Department of Insurance and Actuarial Science,
University of Lagos, Lagos, Nigeria
Formerly of Department of Business Administration, University of Lagos, Lagos, Nigeria, and
Department of Mechanical Engineering, University of Lagos, Lagos, Nigeria
– Characterized by declining goodwill and exemplified sharp drop in gross premium, the Nigerian insurance industry, in recent times, has experienced turbulent economic challenges that necessitated re-engineering of its core activities. However, advertising and sales are core activities,
which are important predictors of stability and growth in the insurance industry. Consequently, the purpose of this paper is to examine the impact of advertising on sales of insurance products. Design/methodology/approach
– An empirical investigation is carried out using a survey that
utilizes questionnaires, interviews, and field observation as major research instruments. A total of 71 insurance companies in Nigeria, which represent the total operating insurance companies in Nigeria at the time of study, were surveyed. With 100 scientifically selected subjects sampled, descriptive analysis was employed to understand the relationship and the strength of such relationships.
– It was found that advertising had effects on sales volume and improved public image. However, the choice of advertising medium, the message, and the format are critical ingredients of a successful advertising program in the insurance industry.
– The insurance industry in Nigeria was studied from a
holistic viewpoint due to the need to present reliable and detailed information for decision makers. However, limitation in achieving this relates to the reluctance of respondents to release information for the study.
– The implication of this research is that proper control of advertisement budget vis-a` -vis the expected sales volume could be made. Thus, organizations could spend budgets more effectively on growth enhancing projects instead of excessive wastage of funds on advertisement.
– This paper seems to be the first original work that concerns the impact of advertising on sales in the Nigerian insurance industry. As such, it bridges a gap that is opened for investigations. It may be of great value to decision making seeking for control tools.
Insurance, Nigeria, Advertising media, Sales management
Over the years, there has been tremendous decline in the goodwill of the Nigerian insurance industry as a result of poor performance in the payment of insurance claims.
The sharp drop in gross premium exemplifies this problem. Randle (2003) estimated a decline of more than 89.4 percent in the 1999/2000 comparative periods. This decline may have worsened as a result of the global economic crisis. There is therefore the need to advertise insurance products in order to increase sales. Unfortunately, no reliable records exist on the impact of advertising on sales of insurance products, thus suggesting its strong need.
The need to examine the impacts of advertising on sales volume is further
strengthened by the significant value of the total premiums generated in Africa, which originated in South Africa (84 percent) while only an insignificant value (16 percent) is partly contributed by Nigeria. Thus, with the enormous advertising expenditures, it becomes necessary to know if such expenditures justify sales volume obtainable from the advertisement efforts. Luo and Donthu (2005) identified advertising media and spending inefficiencies in generating sales, and concluded that top 100 marketers’ advertising spending in print, broadcast,...