A comparative survey of effects of advertisements on customers and private insurance companies in India

By Group 1 Div A Submitted to Prof. Kinshuk

Executive summary
Understanding and quantifying the benefits of advertising is a problem as old as advertising itself. The problem stems from the many purposes advertising serves: building awareness of about insurance, creating brand equity and generating sales. Each of these objectives is not easily measured or related to the advertising that may have affected it.
58 % of the people who filled the questionnaire are post graduate; it states that most of the people in Pune area are highly educated. Educated people are more aware of advertisements carried out by various insurance companies and are interested in insurance plan. Age group 25-32 years which are 46% of total samples collected possess more knowledge about insurance as compared to other age groups, and may be interested in buying insurance plans in future. 91 % of the total samples collected are salaried and most of them are highly educated and are more interested in secured investment for future. As LIC is the one of the oldest and trusted company in insurance field so we can figure out that 48 % of individuals have insurance policies with LIC. After LIC being the number one insurance companies 18 % of the individuals have insurance policies with ICICI PRUDENTIAL. we saw that advertisements have only influenced the 35 % of the individuals in total sample data collected in which 51 % of the individual are influenced by the LIC advertisements. It suggests that LIC advertisements are able to connect to people more as compared to others, which helps LIC to sale more policies. After LIC 17 % of the individuals are influenced by Bajaj Alliance. 61 % of the people said that advertisements create confusion about which policies. As all companies are into advertisement to increase their sale of polices or to increase their customer base people are exposed to too much of information which create confusion.

Introduction (part a)
Understanding and quantifying the benefits of advertising is a problem as old as advertising itself. The problem stems from the many purposes advertising serves: building awareness of about insurance, creating brand equity and generating sales. Each of these objectives is not easily measured or related to the advertising that may have affected it. First, there has been an explosion in media alternatives from the traditional standbys of television, radio and print into a broader spectrum of both offline and online options, with the internet clearly being the most visible example of this change. The choices within each medium have also expanded in an attempt to reach more targeted audiences. Television, for example, has burgeoned from three primary networks to literally dozens of mainstream cable channels, all capable of reaching large audiences with brand messages or product promotions. Hundreds of new magazines now serve many special interest groups, while web advertising presses the edge of one-to-one marketing. In addition, more and more companies are using integrated, multi-media strategies to reach their desired audiences, layering broadcast advertising over direct response campaigns or combining online with offline campaigns. All of this is making it harder to separate out the individual influences of each advertising effort on insurance sales. Second, most companies are no longer satisfied relying solely on traditional methods of measuring advertising effectiveness, namely awareness surveys and tracking studies, and want more precise and concrete evidence that their marketing investments are paying off. It is one thing to know how memorable an ad might be or how potential customers feel about a company or its products, but it is quite another to quantify the sales and profitability impact that advertising might produce. The difficulty is that measuring these effects may involve tracing advertising's stimulus through a behavioural chain of events that eventually may culminate in a sale long after the advertising has been delivered. Third, companies today are in a more competitive and faster-paced environment than ever before, accelerating the need to understand the consequences of their marketing efforts. Marketers simply do not have the luxury any more to rest on their laurels or to assess how a set of campaigns performed months after they have concluded. The marketplace is moving so rapidly in many cases that knowing what's working and what's not almost as fast as it is happening has great value. For these reasons, marketers have begun to use measurement tools to help them estimate the impacts of their advertising efforts. One such technique that is gaining in popularity is surveying, which, when used prudently, can add new insight into how to maximize business results from a broad range of marketing investments. An approach to evaluating advertising effectiveness While advertising may have several objectives, ultimately marketing and business executives want to know, How has advertising contributed to sales and ultimately to the companys bottom line? Since we cant ask consumers to tell us what made them purchase a product, we have no choice but to make this assessment by other means.

