MARKETING RESEARCH AS A TOOL FOR PROFITABILITY IN THE SERVICE INDUSTRY
ABSTRACT
Marketing research is the systematic planning, collecting, analysis, and reporting of data and findings related to a company’s specific marketing situation. Koller, P. 2003.
This study focused on marketing research as a tool for service industry profitability, using a case study of AIICO insurance firm operations in Enugu metropolitan.
The following objectives, among others, were stated in order to carry out the study:
Three hypotheses were developed based on the given objectives, and they are as follows:
Ho: Marketing research does not increase AIICO insurance company awareness.
AIICO insurance company becomes more well-known thanks to HI1 Marketing research.
The number of policyholders is not increased by Ho2 marketing research.
Marketing research by HI2 boosts the number of policyholders.
AIICO Insurance Company’s profit is not increased by Ho3 Marketing Research.
AIICO insurance company’s profit is increased because to HI3 marketing study.
To get secondary data, an extensive literature research of textbooks, newspapers, magazines, business journals, and some prior projects of graduated students who studied comparable topics was conducted. Respondents were policyholders, managers, and relevant staff from the AIICO insurance company in Enugu.
The sample size for AIICO Insurance company policyholders was determined using Topman’s formular, while a census was done for AIICO insurance company management and related workers in Enugu.
To test the hypotheses developed for the study, the researcher employed the chi-square (x2) statistical approach. The obtained data was put on statistical tables for analysis utilizing frequencies and percentages.
The following findings were discovered during the course of the study.
– The AIICO insurance firm was involved in marketing research at one point or another.
– That the corporation only has a marketing research section at the headquarters, not at the zonal offices.
– That marketing research initiatives lead to a rise in the number of policyholders.
– That marketing research operations boost the company’s profit level.
In light of the findings, recommendations on how to use marketing research for the company’s success were made.
In conclusion, the ultimate goal of utilizing marketing research is to satisfy customers while profiting the company, hence AIICO Insurance Company is urged to continue using marketing research effectively.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Organizations rely on a variety of resources to function. One of their most valuable assets, and frequently the least appreciated, is their knowledge base. Management cannot make informed judgments without knowledge, and the quality of that knowledge, skills, rests mostly in personnel, but it can also be collected in data bases, reports, patents, plans, budgets, memoranda, and a number of other papers. The knowledge base encompasses all aspects of the organization’s activities, including products, technology, human resources, finance, sales, and marketing, and is a wasting asset that necessitates constant updating, improvement, and extension to keep up with changes in the operational environment.
The necessity for precise, accurate, and up-to-date knowledge is nowhere more clear than in the marketing role.
The marketplaces are distinguished from other contexts in which corporations operate by two criteria. They are as follows:
1. In a changing dynamic and are becoming more so in response to the increasing rate of technological advancement, competitive pressure, and a continuous increase in customer expectations.
2. Change is generated by a wide range of causes, the majority of which are outside the control of any single supplier.
As a result, marketing operates in an inherently unstable environment, and it is all too easy for businesses to lose touch with market conditions.
Furthermore, in the quest for growth or even to defend existing market positions, the problem tends to be exacerbated by the fact that companies continually need to do something new. They develop new strategies launch new product, target new market and initiate new service packages – all of which push them into increasingly unfamiliar marketing territory.
Marketing knowledge is created from a number of inputs experience and expertise are critical, as are experimentation and analysis, but the key dynamic ingredient marketing information derived from sources within the market place itself, notably customers, competitors and distributors.
Marketing research is the marketing information. It is defined by the American marketing association as the systematic gathering, recording and analyzing of about problems relating to marketing of goods and services. Marketing research can also be defined Kolter (20003:129) as the systematic design, collection, analysis and reporting of data and findings relevant to a specific marketing situation facing the company.
Marketing research is very important to any organization or company because it is through it that we know the feelings, wants, needs, perceptions and preference of customers/consumers knowing that consumer/customer is the focal point of marketing and every organization or company will always want to satisfy their customers/clients in other to continue in the business. It is a link between the customer and the general public to the individual, organization of the business firm and also identify and define marketing opportunities, trends, threats and measurements.
Therefore, this study try to find out how marketing research is carried out in the service industry – people always believe that marketing research is more suitable in product/goods offering company and it is not well practice in the service industry due to its certain characteristics.
Service can be defined as any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership anything. (Kotter 2003) services have four major characteristics that greatly affect the design of marketing programs: intangibility, inseparability, variability and perishability. Services also vary as to whether they are equipment based or people based. It requires the client’s presence and differs as to whether they meet a personal need or business need. Services provided differ in their objectives (i.e. profit or non profit) and ownership (as to private or public).
These have made people believe that marketing research in the service industry – insurance company, has resulted from the growth of marketing management and marketing concept. The basic purpose of applying marketing research is to reduce marketing management risks and consequently embrace higher marketing efficiency. Marketing research is also used in situation of disagreement or uncertainty amongst the marketing decision or where the available marketing research techniques will increase the amount or reliability of marketing information decision in service industry.
There are certain factors in service industry especially in insurance companies that affect the profitability of the firm such as the impact of legislation and tax concession, size and distribution of population, national income, competition, inflation, use f mass merchandising, packaging policy approach etc it is through marketing research that these problems will be solved and thus bring profit to the company. The success of any business firm depends to a great extent on the efficiency and aggressiveness of the entire marketing organization operations, and the effectiveness of the management, working together as a team, towards the accomplishment of the specific and broad corporate goals and objectives.
