A SUMMER TRAINING REPORT ON CUSTOMER-BUYING BEHAVIOR WITH A FOCUS ON MARKET SEGMENTATION Submitted in partial fulfillment of POST GRADUATE DIPLOMA MANAGEMENT(APPROVED BY A.I.C.T.E.) Session: 2008 – 2010 Submitted To Mrs. Rosy Sharma (Lecturer) Chandigarh Business School , Landran , Mohali Submitted By Praveen Kumar Tripathi Roll No.: 08CBSPGDM37 1
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A SUMMER TRAINING REPORT
ON
CUSTOMER-BUYING BEHAVIOR WITH A FOCUS ON MARKET SEGMENTATION
Submitted in partial fulfillment of
POST GRADUATE DIPLOMA MANAGEMENT(APPROVED BY A.I.C.T.E.)
Session: 2008 – 2010
Submitted To
Mrs. Rosy Sharma (Lecturer)
Chandigarh Business School , Landran , Mohali
Submitted By
Praveen Kumar Tripathi
Roll No.: 08CBSPGDM37
1
CONTENT
Page no.
A) CERTIFICATE OF SUPERVISOR 4
B) DECLARATION 5
C) ACKNOWLEDGEMENT 6
D) PREFACE (7-8)
E) EXECUTIVE SUMMARY 9
F) CHAPTER – 1 (10-22)
Introduction To Insurance Industry
History of insurance
Major players in insurance industry in India
Marketing of insurance
G) CHAPTER - 2
Company Profile (23-26)
About HDFC standard life insurance
HDFC standard life insurance parentage
About standard life group
HDFC key strength
Corporate objective
H) CHAPTER-3
Company’s Insurance Plans (26-32)
Individual products
Group products
Tax Benefits
2
I) CHAPTER - 4
Research Methodology (33-37)
Objective of the Study
Scope of the Study
Significance of the Study
Research Design
Sampling Methodology
Limitations Of Research
J) CHAPTER – 6
FACTS AND FINDINGS (37-71)
DATA ANALYSIS AND INTERPRETATIONS
RECOMMENDATIONS
CONCLUSION
BIBLIOGRAPHY
3
Certificate of Supervisor
This is to certify that Mr. Praveen Kumar Tripathi Roll No.08CBSPGDM37 has completed the
research project titled “CUSTOMER-BUYING BEHAVIOR WITH A FOCUS ON
MARKET SEGMENTATION ” under my supervision in partial fulfillment of the Post
Graduation Diploma Management (Approved By A.I.C.T.E.)
Ms. Rosy Sharma
(Lecturer)
Chandigarh Business School
Date:
Place:
4
Declaration
I, hereby declare that the research project report titled “CUSTOMER-BUYING BEHAVIOR
WITH A FOCUS ON MARKET SEGMENTATION “ is my own original research work and
this report has not been submitted to any University/Institute for the award of any professional
degree or diploma.
Praveen Kumar Tripathi
Pgdm 3rdSem
Chandigarh Business School
Date:
Place:
5
ACKNOWLEDGEMENT
First of all I would like to thank the Management at HDFC Standard Life Insurance Company
Ltd for giving me the opportunity to do my two-month project training in their esteemed
organization. I am highly obliged to Miss. Geetika Sajjanhar (Channel Development Manager)
for granting me to undertake my training at Mohali branch.
I express my thanks to all Sales Managers under whose able guidance and direction, I was able to
give shape to my training. Their constant review and excellent suggestions throughout the project
are highly commendable.
My heartfelt thanks go to all the executives who helped me gain knowledge about the actual working and the processes involved in various departments.
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PREFACEThe liberalization of the Indian insurance sector has been the subject of much heated debate for
some years. The policy makers where in the catch 22 situation wherein for one they wanted
competition, development and growth of this insurance sector which is extremely essential for
channeling the investments in to the infrastructure sector. At the other end the policy makers had
the fears that the insurance premia, which are substantial, would seep out of the country; and
wanted to have a cautious approach of opening for foreign participation in the sector.
