1.

PRODUCT: 
A product means what we produce. If we produce goods, it means tangible product and when we 
produce or generate services, it means intangible service product. A product is both what a seller 
has to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore 
services are their product. 
In India, the Life Insurance Corporation of India (LIC) and the General Insurance Corporation
(GIC) 
are the two leading companies offering insurance services to the users. Apart from offering life 
insurance policies, they also offer underwriting and consulting services. 
When a person or an organisation buys an Insurance policy from the insurance company, he not 
only buys a policy, but along with it the assistance and advice of the agent, the prestige of the 
insurance company and the facilities of claims and compensation. 
It is natural that the users expect a reasonable return for their investment and the insurance 
companies want to maximize their profitability. Hence, while deciding the product portfolio or the 
product-mix, the services or the schemes should be motivational. The Group Insurance scheme is 
required to be promoted, the Crop Insurance is required to be expanded and the new schemes
and 
policies for the villagers or the rural population are to be included. 
The Life Insurance Corporation has intensified efforts to promote urban savings, but as far as
rural 
savings are concerned, it is not that impressive. The introduction of Rural Career Agents Scheme 
has been found instrumental in inducing the rural prospects but the process is at infant stage and 
requires more professional excellence. The policy makers are required to activate the efforts. It 
would be prudent that the LIC is allowed to pursue a policy of direct investment for rural 
development. 
Investment in Government securities should be stopped and the investment should be
channelized 
in private sector for maximizing profits. In short, the formulation of product-mix should be in the 
face of innovative product strategy. While initiating the innovative process it is necessary to take 
into consideration the strategies adopted by private and foreign insurance companies. 
2. PRICING: 
In the insurance business the pricing decisions are concerned with: 
i) The premium charged against the policies, 
ii) Interest charged for defaulting the payment of premium and credit facility, and 
iii) Commission charged for underwriting and consultancy activities. 
With a view of influencing the target market or prospects the formulation of pricing strategy 
becomes significant. In a developing country like India where the disposable income in the hands
of 
prospects is low, the pricing decision also governs the transformation of potential policyholders
into 
actual policyholders. 
The strategies may be high or low pricing keeping in view the level or standard of customers or
the 
policyholders. 
The pricing in insurance is in the form of premium rates. The three main factors used for 
determining the premium rates under a life insurance plan are mortality, expense and interest.
The 
premium rates are revised if there are any significant changes in any of these factors. 
• Mortality (deaths in a particular area): 
When deciding upon the pricing strategy the average rate of mortality is one of the main 
considerations. In a country like South Africa the threat to life is very important as it is played by 
host of diseases. 
• Expenses: 
The cost of processing, commission to agents, reinsurance companies as well as registration are
all 
incorporated into the cost of installments and premium sum and forms the integral part of the 
pricing strategy. 
• Interest: 
The rate of interest is one of the major factors which determines people's willingness to invest in 
insurance. People would not be willing to put their funds to invest in insurance business if the 
interest rates provided by the banks or other financial instruments are much greater than the 
perceived returns from the insurance premiums. 
3. PLACE: 
This component of the marketing mix is related to two important facets -- 
i) Managing the insurance personnel, and 
ii) Locating a branch. 
The management of agents and insurance personnel is found significant with the viewpoint of 
maintaining the norms for offering the services. This is also to process the services to the end
user 
in such a way that a gap between the services- promised and services -- offered is bridged over.
In a 
majority of the service generating organizations, such a gap is found existent which has been 
instrumental in making worse the image problem. 
The transformation of potential policyholders to the actual policyholders is a difficult task that 
depends upon the professional excellence of the personnel. The agents and the rural career
agents 
acting as a link, lack professionalism. The front-line staff and the branch managers also are found 
not assigning due weight-age to the degeneration process. The insurance personnel if not
managed 
properly would make all efforts insensitive. Even if the policy makers make provision for the
quality 
upgrading the promised services hardly reach to the end users. 
It is also essential that they have rural orientation and are well aware of the lifestyles of the 
prospects or users. They are required to be given adequate incentives to show their excellence. 
While recruiting agents, the branch managers need to prefer local persons and provide them 
training and conduct seminars. In addition to the agents, the front-line staff also needs an
intensive 
training programme to focus mainly on behavioral management. 
