The Impact of Internet Marketing on Insurance Service
Chapter One
OBJECTIVES OF THE STUDY
The main objective of the study is to examine internet marketing as a key driver of sales improvement in insurance services in Lagos Metropolis.
The sub-objectives of the study are to:
- Explore the relationship between the forms of internet marketing (email, search engine, online advertising and blog) and sales improvement of insurance services in Lagos metropolis.
- Examine the effects of the implementation of internet marketing on the performance of insurance services in Lagos.
CHAPTER TWO
LITERATURE REVIEW
Theoretical Review
The study was anchored on several theories that are captured hereunder:
Network/Social Network Theory
The network approach’s concept originates from several of the structural concepts brought forward by sociological thinkers such as Emile Durkheim, Georg Simmel and anthropologist Radcliffe-Brown whose research were largely based on comprehending the structure and impact of relational webs or “networks” of social associations between and among individuals. Network theory analyses all kinds of relationships, whether it is between people, animals or things. Social network analysis is an overlapping instrument used for learning about patterns that manifest within social networks and their influence on behaviour. Internet marketing channels are important in this respect since they allow marketers to listen and understand what is said by consumers, and also enable them to take advantage of the power of influential users so as to be able to spread the messages to other people in their networks. Research indicates that the very powerful users are those with the most impact across a number of differentiated networks.
The network theory sees social relationships in terms of nodes and ties. The nodes are the players within the networks, and ties are the relationships amongst the players. Various types of ties are present between the nodes, and in its basic form, a social network outlines all the relevant ties between the nodes being analysed. The network can also be used to “determine the social capital of individual players”. These ideas are usually exhibited in a social network diagram, where nodes represent the points while ties are the lines. This theory is useful in the study since it analyses how insurance companies can maximize their ‘networks’, in this case their customers.
Theory of Collective Intelligence
Collective intelligence refers to a process where large numbers of people can converge simultaneously upon the same point(s) of knowledge, while at the same time achieving intellectual performance. The theory of collective intelligence postulates that groups are generally smarter and more productive than the sum of the individuals. Crowdsourcing is an internet phenomenon in which projects are broken down into small, individual tasks that are distributed to a large number of individuals for completion, and is known to have collective intelligence characteristics. According to Tapscott and Williams (2008), for collective intelligence to exist, it requires four principles. These principles are openness, peering, sharing, and acting globally.
Openness: for collective intelligence to work to its full potential, it requires people and companies to present and be candid about their ideas to the people on the internet so that their products can be improved. Peering: taking old information or products and modifying them to match yours and others’ personal needs before releasing it to the public so that people can take utilize them. Sharing: it explains how intellectual property is required to be shared with others in the group. It is essential to allow for the constant exchange of ideas and critiques around which productivity is enhanced. Acting globally principle is based on communications technologies advancement that allows organizations to reach out across their entire collaborators’ network and to engage everyone. This concept overcomes challenges such as department and branch borders in an effort to capture and utilize new ideas, new talents, and new markets. This theory is useful in the study since it indicates how internet marketing is able to bring insurance companies and its consumers together to interact and be able to exchange ideas to come up with products or services that improve the whole experience.
Generational Theory
Generation theory explains that the era in which a person was born impacts their perception of the world. It also indicates that our value systems are shaped in the formative years of our lives through our families, friends, communities, significant events and the general era in which we are born (Jurkiewicz & Brown, 1998). Initiated by Strauss and Howe in 1991, generational marketing theory stipulates that consumers born during the same era, usually a 20-year period, have similar attitudes and behaviours due to shared experiences that influenced their childhood and moulded their world views. This current era can be defined as that of internet information which can be defined by the use of internet media. Generational theory is relevant to internet marketing based mainly on how each generation communicates and the online places where they can be accessed easily by marketers. This theory is useful to the study since assists insurance companies to identify customer generations and homogenous groups and formulate appropriate marketing content for them using internet media.
CHAPTER THREE
RESEARCH METHODOLOGY
Research Design
According to Bryman and Bell (2007) research design can be defined as a general plan that gives an outline on how data will be collected and data analysis procedures. The study used descriptive cross-sectional research design. The descriptive study is one where information is gathered without changing the environment while a cross sectional study is one where there is a one-time interaction (snapshot) with the unit of analysis. An advantage of the cross-sectional research design is that it enables researchers to do a comparison of various units of analysis at an instant.
Target Population
Target population comprises the whole group of individuals or unit of analysis to which researchers are interested in studying in order to come up with conclusions. The study’s target population was all the insurance companies in Lagos, Nigeria which comprises of thousands of insurance services in Lagos. The study used a list compiled from https://www.businesslist.co.ke/category/small-business/city:lagos which comprised of 399 small-sized companies. The study also used the list of Nigeria Top 100 companies in the last 5 years between 2012 and 2016 which has an average of 25 new entrants in a year giving a total of 200 medium-sized companies. In total, the study had a population of 49 insurance companies.
Sampling Design
Sampling is the selection of a number of units of analysis for a study so that the findings of the representatives represent the population from which they are selected (Mugenda and Mugenda, 2008). The study used a random sampling technique to select the insurance companies for gathering information. According to Israel (2013), a sample size is determined by the level of precision, the confidence level, and the degree of variability. Cochran (1963) indicated that for large populations, the following formula may be used to determine a sample size:
Where n is the sample size, N is the population size, and e is the level of precision. The study used a precision level of 5% and therefore from the above formula, the calculated sample size is 25 insurance companies which were randomly selected to get the relevant information for the study.
