FACTORS

CONTRIBUTI
NG TO
BUYING
BEHAVIOR
OF IDBIFEDERAL
LIFE
INSURANCE
CO LTD
FINANCIAL
PRODUCTS
BY:
ABISHEK A
GANESH
10BSPHH010028
[Type the author name]

A REPORT
ON
FACTORS CONTRIBUTING TO BUYING BEHAVIOR OF IDBI FEDERAL LIFE
INSURANCE CO LTD FINANCIAL PRODUCTS

SUBMITTED BY:

To:

ABISHEK A GANESH

MR. Y L N KUMAR

10BSPHH010028

FACULTY GUIDE

A REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS OF MBA PROGRAM.

DATE OF SUBMISSION- 13TH MAY, 2010

ACKNOWLEDGMENT

First and foremost I would like to take this opportunity to thank Mr. Nageshwara
Rao ( CEO) for enabling the completion of this project.
I would also like to express my gratitude to Mrs. Shanthi Yagyanath & Mr.
Sathyabalan for providing us an opportunity to work in IDBI Federal Life
Insurance Co Ltd.
Not to forget ( FACULTY GUIDE), for giving his valuable guidance, healthy
support and suggestions to make the project a successful one.
Lastly I would like to thank ( College Name) for giving me this opportunity to
work in a competitive organization. This opportunity has led me to understand the
nuances of working along with fostering personal growth as well as value addition.
There have been numerous influences, big and small that have helped me to work
on my project successfully.
Regardless of the source, I thank all those who have contributed to this project.

TABLE OF CONTENTS

Authorization

Acknowledgements

Abstract

1. Introduction
a. IDBI-Federal Life Insurance Co Ltd.
b. Incomesurance & Sales Force
c. Identification of factors affecting
buying behavior

6
16
20

2. Objective
3. Factors Considered
4. Methodology
5. Interpretation & Analysis
6. Theoretical Framework
7. Limitations
8. Findings
9. Conclusion
10.
Recommendation
11.
References

21
21
24
30
37
53
54
56
57
58

ABSTRACT

The objective of this project is to identify and pinpoint all the factors which are responsible for
the buying behavior of financial products, IDBI Federal Life Insurance Co Ltd, in particular.

Insurance being a service, the factors which lead to buying behavior of insurance products are
rather obscure and not easy to spot. However as it is an offering to the consumers there have to
exist a number of reasons due to which people chose to buy financial products.
The scope of this project extends to finding all the various factors which may cause people to
buy insurance products as well as use statistical tools in order to create baskets of correlated
factors which can be tackled together.
After data analysis from the survey that was conducted it was seen that the variables chosen for
analysis grouped themselves into 4 distinct factors. The factors were namely Product
Characteristics, Internal Marketing, External Marketing and Extrinsic Factors.
The findings and conclusions are focused on the Internal Marketing aspects of IDBI- Federal
Life Insurance Co Ltd,. This particular factor which stresses on the internal customers or
employees is important as the sales force of the organization plays a very vital role in sales of
IDBI-Federal Life Insurance Co Ltd financial products.
The outcome of the project is an organization specific RATER- model developed for IDBIFederal Life Insurance Co Ltd.
The sales force should be educated with respect to this particular model so as to enhance
customer experiences and thus increasing the brand equity subsequently.

INTRODUCTION
IDBI FEDERAL LIFE INSURANCE CO LTD

IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, Indias

premier development and commercial bank, Federal Bank, one of Indias leading
private sector banks and Ageas, a multinational insurance giant based out of
Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and
Ageas own 26% equity each. At IDBI Federal, we endeavor to deliver products
that provide value and convenience to the customer. Through a continuous process
of innovation in product and service delivery we intend to deliver world-class
wealth management, protection and retirement solutions to Indian customers.
Having started in March 2008, in just five months of inception we became one of
the fastest growing new insurance companies to garner Rs 100 Cr in premiums.
The company offers its services through a vast nationwide network across the
branches of IDBI Bank and Federal Bank in addition to a sizeable network of
advisors and partners. As on March 31st 2011, the company has issued over 2.92
lakh

policies

with

over

Rs

16,

384

Cr

in

Sum

Assured.

About the sponsors of IDBI Federal Life Insurance Co Ltd

IDBI Bank Ltd. continues to be, since its inception, Indias premier industrial
development bank. Created in 1956 to support Indias industrial backbone, IDBI
Bank has since evolved into a powerhouse of industrial and retail finance. Today, it
is amongst Indias foremost commercial banks, with a wide range of innovative
products and services, serving retail and corporate customers in all corners of the
country from 816 branches and 1372 ATMs. The Bank offers its customers an
extensive range of diversified services including project financing, term lending,
working capital facilities, lease finance, venture capital, loan syndication, corporate
advisory services and legal and technical advisory services to its corporate clients
as well as mortgages and personal loans to its retail clients. As part of its
6

development activities, IDBI Bank has been instrumental in sponsoring the

development of key institutions involved in Indias financial sector National
Stock Exchange of India Limited (NSE) and National Securities Depository Ltd,
SHCIL (Stock Holding Corporation of India Ltd), CARE (Credit Analysis and
Research Ltd)
Federal Bank is one of Indias leading private sector banks, with a dominant
presence in the state of Kerala. It has a strong network of over 739 branches and
797 ATMs spread across India. The bank provides over four million retail
customers with a wide variety of financial products. Federal Bank is one of the first
large Indian banks to have an entirely automated and interconnected branch
network. In addition to interconnected branches and ATMs, the Bank has a wide
range of services like Internet Banking, Mobile Banking, Tele Banking, Any
Where Banking, debit cards, online bill payment and call centre facilities to offer
round the clock banking convenience to its customers. The Bank has been a
pioneer in providing innovative technological solutions to its customers and the
Bank

has

won

several

awards

and

recommendations.

