Marketing Application in Banking and Insurance Services

BANKING
In general terms, the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn a profit is term as banking. A bank is a financial institution that serves as a financial intermediary. The Banking industry comprises of segments that provide financial assistance and advisory services to its customers by means of varied functions such as commercial banking, wholesale banking, personal banking, internet banking, mobile banking, credit unions, investment banking and the like. Because of the important role depository institutions play in the financial system, the banking industry is generally regulated with government restrictions on financial activities by banks varied over time and by location. Current global bank capital requirements are referred to as Basel II. In some countries, such as Germany, banks have historically owned major stakes in industrial companies, while in other countries, such as the United States, banks have traditionally been prohibited from owning non-financial companies. A Bank's main source of income is interest paid on loans. A bank pays out at a lower interest rate on deposits and receives a higher interest rate on loans. The difference between these rates represents the bank's net income. Banks also generate non-interest income from service fees for Retail and Business banking products, transactional fees, or other non-traditional services such as Trust and Wealth Management consulting, Insurance, Cash Management services, Mortgage loan closing costs and points.

Size of Global Banking Industry

Assets of the largest 1,000 banks in the world grew by 6.8% in the 2008/2009 financial year to a record $96.4 trillion while profits declined by 85% to $115bn. Growth in assets in adverse market conditions was largely a result of recapitalization. EU banks held the largest share of the total, 56% in

2008/2009, down from 61% in the previous year. Asian banks' share increased from 12% to 14% during the year, while the share of US banks increased from 11% to 13%. Fee revenue generated by global investment banking totaled $66.3bn in 2009, up 12% on the previous year. The United States has the most banks in the world in terms of institutions (7,085 at the end of 2008) and possibly branches (82,000). This is an indicator of the geography and regulatory structure of the USA, resulting in a large number of small to medium-sized institutions in its banking system. As of Nov 2009, China's top 4 banks have in excess of 67,000 branches with an additional 140 smaller banks with an undetermined number of branches. Japan had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy each had more than 30,000 branchesmore than double the 15,000 branches in the UK.

Globalization in the Banking Industry

In modern time there has been huge reductions to the barriers of global competition in the banking industry. Increases in telecommunications and other financial technologies, such as Bloomberg, have allowed banks to extend their reach all over the world, since they no longer have to be near customers to manage both their finances and their risk. The growth in cross-border activities has also increased the demand for banks that can provide various services across borders to different nationalities. However, despite these reductions in barriers and growth in cross-border activities, the banking industry is nowhere near as globalized as some other industries. In the USA, for instance, very few banks even worry about the Riegle-Neal Act, which promotes more efficient interstate banking. In the vast majority of nations around globe the market share for foreign owned banks is currently less than a tenth of all market shares for banks in a particular nation. One reason the banking industry has not been fully globalized is that it is more convenient to have local banks provide loans to small business and individuals. On the other hand for large corporations, it is not as important in what nation the bank is in, since the corporation's financial information is available around the globe.

Indian Banking Industry

Banking in India originated in the first decade of 18th century with The General Bank of India coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are now defunct. The oldest bank in existence in India is the State Bank of India being established as "The Bank of Bengal" in Calcutta in June 1806. A couple of decades later, foreign banks like Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due to which banking activity took roots there and prospered. The first fully Indian owned bank was the Allahabad Bank, which was established in 1865. By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded under private ownership. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. Nationalization By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensued about the possibility to nationalize the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the GOI in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquition and Transfer of Undertaking) Bill, and it received the presidential approval on 9th August, 1969.

A second dose of nationalisation of 6 more commercial banks followed in 1980. The stated reason for the nationalisation was to give the government more control of credit delivery. With the second dose of nationalisation, the GOI controlled around 91% of the banking business of India. After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy. Currently (2007), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.

Adoption of Banking Technology

The IT revolution had a great impact in the Indian banking system. The use of computers had led to introduction of online banking in India. The use of the modern innovation and computerisation of the banking sector of India has increased many fold after the economic liberalisation of 1991 as the country's banking sector has been exposed to the world's market. The Indian banks were finding it difficult to compete with the international banks in terms of the customer service without the use of the information technology and computers. The RBI in 1984 formed Committee on Mechanisation in the Banking Industry (1984) whose chairman was Dr C Rangarajan, Deputy Governor, Reserve Bank of India. The major recommendations of this committee was introducing MICR Technology in the all the banks in the metropolis in India.This provided use of standardized cheque forms and encoders. In 1988, the RBI set up Committee on Computerisation in Banks (1988) headed by Dr. C.R. Rangarajan which emphasized that settlement operation must be computerized in the clearing houses of RBI in Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram.It further stated that there should be National Clearing of inter-city cheques at Kolkata, Mumbai, Delhi, Chennai and MICR should be made Operational. It also focused on computerisation of branches and increasing connectivity among branches through computers. It also suggested modalities for implementing online banking. The committee submitted its reports in 1989 and computerisation began form 1993 with the settlement between IBA and bank employees's association. In 1994, Committee on Technology Issues relating to Payments System, Cheque Clearing and Securities Settlement in the Banking Industry (1994) was set up with chairman Shri WS Saraf, Executive Director, Reserve Bank of India. It emphasized on Electronic Funds Transfer (EFT) system, with the BANKNET communications network as its carrier. It also said that MICR clearing should be set up in all branches of all banks with more than 100 branches. Committee for proposing Legislation On Electronic Funds Transfer and other Electronic Payments (1995) emphasized on EFT system. Electronic banking refers to DOING BANKING by using technologies like computers, internet and networking, MICR, EFT so as to increase efficiency, quick service, productivity and transparency in the transaction.

