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Marketing Plan

SmartKid Policy
Presented to:


Presented by:


ICICI Prudential Life Insurance Company limited (from now on

IPru), is a joint venture between ICICI Bank and Prudential plc.
It is the first private company to open its operation in India
after the liberalization of Insurance industry in India in the year
2000. Since inception, it has written over 8 million policies and
has a network of 2080 offices, over 290,000 advisors and 24
bank partners. It was also the first Indian Insurance Company to
get AAA(Ind) credit rating by Fitch rating. It has been number
one private insurer in India for 8 years continuously.
ICICI SmartKid New Unit-linked Regular Premium policy (from
now on SmartKid Plan) is the number one child/education plan
in India. Since the inception of this policy, it is the front runner
in the race of all child/education plans. Due to various benefits,
good returns, lower load on premium and the brand name
“ICICI Prudential” associated with it; SmartKid has become the
number one child/education plan in India. With this policy,
people can invest their money in unit-linked funds which allows
them to withdraw money to meet expenses at key educational
milestones of their child. Additionally, the life insurance cover
offered under this policy ensures that their loved ones stay
financially secure in their absence.


The various competitors of SmartKid Plan are:

➢ LIC’s Komal Jeevan
➢ Tata AIG Mahalife junior
➢ SBI Life – Scholar II
➢ SBI Life – Unit Plus Child Plan
➢ Bajaj Allianz Child Gain
➢ Kotak Mahindra Future Perfect
➢ Kotak child Advantage Plan
➢ HDFC Standard Unit Linked Young Star
➢ Birla Sunlife Childrens Dream plan
➢ AEGON Religare Star Child Plan
➢ ING Creating Star
➢ Sahara Ankur

1.Situation Analysis

3.a.i Product Specifications

Key features:
➢ Lump sum payment of Sum Assured plus company
contributes future premiums in the unfortunate event of
death of parent (life assured).
➢ With Income Benefit Rider, the child (beneficiary) would
receive an annual allowance every year till maturity, in
the unfortunate event of death of parent.
➢ Flexibility to increase the investment by investing
additional money over and above your regular premiums
as top ups.
➢ Eliminate the need to the your investment with the
Automatic Transfer Strategy.
➢ Choose from 8 investment funds to invest your money
based on the risk appetite.
➢ Withdrawal facility to provide money at key educational
milestones of the child.
➢ Potentially higher returns over the long-term by investing
in unit-linked funds.

➢ Cover Continuance option to ensure continuance of life
insurance cover, if you wish to stop paying premiums.
➢ Avails tax benefits on premiums paid and benefits
received under the Income Tax Act, 1961.

3.a.ii Analysis of the category

3.a.ii.1 Aggregate Market factors

a. Market Size : The market size and its potential is very

large. Only about 3.11% of the Indian population is
insured. 40% Indian are below 15 years of age.
According to Mckinsey, 300 million people belong to the
middle class which is expected to grow to 583 million in
2025. These are the people who are the target for
educational plans.

b. Growth : The present GDP is 6.4%. The higher

education segment is estimated to be worth INR 6.5 bn
and is expected to be growing at 12% per annum.
Presently, the per capita income is Rs 34, 084 in 2008-
09, which is expected to increase by 14.4 percent in the
current fiscal. The middle class which is the target for
child plan is constantly increasing.

c. Stage in product life cycle : The child plan is in the

introductory stage. Unit linked plans were introduced in
2001 only. So, the category which we are talking about
is in its beginning phase.

d. Sales Cyclicity : Insurance is correlated with interest

rates so it has cyclicity.

e. Seasonality : It is not applicable.

f. Profits : Fixed cost are very high. Companies don’t
earn much profits or have benchmark profitability from
the child plan premium as the number of competitors
and similar products are high. Whatever the profit that
company earns is from the premium load. IPru will
break even by 2010 when its total cost will be equal to
total revenue. It will be the first private insurer to break

If we can summarize the aggregate market factors in

terms of attractiveness of the industry, then it will be
somewhat like given below.

