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EFFECTS OF INTEGRATED MARKETING COMMUNICATION ON BUSINESS
PERFORMANCE IN THE INSURANCE INDUSTRY
A CASE STUDY OF THE KENYA ORIENT INSURANCE LIMITED
BY
KATHLEEN KIHANYA
UNITED STATES INTERNATIONAL UNIVERSITY
SPRING 2013
ii
EFFECTS OF INTEGRATED MARKETING COMMUNICATION ON BUSINESS
PERFORMANCE IN THE INSURANCE INDUSTRY
A CASE STUDY OF KENYA ORIENT INSURANCE LIMITED
By
KATHLEEN KIHANYA
A Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of
the Requirement for the Degree of Global Executive Masters in Business Administration
(GeMBA)
UNITED STATES INTERNATIONAL UNIVERSITY
SPRING 2013
iii
STUDENT’S DECLARATION
I, the undersigned, declare that this is my original work and has not been submitted to any other
college, institution or university other than the United States International University in Nairobi
for academic credit.
Signed:_______________________ Date: _____________________
Kathleen Kihanya 1/D no 638749
This project has been presented for examination with my approval as the appointed supervisor.
Signed: ________________________ Date: _____________________
Supervisor: Francis Wambalamba
Dr Peter Kiriri
Signed: _______________________ Date: ____________________
Dr. George Achoki
GEMBA Coordinator
Signed: _______________________ Date: _________________
Dr. George Achoki
Dean, School of Business
iv
COPYRIGHT
©Copyright Kathleen Kihanya. 2013
All Rights Reserved
v
ABSTRACT
The general objective of this study was to assess the effect of integrated marketing
communication tools on business performance in the insurance industry, using the case study of
the Kenya Orient Insurance Limited. The study was guided by the following specific objectives.
To determine the impact of advertising on performance of the Kenya Orient Insurance Limited,
the determine the impact of sales promotion on performance of the Kenya Orient Insurance and
to assess how direct personal selling affects performance of the Kenya Orient Insurance Limited.
A descriptive research design was used this study. The target population was 384 respondents
comprising of 82 staff in different managerial levels currently employed at Kenya Orient
Insurance Limited and 302 agents. Stratified proportionate random sampling technique was used
to select the sample. The study grouped the population into three strata i.e. top managers, middle
level managers and agents. From each stratum the study used simple random sampling to select
77 respondents by taking 20% from each group. The researcher used primary data for this study
and collected using questionnaires. On the primary data, questionnaires were used to collect data.
The researcher administered the questionnaire individually to all respondents. The quantitative
data in this research was analyzed by descriptive statistics using statistical package for social
sciences (SPPS). Descriptive statistics includes mean, frequency, standard deviation and
percentages to profile sample characteristics and major patterns emerging from the data. A
multivariate regression model was applied to determine the relative importance of each of the
four variables with respect to performance of the Kenya Orient Insurance Limited.
The study found that advertising of services through the key media channels- above the line-TV
Radio newspapers and billboards), below the line(wall branding, newsletters, leaflets) Social
media( Facebook, Youtube) and Billboards influenced the company performance to a great
extent. The content of the advert and the messaging was very important. However, Kenya Orient
focused more on radio, Billboards and wall branding due to budget constraints.
Sales promotions initiatives such as Win plot/car/holiday promos, customer service week and
intermediary training influenced the company performance to a great extent. The promotions
were targeted to the intermediaries and were based purely on sales volumes. This made the
intermediaries increase their businesses to Kenya Orient.
Direct personal selling (to agents and brokers) had a positive effect on company performance to
a great extent. One on one approach is critical in building close relationships with the agents and
Kenya Orient was able to get immediate feedback and were therefore immediately able to
measure the effect to the bottom line.
vi
Other IMC tools like direct marketing also influenced the company performance to a great
extent.
The study concludes that the trend of sales turnover and number of employees had greatly
improved for the last five years. In addition, the trend of profitability and market share had
improved for the last five years.
