funeral services
TRANSCRIPT
SIBM Pune
Funeral Services
Is Indian Consumer Ready for Commercialization in this Area?
Shreyansh Chauhan – 35146, Ramneek Puri – 35181, Vikas Mulchandani – 35201, Yuvraj Suryavanshi - 35204
2/11/2013
ContentsContext.......................................................................................................................................3
Literature Review.......................................................................................................................4
Gaps in Current Literature.....................................................................................................6
Research Methodology...............................................................................................................7
Literature Review and Hypotheses Generation......................................................................7
Sampling and Data Collection...............................................................................................7
Tools Used for Data Analysis and Rationale.............................................................................8
Description of Collected Data....................................................................................................8
Managerial Implications & Discussion (on findings & interpretations)..................................12
Data category 1: Data based on respondents’ Age (Young, Elderly)..................................12
Data category 2: Data based on respondents’ City Type (Tier1, Tier2, and Tier3).............13
Data category 3: Data based on respondents’ Faith (Hindu & Non Hindu)........................14
Findings from Focus Group Discussions.............................................................................15
Findings from visit to Crematorium:....................................................................................16
Conclusion................................................................................................................................17
References................................................................................................................................18
Appendix 1: Data analysis for categorization based on respondents’ age...............................20
Appendix 2: Data analysis for categorization based on respondents’ age...............................22
Appendix 3: Data Analysis for Tier1 City Respondents..........................................................24
Appendix 4: Data Analysis for Tier2 City Respondents..........................................................26
Appendix 5: Data Analysis for Tier3 city Respondents...........................................................28
Appendix 6: Data Analysis for Hindu respondents..................................................................30
Appendix 7: Data Analysis for Non Hindu respondents..........................................................32
2
Context
The funeral services are viewed in a negative light due to the morbid nature of the issue it
resolves. But most people will, at some point of time in their life, be compelled to buy these
products and services. It definitely offers a good business opportunity which can be harnessed
to reap profits which has been proven in practice and also through researches in the
developed economies like US, UK etc. In India, the funeral services industry is in a fledgling
state and hence can provide a huge scope for commercialization. The purpose of this project
is to gauge the level of awareness and acceptability of funeral services in India.
The data collected through various surveys, questionnaires and focused group discussions is
analyzed on various aspects. Firstly, the sample population has been segmented on basis of
age where we have divided the population into two groups i.e. young and elderly. Second
segmentation has been done on the basis of the type of city namely tier I, tier II and tier III.
Thirdly, the data has been segmented on the basis of faith i.e. Hindus and non Hindus.
This report also tries to uncover the gaps in the existing funeral services in the city of pune.
Focused group discussions have also been used to identify the perceptions of people towards
funeral services.
3
Literature Review
Lensing (2001) examined the recent trends which have led to greater acceptability of funeral
services business in USA.
She argues that now-a-days providing basic funeral services is not the only product of funeral
homes, but also they provide grief support or aftercare. The paper described the emotional
and scientific ways for grief support which includes a wide range of services.
In another paper, Schwartz, Jolson, Lee (1986), concludes that three peculiar characteristics
are associated with the purchase of funeral services – 1) Lack of prior information including
price consideration, 2) Time pressure, 3) Disturbed emotional state.
Schwartz et al., (1986), also argue that there are few other transactions where purchase price
is so large and buyer’s bargaining power low. The situation directly contradicts the finding of
Newman and Staelin, (1973) that the more the price of the purchase, more will the time
required by the consumer to take purchase decision.
Irion, (1976) classifies a consumer’s needs during this period of emotional trauma into four
categories: Psychological, Sociological, Theological, And Physical.
Abrahams (2011), talks about the funeral services industry in South Africa, examines two
business models of franchises and independent operators. The importance of good
recruitment process for funeral directors is also stressed upon.
Abrahams (2011) spotted the modern day trend of green cremation/burials.
The scope for strategic tie-ups between banks and funeral services providers is spotted and
examined by Chen, Huang (2003). There is ample scope for these types of model to develop
in future in Taiwan.
Ein (2004) examined trends on the future of Death Care industry in the USA. He identified
declining death rate as the most important trend affecting Death Care industry.
The Director (2001), spotted in its issue the burgeoning trend of preplanning funeral
arrangements.
