The Insurance market emerged as a new and lucrative growth avenue for both the new entrants as well as the existing players. According to data released by IRDA, general insurance industry recorded 13.85 percent growth in gross premium in 2009-2010. Furthermore, the report also identifies what will be the possible growth areas for expansion and gives a detailed overview of the competitive landscape. As Insurance sector is growing rapidly I took ICICI Lombard for my analysis of Strategic marketing planning.
THE SUPER-ORDINATE GOALS
To become the top insurer of India by 2010 in terms of premium.
The style of ICICI is one and only. They change their management structure according to the need of the situation. ICICI Lombard has always been aggressive in marketing and as a result they are successful in acquiring a good amount of market share. They are the top private sector company and they have always kept their ambitions high. They have suffered couple of high losses but they have managed their way and are moving with the same pace. They are also developing channel partners for a long term sustainable relationship. They are trying to ingregrate their banking model of doing retail business in doing Insurance retailing business. This model has undergone several criticism but they are determined to prove themselves. They are having a full proof B to C model where are selling their policies through the net.
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Networking: ICICI Lombard has 65 offices throughout the country. All the offices are totally connected which each other and with the head office at Mumbai. They are using software called Premia developed by ICICI Infotect limited. The software is basically accounting software connecting all the offices. It also has customer relation software integrated into it to support activities such as policy generation, claims management, online issuance of policy etc.
There is an intranet facility within an office and among all offices. There is a strong communication among the employees through emails and each employee has email identification.
Updating : There is continuous updating of information in the system. As soon an entry of a transaction is made all updates within the system is made accordingly. The updating is so foolproof that the CEO can see on his screen what premium has been booked at any point of time and the division of premium on various heads.
Assurance: Various steps are taken and maintain a robust platform for underwriting, reinsurance accounting, customer relation management(claims to be a part of this) and business reporting. On the B TO C the company is selling all personal lines policy and legally secured on all fronts. The company is also working on the digital signature module so that it can allow policies to be generated online, directly by the consumers, it has obtained the "verisign" secured transaction processing system, ensuring complete confidentiality and control over web based transactions. It is also looking at online transaction for its channel partners such as the agents and brokers.
Attrition and Retention : The top level management is not a problem. The attrition rates is low, as a result the retention rate is high. At the top the people have stayed longer with the organization. It is also ICICI practice to shuffle people from their other businesses to insurance. They get the best of people in their new businesses and go hard in attaining the market share. The biggest problem of attrition and retention comes lower down the line in the SME and retail categories sales force where salaries are low and stress in more on incentives.
Sourcing:ICICI Lombard sources its lower level staff from the placement agencies and employment exchanges. The top level staff from the placement agencies and employment exchanges. The top level managed are selected from the top management and insurance institutes and also from internal appraisals. ICICI appraisals depend upon the results generated by the managers.
Training and Retraining : Human capital too is very important at ICICI. Training is a big thing; each employee spends at least 69 hours during the year recharging him.Training is essential for continuous improvement of any person and for organizational growth. Training at two levels are imparted. One type of training is the internal training given to sales people and term managers and other is the training given to key people in such as underwriters, claims executives ect. To continuously update their knowledge.
Always on Time
Marked to Standard
Innovation : The integrated intranet system is helping the whole organization to work as a unit. The online policy generation by the company to its agents and channel partners is another innovative feature which the company has done. The company is leveraging technology to make work simpler. In the marketing front is adopted a new approach to sell personal lines insurance. It has planned to recruit more than 200 direct sales force under a team head in each city, depending upon the size of the city and the premium potential. The company is creating a retail hub where these sales people would sit. They would be provided with computers and technology would be integrated into system. ICICI is diverting from the traditional way of doing retail business where one ties up with dealers, intermediaries and sell it. It is going direct in the market to sell personal lines of insurance. In the S.M.E sector also ICICI has taken out innovative policies with a lot of section built in one policy, so that a consumer can take one policy and have a lot of covers built into it. There are discounts provided in the non-tariff section also. In the corporate front also ICICI has approach its banking corporate clients and leveraged the relationship to get business. They have provided valve added services to their corporate client in the tariff regime where premium are fixed and have given them value for money. Among all the private sector is has been the most aggressive in the market and is the leading private sector insurer.