Overall, the study concludes that Integrated marketing communication (IMC) positively affects
the performance of Kenya Orient Insurance with advertising having the highest impact followed
by sales promotions while personal selling has the lowest effect on performance of Kenya
Orient Limited.
The management at Kenya Orient Insurance Limited must increase their advertising initiatives
and must advertise consistently, with a clear brand messaging to create awareness of their
products and also to increase their sales( attract new customers and retain the old).The Company
needs to maximize the use of social media platforms such as Twitter, Facebook and blogs to
communicate, inform and encourage feedback from a new unexploited target market, the
Generation Y. Kenya Orient must continue to use sales promotions as a very effective tool to
enhance loyalty and increase sales volumes from the intermediaries (agents and brokers). The
company should continue with the one to one interaction with their key customers for retention
and enhancing the positive customer relationships. IMC must remain an integral component of
senior management business strategy as a tool to achieve the Company’s business objectives.
vii
DEDICATION
This project is dedicated to my family for giving me the enabling learning environment and their
support in the entire period of my Masters studies.
viii
ACKNOWLEDGEMENT
It has been a challenging journey. The collection of data was particularly challenging trying to
get all the respondents answer all the questions and on time. However the whole process was a
learning curve and field data collection was definitely a nerve wrecking experience. I would like
to thank the respondents for being cooperative and responding on time.
I thank my supervisors, who have been very helpful in the development of this project. The
success of this project write up has been due to their dedication and availability during the entire
proposal development period.
I am grateful to the United States International University lecturers who facilitated the
acquisition of knowledge through various courses that formed the foundation of idea generation
for this research study. I also appreciate the immense contribution of my course mates through
consultancies aimed at making the project achieve the required academic standards.
Thank you so Much.
May God bless you.
ix
TABLE OF CONTENT
STUDENT’S DECLARATION .................................................................................................... iii
COPYRIGHT ................................................................................................................................. iv
ABSTRACT .................................................................................................................................... v
DEDICATION .............................................................................................................................. vii
ACKNOWLEDGEMENT ........................................................................................................... viii
TABLE OF CONTENT ................................................................................................................. ix
LIST OF TABLES ......................................................................................................................... xi
CHAPTER ONE ............................................................................................................................. 1
INTRODUCTION .......................................................................................................................... 1
1.1 Background of the Problem .................................................................................................. 1
1.2 Statement of the Problem ...................................................................................................... 7
1.3 Purpose of the Study ............................................................................................................. 9
1.4 Research Questions ............................................................................................................... 9
1.5 Rationale of the Study ........................................................................................................... 9
1.6 Scope of the Study .............................................................................................................. 11
1.7 Definition of Key Terms ..................................................................................................... 11
CHAPTER TWO .......................................................................................................................... 15
LITERATURE REVIEW ............................................................................................................. 15
2.1 Introduction ......................................................................................................................... 15
2.2 Effects of Advertising on Performance............................................................................... 15
2.3 Effects of Sales Promotions on Performance ...................................................................... 22
2.4 Effects of Direct Marketing on Performance ...................................................................... 26
2.5 Effects of Personal Selling on Performance ....................................................................... 31
2.6 Chapter Summary ............................................................................................................... 33
CHAPTER THREE ...................................................................................................................... 34
RESEARCH METHODOLOGY.................................................................................................. 34
3.1 Introduction ......................................................................................................................... 34
3.2 Research Design.................................................................................................................. 34
3.3 Population and Sampling Design ........................................................................................ 35
x
3.3.1 Population ........................................................................................................................ 35
3.5 Data Collection Methods .................................................................................................... 37
3.6 Research Procedures ........................................................................................................... 38
3.7 Data Analysis Methods ....................................................................................................... 39
3.8 Chapter Summary ............................................................................................................... 40
CHAPTER FOUR ......................................................................................................................... 41
4.0 RESULTS AND FINDINGS .............................................................................................. 41