Bank Group Nationalised SBI Old pvt sector New Pvt Sector Foreign Bank

No. Of Branches On site ATM 33627 3205 13661 1548 4511 800 1685 1883 242 218

Off site ATM 1567 3672 441 3729 579

Total ATM 4772 5220 1241 5612 797

INSUARANCE

In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; an insured, or policyholder, is the person or entity buying the insurance policy. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate (indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated. Wherever there is uncertainty there is risk. We do not have any control over uncertainties 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 financial service for collecting the savings of the public and providing them with risk coverage. The main function of Insurance is to provide protection against the possible chances of generating losses. It eliminates worries and miseries of losses by destruction of property and death. It also provides capital to the society as the funds accumulated are invested in productive heads. Insurance comes under the service sector and while marketing this service, due care is to be taken in quality product and customer satisfaction. While marketing the services, it is also pertinent that they think about the innovative promotional measures. It is not sufficient that you perform well but it is also important that you let others know about the quality of your positive contributions. The creativity in the promotional measures is the need of the hour. The advertisement, public relations, word of mouth communication needs due care and personal selling requires intensive

Global Insurance Size

The global insurance industry is one of the largest sectors of finance. It ranges from consumer to corporate and industrial insurance, and even reinsurance, or insurance of insurance. The major insurance markets of the world are obviously the US, Europe, Japan, and South Korea. Emerging markets are found throughout Asia, specifically in India and China, and are also in Latin America. With the internet and other forms of high-speed communication, companies and individuals are now able to purchase insurance and related financial products from almost anywhere in the world. Increasing affluence, especially in developing countries, and a rising understanding of the need to protect wealth and human capital has led to significant growth in the insurance industry. Given the evolving and growing socio-economic conditions worldwide, insurance companies are increasingly reaching out across borders and are offering more competitive and customized products than ever before. Over the past ten years, global insurance premiums have risen by more than 50%, with annual growth rates ranging between 2 and 10%.In 2004, global insurance premiums amounted to $3.3 trillion. The majority of insurance comes from developed nations such as most of Europe, the US, and Japan. In 2004, premiums in North American amounted to $1,217 billion, while the European Union generated $1,198 billion, and Japan produced $492 billion. The UK amounted to $295 billion. The four biggest generators of insurance premiums comprised almost two-thirds of premiums for 2004, the US and Japan amount to half, while they only make up 7% of the worlds population. In contrast, the emerging markets that make up 85% of the worlds population produced only 10% of the premiums.

Indian Insurance Industry

India insurance is a flourishing industry, with several national and international players competing and growing at rapid rates. Thanks to reforms and the easing of policy regulations, the Indian insurance sector been allowed to flourish, and as Indians become more familiar with different insurance products, this growth can only increase, with the period from 2010 - 2015 projected to be the 'Golden Age' for the Indian insurance industy. India Insurance Policies at a Glance Indian insurance companies offer a comprehensive range of insurance plans, a range that is growing as the economy matures and the wealth of the middle classes increases. The most common types include: term life policies, endowment policies, joint life policies, whole life policies, loan cover term assurance policies, unit-linked insurance plans, group insurance policies, pension plans, and annuities. General insurance plans are also available to cover motor insurance, home insurance, travel insurance and health insurance. Due to the growing demand for insurance, more and more insurance companies are now emerging in the Indian insurance sector. With the opening up of the economy, several international leaders in the insurance sector are trying to venture into the India insurance industry.

India Insurance: History The history of the Indian insurance sector dates back to 1818, when the Oriental Life Insurance Company was formed in Kolkata. A new era began in the India insurance sector, with the passing of the Life Insurance Act of 1912.The Indian Insurance Companies Act was passed in 1928. This act empowered the government of India to gather necessary information about the life insurance and non-life insurance organizations operating in the Indian financial markets. The Triton Insurance Company Ltd formed in 1850 and was the first of its kind in the general insurance sector in India. Established in 1907, Indian Mercantile Insurance Limited was the first company to handle all forms of India insurance.

Marketing Of Banking Services

Marketing of banking services is concerned with product, place, distribution, and pricing and promotion decision in the changing, socio economic and business environment. It means organizing right activities and programmes at the right place, at right time at a right price with right communication and promotion. The causes of Bank Marketing can be seen as: Rising customer needs and expectations Due to improvements in general standard of living. Entry of foreign and private sector banks in India. Economic liberalization of Indian economy. Phenomenal growth of competition due to economic liberalization. Rise in the Indian middle class with considerable resources. Government intervention in protecting the interests of consumers.

The users of banking services or the prospects play a very significant role in the formulation of overall marketing strategies. The bank marketing activities are concerned with the designing of product strategies keeping in view the needs and requirement of prospects. It is also related with the place decisions i.e. location of a bank at suitable points

Bank Marketing
Bank marketing is the aggregate of function, directed at providing service to satisfy customers financial needs and wants, more effectively and efficiently than the competitors keeping in view the organizational objective of banks The existence of banks have liitile value without the existence of customers. Aim is not only to create and win more and more customer but also to retain them through effective customer service. Appropriate promise to a customer through a range of service and also to ensure effective delivery through satisfaction is important.

