Promotional Strategies of Idbi Federal Life Insurance Essay
Promotional Strategies of Idbi Federal Life Insurance
The paper deals with the study of the promotional strategies of IDBI federal life insurance co ltd vis-à-vis its various competitors like LIC, SBI life, ICICI prudential, etc. The paper aims at the various promotional strategies adopted by the company to make information available, about its products, to its potential customers. The primary objective of the paper is to find out whether the current promotional strategies are effective enough in attracting customers, to find out what customers look for in a life insurance advertisement and to suggest the company as to what are the new sources through which it can advertise its products. The secondary objective is to find out whether the current marketing strategies are sufficient enough to capture the current market in the face of rising competition. The research methodology includes collection of primary data from people by interviewing them over phone, meeting them, getting their opinion through questionnaires, etc. as well as collection of secondary data from internet, published articles, books, research reports and other sources.
A Questionnaire was designed to collect information from the respondents about the awareness of the brand IDBI Federal and the data analysis was based on the information collected through the questionnaire. Data analyses were done through graphical representation and excel tools. The limitation faced was that it was confined to one area due to travelling constraints and time constraints. Overall the project has tried to maintain an accuracy of data so that unbiased responses may be recorded which will give a true picture of the respondents’ opinion and help the company in taking a proper decision as to the promotional strategies of the company.
2. Company profile
IDBI Federal Life Insurance co Ltd (formerly known as IDBI Fortis Life Insurance) is a joint venture between three financial companies – development and commercial bank, IDBI Bank, India’s private sector bank, Federal Bank and European insurer Ageas (formerly Fortis), which was formed on March 2008 In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26% equity IDBI Federal Life Insurance Co. Ltd.,(formerly IDBI Fortis Life Insurance) is a joint venture each. IDBI bank is a government owned bank started in 1964 as a subsidiary of RBI for providing institutional credit. It is known to be a bank for high end customers.
In 2008 it changed its name to IDBI bank ltd. and entered into the retail segment. IDBI has more than 1500 branches across India. Federal bank is a scheduled commercial bank which was started in 1931. It has a strong base of NRI customers. It has a presence in both south and west. It was one of the first banks to start core banking. Federal bank has 1200 branches across India. Ageas is a Belgium-Dutch multinational insurance company. After its creation in 1990, Fortis expanded its offerings to include private and investment banking and asset management, establishing subsidiaries around the world.
4.1 Introduction to the problem
In the current scenario, Indian insurance companies have become competitive in nature and are providing appropriate distribution channels to get the maximum benefit and serve customers in manifold ways. Indian Insurance industry has big opportunity to expand, given the large population and untapped potential. The insurance market in India has witnessed dynamic changes including entry of a number of global insurers. Most of the private insurance companies are joint ventures with recognized foreign institutions across the globe. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The US$ 41 billion Indian industry is considered the fifth largest life insurance market, and is growing at a rapid pace of 32-34% annually, according to the Life Insurance Council. Innovative products, smart marketing, and aggressive distribution have enabled fledging private insurance companies to sign up Indian customers faster than anyone expected.
Insurance products come in a variety of forms and are advertised and marketed using a variety of methods to entice customers. Thus insurance companies need to market their products because they are in competition with other insurers for the same customers. The only thing that distinguishes an insurance company’s products is the price as well as the advertising message that it sends across to its customers. Thus the major area of concern of the study is how IDBI federal should distinguish itself in terms of reaching customers through various promotional strategies so that customers respond to the promotional strategies of the company Vis-à-vis those of competitors.
4.2 Significance of the problem
There are many players in the Indian Insurance Industry, each capturing sufficient market share of the total industry. In the Indian insurance sector, the market position of the incumbent, LIC, continues to dominate even 10 years after the opening up of the sector for private players. This puts the onus on the private sector players to differentiate themselves in terms of product innovation and customer servicing, so that they could grab a bigger share of the Indian insurance pie. As insurance is a ‘push’ rather than a ‘pull’ product, it is a big challenge for the companies to make their products meaningful to prospective customers. Companies should simplify insurance products and design the benefits so as to suit the specific needs of policyholders. A higher degree of transparency on policy terms will ensure that the customer understands the product and its benefits, minimizing fears of being cheated. It is therefore important for the industry to invest not just in expansion and distribution but also in client servicing and processing.
Many customers are discouraged from buying insurance due to the anticipated complexity involved in settlement of claims. Insurance companies do assert that the competition in the industry is forcing them to speed up their claim processes, but the fact remains that a lot more needs to be done to make general insurance a hassle-free experience for the customers. Such things are very important to be communicated to the prospective customers so that they understand the products of the company and the benefits and features of the products. Thus promotion becomes very important for any IDBI federal to stand ahead of other players.