The first thing to recognize is that advertising is only one of many marketing elements that affect sales. Other elements include pricing, promotional offers, product attributes and reactions by competitors. In addition, external factors, such as macroeconomic trends and seasonality, are likely to affect response in the market. Consequently, the response to advertising can best be evaluated by techniques that allow researchers to account for the mix of marketing activities and other external factors.

Figure 1: Factors That Affect Sales

Advertising carryover and wear-out Another important consideration in quantifying the effect of advertising is measuring its carry over effects or persistence. Advertising media deliver impressions at a point in time, but psychological measurements of stimulus retention show that advertising messages may linger in the consumers mind over time. Thus, this relationship must be understood and accounted for. What is clear from models we have done is that the effect of advertising persistence differs by media type. For example, as shown in Figure 2, the impact of broadcast TV may persist for months, while the impact of online advertising is likely to fade very quickly. For other advertising media, maximum durations are typically measured in weeks.

Introduction to the companies visited during the survey (part b)

ICICI Prudential Life Insurance Company was amongst the first private sector life
insurance companies to begin operations in December 2000 after receiving approval from IRDA. ICICI Prudential Life's capital stands at Rs. 4,780 crores (as of September 30,2010) with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For the period Apr il 1, 2010 to September 30, 2010, the company garnered Rs7,267 crores of total premiums and has underwritten over 10 million policies since inception. The company has a network of over 1,500 offices and over 1, 60,000 advisors, as on September 30, 2010. The company has assets held over Rs. 65,000 crores as on September 30, 2010. AEGON Religare Life Insurance Company AEGON, an international life insurance, pension and investment company, Religare, a global financial services group and Bennett, Coleman & company, Indias largest media house, have come together to launch AEGON Religare Life Insurance Company Limited (ARLI). This venture is dedicated to build a profitable customer-centric business with scale, providing a work environment that fosters excellence and innovation. This joint venture will balance a local approach with the power of an expanding global operation. AEGON has businesses in over twenty markets in the Americas, Europe and Asia. With headquarters in The Hague, the Netherlands, AEGON companies employ approximately 28,000 people and serve some 40 million customers across the globe. The companys common shares are listed on three stock exchanges: Amsterdam, New York and London. AEGON has more than 160 years of experience with its roots going back to 1844. AEGON holds 26% equity in ARLI.

Aviva India is a joint venture between one of the countrys oldest and largest groups,
Dabur, and Aviva plc, the UK's largest insurance group, whose association with India dates back to 1834. Dabur (74% stake) Aviva plc (26% stake). The world's 6th largest Insurance groups and the biggest in the UK. It is one of the leading providers of life and pensions products to Europe. Aviva has a 44.5 million-customer base worldwide with 402 billion assets under management.

Max New York Life Insurance Company Ltd. is a joint venture between Max
India Limited., one of India's leading multi-business corporations and New York Life International, the international arm of New York Life, a Fortune 100 company. Max New York Life offers a suite of flexible products. It has multi-channel distribution spread across the country. Agency distribution is the primary channel complemented by partnership distribution, alliance marketing and dedicated distribution for emerging markets. The company currently has more than 71,000 agent advisors at 676 offices across 389 cities. The company also has 50 tie-ups with banks, 30 partnership distribution relationships Max New York Life has put in place a unique hub and spoke model of distribution to deepen our rural penetration. This is the first time such a model has been put in place for rural marketing of insurance. Max Healthcare is the country's first comprehensive provider of standardized, seamless andworld-class healthcare services.

Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company,
formed by Tata Sons and AIA Group Limited (AIA). Tata AIG Life combines Tata's preeminent leadership position in India and AIA's presence as the largest, independent listed pan-Asia life insurance group in the world spanning 15 markets in Asia Pacific. Tata Sons holds a majority stake (74%) in the company and AIA holds 26% through an AIA Group company. Tata AIG Life Insurance Company Limited was licensed to operate in India on February 12, 2001 and started operations on April 1, 2001.