4.1 Introduction ......................................................................................................................... 41
4.3 Background Information ..................................................................................................... 41
4.4 Effects of Integrated Marketing Communication on Performance ..................................... 44
4.5 Organizational Performance ............................................................................................... 55
4.6 Regression Analysis ............................................................................................................ 56
4.7 Chapter Summary ............................................................................................................... 59
CHAPTER FIVE .......................................................................................................................... 60
5.0 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS .................................... 60
5.1 Introduction ......................................................................................................................... 60
5.2 Summary ............................................................................................................................. 60
5.3 Discussions ......................................................................................................................... 64
5.4 Conclusions ......................................................................................................................... 68
5.5 Recommendations ............................................................................................................... 69
REFERENCES ............................................................................................................................. 72
APPENDICES .............................................................................................................................. 77
Appendix I: Questionnaire ........................................................................................................ 77
xi
LIST OF TABLES
Table 3.1: Target Population......................................................................................................... 35
Table 3.2: Sampling Frame ........................................................................................................... 37
Table 4. 1: Gender of the Respondents ......................................................................................... 42
Table 4. 2: Age of the Respondents .............................................................................................. 42
Table 4. 3: Education Level of the Respondents .......................................................................... 43
Table 4. 4: Period the Respondents had been Working with the Company ................................. 43
Table 4. 5: Extent that advertising of institutions services/products influenced the company
performance .................................................................................................................. 44
Table 4. 6: Extent that forms of advertising influenced the company performance ..................... 45
Table 4. 7: Extent that Social Media Influenced the Company Performance ............................... 46
Table 4. 8: Extent that Electronic Media Influenced the Company Performance ........................ 46
Table 4. 9: Extent that Print media Influenced the Company Performance ................................. 47
Table 4. 10: Extent that Pr/Media Relations Influenced the Company Performance ................... 48
Table 4. 11: Extent that Sales Promotions Practiced by Kenya Orient Insurance Influenced the
Company Performance ................................................................................................. 49
Table 4. 12: Extent that forms of sales promotions influenced company performance ............... 50
Table 4. 13: Statements that Regard Sales Promotions ................................................................ 51
Table 4. 14: Extent that Direct Marketing Influenced Company Performance ............................ 52
Table 4. 15: Extent that aspects of direct marketing influenced the company performance ........ 53
Table 4. 16: Extent that personal selling practiced by Kenya Orient influenced the company
performance .................................................................................................................. 54
Table 4. 17: Extent that aspects of personal selling by Kenya Orient influenced the company
performance .................................................................................................................. 55
xii
Table 4. 18: Trend in the business for the last five years ............................................................. 56
Table 4. 19: Results of multiple regression between organizational performance (dependent
variable) and the combined effect of the selected predictors ....................................... 56
Table 4. 20: Regression coefficients of the relationship between organizational performance and
the four predictive variables ......................................................................................... 58
1
CHAPTER ONE
INTRODUCTION
1.1 Background of the Problem
Since the last decade, the integrated marketing communications (IMC) concept has increasingly
gained momentum and is been largely regarded as the key differentiating factor between
successful companies that control large market shares and those that don’t. Fierce competition is
driving companies to look for innovative ways not only to gain market share but to retain what
they already have. IMC has therefore become an important marketing management issue, and is
ranked as a top pillar in developing a company’s marketing strategy. Effective strategies focus
on the successful development of integration of marketing communications tools (e.g.
advertising, public relations, direct marketing, sales promotion, and personnel selling) to
optimize the communications impact on target consumers (Kotler,2006).
There are several reasons for the growing importance of IMC. These include: a change of
strategy in allocation of marketing spend from the traditional media advertising to other forms of
promotion, particularly consumer-and trade-oriented sales promotions; a movement away from
relying on advertising-focused approaches which emphasize on mass media to lower-cost more
targeted communication tools such as event marketing, sponsorships, direct mail, sales
promotion and the Internet; a shift in marketplace power from manufacturers to retailers; the
rapid growth and development of database marketing; demands for greater accountability from
advertising agencies and changes in the way agencies are compensated; the rapid growth of the
Internet, which is changing the nature of how companies do business and the ways they
2
communicate and interact with consumers; increased efforts to measure and improve marketing
communication return on investment (ROI) by both clients and agencies (Belch and Belch,
2004).
