7 P’S OF SERVICES MARKETING IN INSURANCE AND BANKING .

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1 Journal of Management and Science - JMS ISSN 2250-1819 (Online) / ISSN 2249-1260 (Printed)7 P’S OF SERVICES MARKETINGIN INSURANCE AND BANKING SERVICESG.KalaimaniHead of the Department, Department Of Business Management, Sri Vasavi College ErodeINTRODUCTIONWherever there is uncertainty there is risk. We do not have any control overuncertainties which involves financial losses. The risks may be certain events like death,pension, retirement or uncertain events like theft, fire, accident, etc. Insurance is a financialservice for collecting the savings of the public and providing them with risk coverage. Themain function of Insurance is to provide protection against the possible chances of generatinglosses. It eliminates worries and miseries of losses by destruction of property and death. Italso provides capital to the society as the funds accumulated are invested in productiveheads. Insurance comes under the service sector and while marketing this service, due care isto be taken in quality product and customer satisfaction. While marketing the services, it isalso pertinent that they think about the innovative promotional measures. It is not sufficientthat you perform well but it is also important that you let others know about the quality ofyour positive contributions.Insurance marketingThe term Insurance Marketing refers to the marketing of Insurance services with theaim to create customer and generate profit through customer satisfaction. The InsuranceMarketing focuses on the formulation of an ideal mix for Insurance business so that theInsurance organisation survives and thrives in the right perspective.Marketing --Mix For Insurance CompaniesThe to best meet the needs of its targeted market. The Insurance business deals inselling services and therefore due weight-age in the formation of marketing mix for theInsurance business is needed. The marketing mix includes sub-mixes of the 7 P's ofmarketing i.e. the product, its price, place, promotion, people, process & physical attraction.The above mentioned 7 P's can be used for marketing of Insurance products andbanking services, in the following manner:1. PRODUCTA product means what we produce. If we produce goods, it means tangible productand when we produce or generate services, it means intangible service product. A product isboth what a seller has to sell and a buyer has to buy. Thus, an Insurance company sellsservices and therefore services are their product. In India, the Life Insurance Corporation ofIndia (LIC) and the General Insurance Corporation (GIC) are the two leading companiesoffering insurance services to the users. Apart from offering life insurance policies, they alsooffer underwriting and consulting services.2. PRICINGWith a view of influencing the target market or prospects the formulation of pricingstrategy becomes significant. The pricing in insurance is in the form of premium rates. Thethree main factors used for determining the premium rates under a life insurance plan aremortality, expense and interest. The premium rates are revised if there are any significantchanges in any of these factors. Mortality (deaths in a particular area) When deciding upon the pricing strategy the averagerate of mortality is one of the main considerations. In a country like South Africa the threat tolife 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 intothe cost of installments and premium sum and forms the integral part of the pricing strategy.

