CHAPTER 1 INTRODUCTION

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THEORITICAL BACKGROUND OF THE STUDY CONSUMER BEHAVOIUR

One official definition of consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. It brings up some useful points: Behavior occurs either for the individual, or in the context of a group (e.g., friends influence what kinds of clothes a person wears) or an organization (people on the job make decisions as to which products the firm should use). Consumer behavior involves the use and disposal of products as well as the study of how they are purchased. Products use is often of great interest to the marketer, because this may influence how a product is best positioned or how we can encourage increased consumption. Since many environmental problems result from product disposal (e.g., motor oil being sent into sewage systems to save the recycling fee, or garbage pilling up at landfills) this is also an area of interest. Consumer behavior involves services and ideas as well as tangible products.

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The impact of consumer behavior on society is also of relevance. For example, aggressive marketing of high fat foods, or aggressive marketing of easy credit, may have serious repercussions for the national health and economy. The most obvious application of consumer behavior is for making better marketing campaigns. For example, by understanding that consumers are more receptive to food advertising when they are hungry, we learn to schedule snack advertisements late in the afternoon. By understanding that new products are usually initially adopted by a few consumers and only spread later, and then only gradually, to the rest of the population, we learn that (1) companies that introduce new products must be well financed so that they can stay afloat until their products become a commercial success and (2) it is important to please initial customers, since they will in turn influence may subsequent customers brand choices.

Need to study consumer behavior:

The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how: The psychology of how consumers think, feel, reason, and select between deferent alternatives (e.g., brands, products) The psychology of how the consumers is influenced by his or her environment (e.g., culture, family, media) The behavior of consumers while shopping or making other marketing decisions Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome How consumer motivation and decision strategies differ between products that differ in their level of importance or inerest that they entail for the consumer How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer. NEWHORIZONPage3

Understanding these issues helps us adapt our strategies by taking the consumer into considerations. According to section 2 on the Consumer Protection Act, 1986 consumer means any person who i. Buys any goods for a consideration which has been paid or promised or partly paid and partly promise or under any system of differed payment and includes any user of such goods other than the person who buys such good for consideration paid or promised or partly paid or partly promised or under any system of deferred payment when such use is made with the approval of such person but does not includes a person who obtains such goods for resale or for any purpose or ii. Hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised or partly paid and partly promised or under any system of deferred payments when such services are availed of with the approval of the first-mentioned person. Note: THE CONSUMER PROTECTION ACT, 1986 An Act to provide for the better protection of the interests of consumers and for that purpose to make provisions for the establishment of consumers councils and other authorities for the settlement of consumers disputes and for matter connected therewith.

A MODEL OF CONSUMER BEHAVIOR At one time, marketers could understand consumers through the daily experience of selling to them. But the growth of companies and markets has removed many marketing managers form direct contact with customers. Increasingly, managers have had to rely on the 7 Os framework for consumer research to answer the following key questions about market: Who constitutes the market? What does the market buy? Why does the market buy? Occupants Objects Objectives

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Who participates in the buying? Organizations How does the market buy? When does the market buy? Where does the markets buy? Operations Occasions Outlets

The starting point for understanding buyer behaviour is stimulus-response model shown below. Marketing and environmental stimuli enter the buyers consciousness. The buyers characteristics and decision process lead to certain purchase decisions. The markers task is to understand what in the buyers consciousness between the arrival of outside stimuli and the buyers purchase decisions. They must answer two questions: How do the buyers characteristics-cultural, social, personal, and psychologicalinfluence buying behavior? How does the buyer make purchasing decisions?

Marketing stimuli

Other stimuli

Buyers

Buyers

Buyers decision

characteristics decision making process

Product Price Place Promotion

Economical

Cultural

Problem recognition Information search Evaluation Decision Post purchase behavior

Product choice Brand choice Dealer choice Purchase Timing Purchase

Technological Social Political Cultural Personal Psychological

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amount

BUYER BEHAVIOUR Buyer behavior is the process by which consumers and organizational buyers make purchase decisions. Buyer behavior is a broad term that applies both to ultimate consumers and to organizational buyer. Consumers behavior refers to the buyer behavior of ultimate consumers. In order to understand human behavior in purchase/non purchase situations, consumer behavior researchers borrow theories from other relevant social science disciplines such as psychology and sociology.

The Interpersonal Determinants of Consumer Behavior 1. Cultural influences

Culture can be defined as values, beliefs, preferences, and tastes that are handed down from one generation to the next. Although cultural values are show to change, they do change over time. Basic core values are slow to change. Cultural differences are important for the international marketer who is involved in understanding the potential of target markets and constructing effective marketing programs. A culture includes numerous subgroups with their own distinguishing modes of behavior called subcultures. Subcultures are based upon such factors are race, nationality, age, rural vs. urban, sex, religion, and geographical distribution among others.

2. Social influences
All interactions with and influences resulting from both formal and informal group memberships other than the families are included. From the group, individuals receive norms, status, and roles. Norms are values, attitudes, and behaviors that a group deems appropriate for its members. Status is a persons relative position in a group. From NEWHORIZONPage6

groups, individuals acquire roles. Roles refer to what members of the group expect of the individual. The Asch phenomenon refers to a research project that demonstrates the impact groups and group norms have on an individuals behavior. Reference groups are those whose value structures and standards influence a person behavior. A person need not be an actual member of a particular reference group in order to be influenced by it. Strong influence by a group on a members purchase requires two conditions: The purchased product must be one that others can see and identify. The purchased product must be conspicuous, a brand or product not everybody owns. Social class membership can affect both lifestyle and purchasing behavior, though to what extent, researcher has not determined.

3. Family influence
Because of the close, continuing interactions among family members, the family often represents the strongest source of group influence. Like other groups, the family has set of norms, roles, and status. Four roles have been utilized in research on family decision-making: Each partner makes Autonomic an equal number of decisions. Husband dominates. Wife dominates. Syncratic both partners jointly make most decisions. The role of young children in purchasing decision-making is also changing. Children influence their parents and santa claus to buy certain toys, clothing and cereals, and so forth. Teenagers, in May cases have become the household-purchasing agent in their family unit.

4. Psychological influences

Needs and motives

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A need is a lack of something useful. It is an imbalance between the customers actual and desired state. A need must be sufficiently aroused before it can serve as a motive to buy something. Motives are inner states that direct a person towards the goal of satisfied a felt need. The individual moved to take action to reduce a state of tension and to return to a condition of equilibrium.

TYPES OF CONSUMER BUYING BEHAVIOUR

Consumer always wants to create an assortment of products which satisfies their needs and wants in the present and also in the future. To realize this aim, the consumer has to make a lot of decisions. These purchasing decisions can be classified into three main categories of decisions:

1. Routine response behavior

This behavior happens when the consumer regularly buys cheap products that needs very little search and also very little decision effort. In this care the consumer prefers a special brand but he also knows other brands of the same product class to have an alternative to buy if there is something wrong with his favorite brand.

2. Limited Decision Making

This is the case if the consumer buys a product occasionally or if there is a new brand, he doesnt know about, in a familiar product category. For this type of decision-making,

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the consumer needs a moderate amount of time for gathering information and deliberation.

3. Extensive Decision-making
This is the most complex decision making behavior. It happens when a purchase includes unfamiliar, expensive or infrequently bought products; for e.g. cars, house etc. the buyer uses a lot of time evaluating alternative brands or choices and also for seeking information. A big contrast to the extensive decision making process that were mentioned earlier is the behavior of the impulse buyers. These people do not plan conscious to buy; they have a persistent urge to buy something immediately if they like it. But often these people get in emotional conflicts; they often feel guilty because of their limited finances or some thing else.