The marketing of products and services poses many challenges to marketers because of saturated
market conditions, the overwhelming availability of substitutes and diminishing opportunities for
differentiation. Insurance companies in particular have more challenges. Insurance companies
sell the same products with very little product differentiation. These challenges include: creating
awareness of a particular product when competition has exactly the same products offering the
same values, creating a brand identity for the products, and attracting the targeted audience who
are also targeted by the competition. When marketers attempt to differentiate their marketing
mix, the role and support of the promotions mix is essential. Accordingly, it is important for a
marketing manager to understand how an integrated marketing communications mix can be used
to market unique products and create a competitive edge in the market. /(Kotler and Keller,
2009).
Integrated Marketing Communication (IMC) is defined as an approach to achieving the
objectives of a marketing campaign through a well co-ordinated use of different promotional
methods that are intended to reinforce each other.
As defined by the American Association of Advertising Agencies integrated marketing
communications " recognizes the value of a comprehensive plan that evaluates the strategic roles
of a variety of communication disciplines that combines them to provide clarity consistency and
maximum communication impact."
3
Ana and Raluca (2009) noted that integrated marketing communication is an essential concept
used in managing lucrative relations with the employees, consumers and shareholders and
sending a uniform message to provide coherence and the maximum impact of communication in
an organization. As observed by Ana and Raluca (2009), in order to provide the success of such
an approach the marketing manager must observe the following steps: recognizing the target
audience, setting communication objectives, creating the message, structuring integrated efficient
communication and promotion programs by choosing both the personal and impersonal
communication paths of the message with an aim to emphasize the expected feedback from
potential and present customers. Hence, the purpose of integrated marketing communication is
the simplicity of the message and the use of various online and offline communication means by
improving the potential of the company so as to send the right message to the right customers at
the right time and place.
Firat and Venkatesh, (2003) noted that most of the companies in Nigeria practice orientation
towards integrated communication when they want to build up the brand starting from the
consumer. They emphasize especially the comprehension of consumers’ needs and wishes, of the
way in which they are responsive to the messages sent by the company. By means of this
process, they aim at improving the image of the organization which is possible due to the quality
and the coherence in communicating the brand values to the customer. Practically, the customers
shall be presented with the most convincing form of the company products and services in order
to guaranty their satisfaction so as they come back to the customer and make them buy.
Integrated Marketing Communication (IMC) is a tactic to brand communications where the
different methods work together to create a unified experience for the customer and are presented
4
with a similar tone and style that reinforces the brand’s core message. Its goal is to make all
aspects of marketing communication such as advertising, sales promotion, public relations, direct
marketing, personal selling, online communications and social media work together as a unified
force, rather than permitting each to work in isolation, which maximizes their cost effectiveness
and of course their efficiency.
According to Maria and Raluca (2009), the integrated marketing concept at the level of the
company may be structured on two levels. In the first stage, the functions of marketing: sale
promotions, publicity, customers’ relations, product management, marketing research must
interact to get maximum benefit from IMC. All other departments of the company must be
integrated in the marketing concept. A company whose focus is customer focused believes that
that the only “profit centre” is the consumer. The management strategy is based on the agreement
and understanding that all the departments: research development, production, financial
department, etc., are equal contributers to the satisfaction of the customer’s needs, resulting in
integrated management. Each department represents a “supplier” for some departments and a
“customer” for others. At the same time, from this point of view, it is necessary to work as a
team (Proctor and Kitchen, 2002).
Kotler and Armstrong (2005) indicated that under integrated marketing communication, the
company carefully integrates and coordinates its many communications channels to deliver a
clear, consistent and compelling message about the organization and its products. Kotler and
Armstrong further notes that the marketing communication mix consists of a set of promotion
instruments needing their integration.
