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Interdisplinary Journal of Research and Development “Aleksander Moisiu“ University, Durrës, Albania Vol (III), No.1, 2016 ________________________________________________________________________________________________ RESEARCH PAPER The influence of advertising in insurance companies in Albania and consumer decision making process 1 Violeta NEZA, Ervin MYFTARAJ University “Aleksander Moisiu” Durres, Rr. e Currilave, lagjia nr.1, Durrës, Albania e-mail: [email protected] mail: [email protected] Abstract This study aims to study the impact of advertising and their different strategies in the insurance industry. It also focuses on the role of insurance in general and the role of the FSA ( Financial Supervisory Authority ) as a supervisory authority for the insurance sector. The study also includes an overview of the different players in the market for this specific sector. Albanian insurance is a new industry, with several national and international competitive participants, which is growing rapidly. Thanks to the reforms and and facilitating rules and policies, it is increased the role of advertising that influences on consumer choice. Nature of being descriptive and explanatory of this study shows that findings have been made through theoretical analysis in order to receive an insight perception into relationships “cause – consequence” of advertising and consumer perception about insurance products, which ultimately affect in general in the insurance industry. Thus, detailed descriptions of specific issues relating to purchasing consumer behavior and the effect of advertising in this particular industry are studied using a detailed questionnaire to interview customers and observing their behavior after a detailed review that is made. Key words: Insurance industry, the FSA, consumer behavior, advertising effectiveness. Introduction It shows a special effort to popularize a product or service at a certain cost. This is a way of doing publicity. It is always deliberately openly sponsored by the sponsor and includes a fixed cost, for this reason we pay for it. This is a common form of nonpersonal communication of an organization or service ideas of its products and that is transmitted to a targeted audience through mass media. Advertisements are considered as the nervous system of the business world. Just as our nervous system is built to give us all possible facilities sensitivities, so the advertising, which is comparable to our nervous system must awaken to the reader different types of images as the object itself can raise. Effectiveness advertising means different perceptions of its different effects on the groups responsible. Effective advertising must achieve several goals, such as giving the right message to the audience, thus creating profitable sales. Albanian insurance companies offer a wide range of insurance plans, which grows to maturity of economy and increase the income of the middle class. Albanians are increasingly recognized by various insurance products, and this is due to the growth of inclusion of advertising that is used by various insurance companies to influence consumers and make them more aware of recently developments and insurance benefits. Objectives of the study To understand and measure the impact of advertising in the insurance market. To measure the effectiveness of advertising / promotional activities for a certain class of product and corporate advertising. To create the awareness for importance of the advertising for the industry. To understand and measure the impact of advertising on brand building, the need for brand and finally choosing the plan, while buys it. Literature Review The insurance industry thrives on insurance companies, sales agencies, where agents are those who sell these products to customers. Wide advertising typically done in the level of 111 The influence of advertising in insurance … V. Neza, E. Myftaraj _______________________________________________________________________________________________ consumption. However, at the end of the day the insurance companies need to attract agents to sell products. Matin Khan in his book, "Consumer Behavior and the Advertising Management" 2006, deals with consumer behavior as long as advertising is a problem. The book deals with common aspects of consumer behavior as culture, social class, lifestyle, psychographic segmentation etc... The author also discusses the way out, consumerism, consumer satisfaction, e-consumer behavior and changing consumer behavior. Further, ethical and social issues are discussed in advertising management, advertising agency and an advertising role in national development with the help of different examples and case studies. Flemming Hansen, Sverre Riis Christensen"Emotions, Advertising and consumer choice" "Emotions, Advertising and consumer choice" focus on the latest knowledge of neurological and psychological origin in brain scans or neurological experiments in basic emotional processes in the brain and their role in controlling human behavior. These knowledge are translated by the authors to cover ordinary behavior of individuals in everyday life. The book looks at these developments in the light of traditional cognitive theories of consumer choice and discusses implications for testing advertising and other communication methods. The book offers for the first time a comprehensive review of contemporary thought in the field of consumer behavior and an amount exhaustive empirical evidence to support the idea of the authors of a development paradigm of consumer choice based on emotion, where the brand mental capital