Another important dimension to the Place Mix is related to the location of the insurance branches. 
While locating branches, the branch manager needs to consider a number of factors, such as 
smooth accessibility, availability of infrastructural facilities and the management of branch offices 
and premises. In addition it is also significant to provide safety measures and also factors like
office 
furnishing, civic amenities and facilities, parking facilities and interior office decoration should be 
given proper attention. 
Thus the place management of insurance branch offices needs a new vision, distinct approach and 
an innovative style. This is essential to make the work place conducive, attractive and proactive
for 
the generation of efficiency among employees. The branch managers need professional excellence 
to make place decisions productive. 
4. PROMOTION: 
The insurance services depend on effective promotional measures. In a country like India, the
rate 
of illiteracy is very high and the rural economy has dominance in the national economy. It is 
essential to have both personal and impersonal promotion strategies. In promoting insurance 
business, the agents and the rural career agents play an important role. Due attention should be 
given in selecting the promotional tools for agents and rural career agents and even for the
branch 
managers and front line staff. They also have to be given proper training in order to create
impulse 
buying. 
Advertising and Publicity, organisation of conferences and seminars, incentive to policyholders are 
impersonal communication. Arranging Kirtans, exhibitions, participation in fairs and festivals, rural 
wall paintings and publicity drive through the mobile publicity van units would be effective in 
creating the impulse buying and the rural prospects would be easily transformed into actual 
policyholders. 
5. PEOPLE: 
Understanding the customer better allows to design appropriate products. Being a service industry 
which involves a high level of people interaction, it is very important to use this resource
efficiently 
in order to satisfy customers. Training, development and strong relationships with intermediaries
are 
the key areas to be kept under consideration. Training the employees, use of IT for efficiency,
both 
at the staff and agent level, is one of the important areas to look into. 
6. PROCESS: 
The process should be customer friendly in insurance industry. The speed and accuracy of
payment 
is of great importance. The processing method should be easy and convenient to the customers. 
Installment schemes should be streamlined to cater to the ever growing demands of the
customers. 
IT & Data Warehousing will smoothen the process flow. 
IT will help in servicing large no. of customers efficiently and bring down overheads. Technology
can 
either complement or supplement the channels of distribution cost effectively. It can also help to 
improve customer service levels. The use of data warehousing management and mining will help
to 
find out the profitability and potential of various customers product segments. 
7. PHYSICAL DISTRIBUTION: 
Distribution is a key determinant of success for all insurance companies. Today, the nationalized 
insurers have a large reach and presence in India. Building a distribution network is very
expensive 
and time consuming. If the insurers are willing to take advantage of India's large population and 
reach a profitable mass of customers, then new distribution avenues and alliances will be
necessary. 
Initially insurance was looked upon as a complex product with a high advice and service
component. 
Buyers prefer a face-to-face interaction and they place a high premium on brand names and 
reliability. As the awareness increases, the product becomes simpler and they become off-the-
shelf 
commodity products. Today, various intermediaries, not necessarily insurance companies, are
selling 
insurance. For example, in UK, retailer like Marks & Spencer sells insurance products. 
The financial services industries have successfully used remote distribution channels such as 
telephone or internet so as to reach more customers, avoid intermediaries, bring down overheads 
and increase profitability. A good example is UK insurer Direct Line. It relied on telephone sales
and 
low pricing. Today, it is one of the largest motor insurance operator. 
Technology will not replace a distribution network though it will offer advantages like better 
customer service. Finance companies and banks can emerge as an attractive distribution channel
for 
insurance in India. In Netherlands, financial services firms provide an entire range of products 
including bank accounts, motor, home and life insurance and pensions. In France, half of the life 
insurance sales are made through banks. 
In India also, banks hope to maximize expensive existing networks by selling a range of products.
It 
is anticipated that rather than formal ownership arrangements, a loose network of alliance
between 
insurers and banks will emerge, popularly known as bancassurance. 
Another innovative distribution channel that could be used are the non-financial organisations. For 
an example, insurance for consumer items like fridge and TV can be offered at the point of sale. 
This increases the likelihood of insurance sales. Alliances with manufacturers or retailers of 
consumer goods will be possible and insurance can be one of the various incentives offered

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