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Executive Summary
Our Project with a title Why the Rural marketing strategies of HDFC
SLIC not serving them in Rural areas is the research conducted because of the
benefit of the HDFC LIFE in the rural areas of the three districts of Karnataka, i.e.
Shivamogga, Chikkamagaluru, Haasan.
The focus and the aim of the study is to find out which are the drawbacks fall in
the strategies of HDFC LIFE and why they are not giving enough benefits to the
company, which are being used by HDFC LIFE. The Study also contains some
suggestions and some possible solutions which can to overcome this problem in
respect to rural market.
The Two main objectives of the study are as follows:
Objective One:
To determine and find out what are the different techniques used byHDFC LIFE in marketing its products.
To analyze what feedback the targeted customers are providing to theFinancial Consultants.
Objective Two:
To determine what are the reasons behind not choosing insurancepolicies of HDFC SLI.
To provide with information of customers reasons for choosing thatparticular policies of the other company and HDFC LIFE.
To study the use of IT tools in reaching to the customers.
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The study is also very much involved in realizing the significance of the Insurance
and the perception and mindset of the Indian customer towards HDFC LIFE in the
rural area.
The project also keeps a hawk eye view of the use of modern technologies in
HDFC LIFE for reaching the customers.
The report involves few findings through interviewing the customers,
questionnaires in bringing out the extract view of the customer perceptions towards
HDFC LIFE.
In order to meet these objectives a set of well administered questionnaires were
prepared for the market, comprising of managers and customers scattered all over
me sample areas.
Internal employees and FCs, few customers were interviewed to take the actual
information.
It was found that, at present there are 4 marketing channels selling products of
HDFC SLIC. They are:
1. Retail channel.2. Alternative channel.3. Rural channel.4. Banks
The study is conducted in Retail channel because there is no formal organization
structure for Rural channel.
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HDFC LIFE is ranked as no. 2 in insurance sector in India (by the study of
2010-2011) at present time among 23 companies presented in the market.
Company is having a HR capital of over 10000 with 569 branches all over the
country. HDFC SLIC is one the fastest growing insurance company in India. It has
got the first rank 3 times from its origin on 23-10-2000.
INTRODUCTION OF THE COMPANY
HDFC Standard Life Insurance Company Ltd. is one of India's leading
private insurance companies, which offers a range of individual and group
insurance solutions. It is a joint venture between Housing Development FinanceCorporation Limited (HDFC Ltd.), India's leading housing finance institution and a
Group Company of the Standard Life, UK. HDFC as on December 31, 2009 holds
81.6 per cent of equity in the joint venture.
HDFC Standard Life
Founded on 14th August 2000 Received a license on 23rd October 2000 First private insurance company to get a license from the IRDA Declared 7th consecutive bonus
BACKGROUND
HOUSING DEVELOPMENT FINANCE CORPORATION (HDFC)
HDFC was started by Hasmukh Bhai Parekh in1977 with the formation of
Malhotra Committee. HDFC was incorporated with the primary objective of
meeting a social need that of promoting home ownership by providing long-term
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finance to households for their housing needs. HDFC was promoted with an initial
share capital of Rs. 10 crores.
HDFC has since emerged as the largest residential mortgage finance institution in
the country. The corporation has had a series of share issues raising its capital to
Rs. 119 crores. The net worth of the corporation as on March 31, 2000 stood at Rs.
2,096 crores. HDFC operates through 75 locations throughout the country with its
Corporate Headquarters in Mumbai, India. HDFC also has an international office
in Dubai, U.A.E., with service associates in Kuwait, Oman and Qatar.
HDFCs main goals are to:
Develop close relationships with individual households. Maintain its position as the premier housing finance institution in the
country.
Transform ideas into viable and creative solutions. Provide consistently high returns to shareholders. To grow through diversification by leveraging off the existing client base.
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INCORPORATION OF HDFC STANDARD LIFE INSURANCE CO. LTD.
The company was incorporated on 14th August 2000 under the name of
HDFC Standard Life Insurance Company Limited. Their ambition from the
beginning was to be the first private company to re-enter the life insurance market
in India. On the 23rd of October 2000, this ambition was realized when HDFC
Standard Life was the first life company to be granted a certificate of registration.
HDFC are the main shareholders in HDFC Standard Life, with 81.4%, while
Standard Life owns 18.6%. Given Standard Life's existing investment in the HDFC
Group, this is the maximum investment allowed under current regulations. HDFC
and Standard Life have a long and close relationship built upon shared values and
trust. The ambition of HDFC Standard Life is to mirror the success of the parent
companies and be the yardstick by which all other insurance companies in Indiaare measured.
