PROJECT PROPOSAL PROJECT TOPIC: THE INFLUENCE OF ADVERTISING ON THE ACCEPTANCE OF INSURANCE NAME: COURSE CODE: MAS 899

(RESEARCH PROJECT)

INTRODUCTION/BACKGROUND TO THE STUDY The role of advertising in todays marketing cannot be

overemphasised. It has even been argued, that in the promotions aspect of marketing, advertising plays the point, that is, that all other promotional activities are built and/or themed around advertising in a bid to achieve what marketing professionals describe as 3600 communication (Merenda, 2012). Be it in the services and allies industries, or in the FMCGs or manufacturing sectors, clearly the role of advertising is clear: to create interest in a value offering, support other marketing efforts (e.g. personal selling), enhance goodwill and induce preference, promote sales, and ensure brand differentiation (Shimp, 2007; Khan, Kamble and Khatri, n.d; Belch and Belch, 2004; Boone and Kurtz, 2007).

Many

institutions

including

insurance

companies

spend

considerable portion of their time, energy and resources chasing new business. Underlining the importance of replacing lost business, growing the business and expand into new markets, one of the primary goals should be to keep existing customers and enhance customer relationships. Conventional wisdom

suggests that it costs at least five times more to get a new customer than to keep an existing one (Weinstein, 2002). According to Weinstein, in many markets, share of customer, which is a customer retention measure, has supplanted market share, which is a customer attraction measure, as the relevant business performance of objective. Consequently, a good helps

understanding

customers

purchasing

patterns

companies keep customers and gain a greater share of their business. This applies also to insurance companies. Customer satisfaction, customer loyalty and customer retention are

important intermediate goals for financial service providers on their way to superior economic success in the liberalised markets. As market growth slows or as the markets become more competitive, companies will more likely attempt to maintain their market share by focusing on retaining existing customers, rather than attempting to attract new customers. Customer retention
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has been advocated. To improve customer retention, companies initiate a variety of activities, including programs on customer satisfaction (Rust & Zahorik, 1993), complaint management (Fornell & Wernerfelt, 2003), and loyalty (Reichheld, 2000). Speed and Smith (1992) advocate the use of segmentation as a way to improve customer satisfaction, customer loyalty and customer retention. However, before customer retention, which is key to growth of any business, including insurance is achieved, there must first be concerted marketing efforts directed at creating awareness, inducing preference and fostering brand experience. However, with a service sector as fraught with concerns and legitimacy issues as insurance, attempts at promotion, especially

advertising, may not be as effective as in creating the preferred attitude towards insurance, especially in Nigeria. Yusuf,

Gbadamosi and Hamadu (2009) state that in Nigeria, insurance penetration is still at an all-time low due to lack of trust and confidence in the insurance companies, as well as the dearth of knowledge about insurance product (Omar, 2005). Socio-cultural factors and religious dogma has also not aided the cause of insurance penetration, especially with reference to life insurance products. From the submissions of authors on advertising, it is
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clear that these primary problems: poor perception of insurance products, and lack of knowledge a result of little or no information on insurance can be addressed through a strategic marketing campaign that disseminates information adequate enough to change negative impressions whilst ensuring that the consumers have information on the advantages of insurance, especially in the face of the uncertainty that pervades the living and operating environment in Nigeria. Recently, insurance companies led by the National Insurance Commission organised an advert campaign to increase

sensitisation of Nigerians on the need for insurance. While there has been considerable growth in the sector, with policy holders going up from 500,000 in 2010 to 1.5million in 2012 (Duru, 2013), it is arguable that this upsurge was as a result of the campaign. Hence, this study. Particularly, this study takes an empirical look at advertising in a service industry, with reference to insurance. The specific interest of the researcher is to determine the extent to which acceptance of insurance products (or the chance that insurance products will be more acceptable in future) is as a function of advertising, using Royal Exchange Assurance Plc as a case in note.

PROBLEM STATEMENT There is a view among experts that insurance is key to the sustained economic development of every country. According to Abede (2006), this is because the insurance industry plays a very significant role in the utilisation and application of investible funds in an economy. It also acts as the absorber of the risks and uncertainties normally associated with economic activities. This means that the absence of a viable insurance sector can greatly reduce the growth of economic activity. By implication, insurance must enjoy a high level of penetration in any developing economy that is interested in managing its risks as it makes investments towards a better future. However, such is not the case in Nigeria, which only has 1.5 million policy holders in a population of over 160 million people. The relevance of the insurance industry is even more evident in such less developed economies as Nigeria, where the financial system is not very sophisticated and where there is lack of basic infrastructures required to aid the growth of the economy. While corporate governance issues and concerns in the financial regulations regime need to be reappraised and realigned to
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ensure growth in the sector, there is also the need to cultivate a better insurance culture among the Nigerian populace. Insurance for the small-scale industries presents a vital area where conscious efforts at cultivating insurance culture can be helpful to the growth of insurance in Nigeria. Experience has shown that many private sector business entrepreneurs are unaware of the benefits they may derive from insurance. Even where they are aware, they may not know of the type or class of insurance that may be beneficial to their business and themselves. This clearly creates a need for advertising. A look at the landscape would show that there have been a number of advertising campaigns by insurance companies, and in the build-up to the global financial crises, many insurance companies joined their banking counterparts to embark on heavy advertising and promotions campaigns. With the fall of the capital market and the subsequent loss of confidence in insurance products in a country where insurance penetration was already too low in the first place there was another campaign organised by all advertising agencies to reinforce the need for the grooming of an insurance culture in Nigeria. This study therefore looks at advertising by insurance companies in Nigeria vis--vis the level of acceptance that insurance
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currently enjoys among the populace, pinpointing its efforts on Royal Exchange Assurance Plc.

