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Unit-3 Develop a Marketing Strategy for Insurance Products

Identifying Segments in Customers: Insurance is an intangible service to customers, where
they essentially are buying security and peace of mind. Insurance protects them against
unexpected damage of their motor vehicle and financial loss.
Insurance is one of those products where the majority of consumers are less involved in
the purchase decision and as a result, consumer typically sees very little differentiation between
competitive offers. This will mean that price and brand and distribution channel will play a
more important role in the successful sale of insurance products, as opposed to the quality and
design of the product itself.
The insurance customers can be identified through considering of followings:
1. Customer Focus: Attracting, retaining and cross-selling to customers.
2. Business Growth: Improving sales and distribution, accelerating new product and
service introductions.
3. Cost Reduction: Driving operational excellence, improving process, transforming
policy administration and legacy environments.
4. Risk Management: Actuarial modernization, business intelligence, analytics and
reporting.

Customer Behaviour: Customer behaviour is the study of how individual customers, groups
or organisations select, buy, use and dispose ideas, goods and services to satisfy their needs
and wants. It refers to the actions of the customers in the marketplace and the underlying
motives for those actions.
Customer’s Attributes and Behaviour towards Insurance Products
Customers have the flexibility to take advantage of the service according to their
convenience and without interacting with service staff. Technological innovations and
advancements would continue to be a critical component of customer-firm interface. Internet
as a service delivery channel has revolutionized the traditional marketplace interaction by
providing greater accessibility to customers. The virtual marketplaces have changed the nature
of customer-company interaction and their relationships. Assessment of customers’ attitude
can be of immense help in planning self-service technologies (SSTs) and improving service.
➢ Customers have the flexibility to take advantage of the service according to their
convenience and without interacting with service staff.
➢ Internet as a service delivery channel has revolutionized the traditional marketplace
interaction by providing greater accessibility to customers.
➢ Technological innovations and advancements would continue to be a critical component
of customer-firm interface.
➢ The virtual marketplaces have changed the nature of customer-company interaction and
their relationships.
➢ The online business models can be improved by comprehending customer’s needs.
➢ Assessment of customer’s attitude can be of immense help in planning self-service
technologies (SSTs) and improving service.

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➢ SST is an independent service delivery system, which permits customers to avail the
service at their convenience without the interference of the service staff.
➢ Technology use in services has made it possible for service providers to offer
personalized service to customers.
➢ The acceptability of technology in insurance sector is of interest to the Insurance
companies.
➢ Customers prefer direct channels for seeking information about the insurance products.
➢ The customer satisfaction in online financial service depends on easy navigation,
availability of information, graphics and security in transaction.

Meaning and Definition of CRM

Customer Relationship Management (CRM) refers to practices, strategies and
technologies that companies use to manage and analyse customer interactions and data
throughout the customer lifecycle, with the goal of improving business relationships with
customers, assisting in customer retention and driving sales growth.
According to Sweeney Group, CRM is “all the tools, technologies and procedures to
manage, improve or facilitate sales, support and related interactions with customers,
prospects and business partners throughout the enterprise”.
Features of CRM
1. Marketing Automation: CRM tools with marketing automation capabilities can
automate repetitive tasks to enhance marketing efforts to customers at different pints
in the lifecycle. For example, as sales prospects come into the system, the system
might automatically send them marketing materials, typically via email or social
media, with the goal of turning a sales lead into a full-fledged customer.
2. Sales Force Automation: Sales force automation is meant to prevent duplicate
efforts between a salesperson and a customer. A CRM system can help achieve this
by automatically tracking all contact and follow-ups between both sides.
3. Contact Center Automation: Designed to reduce tedious aspects of a contact
center agent’s job. Contact center automation might include pre-recorded audio that
assists in customer problem-solving and information dissemination. Various
software tools that integrate with the agent’s desktop tools can handle customer
requests in order to cut down the time of calls and simplify customer requests in
order to cut down the time of calls and simplify customer service processes.
4. Geolocation Technology or Location-based Services: Some CRM systems
include technology that can create geographic marketing campaigns based on
customers’ physical locations, sometimes interacting with popular location-based
GPS apps. Geolocation technology can also be used as a networking or contact
management tool in order to find sales prospects based on location.