HDFC Standard Life Insurance Company Ltd. is one of Indias leading private life
insurance companies, which offers a range of individual and group insurance
solutions. It is a joint venture between Housing Development Finance Corporation
Limited (HDFC Ltd.), Indias leading housing finance institution and one of the
subsidiaries of Standard Life plc, leading providers of financial services in the
United Kingdom. Both the promoters are well known for their ethical dealings and
financial strength and are thus committed to being a long-term player in the life
insurance industry.
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Vision:
'The most successful and admired life insurance company, which means that weare the most trusted company, the easiest to deal with, offer the best value for
money, and set the standards in the industry'.
Mission:
Our mission is to build valuable customer relationships by helping customers grow
and protect their assets.
Values:
Values that we observe while we work:
Integrity.Innovation.Customer centric.People Care One for all and all for one.Team work.Joy and Simplicity.
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TERMS OF REFERNCES
HDFC LIFE is struggling to attain a comfortable space in rural areas at
current scenario. Company is still trying to find out the reasons behind it and
tend to improve its market share in rural areas as well. Basically the rural
market of India is ruled by Life Insuarace Corporation of India with their basic
strategy based on that area and their variety of plans for the people.
We as a trainee asked to work on this problem and trying to find out a
feasible and possible solution by the company. So by that conclusion we formed
a research question Why the Rural marketing strategies of HDFC SLIC
not serving them in Rural areas.
To work out on this specific problem we were being included in a team
which is already working on it in three districts of Karnataka i.e. Shivamogga,
Chikkamagaluru, Haasan. This project for us was guided by Mr. S. Srinivasa Rao.
Mr. Rao helped us in providing data from the field as well as from the companys
inner core. We were being allowed to access the data from companys database in
the guidance of Mr. Rao.
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INTRODUCTION
As described earlier the insurance sector of containing 23 companies
which are controlled by IRDA (Insurance Regulatory and Development
Authority). IRDA is the controlling body of all kind of insurance in India. India
being a developing nation is having an insurance penetration of just 6%. It
means most of the population and equipment are not insured. After all of that
insurance is a highly emerging business in the country and there are 23
companies are working in it.
HDFC LIFE is one the fastest emerging companies in this sector but
unfortunately it does not have a good market share in rural areas of India so we
as a trainee need to solve this particular problem according to our opinion. By
the giving context we formed a research question Why the Rural marketing
strategies of HDFC SLIC not serving them in Rural areas.
To work on this problem we adopted a hybrid method of investigation.
We adopted both the medium of collecting data i.e. primary method and
secondary method. Most of the data we used is primary but still we used some
some secondary data also from companys database. Near about 80 %
information is based on primary research and the remaining part is based on
secondary.
The 80 % primary data which we have came from the three
districts of Karnataka. This information was collected by a special team of
HDFC LIFE which is still working on this issue. We gave priority and select
this route because the information about the people cannot be collected without
interacting them. Which are the problems they are facing to select the HDFCs
plan and why they are going to choose the another one cannot be solved without
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talking to them. This was the most successful route according to us and that is
why we choose this route.
INDUSTRY PROFILE:-
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY ACT
1999
This Act passed in December 1999, provided for the establishment of the
IRDA to protect the interests of holders of insurance policies, to regulate, promote
and ensure orderly growth of the insurance industry and for matters connectedtherewith or incidental thereto. It also sought to amend the Insurance Act, 1938,
the Life Insurance Corporation Act, 1956 and the General Insurance Business
(Nationalization) Act, 1972.
The IRDA is a corporate body. It is advised by an Insurance Advisory Committee
consisting of not more than 25 members to represent the interests of commerce
,industry, transport, agriculture, consumer forums, surveyors, agents
intermediaries, organizations engaged in safety and loss prevention, research
bodies and employees associations in the insurance sector. It replaces the
Controller of Insurance to administer the provisions of the Insurance Act. That
includes registrations, licensing, and laying down regulations for the proper
conduct of the business and the protection of the interests of policyholders.
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INDIAN INSURANCE INDUSTRY:
Insurers
Insurance industry, as on 1.4.2000, comprised mainly two players:
Life Insurers:
Life Insurance Corporation of India (LIC)General Insurers:
General Insurance Corporation of India (GIC)GIC had four subsidiary companies, namely (with effect from Dec'2000, these
subsidiaries have been de-linked from the parent company and made as
independent insurance companies.
1. The Oriental Insurance Company Limited2. The New India Assurance Company Limited,3. National Insurance Company Limited4. United India Insurance Company Limited.