4.3 Important Observations
IDBI Federal Life Insurance already has a strong distribution network of over 1477 branches through their partner banks. IDBI Federal has adopted various promotional strategies like commercial ads, print ads, events, personnel selling, word of mouth, viral marketing, etc. The advertising focus of the company has therefore been the product rather than the corporate brand. TVC’s- The major promotion of IDBI federal is done through television commercials on sports channels. The TVC’s for IDBI Federal have been designed by Ogilvy and Mather. January, 2011: IDBI Federal Life recently launched three clutter breaking television commercials focusing on its frontline products – Wealthsurance and Incomesurance. The first advertisement reflects that the product is so great that whoever hears about it, buys it instantly and the second advertisement promises to be clear and transparent on the issue of returns in the investment product. IDBI Federal has also introduced two animation characters by the name of Happy and Lucky to promote the brand.
The campaign revolves around the immense strength of the products and conveys the message: Anyone who hears about it buys it. The story board revolves around the most unexpected people in the most unexpected situations, hear about the product and buy it. * March, 2011: Through the example of a 60-year-old-son and his 90-year-old father, the insurance company, in its new campaign, reinforces the need to be financially secure post-retirement. Through the TVC, they wanted to explain the benefit of a tension-free life thanks to the pension plan. * August, 2011: The incomesurance TVC adds a comic touch to a series situation of family interview. The strategy for them was to drive home a practical and relevant message to the viewers. After sifting through many auditions, they singled out on a non-model/ non-celebrity talent to ensure that the slice-of-life situation came across as genuine and credible. The TVC went on air on 15th Aug, on the eve of Independence Day. The company’s films are based on simple consumer insights that bring alive the core product benefits. * January, 2012: IDBI Federal Life Insurance has come up with a new campaign to promote its child insurance plans.
The head of the Ad agency commented that in a world of goody-goody child plan advertising, they wanted to ensure that IDBI Federal’s Childsurance stood out. The senior vice-president of IDBI Federal said that choosing the right plan is very important today, given the rising inflation in education. Childsurance, with five unique features, can be the strong partner that parents seek to ensure that their children’s dreams come true, which has been captured in the ad campaign. Distributors- IDBI Federal has a strong network of distributors who contribute a lot to the promotion of the products by word of mouth promotion. IDBI Federal has Bancassurance partnership with IDBI Bank and the Federal Bank and also distributes its products through its own network. To further diversify its distribution base, it has set up an Alternate & Direct Distribution channel. Management- IDBI federal life insurance co ltd leverages on its strong distribution network of promoters and advisors who have constantly revised the company’s product portfolio by adding on new products from time to time depending on the environment and needs of the customers. Partnerships- IDBI Federal Life Insurance, in partnership with SAMHITA Community Development Services, is engaged in financial literacy programs for the urban and rural poor in MP since 2011.
The company has participated in a felicitating program organized by SAMHITA for women from slum dwelling households in Bhopal, who have successfully completed this financial literacy program in 2008, when it tied up with SAMHITA for providing low cost group coverage to the female members of SAMHITA under Group Microsurance. So far it has covered over 86,721 lives for a sum insured of Rs.66.7crores. IDBI Federal Life Insurance also offers the protection of Termsurance Grameen Suraksha to the family members of these people. Thus, this was a major step taken by IDBI federal for promoting its products in the rural areas. Web promotion- The TVC’s are uploaded in you tube. They have launched microsites for their ads. In addition, IDBI federal also planned to launch a viral in the digital space to create awareness about its products. Events- IDBI federal has tried to promote its products by conducting certain events.
They organized the event Spelling Bee, which was a specially created spelling contest arranged to connect with children. The event was organized on children’s day, 2010 to coincide with the launch of childsurance. The spellings to be completed revolved around visual and verbal cues to words related to savings, money and finance. Viral marketing- “Boss-ka-Boss”, the viral flash film launched by IDBI federal for marketing its product online, made it very popular and was a good way to reach customers which could be viewed through You-tube. The film had also been adjudged for a special award under animation film category at the PR Council of India (PRCI).
4.4 Comments by the experts in the area
Mr. Amish Tripathi, National Head – Marketing & Product Management, IDBI Federal Life Insurance said that “the critical objective for IDBI Federal is name recognition and a strong differentiator, and each of their products is designed to be unique and offer great value to the customers” He also said that, “they are happy to have a creative partner like Ogilvy & Mather that has been able to successfully convey the message.” According to Mr. Aneesh Khanna, Senior Vice President – Head – Marketing & Product Management, IDBI Federal Life Insurance, “the strategy for them was to drive home a practical and relevant message to the viewers.
‘Humoring’ the customer with a convincing, rational appeal has been the insurance venture’s style. Their films are based on simple consumer insights that bring alive the core product benefits. According to Amish Tripathi, there were clear guidelines that the commercials have to be funny and clutter-breaking when it comes to campaigns, as every second company sells the same proposition in the insurance sector. “Therefore, it is important to stand out from the rest,” according to Mr. Tripathi.
Nitin Pradhan, executive creative director, Leo Burnett, says, “It’s a tongue-in-cheek take on retired life” which meant that it was very common for IDBI Federal to take old people in the retirement term advertisement.