4
Carnells, further identified certain trends in Death Services in Northern America. Single
Ownership of Multiple Locations as the first trend. The second trend analyzed was that of
preplanning. Third trend identified was the movement towards cremation, while growth of
burials has remained relatively flat. And lastly a fourth trend of increasing number of price
conscious consumers was identified.
Hermanson (2000), wrote a research paper highlighting similar trends of preplanning. She
claims that consumers chose cremations because it: saves money (25%); saves land (17%); is
simpler (13%) and prevents body from being on earth (11%).
Meeks (2011), explored the challenges faced by professional large size Death Service
players. He believes that growing reliance on preneed sales creates top-line volatility, and
generates investment risk for the industry's players.
Datamonitor (2011), a leading business information company in USA, conducted a SWOT
analysis of one of the leading providers of funeral products and services in business in North
America (Service Corporation International).
In an article written by Shaw (2009), he discusses the challenges faced by the funeral services
and how the industry is coping with it. The biggest challenge faced by the industry, he
contends, is the marked preference for cremations over the traditional funerals.
An article in funeral-home-financing.com discusses about the industry dynamics of the
funeral homes industry. The industry typically consists of family owned businesses which are
owned for over a few generations. The industry is very fragmented and consists of localized
players which may be subdivided into religion, cultural or ethnic backgrounds. The failure
rate in the industry is as low as 1%. The demand for the services is affected by the death rates
and population density.
Walsh, J. (2011), over past several years there has been an evident trend of people moving
towards cities. This has a direct bearing on the funeral services. As more and more people
join an urban environment in which they are less connected with their rural antecedents, the
emerging middle classes are finding the need to arrange funerals themselves.
Walsh, J. (2011), examines that companies seeking to enter the market will need to consider
carefully the ways in which they will need to educate and develop their potential customers to
overcome any resistance.
5
6
Gaps in Current Literature
Literary review of various secondary sources has shown clear movement of highly
personal and emotional death services to a more professional and effective arena. Research in
this area has been limited mainly to developed economies of the USA, Canada, UK & Japan.
Through our research we intend to seek the validity of these services in an Indian context, for
which the studies till now have been unsatisfactory. Through primary research we seek to
find the level of awareness and acceptance of these services by Indian consumers. To further
this motive this project has explored challenges faced by these service providers, challenges
in marketing these services, understood the need of consumers, saw various pricing models,
analyzed various trends, ascertained the industry and appreciated the uniqueness of this issue.
7
Research Methodology
Literature Review and Hypotheses Generation
The research started with the review of literature available on funeral services and
determination of gaps in literature for professional funeral services in India. After literature
reviews following hypotheses were identified for testing:
1) The awareness of professional funeral services, in terms of availability of traditional
and value added services, is low in India
2) The acceptability of commercialization of funeral services in India is low, but it will
grow in future
3) It is financially feasible to develop a profitable business model for professional
funeral services
Sampling and Data Collection
The data was collected through a questionnaire (refer Appendix) for two group types. First
were the people who had been consumers of funeral services in the past and second group
was people who will need to avail funeral services in future. The questionnaire included
several scales which were continuous and categorical in nature. The responses were recorded
and data was segregated for analysis based on three consumer characteristics:
1. Age groups (18-30yrs, 45-60yrs)
2. City lived in (Tier1, Tier2, Tier3)
3. Faith (Hindus and Non-Hindus)
Random convenience sampling was used for future consumers and targeted convenience
sampling was adopted for past consumers of funeral services. Method of data collection for
18-30yrs consumer group was through online/manual filling of questionnaire, while for 45-
60yrs age group consumer questionnaire was filled by taking personal/telephonic interviews.
Total 87 respondents filled the questionnaire, out of which 15 were interviewed.
In addition to this primary exploratory research was done by conducting Focus Group
Discussions for future consumers to know their views and expectations from
8
commercialization of these services. Visits to three cremation grounds were also a part of
primary research with the aim of finding out the gaps in current offerings.
Tools Used for Data Analysis and Rationale
Continuous and categorical scales were used to collect respondents’ opinion on various
decision points. Descriptive statistics was employed to present information collected from the
respondents. Mean scores were calculated for individual data groups on each of decision
criteria to determine the perception / opinion of respondents within the data groups.