Ageas is an international insurance company with a heritage spanning more than

180 years. Ranked among the top 20 insurance companies in Europe, Ageas has
chosen to concentrate its business activities in Europe and Asia, which together
make up the largest share of the global insurance market. These are grouped
around four segments: Belgium, United Kingdom, Continental Europe and Asia
and served through a combination of wholly owned subsidiaries and partnerships
with strong financial institutions and key distributors around the world. Ageas
operates successful partnerships in Belgium, UK, Luxembourg, Italy, Portugal,
China, Malaysia, India and Thailand and has subsidiaries in France, Germany,
7

Hong Kong and UK. It is the market leader in Belgium for individual life and
employee benefits, as well as a leading non-life player, through AG Insurance, and
in the UK, it has a strong presence as the second largest player in private car
insurance and the over 50s market. It employs more than 13,000 people and has
annual

inflows

of

almost

EUR

18

billion.

Mission and Vision:

At IDBI Fortis, we endeavor to deliver products that provide value and
convenience to the customer. Through a continuous process of innovation in
product and service delivery we intend to deliver world-class wealth management,
protection and retirement solutions to Indian customers. Having started in March
2008, in just five months of inception we became one of the fastest growing new
insurance companies to garner Rs 100 Cr in premiums. The company offers its
services through a vast nationwide network across the branches of IDBI Bank and
Federal Bank in addition to a sizeable network of advisors and partners. In only its
first year of operations, as on March 31st 2009, the company collected more than
328 Cr in premiums highest first year collection in the history of Indian life
insurance industry, through over 87000 policies and over Rs 2825 Cr in Sum
Assured.

Products of IDBI Life Insurance Co Ltd

are :

Wealthsurance
Homesurance
Bondsurance
Microsurance
8

Termsurance Protection Plan

Termsurance Grameen Suraksha
Retiresurance
Incomesurance

Overview of the Insurance Sector in India:

People go in for insurance because it provides them with reasonable security
against risk and in the event of occurrence of an unfortunate event.
The history of life insurance in India dates back to 1818, when it was actually
initiated and conceived to provide for English widows. A higher premium was
charged for the Indian lives than non Indian lives (presuming a greater level of risk
considering the living conditions of Indians at that point of time compared to the
non Indians)
Inception of Oriental Life Insurance Company at Calcutta took place in 1818 and
by 1938 there were 176 Insurance companies
The Insurance Act of 1938 also came into play which regulated and monitored the
insurance business in India
Insurance business grew and the competition intensified and nationalization of
Insurance industry took place in 1956 where in 256 Indian and foreign insurance
companies were first merged and then nationalized
This gave birth to LIC (Life Insurance Corporation) which held monopoly over
Insurance sector for quite sometime

In 1973, non life insurance business was nationalized

Till 2000, LIC and GIC (General Insurance Corporation) were the monopoly
Insurance providers in India
GIC included the following subsidiaries
National Insurance Co Ltd
Oriental Insurance Co Ltd
New India Insurance Co Ltd
United India Insurance Co Ltd

In 1993 the Malhotra Committee was set up which was headed by former finance
secretary and former RBI governor RN Malhotra to evaluate the Insurance industry
and to suggest and recommend the direction it was headed.
The basic objective of this committee was to aid the reforms taking place in the
industry and to further enhance them thereby increasing the efficiency of this
sector
Recommendations of the Committee were as follows

1) Structure
Government stake in the insurance Companies to be brought down to 50%.

10

 Government should take over the holdings of GIC and its subsidiaries so that
these subsidiaries can act as independent corporations.
All the insurance companies should be given greater freedom to operate.
2) Competition
Private Companies with a minimum paid up capital of Rs.1bn should be
allowed to enter the industry.
No Company should deal in both Life and General Insurance through a
single entity.
Foreign companies may be allowed to enter the industry in collaboration
with the domestic companies.
Postal Life Insurance should be allowed to operate in the rural market.
Only One State Level Life Insurance Company should be allowed to operate
in each state.
3) Regulatory Body
The Insurance Act should be changed.
An Insurance Regulatory body should be set up.
Controller of Insurance (Currently a part from the Finance Ministry) should
be made independent.
4) Investments

11

 Mandatory Investments of LIC Life Fund in government securities to be

reduced from 75% to 50%.
GIC and its subsidiaries are not to hold more than 5% in any company
(There current holdings to be brought down to this level over a period of
time).
5) Customer Service
LIC should pay interest on delays in payments beyond 30 days.
Insurance companies must be encouraged to set up unit linked pension plans.
Computerization of operations and updating of technology to be carried out
in the insurance industry The committee emphasized that in order to improve
the customer services and increase the coverage of the insurance industry
should be opened up to competition.
But at the same time, the committee felt the need to exercise caution as any failure
on the part of new players could ruin the public confidence in the industry. Hence,
it was decided to allow competition in a limited way by stipulating the minimum
capital requirement of Rs.100 crores. The committee felt the need to provide
greater autonomy to insurance companies in order to improve their performance
and enable them to act as independent companies with economic motives. For this
purpose, it had proposed setting up an independent regulatory body.
In 1999 Insurance Regulatory Authority bill (IRA) designed to liberalize the
insurance sector was approved. On 7th December 1999 Govt passed IRDA Act
(Insurance Regulatory Developmental Authority)

12

IRDA has set up strict guidelines on all aspects of insurance business which the
companies are supposed to adhere to.
The above changes were brought in by the privatization of insurance sector. These
changes can be categorized into the following
New Market development: The hunt for new markets is on since the
competition has grown more intense by the day. By using advertising and
other promotional tools, the players in the insurance industry are making
sure they are reaching out to the target customers and in the process
educating these prospective clients regarding insurance. The strategy to hunt
for new markets has been supplemented by new product offerings as well

New Product Development: There has been an array of new and innovative
products offered by the new players mostly from the stable of their
international partners. The main concept underlying new product
development has been : Need based positioning development and Variety
based development. The customers have many choices- they can go in for
options ranging from pure insurance product to unit linked investment
products. Also they are offered a variety of benefits called riders from
which they can pick and choose.

Customer Centric Approach: CRM is the buzzword and so is customer

satisfaction. Hence the sales force and technology process efforts have been
13

towards making the experience for the consumer as easy and as user friendly
as possible.