CONSUMER DECISION MAKING

Consumer decision-making process

NEED RECOGNITION

INFORMATION SEARCH

EVALUATION OF ALTERNATIVES

POST PURCHASE BEHAVIOUR

PURCHASE

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This decision process can be divided into five stages:

1) Problem Recognition
This occurs when the buyer notices that there is a difference between the desired state and the actual conditions. The consumer gets aware that he has to change some thing to get satisfied. For example, if somebody needs a care to get to work and one day the car stops working. In this situation the person recognizes that there is a difference between the desired state (a working car) and the actual condition (a broken car).

2) Information search
After recognizing the problem, the buyer searches for information about a new product, which can solve his problem and also is able to satisfy his needs. Here we distinguish two aspects to an information search: In the internal search, buyer check first if they have any information about the needed product in their memory. If they cannot get enough information for their memory for a decision, they are looking for more information in an external search. In the external search the buyer may focus on communication with friends or relatives, to here about their experience with special brands. He also can obtain information from public sources like manufacturers, sales persons, or product test organizations.

3) Evaluation of Alternatives
To evaluate the products of which the buyer got information is looking for criteria to compare the products. These criteria are for example characteristics or features that the buyer wants (or does not want). The buyer also think about how important each criterion is; because some features may carry more weight than others. This evaluation of the consumer can be influenced by the marketer by framing the alternatives-that means the manner how the marketer describes the products and its features.

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4) Purchase
In this stage the consumer chooses the product or brand, which he wants to buy. This selection is based on the result of the previous evaluation stage. There is also a set of criterions, which must be taken into account: One of the most important criterions is the product availability, which may influence which brand is purchased. If the favorite brand is not available at the moment the consumer may choose the brand that is ranked second. Other criterions that also could be important for the consumer are for example the price, delivery, guarantees, maintenance agreements, and installation and credit agreements.

5) Post purchase evaluation

After the purchase the buyer begins to check the product with actual performance meet the expected level. In this stage many of criteria used in the evaluating alternatives stage are used again. The result is either satisfaction or dissatisfaction.

THE POST PURCHASE EVALUATION PROCESS

Increased knowledge Leads to more realistic expectations of the product. Yields higher levels of satisfaction. State of inner tension felt when Cognitive dissonance consumers are aware of a lack of consistency between their values or opinions and their behavior. Finding new information that reConsumers cognitive by: reduce dissonance enforces positive ideas about the purchase. Avoiding information that contradicts their decision NEWHORIZONPage11 before purchase

Revoking the original decision by returning the products.

CHAPTER 2

RESEARCH DESIGN

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STATEMENT OF THE PROBLEM

The title of the present research is A study on consumer behavior towards the insurance products with special to ICICI PRUDENTIAL ICICI (Industrial Credit and Investment Corporation of India), which was one of the largest developmental banks, has ventured into many areas of finance-in fact it has become a universal banking brand. Prudential one of the worlds leading insurance company has joined hand with ICICI to offer insurance products. Though private insurance companies are in the infancy stage, the impact on the insurance market is tangible. The marketing strategies of these private operators have forced LIC to change its gears. Insurance products are marketed with unique STP strategies. The market is more aware and realistic about investment and returns from insurance products. Insurance business is more transparent as compared to the past. In this background this study tries to analyze the investors behavior towards insurance products in general and ICICI in particular.

OBJECTIVE OF THE STUDY

1. To understand the attitudes and perception of respondents towards insurance products. 2. To understand the purchase behavior towards insurance products. 3. To study the respondents awareness towards ICICI PRUDENTIAL 4. To know people perception towards investments available in the market and their risk perception. 5. To analyze the investment strategies of respondents. 6. To know the present consumer trend prevailing in the market. NEWHORIZONPage13

7. To offer suggestion based upon the findings.

SCOPE OF THE STUDY

It is necessary to understand what make people to buy insurance products; who influence the buying decision and the market attitude towards insurance products. In this perspective, the present study has concentrated to analyze the behavior exhibited by the consumers of ICICI Prudential. It necessities to understand the attitudes of consumers towards products and services offered by ICICI Prudential. The study about consumers helps the company to improve their marketing strategies by understanding the consumers. For example, by understanding that a number of different messages compete for our potential customers attention, company learns that to be effective, advertisement must usually be repeated extensively. Company also learn that consumers will some times be persuaded more by logical arguments, but at other times will be persuaded more by emotional or symbolic appeals. By understanding the consumer the company will be able to make a more informed decision as to which strategy to employ.

Limitations of the study

1. An underlying assumption for the entire project is that the details and the feedback received from the population is true. 2. It was difficult to find respondents as they were busy in their schedule, and collection of data was very difficult. Therefore, the study had to be carried out based on the availability of respondents. 3. Some of the respondents were not ready to fill the questionnaires and some of them were not ready to come out openly 4. Due to Time constraints, the research study cannot be applied for a long time. NEWHORIZONPage14

REVIEW OF LITERATURE

PURPOSE
For the present dissertation also information where collected from both primary and secondary sources. Primary source constitute questionnaires and personal interviews. Most of the theoretical information needed is collected from different textbooks, magazines and web sites. Those constitute a significant information source for the present study. As the present dissertation was titled as consumer behavior towards the insurance products, literature reference were concentrated mostly on marketing and insurance related journals and magazines.

Sources of information

Insurance information:
Monthly insurance magazines like Asia Insurance Post, Insurance chronicle and other business magazines like Business World, Business India etc. have also provided good insight and valuable information during literature search. Insurance sector plays a very vital role in the process of economic development of any country it act as a mobilizer of savings, as a financial intermediary, as promoter of investment activity a stabilizer of financial market and as a risk manager. Insurance services lead to efficient and products allocation of capital resources, facilitate growth of trade and commerce, substitute for governments social security programs and assessed individuals and firm in efficient management of risk. [The Chartered Accountant Journal of the Institute of Chartered Accountants of India June 2003 - Insurance Industry]

The Indian life insurance industry vibrant activity, since it opened to private sector participation in 2001. The number of private life insurers now numbers to 12. This NEWHORIZONPage15

has led to a significant increase in life insurance in penetration, which stood at 2.7% of the GDP during 2001 02. all private insurers witnessed impressive growth, with a campaigned growth of 33%. ICICI Pru continues to lead the private insurers with a new business market share 37%. Birla Sunlife has seen a rapid growth with close to 90% of its premium income arising out of unit-linked plan. The union budget 2003 04 proved to be disappointing for life insurance industry. It restricted the tax benefit currently offered. The budget proposes to restrict the tax rebate under Section 88 to 20% of the sum assured. [Asia Insurance Post May 2003 A firm leap by Richard Holloway, managing consultant & Sumit Narayanan, Consultant of Watson Wyatt]

Life insurance is no longer being bought only as a savings tool but is increasing being sold for protection. The competition in the insurance market is not in savings products such as endowment and money back, but in the term insurance market. According to survey carried out by FICCI, as many 88% of the respondents said that they insure for security while only 40% did not for saving.

% of market share in 2001-02 Company Name LIC ICICI PRUDENTIAL HDFC STANDARED LIFE OTHERS % 98% 0.8% 0.2% 1.0%

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Private players: Company Name ICICI prudential Max New York Birla Sunlife HDFC Standard SBI life Allianze Bajaj Others % 40% 14% 12% 12% 6% 4% 12%

[Business India Oct 28 Nov 10, 2002 precious life]

Marketing information
Businesses today face three major challenges and opportunities: globalization and advance in technology and de-regulation. Marketing is typically seen as the task of creating, promoting and delivering good and services to consumers and business. And marketer are involved in marketing many type of entities: goods, service, information etc. among these service marketing has an eminent role in this present century. Consumers are in present days marketing. So it is important to a marketer to analyze and perceive the consumer behavior. In this perspective in order to get information about the above-related areas the following books has given a valuable in-depth in-sight: 1. 2. 3. Marketing Management Philip Kotler (the millennium edition) Service Marketing Valarie A. Zeithaml & Mary Jo Bitner Consumer Behavior - Leon G. Shiftman & Loslie Lazar Kanok (6th edition)

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CONCLUSION
The different information or benefits derived from the in-depth study of the above mentioned information sources are as follows: History of the life insurance industry; it helped to know about where from the life insurance company started their journey and how it has grown to the present set-up. It was a surprising information about the contribution of insurance industry to the growth of the country. Existing regulations and legislations relating to the life insurance industry; this gives me an insight into the rules and various restriction that IRDA has passed and the effect of Union Budget 2003 04 Competition existing in the present insurance market; the private sector also took participation in the insurance industry from 2001. It was clear from the above-mentioned articles, still LIC is the market leader in the life insurance industry with 98% market share. All the marketing information sources has given a significant contribution to the detailed theoretical perspective for the research i.e. about marketing in general, about service marketing and about consumer behavior. World wide web also worked as a highly important information source as it provides updated information for the research relating to various areas.

