CUSTOMER COST - SECOND IMPORTANT FACTOR FOR IMAGE GAP ANALYSIS OF LIFE INSURANCE SERVICES - BASED ON THE DATA COLLECTION FROM GUWAHATI

The concept of Customer Cost was developed by Lauterborn (1990) while developing the customer oriented Marketing Mixthe 4C concept. 4C model replaces the earlier 4Ps of Marketing Mix, here the focus is on customer and the current chapter is all about the second C of this model i.e. Customer Cost or Price in earlier 4P model. The Customer Cost concept is based on the fact that customers are more concerned with the total cost of acquiring a solution of their problem (Product or Service) rather than the price being charged for the Solution (Product or Service) offered by the Company (Moller, 2006), Customer Cost is a assumed to be a better approach as customers are interested in it. price is the quantity of payment or compensation given by one party to another in return for goods or services. In modern economies, prices are generally expressed in units of some form of currency. (For commodities, they are expressed as currency per unit weight of the commodity, e.g. Rs. per kilogram). Although prices could be quoted as quantities of other goods or services this sort of barter exchange is rarely seen. Prices are sometimes quoted in terms of vouchers such as trading stamps and air miles. In some circumstances, cigarettes have been used as currency, for example in prisons, in times of hyperinflation, and in some places during World War 2. In a black market economy, barter is also relatively common. In many financial transactions, it is customary to quote prices in other ways. The most obvious example is in pricing a loan, when the cost will be expressed as the percentage rate of interest. The total amount of interest payable depends upon credit risk, the loan amount and the period of the loan. Other examples can be found in pricing financial derivatives and other financial assets. For instance the price of inflation-linked government securities in several countries is quoted as the actual price divided by a factor representing inflation since the security was issued. Price sometimes refers to the quantity of payment requested by a seller of goods or services, rather than the eventual payment amount. This requested amount is often called the asking price or selling price, while the actual payment may be called the transaction price or traded price. Likewise, the bid price or buying price is the quantity of payment offered by a buyer of goods or services, although this meaning is more common in asset or financial markets than in consumer markets. Price refers to the amount charged for a product or service (Kotler, 2007), from producer’s point of view Price generates revenue (Kotler, 2003). Whereas Customer Cost concept not only includes the price of the product but also includes other associated costs in addition to the [Bihani et. al., Vol.4 (Iss.3): March, 2016] ISSN2350-0530(O) ISSN2394-3629(P) Impact Factor: 2.035 (I2OR) Http://www.granthaalayah.com ©International Journal of Research GRANTHAALAYAH [124-130] Price of the product or service (Goi, 2009). Customer Cost means the total expenditure a customer is going to spent for purchasing a Customer Solution. Thus Price represents only a part of total cost or Customer’s Cost (Kotler, Armstrong, & haque, 2012).


INTRODUCTION
In the context of Life Insurance, the price of a ULIP is determined by the offer price or NAV (Net Asset Value), in case of Traditional product price is determined by actuary. Price or Customer Cost is the yardstick and acts as most influential factor in a buying decision. Specially in the context of Life Insurance Price or Premium or Customer Cost plays a vital role both from the point of view of business firm as well as customer. (Yogakshema, Jan, 09) Rangachary, ex-Chairman of IRDA, in his article states that -the principle of differential pricing is necessary to sell products in rural areas.

OBJECTIVE
To ascertain the gap between the degree of 'Customer Cost Dimension Expected' and the degree of 'Customer Cost Dimension Experienced' of 4C based Marketing Mix with respect to Life Insurance.

HYPOTHESIS
There is no significant difference between the 'Degree of Customer Cost Dimension Expected' and the 'Degree of Customer Cost Dimension Experienced' of 4C based Marketing Mix with respect to Life Insurance in Guwahati.

DESCRIPTION OF ITEMS FOR MEASURING GAP ANALYSIS ON CUSTOMER COST DIMENSION
A list of items was identified to measure the degree of Customer Cost Dimension Expected and the degree of Customer Cost Dimension Experienced. The following 27 (Twenty Seven) items (Table No. 4.4) were finally identified and used for the purpose of measuring expectation and experience related to Customer Cost dimension of 4C based Marketing Mix. Easy to select the premium size for the Life Insurance 6 The Online Renewal Payment system is very good 7 Premium related information is readily available 8 Online comparison of Premium from other competitors is very easy 9 Awareness about the Allocation charges, commission etc. 10 Handouts on Cost Of Insurance and other related charges is available 11 Understanding the costs involved in the premium amount 12 The single payment policy-where we need to pay the premium in lump sum is very good. 13 Able to understand the cost structure of the life insurance products 14 Understanding about the changes in NAV in respect of ULIP 15 Understanding about the pattern of changes in NAV in respect of ULIP 16 The volume of premium is affordable compared the coverage in Term Plans 17 Easy to calculate the Premium for Endowment plans 18 It is difficult to understand the buying price fixation mechanism in respect of ULIP. 19 Confidence about the appropriate buying-time in respect of ULIP. 20 Confidence about the appropriate buying price in respect of ULIP. 21 The premium of Term Plans are confusing 22 Premium amount of ULIP is simple as Sum Assured is multiple of Premium