5
In order to gain appreciation, Kotler (2003) notes that a company has five available
communication means: Commercial advertising or mass-media communication (paid
advertising) is a quality variable at the psychological level with long-term results. In other words,
this concept uses a mass communication aiming at the same message through indirect and non-
personal presentation and promotion contact, paid by a well-paid sponsor set to satisfy its
interests; sale promotion is a quantity variablewith short term objectives which is maily to
increase sales over a defined period, using short-term stimulation techniques in order to
encourage the customers in buying and trying a product; public relations (non-commercial
advertising) is a set of activities with efficient long term psychological effects. The aim is to
build profitable relations with the audience inside and outside the company through favorable
publicity and creating programs meant to protect the market image or the company products;
Public relations builds brand loyalty in the long run. Personal selling (sale power) is the most
efficient instrument from the point of view of the purchase process contributing to creating
consumers’ convictions and actions. In order to add to this definition we need to emphasize that
the sales involve the direct interaction between two or more possible buyers in order to sell the
products; direct marketing is an information means used in promotional policy using databases to
identify the potential customers that are to be contacted. It is the most accessible communication
means as it is less expensive than other media. It aims at direct reactions among the target so as
to obtain both immediate and customized sale and to consolidate a long-term relationship. Under
the circumstances, they offer the interested customers the possibility of company feedback using
efficient techniques such as: using mail, phone electronic mail fax or the Internet.
6
In Africa, a study by Kallmeyer and Abratt (2009) on perceptions of IMC and organizational
change among agencies established that the use of IMC influences application of effective
promotion methods that lead to realization of increased sales revenue. However, promotion
methods that fail to use a modern IT concept fail to contribute towards attracting and retaining
many customers and this negatively affects marketing of products/services. Promotion methods
such as advertising through short message services and the internet facilitate marketing of
communication services to individuals located over long distances. The use of information
technology has made it possible to many organizations to access a big market share in various
industries and this has resulted to a difficulty for companies in the same industryto acquire a big
market share in the target market.
Further, Tsikirayi, Muchenje and Katsidzira (2009) did a study on the impact of integrated
marketing communications mix (IMCM) in small to medium enterprises (SMEs) in Zimbabwe as
a marketing tool. The study established that the SME sector in Zimbabwe has assumed greater
importance as the main employer of the displaced workforce, as well as being the main
contributing sector to the economy of the country as supplier of essential goods and services.
However, the many players in this sector do not seem to appreciate the critical role played by the
marketing communications mix in getting their products and services to the market and making
the potential customers aware of these products and services, the quality and benefits of the
offerings.
Coming closer home, a study conducted by Kimani and Bett (2009) on the effects of IT in
marketing of communication services at Safaricom Kenya established that the organization
applies various IMC methods as a strategy to acquire a large market share in the country, Kenya.
7
This has led to Safaricom being the largest communications company in Kenya not only in
market share but by sales volumes and profitability.
Kimani and Bett (2009) also noted that many organizations in the communication sector have
learnt and taken advantage of IT, giving them an even larger competitive edge. Little has been
done to study the relationship between IT and IMC and how the combined effort of the two leads
to a successful marketing strategy. Since no major study has been undertaken to address these
problems, many marketing managers wishing to integrate the two lack knowledge and skills on
how to effectively improve integrated marketing of various services.
1.2 Statement of the Problem
Most studies have focused on studying the impact of the marketing mix as stand alone strategies
but not as IMC tools. These includes the effect of advertisement slogans on consumer brand
choices,, relationship marketing in enhancing brand loyalty, the use of personality in creating
brand loyalty and the creation and application of brand equity (Njuguna, 2002; Wanjau, 2001;
Mbau, 2000; Murage, 2002; Mwende, 2005 and Waweru, 2003). Hence, it was against this
background that the study aimed to investigate the impact of advertising, sales promotions and
direct personal selling on business performance using the case study of Kenya Orient Insurance
Company.