High Low
Market Size + -
Growth + -
Sales Cyclicity + -
Seasonality - +
Rivalry in + -
Profits - +

3.a.ii.2 Category Factors

a. Threats of new entrants : In India, almost all of the

insurance companies except LIC is in joint venture with
foreign players. The stake has increased from 26% to

49%. At present, there are 22 insurers in India. New
companies are looking for more and more new areas to
develop its market. The new companies have the fear of
being eliminated by the big player but as the market
size is very large and this area is almost undiscovered,
there is lots of potential for the new players. High
capital requirement is also an inhibitor. Certain
regulations keep the players from coming in but if these
regulations are removed then India will become heaven
for the insurance companies. The threat of new
entrants at presently low so the attractiveness is high.

b. Power of suppliers : NA

c. Bargaining power of buyers : The buyers don’t have

much bargaining power. The plans are designed as they
have pre-calculated premiums or the premiums are
based on certain formulas. Large clients like
corporations have a lot more bargaining power with
insurance companies as they give lacs of rupees as
premium. Their premiums are tailor made. The products
of various companies are not much differentiated, so
even individual buyers also get bargaining power. They
get bargain in the terms that the agents part there
commission with the customer so as to sell more and
more products. The market is full of substitute and the
buyers are educated, so this increase their bargaining

d. Pressures from substitutes : There are plenty of

substitutes for the child plan. Each company has one or
other insurance plan. In India, there are approximately
39 child plan available.

e. Current Rivalry in category : Rivalry is very high.
There are about 22 insurance companies in India and
every company provides almost all kinds of products.

3.a.ii.3 Environmental factors

a. Political : Government increased locking period for ULIP from

3 to 5 years, Planning to hike FDI to 49% in insurance
companies, Planning to introduce a minimum paid-up capital of
Rs 50 crore for pure health insurance companies, allow
nationalized companies to divest to raise the money from

b. Economic : GDP of India as projected by World Bank in 2008

was 7 which declined this year to 5.8. Due to declining
purchasing power due to recession there was a decline in sale
of SmartKid policy. With 24% inflow of FDI in services sector
and many reforms introduced by the government, we can
assume that insurance sector will have a boom in coming

c. Social : Due to rising trend of nuclear family in India,

children are becoming more & more dependent on their
parents for their financial needs. Earlier, in combined families in
case of death or disability of parents other earning members of
family used to take responsibility of children. Moreover,
increasing awareness of education has led to increase in sale of
SmartKid policy. In 1999 census people between age 25-29
were 8.33% of total population which is a healthy sign. They
are the target for this type of products.

d. Technological : This is an era of technological growth.

Technology is now being used for selling Insurance products
also. ICICI pru. website is designed in such a way as to offer

online purchasing of Insurance products. With a few clicks
customers can avail products. But the use of this facility is
limited to people living in metros & other developed cities.
Moreover, one-to-one selling has been found more effective in
Insurance industry. In the coming few years it is expected that
use of online selling will increase.

3.a.iii Company and Competitor Analysis

1. Product Features Matrix : In this part, we are comparing

the features of SmartKid with various others child Plan.

Features IPru Birla Sun SBI Life HDFC

SmartKid Life Unit Plus Standard
Children’s Child Plan Young Star
Dream plan ii
Fund 8 3 5 7
Free 4 2 4 24
Regular 18, 5, 5, 5 0, 0, 0, 0 18, 5, 5, 2 35, 35, 2, 2
charges in
1st 2nd, 3rd
and 4th yr
(in %age)
Death Sum assured Basic plus Sum assured Sum assured
Benefit any
sum assured

Maturity Fund Value Higher or Fund Value Fund Value
Benefit guaranteed
benefit or
fund value
Admin Rs. 60 NA Rs. 61 Rs. 60
Min/Max 10/25 5/18 3/25 10/25
Additional Regular Death Death Death
Benefits Payouts, Benefit, Benefits, Benefit,
Accidental Double/ Loyalty Death +
death and Triple units, Partial critical
disability Guaranteed Withdrawal illness
rider, Waiver maturity benefit,
of premium benefit, Loyalty
rider Units, Partial
Top Up Rs. 2000 Rs. 5000 Rs. 2000 Rs. 5000

2. Marketing Mix : If we can grade the products from 1-4,

where 1 represents “Excellent”, 2 represents “Very Good”, 3
represents “Good” and 4 represents “Average”, then, the
table will look something like this.

