Page 39 - MARKETING & PUBLIC RELATIONS EBOOK IC88

1. In the matter of goods and also in many services, Price is the resultant of demand and supply.
Price can be used to influence the demand. When price lowered, demand and sales ^o up. Many
products have 'sales' and discounts' when the normal sales are less. Hotels have off-season
rates. In some industries, prices are raised in order to curtail demand. Some taxi services tried
varying the rates, if there was a sudden increase in demand. A restaurant would mark up the
price of any drink for which there is a surge of orders, and tower it when that surge went down,
like the prices in a stock exchange, did well as the customers began to preempt the decisions of
the bar owner.

2. Insurance is not price-elastic. That is to say, the demand for insurance will not increase or
decrease, as the price (premium) is reduced or raised. While there is need for insurance, very
few 'want' it. On the contrary, if there is a heavy demand for insurance, as may happen during
an epidemic or a riot, the insurer will have to be cautious in granting the requests.

3. Policyholders tend to comment that the premium rates are high. Owners of motor vehicles,
both trucks and cars, were opposed to the rise in rates for motor insurance in India, while the
industry claimed that there was adverse experience in claims. They also tend to compare the
rates of one insurer with those of another. Such comparisons ignore the differences in the
respective target segments. Similarly, comparisons between countries also mislead, because
there are substantial differences in factors that affect claims in life insurance (mortality) as well
as in non-life insurance (packaging, handling, security, etc., practices).

4. A cheaper car may turn out to be costlier if the running costs are high. Because of intense
competition among Internet Service Providers and cellular phone operators in India there are
offers of 'free' access. One needs to check where the extra cost is. Those who choose insurance
agents, who offer temptations in cash or kind, later regret the lack of assistance from them.

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