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XLRI, JAMSEHDPUR

A
Project Report
On
Competition Analysis

“Poor firms ignore their competitors; average firm copy their competitors; winning firm lead their
competitors.”
-Philip Kotler

By
Deepanshu Gupta
Enrolment No XI09013
PGPMI-2009
INDEX
Content Page
no.
1. Objective of the project 3

2. Scope of the Project 3

3. Introduction 4

4. Research Methodology and Findings 7

5. Recommendations 10

6. Bibliography 11

7. Appendix A : Questionnaire 12

Note: click the hyperlink above to go to the topic.

Deepanshu Gupta, XI09013 Page 2


Objective of the project:

To examine the technologies involved in analyzing business & competitive data &
information including environmental analysis, industry analysis & competitor
analysis.

Scope of the project:

“Know your enemy, and in 100 battles you will never be defeated.”
-Sun Tsu, from Art of War
The insurance industry is as competitive as any, yet sometimes we are negligent in
the analysis of our competition. Most companies have concluded that they can’t be
“all things to all people”. Every company has certain unavoidable limitations and
obstacles. It is in the assessment of this fact that we all need to evaluate ourselves
relative to our competitors.

Knowing these strengths and weakness enables a company to effectively build its
brand and establish its product. We need to make a conscious effort to ask the key
question: how do we stack up against our competitor? The answer to this will be
constantly changing, so the question should be repeated and discussed often.

For evaluating how we measure up the competition, we use certain tools and
techniques which is used to define the different criteria of competitor analysis like
price, products, policy, customer service, automation etc.

Using different tools and techniques, we can define


a) the scope and nature of the industry,
b) the profile of the competitor,
c) the customers and what benefits they expect, and
d) the key success factor in the industry.

This project can be used by every organization in the insurance industry so as to


acknowledge the importance of competitor analysis and different tools and
techniques associated with it. This project also gives the overview of customers likes
and dislikes and what benefits they expect. It could be used by the companies to
build a brand image and establish a product positioning based on the customer
profiling.

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INTRODUCTION
Competition

Competition is the combat between parties (individual or group) for a niche or


allocation of resources. It arises when two or more parties strive for a goal which
cannot be shared. Competition is a term that encompasses the notion of individuals
and firms striving for a greater share of a market to sell or buy goods and services.

Competitor Analysis

It is an assessment of the strengths and weakness of the current and potential


competitors. The analysis provides both and offensive and defensive strategic
context through which to identify opportunities and threats.

It has two primary activities, 1) obtaining information about competitors, and 2) using
that information to predict competitors behaviour. The goal of competitor analysis is
to understand:
• with which competitor to compete,
• competitor’s strategies and planned actions,
• how competitor might react to a firm’s action,
• how to influence the competitor behaviour to the firm’s own advantage,
• how to increase the market share,
• how to build the brand image,
• how to establish the position of the product in the eyes of the customers etc.

Casual knowledge about competitors usually is insufficient in competitor analysis.


Rather, competitors should be analyzed systematically, using organized competitor
intelligence- gathering to compile a wide array of information so that well informed
strategy decision can be made.

Various Tools and Techniques of Competitor Analysis:

The various techniques used for competitor analysis are:

1) Competitive Intelligence System – This is an important tool for competitive


analysis. It includes identifying competitive information and setting up the
data, collecting, evaluating and analyzing the data, disseminating information
and responding, selecting competitors using customer value analysis etc.

2) Porter’s Five Forces Framework : The five forces come from Michael porter’s
famous framework and are:

Deepanshu Gupta, XI09013 Page 4


• Power of buyers
• Power of suppliers
• Threat of substitutes
• Barriers to entry
• Competitors

The idea is that change in the market is to come on the basis of one of these
five areas. In considering how these “forces” act on your market, we get a
picture of issues such as channel conflict, threats from vertical integration in a
competitive market. We can also take the view as to how we can affect the
competitive situation for our own benefits, rather than statically accepting the
status quo.

Consequently, it becomes possible to play around with different future


competitive scenarios and to use these to test different propositions to try and
guess how the market will change. Our strategy can then include
contingencies and responses to changes that might affect us, or changes that
we might make to the market.

3) Competitor Array- One common and useful technique constructing a


competitors array. In this the industry, competitors, customers, the benefits
expected by the customers, key success factor in the industry etc are
determined. Using the methodology, a 2-D matrix is formed, which reflect the
workings of a company using all the industry best practices.