Major Players in the Insurance Industry

Life Insurers
HDFC Standard Life Insurance Company Limited
Max New York Life Insurance Ltd
ICICI Prudential Life Insurance Company Ltd
Om Kotak Mahindra Life Insurance Co Ltd
Birla Sun Life Insurance Co Ltd
Tata AIG Life Insurance Co Ltd
SBI Life Insurance Co Ltd
ING Vyasya Life Insurance Private Ltd
Allianz Bajaj Life Insurance Co Ltd
Metlife India Insurance Co Ltd
Dabur CGU Life Insurance Company Pvt Ltd

14

General Insurers
Royal Sundaram Alliance Insurance Co Ltd
Reliance General Insurance Co Ltd
Tata AIG General Insurance Co Ltd
Bajaj Allianz General Insurance Co Ltd
ICICI Lombard General Insurance Co Ltd
Cholamandalam General Insurance Co Ltd
Export Credit Guarantee Corporation Ltd
HDFC Chubb General Insurance Co Ltd

15

INTRODUCTION
INCOMESURANCE & SALES FORCE

Incomesurance is the financial product of IDBI Federal Life Insurance Co Ltd that
we were asked to do sales for.
The product profile is as given below:
The product works as an insurance scheme which offers steady income
during the second half of the policy term.
The rate of return is pegged against the G-sec rates which are released by the
FIMMDA(Fixed Income, Money Market and Derivatives Association) every
month.
The payout that the customer receives is decided, right when the premium is
paid thus eliminating risk and making the product a very safe bet with
moderate returns.
Option to receive lump sum as in Endowment, or periodically as in Money
Back.
Tax deductions on premium under Sec 80C and Tax-free income under Sec
10(10D).

16

IDBI FEDERAL LIFE INSURANCE LIMITED

ORGANIZATIONAL CHART
CHIEF EXECUTIVE
OFFICER
Mr.Nageshwara Rao

COUNTRY HEAD
Mr.Murali

HUMAN RESOURCES
HEAD
Mrs. Radhika Venkatraman

MARKETING HEAD
Mr. Amit Tripathi

TRAINING HEAD
Mrs. Vaishali

17

ZONAL WISE ORGANIZATIONAL STRUCTURE

COUNTRY HEAD
Mr.Murali

NORTH
ZONAL
HEAD

MUMBAI

EAST ZONAL
HEAD

WEST ZONAL
HEAD

SOUTH
ZONAL HEAD
Mr.Balaji

LUCKNOW

COIMBATORE

AREA HEAD
Mr. Vijay
Kumar

18

BENGALURU

AREA
HEAD

HYDERABAD

AREA
HEAD

AREA WISE ORGANIZATIONAL STRUCTURE

COIMBATORE
AREA HEAD
Mr. Vijay Kumar

BRANCH HEAD

CHIEF MANAGER

DEPUTY MANAGER

SENIOR EXECUTIVE

Mrs.Shanthi Yagyanath

BAND 1

BAND 2

BAND 3

BAND 1

BAND 2

AGENCY

BANKS

DISTRIBUTION
CENTER

MANAGEMENT TRAINEES

CORPORATE CHANNELS

19

BAND 3

BAND 1

BAND 2

BAND 3

INTRODUCTION
IDENTIFICATION OF FACTORS AFFECTING BUYING
BEHAVIOR

Consumer behavior is the study of how individuals, groups, and organizations

select, buy, use and dispose of goods, services, ideas, or experiences to satisfy their
needs and wants.
With respect to financial products from an insurance company the consumer
behavior is not clearly defined.
Consumer behavior for services generally vary from that of products, however
when it comes to financial products the available literature on buying behavior
falls short.
The objective of this project is to identify all possible factors which influence
consumers one way or the other with respect to IDBI Federal Life Insurance Co
Ltd financial products.

20

a. OBJECTIVE: To identify the factors which affect buying behavior of

IDBI-Federal Life Insurance Co Ltd.
This project is dedicated in identifying all the factors which influence the
consumers to purchase IDBI Federal Life Insurance Co. products. Through
the extensive study of factors the project hopes to find out correlations
amongst factors and how the company can use this information to develop
affective promotional strategies thus leading to business development.

b. FACTORS CONSIDERED:
The foremost step to the research process is to identify the basic variables
which tend to affect consumer behavior towards a particular product either
favorably of unfavorably.
In this particular project, the tools used to arrive at the initial list of variables or
factors which influence buying behavior are:
1) Experience Survey
2) Informal Interviews
The decision to use experience survey and informal interviews was made
keeping in mind that the industry of insurance is relatively new to INDIA, the
various factors or variables which affect the consumers have not been studies
thoroughly as yet.

21

Experience Survey is a type of survey where the questionnaire is circulated

amongst experienced personnel from the related field of expertise in order to
get a good idea of all the variables that are influential.
Informal Interviews were conducted in the office so as to narrow down the list
of factors available.
These two methods of initial variable identification were used specifically in
this research project due to the characteristics of the Insurance Industry which is
both new and unexplored. The experience survey which was used in this project
is shown in the attachments.

22

EXPERIENCE SURVEY
This is a survey intended to determine the factors which lead to buying of insurance
products.
Please answer the following question after filling in your details.
NAME:
AGE:
Contact Number:
OCCUPATION:

Please answer the following question based on your experience in this

particular industry
What according to you are the top 5 factors which influence people while
purchasing IDBI-Federal financial products?
1.

2.
3.
4.
5.
Feel free to use the list of factors mentioned below and if there are any other
factors please mention specifically.