Independent t-tests were used to determine if significant differences existed between the
mean scores of various data groups. t-test with 95% confidence (α = 0.05) level was used to
study the difference in results between comparison groups on different parameters.
Description of Collected Data
As described before the collected data was segregated into three data categories to compare
the results based on these three uncontrollable pivot variables (Age group, Faith and City
type). Data was analyzed using descriptive statistics and summarized in the tabulated form.
Data category 1: Data based on respondents’ Age (Young, Elderly)
The table below shows the measure of central tendency and respective standard deviations for
various decision points when respondents were segregated according to their age (Young,
Elderly).
9
The second table below shows the t-test results for various decision points when data was
segregated according to respondents’ age (Young, Elderly)
10
Data category 2: Data based on respondents’ City Type (Tier1, Tier2, and
Tier3)
The table below shows the measure of central tendency and respective standard deviations for
various decision points when respondents were segregated according to their home city type
(Tier1, Tier2, and Tier3).
The second table below shows the t-test results for various decision points when data was
segregated according to respondents’ home city type (Tier1, Tier2, and Tier3)
11
Data category 3: Data based on respondents’ Faith (Hindu & Non Hindu)
The table below shows the measure of central tendency and respective standard deviations for
various decision points when respondents were segregated according to their faith (Hindus
and Non-Hindus).
The second table below shows the t-test results for various decision points when data was
segregated according to respondents’ faith (Hindu and Non Hindu)
12
Managerial Implications & Discussion (on findings &
interpretations)
Data category 1: Data based on respondents’ Age (Young, Elderly)
The data collected was segmented into 2 categories i.e. young (below 40) and elderly (above
40). It was observed that on an average a young person considered the cost of arranging a
funeral to be around 78000 while the group of elderly considered the cost to be around 33000
on an average. On the other hand, the perception of the sample on the costs for outsourcing
the funeral to a funeral service provider was that the young considered the cost of outsourcing
to come down while the elderly considered the costs to go up. The t-test showed that there
was a marked in thinking of the young and the elderly.
Moreover, it was found that only 22% and 23% of respondents were willing to invest in
advance in the funeral services in young and elderly categories (see Appendix 1.b;2.b). On
being given a situation where they had to invest in advance for the funeral services, most of
the respondents chose packaging along with the life insurance as their first preference in both
the young and elderly category (58% and 54% respectively) (see Appendix 1.c;2.c).
Another trend that came out from the data collected was that most of the people preferred
conducting of the funeral rituals in funeral homes rather than their homes. This is indicative
of a need generated due to shrinking of household spaces which can be catered to as part of
the funeral service (see Appendix 1.d;2.d).
Furthermore, the characteristics that people desired most in a funeral service were the ability
to conduct the rituals of a particular faith as per the faith’s prevalent norms and
trustworthiness (see Appendix 1.e;2.e).
13
Data category 2: Data based on respondents’ City Type (Tier1, Tier2, and
Tier3)
The data collected shows that all three types of cities consumers believe that arranging a
funeral service on own without taking professional help will cost them more rather than
outsourcing it to a funeral service provider. Also the perceived cost of arranging a funeral is
highest for tier1 city and least for tier3 cities. Also though a small proportion (25%, 12% &
11% for tier1, tier2 & tier3 respectively) is willing to invest in advance for their funeral, those
who opt for it are quite willing (2+ at a scale of 0-5). (See Appendix 3, b; 4, b & 5, b)
Acceptability for traditional cremation is most followed by electric cremation and traditional
burial. A main reason for this can be that a large proportion of population believed in
Hinduism. While modern and green ways of funeral like burial without coffin, green coffins
etc. are not looked at in a positive way.
For professional funeral services consumer give most importance to trustworthiness, followed
by local rituals/customs. Funeral services being very emotional and considered very sacred in
nature, from the given parameters, customers are least concerned about price of the service.