Concept
Identify the most profitable market now and in future. Assesing ther present and future needsa of the customer Setting business development goals and making plans to meet them Managing the different services and promoting them to achieve the plans Adapting the changing environment in the market place

MARKET SEGMENTATION FOR BANKS

An organization is supposed to cater to the changing needs of customers. It is natural that all customers have their own likes and dislikes. They have some uniqueness which throw a big imprint on their lifestyles. This makes the task of understanding the customer a bit difficult. It is in the context that we go through the problem of market segmentation in banking services. A study of the needs of customers invites a plethora of problems since in addition to other aspects, the regional consideration also influence the hierarchy of needs. To be more specific in the banking services, the banking organizations are supposed to satisfy different types of customers living in different segments. The segmentation of market makes the task of bank profe ssionals easier. If the market segmentation is done in a right fashion, the task of satisfying customers is simplified considerably. The modern marketing theories advocate the formulation of market policies and strategies for each segment which an organization plans to solicit.

The bank professionals have to segment the market in such a way that the expectations of all the potential customers are studied in a right perspective and the marketing resources are developed to fulfill the same. The marketing efforts can be made more proactive if the process and bases of segmentation are right. It is essential that the bank professionals assign due weightage to the difference that we find in market behaviour due to geographical, age, sex, nationality, educational background, income classes, occupation, social and other consideration. If they overlook or underestimate key bases while segmenting, the study result cant be proactive to the formulation of creative marketing decisions. This makes it essential that the bank professionals are aware of the criteria for market segmentation. This would make the segmentation process right vis--vis the result proactive. The agricultural sector, industrial sector, service sector, household sector are found important in the very context. The gender segment is found important no doubt but we cant underestimate institutional and professional segments. Since the banking organizations serve different sectors and segments the segmentation should be done carefully.

IMPORTANCE OF SEGMENTATION TO THE BANKING ORGANISATION

Like other goods manufacturing and services gene rating organizations, we find segmentation important even to the banking organizations. The following facts testify it. 1) Instrumental in exploring opportunities: We find segmentation very much

effective in exploring the profitable opportunities. It is well known to us that while segmenting, the market is divided into different groups and sub -groups and this simplifies the process of studying and understanding the customers in a right perspective. If we known about the rural segment, the opportunities are explored in the rural areas. If we known about the low income group, the opportunities are explored in that group. Thus the segmentation helps bank professionals i n exploring the profit opportunities. 2) Instrumental in designing a sound marketing strategy: We cant deny that market segmentation makes it easier to formulate a sound strategy. Since the bank professionals are

aware of the changing needs and requirements of a segment, the marketing resources can be developed in tune with needs and requirements of a segment. The formulation of a package is found significant and the bank professional measures can do it successfully on the basis of market segmentation. The promotional measures can be sensitized in the face of the receiving capacity of a particular segment. The pricing strategy can be made operational and the sales promotion measures can be made productive. 3) Helpful to the policy planners: In addition, the policy makers also find segmentation important since they are well aware of the emerging trends in the business environment. They get detailed information about the changing needs and requirements of a segment. The planning is an on going process. The bank professionals transmit necessary information to the policy planners which simplify the process of making a sound policy. 4) A sound management of budget is possible: Formulation of a pragmatic plan and an optimal budget has a far reaching effect on the rate of success. As and when we talk about planning, the budgetary provision, allocation in the face of changing requirements, optimal distribution of funds to different heads, monitoring of expenses became important. If we known about a segment, we also known about the requirement of that segment .At branch level, the segmentation provides necessary information to a branch manager that help him in studying the requirements of the command area in which the study is undertaken. 5) Enriching the marketing resources: In addition to other aspects, we find segmentation instrumental in enriching the markets potentials. If we known about the preference, needs, requirements, attitudes, lifestyles; it is found easier for us to develop the marketing resources accordingly. This in a natural way makes it convenient to develop the marketing resources. The process of innovation can be activated. The services, the promotional measures, the pricing tool and the process of offering can be made more competitive. The development of world class marketing resources thus makes it convenient to influence the impulse of prospects. The bank professionals find it easier to get the positive results for their productive marketing efforts.

BANKING SERVICE MARKETING MIX

SERVICE MARKETING MIX ELEMENT

PRODUCT PRICE PLACE PROMOTION PEOPLE PROCESS PHYSICAL EVIDENCE

PRODUCT:
BANK PRODUCTS (A)DEPOSITS: savings, current, fixed etc. (B)ADVANCES: (1) FUND ORIENTED: Term loan, Clean loan, Bill discounting, Advances, Pre-shipment finance, Post-shipment finance, Secured and unsecured lines of credit.

(2) NON-FUND ORIENTED: Guarantees, and Letter of credit

C) INTERNATIONAL BANKING

Letter of credit, and Foreign Currency. D) CONSULTANCY: Investment Counseling, Project Counseling, Merchant Banking, and Tax Consultancy. (E) MISCELLANEOUS: Traveller Cheques, Credit Card, Remittances, Collections, Sale of Draft, Standing instructions, and Trusteeship. In banking the products are services. Services cannot be seen or protected like goods. The potential buyer of the services can form an opinion about the services offered. The product should suit the market needs. Bank services are viewed in terms of the satisfaction they deliver and not just the things that are created with value. The banks primarily deal in services and therefore, the formulation of product mix is required to be in the face of changing busi ness environment conditions. The changing psychology, the increasing expectation, the rising income, the changing lifestyles, the increasing dominations of foreign banks and the changing needs and requirements of the customers at large make it essential that they innovate their service mix and make them of worked class. In the formulation of service mix, the banks can follow two guidelines, first is related to the processing of product to market needs and the second is concerned with the processing of market needs to product. Marketing aims not only offering but also at creating/innovating the services/schemes found new to the competitors vis --vis- to the customers. The additional attraction, the product attractiveness

would be a plus point, which would be of great help in many ways. Thus, the formulation of product mix is found to be difficult task that requires world-class professionalism.