Brand Equity
Returns from the product
Life Cover
Spouse Influence
Promotional Strategies
Sales Force
Premium Payable
Parenthood
Tax Deductions
Celebrity Endorsement
23

c. METHODOLOGY:

Questionnaire Design

The questionnaire design was the next step in the research process after
finalizing on the variables which were involved.
1) The questionnaire was designed using the funnel technique where general
questions are asked before specific ones in order to obtain unbiased
responses.
2) A 5 point Likert Scale was adapted for the whole questionnaire so that
there is ease during filling up of questions and to retain homogeneity.
3) A total of 10 identified variables led to 20 questions on the questionnaire
with each variable being tested with two questions. As a thumb rule a
minimum of 100 respondents are required to get satisfactory results for 10
variables thus it was decided to use a sample size of 150 in order to
eliminate chances of error.
4) Questionnaire Pretest:
The questionnaire was pretested with 10 respondents in order to identify any
biased or ambiguous questions.
Due to pretesting it was evident that respondents felt discomfort during
filling the questionnaire owing to its length and thus the decision to make
the survey oral was arrived at.

24

The data collection process now includes orally questioning all the
respondents and recording their answers on the questionnaire so as to
eliminate any bias and make it convenient for the respondents.
The questionnaire is shown in the attachments page:

INSURANCE QUESTIONNAIRE
This is a questionnaire intended to determine the factors which lead to buying of insurance products.
Please answer all the questions by choosing amongst the various alternatives.
NAME:
AGE:

25

Contact Number:
OCCUPATION:
ADDRESS:

1. Brand name is important to me while buying insurance

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Strongly
Mildly Agree Agree
3
4

2. I only buy insurance from well known organizations

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Strongly
Mildly Agree Agree
3
4

3. I expect good returns when Im investing in insurance

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Strongly
Mildly Agree Agree
3
4

4. I will not invest in an insurance policy if the returns are very low
Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Mildly Agree
3
4

Strongly
Agree
5

5. Death benefit is crucial while investing in insurance

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Mildly Agree
4

Strongly
Agree
5

6. Life cover is vital in an insurance policy

Strongly

Mildly

Neutral
26

Mildly Agree

Strongly

Disagree

Disagree
1

Agree
2

7. My spouses choice influences my decision to buy insurance

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Strongly
Mildly Agree Agree
3
4

8. After marriage it is necessary to have some type of insurance

Strongly
Disagree

Mildly
Disagree
1

9.

Neutral
2

Mildly Agree
4

Strongly
Agree
5

TV Advertisements are influential in my knowledge of insurance products

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Strongly
Mildly Agree Agree
3
4

10. I have seen IDBI Federal Life Insurance Co advertisements

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Strongly
Mildly Agree Agree
3
4

11. Insurance agents have convinced me to buy products previously

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Mildly Agree
3
4

Strongly
Agree
5

12. I might invest in some product because of a good sales pitch

Strongly
Disagree

Mildly
Disagree

Neutral
27

Mildly Agree

Strongly
Agree

13. Amount of premium I have to pay decides which insurance I buy

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Strongly
Mildly Agree Agree
3
4

14. I choose insurance policies where I have to pay less premium

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Strongly
Mildly Agree Agree
3
4

15. Being a parent I have to think about insuring my child

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Mildly Agree
4

Strongly
Agree
5

16. Insuring my childs future is of utmost importance to me

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Mildly Agree
4

Strongly
Agree
5

17. Insurance is helpful while filing tax deductions

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Strongly
Mildly Agree Agree
3
4

18. Insurance products are best described by the celebrity endorsing them
28

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Mildly Agree
3
4

Strongly
Agree
5

19. Including a celebrity in their promotions would help IDBI Federal

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Strongly
Mildly Agree Agree
3
4

20. Insurance is a convenient way of avoiding taxes

Strongly
Disagree

Mildly
Disagree
1

Neutral
2

Mildly Agree
4

Strongly
Agree
5

d. INTERPRETATION & ANALYSIS:

The questionnaire was used to collect data for analysis in Bangalore city.
150 respondents were subjected to the survey and their responses were used
in order to analyze the factors which lead to buying behavior of IDBIFederal Life Insurance Co Ltd financial products.
SPSS 13.0 ANALYSIS:

29

1. Correlation Matrix:

Correlation Matrixa

Correlation

Sig. (1-tailed)

TV Ads
Returns
Tax Deductions
Parenting
Premium
Agents
Spouse/Marriage
Death Benefit
Celebrity Endorsements
Brand Equity
TV Ads
Returns
Tax Deductions
Parenting
Premium
Agents
Spouse/Marriage
Death Benefit
Celebrity Endorsements
Brand Equity

TV Ads
1.000
.333
-.282
.341
-.078
.122
-.001
-.050
-.244
-.191
.000
.000
.000
.171
.069
.497
.272
.001
.010

Returns
.333
1.000
-.137
-.031
-.440
.212
.174
.190
.022
-.343
.000
.047
.355
.000
.005
.017
.010
.397
.000

Tax
Deductions
-.282
-.137
1.000
-.282
-.053
.166
-.211
.135
.247
-.079
.000
.047
.000
.259
.021
.005
.050
.001
.167

Parenting
.341
-.031
-.282
1.000
-.005
.047
.314
-.168
-.160
-.054
.000
.355
.000
.474
.285
.000
.020
.025
.257

Premium
-.078
-.440
-.053
-.005
1.000
-.196
-.027
-.192
.024
.421
.171
.000
.259
.474
.008
.372
.009
.387
.000

Agents
.122
.212
.166
.047
-.196
1.000
.094
.226
.175
-.548
.069
.005
.021
.285
.008
.127
.003
.016
.000

Spouse/
Marriage
-.001
.174
-.211
.314
-.027
.094
1.000
-.039
.117
-.005
.497
.017
.005
.000
.372
.127

Death Benefit
-.050
.190
.135
-.168
-.192
.226
-.039
1.000
.246
-.155
.272
.010
.050
.020
.009
.003
.317

.317
.077
.475

.001
.029

Celebrity
Endorse
ments
-.244
.022
.247
-.160
.024
.175
.117
.246
1.000
-.041
.001
.397
.001
.025
.387
.016
.077
.001
.308

a. Determinant = .153

Interpretation:
This table shows that none of the variables exhibit high correlation amongst
them and thus we can safely say there is no multi-collinearity between these
variables, so we need not remove any variables from the analysis.
2. KMO and Bartletts Test
KMO and Bartlett's Test

30

Brand Equity
-.191
-.343
-.079
-.054
.421
-.548
-.005
-.155
-.041
1.000
.010
.000
.167
.257
.000
.000
.475
.029
.308

Kaiser-Meyer-Olkin Measure of Sampling

.588

Adequacy.
Bartlett's Test of

Approx. Chi-Square

Sphericity

df

272.219
45

Sig.