2 Journal of Management and Science - JMS ISSN 2250-1819 (Online) / ISSN 2249-1260 (Printed) Interest:The rate of interest is one of the major factors which determines people's willingnessto invest in insurance. People would not be willing to put their funds to invest in insurancebusiness if the interest rates provided by the banks or other financial instruments are muchgreater than the perceived returns from the insurance premiums.3.PLACEThis component of the marketing mix is related to two important facetsi)Managing the insurance personnel, andii) Locating a branch.The management of agents and insurance personnel is found significant with theviewpoint of maintaining the norms for offering the services. This is also to process theservices 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 isfound existent which has been instrumental in making worse the image problem. Thetransformation of potential policyholders to the actual policyholders is a difficult taskthat depends upon the professional excellence of the personnel. The agents and the ruralcareer agents acting as a link, lack professionalism.4. PROMOTION:The insurance services depend on effective promotional measures. In a country likeIndia, the rate of illiteracy is very high and the rural economy has dominance in the nationaleconomy. It is essential to have both personal and impersonal promotion strategies. Inpromoting 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 careeragents and even for the branch managers and front line staff. They also have to be givenproper training in order to create impulse buying. Advertising and Publicity, organisationof conferences and seminars, incentive to policyholders are impersonal communication.Arranging Kirtans, exhibitions, participation in fairs and festivals, rural wall paintings andpublicity drive through the mobile publicity van units would be effective in creating theimpulse buying and the rural prospects would be easily transformed intoactual policyholders.5. PEOPLEUnderstanding the customer better allows to design appropriate products. Being aservice industry which involves a high level of people interaction, it is very important to usethis resource efficiently in order to satisfy customers. Training, development and strongrelationships with intermediaries are the key areas to be kept under consideration. Trainingthe employees, use of IT for efficiency, both at the staff and agent level, is one of theimportant areas to look into. Human resources can be developed through education, trainingand by psychological tests. Even incentives can inject efficiency and can motivate people forproductive and qualitative work.6. PROCESS:The process should be customer friendly in insurance industry. The speed andaccuracy of payment is of great importance. The processing method should be easy andconvenient to the customers. Installment schemes should be streamlined to cater to the evergrowing 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 costeffectively. It can also help to improve customer service levels. The use of data warehousingmanagement and mining will help to find out the profitability and potential of variouscustomers product segments.

3 Journal of Management and Science - JMS ISSN 2250-1819 (Online) / ISSN 2249-1260 (Printed)A. Flow of activities: all the major activities of banks follow RBI guidelines. There has to beadherence to certain rules and principles in the banking operations. The activities have beensegregated into various departments accordingly.B. Standardization: banks have got standardized procedures got typical transactions. In factnot only all the branches of a single-bank, but all the banks have some standardization inthem. This is because of the rules they are subject to. Besides this, each of the banks has itsstandard forms, documentations etc. Standardization saves a lot of time behind individualtransaction.C. Customization: There are specialty counters at each branch to deal with customers of aparticular scheme. Besides this the customers can select their deposit period among theavailable alternatives.D. Number of stores: numbers of steps are usually specified and a specific pattern is followedto minimize time taken.E. Simplicity: in banks various functions are segregated. Separate counters exist with clearindication. Thus a customer wanting to deposit money goes to ‗deposits‘ counter and does notmingle elsewhere. This makes procedures not only simple but consume less time. Besidesinstruction boards in national boards in national and regional language help the customersfurther.7. PHYSICAL DISTRIBUTION:Distribution is a key determinant of success for all insurance companies. Today, thenationalized insurers have a large reach and presence in India. Building a distributionnetwork is very expensive and time consuming. Technology will not replace a distributionnetwork though it will offer advantages like better customer service. Finance companies andbanks 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 madethrough banks. In India also, banks hope to maximize expensive existing networks by sellinga range of products.The physical evidences include signage, reports, punch lines, other tangibles,employee‘s dress code etc.A. Tangibles: banks give pens, writing pads to the internal customers. Even the passbooks,chequebooks, etc reduce the inherent intangibility of services.B. Punch lines: punch lines or the corporate statement depict the philosophy and attitude ofthe bank. Banks have influential punch lines to attract the customers. Banking marketingconsists of identifying the most profitable markets now and in future, assessing the presentand future needs of customers, setting business development goals, making plans-all in thecontext of changing environment.ConclusionIn India, banks hope to maximize expensive existing networks by selling a range ofproducts. It is anticipated that rather than formal ownership arrangements, a loose network ofalliance between insurers and banks will emerge, popularly known as bankassurance. Another innovative distribution channel that could be used are the non-financialorganisations. We can‘t deny the fact that if foreign banks are performing fantastically, it isnot only due to the sophisticated information technologies they use but the result of a fairsynchronization of new information technologies and a team of personally committedemployees. The development of human resources makes the ways for the formation of humancapital.*****