PRICE:
Pricing in banking relates to the interest rates paid by the bankers on deposits, interest charged by the banker on loans and demand draft, charges for various types of transactions and fees for certain services. In India deposit and lending rates are prescribed by RBI. Pricing policy of a bank is considered important for raising the number of actual customer. In the formulation of marketing mix, the pricing decisions occupy a place of outstanding significance. The pricing decision include the decisions related to interest and fee or commission charged by bank. Keeping in view the level of satisfaction of a particular segment, the bank have to frame the pricing strategies. The banks are required to frame two -fold strategies. Strategies concerned with interest and commissions to be paid to the customer and interest and commissions to be paid by the customers for different types of services.

PLACE:
The place decision mainly deals with selection of a suitable location for the branch. Sound location decisions help in activating the business. The location should have adequate availability of transportation, communication, electricity and other necessary facilities for the smooth functioning of the banks. Technological development, increased customer satisfaction, inadequacy of the traditional challenge to serve all customer segments have brought about ATM, telebanking, home banking, Internet banking and now SMS Banking. Another significant development is a strategic alliance set up by the private banks to overcome the handicap of limited branch network. In such alliance the branch network of one branch will be used by the other for selected transaction like bill collection, cheque collection, etc.

PROMOTION:
The object of a promotion programme are to inform about the new service product, to persuade the customer, to remind the customer, build image of the bank, etc. Banking services can be promoted in two ways: 1. Personal Promotion: The bank marketer gets opportunity to tangibilise the product through personal selling; persuasion is more effective with direct contact. It helps in creating impulse buying. 2. Impersonal Promotion: i.e. Advertising, Publicity and Sales Promotion measures. An advertisement in banking is a promotion measures. An advertisement in banking is a promise- a promise of satisfaction to prospectus who buy the service offered by the bank. Banks use all types of advertisement such as newspaper, radio, television, magazines and hoardings. Also, sales promotion device such as Point of Purchase material, brochures and advertisement specialties like ball pens, calendars, diaries, etc. Publicity is a major strength as a promotion tool than advertising as customers tend to believe a news item rather than an advertisement. Word of promotion is yet another important promotion tool as it is a better persuader and convincer than advertising and personal selling, as banking services are narrated by customer themselves. Besides, as Social welfare and Corporate Social Responsibility are considered to be an important part of banking services, the publicity measures need due care.

PEOPLE:
Banking products cannot be separated from the person (banker) who markets them. The product and the seller together constitute the banking product. Banks should adopt internal marketing in order to make the whole business customer -oriented. The bank products should be marketed to the employees first before they are marketed to customer. The corporate mission should be communicated repeatedly and effectively to all employees by the top management. The placement policy should emphasize that the recruits should not only be conversant with all aspects of banking businesses but also have the skill for social interaction and tolerance for interpersonal contact. The

quality for banking sector is an aggregation of all the properties, which are found essential for generating the efficiency and projecting a fair image. Even efficiency essentially is supported by ethical dimension, humanity and humanism. The development of human resources makes the way for the formation of human capital. Human resource can be developed through education, training and by psychological tests. Even incentives can inject efficiency and can motivate people for productive and qualitative work.

PROCESS:
It involves all activities right from the product conception stage, to product designing and development down to its marketing at the branch level. Flow of activities: all the major activities of banks follow RBI guidelines. There has to be adherence to certain rules and principles in the banking operations. The activities have been segregated into various departments accordingly. a) Standardization: banks have got standardized procedures got typical transactions. In fact not only all the branches of a single bank, but all the banks have some standardization in them. This is because of the rules they are subject to. Besides this, each of the banks has its standard forms, documentations etc. Standardization saves a lot of time behind individual transaction. b) Customization: There are specialty counters at each branch to deal with customers of a particular scheme. Besides this the customers can select their deposit period among the available alternatives. Number of stores: numbers of the steps are usually specified and a specific pattern is followed to minimize time taken. Simplicity: in banks various functions are segregated. Separate counters exist with clear indication. Thus a customer wanting to deposit money goes to deposits counter and does not mingle elsewhere. This makes procedures not only simple but consume less time. Besides instruction boards in national boards in national and regional language help the customers further. Customer involvement: ATM does not involve any bank employees. Besides, during usual bank transactions, there is definite customer involvement at some or the other place because of the money matters and signature requires.

PHYSICAL EVIDENCE:
The physical evidences include signage, reports, punch lines, other tangibles, employees dress code etc. The companys financial reports are issued to the customers to emphasis or credibility. Even some of the banks follow a dress code for their internal customers. This helps the customers to feel the ease and comfort. Signage: each and every bank has its logo by which a person can identify the company. Thus such signages are significant for creating visualization and corporate identity . Tangibles: banks give pens, writing pads to the internal customers. Even the passbooks, chequebooks, etc reduce the inherent intangibility of services. Punch lines: punch lines or the corporate statement depict the philosophy and attitude of the bank. Banks have influential punch lines to attract the customers. Banking marketing consists of identifying the most profitable markets now and in future, assessing the present future needs of the customers, setting business development goals, services marketing. Most private and foreign banks like ICICI, Citibank and HDFC bank portray a new look to the customers rather than drudgery banking counters. Attractive brand names, logos, symbols, etc. add to the customers perception of service quality.