Growth without technological advancement is not possible. ICICI is incorporating new technology within the organization to help the organization grow. It is integrating technology with business processes and trying to create a business process which is totally integrated so that they can handle any amount of work.
Benchmarking: With the change in the structure of ICICI Lombard there has been a change in accountability of each individual. Every person is managed by results and objectives. Management by objectives is comprehensive managerial system that integrates many key managerial activities in a systematic manner and that is consciously directed towards the effective and efficient achievement of organizational the individual studies.
Their strategy changes from time to time. Current their focus is morew on retail business. The growth which the company is looking at would come from retail.
Delayering and boundary less organization: Basically delayering leads to a boundary less organization. In ICICI initially the structure was different. It functions differently from what it was. Earlier the whole of India was divided into 5 regions. Each region had a Regional Manger and under him there were people who were looking after Retail, Corporate, SMES, Banc assurance and Government business. The organization arranged itself into business verticals, namely Corporate, Government & Key accounts, SME, Retail and Banc assurance, with support activities like Underwriting, Operations and Claim realigning to suit the needs of the business verticals.
The support activities namely include Underwriting, operations and claims processing. This basically happens at the local level as well as the head office level. Currently the claim are processed at the local level by the claims head and a request is send for payment with all the papers to the head office. Claim payment is highly centralized at the head office level and needs a change because it is time consuming and involves customer dissatisfaction.
Matrix formations: The support activities involved with all five lines of business and help them whenever required. The support activities have specified people who are well versed with their subjects and help the verticals in all respects.
b) Yes there are models that underlie strategic planning. I am explaining about two Strategic planning models here.
Model 1: Applied Strategic Planning
Business and military executives tend to favour this model. It assumes a top-down hierarchy with a plan and operations department that is responsible for running the models and involving appropriate and key personnel. It also presumes the existence of a fair degree of quantifiable data and business modelling decision making where one finds targets and executes programs. This method might be well suited for solving problems where constituents have problem and are unified in the opinion that better service is needed. The process also incorporates scanning the environment, brainstorming solutions, establishing a future orientation, and specifying at the behaviour of competitors and new products on the horizon.
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Applied Strategic planning includes:
Identifying consultants and key internal players.
Garnering CEO support, identifying stakeholders and setting planning goals.
Scanning organizational values, cultures and philosophy.
Redefining the organization's mission statement.
Identifying new venture opportunities and new futures.
Auditing threats, strengths and weaknesses
Identifying critical gaps between where the organization is and its future.
Selecting strategies to expand as a means to close performance gaps.
Implementing the strategies to divest or acquire.
Monitoring actions, restarting the cycle and updating conditions.
Model 2: ICMA Strategic Development
This Model is the least relevant to community planning as it focuses narrowly on the special issue of economic development. It makes a strong case for inventorying existing capacities and capabilities. It also contains good elements that would stimulate association planning groups thinking on consensus building.
ICMA Strategic Development Includes:
Augmenting existing planning structure with stakeholders.
Conducting an environmental scan of community conditions
Evaluating and Identifying the community resources.
Rating different community business activities.
Rating different community development agencies and programs.
Describing multiple visions of different community economic sectors.
Developing goals and establishing objectives to reach the goals.
Describing who,when,what,and where resources are needed.
Monitoring, reporting updating and reallocating efforts as targets are hit.
Restarting the process again by recruiting a new group and conducting scans.
The term Strategic Planning has been used traditionally through new titles such as Business policy, Business Policy and strategic management, Corporate strategy and Policy, Corporate Planning and policy.
Important step in developing a strategic marketing plan is to identify target markets. Include both current customers (can we sell them more of what they are already buying, products and services in addition to what they are already buying, or a more premium version of our products/services?) and new prospects. For new prospective buyers, develop a plan for each micro markets.
Benefits of Strategic marketing plan:
Research customer attitudes towards company, product category and competition.
Evaluate the attractiveness of potential target markets
Determine the competitive strengths and weaknesses of company and competitors.
Develop marketing communications and sales development strategies for each target market always.
Design the standard metrics to measure performance .