As one of the rare occurrences the entire debate was put on the back burner and the IRDA saw
the day of the light thanks to the maturing polity emerging consensus among factions of different
political parties. Though some changes and some restrictive clauses as regards to the foreign
participation were included the IRDA has opened the doors for the private entry into insurance.
Whether the insurer is old or new, private or public, expanding the market will present multitude
of challenges and opportunities. But the key issues, possible trends, opportunities and challenges
that insurance sector will have still remains under the realms of the possibilities and speculation.
What is the likely impact of opening up India’s insurance sector?
The large scale of operations, public sector bureaucracies and cumbersome procedures hampers
nationalized insurers. Therefore, potential private entrants expect to score in the areas of
customer service, speed and flexibility. The critics counter that the benefit will be slim, because 7
new players will concentrate on affluent, urban customers as foreign banks did until recently.
This seems to be a logical strategy. Start-up costs-such as those of setting up a conventional
distribution network are large and high-end niches offer better returns. However, the middle-
market segment too has great potential. Since insurance is a volumes game. Therefore, private
insurers would be best served by a middle-market approach, targeting customer segments that are
currently untapped.
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EXECUTIVE SUMMARY
In today’s corporate and competitive world, I find that insurance sector has the maximum growth
and potential as compared to the other sectors. Insurance has the maximum growth rate of 70-
80% while as FMCG sector has maximum 12-15% of growth rate. This growth potential attracts
me to enter in this sector and HDFC Standard Life Insurance Company Ltd has given me the
opportunity to work and get experience in highly competitive and enhancing sector.
The success story of good market share of different market organizations depends upon
the availability of the product and services near to the customer, which can be distributed
through a distribution channel.
Agents are the only way for a company of Insurance sector through which policies and benefits of the company can be explained to the Customer.
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CHAPTER - 1
Introduction To Insurance Industry
THE HISTORY OF INDIAN INSURANCE INDUSTRY
LIFE INSURANCE
In 1818 the British established the first insurance company in India in Calcutta, the Oriental Life
Insurance Company. First attempts at regulation of the industry were made with the introduction
of the Indian Life Assurance Companies Act in 1912. A number of amendments to this Act were
made until the Insurance Act was drawn up in 1938. Noteworthy features in the Act were the
power given to the Government to collect statistical information about the insured and the high
level of protection the Act gave to the public through regulation and control. When the Act was
changed in 1950, this meant far reaching changes in the industry. The extra requirements
included a statutory requirement of a certain level of equity capital, a ceiling on share holdings in
such companies to prevent dominant control (to protect the public from any adversarial policies
from one single party), stricter control on investments and, generally, much tighter control. In
1956, the market contained 154 Indian and 16 foreign life insurance companies. Business was
heavily concentrated in urban areas and targeted the higher echelons of society. “Unethical
practices adopted by some of the players against the interests of the consumers” then led the
Indian government to nationalize the industry. In September 1956, nationalization was
completed, merging all these companies into the so-called Life Insurance Corporation (LIC). It
was felt that “nationalization has lent the industry fairness, solidity, growth and reach.”
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Some of the important milestones in the life insurance business in India are:
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life
insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of
protecting the interests of the insuring public.
1956: The market contained 154 Indian and 16 foreign life insurance companies.
GENERAL INSURANCE
The General Insurance industry in India dates back to the Industrial Revolution and the
subsequent increase in trade across the oceans in the 17th century. As for Life Insurance, the
British brought General Insurance to India, and a similar path was followed in the development
of this industry. A number of private companies were in existence for years and years until, in
1971, the Indian Government decided that the public interest would be served by nationalizing
the industry, merging all the 107 companies into four companies, depending on the sort of
business transacted (Marine, Fire, Miscellaneous). These were the National Insurance Company
Ltd., the Oriental Insurance Company Ltd., the New India Assurance Company Ltd., and the
United India Insurance Company Ltd. located in Calcutta, New Delhi, Bombay and Madras
respectively. The General Insurance Corporation (GIC) was set up in 1972 as a ‘holding’
company, having these four companies as its subsidiaries.