.000

Interpretation:
This table shows sampling adequacy .588 and a high Chi-Square value.
Thus we can infer that the sampling is adequate and the results are valid.
3. Anti-Image Correlation Matrix

Anti-image Matrices

Anti-image Covariance TV Ads

Returns
Tax Deductions
Parenting
Premium
Agents
Spouse/Marriage
Death Benefit
Celebrity Endorsements
Brand Equity
Anti-image Correlation TV Ads
Returns
Tax Deductions
Parenting
Premium
Agents
Spouse/Marriage
Death Benefit
Celebrity Endorsements
Brand Equity

TV Ads
Returns
.666
-.228
-.228
.610
.115
.090
-.234
.163
-.084
.235
-.055
-.008
.146
-.161
.018
-.077
.126
-.041
.041
.076
.536a
-.358
-.358
.566a
.160
.132
-.343
.249
-.124
.363
-.084
-.013
.204
-.235
.023
-.107
.171
-.058
.066
.128

Tax
Deductions Parenting Premium
.115
-.234
-.084
.090
.163
.235
.770
.107
.063
.107
.701
.056
.063
.056
.690
-.111
-.026
-.046
.136
-.254
-.022
-.016
.073
.087
-.137
.047
-.075
.016
.027
-.189
.160
-.343
-.124
.132
.249
.363
.680a
.145
.087
.145
.509a
.081
.087
.081
.619a
-.159
-.039
-.070
.176
-.345
-.030
-.019
.095
.113
-.174
.063
-.101
.024
.042
-.301

a. Measures of Sampling Adequacy(MSA)

Interpretation:

31

Agents
-.055
-.008
-.111
-.026
-.046
.635
-.079
-.108
-.080
.297
-.084
-.013
-.159
-.039
-.070
.612a
-.113
-.147
-.112
.492

Celebrity
Spouse/
Endorse
Marriage
Death Benefit ments Brand Equity
.146
.018
.126
.041
-.161
-.077
-.041
.076
.136
-.016
-.137
.016
-.254
.073
.047
.027
-.022
.087
-.075
-.189
-.079
-.108
-.080
.297
.772
.051
-.126
-.058
.051
.846
-.160
-.019
-.126
-.160
.808
-.005
-.058
-.019
-.005
.574
.204
.023
.171
.066
-.235
-.107
-.058
.128
.176
-.019
-.174
.024
-.345
.095
.063
.042
-.030
.113
-.101
-.301
-.113
-.147
-.112
.492
.400a
.063
-.159
-.087
.063
.726a
-.193
-.027
-.159
-.193
.625a
-.008
-.087
-.027
-.008
.646a

The diagonal of this matrix shows the sampling adequacy for each variable,
from this we can infer that all the variables have enough sampling adequacy
except for Spouse/Marriage.
Thus we can say that we do not have enough sampling data to comment
about this particular variable in the analysis as its value is below 0.5.
4. Communalities:

Communalities
TV Ads
Returns
Tax Deductions
Parenting
Premium
Agents
Spouse/Marriage
Death Benefit
Celebrity Endorsements
Brand Equity

Initial
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000

Extraction
.585
.742
.611
.685
.559
.757
.781
.450
.647
.732

Extraction Method: Principal Component Analysis.

Interpretation:
This table shows that all the variables have been extracted satisfactorily.
The variable Death Benefit has the lowest extraction and thus concrete
analysis for this variable is not possible.

5. Total Variance Explained:

32

Total Variance Explained

Component
1
2
3
4
5
6
7
8
9
10

Total
2.324
1.973
1.229
1.023
.845
.698
.641
.558
.369
.340

Initial Eigenvalues
% of Variance Cumulative %
23.243
23.243
19.726
42.969
12.286
55.255
10.230
65.486
8.453
73.939
6.976
80.915
6.415
87.329
5.579
92.908
3.689
96.597
3.403
100.000

Extraction Sums of Squared Loadings

Total
% of Variance Cumulative %
2.324
23.243
23.243
1.973
19.726
42.969
1.229
12.286
55.255
1.023
10.230
65.486

Rotation Sums of Squared Loadings

Total
% of Variance Cumulative %
1.720
17.200
17.200
1.713
17.131
34.332
1.635
16.353
50.685
1.480
14.801
65.486

Extraction Method: Principal Component Analysis.

Interpretation:
As the standardized Eigen values for variables is assumed to be 1 in SPSS,
after factor analysis Components having Eigen Value less than 1 are
eliminated.
This leaves us with 4 components/factors which explain 65.486% variance
of the total data that is collected.
6. Rotated Component Matrix:

33

a
Rotated Component Matrix

TV Ads
Returns
Tax Deductions
Parenting
Premium
Agents
Spouse/Marriage
Death Benefit
Celebrity Endorsements
Brand Equity

1
-.674

Component
3

.831
.471
-.434

-.476
.628
-.699
.847
.861

.438
.764

.489
-.765

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 5 iterations.

Interpretation:
This matrix gives us the composition of variables in each of the 4 factors as
explained below:
Factor 1 Celebrity Endorsements and TV Advertisements.
Factor 2 Returns, Premium Amount and Death Benefit.
Factor 3 Agents and Brand Equity.
Factor 4 Spouse/Marriage, Parenting and Tax Deductions.