CHAPTER FOUR
DATA ANALYSIS, RESULTS AND DISCUSSION
Summary Statistics
With the objective of the study being to analyse the impact of internet marketing on sales of insurance services in Lagos, questionnaires were sent to 255 Insurance companies in Lagos, Nigeria and 190 insurance companies responded by sending back the questionnaires. This gave the study a response rate of 74.5% with the other 25.5% not responding either because they were not in a position to give their insurance company marketing information or could not answer the questionnaire in time required for the study.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
Summary
Marketing in an organization helps to create awareness of products and services by a business. One of the main reason companies create this awareness is to increase sales for both the short run and long run. Conventional marketing has been used by companies for many years and with the growth of technology, internet marketing channels have become greatly used by companies. As large companies have been able to adapt with the technological changes in marketing, the extent of adoption and impact of internet marketing in insurance companies is not yet certain. The study therefore sought to determine the effect of internet marketing techniques on sales growth of insurance services, with the scope of the study being Lagos, Nigeria. The study also set to find out the challenges that insurance companies encounter which hinder their internet marketing adoption.
With the objective, the study analysed theories relevant to the study and conducted a literature review of similar studies. The internet marketing techniques that were used to operationalize internet marketing were email marketing, mobile marketing, social media marketing, search engine optimization, pay-per-click marketing, and online marketing. These techniques were used to assess the extent to which internet marketing affects insurance companies’ sales growth in Lagos, Nigeria. The study conducted a descriptive cross-sectional research design by analysing different Insurance companies in Lagos, Nigeria at the same time. The target population size consisted of 49 insurance companies in Lagos, of which the sample size were 255 insurance companies which were randomly selected. Primary data used was used for analysis purpose and was collected using a structured questionnaire. The data was analysed using descriptive and univariate techniques which were Kruskal-Wallis test and Pearson’s correlation test.
From the data analysis, it was found that email marketing had an impact on insurance companies sales growth to a great extent. Mobile marketing as an internet marketing technique had an effect on insurance companies’ sales growth to a moderate extent. The findings also indicated social media marketing to have an effect on insurance companies’ sales growth to a great extent. Search engine optimization, pay-per-click, and online marketing all had an effect on insurance companies’ sales growth to a moderate extent. From the study’s second objective, the study findings indicated that lack of internet media knowledge was the greatest challenge for Insurance companies in the adoption of internet marketing. This was followed by lack of suitable internet marketing techniques which was also a challenge experienced of insurance companies in the adoption of internet marketing. The third challenge experienced of insurance companies in the adoption of internet marketing was lack of finances, followed by the lack of time for planning and implementation.
Conclusion
From the study findings, conclusions were made in regards to internet marketing adoption of insurance companies and its effect on sales growth. From the study results, it can be concluded that internet marketing has a positive effect on insurance companies sales growth in Lagos, Nigeria. With regards to email marketing, the study indicated that it is used of insurance companies to a great extent and the effect on sales was significant. The study therefore concludes that email marketing is important and should be used more of insurance companies to improve their sales. More insurance companies should start using personalized email which would be cheaper compared to niche marketing using traditional media. The study findings also indicated that mobile marketing is used to a little extent of insurance companies and had a moderate effect on sales and the study concluded that it has not achieved greater sales for insurance companies as would be expected.
The findings on social media marketing of insurance companies indicated that it is significant factor to insurance service’ sales growth that has been used to a great extent, and it has had a positive effect on sales to a great extent. The study therefore concluded that social media marketing technique is effective to Insurance companies in Lagos as a means of marketing and helps to grow sales. Search engine optimization (SEO) as an internet marketing technique was found to be a significant factor on insurance companies’ sales growth and had an effect on the sales to a moderate extent. The study therefore concluded that SEO as an internet marketing technique is important to sales growth even though its effect is moderate.
The study findings with regards to pay-per-click as an internet marketing tool indicated that it was significant on insurance companies sales with a moderate extent. The study findings led to the conclusion that pay-per-click is significant to insurance service’ sales growth but to a moderate extent. The last internet technique to be analysed as an internet marketing tool was online marketing whose results indicated that it was significant on insurance companies sales but also to a moderate extent. The study findings led to the conclusion that online marketing is significant to insurance companiy’ sales growth but to a moderate extent.
Recommendations
From the research findings and conclusions, the study made recommendations on the way forward on internet marketing adoption of insurance companies. The first recommendation is that there should be proper sensitization and training to insurance service on available internet marketing options and how it can be done.
From the study findings, one of the recommendations for further research is of more research should be done for other counties outside Lagos as this would provide comparison and reinforcement or disapproval of this study’s findings with regards to internet marketing. The organization should also look at how internet marketing affect other aspects of a business such as brand loyalty and customer relationship management since the organization is more than sales and profits. Also, other factors that affect sales growth and profitability of insurance services should also be analysed since it is known that sales are not affected only by marketing or internet marketing, but a combination of both internal and external factors to an organization. The government should also come up with favourable policies to internet marketing so as not to restrict them when they use them. Finally, other analytical techniques apart from that used by the study should be done by researchers to determine how internet marketing affect sales growth in an organization.
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