TERM PAPER

OF
STRATEGIC
MANAGEMENT

SUBMITTED TO- SUBMITTED BY-

MRS GAGANDEEP BATARA MRIDULA SHARMA

R-1902 B31

10901806
 LIFE INSURANCE CORPORATION

INTRODUCTION

Life Insurance Corporation of India (LIC) is a Government of India enterprise, and is said to
be the largest life insurance company and also the largest investor of the country. LIC had
been established on the 1st of September, 1956, after the Life Insurance Corporation Act had
been passed by the Parliament of India in the same year. The corporation is aimed at
providing life insurance services primarily to the rural masses and the socially &
economically backward sections of the Indian society. The headquarters of Life Insurance
Corporation of India are located in Mumbai, and as of April 2009 it has 8 zonal offices, 101
divisional offices and 2048 branches located in different towns and cities of India. Along with
a workforce of 112,184 employees serving the institution. Life Insurance Corporation of India
has a number of subsidiaries which help it in leveraging its potential to the maximum,
providing an enhanced set of diversified services to its customers. These subsidiaries include
LIC International, LIC Nepal, LIC Lanka, LIC Housing Finance and LICHFL Care Homes.

Insurance industry’s growth in the India was minimal in 1960s and 1970s due to factors like
low savings, low investment, inadequate infrastructure, and illiteracy. However, changes in
the economy in 1980s, such as growth in the rate of industrialization, infrastructure, the
capital markets, savings rate and capital formation resulted in a tremendous growth in the life
insurance industry, which in other words meant growth of LIC.

OBJECTIVES OF LIC

1. Spread Life Insurance widely and in particular to the rural areas and to the socially and
economically backward classes with a view to reaching all insurable persons in the
country and providing them adequate financial cover against death at a reasonable
cost.

2. Maximize mobilization of people's savings by making insurance-linked savings

adequately attractive.

3. Conduct business with utmost economy and with the full realization that the moneys
belong to the policyholders.

4. Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy.
 5. Promote amongst all agents and employees of the Corporation a sense of participation,
pride and job satisfaction through discharge of their duties with dedication towards
achievement of Corporate Objective.

MARKETING STRATEGIES USED BY LIC

The marketing strategies used by LIC are not much effective due to some the reasons like low
insurance penetration as well as the ineffective penetration. The company reportedly never
had any strategic marketing game plan, and due to its monopolistic nature the need for a
serious marketing effort was never felt. The advertising initiatives are limited to some print
and electronic media advertisements that typically talked about LIC’s products being great tax
saving tool for salaried individuals who came under the income-tax bracket. Despite all this,
LIC is synonymous with insurance in India and it had established an enviable brand image for
itself, especially in the rural areas and small towns. Some of the strategies used by LIC are

1. LIC has taken help of advertising agencies to promote the brand LIC.

2. They used creative slogans which affects the customer’s mindset and able to attract
their attention.

3. These slogans helped LIC to make the customer emotionally attached to services
provided by them.

4. They spend huge amount of money in advertising and sales promotion to build their
brand equity and identity.

5. To avoid the interference in communication to customer, they reduced the number of

ad agencies and worked with limited number of those agencies so that message
reached to customer does not lose the main objective.

SWOT ANAYSIS OF LIC

Strengths
1) Brand Image
2) Govt Guarantee
3) Claims settlement
4) Pan India presence
5) Large product portfolio

Weakness

1) Lethargic Staff
2) Mediocre Top Bosses
3) Large scale Corruption in Main Office
4) Ultra-Slow decision making process
5) internal problems between Top Management and lower cadre Employees

Opportunities

1) Pension Market
2) Health Insurance
3) Large Real Estate portfolio

Threats

1) Internal discord
2) New players
3) Red-tapism

PORTERS FIVE FORCES MODEL OF LIC

Buyer/Customer Power

Widening Product Range

Large Corporate Clients
Price Sensitive Buyers
Multiple Distribution Channel

Suppliers Power

Limited Actuaries in the Market

Reinsurance Concentration
Cession to the National Insurer
Dependence on IT Providers

Rivalry among Competitors

Industry Concentration in Life and Non-life

Low Penetration of Insurance
Regulation Restricts Competition

Barriers to entry

FDI Ceiling
Capital Requirements
Elaborate Distribution Requirements
‘Lock-in’ of Buyers

Threat of Substitutes products

Government Pension Scheme

Tax Saving Instruments
Emerging Substitutes
Dependence on Children in Rural India

BIRLA SUN LIFE INSURANCE

INTRODUCTION
Birla Sun Life Insurance Co. Ltd. is a joint venture between Aditya Birla Group, an Indian
multinational corporation, and Sun Life Financial Inc, a leading global insurance company.
Birla Sun Life Insurance is distinguished as the first company in the sector of financial
solutions to begin Business Continuity Plan. This insurance company has pioneered the
unique Unit Linked Life Insurance Solutions in India. Within 4 years of its launch, BSLI
became one of the leading players in the industry of Private Life Insurance Scheme.