ROLE OF TECHNOLOGY IN BANKING

Technology has a major impact on many industries including financial services and banking in particular. ATM services which not only provide cash but also allow for bill payments, deposits and instant statements are widely used. From the customers viewpoint, technology has played a major role in the development of the process whereby the service is delivered. Automated queuing systems have made visits to the bank easier and more convenient. Telephone Banking and insurance services are now being used in place of the traditional branch-based service process. Technology has also played a major role within organizations, bringing about far greater efficiency through computerized records and transaction systems and also in business development, through the setting up of detailed customer databases for effective segmentation and targeting. The main technological developments fall within these categories; Process developments Information storage and handling Database system

Emerging Technology in Banking sector

1. AUTOMATED TELLER MACHINES(ATM): The trend in banking has evolved from a cash economy to cheque economy and there on to the plastic card economy. One of the channels of banking service delivery is the AT M or the Automated Teller Machines, whose traditional and primary use is to dispense cash upon insertion of a plastic card and its unique PIN. Current and saving account holders of a bank who hold a certain minimum balance in the account are issued an ATM card. The card is a plastic card with a magnetic strip with the account number of the individual. When the card is inserted into ATM, the machines sensing equipment identifies the account holder and asks for his or her identification code number. Usually this is referred to, as the PIN and is issued by the bank's computers. This number is not known to the bank's staff and is

secret and unique to that individual. When the person uses the ATM card is asked for the PIN, that the cardholder identifies himself or herself by pressing the relevant number buttons. The machines then verify the account number on the ATM card along with the secret code number stored in the ATM. When the match is found, the ATM pops up a menu screen which allows the user to transact almost all types of bank transactions. A typical transaction would be that of cash withdrawal. The bank generally restricts the maximum amount and the frequency with which one can withdraw cash. The amount withdrawn is immediately debited to the concerned account through accounting entries pre programmed on the ATM. Similarly, cash or cheques can be deposited through the ATM for credit to an account. When the menu screen appears one should indicate that he or she wants to deposit money. The ATM dispenses an envelope which is to be filled with the cheque or cash. The account number to be credited is registered on the envelope and stored. Later the bank staff collects the envelope to credit the account. Account balance queries, fixed deposit details, debits and credits to the account etc. can all be queried at the ATM. The advantages of an ATM over personal teller are as follows: (1) ATM's can be accessed round-the-clock. (2) No employee interface is necessary. (3) Cash and cheques can be deposited and stat ement of accounts requirement, transfer of funds etc. can be effected. (4) It offers a cost-effective solution alternative to labour costs. (5) Automatic and instantaneous accounting is possible. (6) It eliminates the need for customers to travel to the br anch where his or her account is maintained, if the ATMs are conveniently located and networked. (7) To depositors who do not have a credit card, ATM offers cash availability when necessary. (8) Scope for frauds, robberies and misappropriation is reduced considerably if the PIN is maintained. 2. TELEBANKING AND ELECTRONIC BANKING: - A customer can access information about his/her account through a telephone call and by giving the coded Personal Identification Number (PIN) to the bank by Telebanking. Some banks like SBI, Andhra Bank, etc. have made this facility available to some branches. Automatic withdrawals and transmission of cash balance

data and other information about an account is another facility that is offered by banks in a consolidated form through fax or telex. Some banks have also adopted the use of E -mail service for data and information transmission. Banks have also started with the Electronic display of information through Satellite Communication System and transfer of funds through the same channel for inter branch and inter-bank adjustment and clearance of cheques, drafts, etc. 3. CELL PHONE BANKING AND INERNET BANKING: Through Inter-net banking one can visit the web-site of each bank by entering his password and know the account balance and even pass his own credit and debit entries.This means that we can do our banking through our personal computer sitting at home. Banks may soon allow zero balance savings accounts through Internet facility only. Customers can now make balance enquiries, download statements and open fixed deposits over the net. They will soon be able to carry out all their transactions over the net. So visiting a bank would become needless. Time to come; Mobile phones will drive banking transactions. These mobile phones will be equipped with smart cards that are embedded with banking and other information. This mobile phone banking facility is yet to come but the mechanics of linking the banking with the cell phone is being sorted out. Teller machines are being installed in the banks for the Electronic banking facility. The use of email for banking will open up new avenues for Internet banking. Banking will be on wheels and mobile by the use of smart banking.

MARKETING OF BANKING SERVICES IN THE GLOBALISED SCENARIO Emerging Challenges

"Change" is a continuous process and banking industry is no exception to this law which is natural. Due to the implementation of the financial sector reforms and policies for the country change in the banking industry is inevitable. The main aim of the financial sector reforms is to promote an efficient, competitive and diversified financial system in the country. After liberalization and globalization process that was initiated in 1991, the Indian banking industry has undergone tremendous transformation. These changes have

