Page 19 - Life Insurance Today May 2016

there is a good chance that the customer will look to other
agents who would offer all the services under one roof to
avoid dealing with different people. This will lead the
customer to switch the loyalties. So it is very important
that apart from life insurance the agent may also offer
other products which are spin offs from his relationship
with the customer.
Here it is possible to earn additional income with a very
little effort. It is very easy for an agent to double his/her - it is referred to as Consolidation.
income by using the product development strategy.
Quadrant II strategy is a little more difficult than Quadrant 4. Finally:
I in terms of the effort versus the income potential.
3.2.4. Business diversification (new markets, new
products) [diversification as a growth stategy]:
This is where we market completely new products to new
customers. There are two types of diversification, namely
related and unrelated diversification. Related
diversification means that we remain in a market or
industry with which we are familiar. This diversification can
be divided again into horizontal, vertical and lateral
diversification.
1. The horizontal diversification is the extension of the
production Programme.
2. The vertical diversification is the sales stage stored by
products pre order.
3. The lateral diversification is the sales of completely
new products, which within the range of the
technology and marketing in no connection.
Diversification is an inherently higher risk strategy because about future economic conditions are an essential part of
the business is moving into markets in which it has little
or no experience. For a business to adopt a diversification
strategy, it must have a clear idea about what it expects
to gain from the strategy and a transparent and honest
assessment of the risks.
Moving away from what you are selling (your core
activities) in providing something new e.g. Moving from
selling Whole Life Policy to selling Term Policies to the
persons who want to avail house building loans.
‘Diversification’ is the name given to the growth strategy
where a business markets new products in new markets.
It all sounds almost silly, but the fact is that the only way to change a corporate culture is to just change it.
Life Insurance Today May 2016
For a business to adopt a diversification strategy, therefore,
it must have a clear idea about what it expects to gain from
the strategy and an honest assessment of the risks.
3.2.5. Consolidation:
When the organization adopts a strategy of withdrawing
from particular markets, scaling back on operations and
concentrating on its existing products in existing markets
Using Ansoff matrix the agent may analyze and plan to
meet customer needs and expectations. Facts that are
worth considering by the agent in the way of self-
introspection or a true feedback may include.
1. What strategy are agent's Organization / agent's Dept.
implementing now for its products/services? The
agent will need to place products/services in an
appropriate quadrant?
2. Is this the right strategy in terms of meeting customer
needs and expectations?
3. Is implementation effective?
4.1. Rational expectations of an agent:
Rational expectations are an assumption used in many
contemporary macroeconomic models, and also in other
areas of contemporary economics. Since most
macroeconomic models today study decisions over many
periods, the expectations of workers, consumers, and firms
the model.
How to mould these expectations has long been
controversial, and it is well known that the macroeconomic
predictions of the model may differ depending on the
assumptions made about expectations. To assume rational
expectations is to assume that agents' expectations are
correct on average. In other words, although the future is
not fully predictable, agents' expectations are assumed not
to be systematically biased and use all relevant information
in forming expectations of economic variables.
This way of modeling expectations was originally proposed
by John F. Muth (1961) and later became influential when
it was used by Robert E. Lucas Jr. and others. Modeling
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