Due to continuously shrinking size of apartments/homes most people prefer to conduct
funeral at funeral homes and this number is highest in case of tier1 cities and lesser for tier2
and tier3 (90%, 86% and 73% respectively). (See Appendix 3, d; 4, d & 5, d)
Only respondents of tier1 cities saw a funeral service provider contacting them to give
information about his offerings in a positive light (14%), in tier2 and tier3 cities no
respondent answered in a positive way. (See Appendix 3, e; 4, e & 5, e)
Independent t-stats for all these decisions points show that there not a significant difference
between opinions of respondents of tier1, tier2 and tier3 cities except for the acceptability of
traditional burial, which might be due to the fact that in tier2 respondent group there were no
non-Hindu respondents.
14
Data category 3: Data based on respondents’ Faith (Hindu & Non Hindu)
It was important to understand the effect of faith on the perception / opinion of the
respondents. The respondent data was segregated into Hindus and Non-Hindus. This
segregation pattern was because of the fact that 80% of the respondents were Hindus.
When respondents were inquired about the first contact point in case of death of a loved one
both Hindu and Non Hindu respondents agreed that they got in touch with an acquaintance
who had gone through a similar situation recently (51% and 43% respectively) (Appendix 6,a
; Appendix 7,a). The response towards the possibility of investing in advance for funeral
service was negative for both the categories (79% and 71% respectively). This showed that
irrespective of faith, there is a lower acceptability towards such investment linked to funeral
services. However when they were asked about preferable medium, in case investment
becomes a compulsion, LIC was the most preferred option.
Commercial aspect of such service would entail sales pitch to individuals. When checked
about their reaction to such a pitch, irrespective of faith, negative reaction was observed
(Appendix 6,e ; Appendix 7,e).
When inquired about whether they would like to avail the facility of Funeral Parlors
(designated places where funeral service can be organized), the opinion of both the categories
differed. 84% of Hindu respondents were willing to use this facility whereas only 50% of the
Non Hindu respondents showed their willingness to use the same. This can be attributed to
the elaborate customs involved in Hindu religion which span over several days. It becomes
more convenient to use such facility. This difference is visible through the t-stat value which
was on the verge of being significant (t-stat : 1.939, t-critical : 2.028)
Mean scores were calculated for both groups on each opinion / perception. Independent t-test
was used to determine if significant differences existed between the mean scores. Statistical
significance was tested at α = 0.05.
No significant difference was found in the factors apart from
15
Findings from Focus Group Discussions
Perception of respondents about using Professional Funeral services
1) Means that we do not care about the departed and do not want to take responsibility of
the deceased.
- But even in US, the relatives of the deceased make sure that every care is taken of the
deceased’s body and that he is given all the respect that is possible
2) There are a number of diverse cultures in India and taking care of all the rituals
associated with every religion is difficult for the service
- But if this problem can be tackled, then there can be acceptability towards the service
Reasons respondents feel that could lead to increasing acceptability of funeral services in
future
1. Lack of time amongst the younger population
2. Perception that priests/pundits take undue advantage of the emotional distress of the
family members of the deceased and extort money out of them
3. Coming up of nuclear families (see Appendix)
4. Kids staying abroad with parents in India
5. Lack of knowledge of the rituals in the current generation
- Example of the service of child crèches where the public was averse initially to the
service but today it has become a part of our lives.
How to overcome the problem of creating awareness
1) Use of priests as opinion leaders as people do not know what needs to be done and
they ask the priest about what needs to be done
2) Hospitals to promote awareness during the time of death
3) Take contract from municipal corporations to take care of unclaimed bodies
4) Promotions at Old age homes
5) Promotions at organ donation centers
16
Findings from visit to Crematorium:
In order to get the suppliers perspective, a survey was conducted on the crematorium in and around Pune. The nearest geographical location, Pashan was the key focus. We found that this region has three crematoriums namely:
1. Sutarwadi Smashan Bhumi2. Pashan Smashan Bhmi3. Sus Gaon Smashan Bhumi
All these three crematoriums are owned and run by Pune Municipal Corporation. The intent behind running them is public welfare. Following were the observations made at these places:
1. There was no caretaker present to help with the proceedings2. All the necessary material, required for cremation was to be brought by the customers3. There was no shop present in the vicinity to help with required material4. Only wood was available around in the vicinity5. No designated priest was present6. There was only one phone no. present on a A4 size poster which was not reachable7. The cost of wood required varies between 8000 to 10000
Posing as a customer we tried to find out what challenges a potential customer would face when he / she encounters such a situation. Given the above observations, there was not much support present at such a critical juncture of life.