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METHODOLOGY Type of research

The study was conducted as an exploratory sampling survey method to collect primary and secondary data.

Primary Source of Data

A well-structured questionnaire was personally administrated to the selected sample to collect the primary data and personal interviews were conducted from insurance policy holders of ICICI PRUDENTIAL.

Secondary Source of Data

Secondary data are those, which have already been collected by some other persons for their purpose and published. Secondary data are usually in the shape of finished products. Two types of secondary data were collected for the preparation of the project work: Internal Data was generated from companys brochures, manuals and annual reports. External Data, on the other hand, was generated from magazines, research books and internet (websites). Magazines devoted solely to insurance news, such as Asia Insurance News, Insurance Chronicle-monthly insurance digest and other marketing magazines

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Sampling Techniques
A sample is a representative part of the population. In sampling technique, information is collected only from a representative part of the universe and the conclusions are drawn on that basis for the entire universe. A random sampling technique was used to collect data from the respondents. A random sample is a sample selected from a population in such a way that every member of the population has a equal chance of being selected and the selection of any individual does not influence the selection of any other. The selection is purely depends on chance. So while conducting the survey, 90 respondents were selected at random.

Sample Size Sample size denotes the number of elements selected for the study. For the present study, 90 respondents were selected at random. All the 90 respondents were the customers of one or another insurance company. Out of these 90 respondents 30 were specifically ICICI Prudential customers.

Sample Description The dissertation was focused on the consumer behaviour towards the insurance products with special reference to ICICI Prudential. The respondents were personally contacted for the purpose of the study. Most of the respondents were in age group of 45-55; which was having a frequency of 31, 23 respondents were in the age group of 35-45, 15 respondents were in the age group of 25-35 and 21 respondents were more than 55 years. According to gender wise, 78 were male respondents and only 12 were female respondents. Nearly half of the respondents were professionals and a big chunk of the rest was business class. Retired officers and others like housewives were among the respondents. NEWHORIZONPage20

CHAPTER 3 COMPANY PROFILE

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ICICI PRUDENTIAL Life Insurance was established in2000 with a commitment to expand and reshape the life insurance industry in India. The company was amongst the first private sector insurance company to begin operations after receiving approval from Insurance Regulatory Development Authority (IRDA), and in the time since, has taken several steps towards realizing its goal.

THE COMPANY
ICICI PRUDENTIAL Life Insurance Company is a joint venture between ICICI, a premier financial powerhouse and prudential plc; a leading international financial services group headquarters in the United Kingdom. ICICI Prudential was amongst the first private sector insurance company to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI and Prudential come together in1993 to form prudential ICICI Asset Management Company, which has today emerged as one of the leading mutual funds in India. The two companies bring together two of the strongest financial service brands in Asia, known for their professionalism, excellent quality of service and long term commitment to customers. Riding on the success of this relationship, the two companies joined hands once more in2000, to form ICICI PRUDENTIAL Life Insurance, with a commitment to provide leading-edge life insurance solutions. ICICI Bank has 74% stake in the company, and Prudential plc has 26%. COMPANY PROFILE

LIFE INSURANCE
Life insurance is a contract providing for a payment of a sum of money to the person assured or failing him to the person entitled to receive the same on the happening of certain event. Uncertainty of death is inherent in human life. It is this risk, which gives rise to the necessity for some form of protection against the financial loss arising from death. Insurance substitutes this uncertainty by certainty. NEWHORIZONPage22

The objective of insurance is normally to provide:

a. b.

Family protection and Provision for old age.

HISTORY AND PRESENT STATUS OF INSURANCE MARKET IN INDIA

The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reviles the 360-degre turn witnessed over a period of almost two centuries.

A brief history of the insurance sector

The business of life insurance in India in its existing form started in India in the 1818 with the establishment of Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are: 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Insurance Companies Act enacted to enable the government to collect statistical information about both life and non insurance business. 1938: earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interest of the insuring public. 1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalized. LIC found by an Act of Parliament, viz. LIC Act 1956, with a capital contribution of rupees Five Crore from the Government of India.

Insurance sector reforms

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R.N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future direction. The Malhotra committee setup with the objective of NEWHORIZONPage23

complimenting the reforms initiated in the financial sector. The reforms where aimed at creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms In 1994, the Committee submitted the report and some of the key recommendations included: i. Structure Government stake in the insurance companies to be brought down to 50%. Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations. All the insurance company should be given greater freedom to operate. ii. Competition Private companies with a minimum paid up capital of Rs. 1bn should be allowed to enter the industry. No company should dealing both the life and general insurance through a single entity. Foreign companies may be allowed to enter the industry in collaboration with the domestic companies Postal Life Insurance should be allowed to operate in the rural market. Only one State Level Life Insurance Company should be allowed to operated in each state iii. Regulatory body The Insurance Act should be changed. An insurance regulatory body should be setup.

ICICI Bank

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ICICI Bank (NYSE:IBN) is Indias second largest bank with an asset base of Rs. 106812 Corer. ICICI bank provides a broad spectrum of financial services to individuals and companies. This includes mortgages, car and personal loans, credit and debit cards and corporate and agricultural finance. The bank services a growing customer base of more than 7 mn customer accounts and five mn bondholders accounts through a multichannel access network. This includes about 450 branches and extension counters, 1675 ATMs, call centers and Internet banking. ICICI bank posted a net profit of Rs 1206 Crore for the year ended March 31, 2003. ICICI bank is the only Indian company to be rated above the country rating by the international rating agency Moodys and only the only Indian company to be awarded an investment grade international credit rating. The bank enjoys the highest AAA (or equivalent) rating from all Indian leading rating agencies.

PRUDENTIAL PLC

Established in 1848, Prudential plc is a leading international financial services company in UK with around US $ 250 bn funds under management, and more than 16 mn customers worldwide. Prudential has brought to market an integrated range of financial services products that now includes life assurance, pensions, mutual funds, banking, investment management and general insurance. In Asia prudential is UKs largest life insurance company with a vast network of 22 life and mutual fund operations in 12 countries- china, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand and Vietnam. Since 1923, prudential has championed customer centric products and services, supported by over 60000 staff and agents across the region.

DISTRIBUTION

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ICICI PRUDENTIAL has one of the largest distribution networks amongst private life insurance in India, having commenced operations in 28 cities and towns in India. These are: Ahmedabad, Bangalore, Chandigarh, Chennai, Coimbatore, Gurgaon, Hyderbad, Indore, Jaipur, Jalandhar, Kanpur, Cochin, Kolkotta, Kottaym, Lucknow, Ludhiana, Madurai, Mangalore, Meerut, Mumbai, Nagpore, Nasic, Noida, New Delhi, Pune, Thane, Vadodara and Vashi. The company has a largest number of banc assurance tie-ups, having agreement with ICICI Bank, Citi Bank, Allahabad Bank, Federal Bank, South Indian Bank, Bank of India, Lord Krishna Bank, and Punjab&Maharashra Co-operative Bank, as well as some corporate agents. It has also tied-up with organizations like Dahn for distribution of Salaam Zindagi, a policy for the socially and economically under privilege sections of society.