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Premium multiplication for Sum Assured to avail tax benefit u/s 80C are known to me in respect to ULIP 24 Having proper Knowledge of Riders 25 Extra Premium charged due to sub standard age proof are explained properly 26 Premium is a factor of Age, as age increases premium increases in case of traditional plans 27 Premium is independent of Age in respect of ULIP Source: Questionnaire Respondents were requested to respond to item number 1 to 27 under Questionnaire III in a 5 point scale in respect to their expectations as well as their experiences, to what extent they are agree or disagree with respect to items selected for the study under five categories i.e., Strongly Agree (SA), Agree (A), Neither Agree Nor Disagree (NAND), Disagree (DA), Strongly Disagree (SDA), using tick marks only. Then these categories were assigned scores as Strongly Agree (SA) equals to 2, Agree (A) equals to 1, Neither Agree Nor Disagree (NAND) equals to 0, Disagree (DA) equals to -1, Strongly Disagree (SDA) equals to -2, the data so generated were subjected statistical treatment using SPSS. The scores of individual items by a single respondent were totaled. This total represented the 'Degree of Customer Cost Dimension Expected' of that single respondent. Similarly, the total of the 'Degree of Customer Cost Dimension Experience' was derived.

NORMALITY TEST OF DATA OF EXPECTATION AND EXPERIENCE ON CUSTOMER COST DIMENSION
One Sample KS test was used to test the Normality of Distribution of the data relating to the 'Degree of Customer Cost Dimension Expected' and the 'Degree of Customer Cost Dimension Experienced' in respect to each of the areas as well as the overall data. The results of one sample KS Test are shown in Table 3. The test revealed that the data distribution does not follow the Normality of sample Distribution at overall as well as District Headquarter level. This is because the Asymp. Sig. (2-tailed) values of both the Customer Cost Expected and Customer Cost Experienced were found to be less than 0.05 (at 5% level of significance). From the above analysis it is observed that only non-parametric tests are suitable for studying test of significance of the main hypothesis.

COMPUTATION OF TEST STATISTICS & DECISION OF CUSTOMER COST DIMENSION
Since the data in consideration do not follow normality of distribution, Wilcoxon Sign-rank Test was applied to test the hypothesis considered in this Chapter -"There is no significant difference between the 'Degree of Customer Cost Dimension Expected' and the 'Degree of Customer Cost Dimension Experienced' of 4C based Marketing Mix with respect to Life Insurance in Guwahati".
Wilcoxon Signed-rank test revealed that the null hypothesis i.e., "There is no significant difference between the 'Degree of Customer Cost Dimension Expected' and the 'Degree of Customer Cost Dimension Experienced' of Marketing Mix with respect to Life Insurance in Guwahati" is rejected [This is discernable from the

CONCLUSION
Given the Objectives, Hypothesis, and Methodology considered in this Chapter, it may concluded that there is significant difference between the 'Degree of Customer Cost Expected' and the 'Degree of Customer Cost Experienced' of 4C based Marketing Mix with respect to Life Insurance in Guwahati. The area-wise analysis also revealed similar results with respect to the each of the area considered in the study. Moreover, the Cross-Sectional analysis revealed that there is predominance of Insurance Investors with Negative Image; Investors with Positive and Neutral Image are in the minority.
In addition, Wilcoxon Signed-rank test revealed that the null hypothesis i.e., "There is no significant difference between the 'Degree of Customer Cost Dimension Expected' and the 'Degree of Customer Cost Dimension Experienced' of Marketing Mix with respect to Life Insurance in Guwahati" is rejected. Stating differently there is a significant difference in the population between the 'Degree of Customer Cost Dimension Expected' and the 'Degree of Customer Cost Dimension Experienced'.
The findings if the current chapter suggests that for Customer focused product development, the Customer Cost (Price) is an important factor and must be factored into. The Actuary must develop the pricing based on the Gaps (Positive/ Neutral/ Negative) of investors, and the price must be simple, easy and affordable for the individual investors.