People moving in from different cities, who are in this age group, will require a one stop solution to tackle this.
17
Conclusion
Hypotheses 1: The awareness of professional funeral services, in terms of availability of
traditional and value added services is low in India.
Conclusion 1: This hypothesis is true as people are not aware of the presence of such services
in India. There are a few funeral services, like Antim Samskar, already existent in India but
the awareness among the people is pretty low about such services.
Hypothesis 2: The acceptability of commercialization of funeral services in India is low, but
it will grow in future.
Conclusion 2: This hypothesis is true as right now people are averse to using funeral services.
There is almost no acceptability for investing in advance for such services but such services
can be used as an integrator of the currently working services which operate in silos. Like
arrangement of ambulance, arrangement of priests, acquiring of death certificates can be
integrated and provided as part of the funeral services.
Hypothesis 3: It is financially feasible to develop a profitable model for professional funeral
services.
Conclusion 3: According to our findings, people are ready to use funeral homes for the
conduction of all the rituals associated with a funeral which will be a major contributor
towards the business model. Moreover, people accept that outsourcing of such services will
lead to cost reduction for them. This is an opportunity which can be tapped and promotions
and awareness of such services can lead to increased acceptability in people. Also, perception
of people about after care services is positive and this can also be a good opportunity to tap.
18
References
Lensing, V. (2001). Grief support: the role of funeral service. Journal of Loss & Trauma, 6,
45-63.
Schwartz, M.L., Jolson, M.A., Lee, R.H. (1986). The marketing of funeral services: past,
present, and future. Business Horizon, March-April, 40-45.
Newman, J.W., Staelin, R. (1973). Information sources of durable goods. Journal of
Advertising Research, April, 19-30.
Irion, P.E. (1976). The funeral and the be-reaved. Springfield, Charles C. Thomas Co., [1],
67.
Abrahams, G. (2011). How to start a funeral business. Entrepreneur Magazine, SA,
November.
Chen, M.S., Huang, C.H. (2003). Increasing the deposit business of commercial banks by
developing the strategic alliances with the funeral services industry. International
Journal of management, December, Vol.20 No.4, 423-429.
Ein, J. (2004). The future of the death care industry. Forbes Magazine, August.
http://www.forbes.com.
Carnells, G. Trends in funeral service. Carnell’s Funeral Home. http://www.carnells.com.
(2001). The director. National Funeral Directors Association Publication. September.
Hermanson, S. (2000). The death care industry. Public Policy Institute, Research Group.
http://research.aarp.org.
Meeks, B. (2011). Dark clouds for the death-care industry. http://seekingalpha.com.
Datamonitor (2011). Service Corporation International. Research Article, October.
http://www.funeral-home-financing.com/funeral-home-industry.html
Spencer, M.(2005). Industry analysis: funeral services. www.valueline.com.
Shaw, S. J. (2009). The life and death struggle for survival in the funeral. www.loma.org
19
Walsh, J. (2011). Suriya coffins: traditions become market opportunities. Society and
Business Review, Vol. 6 Iss: 2 pp. 168-175
Parker, P. M. (2009). The 2009-2014 outlooks for funeral homes and funeral services in
India. www.icongrouponline.com
Parker, P. M. (2009). The 2009 report on funeral homes and funeral services: world market
segmentation by city. www.icongrouponline.com
20
Appendix 1: Data analysis for categorization based on
respondents’ age
a)
45%
18%
18%
9%
9%
You contact __ for help during funeral(Young)
Close Relatives
Good Friends/Neighbour
Priest
Professional Funeral Services
Acquaintance who has gone through the same process
b)
23%
78%
I am willing to invest in advance with funeral service providers for my funeral (Young)
YesNo
21
c)
59%
15%
12%
15%
Preference for advance funeral investment (Young)
Life InsuranceDirect Contract with funeral service providerWillFixed Deposit
d)
22%
78%
Keeping space availability in mind, I will prefer to conduct funeral at
(Young)
Own HouseFuneral Homes
