The effects of advertising media on sales of insurance products: a developing‐country case

Abstract

PurposeCharacterized 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/approachAn 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.FindingsIt 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.Research limitations/implicationsThe 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.Practical implicationsThe implication of this research is that proper control of advertisement budget vis‐à‐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.Originality/valueThis 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.