CHAPTER-6. Developing a new Operational Framework for marketing of life insurance and it's Pretesting

Transcription

1 CHAPTER-6 Develping a new Operatinal Framewrk fr marketing f life insurance and it's Pretesting 6.0 Intrductin In the previus chapters, the linkages f all the bjectives and hypthesis empirically validate the primary bjectives f the study. Varius cmpnents leading t designing f the peratinal marketing framewrk were discussed. In this chapter, designing and pretesting f the framewrk with its cmpnents has been discussed. The rganizatinal structure f LIC has the fllwing levels: crprate, znal, divisin and branch. Mst f the private players have tw levels: crprate and branch. It is at the branch level that the marketing actin takes place, which has all the details and infrmatin f the events and utcmes and these becme apparent and dcumented. It is the branch manager, wh is cntrlling the peratins f marketing in the territry and needs an analytical framewrk which can guide him meaningfully. Hence, an analytical framewrk which gives the right rientatin fr the peratinal level executive, here in this case the branch manager is required. It is this peratinal framewrk that is being titled Marketing Life Insurance Tracker fr the purpse f this thesis. Hencefrth, in this thesis, the wrd peratinal framewrk has been used in this sense. Befre liberalisatin, the market scenari due t mnplistic situatin was sales/number driven in cntrast t the present a market driven situatin emerging because f pening up and cmpetitin emerging thrugh liberalisatin. Marketing rientatin emerged as a new need. T take care f this, an peratinal framewrk mentined abve has becme the need f the hur fr peratinal level executive in the pst liberalisatin scenari. im

2 6. Operatinal Framewrk Befre liberalisatin, it was a mnplistic scenari fr LIC as it was the nly player and its fcus was n selling. Liberalisatin unflded an pprtunity fr grwth and expansin f the business but als, sustaining leadership psitin due t enhanced intensity f cmpetitin was needed. Perhaps the cmpetitive peratinal framewrk was nt necessary earlier as business was individual driven and a large part f the infrmatin was with agents, wh cntrlled and did nt pass n this infrmatin as there was n frmal reprting system fllwed by cmpilatin and analysis f data. This culd be identified as the first stage frm the seven stages in services marketing.' Next three stages f advertising and cmmunicatin, prduct develpment as well as differentiatin with cmpetitr analysis are underway. The need f sci-ecnmic analysis as well as cmpetitr analysis was identified frm subject experts and the framewrk which culd be useful fr the participants at peratinal level i.e. the branch level t cver up t the verview n marketing. This cmpilatin is n a quarterly/yearly basis. The aggregate fr the regin/ cuntry wuld be input fr strategy frmulatin as well as mnitring fr the insurer t have a cmpetitive edge r negate the advantage f the cmpetitr if it identifies thrugh this tracking system. At the peratinal level say the branch, a manager needs t knw what is happening in the territry and he has t keep an update f the changes with respect t market and cmpetitin. The peratinal framewrk titled 'Marketing Life Insurance Tracker' has been develped as shwn in Figure N This cnsists f tracking the marketing intelligence which includes cnsumer prfile, all the seven elements f the marketing mix besides market share, first year lapsatin rati as well as custmer satisfactin level. 2

3 The branch manager fills in the details like lcatin and the area f peratin. In life insurance business the cnsumer prfile is imprtant and this was recmmended t Lie way back in mid-eighties even befre cmpetitin was in sight. (Refer: Expert interviews - Appendix V.) The envirnmental uncertainties nw are higher and these need t be mnitred clsely.^ The factrs f scial and cultural envirnment include tracking f changes in age distributin, life style, pace f urbanizatin, spread f literacy, health and life expectancy and grwth f ppulatin. It tracks the prduct expectatins f the custmer. This wide canvas f 7 Ps is necessary t track cmpetitin in life insurance business."* First the relevant sub-elements have been identified and fr details refer Appendix VI. In case f prduct and premium, the data can be cmpiled fr fluctuatins as this will als indicate the custmer sequence f buying a plicy. Tracking f the prmtin and its intensity will give a picture f what campaigns are running and their impact in the market place. The place (distributin) can be mnitred by bench marking with the cmpetitr and knw where the insurer stands with respect t the cmpetitr and take crrective actin if they are lagging and put mre effrt. The peple element n the basis f talent market share, retentin and lyalty can be assessed. The feedback frm the custmer and channel partners prvides an assessment fr the prcess where they stand with respect t their perceptin n this factr. The physical evidence can be tracked by visiting cmpetitin utlets. All the seven elements will be given a scre ut f 00. The branch manager will evaluate scre n each element fr the insurer as well as the cmpetitrs at the branch level. Once this is in place, benchmarking can be dne with respect t the best cmpetitr fr each element t fine tune the tactical strategy at the peratinal level in view f increasing cmpetitin. 22