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Using data from CRM systems to feed into strategy

CRM is not just the application of technology, but is a strategy to learn more about
customers’ needs and behaviours in order to develop stronger relationships with them. As such
it is more of a business philosophy than a technical solution to assist dealing with customers
effectively and efficiently. Successful CRM relies on the use of technology.
How to implement CRM? The implementation of a CRM solution is best treated as a six-
stage process.
Stage 1: Collecting information: The priority should be to capture the information you need
to identify your customers and categorise their behaviour. Those businesses with a website and
online customer service have an advantage as customers can enter and maintain their own
details when they buy.
Stage 2: Storing information: The most effective way to store and manage your customer
information is in a relational database – a centralised customer database that will allow you to
run all your systems from the same source, ensuring that everyone uses up-to-date information.
Stage 3: Accessing information: With information collected and stored centrally, the next
stage is to make this information available to staff in the most useful format.
Stage 4: Analysing customer behaviour: Using data mining tools in spreadsheet programs,
which analyse data to identify patterns or relationships, you can begin to profile customers and
develop sales strategies.
Stage 5: Marketing more effectively: Many businesses find that a small percentage of their
customers generate a high percentage of their profits. Using CRM to gain a better
understanding of your customers’ needs, desires and self-perception, you can reward and target
your most valuable customers.
Stage 6: Enhancing the customer experience: Just as a small group of customers are the
most profitable, a small number of complaining customers often take up a disproportionate
amount of staff time. If their problems can be identified and resolved quickly, your staff will
have more time for other customers.

Benefits of CRM
➢ Increased sales through better timing due to anticipating needs based on historic trends.
➢ Identifying needs more effectively by understanding specific customer requirements.
➢ Cross-selling of other products by highlighting and suggesting alternatives or
enhancements.
➢ Identifying which of your customers are profitable and which are not.
➢ Can lead to better marketing of your products or services by focusing on:
• Effective targeted marketing communications aimed specifically at customer
needs.
• A more personal approach and the development of new or improved products
and services in order to win more business in the future.
Ultimately this could lead to:
➢ Enhanced customer satisfaction and retention, ensuring that your good reputation in the
marketplace continues to grow.

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➢ Increased value from your existing customers and reduced cost associated with
supporting and servicing them, increasing your overall efficiency and reducing total
cost of sales.
➢ Improved profitability by focusing don the most profitable customers and dealing with
the unprofitable in more cost effective ways.
Developing a Portfolio of opportunities of Insurance Product
1. Identify current and future competitors in the market: The best way to identify
current and future competitors is to target products. Supposing you are currently selling
insurance product. There is a need to know how many branded and unbranded players
are there in the market. Need to know if any new company is starting to sell same
products or if any current company might stop selling the same. Know the direct and
indirect competition.
2. Finding market share: Naturally, once you have identified the competition, the second
step is to know their market share. You cannot know the strengths and weaknesses of
your competition unless and until you know their presence. Thus if product is selling in
a wide region, you need to break down the region into territories and find out the share
of wallet in each territory. While doing this, do a mini market research to find the reason
for the sale of your competition.
3. Performing SWOT: Once you know the share of market and you have done your
secondary and primary analysis, you need to actually work out the strengths,
weaknesses, opportunities and threats for each competitor in turn. This is important as
this shows where you currently stand in your industry, who needs to benchmark to more
forward and what strategies can be most effective to stay on top or avoid a drop in rank.
4. Build competition portfolio: Once you know the SWOT of your competitors, you can
build competition portfolio. A competition portfolio will have each and every product
of your competitors, their features, logistics, tangible features, intangible features etc.
The best source for building a competition portfolio sales force itself.
5. Plan strategies: Now you have your complete competition portfolio in front of you.
Thus, clearly know the line of action. If the competition is far superior, you have two
ways to move forward. You can either try the same strategies as top competitor or slowly
move on top. If reaching the top takes much effort, then staying on top will take double
the effort from the complete organisation.
6. Execute strategies: Execute the strategies which you think are the best and make sure
of executing them effectively. There is no meaning of going to such an effort to analyse
a competition and then fail at the implementation part. At the same time, it is very
important to have a contingency plan and to anticipate competitor’s reaction. If your
competitor reacts too strongly, put the contingency plan in place to avoid any long term
affects to the brand/product.
7. Follow up: Statistics are always useful for a firm and help the firm in practical decision
making. Thus by following up to make sure of quantitatively and qualitatively
measuring the response to the executed strategy.