becomes a central phenomenon. Research method Design research - Narrative. Interviewed segments - clients of various companies insurance and perspective clients. Type of data - primary and secondary The number of cases - 200 cases Research Methodology The methodology includes findings from surveys and interviews conducted in the age group 25-50 years old, who are or may be clients of insurance companies. Methods of data collection Data collection includes primary and secondary data .The primary data are collected from a well structured questionnaire .The secondary data were collected from the website, various publications and statistics published by the FSA.Instumentat e kërkimit : The questionnaire was structured, carefully designed and organized with a standardized set of questions that summarizes the information needed for the study, such as those associated with the effect of insurance companies advertising and customer’s behavior towards them. Interviews The next step involves collecting information that requires discussions with various people. Valuable information was collected through informal discussions or between the social discussion. Determining the technique of choice of respondents: Customer selection techniques was chosen for this study .The respondents were selected randomly in the age group 25-50 years in two different cities (Durres, Tirana). Studying the promotional strategy of various insurance companies shows that they cover us in every step of life, from birth to death. Recently, the insurance companies are giving priority to advertising in television, print, radio or leaflets. Image building and creating different identities in creative and compelling way is what advertising is doing as much as insurance industry is concerned. Creative thinking has increased emotional connection with the brand. For the same purpose, different insurance companies are using different advertising strategy which makes their products and services to reach the customers in different ways. TV advertising The TV commercial is generally considered the most effective mass market advertising format, as is reflected by the high prices TV networks charge for commercial airtime during popular TV events. A piece of television advertising contain songs, music that affect listeners interested for the product as soon as possible. Virtual advertising may be inserted into regular television programs through computer graphics. Infomercials An infomercial is a long-format television commercial, typically five minutes or longer. The word "infomercial" combining the words "information" & "commercial". The main objective in an infomercial is to create an impulse purchase, so that the consumer sees the presentation and then immediately buys the product through the advertised toll-free telephone number or website. Infomercials describe, display, and often demonstrate products and their features, and commonly have testimonials from consumers and industry professionals. Radio advertising 112 Interdisplinary Journal of Research and Development “Aleksander Moisiu“ University, Durrës, Albania Vol (III), No.1, 2016 ________________________________________________________________________________________________ Radio advertising is a form of advertising via the medium of radio. Radio advertisements are broadcast as radio waves to the air from a transmitter to an antenna and a thus to a receiving device. Even advertising on radio heard from their audience especially in summer, in public places such as beach, etc. or even while driving. It is a widespread form of advertising various products. Online advertising Online advertising is a form of promotion that uses the Internet and World Wide Web for the expressed purpose of delivering marketing messages to attract customers. Online ads are delivered by an ad server. Examples of online advertising include contextual ads that appear on search, banner ads, in text ads, Rich Media Ads, Social network advertising, online classified advertising, advertising networks and email marketing, including e-mail spam. Press advertising Press advertising describes advertising in a printed medium such as a newspaper, magazine, or trade journal. This encompasses everything from media with a very broad readership base, such as a major national newspaper or magazine, to more narrowly targeted media such as local newspapers and trade journals on very specialized topics. A form of press advertising is classified advertising, which allows private individuals or companies to purchase a small, narrowly targeted ad for a low fee advertising a product or service. Print media Mobile billboard advertising Mobile billboards are generally vehicle mounted billboards or digital screens. These can be on dedicated vehicles built solely for carrying advertisements along routes preselected by clients, they can also be specially equipped cargo trucks or, in some cases, large banners strewn from planes. The billboards are often lighted; some being backlit, and others employing spotlights. Some billboard displays are static, while others change; for example, continuously or periodically rotating among a set of advertisements. Mobile displays are used for various situations in metropolitan areas throughout the world, including: Target advertising, One-day, and long-term campaigns, Conventions, Sporting events, Store openings and similar promotional events, and Big advertisements from smaller companies In-store advertising In-store advertising is any advertisement placed in a retail store. It includes placement of a product in visible locations in a store, such as at eye level, at the ends of aisles and near checkout