Following describes about marketing plan with help of three techniques that could be used to develop a marketing plan.
THE PROFIT-IMPACT OF MARKET STRATEGY MODEL (PIMS)
The Profit-Impact of market strategy model is a major attempt to provide a quantified view of business strategy. The PIMS model uses 30 variable to explain the comparative performance of firms. OF these, three of them most important area are:The effects of quality, capital intensity and the impact of market evolution on profitability.
How the PIMS Model works:
The PIMS model is desgned to enable firms to make evaluations of their SBU's strategic and budgetary plans. The model is based on some 30 strategic variable stored in an extensive computer based model & satabase. The variable are organized in the form of a series of regression equations. This enables users to make predictions about the outcome of a series of structural changes as well as about changes in conditions affecting the SBU.
The PIMS database includes financial and strategic information for approximately 4000 business units operated by some 480 corporations, primarily in Europe and North America for periods that range from two to twelve years.
SPI collects PIMS data not only on income statement and traditional balance sheets but also on each businesses relative market share, product quality, price and direct cost. The database describes more than 300 characteristics for each business , in addition documents its actions, its competitive environment, the market it serves and its financial results.
We will examine two main aspects of the PIMS model.
How the model:
Affects evaluations of the relative performance of Strategic Business Units compared with industrial norms for their market segment.
Is used to evaluate the industrial and combined impacts of Quality Positioning and Market Share on the level of profits generated.
There are six major principles that explains the linkages between strategy and performance
quality of the products & services
Cash flow Position
Return on investment
The use of PIMS
The PIMS model helps to find universal relations and also answers more particular questions:
What rate of ROI or C/F is normal in a given type of SBU under given market conditions and pursuing a given strategy?
How will ROI and other measures of performance change in a specific SBU given a specific change of strategy?
What are promising directions to explore in improving the performance of a given SBU?
The MCKINSEY 7-S Framework
The 7-S Framework was developed McKincy company, a very well known management consultancy company. It aimed to diagnose the causes of company problems and to formulate programs for improvements.
Super Ordinate goals
They may be considered to be company purposes.
According to the framework, super ordinate goals refer to a set values and aspirations, unwritten, which beyond the conventional statement of corporate objectives. Super ordinate goals are fundamental ideas around business is built. They are its main values.
It is the skeleton of the whole company edifice. Company structure refers to the relatively more relationships and durable company.
Major functions of the structure:
To reduce external uncertainty through the forcasting , research and planning sub units.
To reduce internal uncertainty arising out of variable, unpredictable, random human behaviour within the company through the control mechanism.
To undertake a wide variety activities through devices such as departmentalization, specialization, division of labor and delegation of authority.
To enable the company to keep its activities coordinated and to have a focus in the midst of diversity in the pursuit of its objectives.
Systems refers to all the regulations, rules and procedures both informal and formal that complements the company structures.
It include production planning and control systems cost accouting procedures planning and budgeting systems.
Style is the one of the seven levers which top managers can use to bring about company change.
The style of a company includes the following
Actions of top management
Culture of the company
Staffing is mainly for the process of acquiring human resources for the company and ensuring that they have the potential by contributing to the achievements of the company's goal.
This process involves selecting people for specific company positions. These people are then trained and development so that they acquire the abilities and skills they would need to be effective in the assignments allotted to them
This term Skills include this characteristics, which most people use to describe a company. Company may have strength in different areas, but their key strengths or dominant skills are few. The dominant skills of the distinctive competence of a company are part of the company character.
There are different types of marketing strategies. They are
Market Share Growth
Market Expansion- This Strategy increases the growth in the following two ways.
Grow Sales with Existing products - With this approach my organisation seeks to actively increase the existing customers to buy more.
Grow Sales with New Products - With this ICICI seeks to achieve objectives through the introduction of new product.
Market Share Growth : This increases the overall percentage or share of market.
Status Quo - It will maintain ICICI 's current position in the market such as maintaining the same level of market share.
The positive feedback from customers and stakeholders who have personally experienced the impact of this approach reinforces our belief that this is the way forward in building lasting customers loyalty and advocacy.