AIICO insurance company, a service sector, was founded in 1963 as a collecting center, incorporated in 1970, transformed to a public liability company in 1989, and was listed on the Nigeria stock exchange on December 3, 1990. AIICO is now Nigeria’s largest life insurance company and a major underwriter of general insurance business. The company’s success has resulted from its ability to assess its potential, set realistic goals, and take the required steps to attain them. They have a distinct marketing department as well as a research department that handles marketing research. These actions have had a significant impact on AIICO Insurance Company Nigeria’s overall success.
1.2 STATEMENT OF THE PROBLEM
Notwithstanding the vast market potentials and competitive nature of the service industry in Enugu State, many organizations and businesses still struggle to produce an adequate offering that would serve the market properly.
At its inception, ALLCO insurance company faced stiff opposition from other insurance companies, particularly other foreign-owned insurance brokers and agents, who were concerned about the uncertain effects that its entry into the industry might have on their business prospects and thus were hesitant to assist the company.
Furthermore, the degree of insurance awareness in the country is still relatively low; currently, around 10-15% of the Nigerian population is insured, which, in contrast to industrialized countries, results in low productivity and profitability.
As a result, there have been allegations that AIICO insurance business did not compensate the unhappy policy holders; all of this has resulted in a poor attitude toward their services, resulting in a profit loss. This study investigates this allegation and other pro issues in order to provide a favorable perspective toward AIICO insurance corporation.
1.3 OBJECTIVE OF THE STUDY
The study’s objectives are to determine.
1. What kind of marketing research activities are available to businesses, particularly those that AIICO Insurance Company is interested in conducting?
2. What percentage of AIICO insurance company’s marketing budget is allocated to marketing activities in a given period?
3. Whether or not the organization has its own established marketing research department or if it hires marketing research consultants.
4. The source of their marketing data and the strategy employed to analyze such data to derive insight.
5. If marketing research raises awareness in the AIICO insurance organization.
6. If marketing research improves the number of policyholders in AIICO insurance business
7. If marketing research helps the AIICO insurance firm boost profits.
1.4 FORMULATION OF HYPOTHESES
The following hypotheses were formulated and tested.
Ho: Marketing research does not create awareness of AIICO insurance company
HI: Marketing research creates awareness of AIICO Insurance Company.
Ho2: Marketing research does not increase the number of policy holders.
HI2: Marketing research increases the number of policy holders.
Ho3: Marketing research does not increase profit of AIICO Insurance Company.
HI3: Marketing research increases profit of AIICO Insurance Company.
1.5 SIGNIFICANCE OF THE STUDY
Olakunori (1997:20) defined marketing research as the planned and systematic investigation and collection of relevant facts, the analysis and interpretation of those facts through objective and verifiable methods, for the purpose of arriving at solution of problems or deducing broad principles or laws”. To put it another way, research is a deliberate process of conducting inquiries in order to reach specific goals.
The goal is usually to solve one or more problems or to add to current knowledge in a certain sector. Against this backdrop, the researcher believes that a study of this kind is important. The findings of this study will provide an acceptable understanding of how to use various marketing studies to the service business/industry.
This research will also help AIICO insurance firm improve the quality of service it provides to customers and the general public, as well as assist management in developing plans and programs that will allow them to remain competitive.
The study also assists other service firms in better understanding the basic concepts of marketing research and its role in the service business/industry in order to affect future marketing operations.
Finally, the researcher will benefit greatly from this study because he will learn a great deal as he progresses through the stages of study by completing all of the critical and difficult tasks required in gathering necessary information and the subsequent analysis, interpretation, and presentation of the research findings.
1.6 THE SCOPE OF THE STUDY
The study takes a look into the marketing research activities of insurance firms in service industry. Because of time and other factors involved, the researcher was limited to the study of particular insurance firm known as AIICO insurance company operating at Enugu metropolis. It examines the conduct/operations of marketing research activities in the industry.
1.7 DEFINITION OF TERMS
Marketing is the process of conceptualizing, pricing, promoting, and distributing ideas, goods, and services in order to produce exchanges that satisfy individual and corporate goals. Bennett, Peter D. (1988).
Service Marketing: The marketing process that involves organizations purchasing services from others, or these marketing activities or procedures that involve the providing of services to clients through an exchange process. N.A. Hart and J. Stapleton (1986)
Services are intangible actions or benefits that one person can provide to another that do not result in ownership of anything. P. Kotter (2003).
Insurance is a social science that is primarily concerned with risk, and risk entails the possibility of loss. C. Benaeth C. (1980)
Insurance: This is the party who agrees to pay money to another party known as the insured or the assured in exchange for a premium if a certain event occurs. Bénéth C. (1980).
The insured is the party to the insurance contract who is entitled to be indemnified or compensated in monetary terms if the covered event or contingency occurs. M. Brandmaire (1986).
The written or typewritten document that evidences the provisions of the insurance contract between the parties is known as a policy. J.O Itukwu (1988).
The premium is the financial contribution given by the insured to the insurer in exchange for the insurer’s commitment. Mr. Itukwu J.O. (1988)
Insurance Market: All of the facilities available for the placement of insurers as well as the various types of professional risk beers (insures) accessible (Ayankoyi R. (1988).
Marketing research is the systematic and objective design, collection, presentation, analysis, and interpretation of data (information) to assist managers in dealing with specific difficulties that any firm may face. Adirika and E.O. (1996:332).
Baker defines market research as the process of conducting research into the features of a specific market. Michael J. (1991).
Marketing services is a word that is occasionally used to refer to all marketing operations in a firm that are not related to sales, such as marketing research, advertising, and so on. N.A. Hart and J. Stapleton (1986).
Marketing function: This is an all-encompassing word that encompasses every contributing aspect in the process or decision that falls under the purview of marketing management. N.A. Hart and Stapleton (1986).
Marketing information: information and news on marketing operations. Ifezue N. (1990).
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