SERVICE
ICICI PRUDENTIAL has recruited and trained over 18000 insurance agents to interface with and advice customers, and has the highest number amongst private life insurers on the renowned Million Dollar Round Table (MDRT). Further, it leverages its state-of-the-art IT infrastructure to provide superior quality of service to customers.

MILESTONES
ICICI PRUDENTIAL life insurance has crossed Rs 500 Crore premium income mark on March 31, 2003 having issued nearly 350000 policies for a sum assured of Rs.8700 Crore since its inception. NEWHORIZONPage26

The last fiscal had seen significant growth for ICICI PRUDENTIAL across all segments, with 246827 policies issued in the period April 2002-March 2003, and Rs. 348 Crore premium from new business in the same period, a 200 per cent growth over the previous fiscal (April 2001-March 2002). The company had also met all its rural and social sector obligations, said a press release. The growth been driven by pensions and unit linked products. It has garnered 23% of pensions premium amongst all players for the period April 2002-February 2003 and 34% in Feb alone. Today the company has established itself the number one private life insurer in the country.

OUR VISION
To make ICICI PRUDENTIAL the dominant pensions player build on trust by world-class people and service. This we hope to achieve by: Understanding the needs of customers and offering them superior products and service. Leveraging technology to service customers quickly, efficiently and conveniently. Developing and implementing superior risk management and investment strategies to offer sustainable and stable returns to our policyholders. Providing an enabling environment to foster growth and learning for our employees. And above all, building transparency in all our dealings. The success of the company will be founded in its unflinching commitment to 5 core value -- Integrity, Customer first, Boundary less, Ownership and Passion. Each of the values describes what the company stands for qualities of our people and the way we work. We do believe that we are on the threshold of an exciting new opportunity, where we can play significant role in redefining and reshaping the sector. Give the quality of our parentage and commitment of our team; there are no limits to our growth. NEWHORIZONPage27

PRODUCTS Insurance Solutions for Individuals

ICICI PRUDENTIAL life insurance offers a range of innovative, customer centric products that meet the needs of customer at every life stage. Its 13 products can be enhanced with up to four riders, to create a customized solution for each policyholder.

Savings Solutions
ICICI PRUDENTIAL Save n Protect is a traditional endowment savings plan than offers life protection along with adequate returns. ICICI PRUDENTIAL CashBak is an anticipated endowment policy ideal for meeting milestone expenses like a childs marriage, expenses for a childs higher education or purchase of an asset.

Protection Solutions
ICICI PRUDENTIAL Life Guard is a protection plan, which offers life covers at very low cost. It is available in three options level term assurance, level assurance with return of premium and single premium.

Child Solutions
ICICI PRUDENTIAL Smart Kid provides guaranteed educational benefits to a child along with life insurance cover for the parent who purchases the policy. The policy is designed to provide money at important milestones in childs life.

Market linked Solutions

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ICICI PRUDENTIAL LifeLink is a single premium Market Linked Insurance Plan, which combines life insurance cover with the opportunity to stay, invested in the stock market. ICICI PRUDENTIAL LifeTime offers customers the flexibility and control to customize the policy to meet the changing needs at different life stages. It offers three investment options Growth Plan, Income Plan and Balanced Plan. Retirement Solutions ICICI PRUDENTIAL ForeverLife is retirement product targeted at individuals in their thirties. ICICI PRUDENTIAL LifeTime Pension is a regular premium market linked pension plan. ICICI PRUDENTIAL LifeLink Pension is a single premium market linked pension plan.

Single Premium Solutions

ICICI PRUDENTIAL AssureInvest is a single premium savings product with life cover for terms of 5, 7or 10 years. ICICI PRUDENTIAL ReAssure is a retirement product for senior citizens who are on the verge of retirement or have just retired. ICICI PRUDENTIAL also launched salaam zindagi, a social sector group insurance policy targeted at the economically under privileged sections of the society.

Group Insurance Solutions

ICICI PRUDENTIAL also offers Group Insurance Solutions for companies seeking to enhance benefits to their employees. ICICI PRUDENTIAL Group Gratuity Plan: ICIC Prus Group Gratuity Plan helps employers fund their statutory gratuity obligation in a scientific manner. The plan can also be customized to structure schemes that can provide benefits beyond the statutory obligations. NEWHORIZONPage29

ICICI PRUDENTIAL Group Superannuation Plan: ICICI Pru offers a flexible defined contribution superannuation scheme to provide a retirement kitty for each member of the group. Employees have the option of choosing from various annuity options or opting for a partial commutation of the annuity at the time of retirement.

ICICI PRUDENTIAL Group Term Plan: ICICI Prus flexible group term solution helps to provide affordable cover to members of a group. The cover could be uniform or based designation or rank or a multiple of salary. The benefit the policy is paid to the beneficiary nominated by the member on his/her death.

Flexible Rider Options

ICICI PRUDENTIAL life offers for flexible riders, which can be added to the basic policy at a marginal cost, depending on the specific needs of the customer. 1. Accident & disability benefit: If death occurs as the result of an accident during the term of the policy the beneficiary receives an additional amount equal to the sum assured under the policy. If the death occurs while traveling in an authorized mass transport vehicle, the beneficiary will be entitled to twice the sum assured as additional benefit. 2. Level Term Cover: This rider provides the option to increase the risk cover. The may be increased for an additional amount upto a maximum of the existing basics sum assured on your policy. 3. Critical Illness Benefit: protects the insured against the financial loss in the event of 9 specified critical illnesses. Benefits are payable to the insured for medical expenses prior to death. 4. Major Surgical Assistance Benefit: provides financial support in the event of medical emergencies, ensuring that benefits are payable to the life assured for medical expenses incurred for surgical procedures. Cover is offered against 43 different surgical procedures.

NEWHORIZONPage30

AWARENESS
According to Saugata Gupta Chief Marketing of ICIC Pru ICICI Pru lifes communication strategies have been very success full in building the brand and driving awareness of the company and the category. ORG-Margs Brand track survey undertaken last year indicate that though awareness of LIC stands at 100%, ICICI Pru life stands not far behind in second place at 70%. Further the awareness scores for ICICI Pru life double between February 2001 and September 2001. ORG Marg research also showed that the communication not only created saliency and awareness, but also succeeded in influencing the buying decision. ICICI Pru life emerged far ahead of other private players as far as share of wallet went, with 52% of the respondents saying that they intended to buy policy from ICICI Pru life.

ADVERTISING EFFECTIVENESS
ICICI Prudential Agency: Lowe The making of Indias no: 1 Private life insurer

ICICI Pru is a case study in the role of marketing in reshaping an industry. It highlights how an industry where sell and push were oft used words and consumer was nothing more than a file number, has changed to one where consumer preference and consumer pull rule the roost. Heres a look at how ICICI Pru changed the rules of the games and emerged a leader in the process.

Background
When the insurance sector was liberalized in 2000, the private players contend with a few issues. Ratio of premium to GDP was low;1.3% of GDP was invested in insurance. Insurance penetration was at an abysmal 22% of insurable population. Besides NEWHORIZONPage31

the above the private players were faced with attitudinal barriers, perception of insurance has a tax saving tool and lack of a consumer centric approach in service and product offerings.

The marketing challenges facing ICICI Pru:

The challenge therefore was to change established category drivers (death payment and tax saving) and to get the consumer to evaluated insurance on a more emotional plat form (protection) rather than a mere rational decision (tax savings).

The campaign Objectives:

a. Reposition the category in the consumers mind. Influence the consumer to view it as a protection instrument and not a tax saving product alone. b. In the process, create differentiation for the ICICI Pru brand as a provider of social security and family protection. c. Achieve leadership status in saliency, image and product parameters. d. Build credibility and trust.