e)
7%
44%
49%
My Reaction when a funeral service provider approached me (young)
PositiveNeutralNegative
22
Appendix 2: Data analysis for categorization based on
respondents’ age
a)
77%
23%
You contact __ for help during funeral(Elderly)
Close Relatives
Good Friends/Neighbour
Priest
Professional Funeral Services
Acquaintance who has gone through the same process
b)
23%
77%
I am willing to invest in advance with profes-sional service providers for my funeral (Elderly)
YesNo
c)
54%
31%
15%
Preference for advance funeral investment (Elderly)
Life InsuranceDirect Contract with funeral service providerWillFixed Deposit
23
d)
17%
83%
Keeping space availability in mind, I will prefer to conduct funeral at
(Elderly)
Own HouseFuneral Homes
e)
6%
41%53%
My Reaction when a funeral service provider approached me (Elderly)
PositiveNeutralNegative
24
Appendix 3: Data Analysis for Tier1 City Respondents
a)
43%
10%
23%
10%
13%
I contacted ___ for arranging funeral, when one of my loved one died
b
25%
75%
I am willing to invest in advance with pro-fessional service providers for my funeral:
1 2
c)
59%18%
14%
9%
If I MUST invest in advance, my preference for advance funeral investment (Rank 1 as most
preferred)
1234
25
d)
10%
90%
Keeping space availability in mind, I will prefer to conduct funeral at ______
12
e)
14%
41%
45%
My reaction when a funeral service provider comes to me with selling information:
123
26
Appendix 4: Data Analysis for Tier2 City Respondents
a)
75%
13%
13%
I contacted ___ for arranging funeral, when one of my loved one died
1234
b)
13%
88%
I am willing to invest in advance with pro-fessional service providers for my funeral:
12
27
c)
50%
13%
13%
25%
If I MUST invest in advance, my preference for advance funeral investment (Rank 1 as most
preferred)
1234
d)
14%
86%
Keeping space availability in mind, I will prefer to conduct funeral at _____
12
e)
25%
75%
My reaction when a funeral service provider comes to me with selling information:
123
28
29
Appendix 5: Data Analysis for Tier3 city Respondents
a)
50%
25%
8%
17%
I contacted ___ for arranging funeral, when one of my loved one died
1234
b)
11%
89%
I am willing to invest in advance with pro-fessional service providers for my funeral:
12
30
c)
58%
17%
8%
17%
If I MUST invest in advance, my preference for advance funeral investment (Rank 1 as most
preferred)
1234
d)
27%
73%
Keeping space availability in mind, I will prefer to conduct funeral at _____
12
e)
58%
42%
My reaction when a funeral service provider comes to me with selling information:
123
31
32
Appendix 6: Data Analysis for Hindu respondents
a)
51%
11%
20%
9%9%
I contacted ___ for arranging funeral, when one of my loved one died
One of my close relativesOne of my good friends/ My neighborPriest/Rabbi/Pundit/MaulanaProfessional Funeral Service ProviderAn acquaintance who had gone through a similar situation recently
b)
21%
79%
I am willing to invest in advance with pro-fessional service providers for my funeral:
Yes No
33
c)
53%
14%
19%
14%
Investment options for Funeral ServicesAs a package with Life Insurance Direct contract with funeral service providerSetting money aside in my will Fixed deposit with banks
d)
16%
84%
Keeping space availability in mind, I will prefer to conduct funeral at _________
own home funeral parlor
34
e)
6%
29%
65%
My reaction when a professional from funeral home/parlor comes to me for selling funeral
packages:Positive Neutral Negative
35
Appendix 7: Data Analysis for Non Hindu respondents
a)
43%
14%
14%
14%
14%
I contacted ___ for arranging funeral, when one of my loved one died
One of my close relativesOne of my good friends/ My neighborPriest/Rabbi/Pundit/MaulanaProfessional Funeral Service ProviderAn acquaintance who had gone through a similar situation recently
b)
29%
71%
I am willing to invest in advance with pro-fessional service providers for my funeral:
Yes No
36
c)
71%
14%
14%
Investment options for Funeral ServicesAs a package with Life Insurance Direct contract with funeral service providerSetting money aside in my will Fixed deposit with banks
d)
50%50%
Keeping space availability in mind, I will prefer to conduct funeral at _________
own home funeral parlor
e)
30%
70%
My reaction when a professional from funeral home/parlor comes to me for selling funeral
packages:Positive Neutral Negative
37
38