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Taking a position in the Market

Market positioning is an effort to influence consumer perception of a brand or product
relative to the perception of competing brands or products. Its objective is to occupy a clear,
unique and advantageous position in the consumer’s mind. Various activities need to take care
to improve market position.
Market positioning follows seven basic steps listed below:
1. Draft a positioning statement: There are few simple questions that will yield a set of
basic facts about the identity you have determined for your company. The positioning
statement is the result of plugging those facts into a basic, formulaic sentence structure.
2. Compare and contrast to identify your own uniqueness: Differences between your
own messaging strategy and communication channels and those of your competitors
reveal openings in the market that your positioning message should address.
3. Competitor analysis: Investigating and analysing the competition helps to determine
the strengths and weaknesses of your own business measured against the competition.
Understanding the differences between a business and its competitors is central to
finding gaps in the market that can be filled.
4. Determine current position: Determining your existing market position is every bit as
vital as any competitor analysis. That’s because you have to understand your own
market position to be able to properly compete for your share.
5. Competitor positioning analysis: An accessory to the competitor analysis, competitor
positioning analysis identifies the conditions of the market that influence how much
power competitors are able to exercise.
6. Develop a unique positioning idea: With all the analysis data in hand, you should have
a better idea of who you are, who you are not and who your best audience is. It’s time
to make a statement about those facts.
7. Test the effectiveness of your brand positioning: Testing methodology will consist of
qualitative and quantitative data gathering, mainly determined by the steps prior to this,
but may also include focus groups, surveys, in-depth interviews, polls etc.
Scenario Testing
Scenario testing is a software testing activity that uses scenarios: hypothetical stories to
help the tester work through a complex problem or test system. The ideal scenario test is a
credible, complex, compelling or motivating story the outcome of which is easy to evaluate.
Cem Kaner coined the phrase scenario test by October 2003. He commented that one
of the most difficult aspects of testing was maintaining step-by-step test cases along with their
expected results. His paper attempted to find a way to reduce the re-work of complicated
written tests and incorporate the ease of use cases.
Strategies to Create Good Scenarios:
a) Enumerate possible users their actions and objectives.
b) Evaluate users with hacker’s mindset and list possible scenarios of system abuse.
c) List the system events and how does the system handle such requests.
d) List benefits and create end-to-end tasks to check them.
e) Read about similar systems and their behaviour.

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f) Studying complaints about competitor’s products and their predecessor.

g) Taking a position in the market.

Value and Supply Chain Analysis

Value chain analysis is the process of looking activities that go into changing the inputs
for a product or service into an output that is valued by the customer.
Value chain analysis is a strategy tool used to analyze internal firm activities. Its goal is
to recognise, which activities are the most valuable to the firm and which ones could be
improved to provide competitive advantage.