Literature Review:-
The Word Marketing and Rural are very frequently used in various areas. But if wejoin these two words it results into a concept known as Rural Marketing.
The Indian rural market is of very vast size and has a very big base of demand as
well as provides great opportunities for the marketers. More than half of the
consumers of India live in rural areas and nearly half of the income of the nation is
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generated here. This rural area comprises of nearly 450 districts and about 630000
villages which have different income levels, literacy level and various other
parameters.
Rural markets as well as rural marketing both shares some special features ascompared to the urban market. The domination of rural markets in the Indian
marketing scenario demands a very special attention if a business wants to expand
the marketing activities in the rural area.
Improving the lives of billions of people at the bottom of the economic pyramid is
a noble
Endeavor. It can also be a lucrative one. (C.K. Prahlad)
SO if we want to get out the best business out of this rural market we need to givethe best.
In the last few years rural India has shown significant rise in the buying power of
the consumer. Studies show that in the last year LIC sold near about 55% of their
policies in rural India because of their strong and effective rural strategies.
Now this word STRATEGY which is very important in any business may be
defined as Your take of matter at hand. (Nirmalya B Biswas, 2008). When this
word Strategy is combined with rural marketing, the result is a new concept calledRural Marketing Strategy. Any businesses which want to turn out the market
best for them need to have good marketing strategies. As we are dealing with
insurance sector in rural area in our research, we need to concentrate on Rural
Marketing Strategy.
As the penetration of insurance sector in India is only 6%, it means there is a lots n
lot of an opportunity available for the marketers. The only thing they need to keep
in mind is that if they want to get the best, they need to give the best and this can
be done only if they have good Rural marketing Strategy. This is because the ruralmarket is divided on the basis of various parameters such as different income
levels, different literacy levels and so on. So the marketers should design there
marketing strategies keeping in mind all these parameters.
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AS we are doing our research for HDFC SLIC, we studied the Rural marketing
Strategies of the company and kept a bird eye view on how the company is dealing
with the rural market. For the Rural marketing Strategies of the company we went
to the companys website to have a brief of it. Also we read a lot about IRDA
(Insurance Regulatory Development Authority) of India to study all the rules andregulations laid down by IRDA for the proper functioning for the sector.
Also we study the following books, journals and websites to get the exact idea of
the insurance and the marketing strategies.
1. IC- 33IC- 33 is the book which is being issued by the IRDA (Insurance RegulatoryDevelopment Authority) of India. This books contains all the details about
the insurance like rules and regulations for the insurance companies, all
types of contracts and also all the minute details of various types of
products, parties, policies and contracts.
2. Journals by IRDA, ICMR3. Insurance rules and regulation
We study all the rules and the regulations of the insurance industry laiddown by the IRDA, governing body for the insurance sector like claims,
maturity, premiums, and all the regulations and rule which are to be kept in
mind while producing the maturity at the time of death and other legal
formalities.
4. Some books on Service Marketing like Service Management andMarketing by Christian Grnroos, Service Marketing Management by
Hans Kasper, Piet va.
5. IRDA EXAM
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To get the exact knowledge of the insurance sector and to know in detail
about all the rules and the policies the sector we attended IRDA exam which
is being conducted by IRDA itself.
6.
Books on rural Marketing such as RURAL MARKETING by Mathur,U.C.(2008), and
Rural Marketing in India: Strategies & Challenges by Ramakrishnan,
Ruchika (2011)
We also have been through HDFC SLIC website to get the correct
information on how company is working in rural areas and what are their
marketing strategies.
From all these sources we gathered enough information to understand ,what
is the need of strong and effective marketing strategies in the rural areas and
what can be done to implement these strategies so as to get good business
out of it. We also understood the need or importance of these marketing
strategies for a business.
Method of investigation:-
After undergoing the successful training program of 2 weeks in HDFC Slic, in
which we got a brief detail of the company its functionality, how the company is
operating in rural market, what are its products available for rural markets, what all
strategies are they using to cover this huge market and everything regarding the
insurance sector as well as about the company, we were asked to do a research on
Why the Rural marketing strategies of HDFC SLIC not serving them in
Rural areas.
We started our research right from the next week. We prepared three different
questionnaires, one each for Sales manager, financial consultants and also for the
customers. We were provided with a team which will do the survey work for us.