PURPOSE OF THE STUDY The purpose of this study is to determine the extent to which advertising can help to improve the level of acceptance that insurance enjoys among Nigerians, using Royal Exchange

Assurance as a case.

OBJECTIVES OF THE STUDY This study is guided by the following objectives: 1. To determine the extent to which members of the public are exposed to advertisements on insurance by insurance companies (REAN Plc); 2. To establish a relationship between exposure to insurance advertising and knowledge of insurance products; 3. To find out if knowledge of advertising products through advertising has positive or negative implications on product preference; and

4. To

associate

product

acceptance

as

determined

by

patronage with advertisement of said products

RESEARCH QUESTIONS Following from the objectives of the study, the following questions were asked: 1. To what extent are members of the public are exposed to advertisements on insurance by insurance companies (REAN Plc)? 2. Does any form of relationship exist between exposure to insurance advertising and knowledge of insurance products? 3. Does knowledge of advertising products through advertising have positive or negative implications on insurance product preference? 4. To what degree can product acceptance as determined by patronage products? be associated with advertisement of said

RESEARCH METHODOLOGY

Given the nature of the study and the kind of answers being sought, a quantitative method would be used. Survey will form the primary research method, and 200 members of the public from Lagos metropolis will be selected to form the sample through a stratified sampling process.

SIGNIFICANCE OF THE STUDY The importance of this study is multi-dimensional. Firstly, it will provide a comparative study of the advertising as a promotional tool and how they are used in insurance companies. Also, this study will focus more importantly on how insurance companies should and can position this promotional tool for maximum benefits, while providing insight on the problems of acceptance of insurance in Nigeria. Moreover, the importance of this study lies in its potential benefits such as adding to the growing contribution of literature in the subject area; also, to serve as reference material for future researchers in this field of study. Integrated marketing communications practitioners, advertising practitioners, corporate communications and product

development team of insurance companies, students, the media

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industry, business organizations and the public in general as well as researchers who may be interested in the subject matter will find the outcome of this study relevant to their practices as it provides insight into ensuring that promotional tools are used effectively in solving marketing problems.

SCOPE AND DELIMITATION OF THE STUDY The organisational scope of this study is Royal Exchange Assurance Plc, and all the findings would apply strictly to them. The researcher is also conscious of the fact that the sample for the survey is restricted to Lagos State-based insurance customers and therefore also ensures that generalizations are limited only to Lagos State. Replication studies into other insurance firms and other states would have to be conducted to determine the extent to which findings would apply to them as well. LIMITATIONS This study will expectedly suffer some limitations. These would include time to do a more rounded study and look at all possible angles due to the tight schedule of the researcher (she is a parttime student with other non-academic responsibility).

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The researcher expects that literature abounds on the subject in libraries, bookshops and on the Internet, and therefore does not expect this to present a concern.

OPERATIONAL DEFINITION OF TERMS Advertising: Various definitions of advertising are available to explain the term. According to Bovee and Arens, advertising is the non-personal communication of information, usually paid for and usually persuasive in nature, about product (goods and services) or ideas, by identified sponsor through various media. Insurance: A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.

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REFERENCES Merenda, K. D. (2012) Principle Four: Develop 360-Degree Brand Communications. [Online] Available at

http://purpose.edelman.com/principle-four-develop-360degree-brand-communications/#sthash.z2Uyrxpg.dpuf, retrieved on 27/08/2013 Shimp, T. A. (2007) Advertising, Promotion, and Other Aspects of Integrated Marketing Communications, (7th Edition), Ohio: Thomson/South-Western Khan, R. R., Kamble, S. R. and Khatri, R. (n.d) Introduction: Advertising being study content of S.Y.B.A / S.Y.B.Com. ADVERTISING Course Module prepared for the Institute of Distance and Open Learning, University of Mumbai Duru, N (July 10, 2013) Number of Insurance Policyholders Rises to 1.5 million being online news story available at http://www.thisdaylive.com/articles/number-of-insurancepolicyholders-rises-to-1-5-million/152912/, 20/08/2013 Weinstein, A. (2002). Customer-specific strategies - Customer retention: A usage segmentation and customer value approach. Journal of Targeting, Measurement and Analysis
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retrieved

on

for Marketing, Vol. 10 (3), 259-268. American Marketing Association Reichheld, F and Sasser, W. (2000). Zero defections: quality comes to services. Harvard Business Review, SeptemberOctober, pp 105-111 Rust R and Zahonik, A, (1993). Customer satisfaction, customer retention, and market share. Journal of Retailing, Vol. 2 (69): pp. 193-215. Fornell, C and Wernerfelt, B (2003). Defensive marketing strategy by customer complaint management: A theoretical

analysis. Journal of Marketing Research, Vol. 24, Pp 337-346 Abede, O. H (2006) An Evaluation Of The Contributions Of Insurance Companies In The Economic Development Of Nigeria: A Case Study Of Nicon Insurance Plc , being thesis submitted to the Postgraduate School in partial fulfilment of the requirements for the award of the degree of Master In Business Administration (MBA). Boone, L. E., & Kurtz, D. L. (2007). Contemporary marketing (13th ed.). Mason, OH: Thomson/South-Western.

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Belch, G and Belch, M (2004) Advertising and Promotion: An Integrated Marketing Communications Perspective (6th Edition), USA: McGraw-Hill Irwin

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