Kotak Mahindra - Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint
venture between Kotak Mahindra Bank Ltd., its affiliates and Old Mutual plc. A Company that combines its international strengths and local advantages to offer its customers a wide range of innovative life insurance products, helping them take important financial decisions at every stage in life and stay financially independent. The company covers over 3 million lives and is one of the fastest growing insurance companies in India

Bajaj Allianz Life Insurance Company Limited

Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance Company and Bajaj Finserve. Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in the world, managing assets worth over a Trillion (Over INR. 55, 00,000 Crores). Allianz SE has over 119 years of financial experience and is present in over 70 countries around theAge group 25-32 years which are 46% of total samples collected possess more knowledge about insurance as compared to other age groups, and may be interested in buying insurance plans in future.

Introduction to the product or service lines of the company (part c)

Life Insurance: - Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policy holder typically pays a premium, either regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the premium; however, in Australia the predominant form simply specifies a lump sum to be paid on the policy holder's death.
Growth of Life Insurance

The life insurance industry witnessed a steady growth in 2009-10 financial year, with an 18% increase in total premium received during the year to Rs 2,61,025 crore over the previous fiscal. The industry had collected premium worth Rs 2, 21,791 crore in the previous fiscal, the Life Insurance Council said in a statement. According to the council's data, new business premium jumped 25% to Rs 1,09,213 crore in FY'10 from Rs 87,006 crore last year, while renewal premium of the industry grew by 13% to Rs 1,51,812 crore.

Private Sector life Insurance Companies

1. Bajaj Allianz Life Insurance Company Ltd. 2. Birla Sun-Life Insurance Company Ltd. 3. HDFC Standard Life Insurance Co. Ltd. 4. ICICI Prudential Life Insurance Co. Ltd. 5. ING Vysya Life Insurance Company Ltd. 6. Max New York Life Insurance Co. Ltd. 7. MetLife Insurance Company Ltd. 8. Kotak Mahindra Old Mutual Life Ins. Co. Ltd. 9. SBI Life Insurance Company Limited 10. TATA AIG Life Insurance Co. Ltd.

11. Reliance Life Insurance Co. Ltd. 12. Aviva Life Insurance Co. Pvt. Ltd. 13. Sahara India Life Insurance Co. Ltd. 14. Shriram Life Insurance Co. Ltd. 15. Bharti AXA Life Insurance Co. Ltd. 16. Future Generali India Life Insurance Co. Ltd. 17. IDBI Fortis Life Insurance Co. Ltd. 18. Canara HSBC Oriental Bank of Commernce Life Insurance Corp.ltd. 19. AEGON Religare Life Insurance Company limited. 20. DLF Pramerica Life Insurance Co.ltd. 21. Star Union Dai-ichi Life Insurance Co.ltd. 22. India First Life Insurance Company Limited

1 .Aviva Life Insurance Company India Limited Life Shield

2. AEGON Religare Life Insurance Company Limited. Decreasing Term Plan Increasing Term Plan Level Term Plan 3 .Birla Sun Life Insurance Co. Ltd Birla Sun Life Insurance Premium Back Term Plan Birla Sun Life Insurance Term Plan Birla Sub Life Insurance HNWI Term Plan 4. Bajaj Allianz Life Insurance Company Limited Protector New Risk Care Term Care 5.HDFC Standard Life Insurance Co. Ltd Loan Cover Term Assurance Plan Term Assurance Plan Home Loan Protection Plan

6.ICICI Prudential Life Insurance Co. Ltd Life Guard Return of Premium Life Guard Regular Premium Home Assure Loan cover term insurance Life Guard Single Premium

Research methodology
Introduction: Understanding and quantifying the benefits of advertising is a problem as old as advertising itself. The problem stems from the many purposes advertising serves: building awareness of about insurance, creating brand equity and generating sales. Each of these objectives is not easily measured or related to the advertising that may have affected it. This survey aims at carrying out a quantitative research of the effect of advertisements on insurance sales. Research is a process of collecting, analyzing and interpreting information to answer questions. But to qualify as research, the process must have certain characteristics: it must, as far as possible, be controlled, rigorous, systematic, valid and verifiable, empirical and critical. Type of research - Descriptive research attempts to describe systematically a situation, problem, phenomenon, service or programme, or provides information about , say, living condition of a community, or describes attitudes towards an issue. Sample size: 120 Steps in Research Process1. Formulating the Research Problem 2. Extensive Literature Review 3. Developing the objectives 4. Preparing the Research Design including Sample Design 5. Collecting the Data 6. Analysis of Data 7. Generalisation and Interpretation 8. Preparation of the Report or Presentation of Results-Formal write ups of conclusions reached

Question for consumers. 1) Age?