We were also allowed to go with the survey team for the survey but because of the
local language problem we were not able to take active participation in that. We
took interview of both the sales manager and financial consultants and asked about
all the problems they are facing in the rural markets. We also took interview of the
existing customers of the company and of some new potential customers and tried
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to find out what all problems are the customers facing as for every business
customer is the king. We were also been provided the access of the company
database called GREEN PAGE from where we can find each and every required
information about the company. After this when all the surveys were done and we
were finished with all our interviews, we collected all the data which we got andstarted sorting out the result. For this whole process of survey and interviews it
took us about 40 days to complete the task. When we checked the entire
questionnaire and the interview, we found out that there are some gaps and holes
the strategies which are formulated by the company for the rural market. After our
study we were asked to give a final report about are findings and what are our
suitable suggestions which we can provided to the company along with the
effective solution. We worked really hard on the report and on the basis of our
analysis of the questionnaire, interview and the collected information we submitteda report to our project head along with our suggested solutions and suggestions.
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REASEARCH METHODOLOGY:-
For the research methodology we have collection of data from different primary
and secondary sources.
Data collection tools or Sources of Data:-
1. Primary Data:In our Primary data for the study we had; Personal Interviews with:
1. Sales Development Managers (SDM).2. Channel Development Managers (CDM)3. Financial Consultant and4.
Customers.
Questioners was given to:
1. SDM.2. FC.3. Customers.
SAMPLING METHODOLOGY:
Sampling Technique used:-
Initially we prepared a rough draft while keeping in mind the main objective
of our research. We came up with the idea of pilot study so as to have accuracy in
the Questionnaire. We arrived to the final Questionnaire after making after making
certain important changes. This was done in order to get a simple and convenient
sampling.
My Questionnaire was in two languages i.e. Kannada and English. The idea
behind having the questionnaire in Kannada language was that some of customers
were not literate and do not know English as our study was in rural area.
Cluster sampling was the method used for selecting the sample units.
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Sampling Unit:
For the sampling units we have three types i.e. SDM, FC and the real
customers. We gave our questionnaire to the different SDMs financial consultants
as well as customers of different age groups and different area.
Sample size and area:
As we were restricted to cost and time limitations we took a sample of 100 people
only and it was also easy and convenient to collect the data from a small size. We
made different cluster depending on various parameters such as literacy level,
income group, age group etc. Due to the restriction of time our research was
confined to only three regions, Shivamogga, Hassan, and Chikkamaglure.
Data Tabulation: After the collection of data, we put it into SPSS format so as to
make our task easy and to reduce the chances of repetitions and data redundancy.
Secondary Data:-
The secondary data was collected from various books, journals and websites.
Main Findings and Considerations:From the data collected we found out that there are three main reasons for not
going for insurance in the rural sector.
1. There are various excuses for the policies which are fancied but are not reallike Claims are not paid back, Religion does not permit or the premium is
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very high. All these are based on lack of knowledge or superficial beliefs.
All these problems can be met by having a good presentation process and
repeating it. The real skill of salesmanship works here.
2. Another types of problem which is faced is like the excuses such as wecannot afford, my wife is there to support my family. In this case the
prospect is very much sure of what he/she is saying but dont know what
really is good for him. Here he or she is to be encouraged to talk freely. We
have to be a good listener and should try to cover each and every topic and
make them realize the real need of the insurance. We should lay more stress
on the topic which makes him emotional and should catch him right there
without letting him know that he is being trapped.
3. These are the Real ones:a) Inability to pay.b) Absence of need.
These are the real cases so we should not persist and should leave them for the
time being.
Statement of learning:-
The internship training at HDFC LIFE has given lots of things to learn. The
industrial environment with a blend of corporate work culture brings a change of
our mindset about the actual working environment beyond the theoretical conceptof MBA. For the degree the internship is a very effective tool to provide the
complete education of business and its work culture. The internship at HDFC LIFE
was a quite enjoyable and effective experience which gives us a lot to learn. Our
guide Mr. Srinivasa Rao and his team were very co-operative in nature and help us
at each and every step of the project. It was a great experience to work with these
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guys, as well as the faculty member at BMA Prof. Nirmalya B. Biswas who gave
us the opportunity to work with them and co-operate with us at each step.
We tried to blend our theoretical concepts and learning with the actual
working environment and work out on a particular problem which the company isfacing in actual conditions. As well as we tried to give a possible solution for the
problem and all of them being praised by the company also. The main learning
points of the internship training for us are as follows:-
1. First of all we learned how to carry out a research and how to find out thesolutions of the given problem. It was our first research at MBA and we
learn what the most important factors to complete it are.
2. The working environment of corporate world is completely different fromthe theoretical study of MBA. We learn how to use theoretical concepts inreal working conditions.