Supply Chain Analysis

Supply chain analysis consists in a quantitative analysis of inputs and outputs between
firms, prices and value added along a supply chain through agent accounts. These inputs and
outputs can be expressed in physical flows of material and services needed to manufacture a
final product as well as in their monetary equivalents.
The term Supply Chain analysis is used to refer to the overall group of economic agents
that contribute directly to the determination of a final product. Thus the chain encompasses the
complete sequence of operations which, starting from the raw material or an intermediate
product, finishes downstream, after several stages of transformation or increases in value, at
one or several final products at the level of the consumer.
Supply Chain Analysis of Insurance Products
Insurers employ a score of supply chain vendors across the claims process. As insurers
consider more flexible and expanded business models in the Digital age, the opportunity to
bring business partners into the claims process and operating model will become more
prevalent.
1. Talent Analytics: Finding talent with the right analytical skills to provide insight into
your supply chain.

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2. Internal Optimization Pressures: Top-down pressure to continually reduce costs and

optimize working capital in the supply chain.
3. Supply Chain Responsiveness: Designing a supply chain that can responds to volatile
customer demand in “real time”.
4. Visibility and Co-ordination: End-to-end visibility and coordination across the supply
chain.
Present state of Supply Chain Management in Insurance Claims
Insurers use of modern supply chain management techniques to manage and improve
their supply chain process. The key components of a world-class supply chain management
system are:
1. Standardized supply chain management processes across the entire supply chain.
2. Clearly defined metrices for measuring supply chain performance.
3. The right supply chain performance data.
4. A continuous feedback loop to drive supply chain performance improvement.
Pricing of Insurance Products: Any company aims to set prices to maximize its profits. This
is also referred to as optimal pricing. It is not different in the insurance sector. Ideal pricing (or
premium in insurance terminology) must cover:
• Variable costs
• Operating expenses
• Profits

Setting an optimal price depends on understanding costs, price elasticities, consumer

preferences, and the strategic actions of competitors.

Why is optimal insurance pricing important?

Setting an optimal premium price provides a competitive advantage for the firms.

As in any industry, the price is subject to the law of demand and supply. Since getting the best

price is the top priority for insurance customers, even a small percentage change in premium

prices causes many customers to switch providers. Therefore, optimal pricing in the insurance

sector enables profit maximization by allowing operators to gain market share in segments of

their choice (e.g. more profitable segments).

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Top 6 ways of achieving optimal insurance pricing

1. Minimizing Variable Cost i.e., Minimizing the cost of risk bearing service (more
effective underwriting): The most important variable cost for insurance companies is the
determination of the cost of risk. Each insurance policy can be described as an exchange of risk
for money. Thus, each realized claim represents the variable cost of the insurance sector, which
is difficult to determine compared to the variable costs of other sectors. For example, in the case
of manufacturers, the variable costs, such as raw materials, are fairly certain, which makes it
easier to minimize it. In the insurance sector, on the other hand, variable costs are a probabilistic
distribution. Therefore, it is challenging to minimize it.

2. Detecting Fraudulent Claims: Fraud is a factor that increases the costs for insurance
companies and thus increases the premium prices. Therefore detecting fraudulent claims more
effectively can be used either to increase profits or market share. Fraud detection may be
enhanced by using various models.

3. Minimizing the operating expenses: Various business expenses such as customer service,
rent and other expenses can be decreased thanks to technological advancements. This can help
insurers give more flexibility in pricing.
➢ Optimizing customer service: Insurance chatbots and omnichannel engagement with
clients can significantly reduce customer service-related expenses and increase customer
satisfaction due to:
➢ Optimized customer care response times.
➢ Engaging with customers via variety of platforms such as
o WhatsApp
o Mobile App

o Website

➢ Task automation.
➢ Allocating workforce to tasks that yield greater value.

4. Reducing rent expenses: Millennials and urbanites generally demand less physical
interaction, and this process has accelerated following the Covid 19 pandemic. Thanks to digital
technologies and applications insurance companies and brokers can benefit from this recent trend
and reduce the number of branches. This means lower expenses.