counters, eyecatching displays promoting a specific product, and advertisements in such places as shopping carts and in-store video displays. Coffee cup advertising Coffee cup advertising is any advertisement placed upon a coffee cup that is distributed out of an office, café, or drive-through coffee shop. This form of advertising was first popularized in Australia, and has begun growing in popularity in the United States, India, and parts of the Middle East. Role of advertising in insurance industry It is an informative or persuasive message carried by a non personal medium & paid for by an identified sponsor whose organization or product is identified in some way. It is an impersonal and one way communication about a product or organization that is paid by a marketer Advertising is a form of communication used to persuade an audience (viewers, readers or listeners) to take some action with respect to products, ideas, or services. Corporate advertising can tell a story about a company as a whole, large organizations may need to use corporate ads to simplify their image in the minds of key constituents and to show what unifies the company, despite the geographical spread and variety of its businesses.To establish the brand, build awareness and give the brand a larger-thanlife image. Advertising effectiveness means different things to the groups responsible for its different effects. To the writer or artist, effective advertising is that which communicates the desired message. To the media buyer, effective advertising is that which reaches prospective buyers a sufficient number of times. To the advertising or marketing manager, effective advertising is that which, together with other marketing forces, sells his brand or product. To the general manager, effective advertising produces a return on his firm’s expenditure Throughout the range of modern businesses, advertising can play an essential role in the success or failure of a given enterprise. The ability to reach audiences, convey messages, and create an overall image for an individual or business are powerful tools, and some companies may even spend most of their budgets on advertising efforts in an attempt to use these tools to their fullest advantage. In the insurance industry, a great deal of an agent or firm's success depends on the skill with which prospects are approached and handled, and the very best insurance agents in operation know that the creation of positive impressions and the establishment of credibility are essential ingredients for success. On their own time, agents must use various methods to achieve these goals of making the right impression 113 The influence of advertising in insurance … V. Neza, E. Myftaraj _______________________________________________________________________________________________ and maintaining trust throughout the sales and consultation process. But this requires personal attention, and can only be delivered to a limited number of prospects at any given time. Insurance industry advertising, then, addresses the need for creating positive impressions and establishing credibility in the absence of the actual agent. If this seems like a challenging feat, that's because it by all measures, it is. Trust and credibility are privileges typically won through a great deal of face time and the consistent demonstration of dependability and good intentions, and such traits can be especially difficult to portray from a distance. Thankfully, there are many ways that advertising can accomplish this task through creating various impressions and ideas that either overtly or discreetly suggest the good qualities of an agent or firm, without the need for personal attention. Insurance industry advertising accomplishes the task of reaching out to those prospective clients who would otherwise be left to approach insurance agents and brokers on their own, unprompted. Able to present solutions to those who may have no other method of arriving at a sound answer for their insurance questions, such advertising serves as the broad public face of a given agent or firm, and is the first point of contact that will be established between a client and the agency from which a policy or package is purchased. Far from being a simple gimmick to increase sales, thought such an objective can certainly be present in some campaigns, insurance industry advertising has its roots in the establishment of a relationship between clients and companies, setting the stage for future interactions and aiding the course of contract development This function isn't only an essential one; it's also able, in many cases, to help catalyze the process of selling insurance. While agents and firms without extensive advertising –or any advertising at all-must often rely on performing each step of the trust- building process manually, truly excellent insurance advertising campaigns can make this process move much more quickly, allowing for a higher volume of more successful sales. Great insurance industry advertising has a great deal to do with establishing an image and distributing it to prospective clients, but it is also a way to streamline insurance sales itself, providing a compounded benefit that makes working in the modern market without considerable advertising efforts somewhat difficult. Embracing the necessity of advertising, and following through with the creation of quality, carefully-prepared campaigns, is a great way for modern insurance agents and companies to expand their business and take advantage of the powerful possibilities in forming and conveying targeted messages about the benefits and wisdom of retaining insurance. FSA ( Financial