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4) Competitor Profiling - The strategic rationale of competitor profiling is
powerfully simple. Superior knowledge of rivals offers a legitimate source of
competitive advantage. The raw material of competitive advantage consists of
offering superior customer value in the firm’s chosen market. Profiling
facilitates this strategic objective in three important ways. First, profiling can
reveal strategic weaknesses in rivals that the firm may exploit. Second, the
proactive stance of competitor profiling will allow the firm to anticipate the
strategic response of their rivals to the firm’s planned strategies, the strategies
of other competing firms, and changes in the environment. Third, this
proactive knowledge will give the firms strategic agility. Offensive strategy can
be implemented more quickly in order to exploit opportunities and capitalize
on strengths. Similarly, defensive strategy can be employed more deftly in
order to counter the threat of rival firms from exploiting the firm’s own
weaknesses.

5) Media Scanning - Scanning competitor's ads can reveal much about what that
competitor believes about marketing and their target market. Changes in a
competitor's advertising message can reveal new product offerings, new
production processes, a new branding strategy, a new positioning strategy, a
new segmentation strategy, line extensions and contractions, problems with
previous positions, or value migrations within the industry. It might also
indicate a new pricing strategy such as penetration, price discrimination, price
skimming, product bundling, joint product pricing, discounts, or loss leaders. It
might also indicate a new distribution strategy. Little of this intelligence is
definitive : additional information is needed before conclusions should be
drawn.

By knowing the competitor's media buy, media selection, frequency, reach,


continuity, schedules, and flights, the manager can arrange his own media
plan so that they do not coincide.

6) Subjective Assessment using questionnaire- Subjective assessment tells the


evaluator how the users feel about the product or the company. The usual
method of assessment is to used a standardised opinion questionnaire to
avoid criticisms of subjectivity.

7) Usability test- The performance, accuracy, recall and emotional responses of


the products of the competitors are compared with companies own product.

8) Interviews – Interviews can be conducted to know the customer views and


what they expect from the companies. It makes the research more
comprehensive as it can remove closed and leading questions.

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9) SWOT analysis – It is used to find out the strength, weakness, opportunities
and threats of a company with respect to the competitor. It takes care of the
internal factors such as strength and weakness of the companies compared to
its competitors and external factors such as opportunities and threats that
gives an edge over the competitor.

10)PEST analysis – In this type of analysis, we study the political, economic,


socio-cultural and technological factors that affect the competition.

Research Methodology and Findings:

To study the competition and the environmental and industry factors that affects the
competition between the various players in the insurance industry, I adopted the
following research methodologies and their findings :

1) Subjective Assessment using Questionnaire and


interviews: I have done a quantitative research in which the primary
source of information was the questionnaire filled and interview given by the
people. The questions were designed in an easily understandable way so
that the respondents may not have any difficulty in answering them. I have
used it to find out what the people feel about the various insurance
companies, their products & policies and the services provided by these
companies. The main aim for drafting the questions in the questionnaire was
to find out

I. How much the people know about various companies in the


insurance industry?

II. What is the brand image in the eyes of the people?

III. How much the advertisements are important in selling the


policies to the people?

IV. Which is the best channel to sell the products?

V. What is the trust level of the people for different companies?

VI. Which type of product people will like to buy?

VII. What are the things that the people like insurance companies to
provide?

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The motive for drafting this questionnaire was to find out where do the
companies stand in the competitive insurance industry. I have taken a sample
size of 30. Half of the sampling was done online using e-mail in some of the
big cities like Bangalore, Hyderabad and Delhi/Noida. The rest half was done
at Jamshedpur. By this way, it was easier to find out what is the perspective of
the people in big cities versus that of small town. Different age group and
people with different job profile were sampled to provide a comprehensive
study. Using the questionnaire, the sample was studied and inferences were
made on the whole population. Questionnaire attached in appendix A.