4 Journal of Management and Science - JMS ISSN 2250-1819 (Online) / ISSN 2249-1260 (Printed)PROFITABILITY ANALYSIS OF SELECT PRIVATE SECTOR BANKS IN INDIAHaridayal SharmaAssistant Professor, P.G. & Research Department of Commerce, D.G.Vaishnav College,Chennai-600106.INTRODUCTIONA private sector Indian bank is one having its registered office in India, and majority of itsshares are held by private parties. India is the largest country in South Asia with a hugefinancial system characterized by many and varied financial institutions and instruments. Thebanking system in India, like those in most developing economies, is characterized by thecoexistence of different ownership groups, public and private, and within private, domesticand foreign. The Indian banking sector continues to witness domination by the public sectorbanks. Over the last decade, the banking sector has witnessed the entry of many new privatesector banks, resulting in momentous changes. A noteworthy aspect of the private sectorbanks is their ability to command a proportionately higher share of net profit, even thoughthey have a lower share in terms of customer deposits. Private sector banks are orientedtoward niche banking, unlike the public sector banks, which meet the mass bankingrequirements. The strategies adopted by the private sector banks are more in tune with thoseof the foreign banks, where emphasis is given to establishing superior benchmarks ofefficiency, focusing on niche customers, providing impressive customer service and bringingabout operating efficiencies by using high-end technology. Like the foreign banks, the privatesector Indian banks recruit the finest manpower, employ state-of-the-art technologies and areoriented towards building a strong brand image. Even though the private sector Indian banksdo not have an extensive range of branch networks, the emerging trends indicate that theypose a great competition to the public sector banks because of their increasing market share.The paper aims at analysing the profitability of select private banks across the select period.REVIEW OF LITERATUREIn India, research on the performance and efficiency of Indian banking industry is limited inthe existing literature. Rammohan and Ray (2004) compared performances of 58 publicsector, private sector and foreign banks for the period 1992-2000, using a revenuemaximization efficiency approach. Das (1997) estimated the technical, allocative and scaleefficiency of scheduled commercial banks for various pre-reform and reform years. The studyconsidered net interest income and interest income of banks as the two outputs. In his study,Das computed the efficiency measures for the public sector commercial banks. The resultsindicate that the State Bank Group, in general, improved in terms of overall efficiency duringthe 26 year period. Das found that inefficiency was technical in nature, which showed thatthere is underutilization or wastage of resources rather there being allocative inefficiency.Pal, Mukherjee and Nath (2000) studied the efficiency of 68 major Indian commercial banksfor the year 1999. They took 27 public sector banks, 20 private sector banks and 21 foreignsector banks for their study. They also identified weak banks. Five output variables weretaken. They were: deposits, net profits, advances, non-interest income and spread. Similarly,five input variables taken were net worth, borrowings, operating expenses, number ofemployees in the country and number of bank branches in the country. Uppal (2006)analyzed the profitability of four major bank groups, i.e., SBI and its associates, Nationalizedbanks, New private sector banks and foreign banks in the post-reforms era and concluded thatthere is a significant difference in the profitability of various major bank groups. Ballabh(2002) examined various techniques to increase the employees‘ productivity.