IPru Birla Sun SBI Life HDFC
SmartKid Life Unit Plus Standard
Children’s Child Plan Young Star
Dream plan ii
Price Penetration Penetration Penetration Penetration
pricing – 1 pricing – 4 pricing - 3 pricing - 2
Place Direct Direct Internet, Internet,
(distributio channels, channels, Tied agency, bancassuran
n, Channel Internet, Internet, bancassuran ce. - 3
or Tied agency, Tied agency, ce. - 2
intermedia bancassuran bancassuran
ry) ce. – 1 ce. – 4
(graded on
the basis
Product 1 4 2 3
to quality)
Promotion Personal Personal Sales Personal
selling, Sales selling, Sales Promotion, selling, Sales
Promotion, Promotion, Public Promotion,
Public Public Relations – 4 Public
relations, relations, relations,
Direct Mail, Direct Mail, Trade fair,
Trade fair, Trade fair, Advertising,
Advertising, Advertising, Sponsorship
Sponsorship Sponsorship –2
–1 –3
Physical Very Good - Average- 3 Not Good - 2

Evidence 1 attractive -4
People Trained in all Trained in all No specific Trained in all
aspects - 1 aspects - 3 training aspects - 2
given - 4
Process 2 3 4 1
Total 8 24 23 15
The lower the total, the better the marketing mix.

3. Profit : At present, LIC gains most profits from the child

plan. Among the private players, IPru is the front runner,
followed by HDFC Standard, Birla Sun Life and SBI Life

4.Value Chain : In the value chain analysis, through Value

reference model, all the competitors will be graded from 1-4,
1 being excellent and 4 as average, on the 6 business
functions of value chain.
Business IPru Birla Sun SBI Life HDFC
Function SmartKid Life Unit Plus Standard
Children’s Child Plan Young
Dream Star ii
Primary Activities
Inbound NA NA NA NA
Operations 2 4 1 3
Outbound NA NA NA NA
Marketing 1 3 4 2

and sales
Service 1 3 4 2
Support activities
Procureme NA NA NA NA
HRM 3 4 1 2
Firm 2 3 1 4

5. Differential advantage : If we can grade the functions

from 1-4, where 1 represents “Excellent”, 2 represents “Very
Good”, 3 represents “Good” and 4 represents “Average”,
then, the table will look something like this.

IPru Birla Sun SBI Life HDFC

SmartKid Life Unit Plus Standard
Children’ Child Young
s Dream Plan Star ii
Ability to 1 3 4 2
Ability to 1 3 4 2
Ability to 1 2 4 3

Ability to 2 4 1 3
Ability to 1 4 3 2

3.a.iv Customer Analysis

1. Segmentation : The Smart Kid is a segmented towards

those people who would be acquired by ICICI pru in the
coming years. They have segmented the market
according to the salary structure of individuals ranging
from 180000 pa. From the services point of view ,it is
much cheaper to attain a new customer.

2. Customer Behaviour : Due to massive growth of

relationship marketing, consumers tastes have also
changed to an extent. They are looking for products which
suits their needs. They want to buy products whose
premium is quite affordable and cater to their needs. Cost-
effective education insurance policy requiring just a one-
time lump sum investment. The SMART KID product allows
consumers to withdraw money to meet expenses at
important stages of your child's education. It also offers
them potentially higher returns on their investments.
Above all, the life cover provided under this plan protects
consumers loved ones in their absence. There has been a
shift in consumption of insurance products a decade ago
as compared to now.

3. Targeting : They are marking middle class and upper
middle class who are very passionate to educate their
children and make them self reliant. As the policy’s
minimum premium to be charged is Rs 10000, it is
necessary that the mass marketing goes well.

4. Positioning : The IPru SmartKid is positioned as quality

product at competitive prices. The image created by the
launch of this product is unique, through its riders,
benefits and service ,it has created a healthy image in the
minds of the customers. Like its IBR(Interim Benefit Rider)
In the event of death, this rider pays out 10% of (IBR)
Rider Sum Assured to the beneficiary every year till the
maturity of the policy and ADBR(Accident and Death
benefit Rider) In the event of death or disability due to an
Benefit Rider (ADBR) accident, the rider benefit amount
would be paid.
3.a.v Assumptions in Planning Process

1. Marketing Potential : Population under age of 18

(thousands), 2007, under 18 – 446646, Total population
(thousands), 2007 - 1169016. This shows excellent
market potential for Smartkid Insurance policy as 38.21 %
of population in the year 2007 was under the age group of
18 years.