Findings of subjective assessment:

• 100% of the people knew about LIC and about 80%(24 out of 30) of
them were having LIC insurance policies. ICICI Prudential and Bajaj
Allianz were next. About 87% (13 out of 15) in big cities and 60% (9 out
of 15) in small towns knew about ICICI Prudential. Out of these, only
44% (13 out of 30) bought insurance policies of ICICI Prudential. This
percentage was more in big cities than in small towns. Bajaj Allianz
was little behind with about 63% (19 out of 30) awareness level. SBI
Life is another major insurance company about which people are
aware.
• None of the advertisements were very effective. People remembered
ICICI Prudential “Jeete Raho” and HDFC Standard Life Father-
Daughter talk of going to moon advertisement. However, This
percentage was very low. Only 7 out of 30 people, remembered the
ads. People remembered the “Jeete Raho” puchline of icici’s ad.
• People trusted LIC the most. SBI Life and ICICI Prudential followed
next.
• When asked, what is the most important thing people wanted from the
insurance industry – immediate claim settlement, better returns, tax
benefits, added riders and better service – this was the sort that people
wanted in that order.
• The most favoured product were endowment, term, investment, health,
protection and ULIP, in descending order.
• The most important channel for awareness of people by insurance
product was from sales representative/agents. Other important
channels were, friends and colleagues and from TV.
• Number of males buying the policy was more than that of women.
• People who bought or were ready to buy more number of policies were
from the age group 20 to 44 years. About 74%(23 out of 30) were from
this age group.

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• People who were at manager or professional level bought most
number of products. Business men were the next.

2) Porter’s Five Force Framework - I have made porter’s five force


framework with reference to ICICI Prudential Life Insurance Company and its
competitors. The basis of designing this framework was secondary research
using media scanning etc.

POTENTIAL SUBSTITUTES
ENTRANTS JEEVAN ASTHA (LIC),
DLF PRAMERICA UNIT PLUS (SBI
LIFE, STAR UNION LIFE),
DAI-CHI LIFE, NEW CAPITAL GAIN
FUTURE GENERALI (BAJAJ ALLIANZ) etc.
LIFE, SRIRAM

INDUSTRY
COMPETITORS
LIC, BAJAJ ALLIANZ,
SBI LIFE, RELIANCE
LIFE, HDFC
STANDARD LIFE,
BIRLA SUN LIFE,

BUYERS SUPPLIERS
SWITCHING TO GROWING POWERS
DIFFERENT BANKS, CA ARE
INVESTMENT IMPORTANT
SECTORS FOR BETTER CHANNELS TO REACH
RETURNS, THE CLIENT. HIGH
UNDIFFERENTIATED
Deepanshu Gupta, XI09013 Page 9 BARGAINING POWER
Findings from the Porter’s Five Force Theory:

A segment like insurance sector is very attractive because it is in the growing


stage of its life cycle. So, there are lots of aggressive competitors. As the
number of competitors are less at this time which makes this industry most
attractive for new players. There is not much threat for the existing players
from the new entrants because entry barrier is high for foreign companies,
because of restriction imposed by government. When we consider substitute
products this segment is unattractive because there are many actual and
potential substitutes. If new product is brought it becomes obsolete as every
competitor copies it very soon with added features. Here Service point of view
matters rather than the products. Buyers have great bargaining power in this
segment because there are many competitors to provide similar products at
cheaper prices. This is what makes this industry more competitive in terms of
products and services.

Recommendations:

• In terms of awareness, LIC is the leader, the reason being it was established
about five decades ago. Perspective is changing now. People have started
recognizing private companies. Companies should spend more money on
advertisements. Agents play a crucial role here. Agents should be given more
responsibility so that he/she can make more people aware about the
company.

• Advertisement should be more creative and shown very often so that the
people don’t forget the advertisement. It should be more of a reminder and
persuasive advertisement.

• As LIC and SBI are backed up by government so the people trust these
companies more. The private companies should create more trust by
providing better services, better returns and timely claim settlement.

• Companies should come up with more creative products which comes with
protection as well as investment. People still take insurance as investment
option but not a need for their security. This belief has to be changed and the

Deepanshu Gupta, XI09013 Page 10


people should be shown the importance of other products like pension plan,
health care plan etc.

• People from the middle age group buy the insurance most. Newly married
people should be targeted. This is the segment which is potentially very
strong. This is the segment which will take child education, health care,
pension, investment, protection plans for themselves and their families.

• Most of the working professional buy insurance. We should provide more


options and added riders so that they buy even more. They should be
provided online use option as these people don’t have time. It will be more
convenient for them to use internet rather than dealing with agents or doing it
on their own.