Objective- To find out the approximate ages of individual who posses knowledge about insurance Data table Age 18-25 Years 25-32 years 32-40 years 40-50 years 50+ years No. 15 36 40 16 3

Graphical representation
3% 14% 18-25 Years 26-32 years 33-40 years 33% 36% 41-50 years 50+ years

14%

Age group 25-32 years which are 33% of total samples collected possess more knowledge about insurance as compared to other age groups, and may be interested in buying insurance plans in future.

2) Educational Qualification?
Objective- To understand the literacy level of the individual respondents. Data table Educational Qualification 10th or below 10 +2 or below graduate post graduate others No 0 5 35 68 2

Graphical representation

Qualification
0% 5%

32%

10th or below 10 +2 or below graduate

63%

post graduate

63 % of the people who filled the questionnaire are post graduate; it states that most of the people in Pune area are highly educated. Educated people are more aware of advertisements carried out by various insurance companies and are interested in insurance plan.

3) Occupation?
Data table Occupation Salaried Self emp Retired Housewife NRI No. 73 37 5 0 0

Graphical representation

Occupation
0% 4%

32%

Salaried Self emp Retired 64% Housewife

64 % of the total samples collected are salaried and most of them are highly educated and are more interested in secured investment for future.

5) What is your approximate income?

Data table Income level Less/I lakh Between 1-3 Between 3-6 6 above no 5 23 62 20

Graphical representation

Income
5% 18% 21% Less/I lakh Between 1-3 Between 3-6 6 above

56%

As seen 56% of the individuals has income of 3 6 lakh we can find that they are more capable of buying insurance policies and are more concerned about making their future secure.

6) Do you have a existing policy with any insurance company?

Data table Yes 81 No 30

Graphical representation

Policy Holders

27%

Yes No

73%

As it can be easily figure out from above data that 73 % of individuals have existing insurance policies for safer investment and secure life.

7) If yes specify the company name..?

Data table ICICI ING VYASA 18 2

LIC HDFC RELIGARE BAJAJ KOTAK AIG MAX OTHERS AVIVA

43 7 1 7 4 1 3 3 2

Graphical representation

Insurance Companies
1% 3% 5% 8% 1% 8% 2% 3% 20% ICICI ING VYASA LIC HDFC 2% RELIGARE BAJAJ KOTAK AIG MAX 47% OTHERS AVIVA

As LIC is the one of the oldest and trusted company in insurance field so we can figure out that 47 % of individuals have insurance policies with LIC. After LIC being the number one insurance companies 20 % of the individuals have insurance policies with ICICI PRUDENTIAL

8) Which advertisement do you come across often?

Data table -

ICICI ING VYASA IDBI HDFC RELIGARE BAJAJ KOTAK AIG MAX OTHERS AVIVA

51 13 10 31 12 38 21 0 25 3 16

Graphical representation

Insurance Advertisements
1% 7% 11% 0% 10% 6% 5% 17% 6% 14% 23% ICICI ING VYASA IDBI HDFC RELIGARE BAJAJ KOTAK AIG MAX OTHERS AVIVA

As it can be seen that 23 % individuals said that they come across ICICI advertisements. So it can be said that ICICI and BAJAJ (17%)are more into advertisement campaign as compared to other companies. They advertise more aggressively on variously media to promote their insurance policies.

9) Has any advertisement about insurance influenced your buying decision?