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5. Reducing other operating expenses: One of the cost drivers in commercial insurance is
inspections. Plants and equipment need to be inspected for validating their current status and
identifying relevant risks. Companies can outsource these inspections, lowering their costs.
6. Determine a realistic profit margin: Jeff Bezos famously said “Your margin is my
opportunity”. This is definitely relevant in the insurance industry as identified in surveys. Venture
funded companies are embracing that paradigm to set aggressive prices and gain market share.
Their goal would be to dominate the market and set more profitable prices in the future when
they have achieved substantial scale.
Therefore, insurers need to take multiple factors in the account while pricing:
• Competitors’ pricing, including some irrational moves by competitors.
• The fact that market is mature.
• High price elasticity.
It is important to note that while price is the greatest priority, it is not the only important factor
that pulls the customers. Claims processing speed and effectiveness, customer service, consumer
friendly digital interfaces etc. are all important factors for consumers picking an insurer.
Therefore, success in these areas may help charge a higher profit margin for your products.
Insurance Pricing Methods
1. Schedule Rating Method: Insurance pricing methods also known as rate making baseline
or standard rates that form the basis for pricing individual case scenarios. The schedule rating
method also uses baseline rates as a starting point and then factors in other variables depending
on the degree of risk they carry. Schedule rating methods are used within the commercial
property insurance industry, where factors like location, size and business purpose provide
baseline indicators for determining pricing rates.
2. Retrospective Rating Method: The retrospective rating method relies more on a
policyholder’s actual claims experience when setting pricing rates as opposed to baselines or
standard pricing rates. In order to do this, a company may require premium payments be made
in increments, with a portion due at the start of a policy term and the remainder due at the end
of a policy term. An example of this would be burglary insurance where the odds of predicting
how often a business would be burglarized are more difficult than predicting health risks, such
as heart disease or diabetes with health insurance ratings.

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3. Experience Rating Method: Experience rating pricing methods rely more heavily on a that
policyholder’s past claim experience when determining what premium rates to charge. The
types of insurance that use this method include automobile, workers compensation and general
liability insurance. Price rates are determined according to a credibility factor. Which uses a
person’s past claim history as an indication of the level of risk involved and the likelihood that
future claims will be filed. Once a risk level is determined, the credibility factor is measured
against a baseline pricing rate that represents to average rate charged to a class of policyholders
that have similar characteristics. Adjustments are then made to the baseline pricing rate based
on each policyholder’s credibility rating.
INSURANCE BRANDS IN INDIA
There are currently, a total of 34 life insurance companies in India. Of these, Life
Insurance Corporation of India (LIC) is the only public sector insurance company. All others
are private insurance companies. Many of these are joint ventures between public/private
sector banks and national/international insurance financial companies. Most private players
have tied up with international insurance giants for their life insurance foray.
1. AEGON Life Insurance Company: AEGON Life Insurance a joint venture between one
of the world’s leading financial service organisation and Bennett, Coleman & Company. The
company is focused to provide a customer centric business along with an excellent and
innovative working professionals. Started its operation in year 2008 the company works with
a multiple channel distribution strategy with an aim to help to people to plan their life in a
much better way. The plans offered by the company are term plan, endowment plan, Group
plan, ULIP plan, pension plan, protection plan, saving plan, child plan and rural plan.
2. Aviva Life Insurance Company: Aviva Life Insurance is the largest and the most popular
insurance provider in the world. The company is a joint venture between the Dabur Group and
Aviva Group. With 121 networked center across the country Aviva Life Insurance serves a
large number of customer base country wise. Among the other insurance companies in India
the company is known to first introduce Unit Link and Unitized With-Profit Plan in the market.
Some of the most common plan offered by the company are protection plan, ruler plan, child
plan, retirement plan, saving plan, saving plan, health plan, term plan and group insurance
plan.