Creative strategy:
The essence of the creative strategy: To get the consumer to re look at insurance as a means to lead a worry free life and not as a necessary evil. To this effect the core brand insight highlighted was As head of the family, it is my responsibility to take care of my loved ones and protect them from the uncertainties of life, summed up in the advertising idea: we cover you at every step in life. NEWHORIZONPage32

Media Strategy
In a market likely to be cluttered, we used multiple touch points to reach the consumer. The role for each medium was envisaged. The TV medium was used to enhance the emotional link with the brand. Strategic use of 15 sec. edits facilitated high frequency levels. In print, the cost per response rather than the cost per thousand as responses were measured in form of call ins. Radio FM, Cinema, Internet were used to create a media multiplier effect

The results of communication efforts

Being no: one in awareness and saliency. Awareness: ICICI Pru showed a significant jump in awareness between Feb and Sept 2001. Image: highest score among all insurance players including LIC, on image parameters like safety, modernity, service, good returns, etc. Intention to invest: next only to LIC as per research (all source: research by ORG Marg). No: of calls and e-mails: there were 70000 calls at the call center and 6582 e-mails in the year 2001.

NEWHORIZONPage33

CHAPTER 4

DATA ANALAYSIS AND INTERPRETATION

NEWHORIZONPage34

TABLE NO: 1 Table showing the monthly income of the respondents PARTICULARS
Less than 10000 10000-20000 20000-30000 30000-40000 More than 40000 Total FREQUENCY 11 22 24 18 15 90 PERCENTAGE 12% 24% 27% 20% 17% 100%

Interpretation:

From the above table it can be inferred that the maximum respondents fall between income of 20000 30000 i.e., 27% o and 24% of the respondents have a monthly income of 10000 20000 and the respondents who have less income level are upto 12%.

NEWHORIZONPage35

GRAPH 4.1 Graph showing the monthly income of the respondents

Monthlyincomeoftherespondents

25

24

20

18 15

15 11 10

12

lessthan10000 1000020000 2000030000 3000040000 morethan40000

Inference
The above graph shows the monthly income level of the respondents.

NEWHORIZONPage36

TABLE NO: 2 Table showing the monthly savings of respondents

PARTICULARS Lessthan2000 2000-4000 4000-6000 6000-8000 More than 8000 TOTAL FREQUENCY 15 22 21 19 13 90 PRECENTAGE 17% 24% 23% 21% 15% 100%

Interpretation:
From the above table it can be inferred that the respondents fall between savings of 2000 4000 i.e., of 24% and 23% of the respondents have a monthly savings of 4000 6000 and the respondents who have less income level are upto 15%.

NEWHORIZONPage37

Graph 4.2 Table showing the monthly savings of respondents

monthly savings of the respondents

22 25 20 15 10 5 0
less than 2000 4000 - 6000 more than 8000 2000 - 4000 6000 - 8000

21 19

15 13

NEWHORIZONPage38

TABLE NO: 3 Table showing the purpose of savings of the respondents

PARTICULARS Medical expenses To buy durables To buy jewelers To buy house or site Education Others TOTAL FREQUENCY 21 06 05 25 31 02 90 PRECENTAGE 23% 07% 06% 27% 34% 03% 100%

From the above table it can be inferred that:

23% of the 90 respondents make savings for the purpose of medical expenses,07% of the respondents make savings for the purpose to buy durables,06% of the respondents make savings for the purpose to buy jeweler, 27% of the respondents make savings for the purpose to buy house or site,34% of the respondents make savings for the purpose of education, 03% of the respondents make savings for some other purpose like marriage, entrepreneurship etc.

NEWHORIZONPage39

Graph 4.3 Graph showing the purpose of savings of the respondents

Purpose of savings
35 31 30 25 21 20 15 10 6 5 0
medical expences to buy house or site to buy durables education to buy jewellers others

25

5 2

NEWHORIZONPage40

TABLE NO: 4 Table showing the investment preference of the respondents

PARTICULARS Bank deposit Insurance Shares Debentures Real estate Gold Mutual funds Chit funds Others TOTAL FREQUENCY 22 18 13 09 12 04 07 05 00 90 PRECENTAGE 24% 20% 14% 10% 13% 05% 08% 06% 00% 100%

From the above table it can be inferred that:

24% of the 90 respondents preferred to make investments in bank deposits,20% of the respondents preferred to make investments in insurance,14% of the respondents preferred to make investments in shares,10% of the respondents preferred to make investments in debentures,13% of the respondents preferred to make investments in real estate,05% of the respondents preferred to make investments in gold,08% of the respondents preferred to make investments in mutual funds,06% of the respondents preferred to make investments in chit funds

NEWHORIZONPage41

Graph 4.4 Graph showing the investment preference of the respondents

Investment preferences

25 20 15 10 5 0

22 18 13 9 7 4 5 12

bank deposit debenture mutual funds

insurance real estate chit funds

shares gold

NEWHORIZONPage42

TABLE NO: 5 Table showing the respondents who are actively planning their investments taking care of tax implications
PARTICULARS Yes No TOTAL FREQUENCY 72 18 90 PRECENTAGE 80% 20% 100%

From the above table it can be inferred that: 80% of the 90 respondents actively plan their investments taking care of tax implications, 20% of the respondents does not plan their investments taking care of tax implications.

NEWHORIZONPage43

Graph 4.5 Graph showing the respondents who are actively planning their investments taking care of tax implications

Respondents who plan their investments taking care of tax implications

20% 80%

yes

no

NEWHORIZONPage44

TABLE NO: 6 \Table showing the respondents level of information regarding insurance products
PARTICULARS Good Moderate Poor TOTAL FREQUENCY 30 54 06 90 PRECENTAGE 33% 60% 07% 100%

From the above table it can be inferred that:

33% of the 90 respondents have a good level of knowledge and information regarding insurance products of the respondents have an average level of knowledge and information regarding insurance products, 07% have a poor knowledge and information regarding insurance products, 60%

NEWHORIZONPage45

Graph 4.6 Graph showing the respondents level of information regarding insurance products

Level of information on insurance products

poor 7% good 33%

moderate 60%

NEWHORIZONPage46

TABLE NO: 7 Table showing the companies preferred for taking life insurance policies by the respondents
PARTICULARS LIC ICICI ING-VYSYA Birla Sunlife Others TOTAL FREQUENCY 40 30 07 10 03 90 PRECENTAGE 45% 33% 08% 11% 03% 100%

From the above table it can be inferred that:

45% of the 90 respondents are the holders of life insurance policies of LIC, 33% of the respondents are the holders of life insurance policies of ICICI, 08% of the respondents are the holders of life insurance policies of ING VYSYA, 11% of the respondents are the holders of life insurance policies of Birla sunlife, 3% of the respondents hold the life insurance policies of other companies, which include Max New York, Metlife etc.

NEWHORIZONPage47

Graph 4.7 Graph showing the companies preferred for taking life insurance policies by the respondents

Companies preferred for life insurance policies

3% 8% 11%

45%

33%

LIC

ICICI

ING - VYSYA

Birla sunlife

others

NEWHORIZONPage48

TABLE NO: 8 Table showing the policies preferred by the respondent

PARTICULARS Annuity Money back Endowment Term TOTAL FREQUENCY 35 16 28 11 90 PRECENTAGE 39% 18% 31% 12% 100%

From the above table it can be inferred that: 39% of the respondents prefer annuity policy, 18% of the respondents prefer money back, 31% of the respondents prefer endowment, 12% of the respondents prefer term polices

NEWHORIZONPage49

Graph 4.8 Graph showing the policies preferred by the respondent

Policy preferences

35 35 30 25 20 15 10 5 0
annuity money back endowment term

28

16 11

NEWHORIZONPage50

TABLE NO: 9 Table showing how much insurance premium is paid monthly by the respondents
PARTICULARS Less than 1000 1000 2000 2000 3000 3000 4000 More than 4000 TOTAL FREQUENCY 16 22 40 08 04 90 PRECENTAGE 18% 24% 44% 09% 05% 100%

From the above table it can be inferred that:

18% of the 90 respondents used to pay a monthly premium of less than 1000, 24% of the respondents pay a monthly premium of 1000 2000 , 44% of the respondents pay a monthly premium of 2000 3000 , 09% of the respondents pay a monthly premium of 3000 4000 , 05% of the respondents pay a monthly premium of more than 4000

NEWHORIZONPage51

Graph 4.9

Graph showing how much insurance premium is paid monthly by the respondents

Approximate monthly insurance premium 40 40

35
s t 30 n e d25 n o p20 s e r 15 f o o10 n

22 16 8 4

5 0
less than 1000 2000 - 3000 more than 4000 1000 - 2000 3000 - 4000

NEWHORIZONPage52

TABLE NO: 10 Table showing the purpose for which the respondents have taken the policy
PARTICULARS Tax purpose Future security Childrens education Marriage Others TOTAL FREQUENCY 39 23 20 00 08 90 PRECENTAGE 43% 26% 22% 00% 09% 100%

From the above table it can be inferred that: 43% of the 90 respondents have taken the policy for the purpose of tax saving, 26% of the respondents have taken the policy for the purpose of future security, 22% of the respondents have taken the policy for the purpose of childrens education, 09% of the respondents have taken the policy for some other purpose like accidents, natural calamities etc. None of the respondents have opted life insurance policies for marriage purpose

NEWHORIZONPage53

Graph 4.10 Graph showing the purpose for which the respondents have taken the policy

NEWHORIZONPage54

Purpose of the policy taken

40 35 30
s t n e25 d n o p s20 e r f o 15 o n

39

23 20

10 5 0 0

tax purpose

future security

children's education

marriage

others

NEWHORIZONPage55

TABLE NO: 11 Table showing the person who pays premium for the respondent
PARTICULARS Self FREQUENCY 60 15 12 03 90 PRECENTAGE 66% 17% 13% 04% 100%

Employer
Spouse Others TOTAL

From the above table it can be inferred that: 66% of the 90 respondents premium is paid by themselves, 17% of the respondents premium is paid by their employees, 13% of the respondents premium is paid by their spouse, 04% of the respondents premium is paid by persons other than the above three .

NEWHORIZONPage56

Graph 4.11 Graph showing the person the person who pays premium for the respondent

Person who pays premium

12 15 60 3

self

employer

spouse

others

NEWHORIZONPage57

TABLE NO: 12 Table showing whose life is insured as per the policy taken by the respondents
PARTICULARS Self Spouse Children Parents TOTAL FREQUENCY 41 28 11 10 90 PRECENTAGE 46% 31% 12% 11% 100%

From the above table it can be inferred that: 46% of the 90 respondents have insured their life itself as per the policy taken, 31% of the respondents have insured their spouse life as per the policy taken, 12% of the respondents have insured their childrens life as per the policy taken, 11% of the respondents have insured their parents life as per the policy taken.

NEWHORIZONPage58

Graph 4.12 Graph showing whose life is insured as per the policy taken by the respondents

Person whose life insured 41

45 40 35 30 25 20 15 10 5 0 1
self spouse

28

11

10

children

parents

NEWHORIZONPage59

TABLE NO: 13 Table showing the level of information of the respondents regarding the products of ICICI PRUDENTIAL
PARTICULARS Good Moderate Poor TOTAL FREQUENCY 50 27 13 90 PRECENTAGE 56% 30% 14% 100%

From the above table it can be inferred that: 56% of the 90 respondents have a good level of information regarding the products of ICICI PRUDENTIAL, 30% of the respondents have an average level of information regarding the products of ICICI PRUDENTIAL, 14% of the respondents have only a poor information regarding the products of ICICI PRUDENTIAL.

NEWHORIZONPage60

Graph 4.13 Graph showing the level of information of the respondents regarding the products of ICICI PRUDENTIAL

Level of information about products of ICICI PRUDENTIAL

good

moderate

poor

NEWHORIZONPage61

TABLE NO: 14 Table showing ICICI PRUDENTIAL advisors who have contacted the respondents

PARTICULARS Yes No TOTAL

FREQUENCY 39 51 90

PRECENTAGE 43% 57% 100%

From the above table it can be inferred that: 43% of the 90 respondents have contacted by the advisors of ICICI PRUDENTIAL, 57% of the respondents have not contacted by the advisors of ICICI PRUDENTIAL.

NEWHORIZONPage62

Graph 4.14 Graph showing ICICI PRUDENTIAL advisors who have contacted the respondents
ICICI PRUDENTIAL advisors who have contacted the respndents

51 60 50 40
Yes

39

30 20 10 0

no

NEWHORIZONPage63

TABLE NO: 15 Table showing the policies preferred by the respondents owning ICICI PRUDENTIAL life insurance policy
PARTICULARS Annuity Money back Endowment Term TOTAL FREQUENCY 12 05 09 04 30 PRECENTAGE 40% 17% 30% 13% 100%

From the above table it can be inferred that: 40% of 30 respondents who are owing icici prudential life insurance policy prefer annuity policy, 17% of 05 the respondents of prefer money back policy, 30% of 9 of the respondents prefer endowment policy, 13% of the respondents term policy

NEWHORIZONPage64

Graph 4.15 Graph showing the policies preferred ICICI PRUDENTIALS customers

Policies prefered by ICICI PRUDENTIAL'S customers

12
12

9
10 s t n e d n o p s e r f o o n 8

5
6 4 2 0

annuity

money back endowment

term

NEWHORIZONPage65

TABLE NO: 16 Table showing the rating of the service offered by ICICI PRUDENTIAL
PARTICULARS Good Average Poor TOTAL FREQUENCY 18 12 00 30 PRECENTAGE 60% 40% 00% 100%

From the above table it can be inferred that:

60% of the 30 respondents have an opinion that service offered by ICICI PRUDENTIAL is good, 40% of the respondents have rated its service as average.

NEWHORIZONPage66

Graph 4.16 Graph showing service ratings of ICICI PRUDENTIAL

Service ratings of ICICI PRUDENTIAL

18 20
s15 t n e d n o p10 s e r f o o n 5

12

0 1
good average poor

NEWHORIZONPage67

TABLE NO: 17(a)

Table showing whether the respondents are satisfied with the service of the company
PARTICULARS FREQUENCY 25 05 30 PRECENTAGE 83% 17% 100%

Yes No
TOTAL

From the above table it can be inferred that: 83% of the 30 respondents are satisfied with the service of ICICI PRUDENTIAL, 17% of the respondents are not satisfied with its service.

NEWHORIZONPage68

Graph 4.17 Graph showing level of satisfaction on service of ICICI PRUDENTIAL

Level of satifaction on service of ICICI PRUDENTIAL

17% 83%

yes

no

NEWHORIZONPage69

TABLE NO: 17(b)

Table showing whether the respondents are satisfied with the service of ICICI PRUDENTIAL advisors
PARTICULARS Yes No TOTAL FREQUENCY 17 13 30 PRECENTAGE 57% 43% 100%

From the above table it can be inferred that: 57% of the 30 respondents are satisfied with the service provided by ICICI PRUDENTIAL advisors, 43% of 30 respondents are not satisfied with advisors service.

NEWHORIZONPage70

Level of satisfaction on the service of advisors

43% 57%

yes

no

NEWHORIZONPage71

TABLE NO: 18 Table showing how frequently respondents like to pay their premium
PARTICULARS Monthly Quarterly Half yearly Yearly One time single premium TOTAL FREQUENCY 13 08 04 03 02 30 PRECENTAGE 43% 27% 13% 10% 07% 100%

From the above table it can be inferred that:

43% of the 30 respondents like to pay their premium monthly , 27% of the respondents like to pay their premium quarterly, 13% of the respondents like to pay their premium half yearly, 10% of the respondents like to pay their premium yearly, 07% of the respondents like to pay their premium as one time single premium.