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Some of the important milestones in the general insurance business in India are:
1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of
general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of India, frames a code
of conduct for ensuring fair conduct and sound business practices.
1968: The Insurance Act amended to regulate investments and set minimum solvency margins
and the Tariff Advisory Committee set up.
1972: The General Insurance Business (Nationalization) Act, 1972 nationalize the general
insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and
grouped into four companies viz. the National Insurance Company Ltd., the New India
Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India
Insurance Company Ltd. GIC incorporated as a company.
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MAJOR PLAYERS IN THE INSURANCE INDUSTRY IN INDIAMAJOR PLAYERS IN THE INSURANCE INDUSTRY IN INDIA
LIFE INSURANCE CORPORATION OF INDIA (LIC)
Life Insurance Corporation of India (LIC) was established on 1 September 1956 to spread the
message of life insurance in the country and mobilise people’s savings for nation-building
activities. LIC with its central office in Mumbai and seven zonal offices at Mumbai, Calcutta,
Delhi, Chennai, Hyderabad, Kanpur and Bhopal, operates through 100 divisional offices in
important cities and 2,048 branch offices. LIC has 5.59 lakh active agents spread over the
country.
The Corporation also transacts business abroad and has offices in Fiji, Mauritius and United
Kingdom. LIC is associated with joint ventures abroad in the field of insurance, namely, Ken-
India Assurance Company Limited, Nairobi; United Oriental Assurance Company Limited,
Kuala Lumpur; and Life Insurance Corporation (International), E.C. Bahrain. It has also entered
into an agreement with the Sun Life (UK) for marketing unit linked life insurance and pension
policies in U.K.
In 1995-96, LIC had a total income from premium and investments of $ 5 Billion while GIC
recorded a net premium of $ 1.3 Billion. During the last 15 years, LIC's income grew at a healthy
average of 10 per cent as against the industry's 6.7 per cent growth in the rest of Asia (3.4 per
cent in Europe, 1.4 per cent in the US).
LIC has even provided insurance cover to five million people living below the poverty line, with
50 per cent subsidy in the premium rates. LIC's claims settlement ratio at 95 per cent and GIC's
at 74 per cent are higher than that of global average of 40 per cent. Compounded annual growth
rate for Life insurance business has been 19.22 per cent per annum
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General Insurance Corporation of India (GIC)
The general insurance industry in India was nationalized and a government company known as
General Insurance Corporation of India (GIC) was formed by the Central Government in
November 1972. With effect from 1 January 1973 the erstwhile 107 Indian and foreign insurers
which were operating in the country prior to nationalization, were grouped into four operating
companies, namely,
(i) National Insurance Company Limited;
(ii) New India Assurance Company Limited;
(iii) Oriental Insurance Company Limited; and
(iv) United India Insurance Company Limited.
(However, with effect from Dec'2000, these subsidiaries have been de-linked from the
parent company and made as independent insurance companies). All the above four
subsidiaries of GIC operate all over the country competing with one another and
underwriting various classes of general insurance business except for aviation insurance of
national airlines and crop insurance which is handled by the GIC.
Besides the domestic market, the industry is presently operating in 17 countries directly through
branches or agencies and in 14 countries through subsidiary and associate companies.
IN ADDITION TO ABOVE STATE INSURERS THE FOLLOWING HAVE BEEN
PERMITTED TO ENTER INTO INSURANCE BUSINESS: -
The introduction of private players in the industry has added to the colors in the dull industry.
The initiatives taken by the private players are very competitive and have given immense
competition to the on time monopoly of the market LIC. Since the advent of the private players
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in the market the industry has seen new and innovative steps taken by the players in this sector.