forced the Indian banking industry to adjust the product mix and to remain competitive in the globalised environment. In order to accommodate the change s and challenges that are taking place in the present globalization scenario, the Indian banking industry has to re-orient its strategy towards marketing of banking services. New ways and means have to be found to compete in the future and to survive with profit and business growth. The following are some of the vital challenges that threaten the Indian banking industry. (1) Competition from foreign banks and now new private sector banks: The competition in the Indian banking industry have intensified with the entry of more and more foreign banks and now private sector banks, with better technology, market orientation and cost-effective measures. Financial institutions have also stated entering into the domain of banks. The share of business of public sector banks has considerably declined. Hence there is a compelling need for the Indian banking Industry to either change or modify its marketing strategy in order to attract the customers and also to withstand the stiff competition from foreign banks and new private sector banks. (2) Technological advancement: The methodology of banking business has drastically altered due to the advent of technology both in terms of computers and communication. It has opened new vistas in the banking sector and in turn has brought new possibilities for doing the same work differently and in a most cost effective manner. With the help of technology it is now possible to have 24 hours day banking and all seven days in a week. New business potentials and opportunities which have remained unexplored have not opened up with Tele ban king, Internet banking and E-banking. (3) Innovation: Innovation is another important force of change in the Indian banking sector. Now-a-days banks have become innovative and pro-active and offer top-class service to the customers. They play a dynamic role not only as a finance provider but also as a departmental store of finance. Due to this new instruments and new products like factoring, leasing, merchant

banking, forfeiting venture capital, corporate advisory services are emerging. These innovative services may increase the revenue with cost effective measures. (4) Diversified Activities: There is a universal trend towards banks' diversification normally through insurance depository participant services, investment banking etc. Furthermore banks have diversified their activities by rendering various services like depositing gold, sale of gold, paying tax liability and telephone bills and collecting interest on securities on behalf of the customers. All these diversified activities have made the banks t o develop and offer consultancy counseling and customer designed packages for efficient management of funds. The banks traditional roles as financial intermediaries are gradually assuming lesser importance in their overall business as the banks diversify their activities and redefine their roles. It is important to note that the percentage of non-interest income is increasing and the interest income of the banks is decreasing. This shows that the income through service exceeds the income through lendings. (5) Customer Awareness and Satisfaction: In the Urban and metropolitan sector customers demand more facilities than offered since they are more knowledgeable. They look for services that are cheaper, faster and better in quality. IDBI is offering 110% loa n of the cost of the project in case of construction of the building. Such type of loan is given to meet the documentation expenses. Now-a-days customer can know the status of their accounts, request for a cheque book or a financial statement, transfer funds or "Stop-payment" of cheques from his desktop. (6) Development of skills of Banks Personnel: In order to meet the new challenges, banks have to develop novel ways of meeting the customers' demands. To get sufficient knowledge and exposure to technology, suitable packages relating to hardware and software applications are to be provided. Furthermore a separate marketing wing may be created in every bank to market their banking services. They must be suitably trained to keep pace with ever changing environment. For meeting the challenges the human resource departments in banks have to prepare a proper manpower plans and strategies. (7) Profitability Nature: Profit is a barometer for a judging the performance of any bank Profits are needed to meet the expectations of the stake holders, benefit of employees and also for building

capital. Banks have to pay attention to the following emerging areas order to protect and enhance their profitability. Product development and management skill. Skills for operating in electronic environment. Modern credit management skills. New risk management practices. New focus on customer and his needs. New internal audit skills in a changing business environment.

8) Corporate Governance: Corporate Governance plays a highly significant role in corporate governance. It is seen that though the corporate governance revolves around enhancing shareholders value, it has also the responsibility of marketing the banking services by introducing and producing new products and services. Accountability at all levels; transparency and enhancing the image of the organization would be the major ingredients of good corporate governance. After the globalization and financial sector reforms, corporate governance has been receiving a lot of -attention in banking sector. To conclude we say that the recent trend of globalization and liberalization has posed serious problems to the domestic banks. The public sector banks have been pushed to a tight corner because of the aggressive marketing strategies from their foreign counterparts. Potential customers have started moving towards the private sector banks and foreign banks. The business prospects of our public sector banks have gradually started shrinking as such they are forced to revise their strategy of banking operations so that they can meet the threats posed by the foreign banks. Lastly in order to survive and succeed the domestic banks must identify their marketing areas, develop adequate resources, convert these resources into efficient services and distribute them effectively so that the customers are satisfied.

Marketing Strategies in banking Sector

Todays savvy clients have come to showcase a sense of Value for Time with regard to their banking choices. More so, Clients have grown intolerant of the volume and irrelevant information with regard to content of marketing methods. Mass advertising encourages churn not loyalty. There is a greater demand for a packaged one-stop solution for their varied banking needs, including both tangible and intangible products from a single or a reduced number of banking partners. While this desire speaks of possible limitation with regard to fewer customers overall, the potential revenue gains that banks can realize from these finite relationships have never been greater. At the same time, however, the financial implications related to a shrinking and shifting client pool means banks have much to lose if they fail to modify their methods for growing new and retaining existing relationships. This speaks of an integrated approach for development of sales personnel, marketing program support, customer relations, market performance, and contribution to profits. To win their trust and business, banks need to move from traditional methods of communications to a more informative, integrated-product based approach. This also includes exploring the online webspace for establishing a more personal relationship with its customers. Banks need to shift away from a product-centric culture toward a customer centric model to better position them to maintain client loyalty and grow their bottom lines. Furthermore, with availability of several different products at a single institution customers are much less likely to switch banks. For customers of today, communicating about their commoditized products, banks can create unique value. For example, Wells Fargo, a leading bank in US shifted from product-centric marketing toward customer-centric tactics. Strategies include using more personal-communication methods such as e-mails with relevant content to respond to their customers increasing need for on-demand strategic business intelligence.

Insight: Customer Centric Approach

In the process of devising a proper marketing strategy, it becomes important that the banking institution understands their customers and channelize their resources to devise products to meet the various banking demands of their customers.