NEWHORIZONPage72

Graph 4.18 Graph showing frequency of payment

Frequency of payment of premium

7% 10% 43% 13%

27%

monthly quarterly half yearly yearly one time single premium

NEWHORIZONPage73

TABLE NO: 19 Table showing whether the ICICI PRUDENTIAL policyholders are receiving premium notice in advance
PARTICULARS Yes No TOTAL FREQUENCY 25 05 30 PRECENTAGE 83% 17% 100%

From the above table it can be inferred that: 83% of the 30 respondents have agreed that they are receiving premium notice in advance, 17% of the respondents have not agreed that they are receiving premium notice in advance .

NEWHORIZONPage74

Graph 4.19

Graph showing policy holders who receives premium notice in advance

ICICI PRUDENTIAL policy holders who recieves premium notice in advance

25 25 20 15 10 5 0 yes no 5

NEWHORIZONPage75

TABLE NO: 20 Table showing the respondents opinion regarding whether the ICICI PRUDENTIAL website www.iciciprulife.com is informative and suggestive
PARTICULARS Yes No TOTAL FREQUENCY 11 19 30 PRECENTAGE 37% 63% 100%

From the above table it can be inferred that: 37% of the 30 respondents has an opinion that ICICI PRUDENTIAL website is informative and suggestive, 63% of the respondents has an opinion that ICICI PRUDENTIAL website is not informative and suggestive.

NEWHORIZONPage76

Graph 4.20 Graph showing comments on ICICI PRUDENTIAL web site

Comments on ICICI PRUDENTIAL web site

37%

63%

yes

no

NEWHORIZONPage77

TABLE NO: 21 Table showing the number of respondents who are interested to hold more policies other than one they are using now
PARTICULARS Yes No TOTAL FREQUENCY 21 09 30 PRECENTAGE 70% 30% 100%

From the above table it can be inferred that: 70% of the 30 respondents are interested to hold more policies, 30% of the respondents are not interested to hold more than one policy.

NEWHORIZONPage78

GRAPH 4.21 Graph showing respondents willingness to hold more policies

Respondents' willingness to hold more policies

25 20 15 10 5 0

21

yes

no

NEWHORIZONPage79

CHAPTER 5

SUMMARY OF FINDINGS AND CONCLUSION

NEWHORIZONPage80

FINDINGS
1. LIC is the clear market leader across all age groups and income levels. May be ICICI PRUDENTIAL can excuse it self that people in the age of more than 55 years category could not take its policies because ICIC PRUDENTIAL was not around when these people made their life insurance choices. But what is disturbing is that the young age group (25 35) also prefers the government run LIC. 2. Majority of the respondents i.e. 22 respondents have a monthly savings around 2000 4000, 21 respondents said that they have monthly savings around 4000 6000 and only a few respondents have monthly savings of less than 2000, around 6000 - 8000 and more than 8000. 3. It is inferred from the study that, 31 respondents make the savings for the purpose of education, 21 respondents make the savings for the purpose of medical expenses, 25 respondents make the savings to buy house or site and few respondents make savings to buy durable, to buy jewelers and some other purpose also. 4. From the study it is found that majority of the respondents i.e. 22 respondents prefer bank deposits for investment purpose, 18 prefer insurance, 13 prefer shares and 12 prefer real estate. So there is a more scope insurance sector as people feel it is secured and profitable mode investment and this trend can capitalized upon by ICICI PRUDENTIAL. 5. Most of the respondents give enough care to tax implication while planning their investments, only a few i.e. 18 respondents does give any importance for tax implication while planning their investments. 6. In an absurd contrast to the information and awareness of life insurance among the younger earning generation respondents seems careless to take up insurance. ICICI PRUDENTIAL can take up the initiative to create awareness of its insurance policies right from the college level by conducting workshops there. 7. Birla Sunlife is ICICI PRUDENTIALs main competitor for the higher income group and competitors include Max New York, HDFC Standard Life, and SBI Life etc.

NEWHORIZONPage81

8. Most of the respondents prefer annuity policies; followed by endowment policies. 16 respondents like to invest in money back policies and only 11 respondents prefer term. 9. Potential for ICICI PRUDENTIAL exists in the category of respondents aged 25 45 years old earning less than 10000 per month. As awareness of life insurance is gaining ground here and tomorrow respondents from here will be growing upwardly mobile and will invest larger amounts in life insurance. 10. Contrary to popular belief life insurance is not being bought for future security (even though buying an insurance policy automatically implies future security) but for tax exemption purpose under Sec. 88 of the Income Tax Act, 1961. This is quite risky for insurance companies because if this tax exemption is withdrawn by the government later then with this prevailing attitude towards insurance, not many people will be attractive towards life insurance. Hence ICICI PRUDENTIAL must educate the public towards the core benefit of life insurance through innovative promotional campaigns. 11. Life policies have not at all been bought for marriage purpose. 12. From the study, it is clear that majority of the respondents has taken the policy for themselves and 28 respondents have taken the policy for their spouse. The study also shows that very less number of respondents have taken the policy for their children and parents. 13. Most of the respondents are well informed about the products of ICICI PRUDENTIAL, 27 respondents have an average knowledge and 13 respondents have only a poor knowledge about it. 14. The ICICI PRUDENTIAL network of advisors should be increased and their targeting tactics should be strengthened as out of 90 people surveyed only 39 were contacted by ICICI PRUDENTIAL advisors previously. One respondent said he would have taken ICICI PRUDENTIALs policy had not Birla Sunlife approached him earlier. This shows adage the early bird catches the worm is very true here. 15. Among 30 ICICI policyholders majority prefers annuity policies, 9 respondents prefer to take endowment policies and a few give preference to money back and term. NEWHORIZONPage82

16. Majority of ICICI policyholders rates its service as good. 17. It is found that majority of the ICICI PRUDENTIAL policyholders are satisfied with the service of both the company and advisors. 18. 13 policy holders of ICICI PRUDENTIAL are likes to pay their premium monthly, 8 likes to pay quarterly, few likes to pay half-yearly and only 2 likes to pay as one time single premium. 19. Majority of the customers of ICICI PRUDENTIAL has agreed that they are receiving premium notice advance. 5 customers have said that they are not receiving the premium notice frequently, which also a quite good number out of total 30 respondents. So the company should not ignore it. 20. Only 37% of the respondents have logged into iciciprulife.com. The company should understand that if adequate publicity is given to its website through print, television, radio, mobile and even through Internet, people would browse through it. This is important because among all the above media, Internet offered the advantage of presenting the data in the greatest detail anywhere, any time with constrains of time and space and the least expense. If matter is presented well the information seeker can take positive decision. 21. With improving economic conditions people can afford to take up more policies, which is slowly, but surely coming. Thus ICICI PRUDENTIAL can tap into the 25% market held by LIC. It also point out that ICICI PRUDENTIAL has 85% of market potential as many of the existing policy holders are grossly under insured and they can take additional insurance policies as they progress in their career.

NEWHORIZONPage83

CONCLUSION
Since the opening up of the insurance sector in 1994, 20 private insurers are in the fray each one trying to garner more market share than the other. Among all the players ICICI Prudential with the advantage of being the earliest to operate in the liberalized insurance market has cornered 3,50,000 policies as on March 31, 2003.

Yet the survey has exposed how far behind LIC is ICICI Prudential. ICICI Prudential must also be alert what with Birla Sunlife and ING-VYSYA breathing down its neck.

I am sure the company will find my findings relevant and I sincerely hope it uses my suggestions enlisted, which I hope will take them miles ahead of competition.

In short, I would like to say that the very act of the concerned management at ICICI Prudential in giving me the job of critically examining consumer behavior towards financial products of the company is a step in their continual mission of making all round improvements as a means of progress.

I am sure the company has a very bright future to look forward to and will be a trailblazer in its own right.

NEWHORIZONPage84

CHAPTER 6 RECOMMENDATIONS AND SUGGESTIONS

NEWHORIZONPage85

SUGGESTIONS
1. Affordable schemes must be launched for the 20 30 year olds drawing less than 5000 rupees per month. This category will rise in the future and ICICI Prudential must concentrate on catching them young so that the company can generate more income from the longer service lives of the younger potential policyholders. ICICI Prudential must not limit itself to serve only the affluent, as it will be ignoring a large chunk of aspirational Indians. It would be wise for the company to target young people in the above category and grow along with them as they and the nation prospers.