Many insurance companies are established and continue to be established in Kenyan (there are
43 licensed Insurance Companies). Due to the generic nature of Insurance products, Kenya
Orient Insurance has formulated a strategy of having a niche over its competitors through the
innovation platform. In the last two years, the company management has consciously embraced
IMC and has formulated and implemented strategies based on IMC for both corporate and brand
communication. According to Weidman (2009), the increasing demand for value added high
8
quality insurance products has had little or no impact on most of the Insurance companies whose
strategies clearly lack effective marketing communication planning. Weidman study read in part,
“The rapid expansion of insurance brands is a spontaneous response to the high demand. As a
result, the companies have utilized this need for quality products by customers and expanded the
capacity to handle extra demand. However, they have for a long time ignored the benefits of
integrated marketing communication which may contribute to increased sales and therefore
improve performance. The stakeholders in the industry have always taken it for granted that
customer acquisition is a guarantee without much emphasis on utilizing the IMCs. The other
issue in Kenya is that motor insurance in particular is a requirement under the law, thus a high
demand for this line of business. It takes little or no effort for the insurance companies to sell this
product since evry motorist must have it by law.
Ghai (2008) study notes that while it appears most companies play their part in meeting this
demand, most of the opportunities are untapped due to of lack of effective marketing campaign
strategy. This study therefore seeks to fill the existing gaps by looking at the effect of integrated
marketing communication tools on performance of Insurance companies (the Kenya Orient
Insurance Limited. Kenya Orient Insurance Company is an insurance company registered under
the Insurance Act of Kenya and is authorized all classes of General Insurance Business. The
Company’s headquarters are based in Nairobi and they have 12 branches countrywide-3 in
Nairobi, Thika, Meru, Embu, Nyeri, Nakuru Eldoret, Kisumu and 2 in Mombasa. They have
recently been awarded the ISO certification making them the 3rd Insurance Company to be ISO
certified in Kenya, a major milestone considering it is ranked 16th out of the 43 licenced
companies. Since the company adopted the IMC approach 2 years ago, the company had a
9
growth of 30% in 2012. The company has also set itself apart and positioned itself on the
innovation platform. In the last two years, the company has repackaged some of its flagship
products and launched them as brands with a brand identity (Orient Free Excess and Orient
Home). They have supported the two brands with IMC and the campaigns have been very
successful.
1.3 Purpose of the Study
The purpose of the study was to assess the effect of integrated marketing communication tools
on business performance in the insurance industry, focusing on the Kenya Orient Insurance
Limited.
1.4 Research Questions
1.4.1 To what extent does advertising affect performance of the Kenya Orient Insurance
Limited?
1.4.2 What are the effects of sales promotion on performance of the Kenya Orient Insurance
Limited?
1.4.3 How does direct personal selling affect performance of the Kenya Orient Insurance
Limited?
1.5 Rationale of the Study
This study was important in that it sought to establish the effectiveness of IMC in relaying
marketing information to potential customers and thereby increasing customer acquisition rates
and increasing of market share resulting in more sales.
10
1.5.1 Management
The study would be of particular importance to the management in Kenya Orient Insurance
Limited as it would draw recommendations that the company might employ to increase the
company’s market share resulting in increase of their sales turnover and profits. The study would
also be of significance to all the existing firms in the insurance industry in Kenya. The
identification of the integrated marketing strategies employed by the Kenya Orient Insurance
Limited and their effect on performance would give an insight to other aspiring insurance
companies on what elements are important for their success, leading to change of communication
strategy by the other companies.
1.5.2 Policy Makers
Government agencies and policy makers may use the results to formulate positive national
policies on a framework that is relevant and sensitive to the market forces influencing the
insurance industry in Kenya and the East African region. Currently, the Insurance regulatory
authority still has rules and regulations that hamper open competition on some insurance
products reducing competition and discouraging innovation.
1.5.3 Investors
This study assessed the integrated market communication strategies at Kenya Orient Insurance
Limited and how the strategies can manifest into maximum returns for the investors. Investors
would have confidence in Kenya Orient Insurance Limited and this shall translate to improved
perceived value resulting in a strong business positioning.