Methodology: Positioning yourself For devising a successful marketing strategy, it becomes important for us to understand the following factors. Size of the bank is no more the key winning criteria, online and Tele-banking has given a big completion to branch based banking. Marketing through credentials doesnt stand out (Size, age and experience) Banks should focus and integrate non-banking products in the package they offer. Measuring Marketing Initiatives is always important and crucial for any marketing strategy. Understanding the Customers The key is a successful strategy is to positively forecast the needs of the clients and devise products accordingly. The following few aspects needs to be studied for a better strategy: Banks should look for new insights from the existing customer data. Most financialservices companies either dont mine their data enough or dont do it in a way that allows the information to reach product development (Psychographic Segmentation, Conjoint Analysis)

 It is important to understand the evolving needs and attitude of customers. Knowledge and demands of customers are constantly evolving along with their sources of income and their financial complexities. It becomes important that we as a bank, need to understand their attitude and their economic patterns to offer the most suited banking solution. Priority Listing of Customers is an essential ingredient for the right strategy mix. Since we are talking about establishing a more client specific business relationship, it is always important to understand how to make the choice in regard to spacing their demands in regard to our business perspective.

Innovation : Customer Service Innovation is a key for Banking: Focus on innovations doesnt matter how small they are, every small innovation is a liftoff for a bank. Offering based innovation: Addressing one real need, no matter how small, we have liftoff. For example, Octopus which enables users to ride public transportation without having to buy tickets or swipe a turnstile is a big hit. Customer Service Based Innovation: Citibank linked its customer service performance to sales success. They created an incredible incentive to address clients concern and then to sell, it can also give the banks marketers greater insight into consumer needs than they ever had before Innovation in Senior Management Approach: Best practices from across the industry in customer care and satisfaction can go long way in making your customer happy. Most offerings of the banks are too complex for the average consumer to understand. If you look at some consumer products where there is a complexity dimension, such as washing machine. Typically the company will have a sales force to explain the different features. Banks products are currently more like washing machines really hard to sell. But banks have no sales forces to deal with customers. We need to educate consumers.

 Marketing Based Innovation: Bring customers in by offering a special on CDs, one day only, where customers who bring in $1000 for deposit in a 12 month period CD get an extra 0.5%. Furthermore, it would get the staff excited and working towards a goal. This would work in many ways. ING has a great referral program, where current customers get $10 for emailing their friends to sign up, and their friend gets $25. Product specific Innovation: The systems and procedures need to be geared towards speedy delivery of service to customers. For example, banks send out credit cards to customers automatically when their old ones have expired.

Think Different Don't just focus on building smart products, but Build smart business models, new ways to create, deliver, and capture value. Think in terms of platforms and pipelines and not as a single product. A platform based products can be re-launched with modifications leading to faster turnaround time and economical product launches. Take a portfolio approach, i.e. decide on a bunch of products for a category and not a standalone product.

CRM Systems Implementation Build small, usable databases. Systematic but simple checks should be implemented on the database to identify omissions and errors early on. This does not take a long time and has been implemented even in 2 weeks by some companies. Start pushing pilot campaigns quickly testing different hypotheses quickly like 8-10 campaigns in first 2-3 months. Setup a call center to roll out and inform about successful campaigns. Every campaign, whether successful or not, needs to be analyzed thoroughly for continuous improvements in the process.

Evaluation: Monitoring and Review Effective evaluation methodology to monitor and review performance of a strategy is essential. Banks should supplement their traditional sales- and transaction-oriented metrics by increasing their use of activity-based branch-level metrics, such as the number of visits, the purpose of those visits (for instance, service or sales), the flow of customers within branches, and rates of conversion into leads or sales sessions.

Advantages of customer centric approach

1. Customer Loyalty: Establishing the institution as a one stop shop for all banking needs, it becomes easy to gain customer loyalty. With the possibility of having a single banking partner for his/her banking clients, customers will be more willing to share their needs, thus helping the bank to better modify their services. 2. 3. Word-of-mouth Marketing: Loyalty of Customers and customer focus initiatives will Lesser lead time with advanced planning and immediate product delivery A create a greater sphere of marketing space through existing customers. consequence of better customer understanding will cut down the lead time and help us on immediate product delivery. For example, approval for loans, credit card services etc. 4. With better understanding of customers, partnerships with other institutions for product design become easy and also mutually beneficial. Creating new products and offering non-banking services for customers will see tap on potential industrial clients. 5. Lesser Cost of Operation: Better understanding of clients and a more reliable forecasting methods will result in less management overhead, lower capital requirements, and potentially quicker timelines. Employing innovative marketing strategies promises to improve on the business volumes for any banking institution. With considerable percentage of population enjoying a greater purchasing power, and lesser time for conventional banking methods, it becomes important for banking institutions to adapt to their needs. Banks would have to adopt a planned and focused approach to ensure timely roll-out of best in class products coupled with an informed insights about various needs and demands of customers. In conclusion, customer centric approach coupled with effective

use of technology and resources speaks of encouraging signs for the growth in this sector. Banks will have to ensure efficient execution and co-ordinate their actions in order to deliver on their promise.

INSURANCE MARKETING:
The term Insurance Marketing refers to the marketing of Insurance services with the aim to create customer and generate profit through customer satisfaction. The Insurance Marketing focuses on the formulation of an ideal mix for Insurance business so that the Insurance organisation survives and thrives in the right perspective.