Birla Sun Life Insurance believes in passion, integrity, speed, commitment and seamlessness.
The mission of the company is to help people with risk management. It also helps in
managing the financial situation of firms as well as individuals.

There are many plans under BSLI:-

1. Protection plans
2. Savings plans
3. Health solution plans
4. Retirement plans
5. Children plans
6. Rural plans
7. Group plans
8. NRI plans

Birla Sun life insurance has been focus on Investment Linked Insurance Products, supported
with protection products to maintain leadership in product innovation. Multi distribution
channels- Direct Sales Force, Alternate Channels and Group offering convenient channels of
purchase to customers. It has established Web-enabled IT systems for superior customer
services to have issued policies over the Internet. Corporate governance and a high degree of
transparency in all business practices and procedures to have an operational Business
Continuity Plan and all Strong fundamentals based on the Aditya Birla group's local insight
and Sun Life financials global expertise.

MARKETING STRATEGIES USED BY BIRLA SUN LIFE INSURANCE

The new insurance companies used all channels of advertising from newspapers and the
television to insurance agents and direct mailers. A fierce battle seemed to have begun among
Indian insurance companies to make one’s own brand win over the other.
Here are the some of the marketing strategies used by the Birla life insurance-

1. The company focus on the campaigns primarily on building an image of the trust
worthiness and reliability for themselves.

2. The advertisements showed by the company focus insurance as an investment option

not a mere tax saving tool.

3. Birla lives also sponsor events in a major way to attract prospective customers. For
example in 2001 it sponsored a play to which a few Citibank credit card customers
were invited. It considered the sponsorship of premier shows and offering tickets to
corporate agents which will help them to sale their policies.

SWOT ANALYSIS OF BIRLA SUN LIFE INSURANCE

Strengths:-
1. Quality products
2. Large networks
3. Leading company in insurance sector
4. Strong brand name Aditya Birla
5. Overall market share 7% and above

Weakness:-
1. Less awareness about all products of life insurance in market
2. Low advertising
3. Focus only on urban segments

Opportunities:-
1. Scope for opening of new branches in state/country
2. More branches will help in expanding business
3. Increasing population will increase in insurance business
4. Recruiting candidates helps to increase the business
Threats:-

1. Market uncertainty (Recession)

2. Consumers do not invest easily
3. Consumer perception about Birla Sun life Insurance is “purely private
company”

PORTERS FIVE FORCES MODEL FOR BSLI

Buyers-
Switching to different investment sectors for better returns.

Supplier growing power

Banks, ca are important channel to reach the client.

Substitutes-
Jeevan astha (LIC), unit plus (SBI), new capital gain (Bajaj Allianz).

Potential entrants-
DLF pramerica life, star union dai-chi life, future general.

COMPARIZON AND ANALYSIS OF BOTH

We can analyse and compare the marketing strategies used by both the private and public
insurance companies that today the private insurance companies like Birla life insurance are
more and popularly opted by the majority of people due to many reasons like-

1. In order to gain market power and thereby to protect and enhance profitability the
private insurance companies today bringing the product development and innovation
for example the Birla life insurance today provide social security insurance cover to
rural sections and products include insurance cover with low rate of premium for
sericulture, horticulture, agriculture, tribal welfare where as these facilities were not
provided by LIC.

2. LIC used to target either middle aged people or elderly ones. But private insurers
target individuals of all age groups in their advertisements campaigns.

3. LIC also showed biasness in providing insurance to women but private company’s
products covers women’s needs too.

REFERENCES
le:///C:/Users/Compaq/Desktop/Life%20Insurance%20Corporation%20of
%20India%20-%20LIC%20-%20LIC%20India.htm

http://www.iloveindia.com/finance/insurance/companies/birla-sun-life-
insurance.html

http://www.managementparadise.com/forums/publish-upload-project-
download-reference-project/134183-marketing-strategies-lic-india.html

http://www.birlasunlife.com/birlasunlife/Insurance/BSLI_MP/BSLI_InsPlans
/Individual/Rural/bsl_bimakavach2.aspx

http://www.managementparadise.com/forums/marketing-management-rm-
im/123833-help-birla-sun-life-insurance.html