4 Figure N. 6.0 Marketing Life Insurance Tracker Lcatin Branch manager Market Intelligence Please fill in details n qualitative basis, the scial and ecnmic changes in yur place Changes in lifestyle Pace f urbanizatin Literacy Age distributin Health & life expectancy Grwth f ppulatin Prduct Expectatins Risk taking Any ther insights: 23

5 Cmpetitr Analysis Life Insurance Cmpany Cmpany i ( Rate all the elements n marketing mix n 00 pints) *i4 u s O u, CL. B t ON C V "a i 4) (a O US S O a CM ^ ^ in 9 w u cs JS a Cmpetitr Cmpetitr 2 Cmpetitr 3 Cmpetitr 4 Cmpetitr 5 Cmpetitr 6 Cmpetitr 7 Cmpetitr 8 IM

6 The custmer satisfactin scre n -7 pint rating scale will shw what the custmer perceptins are and if need be t take crrective actin r plan initiatives t widen the gap with respect t cmpetitin by ding what is necessary. The scre -2 will indicate that custmer is dissatisfied with the service prvider while scre f 6 r mre will indicate that the custmer is highly satisfied. The market share analysis f the branch as well as first year lapsatin rati will be tracked. These will be dcumented as well as where the directin in which they are heading alng with any crrective actin plan can be initiated. The first year lapsatin rati can be a trigger fr analyzing which business and frm which channel partner can be fine tuned t get better results fr the rganizatin as it als gives an indicatr f quality f business generated. If this is n the higher side, it als des nt crrectly reflect the market share. The branch manager can use the Marketing Life Insurance Tracker as an input fr tactical changes at the perating level while the strategic changes wuld cme frm the tp management after aggregate cmpilatin and analysis. The framewrk will indicate the status as f a particular perid i.e. the financial year. Cmparisn with the previus year will give the trend as well. This wuld be pssible frm the secnd year nwards. 6.2 Pretesting the peratinal framewrk The Marketing Life Insurance Tracker was tested in Pune city with eight branches f Lie as well as with ne branch each f ICICI Prudential Life, HDFC Standard Life, Bajaj Alliance Life and Max New Yrk Life cvering players with mre than 90% f the market share. 25

7 The branch managers felt that they were never expsed t such a range f parameters and were f the pinin that they needed training t get mre frm the mdel t enable them t d a better jb. They felt that the market intelligence part f the framewrk will give them better inputs especially, when they will d the hmewrk with their team cnsisting f emplyees and agents. They pinined that the cmpetitin analysis part f the framewrk wuld enable them t fine tune their strategy especially ver a perid f time as they wuld knw where t fcus as they can take crrective actin at the tactical level. The pretesting peratinal framewrk analysis (Refer Appendix VII) reveals the fllwing: Prduct, premium and place the first place was bagged by LIC; while fr peple and prcess it was HDFC Standard Life; and fr prmtin and physical evidence it was ICICI Prudential Life. LIC need t imprve in prcess, peple and physical evidence. Similar, inference culd be drawn fr ther players. The custmer satisfactin scre wuld prvide them sensitivity t imprve r excel their perfrmance. Currently, LIC fllwed by ICICI Prudential Life lead in satisfactin scre based n pretesting data analysis. The lapsatin rati wuld help them t mnitr and cntrl the quality f business being generated which wuld be beneficial t the rganizatin. The current lapsatin rati is high fr LIC and ICICI Prudential Life but these are als the players having higher market share. 6.3 Cnclusin In this chapter, the develpment f the peratinal framewrk as well as pretesting was dne. Sme f the branch managers pined n its usefulness as well as inputs fr tactical decisin making. In the next chapter, the summary f findings and suggestins has been lked at.!2s

8 References ' Adrian Payne, The Essence f Services Marketing, Prentice- Hall f India Private Limited, Delhi, 995, p. 28. ^ S. H. Haeckel (995), "Adaptive Enterprise Design: The sense and respnse mdel", Planning Review, May/June, 995, pp 6-3, p. 42. ^ R. Srinivasan, Strategic Management: The Indian Cntext, Prentice-Hall f India Private Limited, Delhi, p. 49. '* William E. Rthschild, "Cmpetitr Analysis: The Missing Link in Strategy", McKinsey Quarterly, McKinsey and Cmpany, New Yrk, Issue 3,979, p