5 Journal of Management and Science - JMS ISSN 2250-1819 (Online) / ISSN 2249-1260 (Printed)PARAMETERS FOR STUDYProfitability of the banks was analysed using selected parameters based on review ofliterature. Ten parameters in the form of ratios dealing with the profitability of a bank arei. Interest Spreadii. Adjusted Cash Margin(%)iii. Net Profit Marginiv. Return on Long Term Fund(%)v. Return on Net Worth(%)vi. Return on Assets Excluding Revaluationsvii. Interest Expended / Interest Earnedviii.Other Income / Total Incomeix. Operating Expense / Total Incomex. Selling Distribution Cost CompositionHYPOTHESESThe hypothesis developed wereH01: The select private sector banks do not differ in terms of the specified profitabilityparameters.H02: There is no significant change in the profitability parameters of the private sector banksduring the select period.METHODOLOGYPrivate sector bank that are listed and part of BSE BANKEX were identified. The period ofstudy for analyzing the profitability of private sector banks was restricted to five yearsranging from April 2006 to March 2011. The necessary data for computation was obtainedthrough the website of the concerned bank and other websites offering financial information.For certain banks past data was not available, such banks were not considered for the study.Finally, based on availability of complete data, following four private sector banks arestudied for a period from April 2006 to March 2011.i. Axis Bankii. HDFC Bankiii. ICICI Bankiv. Kotak Mahindra bankSTATISTICAL TOOLSApart from the basic univariate analysis like Arithmetic Mean, Standard Deviation,percentage analysis and ratios, bivariate analysis in the form of Analysis of Variance(ANOVA) is also used.LIMITATIONSThe study has the following limitationsi.The study is restricted only to large private sector banks listed on BSE 30 sensex,and the mid size private sector banks were excluded due to time and costconstraints.ii. Four of the large private sector banks were considered due to non availability ofdata.iii. The study period is restricted to five years.iv.Select profitability parameters were used to analyse the profitability of thesebanks and other aspects such as efficiency, Networth etc were not considered.ANALYSISAnalysis of select parameters was done in the form of analysis of variance (ANOVA). First,ANOVA is applied to find the significance of difference in profitability based on selectparameters across the sample banks. The analysis is given in Table1.Table 1: ANOVA of Profitability parammeters across selected banks

6 Journal of Management and Science - JMS ISSN 2250-1819 (Online) / ISSN 2249-1260 (Printed)VariabledfFSig.Interest Spread3, 1615.7950.000Adjusted Cash Margin(%)3, 161.2640.320Net Profit Margin3, 160.9230.452Return on Long Term Fund(%)3, 165.1850.011Return on Net Worth(%)3, 168.5570.001Return on Assets Excluding Revaluations3, 169.1440.001Interest Expended / Interest Earned3, 1636.3890.000Other Income / Total Income3, 16o.8250.499Operating Expense / Total Income3, 169.0930.001Selling Distribution Cost Composition3, 164.2560.022It is found that sample banks differ significantly in terms of Interest Spread, Return on LongTerm Fund(%), Return on Net Worth, Return on Assets Excluding Revaluations, InterestExpended / Interest Earned, Operating Expense / Total Income and Selling Distribution CostComposition.Table 2: ANOVA of Profitability Parameters across different yearsVariabledfFSig.Interest Spread4, 150.5190.723Adjusted Cash Margin(%)4, 155.2180.008Net Profit Margin4, 159.6690.000Return on Long Term Fund(%)4, 151.8580.170Return on Net Worth(%)4, 151.1350.377Return on Assets Excluding Revaluations4, 151.4660.262Interest Expended / Interest Earned4, 150.3420.845Other Income / Total Income4, 150.5180.724Operating Expense / Total Income4, 150.5800.681Selling Distribution Cost Composition4, 151.6190.221Second, the significance of difference is identified in profitability based on select parametersacross the specific time period ranging from April 2006 to March 2011. Table 2 provides thedetailed information. It is identified that Adjusted Cash Margin(%) and Net Profit Marginratio showed a significant difference over the years.CONCLUSIONSince the process of liberalization and reform of the financial sector were set in motion in1991, banking has undergone significant changes. The underlying objectives of these were tomake the system more competitive, efficient and profitable. A decade of economic andfinancial sector reforms has strengthened the fundamentals of the Indian economy andtransformed the operating environment for banks and financial institutions in the country. In

7 Journal of Management and Science - JMS ISSN 2250-1819 (Online) / ISSN 2249-1260 (Printed)this background, the study is done to analyse the profitability of select private sector banks inIndia.It is identified that banks differ in terms of Interest Spread, Return on Long Term Fund (%),Return on Net Worth, Return on Assets Excluding Revaluations, Interest Expended / InterestEarned, Operating Expense / Total Income and Selling Distribution Cost Composition. Thismay be due to the managerial and administrative differences across various banks. Further, itis attempted to find the difference in profitability aspects of banks over a period of time.Adjusted

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 .

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