By analyzing the composition of each of these factors we can now name

these baskets of variables accordingly.
Factor 1 This factor consists of Celebrity Endorsements and TV
Advertisements, thus we can name this factor as External Marketing Efforts.
Factor 2 This factor consists of Returns from the products, Premium
Amount to be paid and Death Benefit. These are nothing but the Product
Characteristics.
34

Factor 3 This factor consists Agents (Sales Force) and Brand Equity.
This particular factor can be called the Internal Marketing Efforts as it deals
with employees and brand equity is perceived by the customers through their
encounters with the employees.
Factor 4 This factor comprises of Spouse/Marriage , Parenting and Tax
Deductions. All these attributes can be labeled as Extrinsic Factors as they
are not related directly to the products but which play a role in the buying
behavior of IDBI-Federal Life Insurance Co Ltd financial products.

So the 4 distinct factors which I have identified are:

1.
2.
3.
4.

Product Characteristics
External Marketing
Internal Marketing
Extrinsic Factors.

Amongst these 4 factors the one factor which is very important and is vital in the
insurance industry is Internal Marketing.
The importance of Internal Marketing and ways to go about it is explained in the
following pages.

e. Theoretical Framework :

1. Historically the factors affecting consumer behavior have been broadly

classified as:
35

 Cultural Factors
Social Factors
Personal Factors
Consumer behaviour is the study of when, why, how, and where people do or do
not buy a product. It blends elements from psychology, sociology, social
anthropology and economics. It attempts to understand the buyer decision making
process, both individually and in groups. It studies characteristics of individual
consumers such as demographics and behavioural variables in an attempt to
understand people's wants. It also tries to assess influences on the consumer from
groups such as family, friends, reference groups, and society in general.
Customer behaviour study is based on consumer buying behaviour, with the
customer playing the three distinct roles of user, payer and buyer. Relationship
marketing is an influential asset for customer behaviour analysis as it has a keen
interest in the re-discovery of the true meaning of marketing through the reaffirmation of the importance of the customer or buyer. A greater importance is
also placed on consumer retention, customer relationship management,
personalisation, customisation and one-to-one marketing. Social functions can be
categorized into social choice and welfare functions.
Each method for vote counting is assumed as social function but if Arrows
possibility theorem is used for a social function, social welfare function is
achieved. Some specifications of the social functions are decisiveness, neutrality,
anonymity, monotonicity, unanimity, homogeneity and weak and strong Pareto
optimality. No social choice function meets these requirements in an ordinal scale
simultaneously. The most important characteristic of a social function is
identification of the interactive effect of alternatives and creating a logical relation
36

with the ranks. Marketing provides services in order to satisfy customers. With that
in mind, the productive system is considered from its beginning at the production
level, to the end of the cycle, the consumer (Kioumarsi et al., 2009).

For financial products however we cant use this framework, we can say that
buying of insurance can be attributed to Personal Factors, but these also include the
concepts of PERSONALITY and SELF-CONCEPT which do not explain the
buying behavior of insurance.

2. The motivational theories of consumer behavior which have been formulated

are:
FREUDS Theory
MASLOWS Theory
HERZBERGS Theory
However, none of these theories give valuable insight when it comes to motivation
for buying financial products.

3. The Five-Stage Buying Decision Model is widely accepted as a basic

framework for the consumer behavior:
Problem Recognition Information Search Evaluation of alternatives
Purchase Decision Post purchase Behavior
Information search
37

Once the consumer has recognised a problem, they search for information on
products and services that can solve that problem. Belch and Belch (2007) explain
that consumers undertake both an internal (memory) and an external search.
Sources of information include:
Personal sources .
Commercial sources
Public sources
Personal experience
The relevant internal psychological process that is associated with information
search is perception. Perception is defined as "the process by which an individual
receives, selects, organises, and interprets information to create a meaningful
picture of the world".
The selective perception process
Stage Description
Selective exposure consumers select which promotional messages they will
expose themselves to.
Selective attention consumers select which promotional messages they will
pay attention to.

38

 Selective comprehension consumer interpret messages in line with their

beliefs, attitudes, motives and experiences.
Selective retention consumers remember messages that are more meaningful
or important to them.
The implications of this process help develop an effective promotional strategy,
and select which sources of information are more effective for the brand.

Information evaluation
At this time the consumer compares the brands and products that are in their
evoked set. How can the marketing organization increase the likelihood that their
brand is part of the consumer's evoked (consideration) set? Consumers evaluate
alternatives in terms of the functional and psychological benefits that they offer.
The marketing organization needs to understand what benefits consumers are
seeking and therefore which attributes are most important in terms of making a
decision. It also needs to check other brands of the customers consideration set to
prepare the right plan for its own brand.
Purchase decision
Once the alternatives have been evaluated, the consumer is ready to make a
purchase decision. Sometimes purchase intention does not result in an actual
purchase. The marketing organization must facilitate the consumer to act on their
purchase intention. The organisation can use variety of techniques to achieve this.
The provision of credit or payment terms may encourage purchase, or a sales
promotion such as the opportunity to receive a premium or enter a competition
39

may provide an incentive to buy now. The relevant internal psychological process
that is associated with purchase decision is integration.Once the integration is
achieved, the organisation can influence the purchase decisions much more easily.
Postpurchase evaluation
The EKB model was further developed by Rice (1993) which suggested there
should be a feedback loop, Foxall (2005) further suggests the importance of the
post purchase evaluation and that the post purchase evaluation is key due to its
influences on future purchase patterns.
Internal influences
Consumer behaviour is influenced by: demographics, psychographics (lifestyle),
personality, motivation, knowledge, attitudes, beliefs, and feelings. Consumer
behaviour concern with consumer need consumer actions in the direction of
satisfying needs leads to his behaviour of every individuals depend on thinking
External influences
Consumer behaviour is influenced by: culture, sub-culture, locality, royalty,
ethnicity, family, social class, past experience reference groups, lifestyle, market
mix factors.

