Page 32 - MARKETING & PUBLIC RELATIONS EBOOK IC88

1. In the case of insurance, the tangibles are practically non-existent. The product is only a
promise. The purchase is made without reference to anything tangible, except, perhaps, some
literature that may be shown by the agent. The policy document does not exist at that time. It
will be prepared only after the insurance contract is finally agreed upon by the insurance
company as well. The policy document is useful only if a breach of promise is alleged and one
has to go to court to obtain performance of the promise.

2. In the case of insurance, the product bought is the promise as understood by the customer. The
product sold is what the policy means according to the technical experts in the insurer's office.
There could be differences between these two. Unfortunately these differences will come to
light only at the time a claim is made. If there is no claim to be made, there is no promise to be
redeemed and then it does not matter what the promise meant. It is only at the stage of the
claim that the product of insurance comes to focus. What happens at that stage clarifies what
the business of insurance is. The product exists at the time a claim is made.

3. The claimant in general insurance is a person in tragic circumstances. The person making a death
claim in life insurance is also a person in distress. Even in the case of maturity claims in life
insurance, the claimant is likely to feel unhappy that he did not put his money into more
lucrative options. Thus, the product of insurance, which is realized only at the time of claim, is
shrouded in unhappiness.

4. The experience at the time of claim can be made more distressing - or less distressing - by the
nature of interaction the claimant has with the insurer. It is in that interaction that the quality of
service exists. Determining the policy terms and conditions and generating a variety of plans is
one part of product development. Managing the interactions is an equally important part of
product development. This is the Process element of the Marketing Mix. Process is part of the
Product in insurance

5. Every person who has taken an insurance policy may not be aware of the risks around him, as
much as the insurer may, with his rich experience, know. Advising policyholders on the basis of
this knowledge, could be a product of an insurer, offered at a cost or even free. The amount
spent on this activity would be an investment, the returns of which would be reflected in the
reduction of claims. The benefit will flow to the insurer and the community as well. A loss of an
asset through a peril is a 'toss to the community and not merely to the owner or the insurer.

C. PRODUCT DIFFERENTIATION

Products are divided into three main categories, consumer goods (durables and non-durables), industrial
goods and services. Consumer durables are long lasting and relatively costly, items. Non-durables are
items which are bought more frequently and are relatively lower priced. Industrial products are specific
to industry. Services have been defined earlier.

(a) Core and Peripherals

In the case of goods particularly durables and industrial products, services are peripherals that add
value. In the case of insurance, every policy is practically customized in the sense, that the final shape of

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