Marketing Financial Products
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Chapter 9 : Small Savings and Retirement Planning
Types of Products
Savings Schemes
Retirement Schemes
Pricing
Small Savings Schemes
Retirement Plans
Advertising, Sales Promotion, and Public Relations
Media Strategy
Advertisement Appeals for Retirement Solutions
Sales Promotion
Public Relations
Distribution
Distribution of Small Savings Schemes
Distribution of Retirement Products
The Changing Scenario
Chapter Summary
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The objective of savings is to cater to future needs. The
small savings schemes introduced by the Government of India help people develop
the habit of savings to finance their future needs. The concept of retirement
planning in India is still at a nascent stage. This could be attributed to the
low income levels and the lack of awareness about the importance of retirement
planning early in life.
There are different types of small savings schemes and they differ from one
another on parameters like investment limits, maturity period, liquidity and
returns, interest rates offered to the depositors and tax concessions, if any.
When individuals have small amounts of money at their disposal, the best option
for investment is the small savings schemes. The pension plans can be
categorized under compulsory, voluntary, and social assistance schemes. The
compulsory schemes include the employee provident fund, employee pension fund,
civil service pension scheme, group superannuation plan, etc. Pensions under the
voluntary category include products offered by private banks, the post office,
insurance, and mutual fund companies. |
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The targeted social assistance programs are meant for a specific target
group, usually from the economically weaker sections of the society. They
include the National Old Age Pension Scheme (NOAPS) and National Family
Benefit Scheme (NFBS) under the center. Pricing of the small savings schemes
is not rational in the sense that different savings schemes have differing
interest rates, maturity terms, liquidity, and returns. Most of the savings
schemes were launched by the government as a social security measure and to
mop up funds for social development. The determination of the cost of a
retirement plan is a difficult task. The cost of a retirement plan is the
difference of the assets (the sum of investment returns and the
contributions made to the pension plan) and liabilities (benefits to be paid
as per the pension plan and the administration expenses) possessed by the
retirement solutions marketer. These components of the cost system are
measured and estimated by the complex process of actuarial valuation.
Promotions are very important in marketing small savings schemes and
retirement products. They are used by both the public as well as the private
sector. Advertising in the small savings category makes effective use of
radio and print ads. The media strategy of retirement solution providers
includes greater emphasis on television advertising supported by radio (FM
radio) and print advertising. Various appeals used by marketers for
advertising include emotional, fear-evoking, and zealous appeals.
The sales promotion activities with regard to the small savings are managed
by the National Savings Institute (NSI). These promotional activities
include contests, special campaigns, and sweepstake offers. Sales promotions
are restricted in retirement products, especially pension plans of insurance
marketers as there are certain restrictions imposed on offering gifts and
conducting contests.
The public relation activities of small savings marketers include
distribution of pamphlets, hoardings, conducting dramas in villages,
exhibition, handbills, seminars, press release, etc. The PR activities of
marketers of retirement products primarily focus on two objectives –
increasing consumer awareness and improving brand receptivity among
customers. Increasing awareness is preferred by the government and branding
is the focus of private players. The PR activities include conducting
seminars on retirement solutions, distributing retirement planners, and
providing retirement calculators.
Distribution for small savings as well as retirement products is through
direct and indirect channels. The direct distribution is through the
personal selling. Personal selling is done by the agents who are categorized
based on the type of the scheme and the target group. The agents are crucial
in the mobilization of savings. There are generally three types of agents,
viz., Standard Agency System, Mahila Pradhan Kshetriya Bachat Yojana (MPKBY),
and the Public Provident Fund Agency. Indirect distribution makes use of
channels like post offices, and the branch network of public and private
banks. The distribution of retirement products is also done through the
direct sales force and agents (direct distribution) and through the
bancasssurance route and Direct Selling Agents (indirect distribution).
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Short Case Studies / Caselets