It is known that consumers do not always pass through all five stages in buying a
product, they might skip or reverse some. Keeping this in mind we can say this
model is helpful to get a basic idea of how consumers buy financial products. The
information sources are vital in educating the consumers and this can be done
through Personal, Commercial and Public Sources. The evaluation of alternatives
40

however cant be explained for financial products. There is no information

available as to how people filter out alternatives when it comes to deciding on a
particular financial product offering.
4. Elaboration Likelihood Model

The elaboration likelihood model (ELM) of persuasion is a model of how

attitudes are formed and changed that was developed by R. E. Petty and J. T.
Cacioppo in the early 1980s. Central to this model is the "elaboration continuum",
which ranges from low elaboration (low thought) to high elaboration (high
thought). The ELM distinguishes between two routes to persuasion: the "central
route," where a subject considers an idea logically, and the "peripheral route," in
which the audience uses preexisting ideas and superficial qualities to be persuaded.

Central route
Central route processes are those that require a great deal of thought, and therefore
are likely to predominate under conditions that promote high elaboration. Central
route processes involve careful scrutiny of a persuasive communication (e.g., a
speech, an advertisement, etc.) to determine the merits of the arguments. Under
these conditions, a person's unique cognitive responses to the message determine
the persuasive outcome (i.e., the direction and magnitude of attitude change). So, if
favorable thoughts are a result of the elaboration process, the message will most
likely be accepted (i.e., an attitude congruent with the message's position will
emerge), and if unfavorable thoughts are generated while considering the merits of
presented arguments, the message will most likely be rejected. In order for the
41

message to be centrally processed, a person must have the ability and motivation to
do so.

Peripheral route
Peripheral route processes, on the other hand, do not involve elaboration of the
message through extensive cognitive processing of the merits of the actual
argument presented. These processes often rely on environmental characteristics of
the message, like the perceived credibility of the source, quality of the way in
which it is presented, the attractiveness of the source, or the catchy slogan that
contains the message.

Choice of route

The two factors that most influence which route an individual will take in a
persuasive situation are motivation (strong desire to process the message; e.g.,
Petty & Cacioppo, 1979) and ability (actually being capable of critical evaluation;
e.g., Petty, Wells, & Brock, 1976). Which route is taken is determined by the extent
of elaboration. Both motivational and ability factors determine elaboration.
Motivational factors include (among others) the personal relevance of the message
topic, accountability, and a person's "need for cognition" (their innate desire to
enjoy thinking). Ability factors include the availability of cognitive resources (e.g.,
42

the presence or absence of time pressures or distractions) or relevant knowledge

needed to carefully scrutinize the arguments. The subject's general education level,
as well as their education and experience with the topic at hand greatly affect their
ability to be persuaded. Under conditions of moderate elaboration, a mixture of
central and peripheral route processes will guide information processing.

This particular model gives a basic idea as to how people may develop attitudes
towards insurance products. The central route will not differ as the products
offered in this industry are tailored to suit the needs of the consumer. The
peripheral cues are the most important as the brand name, agents etc play an
important role in attitude formation for the consumer.
It would thus be helpful to understand all these cues in order to create favorable
attitude towards IDBI Federal Financial Products.
5. Low-Involvement Marketing Strategies
One type of Low-Involvement Marketing Strategy is to design advertising to
trigger strong emotions related to personal values or ego-defense. This can
be observed in the insurance industry as most advertisements are designed in
order to trigger feelings of uncertainty which can be quelled by purchase of
an insurance product.

6. Factor Analysis:

43

Factor analysis is a statistical method used to describe variability among observed

variables in terms of a potentially lower number of unobserved variables called
factors. In other words, it is possible, for example, that variations in three or four
observed variables mainly reflect the variations in a single unobserved variable, or
in a reduced number of unobserved variables. Factor analysis searches for such
joint variations in response to unobserved latent variables. The observed variables
are modeled as linear combinations of the potential factors, plus "error" terms. The
information gained about the interdependencies between observed variables can be
used later to reduce the set of variables in a dataset. Factor analysis originated in
psychometrics, and is used in behavioral sciences, social sciences, marketing,
product management, operations research, and other applied sciences that deal with
large quantities of data.
Factor analysis is related to principal component analysis (PCA), but the two are
not identical. Because PCA performs a variance-maximizing rotation of the
variable space, it takes into account all variability in the variables. In contrast,
factor analysis estimates how much of the variability is due to common factors
("communality"). The two methods become essentially equivalent if the error
terms in the factor analysis model (the variability not explained by common
factors, see below) can be assumed to all have the same variance.

7. INTERNAL MARKETING

44

Holistic marketing for services requires external, internal, and interactive

marketing.
1. External marketing describes the normal work of preparing, pricing,
distributing, and promoting the service to customers.
2. Internal marketing describes training and motivating employees to serve
customers well.
3. Interactive marketing describes the employees skills in serving the client.

Internal marketing (IM) is a process that occurs within a company or

organization whereby the functional process aligns, motivates and empowers
employees at all management levels to deliver a satisfying customer experience.
Over recent years internal marketing has increasingly been integrated with
employer branding, and employer brand management, which strives to build
stronger links between the employee brand experience and customer brand
experience.
45

According to Burkitt and Zealley, "the challenge for internal marketing is not only
to get the right messages across, but to embed them in such a way that they both
change and reinforce employee behaviour".
Key concepts of internal marketing include:
IM functioning as a continual internal 'upskilling' process.
Alignment of the organizations purpose with employee behavior.
Employees internalizing the core values of the organization.
Motivation, reframing and empowerment of employee attitude.
Inside-out management approach.
Retaining a positive customer experience throughout the business
objectives
Benefits of Internal Marketing:
encourages the internal market (employees) to perform better;
empowers employees and gives them accountability and
responsibility;
creates common understanding of the business organisation;
encourages employees to offer superb service to clients by
appreciating their valuable contribution to the success of the business;
46

 helps non-marketing staff to learn and be able to perform their tasks in

a marketing-like manner;
improves customers retention and individual employee development;
integrates business culture, structure, human resources management,
vision and strategy with the employees' professional and social needs;
creates good coordination and cooperation among departments of the
business.
The following are the problems affecting effective implementation of internal
marketing.
1. Managerial incompetence in interpersonal, technical and conceptual skills is
some of the stumbling blocks against successful internal marketing.
2. Poor understanding of internal marketing concept.
3. Individual conflict and conflict between departments makes the
implementation of internal marketing difficult.
4. Rigid organisational structure coupled by bureaucratic leadership hinders
success of internal Marketing.
5. Ignoring and not listening to subordinate staff.
6. The tendency of ignoring employees' importance and treating them like any
other tools of the business.
7. Unnecessary protection of information against employees.
47

8. Resistance to change.

Clients judge service by its:

a. Technical quality.
b. Functional quality.