2. Forecast Assumptions :
• population growth rate - 1.548% (2009 data); Birth rate
- 22.22 births/1000 population (2009 data)
• After the current recession, in current scenario, the
growth rate can be low. But in future, we can expect a

1. Other Assumptions if any :
• IRDA can impose new regulations, which can be anti-
• New Competitor entry
• Better product with better features
• The economy has yet not improved. There is still
credit crunch. This boom what we are seeing in the
economy now, can be the base of yet another
3.b Objectives
1. Corporate Objective : The Corporate objective of Ipru is
“To be the dominant Life, Health and Pensions player built
on trust by world-class people and service. This is
achieved through:
a. Understanding the needs of customers and
offering them superior products and service
b. Leveraging technology to service customers
quickly, efficiently and conveniently
c. Developing and implementing superior risk
management and investment strategies to
offer sustainable and stable returns to our
d. Providing an enabling environment to foster
growth and learning for our employees
e. Building transparency in all our dealings.

1. Marketing objective :

i. Volumes and Profits : ICICI Prudential Life

Insurance Co. Ltd, India's dominant private life
insurer, garnered a total premium (new business +
renewal) of Rs 15,356 crores for the financial year
ended March 31, 2009, as against Rs 13,563 crores
in FY2008, registering a growth of 13%. The
company's New Business Profit (NBP) stood at Rs

1,004 crores for FY2009, resulting in a stable new
business margin of 18.9%.

ii. Time Frame : ICICI Prudential Life Insurance by

FY10 expects 10-15 percent growth in premium.

iii. Customer Retention : The company's customers

continued to trust it even during the recent volatility
in the markets as reflected in its renewal premiums
which is one of the key indicators of customer's
loyalty towards the brand. Renewal premiums have
shown a robust growth of 61% and stood at Rs 8,872
crores for FY2009. ICICI Prudential Life conservation
ratio (an indicator of persistency) stood at 73%. This
clearly reflects the customers' commitment to the
brand, as they continue to save for their long-term
financial goals through the company's products.

iv. Intermediary Retention : Advisors base in the year

2009 is over 276000.ICICI Prudential has a very high
retention rate of
the best talent. The company's average attrition rate
is slightly better than the industry at just over 30 per
cent. The Industry attrition rate is about 40 per cent.
3.c Strategy - Product
1. Customer Targets : The Smart kid plan is targeting
the middle and high end consumers who wish to protect
their from any exigencies child as well as educate
them. Mostly the people whom they are targeting
should have at least Rs 180000 income per annum. The
customer targets the bundle of benefits that this plan
offers. It provides choice of 8 Fund Types (Debt ,
Balanced, Equity, Thematic etc.), with Fund
Management Charges (FMC) from 0.75% to 1.5%. This
FMC is moderate compared to the FMC charged by
other Insurance Companies.
2. Competitor Targets : Its competitors are targeting
the Premium charged as it’s a bit higher for IPru.

3. Product/ Services Features : It provides certain

advantages that guarantee child's education:
• Lump sum payment of Sum Assured and policy
continual in the unfortunate event of death of Life
Assured (Parent)Withdrawal facility at important
stages of a child's education
• With an income benefit rider, the child (beneficiary)
will receive an annual allowance every year till
maturity, in the unfortunate event of death of parent
• Potentially higher returns over the long term, by
investing in unit-linked funds.
• Tax benefits on premiums paid and benefits received
under the policy, as per prevailing Income Tax Laws
Besides these there are other features like automatic
transfer Strategy, Switching option, Top-up (increasing
investment by investing additional money over your
premium to get a greater sum assured), cover
continuance option, Riders like (IBR, WOPR(waiver of
premium rider)).

