Insurance Marketing | Market Segmentation | Significance

Insurance Marketing

Marketing of Insurance Service to achieve increased customer orientation and generation of profit is called Insurance Marketing. Formulation of an ideal mix for insurance business is the main focus of Insurance marketing. The core and peripheral services can be improved by following an appropriate service mix. The marketing concept enables the insurance business to expand business in the best interest of society as well as the insurance organization.

Market segmentation in the insurance organization

Markets are segmented into different customer groups. Each product or services is tailored to match the needs of the customer group. The segmentation helps the insurance organization in dividing the market into small segments where the customer needs are identical. The following table illustrates market segmentation.

From the above table, it is understood that the market for insurance is divided into segments and sub-segments. Segments include

  1. household sector
  2. industrial sector
  3. trade sector
  4. institutional sector
  5. region-wise sector; and
  6. rural sector.

The household sector is a segment which is subdivided into

  1. Salaried class
  2. Self-employed; and
  3. retired employees.

The industrial sector is subdivided into

  1. Public sector; and
  2. Private sector.

Likewise, the other segments are subdivided into appropriate sub-segments.

Significance of segmentation to the insurance business

1. Market segmentation is very important to an insurance organization. In insurance business, the prime focus is on the policyholder. Insurance marketing aims at transforming the prospects into policyholders. Market segmentation enables the insurance marketer to identify the level of expectations of the policyholders.

2. Insurance organizations capitalize on the available opportunities in market. They need to increase their market share constantly. Market segmentation in insurance business helps in informing, sensing and persuading the different segments where the potential users are available.

3. The insurance professionals can do business in all segments, such as rural and urban, men and women, agricultural or industrial and so on. Segmentation makes it possible to spread the insurance business even to the agricultural sector of the economy which is predominantly rural-based.

4. With market segmentation, the insurance organizations become aware the changing needs and requirements of the rural sector and shape their services accordingly.

5. Knowing and understanding the market is considered significant to the insurance professionals since the segmentation process helps them in scanning the changing needs and requirements of the rural sector.

6. A study of segmentation would help insurance professionals in formulating a sound marketing strategy. The product mix based on market segmentation would be competitive. All the prospects would have additional attraction in using the services.

7. The segmentation would help insurance professionals in making the promotional measures creative. It would be instrumental in sensitizing the prospects. The advertisement professionals would make advertisement appeals, messages and campaigns proactive to the receiving capacity of the target audience.

8. The pricing decision can also be rationalized and the weaker sections of the society would get substantial benefits. In view of the above, it is appropriate to say that segmentation is very important to insurance professionals. It transforms the prospects into users.