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According to reports, in the first quarter of the year 2002, insurance companies spent 70% of what was spent in the whole of 2001, on advertising and publicity. Across the world, insurance, as a category was one of the largest spenders on advertising. In India too substantial expenditure was being incurred due to advertising (Refer Table II). However, during the first year of the entry of new players, while LIC reported a growth of over 250%, private insurers managed to garner only about 0.5% market share, in spite of spending hefty amounts on advertising and promotion. According to reports, LIC's business increased mainly because of the increased public awareness about insurance, which was brought about by the heavy advertisement campaigns of private players. It was reported that customers resorted to LIC after the awareness about insurance increased as a result of the marketing efforts of the new players, because they were attracted by the 'security factor' attached with the state-owned insurer.
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According to a sample survey conducted by ORG-Marg on the popular life insurance brands in 2001, awareness of LIC policies was a phenomenal 100%, while the private insurers lagged far behind (Refer to Table III). The survey was conducted to collect information about the awareness of the life insurance brands and whether respondents were ready to buy the policies of such companies or not (this tested the success of the communication strategies of the companies concerned). |
However, the private insurers failed to tap the rural markets due to their limited reach. They focused their marketing efforts only in limited metropolitan areas. With LIC's brand being very firmly etched in the minds of the Indians, private insurers definitely seemed to have a tough battle ahead. However, it is true that the market share of private players has increased from 0.5% in 2001 to 7% in October 2002, which has reduced LIC's market share to 93%. As marketing and technical superiority were expected to be the decisive factors for success in the Indian insurance sector in the future, the new players stood a good chance. With product-specific advertisement beginning to catch up in mid-2002, private insurers who planned to launch innovative products were hoping for the best.
Exhibit I: Advertisment Code by IRDA
Exhibit II: The ICICI Prudential Tvc
Exhibit III: A Few Print Advertisements
Case Code : MKTG026
Themes: Advertising and Promotion
Case Length : 11 Pages
Period : 2000-2002
Organization : ICICI Prudential, Max New York Life, ETC
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Insurance
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