1. Core Strategy :
○ The value proposition of Smart Kid lies in the its
better service and its bundle of benefits that it brings
to the consumer in the form of investment, wealth
management, contingency planning and faster claim
process. The child is provided great financial security
which only its parents can provide.
○ The core competency of this product lies in “NEED
BASED SELLING“ for which it is very innovative any
product which suits best to the requirement of the

3.d Strategy - Marketing Programmes
1. Integrated Marketing Communication
Programmes :
• Public relations : It had launched this product with
a very good promotional campaign.
• Mass marketing : Through its aggressive
marketing strategy it tries to get hold of maximum
market share.
• Sales promotions : Very often the advertisements
of insurance products are broadcasted so that the
reach gets maximum in a less span.
• Direct marketing : Through its large number of
FOS(feet on street) it spreads the need for this
• Internet : Though internet does not play a very
vital role at present, but as the people will
understand the need of insurance and use of
insurance will increase, this approach will be
integral part of any marketing communication

Pricing Strategy : :- Its pricing strategy are more or less

based on

• Provide long-term capital appreciation through

investments primarily in equity and equity-related
• Provide a balance between long-term capital
appreciation and current income through investment in
equity as well as fixed income instruments in
appropriate proportions depending on market
conditions prevalent from time to time.
• To provide accumulation of income through investment
in various fixed income securities. The Fund seeks to

provide capital appreciation while maintaining a
suitable balance between return, safety and liquidity.
• To generate Superior long- term returns from a
diversified portfolio of equity and equity related
instruments of large, mid and small cap companies.
• To provide long-term capital appreciation from an
equity portfolio predominantly invested in NIFTY
• To generate superior long-term returns from a
diversified portfolio of equity an equity related
instruments of companies operating in four important
types of industries viz., Resources, Investment-related,
Consumption-related and Human capital leveraged

1. Channel Strategy : IPru currently is having about

more than 2 lacs FOS. With 24 Bancassurance
partners, it is also the leader. It has tied up with
NGO’s, MFI and corporate for rural distribution.
Having said this, DM and tied agency is the major
channel, which is indispensible, looking to the fact
that IPru is going for mass marketing.

2. Customer Management Strategy :

• Having the right products is the first step, but it's
equally important to ensure that our customers
can access them easily and quickly. To this end,
ICICI Prudential has an advisor base across the
length and breadth of the country, and also
partners with leading banks, corporate agents and
brokers to distribute our products.
• Robust risk management and underwriting
practices form the core of our business. With clear
guidelines in place, we ensure equitable costing of
risks, and thereby ensure a smooth and hassle-
free claims process.

• Entrusted with helping our customers meet their
long-term goals, we adopt an investment
philosophy that aims to achieve risk adjusted
returns over the long-term.
• Last but not least, 10,000+ strong staff is given
the opportunity to learn and grow, every day in a
multitude of ways. They believe this keeps them
engaged and enthusiastic, so that they can deliver
on our promise to cover you, at every step in life.

1. Research : ICICI Prudential Life Insurance offers a

range of innovative, customer-centric products that
meet the needs of customers at every life stage. The
products have been developed after a clear and
thorough understanding of customers' needs. It is
this research that helps them develop Education
plans that offer the ideal way to truly guarantee your
child's education, Retirement solutions that are a
hedge against inflation and yet promise a fixed
income after you retire, or Health insurance that
arms people with the funds they might need to
recover from a dreaded disease
3.e Controls
1. Financial budget : Data not available
2. Marketing Metrics : Data not available.

3.f Contingency Plan

Dealing with contingencies would be the situation when there is

an unpredictable and unfortunate event and there are changes
in environment (technology, globalization, new players coming
up, turbulence in economy etc). The BCP (Business

Contingency Plan) for The SMART KID would be made keeping
such things in mind.

The scope of the Smart kid plan is tremendous. However, if its

rivals come out with better products and flexibility, then we
also have to come up with a higher and superior product. Also
we have to look into the solvency position of the company .
We should go for a periodic review and analysis of underwriting
strategies, reinsurance strategies, investment strategies,
pricing philosophy, bonus philosophy, analysis of surplus with
specific emphasis to expenses and marketing strategies. This
would just give an insight when to launch a contingency plan.
The Bancassurance partners would help us in solvency issues.
The Actuarial department can design a product according to
the circumstances if too many companies provide a similar
product with the same level of premium charges. The Roles of
Actuarial dept and the Underwriting team would be of prime
importance in this case.