Data table Yes 47 No 62

Graphical representation -

Influence of Ads

43%

Yes No

57%

As it can be seen from above data that 57 % of individuals are not influenced by advertisements of insurance companies, only 43 % of people have purchased insurance based on advertisements. It can be identified that advertisements only create awareness about insurance products but do not influence to the buyers at large extent.

10) If yes, specify company

Data table no ICICI MAX BAJAJ OTHERS HDFC IDBI 12 5 12 5 21 4

Graphical representation

Purchases
7% 20% ICICI MAX 36% 9% BAJAJ OTHERS HDFC IDBI 20% 8%

In above question we saw that advertisements have only influenced the 43 % of the individuals in total sample data collected in which 36 % of the individual are influenced by the HDFC advertisements. It suggests that HDFC advertisements are able to connect to people more as compared to others. After HDFC 20% of the individuals are influenced by ICICI and 20% by BAJAJ.

11) Do you feel that advertisements provide enough information about insurance?
Data table Yes 33 No 75

Graphical representation

Information by Ads

31% Yes No 69%

As seen above 69 % of individuals said that Insurance advertisement does not provide enough information about the policies advertisements are only a mean to create awareness, but do not provide information related to policies.

12) Based on what features of advertisements you decide to buy the product?
no BELIEVABLE RELEVANT CONVINCING 34 28 29

OTHERS

18

Graphical representation-

Factors

16% 31% BELIEVABLE RELEVANT CONVINCING 27% OTHERS

26%

13) Do you feel that the advertisement by various insurance companies create confusion in deciding which policy to buy?

Data table Yes 75 No 18

Graphical representation

Confusion in Purchase

19%

Yes No

81%

As seen in the figure that 19 % of the people said that advertisements create confusion about which policies. As all companies are into advertisement to increase their sale of polices or to increase their customer base people are exposed to too much of information which create confusion. However the consumer today is more aware and vigilant when it comes to purchase decision.

14) Will you buy insurance from a company which does not advertise on a large scale?
Data table Yes 31 No 76

Graphical representation

Purchase without Ads

29% Yes No

71%

Questions for companies 1) In accordance to your perspective/purview, which parameter do you consider to have the utmost impact in the mind of the general public?
OBJECTIVE: To know the factor which plays the most important role during making an advertisement.

A B C D

RISK COVERAGE PENSION PLAN LIFE TIME COVERAGE HEALTH PLAN

56% 11% 22% 11%

11%

RISK COVERAGE 22% 56% PENSION PLAN LIFE TIME COVERAGE HEALTH PLAN

11%

As per the results of the survey done, it has been found that most of the companies focus on the risk coverage factor because customers are very conscious about the risks involved. The second important factor is the life time coverage because this gives a feeling of security to the customers.

2) According to you, what factor in your advertisement has a major impact on customers mind?
OBLECTIVE: To understand the effect of advertisement on customers mind and also the importance of these factors in advertisement.

A B C D

EMOTIONAL BONDING CELEBRITY ENDORSEMENT SECURITY OTHERS

33.33% 22.22% 44.44% 11.11%

11.11%

33.33% EMOTIONAL BONDING CELEBRITY ENDORSEMENT SECURITY 44.44% OTHERS

22.22%

As per the results found, security plays the most important role and then comes emotional bonding. The companies believe that if the customer feels that the insurance policy is safe only by watching the ad then he would definitely enquire about the policy. Ho would definitely show some interest.

3)

Do you think that your advertisement helps in brand building?

OBJECTIVE: To understand whether advertising helps in brand building. A YES 88.89%

NO

11.11%

11.11%

YES NO

88.89%

As the results are showing that majority of the companies feel that advertising plays a major role in building a brand for the company. It is because whenever a customer watch an ad on a regular basis it becomes quite easy for him to remember that particular advertisement. Thats why companies believe more in advertising.

4) As per your companys strategy, which media of advertising is the most suitable one?
OBJECTIVE: To understand the importance of media in advertising and to find out the most suitable media for advertising.