INFERENCE FROM THEORETICAL FRAMEWORK

This points towards the Elaboration Likelihood Model which was discussed earlier
wherein the attitude formation occurs through a Central Route as well as a
Peripheral Route.
The Technical quality here refers to the product characteristics which can not be
heavily differentiated owing to regulatory norms in the industry.
Functional Quality is the way the service is performed which if done well can
cause a favorable opinion within the customer.
This Functional Quality will take the Peripheral Route as well.
To increase the Functional Quality of service it is required to ensure that the
service quality is high and consistent.
The service-quality model highlights the requirements for delivering high service
quality.

48

GAP 1: Not knowing what customers expect:

Lack of marketing research orientation
Inadequate upward communication
Too many levels of management

49

GAP 2: The wrong service quality standards:

Inadequate management commitment to service quality
Perception of infeasibility
Inadequate task standardization
Absence of goal setting
GAP 3: Service performance gap:
Employee role ambiguity
Employee role conflict
Poor Employee job fit
Poor Technology job fit
Inappropriate evaluation and reward systems
Lack of empowered service employees
Lack of teamwork
GAP 4: When promises do not match delivery:
Inadequate horizontal communication
Tendency to overpromise
50

GAP 5: customer satisfaction:

depends on gap 1-5
The greater the gap the lower the customer satisfaction, because expectation
and perception do not match.
Based on this service-quality model, researchers identified following five
determinants of service quality :
a. Reliability - The ability to perform the promised service dependably
and accurately: consistency of performance and dependability, service
is performed right at the first time, the company keeps it's promises in
accuracy in billing and keeping records correctly, performing the
services at the designated time.
b. Responsiveness - The willingness and/ or readiness of employees to
help customers and to provide prompt service, timeliness of service:
mailing a transaction slip immediately, setting up appointments
quickly.

c. Assurance - The knowledge and courtesy of employees and their

ability to convey trust and confidence.
d. Empathy - The provision of caring, individualized attention to
customers: informing the customers in a language they can
understand, Understanding customer's specific needs, Providing
individualized attention
51

e. Tangibles - Physical evidence of the service: appearance of physical

facilities, tools and equipments used to provide the service

f. Limitations:
1. Secondary data available is not specific to insurance industry.
2. Field work limited to Bangalore city thus results can not be applied to
entire organization.
3. The survey results may get affected due to presence of certain biases
like acquiescence bias, extremity bias and auspices bias.
4. Random Sampling error can be present leading to variations in results.

52

g. FINDINGS:
Results from Factor analysis on the data collected depicted 4 distinct
factors affecting buying behavior of IDBI-Federal Life Insurance Co
Ltd products.
When we scrutinize each of these factors:
1. Product Characteristics This particular component plays a
vital part in buying behavior but as there are a lot of norms and
regulations in the insurance industry, product differentiation on
the basis of product characteristics is not viable.
2. External Marketing This component which deals with the
external marketing efforts involves celebrity endorsements as
well as TV Advertisements. Differentiating products based on
this factor is not advisable as insurance products are generally
perceived through peripheral cues, as discussed in Elaboration
Likelihood Model, thus external marketing will not ensure a
boost in sales.
Also during the research process the respondents who took part in the
survey commented that TV Ads and Celebrity Endorsement do not
give enough reason to invest in insurance products.
3. Extrinsic Factors This component of buying behavior is very
important as spousal influence as well as the burden of
parenting are major drivers for investing in insurance products.

53

It can be noticed that many insurance companies use

Advertisements in order to bring out these extrinsic factors in
the market.
However there is no clear cut route to influence these factors in
a person and hence nothing further can be done.
4. Internal Marketing This particular factor is found to be the
most important one which affects buying behavior of insurance
products.
Internal marketing dealing with the employees of a company is
a very unique way of developing functional quality that will
differentiate IDBI-Federal Life Insurance Co Ltd from its
competitors.

h. CONCLUSION:

54

IDBI-Federal Life Insurance Co Ltd must focus on its Internal

Marketing efforts by bringing all its employees who form the
sales force in conjunction with the mission and vision of the
company.
This can be done by adopting service quality attributes and
educating all its employees about it.

i. RECOMMENDATION:
As the service quality attributes which affect customer perception
have been discussed earlier, the RATER model, must be adopted by
IDBI-Federal Life Insurance Co Ltd and each and every employee
who interacts with its clients must be educated about it.

A concise RATER model specific for IDBI-Federal Life Insurance Co Ltd which
can be used as to educate the employees is shown below:

Every IDBI-Federal Life Insurance Co Ltd employee who

comes in contact with our clients changes their perception
about our company.
Lets ensure a positive change, Always!
55

Remember RATER:
1. Reliability: Make sure you have the knowledge to
answer all customer questions.
2. Assurance: Always be courteous; instill confidence in
your customer.
3. Tangibility: Have a neat professional appearance,
remember you represent IDBI-Federal Life Insurance
Co Ltd to the clients.
4. Empathy: Try understanding the needs of each
customer, advice them appropriately.
5. Responsiveness: Keep your customer informed and get
consistent feedback so we can improve, as an
organization.

REFERENCES:
Marketing management Philip Kotler
https://spreadsheets.google.com/gform?
key=0ApDHg_p6r0p2dGpuQXNCQV95bGFzTVBHMTdmbU9hWUE&hl=
en&pli=1&gridId=0#chart IRDA site
http://www.idbifederal.com/Products/Incomesurance/Pages/default.aspx
IDBI website
56

 http://en.wikipedia.org/wiki/Insurance_in_India
http://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?
page=PageNo4&mid=2 from IRDA website
www.spss.com
www.opensourceanalytics.com
www.datastatistics.com

57