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3. Bajaj Allianz Life Insurance Company: Baja Allianz Life Insurance is a joint venture
between the European financial services company Allianz SE and Bajaj Finserv Limited. The
company has gained name as one of the top most life insurance brand in India. Among the
other life insurance companies in India Bajaj Allianz Life Insurance Company meet the
customers need by providing them a huge range of products right from ULIP and Child Plan
to Group and Health Insurance.
4. Bharti AXA Life Insurance Company: Headquartered in Mumbai, it is a life and general
insurance provider company. The company is a joint venture between Bharti Enterprises and
AXA Group. The customers can choose from the wide range of policies offered by the
company ranging from investment plans to traditional plan or life insurance plan to child plan.
The company is flourishing immensely and has a network of 123 offices in different cities
across India.
5. Birla Sun Life Insurance Company: With a 2.5 million of customer base the Birla Sun
Life Insurance came in to existence with the joint venture between Aditya Birla Group and Sun
Life Financial Inc. The company is known as a pioneer of Unit Linked Life Insurance plans
and has over 600 branches spread over 500 cities across the country. A complete range of
insurance services is offered by Birla Sun Life Insurance like protection plan, child plan health
and retirement solution, ULIP plan, customized group product and life stage product to provide
complete satisfaction to the customers.
6. Canara HSBC OBC Life Insurance Company: Launched on year 20008 Canara HSBC
OBC Life Insurance is a joint venture between HSBC Insurance Holding Ltd, Canara Bank
and Oriental Bank. The company works as a pan India network with around 7000 branches of
the three shareholder banks across the country. Moreover, the company provides necessary
training and coaching to the bank staff across the 28 centers in country. With a huge customer
base the company provides most customized products to meet the needs of the buyers.
7. DHFL Pramerica Life Insurance Company: Situated in Gurgaon DHFL Pramerica Life
Insurance is considered to be India’s premier Life Insurance Providers. The company serves
with 67 branches spread across the country. The company offers a variety of plans to the
customers. DHFL Pramerica Life Insurance have a huge customer base and provide one stop
solution for all insurance needs.

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8. Edelweiss Tokio Life Insurance Company: Edelweiss Tokio Life Insurance established in
2011 is a newly formed private sectors insurance provider in India. Edelweiss Group of India
and Tokyo Marine Holding of Japan joined hand together and has formed Edelweiss Tokio Life
Insurance Company. Some of the most common plans offered by the company are savings
plans, endowment plans, child plans, protection plans and retirement plans.
9. Exide Life Insurance Company: It is found in the year 2000 and started its operation in
2001. The company was formerly known ass ING Vysya Life Insurance Company Ltd. It has
a network of 200 offices across the country. The company is ranked as top 10 Trusted Life
Insurance Brand in India. As compared to the other insurance companies in India the plan
offered by the company is customized in a way to fulfil the requirements of the customer and
is available at very affordable rates.
10. Future Generali India Life Insurance Company: Established in year 2007, Future
Generali Life Insurance India is a joint venture between Generali Group, Future Group and
Industrial Investment Trust Limited. The company has a network of 98 branches over India.
The company offers one stop solution for all types of financial security to the customer and
serves their products on different areas like saving protection, policies and Unit Linked
Policies.
(For more brands refer MIP group)
Establishing a Brand
A brand identity is simply how customers perceive your product. Your brand is reflected
in everything presented to your customers, from design of your product, to communications,
to how your employees interact with them.
A brand identity can make or break a company think about what happened to products
or companies when something went wrong. There are companies whose brands evoke
perceptions of confidence and strength and their sales reflect that. That should be your goal.
To establish a brand, you have to do the following in tandem:
a) Develop a company name.
b) Secure an Internet URL with the name.
c) Determine the want of customers to think.
d) Design a logo that matches desired personality.
Components for Comprehensive Branding Strategy
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1. Purpose: Every brand makes a promise. But in a marketplace in which consumer