LIC,GIC, AIG are the three major stakeholders of ICICI. They are introducing many strategy that will result effectively in the growth of ICICI.
General Insurance Corporation have promoted Inter-national Insurance(III). ICICI gaining many things from this (III). GIC also supports ICICI in the development of ICICI's strategy.
Strategic issues can be brought up for top management review.
May bring about a needed change of direction of company. Among the major people-related benefits of a strategic plan is that it can increase morale and commitment and satisfaction. Gathering feedback or input from critical groups in the form of questionnaires or focus groups at key points in the process. It means involving employees in any way that is appropriate to the organization in the question. So it develops the internal coordination of activities.
Tasks 3 :
It outlines what the organization wants to be or how it wants the world in which operates to be. It concentrates on the future. It provides clear decision-making criteria.
It is the fundamental purpose of the organization. It defines the customer and the critical processes. IT informs you of the desired level of performance.
Strategy narrowly defined , means " the art of the general". A combination of the goals for which the firm is striving and the policies by which it is seeking to get there.
Vision, Mission and Objective of ICICI Lombard:
Vision: To be say "Insurance Broker" of India by virtue of our great ethics, efficient workforce and customer experience.
Mission: Creating awareness about Insurance to the masses and distributing the benefits of Risk management to all.
Objective: The main Objectives are to enhance the degree of professionalism in the insurance selling interface and to provide professional consultancy guidance to the customer that helps strengthen clients balance sheets thereby fostering customer confidence and higher levels of investor"
Need of vision and mission:
One organization need these things so that they will be able to tell both what they do and why to make sense of their work. Organizations use vision for their success.
Vision with action is a dream.
Action without vision passes the time.
Vision with action always change the world.
In an organization, vision is to leadership as mission is to management.
Customer experience is one of the main factor used for the growth of the organization. The Importance of customer satisfaction is clearly stated in the vision and objective of the ICICI Lombard. The company is trying to ensure full proof quality in all aspects toward customer orientation. The Business to customer model on the internet where the consumers can buy policies online. This is the one of core competencies and one critical success factor necessary to the achievement of organisations vision, mission and strategic objectives.
Surviving in the economic climate:
Treating customers like family is the key idea to stay stable at economic downfall.
Have to supply best products.
Should be flexible and creative in times.
Always ensure quality service.
Be loyal in business always.
Yes, the changes that my organisation carried out has been effective. So that my organization can survive effectively during the economic fall.
The three major functional areas in my organisation are
Fool proof control and Quality
Training and Retraining
FoolProof Control and Quality
The company has outsourced the surveys to a company called Cunningham Lindsay India Pvt limited. The system ensures that the survey is done on time and the claim is settled in the appropriate time. If the claims settlement period exceeds the time frame the system informs the concerned person. ICICI Lombard is also going towards ISO certification to ensure foolproof quality.
Over the next several years these strategy is being implemented. This declaration accompany the agreement on the air quality directive the latest progress on the development and the adoption of community measures. Strategy will be reviewed always at periodic intervals , first review due to take place in 3 years.
All the activities carried out are continuously monitored ex-ante, during implementation and ex-post - with feedback provided.
Strategies lead to plans, which in turn lead to programmes to be undertaken, which would consists of "projects", each with their own budgets. This would be simplified at the operating level through Policies/Procedures/Rules/Regulations. From Budgets the flow starts in implementation. All the key functionalities are carried out while implementing the new strategy. So it is important to monitor the effectiveness of a new strategy as it is being implemented.
TIMETABLE FOR IMPLEMENTATION OF THE NEW STRATEGY IN THE INSURANCE
Priority areas for action
Milesstones for assessing ICICI performance
External ownership secured for strategy
Strategy commitment of management and staff to urban work is reflected in country assistance strategies and leads to broad buy-in by external partners,securing counterpart resources for urban programs.
Enhanced knowledge management products and services
Expanded Help Desk functions. User satisfaction confirmed from usage and periodic surveys.
Portfolio quality assurance
Continued improvement of Quality Assurance Group and operations Evaluation Department ratings of partfolio.
External client survey
Update 2007 survey undertaken with favourable results.
Human resource development
Adequate recruitment to cover skill gaps and attrition. Training of urban and other network staff.