A B C D

PRINT MEDIA TELEVISION RADIO OTHERS

22.22% 66.67% 11.11%

0 11.11% 22.22% PRINT MEDIA TELEVISION RADIO OTHERS 66.67%

The results have shown that television is the most preferred media for advertising by the companies. It is because television is preferred by majority of the population in our country. Print media also plays an important role and the other means comprises of referral leads.

5) Do you think that radio advertisement creates an impact on the sales?

OBJECTIVE: To know the importance of other media also apart from television.
A B YES NO 77.78% 22.22%

22.22%

YES NO

77.78%

As per the results found, we can conclude that radio is a good media for advertising but television is given preference over the radio because the message though television easily reaches to the masses.

6) Do you think government of every country should decide some criteria for the advertisement of private insurance companies?
OBJECTIVE: To understand the companies view point regarding the rules made by

the government.

A B

YES NO

77.78% 22.22%

22.22%

YES NO

77.78%

As per the responses that have been collected through the survey suggest that the companies have a view point that there should not be any restriction regarding the advertisements by the private insurance companies if the content shown is not unethical.

7) Do you think advertisements really help the customer to take right decision regarding the selection of any insurance policy?
OBJECTIVE: To know the company perspective regarding the effectiveness of the advertisement shown.

A B

YES NO

77.78% 22.22%

22.22%

YES NO

77.78%

As per the results found, most of the companies think that their advertisements are effective enough to convey the message properly and effectively. According to them their ads help the customers to take a correct decision. But some of them has an opinion that the advertisements sometimes mislead the customer as it doesnt cater to each and every need of the customer.

8) Do you feel advertisement cost is a burden over any private insurance company?
OBJECTIVE: A B YES NO 33.33% 66.67%

33.33% YES NO 66.67%

As per the results found, we have concluded that advertisement cost is not a burden on any company. It is because this creates awareness about the product and helps in brand building. Therefore advertising helps in increasing sales turnover and thus increases revenue of the company.

Observations and findings

1. Observations
People are reluctant to give personal information. Young individuals have the maximum knowledge about insurance. People do not pay much attention to the insurance advertisements. Advertisements were treated as a source to generate awareness .

2. Findings The findings are as follows 73% of the respondents already posses insurance policies. Therefore they treat advertisements to increase their knowledge about insurance. Most of the respondents have come across insurance advertisements. Therefore advertisements have a wide reach. 23% have come across ICICIadvertisements. They have a wide reach. 36% HDFCwas the most popular brand amongst the respondents. It was found that they have a effective advertisement campaign. 43% respondents were influenced by advertisements to purchase insurance or related products. Thus it was found that advertisements have a influencing effect on individuals. HDFC advertisements were the most influential advertisements. 69% people feel that advertisements do not provide enough information about insurance. Therefore the content needs to be improved. Hence it was found that insurance have a major part in insurance sales . 19% respondents feel that the advertisement by various insurance companies create confusion in deciding which policy to buy. Therefore advertisements do not have a confusing effect on the consumers tech savvy and updated consumers any more. 71% respondents are not ready buy insurance from a company which does not advertise on a large scale. Therefore the advertisements as mentioned above advertisements have a major share in insurance sales.

Limitations
Information was hard to generate. Non performing team members.

Conclusions and Suggestions

Advertisements have a major effect on sales of insurance and insurance related products. Advertisements create awareness amongst individuals about insurance and insurance related products. Advertisements should be concise and to the point. Certain Advertisements cause confusions amongst the consumers. Company with a effective advertisement campaign has the maximum sales amongst all the players in the insurance industry. One of the service businesses that have put abundant resources into advertisement is insurance companies. People are encouraged by commercials to take care of themselves and their love ones. the top commercials that won prizes for the best advertisement awards last year were from insurance companies and they were all very touching. E.g; Aegon Religare.

In conclusion, the media has great impact on peoples opinion about their way of living because nowadays life and health insurance have become one of the most vital businesses in the country.

THANK YOU