The new players have improved the service quality of the insurance. As a result LIC down the
years have seen the declining phase in its career. The market share was distributed among the
private players. Though LIC still holds the 75% of the insurance sector but the upcoming natures
of these private players are enough to give more competition to LIC in the near future. LIC
market share has decreased from 95% (2002-03) to 82 %( 2004-05).
1. HDFC Standard Life Insurance Company Ltd.
HDFC Standard Life Insurance Company Ltd. is one of India’s 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.), India’s leading
housing finance institution and The Standard Life Assurance Company, a leading provider of
financial services from the United Kingdom. Their cumulative premium income, including the
first year premiums and renewal premiums is Rs. 672.3 for the financial year, Apr-Nov 2005.
They have managed to cover over 11,00,000 individuals out of which over 3,40,000 lives have
been covered through our group business tie-ups.
2. Max New York Life Insurance Co. Ltd.
Max New York Life Insurance Company Limited is a joint venture that brings together two large
forces - Max India Limited, a multi-business corporate, together with New York Life
International, a global expert in life insurance. With their various Products and Riders, there are
more than 400 product combinations to choose from. They have a national presence with a
network of 57 offices in 37 cities across India.
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3. ICICI Prudential Life Insurance Company Ltd.
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier
financial powerhouse and prudential plc, a leading international financial services group
headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector
insurance companies to begin operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA). The company has a network of about
56,000 advisors; as well as 7banc assurance and 150 corporate agent tie-ups.
4. Om Kotak Mahindra Life Insurance Co. Ltd.
Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak Mahindra
Bank Ltd. (KMBL), and Old Mutual plc.
5.Birla Sun Life Insurance Company Ltd.
Birla Sun Life Insurance Company is a joint venture between Aditya Birla Group and Sun Life
financial Services of Canada.
Tata AIG Life Insurance Company Ltd.
SBI Life Insurance Company Limited
ING Vysya Life Insurance Company Private Limited
Bajaj Allianz Life Insurance Company Ltd.
MetLife India Insurance Company Pvt. Ltd.
AMP SANMAR Assurance Company Ltd.
Dabur CGU Life Insurance Company Pvt. Ltd.
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6. Royal Sundaram Alliance Insurance Company Limited
The joint venture bringing together Royal & Sun Alliance Insurance and Sundaram Finance
Limited started its operations from March 2001. The company is Head Quartered at Chennai, and
has two Regional Offices, one at Mumbai and another one at New Delhi.
7. Bajaj Allianz General Insurance Company Limited
Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Auto Limited
and Allianz AG of Germany. Both enjoy a reputation of expertise, stability and strength.
Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority
(IRDA) certificate of Registration (R3) on May 2nd, 2001 to conduct General Insurance business
(including Health Insurance business) in India. The Company has an authorized and paid up
capital of Rs 110 crores. Bajaj Auto holds 74% and Allianz, AG, holds the remaining 26%
Germany.
8. ICICI Lombard General Insurance Company Limited
ICICI Lombard General Insurance Company Limited is a joint venture between ICICI Bank
Limited and the US-based $ 26 billion Fairfax Financial Holdings Limited. ICICI Bank is India's
second largest bank, while Fairfax Financial Holdings is a diversified financial corporate
engaged in general insurance, reinsurance, insurance claims management and investment
management.17
Lombard Canada Ltd, a group company of Fairfax Financial Holdings Limited, is one of
Canada's oldest property and casualty insurers. ICICI Lombard General Insurance Company
received regulatory approvals to commence general insurance business in August 2001.
9. Cholamandalam General Insurance Company Ltd.
Cholamandalam MS General Insurance Company Limited (Chola-MS) is a joint venture of the
Murugappa Group & Mitsui Sumitomo.
Chola-MS commenced operations in October 2002 and has issued more than 1.4 lakh policies in
its first calendar year of operations. The company has a pan-Indian presence with offices in