THE IMPACT OF PROMOTIONAL STRATAEGY ON THE DEVELOPMENT OF INSURANCE IN NIGERIA

CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
According to Robinson, cited in Ashkan, (2016) advertising is a prominent feature of modern business operations. One can encounter advertising messages, while watching TV, reading magazines, listening to the radio, surfing the internet, or even simply while walking down the street, as advertisement has a stimulating influence on purchasing behavior of the customer. This mammoth surge of advertisements from every possible source is basically to fulfill the urge of marketers to reach to a large number of people so that their product may receive optimum exposure. In addition,  Ashkan, (2016)   asserts that the role of this mass mode of communication in creating brand loyalty, deterring entry and consequently increasing sales revenue and profits of the organization and causing impact on the business cycle has been emphasized at various points of time by different studies {Ozga, (1999); Sundarsan,(2007)}.
Broadly speaking, according to Greunes, Kamershcen, and Kllin,(2000), the role of advertising expenses in an economy can be classified under two heads. According to one school of thought, advertising increases profits and reduces consumer welfare by creating spurious product differentiation and barriers to entry. While the other school of thought focuses on the informative character of advertising, which makes markets more competitive and reduces profits by informing the customers about prices and quality (Greunes, etal.,2000).
In the pre-historic era, advertisement appeared in the form of Egyptian papyrus with the information of the upcoming sale of a slave. Advertising in those days was presented by written or oral announcement touting a particular product or service. The oral advertising was spread by some sort of barker. Besides papyrus scrolls and wax boards, the written advertising was embodied in inscriptions on roadside rocks, as well as on buildings. As nowadays, there was a promotion of almost everything - olive oil and amphorae to keep the oil, oxen, horses and other livestock, tools and weapons (Frolova , 2014) . However, advertisement would probably would not have  expanded so much, without the  era of mass communication. The first impetus for this was typography. Another important development was the invention and subsequent spread around the world of the art of photography in the mid- 19th century. A photograph has served as an irrefutable proof of benefits of the advertised product. (Presbrey, 2009).
Meanwhile,  the most important developments in the global advertising business were made in the 20th century. It is no exaggeration to say that the 20th century was the “century of advertising”- at that time there were profound changes and innovations in the field of technology and advertising. It was the 20th century when advertising became this so popular – primarily due to the unprecedented growth rate of world industrial production, as well as due to the appearance of more and more sophisticated means of creating and distributing advertisements: multicolor printing, analog and then digital radio, television, satellite communications, and finally, computers and the Internet. Advertising is day to day becoming more professionally organized and more quality performed (Presbrey, 2009).In spite of the import and evolution on advertising,  one cannot deny the fact that ultimate function of advertising expenses is to promote sales revenue. That is why every organization with the expectation of earning return is investing millions of naira or dollars on this mode of marketing communication (Ashkan, 2016).
Advertising can be a veritable source of sales promotion to insurance company who wants to improve on their sales performance and ultimately leverage on the power of advertising. Marketing has been considered as an isolated part from its old image and it has become one of the tasks with insurance business profitability goals. Production, sales and marketing should be together to get the best results(Aduloju, Odugbesan and Oke, 2009).Hence, in pursuit of their ultimate objective of increasing sales, every endeavor of each marketer is to make this mode of sales generation more effective. But advertisement effectiveness conveys different meanings to different groups. To the writer or artist, effective advertising is that which communicates the desired message. While to the media, effective advertising is that which reaches to prospective buyers a sufficient number of times. However to the advertising or marketing manager, effective advertising is that which, together with other marketing forces, sells his brand or product. Whereas according to the general manager, effective advertising produces a return on his firm’s expenditure. In fact to be effective the advertising must achieve the goal of delivering messages to the right audience and thereby creating sales at a higher profit ( Ashkan, 2016).
Shahram et al (2013) argues that one of the most important factors of marketing in service organizations is advertising. Commercial advertising is a process of communication creation with customers. So that relying on the advantages and benefits and positive features of a product or service does penetrate in thoughts and mental potential or potential customers. Meanwhile Aduloju etal., (2009)  argue that advertising and sales are core activities, which are important predictors of stability and growth in the insurance industry. 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 but this scholar did not specify the need for advertisement budget by insurance companies, the need to separate the budget line between other promotional activities and advertisement itself and how to evolve advertisement strategy.                                                             
According to Ashkan, (2016), it is important to adopt the measure of advertising in order to mitigate major factors contributing to this undesirable performance; low levels of awareness, general poverty levels and low incomes of the clients plus all the other extraneous variables like educational background, religious belief and custom that could act as impediments to the performance of the industry. This informed Yegon, and Nagib, (2016) assertion  that  there is need  for  planning advertising messages, in a manner that suggests four general purposes is to attract attention, create interest, and stimulate desire and pushing people to buy.
Financial challenges are constantly being experienced in Nigeria and accessing insurance or government assistance has also being limited because of the economic downturn. According to Ackah and Owusu (2012) people have very low access (about 4.1% ) to insurance which excludes public health insurance. The low patronage of insurances is attributed to several socio-economic development factors which usually pose challenges to insurance system, the most obvious being that a majority of economically active people work in the informal sector (Ackah and Owusu, 2012). Ibok (2012), also argue that socio economic factors such as age, sex, income, access to health insurance information, education, age, marital status, sex, family size, occupation are jointly contributed  to the state of health care insurance system in Nigeria.
Daniels (2015) opined that Insurance industry over the years have not fully employ the tools of advertisement as a measure of ensuring sale and share patronage but rather has relied on regulators to ensure their survival, this has led to their underperforming hence,  the need to fully  adopt self sustaining strategy to grow and developed . Daniels (2015) further argue that  growth in premiums and assets under management should be a natural consequence of policy changes and their implementation by the regulator, coupled with the revitalization of the players by the influx of fresh ideas and best practices by the foreign players.
Several  policies and program have been put in place in the past to address the low performance of the insurance industry, in spite of this  the performance seems not have improve as many Nigeria still shy away from taking insurance policy except they being compelled to do so. Besides, the perception among Nigeria about insurance policy has been negative because of their past experiences with many insurance companies hence this study intend to explore the impact of advertising on the performance of insurance industry focusing on  five selected insurance firms including AIICO Insurance plc, Anchor Insurance Limited, Capital Express Assurance, Cornerstone insurance Plc. and  Consolidated Hallmark insurance plc .
 1.2 Statement of Research Problem
The insurance industry has been bedeviled by several challenges and threatened its existence. At the initial stage, many Nigerians did not understand the industry. The quota the sector contributed to the country’s GDP at a point was below 1%, prompting the government’s minimal recognition of the industry as an efficient contributor to the financial sector. There was also a low awareness of the need for insurance for the public. In addition to this was a poor regulatory framework and inevitably, the public, (which was supposed to be the insurance market), lost confidence in the sector (Odunmoray, 2015).  Besides, according to Ojumah (2013) insurance penetration in Nigeria is still very low, compared to acceptance levels in other countries. Insurance industry been a service industry and Nigeria been a developing country, there is need to align advertisement benefit to the industry growth and performance in term of advertising cost(Odunmoray, 2015).