3. Our main job at HDFC LIFE was to co-operate with the people and helpthem in finding the solution of their problem. We tried our best to do that
and learn how we can manage relations with our collogues in an
organization.
4. We learn how to maintain the relation with the boss and making it useful forboth the organization as well as for personal goals.
CONCLUSION:-
HDFC LIFE is doing very well in urban areas but due to some reasons it
doesnt have a strong impact on rural population. By the given research we find
a conclusion that the products of HDFC LIFE are not known and not effective
in rural people. Some of the reasons why it is not working in rural areas are:-
1. HDFC LIFE is not a known brand in rural areas. People are notfamiliar with the brand.
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2. Companys employees are not able to communicate effectively withthe rural market. The miscommunication is one of the biggest factor
for its failure in rural areas.
3. After being a successful and big name in the market, the channel ofadvertising by HDFC LIFE not helping it to reach out to the rural
areas. HDFC LIFE is mainly focusing in TV ads where most of the
areas dont have proper TV network and power supply.
4. Company is not having enough product line for the rural market. Inurban areas it is having some brilliant products where in rural market
it has only 3 products i.e. Bima Bachat Yojana, Gramin Bima Mitra
Yojana and Bima Kalyan Yojana.
5. The promises which the company is making, it is not matching withits performance. 16% of the observing people said that the service of
HDFC LIFE is bad.
6. Many times the misrepresentation by the insurance agent of othercompanies and even HDFCs employees makes confusion in the
mindset of public. For example:- During our research when an agent
interacted with a rural customer he said that he met a guy of Future
Generalli Insurance who is promising to double their money in next
5 years with a money back plan.
7. One of the biggest reason of fallback is people of rural areas stillbelieve more in govt. running organization like LIC of India than
private organization like HDFC LIFE.
SUGGESTIONS:-
These are the some points that we concluded after the research and the
answers given by the public shows the above results. On the basis of
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these points we try to make some suggestions for the company and they
are as follows:-
1. Company should try to build their image in rural areas witheffective promotions like Road show, wall painting
advertisements as LIC is doing brilliantly.
2. Company should give a special training to handle ruralcustomers to their employee so they can make an effective
communication with these people.
3. HDFC LIFE should improve their product line in rural areasand try to give some investment plans which can help to create
an interest in the people.
4. Try to introduce some plans which can give good return oninvestment regularly and short term. This could be very helpful
in the terms of grabbing attention.
5. HDFC LIFE should use some IT tools for its dealings and tohelp their employees in rural areas.
6. Try to conduct some CSR activities (Corporate SocialResponsibility) in rural areas. It can help them a lot to get
connected with people and to reach in every house in that area.
7. Try to fill the gap between promises and performance so thatthey can achieve more faith of public by giving excellent
services in rural market.
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REFERNCES:-
www.hdfcinsurance.com
www.indiacore.com
www.irdaindia.org Ic-33 life InsuranceIRDA exam text book
By: S. Balachandran
http://www.hdfcinsurance.com/http://www.indiacore.com/http://www.indiacore.com/http://www.irdaindia.org/http://www.irdaindia.org/http://www.indiacore.com/http://www.hdfcinsurance.com/8/4/2019 Report for Turitin
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Statement of learning:-
The internship training at HDFC LIFE has given lots of things to learn. The
industrial environment with a blend of corporate work culture brings a change of
our mindset about the actual working environment beyond the theoretical conceptof MBA. For the degree the internship is a very effective tool to provide the
complete education of business and its work culture. The internship at HDFC LIFE
was a quite enjoyable and effective experience which gives us a lot to learn. Our
guide Mr. Srinivasa Rao and his team were very co-operative in nature and help us
at each and every step of the project. It was a great experience to work with these
guys, as well as the faculty member at BMA Prof. Nirmalya B. Biswas who gave
us the opportunity to work with them and co-operate with us at each step.
We tried to blend our theoretical concepts and learning with the actualworking environment and work out on a particular problem which the company is
facing in actual conditions. As well as we tried to give a possible solution for the
problem and all of them being praised by the company also. The main learning
points of the internship training for us are as follows:-
1. First of all we learned how to carry out a research and how to find out thesolutions of the given problem. It was our first research at MBA and we
learn what the most important factors to complete it are.
2. The working environment of corporate world is completely different fromthe theoretical study of MBA. We learn how to use theoretical concepts in
real working conditions.
3. Our main job at HDFC LIFE was to co-operate with the people and helpthem in finding the solution of their problem. We tried our best to do that
and learn how we can manage relations with our collogues in an
organization.
4. We learn how to maintain the relation with the boss and making it useful forboth the organization as well as for personal goals.