• Companies should stress more on immediate claim settlement. The


companies should introduce “on the spot” settlement or reduce the time of
claim settlement to few days. One creative idea is to provide a part of the
settlement money on the spot and later pay the rest.

• Agents should be made more reliable in the eyes of the people by giving them
proper training. This is important as they are the first hand contact with the
customers.

• Banks and CA’s which play a major role in providing business to the
companies should be taken well care of by providing them with different
opportunities which will help to increase their as well as the companies profit.
This can be a hike in the commission they receive. Bancassurance should be
started as people trust banks more than the insurance companies..

• Number of women buying the policies is very low. Companies should bring
such products that the women may find useful.

If the companies follow these recommendations, they will have more


opportunity to get an edge over their competitors.

Bibliography:

1) Marketing Management by Keller and kotler

2) Marketing Research by Kress

3) Marketing Strategies for Competitive Advantage by Adcock

4) http://en.wikipedia.org/

5) www.netmba.com

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6) www.managementhelp.org

7) www.usabilitynet.org

8) www.siliconindia.com

9) www.naukarihub.com

Appendix A: Questionnaire

We are conducting a survey about insurance and would like to know your
views and opinions. Would you mind spending a few minutes helping us by
completing this questionnaire?

Q1. Do you buy insurance at all? (Yes/No) ________

Q2. Which brands of insurance are you aware of? (grade from 1 to 6, 6 –
I know very well, 1- I am not aware of)

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LIC
ICICI Prudential Life Insurance Co Ltd
HDFC Standard Life Insurance Co Ltd
Reliance Life Insurance Co Ltd
Birla Sun Life Insurance Co Ltd
Bajaj Allianz Life Insurance Co Ltd
SBI Life Insurance Co Ltd
Max New York Life Insurance Co Ltd
Metlife Insurance Co Ltd
Aviva Life Insurance Co Ltd
Kotak Mahindra Old Mutual Life Insurance
Co Ltd

Q3. Which insurance can you recall having seen or heard advertising
for in the past month? (yes/No)
LIC
ICICI Prudential Life Insurance Co Ltd
HDFC Standard Life Insurance Co Ltd
Reliance Life Insurance Co Ltd
Birla Sun Life Insurance Co Ltd
Bajaj Allianz Life Insurance Co Ltd
SBI Life Insurance Co Ltd
Max New York Life Insurance Co Ltd
Metlife Insurance Co Ltd
Aviva Life Insurance Co Ltd
Kotak Mahindra Old Mutual Life Insurance
Co Ltd

Q4. Describe the advertisement and name the insurance company


associated with it, you remember best?

Q5. Which companies policy product would you like to buy (In which
company do you trust)?
LIC
ICICI Prudential Life Insurance Co Ltd
HDFC Standard Life Insurance Co Ltd
Reliance Life Insurance Co Ltd
Birla Sun Life Insurance Co Ltd
Bajaj Allianz Life Insurance Co Ltd
SBI Life Insurance Co Ltd
Max New York Life Insurance Co Ltd
Metlife Insurance Co Ltd
Aviva Life Insurance Co Ltd
Kotak Mahindra Old Mutual Life Insurance
Co Ltd

Q6. What do you want from your insurance company (product)?


(arrange from 1 to 5 according to your priority, 1 – very important, 5 – not
very much important)

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Better returns
Better customer service
Tax benefits
Immediate claim settlement
Added Riders (Premium waiver)

Q7. Which of the following products would you like to buy for
yourself and your family? (Tick the appropriate box)
Endowment Plan
Pension Plan
Health Plan
Critical care plan
Child Education Plan
Unit linked insurance plan
Term plans
Whole Life Plans
Protection plans
Investments plans

Q8. How do you find out information about insurance?


TV
General Newspaper and magazines
Special magazines
Direct Mails
Leaflets
From friends and colleagues
From Sales Representatives/Agents
From Exhibitions and seminars
Others (Please Specify)

We would like to know a little more about you to help us understand how
different people like different products and services.

Q9. Are you...?


Male
Female

Q10. How old are you?

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20-24
25-34
35-44
45-54
55-64
65+

Q11. Which of these best describes your job?


Managerial
Professional
Clerical
Skilled Traders
Manual Workers
Retired
Unemployed
Home maker
Others (Please Specify)

Thank you for taking part in this survey. All your answers will be treated
confidentially.

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