MARKETING --MIX FOR INSURANCE COMPANIES:

The marketing mix is the combination of marketing activities that an organisation engages in so as to best meet the needs of its targeted market. The Insurance business deals in selling services and therefore due weight-age in the formation of marketing mix for the Insurance business is needed. The marketing mix includes sub-mixes of the 7 P's of marketing 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, in the following manner:

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 productmix, 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.

Marketing Process
Insurance companies are in a unique position when it comes to marketing. They have no tangible products to sell, but must instead rely on strong relationships with loyal customers and word of mouth to help them compete. Still, despite the challenges, the marketing strategies for insurance companies are really no different than for any other company, and require a strong focus on the basics of effective marketing. Know the Market First and foremost, insurance companies must know their market. This means having a strong understanding of their target audience, their competition and the most effective ways to connect with that audience, according to Lin Grensing-Pophal, author of "Marketing With the End in Mind." Competition is fierce, but service organizations like insurance agencies that thoroughly understand the needs and concerns of their target audience can effectively motivate that audience to connect with them.

Establish a Plan Successful marketers dont just go out and & do things. Based on their knowledge of the market, and their overall goals and objectives, successful marketers identify and prioritize the

communication strategies most likely to generate the results they need. This generally involves a combination of activities that include both traditional and new media, direct and indirect sales.

Measure Effectiveness It is important for insurance companies to measure the effectiveness of their marketing efforts based on the goals they have established. This may be as simple as comparing the number of clients before and after a campaign. It may also involve using online analytics to monitor website visits after launching a promotion. Gather Feedback For insurance marketers, word of mouth is key. In addition to measuring the effectiveness of marketing efforts based on quantitative data, insurance marketers can seek input from their existing and new clients about their communication efforts. What worked well? What was unclear? How might they communicate more clearly in the future? In addition, clients can be excellent advocates and part of the marketing process. Successful insurance marketers will take advantage of the opportunity to leverage their clients as word-of-mouth marketing advocates.

Challenges in Insurance Marketing

Insurance marketers have difficulty promoting insurance products to the marketplace, for several reasons. Customer Apathy Few people enjoy researching or purchasing insurance. The product is dry and replete with legal jargon that makes it all but impossible to understand. Many consumers shop at the time of a major life change, such as the purchase of a new home or auto. Once they choose an insurer, most will simply stay with the company because it is the easiest thing to do. Price Focus Those individuals who voluntarily shop for a new insurer generally do so to find a cheaper price. A 2010 study undertaken by J.D. Power and Associates points out that 41 percent of

people who switched insurers did so because of price. Equally as telling, 76 percent of people who received a quote from a company but did not purchase a policy from that insurer said they were influenced by price. When price is your main motivator, it is difficult to market anything else. Common Products Marketers also face challenges because insurance products from all insurers are essentially the same. Insurance companies stick to standard policy wordings when possible, because the language in the contracts has been proven in court. In many territories, auto insurance policy language is mandated by law, with insurers forced to use a standard policy. This leaves very little for insurance marketers to market.

Insurance Marketing Techniques

Marketing insurance is the process of getting your company's name circulating and available to prospective clients that may have a need for your services. Insurance marketing techniques can sometimes vary depending on the kind of insurance, but there are some tactics that will work in almost any insurance sales situation. Employ as many insurance sales marketing techniques as you can to help maintain the flow of new business opportunities. Networking In order to market insurance properly, you need to have a specific plan for each audience you target. For example, term life insurance offers protection for long-term investments such as mortgages and saving for a child's education. That would require you to reach an audience of newlywed couples and people planning on starting a family. You can do that through bridal shows, networking with mortgage officers at lending institutions and advertising in local church bulletins where the wedding services are held. Auto insurance sales agents should be in touch with the sales managers and representatives for area car dealerships. You can offer an incentive to auto sales people for each policy that you write based on their referrals. The

incentives could be cash or gift cards. Develop a network specific to your target audience to help increase the chances of finding new clients. Business Cards When selling insurance or marketing your insurance agency, you need to assume that everyone is a potential client. People that buy new cars, saving for retirement or looking to provide for their families with life insurance products can come from any part of society. That is why a time-tested insurance marketing tactic is to carry business cards with you at all times. The person you meet at the grocery store may not need insurance, but after a pleasant conversation with you, that person may remember that his uncle was talking about life insurance. Give out business cards every chance you get and consider cards an investment in your insurance marketing.

Public Speaking People tend to look at someone as an expert on a topic when they hear that person doing public speaking, writing in the newspaper or talking on the radio. If you can increase a prospect's confidence in your insurance knowledge, then you stand a good chance of converting that prospect into a customer. Offer your services as a public speaker for organizations such as professional associations, the local Chamber of Commerce and church groups that hold gatherings for newly married couples. Contact the editor of the local newspaper and offer to write a monthly or weekly, column on insurance as a public service. You can also offer your services to the local radio or cable access station if they ever need an insurance expert. Offer your services for free, and then benefit from the added boost that your reputation will receive among potential clients. Internet The Internet reaches a local, national and international audience. That is why your insurance marketing should involve full use of the social networking website and resources on the Internet. Develop a website that clients can refer to that has information on all of the products and insurance services you offer. Develop a blog that will allow you to give out helpful

information and address specific client questions. You can use Wordpress or any other free blog service to set up your blog. Create a page for your agency on the social networking sites and be sure to include links to your regular website. Become a regular on message boards that deal in insurance topics and questions. Be sure to always point all of your Internet-related marketing efforts back to your website to develop an effective marketing network.