2. Many respondents in the 20 40 year old category are saving to buy a house / site. ICICI Prudential can capitalize on this yearning by offering house loans with low interest if customers take up its insurance policies.

3. Many respondents in their answer as to why they did not take ICICI Prudential policies said that ICICI Prudential being a private insurer its reliability and long term existence is a big question mark. This myth must be broken through an Ad-campaign through radio, television, print internet that tells that ICICI is nothing but the Industrial Credit and Investment Corporation of India which was set up as a public limited company on January 5, 1955 by the government. Hence it has existed NEWHORIZONPage86

for 48 years close to half a century and has gone from strength to strength, so why not even in the future? It can exist for an even longer time with its tremendous reserves and valuable experience in the financial sector. Even the advisors must sell this fact of the company to the discerning public.

4.

Website Changes:

a) ICICI Prudential must advertise more about its website in the mass media so people can gain first hand knowledge about its products at their convenience in a more detailed manner. b) The website is good but instead of having a glossary as a separate entity, link words which are difficult to understand for a first timer (even if it is as simple as premium) must be marked up (underlined) in the text, which upon clicking must open out to a window giving details. c) A page must be devoted on why life insurance must be taken plus real life stories of how people without insurance protection suffered when tragedies struck them. In contrast happy stories of those who were smart must be given. d) Links to other sites extolling the virtues of life insurance must be given. e) A page devoted to ICICIs beginning as a developmental bank started in 1955 must be included in the website to assure potential customers that this is one company that will stick around for a long time to come. f) Exciting contests can be launched for those who visit the website. g) ICICI Prudential has tied up with Citibank, Allahabad Bank, Federal Bank, Lord Krishna Bank, Bank of India hence it must advertise in these websites also. It can also advertise in other financial sections of websites like rediff.com and indiainfoline.com. Youth sites like mtvindia.com can also be targeted. NEWHORIZONPage87

h) It should highlight in bold letters (not just a mention) that ICICI Prudential is working for underprivileged sections of the society (e.g. Dhan). 5. According to Abraham Maslows hierarchy of needs the 2nd step to self actualization is the fulfillment of the safety needs. Though people feel the need for security a large number live in an ivory tower oblivious to the uncertainties life could throw up in the distant future. They procrastinate to take decisions regarding this aspect. It is this dormant aspect that ICICI Prudential should awaken in people and bring about a restlessness and unfulfilled feeling regarding their and their familys security. The next choice then would be insurance. This could be brought about by an innovative campaign slogan saying, The decision is now.

6. ICICI Prudential must not target people only when they start earning but much before that. To gain the early bird advantage they must organize sessions in schools and colleges giving explanations on life insurance in general and ICICI Prudential in particular. This will make the younger generation more responsible making them go in for insurance in a big way at the earliest thus making ICICI Prudential the ultimate beneficiary to enjoy the income from customers from the very beginning of their service lives. It can also bring about a stronger brand commitment in this manner.

7. ICICI Prudential should consciously try to change the mindset of people from investing in life insurance for the sake of tax exemption to that of worry exemption. India will move into that mode in the future in its journey to being a developed country as is exemplified by the fact that in developed countries insurance policies are bought while in developing countries it is sold.

8. Nuclear families and increased life expectancy are two factors that have left the elderly to fend for themselves. Hence pension is a necessity now than a luxury earlier. Only 6% of the insurable populations are covered by some pension scheme hence

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ICICI Prudential should tap this existing market and bring about awareness and innovative schemes.

9. Majority of the respondents in all age and income groups of this survey prefer to save in banks over insurance citing the reason that banks give better returns. ICICI Prudential should explode this myth among consumers with the following fact: The consumers believe that investment in life insurance is not desirable as the yield on the premia is very low. It is correct that yield on most of the insurance products is in the range of 7 per cent to 8 per cent only. However, this traditional concept of investment totally ignores the invisible yield on the death-risk coverage. For example, a policyholder aged 30 years for an endowment assurance of 25 years will pay a yearly premium of Rs 4,000 only for a sum assured of Rs 1 lakh. In case he dies after two years, his wife will get Rs 1 lakh in settlement of death claims against Rs 8,000 premia paid for this policy. However, if the same consumer makes investment in the recurring deposit of a bank of Rs 4,000 per year, his wife gets only Rs 8000 plus interest after two years. Hence the insurance claim amount is much higher than the bank deposits. This applies to other savings as well. Hence investment in insurance has an edge over other savings in the event of the death of the consumers. 10. Leverage information technology to service large numbers of customers efficiently and bring down overheads. Technology can complement or supplement distribution channels cost-effectively. It can also help improve customer service levels considerably.

11. Use data warehousing, management and mining to gauge the profitability and potential of various customer and product segments and ensure effective cross selling. Understanding the customer better will allow insurance companies to design appropriate products, determine pricing correctly and increase profitability.

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12. Ensure high levels of training and development not just for staff but for agents and distribution organizations. Existing organizations will have to train staff for better service and flexibility, while all companies will have to train employees to cope with new products and an intensive use of information technology. The importance of alliances and tie-ups means that companies will have to integrate related but separate providers into their systems to ensure seamless delivery.

13. Build strong relationships with intermediaries such as agents. The agency force is an important customer interface and companies must partner with this group to reach customers and serve them effectively.

14. SUGGESTIONS TO APPROACH LARGE INSURABLE POPULATION: Given Indias large population, the number of potential buyers of insurance is certainly attractive. However, too broad an approach can be misleading because it ignores the difficulties of approaching this population. New entrants in other mass industries such as consumer products or retail banking have discovered this to their cost. Much of the demand may not be accessible because of poor distribution, large distances or high costs relative to returns. The second trap is the tendency to target the business of existing companies rather than expanding the market. New players find it easier to try to capture existing customers by offering better service or other advantages. Yet, the benefits of this strategy are likely to be limited as respondents as per this survey are very satisfied with their present insurance company ( read LIC ). A better approach may be to examine specific niches where demand can be met or stimulated. In my view new entrants would be best served by a micro-level approach on two fronts: a) First, ICICI Prudential should target specific niches, which are currently served poorly or not at all. For example -- The lack of a comprehensive social security system NEWHORIZONPage90

combined with a willingness to save means that Indian demand for pension products will be large. However, current penetration is poor. By March 1998, LICs pension premium was only Rs. one billion. Making pension products into attractive saving instruments would require only simple innovations already common in other markets. For example, their returns might be tied to index-linked funds or a specific basket of equities. Buyers could be allowed to switch funds before the annuities begin and to invest different amounts at different times. b) The second prong of a new insurers strategy could be to stimulate demand in areas that are currently not served at all. The nationalized insurer currently has a large reach and presence. New entrants cannot and do not-expect to supplant or duplicate such a network. Building a distribution network is expensive and time consuming. Yet, if insurers are to take advantage of Indias large population and reach a profitable mass of customers, new distribution avenues and alliances will be imperative. As products become simpler and awareness increases, they become off-the-shelf, commodity products. Sellers move to remote channels such as the telephone or direct mail. Insurance is sold by various intermediaries, not necessarily insurance companies. In the UK for example, retailer Marks & Spencer now sells insurance products. At this point, buyers look for low price. Brand loyalty could shift from the insurer to the seller.

Recognizing this trend, the financial services industry worldwide has successfully used remote distribution channels such as the telephone or the Internet to reach more customers, cut out intermediaries, brings down overheads and increase profitability. A well-known example is the UK insurer Direct Line. Established in 1985, it relied on telephone sales and low pricing to become the UKs largest motor insurance operator within a decade. It then moved into household insurance. ICICI Prudential must use the above retailing and distribution techniques to target greater numbers.

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