In 2010, when private life insurance companies were facing a decline in sales, Managing Director and Chief Executive Officer GV Nageshwara Rao said that the company is in in the process of adjusting the products. They expected to plan a few revised guidelines on pension products, which they hoped would revive pension plans again. He said that the long-term solution is to increase productivity in a sustained manner. He also quoted that going ahead; the company would consider three segments — children, retirement and health. And the company kept up to its promises by coming up with childsurance, healthsurance and the retirement plans.
Acknowledging the viral flash film awards, Mr. Amish Tripathi, National Head – Marketing and Product, IDBI Fortis, said that “it was a great honour for them for being bestowed with the special award. He also said that at IDBI Fortis, they believe in innovation and delivering unique and distinct offerings. The company has tried to follow the same in their communication through the films. The prestigious awards were an encouragement for the team and they hope to get many more of these in the future”.
4.5 Previous work
According to a journal, written by professors of VIT University, Vellore on the promotional strategies adopted by IDBI Federal life insurance co ltd, for the South- Asian journal of marketing and management research, we find the following recommendations given by them After analysis of data, they suggested the following points
* Television is the best source for entertainment and gaining information. So it is the best media for promotion * People don’t give more importance to the advertisements while compared to brand name * Tax benefit, death benefit, security and low premium are the important components which people look for in an insurance product * The message and creativity is important for insurance product * The promotional efforts and word of mouth is most influencing while compared to internet * Advertisements play a major role in influencing a person to buy an insurance policy * Insurance companies don’t need a brand ambassador to endorse the product 4.6 Gaps in the problem of interest
4.7 Proposed Work
* Amazing customer experiences are one of the most powerful tools in marketing strategy. In today’s market, when a company treats its clients better than kings and queens they will tell the whole world about the company through social networking sites or through word of mouth. * There are many opportunities for growing business. The company can get great PR in the newspaper, meet other local community members and business owners, and educate people about the values and benefits of insurance. * The company can promote its products through social networking sites such as Facebook, twitter and linked in or other popular sites where potential customers visit frequently like news channel sites. Customers who prefer to read news online will be able to notice the ads if the ads are put in such sites. * The best television marketing opportunities would be during programs specifically aimed at the target prospects. The company can aim those channels which potential customers see regularly such as news channels or sports channels.
* An important promotional strategy would be to roll out advertisements during cricket matches such as IPL or one day series which will gain a lot of popularity for the products as well as the company. * Another strategy is to host networking events so businesspeople can meet other businesspeople. Making as many contacts as possible and following up with people will assist insurance marketing with the help of referrals. * Online E-mail newsletters should be sent to customers on a regular basis so as to attract potential customers and retain existing clients. The newsletters will constantly remind the clients about the products and they will re-think over their decisions while investing in insurance products and will keep IDBI federal in mind.
* The company can host seminars about financial planning, understanding insurance, saving money on insurance etc. * IDBI Federal’s sales people can go door to door talking about their products to potential customers. Many sales people can convince about their products to customers in such a way. * One more promotional strategy is advertising through hoardings and billboards in important public places like railway stations, airports, bus stands, restaurants, etc. * The last IDBI federal ad was released in 2012 and the frequency of the ads were also less. To increase visibility of the products, the company should advertise more frequently so that customers notice their products vis-à-vis its competitors. * They can also advertise through various radio channels as more and more people are shifting from television to radio channels * The company can also go for celebrity endorsements as customers go for celebrity endorsed brands as they attach some value to the product when it is endorsed by any celebrity.
4. Objectives and importance of the study
Product promotion is one of the major necessities for getting a company’s brand in front of the public and attracting new customers. Companies use different promotional strategies for different marketing purposes. The importance of the study lies in studying all promotional and marketing strategies followed by IDBI Federal, how effective are the strategies in maintaining the existing customer base and attracting new customers, what do customers look for in the advertisements to go for a particular product, and are the promotional strategies effective as compared to other insurance companies. Primary objective
* To find out whether the current promotional strategies are effective in attracting customers. * To find out what customers look for in a life insurance advertisement. * To suggest a new concept of promotion for the company depending on people’s awareness about the brand IDBI Federal life insurance co ltd
* To find out the level of awareness of the brand IDBI Federal among people * To find out whether the current marketing strategies are sufficient or the company needs to increase promotion in order to capture market.
Primary data: collecting data from people by interviewing them through phone, meeting them through questionnaires, during the time of sales etc. Secondary data: gathering data from internet and television, published articles, books, research reports and other sources. The sample size is 100 and the sampling unit is office going people who have either joined recently or who have been working for quite a few years. The research is carried out in Cuttack, Orissa where the sample is a representative portion of the population of the state.
Both open ended and close ended questions are used in the design of the questionnaire so as to know the opinion of customers relating to insurance and awareness about the brand IDBI federal and how they respond to the marketing stimuli adopted by the company. The type of questionnaire used in this project is structured. The questions are listed in a prearranged order and respondents are informed about the purpose of collecting information. The type of sampling is convenient sampling. The methodology adopted for sales was to visit office going people with a permanent income and explain them about the products of IDBI Federal life insurance co ltd.