Supervisior Authority ) Created in 2006, the Financial Supervisior Authority (FSA) is a public independent institution of the executive, responsible for the regulation and supervision of non-bank financial system and operators that operate in this sector. . The main areas of activity of the FSA is regulation and supervision of: • the activity of the insurance market and its operators, market activity of the securities and its operators; • the activity of supplementary private pension market and its operators; • Other nonbank financial activities Its primary function is to protect consumers by legal, administrative and information devices, and to maintain the stability and transparency in the field of insurance, securities and private supplementary pension. It’s activity is characterized by professionalism, transparency and high standard of service to all interest groups Below we present graphics division of the insurance market by items "compulsory insurance" and gross written premiums in Travel Health Insurance. 114 Interdisplinary Journal of Research and Development “Aleksander Moisiu“ University, Durrës, Albania Vol (III), No.1, 2016 ________________________________________________________________________________________________ Market Share on the Mandatory and Voluntary Non-Life Insurance Gross written premiums in Travel Health Insurance by Non-Life Insurance Enterprises Source: FSA- Statistical Report September 2015 Data analysis and interpretation Question No. 1 Which is the media that you mainly use to be informed about insurance products? Question No 2 Have you ever seen insurance product advertisements ? 4% 8% 14% Television Newspaper 53% Yes Internet No Radio 25% 96% Question No 3 Which is the TV channel you follow more insurance advertising ? Question No 4 Do you remember the content of any insurance advertisement? 6% 4% 16% 41% Klan TV Top Channel Yes Vision No Other 39% 94% 115 The influence of advertising in insurance … V. Neza, E. Myftaraj _______________________________________________________________________________________________ Question No 5 Which insurance company do you prefer more? 5% 13% 25% Question No 6 Has any advertising products left impact which lasted on your mind as brand ? 21% Sigal Sigma Interalbania Po Eurosig 17% Jo Intersig Vienna 22% 18% Albsig 79% Te tjera Question No 7 Has any advertising influenced your decision making in purchasing insurance products? 17% Yes No 83% are many other ways as social networks, public education, etc., to do this. In the market it is easy to note that these advertisements have had a major impact on the TV audience. Although the most popular areas of information collection are displayed in the arena of war in visual mediathe old advertising players through newspapers and radio are still on the top, trying to dominate the market. Even the advertisements through internet is rapidly increased as already 62% of the Albanian population are internet users. The survey clearly specifies that people are aware of the advertising of insurance products as most of them have seen advertisements of these products so that they can provide them with enough knowledge about the products offered by insurance companies. TV channels like Klan TV, Top Channel, Vision Plus have higher visibility and higher impact to potential clients. The great number of people can Conclusions Insurance ads have undergone major changes over the years. Insurance can help customers against disasters. People are understanding more and more this and they have started buying insurance products. If we notice that the recent advertising of Sigal for example, explain how Private Pension funds or different Insurance products can help to alleviate your life in old age through providing these funds, benefiting in old age additional income etc. .. The study shows that advertising is very important in any business. Many of the companies paid in advertising. There are many ways to advertise where them are most highly paid TV, newspapers, radio. In the initial phase of a company it is important to put the emphasis on corporate advertising because it helps in brand memory. Advertising in the media is not the only tool, there 116 Interdisplinary Journal of Research and Development “Aleksander Moisiu“ University, Durrës, Albania Vol (III), No.1, 2016 ________________________________________________________________________________________________ recall the advertising content of the insurance company (94% of respondents) shows that the content of each ad can have a lasting impact in the minds of consumers who can determine the behavior of its purchasing relsted with advertising policy of Insurance Companies. So the content must be realistic and authentic. Insurance are considered sold only by push strategy. We are witnesses of alternative financial instruments available on the market, making competition tougher. The first thing that comes to their mind, before consumers buy an insurance product in a competitive market, is the brand. It really plays a huge role for purchasing a product. This is evident in this survey. According to the survey the most preferred company is Sigal Uniqa insurance, followed by Sigma Interalbanian, Eurosig etc. From the survey can be interpreted that effective advertising have a major impact in the purchase decision making process of the customer, to whom advertising should be effective in order to leave a lasting impact in their minds and making correct decisions in purchasing insurance products. The study shows the importance of brand awareness. Most of the public runs behind the name of the brand. 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