life Policies

The risk is covered for the entire life of the policyholders. That is why, they are
known as whole life policies. The policy money and bonus are payable only to the
nominee or the beneficiary upon the death of the policyholder. These policies can
be issued either on profit basis or non- profit basis.

i. Whole Life Policy

Premiums are payable for a period of 40 years or up to the age 80 of the life
assured whichever is higher. Insurance money is payable on death, whenever that
occurs. Once the policy owner reaches the age of 80 (provided at least 40 years
premium has been paid), the policy will be treated as matured and insurance
money will be paid to the life assured.

ii. Whole Life Policy - Limited payment

is a variation of the Pure Whole Life policy except that premiums are payable for a
limited period at the choice of the insured.
iii. The Whole Life Policy- Single Premium

This is the best form of life assurance for family provision since it enables the Life
Assured to pay the premium during the ordinarily and most productive years of
life.

4) Women Policy Jeevan Bharati

It is exclusively for women encouraging them to save for SAFETY & SECURITY.
This is like a money Back plan with 15 & 20 years term where 20% of the sum
assured is paid at the end of every 5 years and on maturity, the balance sum
assured will be paid along with Reversionary Bonus & Final Additional Bonus if
any. Apart from the above, this plan offers following 3 optional Riders by payment
of additional premium,

1. Accident Benefit Rider,

2. Critical illness Rider &

3. Congenital Disability Benefit Rider

5) Plans for Handicapped Dependents

Currently two plans are available to purchase for handicapped dependent. They
are:
1. Jeevan Adhar : The benefits under the plan are for the handicapped dependant
which are partly in lump sum and partly in the form of an annuity.

2. Jeevan Vishwas : Is an Endowment Assurance plan designed for the benefit of

handicapped dependents.

6) Jeevan Arogya

A unique non-linked Health Insurance plan which provides health insurance cover
against certain specified health risks and provides you with timely support in case
of medical emergencies and helps you and your family remain financially
independent in difficult times.

7) Micro Insurance

Still a vast majority of people in rural and urban areas remained uninsured
particularly those who are in lower income states and cannot afford insurance at
normal price. In order to cover a large section of uninsured, particularly among the
vulnerable sections of society, a new product ranged at a cheaper price was
required to be launched and that ideal product was “micro insurance”.

1. Jeevan Madhur –It is a simple savings related life insurance plan where you
may pay premiums regularly at weekly, fortnightly, monthly, quarterly, half-yearly
or yearly intervals over the term of the policy.

2. Jeevan Mangal – It is a term assurance plan with return of premiums on

maturity, where you may pay the premiums either in lump sum or regularly at
Yearly, Half Yearly, Quarterly, Monthly, fortnightly or weekly intervals over the
term of the policy.

3. Jeevan Deep - It is a simple savings related life insurance plan with Guaranteed
Additions where you may pay premiums either in lumpsum or regularly at
monthly, quarterly, half-yearly or yearly intervals over the term of the policy.
9. SUGGESTIONS

As per the findings there are some suggestions which should be followed by LIC
to retain its reliable position with private sector life insurance companies in the life
insurance industry:-

1. LIC should strive to increase its business by issuing more & more policies in
order to retain its market share in the competitive scenario.

2. LIC should adopt new marketing strategies as well as make advertisement to

promote & aware about its policies to the consumers.

3. LIC should concentrate on agents‟ training to make them updated as per market
requirements & professionalism to tackle the queries of customers & doubts raised
in their mind by other Life Insurance competitors of the market.

4. LIC should also open more number of offices & authorized collection centers to
make its objectives achieved in true way to spread the life insurance business in
every corner of the country & to reach among the customers.

5. As Private Insurance companies capture the market now-a-days, therefore, LIC

should launch different kinds of plans with more facilities, so that it can increase
its income amount, especially premium amount.

6. Secured investments should be made continuously by LIC of India.

10. CONCLUSION

After privatization, insurance industry has seen significant growth. Due to low
penetration and huge potential, many foreign and domestic players have entered
the sector. Many players have joined insurance industry posing a tough
competition to LIC.

LIC has been reorganizing itself in order to perform better than the new players.
LIC offers a wide variety of products, which fulfills the needs of different
segments of the society. As at the end of the financial year 2016-17, the
Corporation had 52 products available for sale. The performance of LIC has been
exemplary and it has been growing to strength be it customer base, agency
network and branch office network. LIC continues to remain the largest player in
the Indian Life Insurance market with a market share of 71.30% in FY 2016-17.
 11. QUESTIONNAIRE

1. How do you rate LIC?

a) Excellent

b) Very Good

c) Good

Excellent
Very Good
Good

2. How do you rate the marketing strategies of LIC?

a) Excellent

b) Very Good

c) Good
 Excellent
Very Good
Good

3. How do you come to know about lic’s new policies?

a) Television

b) Newspapers

c) Agents

Television
Newspapers
Agents

4. How do you rate the Investment Plans of LIC?

a) Excellent

b) Very Good

c) Good
 Excellent
Very Good
Good

5. Are you satisfied with your LIC Agent?

a) Yes

b) No

Yes
No

6. Reasons for Investing in LIC?

a) Future Planning

b) Income Tax Savings

c) Brand Name
 Future Planning
Income Tax Savings
Brand Name

7. Does advertisement help you to take decision regarding insurance product and
company?

a) Yes

b) No

Yes
No
8. How will you rate advertisements of LIC?

a) Excellent

b) Very Good

c) Good

Excellent
Very Good
Good

9. Which advertisement of insurance company influences you most?

a) LIC

b) ICICI

c) HDFC Life
LIC
ICICI
HDFC Life
12. REFERENCES

1. Kulkarni.S.J and Sagar. P.N (2011) “Recent Trends in Marketing Strategy of

LIC of India”. Feb. 2011.

2. Sonika Chaudhry and Priti Kiran(2011) “ Life Insurance Industry in India

Current Scenario” International Journal of Management and Business Studies
September 2011, page no. 146-150 and 158-164.

3. www.licindia.com
4. www.irdaindia.org
5. www.bimadeals.com/life-insurance-india
6. www.insuringindia.com