confidence is low and budgetary vigilance is high, its not just making a promise that
separates one brand from another, but having a defining purpose”. While understanding
what the business promises necessary when defining the brand is positioning, knowing
why we wake up every day and go to work carries more weight. In other words, the
purpose is more specific, in that it serves as a differentiator between the company and
competitors.
2. Consistency: The key to consistency is to avoid talking about things that don’t relate to
or enhance your brand. In an effort to give the brand a platform to stand on, you need
to be sure that all of your messaging is cohesive. Ultimately, consistency contributes to
brand recognition, which fuels customer loyalty. Example, Coca Cola.
3. Emotion: By provided their customers with an opportunity to feel like they are part of
a larger group that’s more tight-knit than just a bunch of motorcycle riders. “People
have an innate desire to build relationships. People have a basic psychological need to
feel closely connected to others and caring, affectionate bonds from close relationship
are a major part of human behaviour”.
4. Flexibility: In this fast-changing world, marketers must remain flexible to stay relevant.
On the plus side, this frees you to be creative with your campaigns. A great example of
this type of strategic balance comes from Old Spice. These days, Old Spice is one of
the best examples of successful marketing across the board.
5. Employee Involvement: Achieving a sense of consistency is important if to build brand
recognition. And while a style guide can help you achieve a cohesive digital experience,
its equally important for employees to be well versed in the how they should be
communicating with customers and representing the brand.
6. Loyalty: Cultivating loyalty from these people early on will yield more returning
customers and more profit for business. Sometimes, just a thank you is all that’s needed.
Other times, its better to go above and beyond. Write them a personalized letter. And
while it may have seemed a little out of the ordinary to some folks, for those who know
our brand, the gesture made perfect sense.

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7. Competitive Awareness: Take the competition as a challenge to improve own strategy

and create greater value in overall brand. Tailor your brand positioning based on their
experience to better your company.
The Importance of Branding
1. Branding provides a competitive advantage: Whether you’re a non-profit or a for-profit,
your organisation needs to compete for resources, funding and talent and audience attention.
To win category organisations plan and implement strategy a roadmap that outlines specific
actions and measures for reaching their goals and out maneuvring their peers for needed
resources. When done correctly the organisation’s brand mirrors their strategic plan and helps
promote strategic areas initiatives that will move the organization forward.
2. Brands provide a stable asset: Product might fail, companies are bought and sold,
technologies change on a daily basis, but strong brands carry on through all these changes.
Brands are the most sustainable asset of any organisation and when aligned with the overall
strategy of the organization they can function as the central organizing principle for the
organisation’s decision making.
3. Brands provide economic value: The value of organisations is divided into two areas:
intangible and tangible assets brands being intangible assets. Brands play a key role in
attracting employees, partners and most importantly audiences to an organisation. Brands help
cut through the clutter of the marketplace, creating awareness for organisations and helping
them attract and develop the mutually beneficial relationships with customers, suppliers and
the public that they need to reach their goals.
4. Brands set Expectations: We live in a world based on promises. Restaurants promise to
provide fresh food made in clean environments. Our teachers promise to educate and protect
our children during the school dat. We have an unspoken contract with the people we live and
work with, that they will do what they say they’ll do. We have similar agreements with
companies, products and services.
Brand Awareness: Brand awareness refers to the extent to which customers are able to recall
or recognise a brand. Brand awareness is a key consideration in Consumer Behaviour and
Advertising Strategy. The consumer’s ability to recognise or recall a brand is central to
purchasing decision-making.

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Brand awareness is related to the functions of brand identities in consumer’s memory

and can be reflected by how well the consumers can identify the brand under various
conditions. Strong brand awareness can be a predictor of brand success. Setting brand
awareness goals/objectives is a key decision in marketing planning and strategy development.
Types of Brand Awareness
1. Brand recognition aided recall: It refers to the ability of the consumers to correctly
differentiate the brand when they come into contact with it. This does not necessarily
require that the consumers identify the brand name. Instead, it means that consumers
can recognise the brand when presented with it at the point of sale or after viewing its
visual packaging.
2. Top-of-Mind Awareness: Top-of-mind awareness, arguably a special type of brand
recall, is defined as “the first brand that comes to mind when a customer is asked an
unprompted question about a category. When discussing top-of-min awareness among
larger groups of consumers it is more often defined as the “most remembered” or “most
recalled” brand names.
Types of recall test used to measure brand awareness
1. Unaided recall tests: It is conducted where the respondent is presented with a
product category and asked to nominate as many brands as possible. Thus, the
unaided recall test provides the respondent with no clues or cues. Unaided recall
tests are used to test for brand recall.
2. Aided recall test: It is conducted where the respondent is prompted with a brand
name and asked whether they have seen it or heard about it. In some aided recall
tests, the respondent might also be asked to explain what they know about the brand
e.g., to describe package, colour, logo or other distinctive features. Aided recall tests
are used to test for brand recognition.
Brand Extension: Brand extension or brand stretching is a marketing strategy in which a
firm marketing a product with a well-developed image uses the same brand name in a different
product category. The new product is called a spin-off. Organisations use this strategy to
increase and leverage brand equity. It increases of the brand name and increases profitability
from offerings in more than one product category.

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A brand’s “extendibility” depends on how strong consumer’s associations are to the

brand’s values and goals.
Types of Brand Extensions
1. Product form extension: When a brand is launched in a different form, it is line
extension. If a different product form is within an entirely different product category, it
will be a brand extension. For example, Amul milk extended to Amul condensed milk
and Real juices extended to real juice concentrate.
2. Companion product extension: Nowadays, extensions in the form of companion
products are very popular. The reason is to capitalize on product complimentary. As
consumers view both products jointly, it offers scope for brand extension.
3. Extension of customer franchise: A product range is extended in order to meet the
needs of a specific customer group. For example, a variety of products are launched for
say nursery school children. Customer franchise focuses on customer base. The diverse
needs of a specific customer group are satisfied.
4. Extension of company expertise: Extensions take forms of different product category
introductions under common name. Common expertise pool helps such instructions.
Example: Honda offers Honda cars, Honda gensets, Honda scooters, Honda lawn
movers etc.
5. Extension of Brand Distinction: Many brands are unique in terms of attribute or
benefit. Customers strongly associate such uniqueness with the brand. The company
works backward to launch different products which are necessary to capitalize this
distinction.
6. Extension of Brand image or Prestige: Under brand extension, new products may ne
introduced into unrelated product categories. A popular brand name is used in a host of
unrelated products. The name Tata has extended from salt to software. Godrej can be
seen on hair dyes, almirahs, safety locks, refrigerators and electronic typewriters. These
names are hundred years old now.
7. Distinctive taste, ingredient or component extension: A brand may develop a close
association with a combination of taste. When it is well received in the market and
survives long it enjoys a proprietary association of distinctive taste. Capitalizing on
these properties, the brand could be leveraged in other product fields.

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White Labelling: A white label product or service produced by one company that other
companies rebrand to make it appear as if they had made it.
Brands can extend their reach and engagement with customers by providing their own
insurance products, known as ‘white labelled insurance solutions’.
Many insurers and intermediaries have deployed online insurance applications that
enable users to obtain quotes and purchase policies for a range of personal line and commercial
line products. The policy details are then transferred to the insurer’s back-end system. IT has
developed and deployed many such applications.
Common Use of White Label
➢ White label production is often used for mass-produced generic products including
electronics, consumer products and software packages such as DVD players, televisions
and web applications.
➢ White label enables a successful brand to offer a service without having to invest in
creating the technology and infrastructure itself.
➢ Many IT and modern marketing companies outsource or use white-label companies and
services to provide specialist services without having to incest in developing their own
product.
➢ Most supermarket private brand or store brand products are provided by companies that
sell to multiple supermarkets, changing only the labels.
➢ Some manufacturers create low-cost generic brand labels with only the name of the
product.
➢ Smaller banks sometimes outsource their credit-card or check processing operations to
larger banks, which issues and processes the credit cards as white label cards, typically
for a fee, allowing the smaller bank to brand the cards as their own without having to
invest in the necessary infrastructure.
➢ Many software companies offer white label software to agencies or other customers,
including the possibility to resell the software under the customer’s brand. This typically
requires functionalities such as the adaptation of the software’s visual appearance,
multi-customer management and automatic billing to the end-customers based on usage
parameters.

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