1.5.4 Scholars and Researchers
11
The research results would also be important to scholars and researchers as it would add to the
existing pool of knowledge in effects of IMC on marketing. Further, this study is also significant
in that, academically it would add to the existing knowledge on IMCs strategies that can be used
to maintain and improve insurance companies’ performance thus forming part of academic
reference.
1.6 Scope of the Study
The researcher targeted Kenya Orient Insurance Limited headquarters and branches in Nairobi.
The company management, supervisory staff and intermediaries (brokers and agents) are the
main point of focus. These are considered as major respondents of the study since they are the
ones conversant with the subject matter of the study. The study was determined to collect data
from the respondents with a goal of investigating the effect of integrated marketing
communication (IMC) on performance of the Kenya Orient Insurance Limited. The study was
conducted between March and April, 2012.
1.7 Definition of Key Terms
1.7.1 Advertising
Any paid form of non-personal presentation and promotion of ideas, goods or services by an
identified sponsor (Koltler, 2006). This is done through the various media.
1.7.2 Direct marketing
The use of consumer-direct (CD) channels to reach and deliver goods and services to customers
without using marketing middlemen (Pickton& Broderick 2001).
12
1.7.3 Information management
Refers to utilization of information collected from different sources to various managerial
departments and specific functions within an organization. Organizations emphasize different
processes depending on their strategies and objectives. There are four major cycles of
information management, which includes capturing, organizing, refining and transfer (Hans et
al., 2011).
1.7.4 Integrated Marketing Communication
This is a marketing strategy that takes and makes use of various customers’ information to make
or establish a marketing plan that will be effective in building and improving the customers’
relations with the organization (Barnes & Matsson, 2010). Integrated Marketing Communication
is “the concept under which a company carefully integrates and coordinates its many
communications channels to deliver a clear concise and consistent message. Integrated marketing
recognizes the value communication in advertising and aims at providing clarity and consistency
of whatever is being prompted.
1.7.5 Personal selling
This is face to face communication (one to one) interaction with one or more prospective
customers for the purpose of making sales and building customer relationships (Mortimer, 2001).
1.7.6 Public relations
Practice of managing the flow of information between an individual or an organization and the
public (Aldred, 2005).
13
1.7.7 Sales Promotions
Sales promotions is media & non media marketing pressure applied for a predetermined, limited
period of time in order to stimulate trial & impulse purchases, increase consumer demand or
improve product quality (Muniz and O'Guinn, 2001).
1.7.8 Performance
An analysis of a company's achievement as compared to goals and objectives. Within corporate
organizations, there are three primary outcomes analyzed: financial performance, market
performance and shareholder value performance (in some cases, production capacity
performance may be analyzed) (Meidan, 2006).
1.8 Chapter Summary
This chapter has addressed the importance of integrated marketing communication on
performance of a company. The chapter highlights the background information to the problem,
identifies the problem statement, states the purpose of the study and lists the research questions
that the research project will investigate. The chapter clearly outlines the rationale of the study
and the research questions to guide the study within the specified geographical and time scope.
Chapter two presents the literature review. It discusses the existing research on integrated
marketing communication. The discussion tackles all the research questions posed and provides
a firm theoretical background for the study. Chapter three presents the research methodology
proposed for this study. It details the research design, data collection methods, and how results
14
will be analyzed. Chapter four presents the findings of the study and their presentation. The
study winds up with chapter five which presents the discussion, conclusion, and
recommendations for action and further research.
15
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
In this second chapter, relevant literature information that is related and consistent with the
objectives of the study is reviewed. Important issues and practical problems are brought out and
critically examined so as to determine the current facts. This section is vital as it determines the
information that link the current study with past studies and what future studies will still need to
explore so as to improve knowledge.
2.2 Effects of Advertising on Performance
Koltler (2006) define advertising as any paid form of non-personal presentation and promotion
of ideas, goods or services by an identified sponsor. Montaner and Pina (2008) on the other hand
defines advertising as any paid form of non-personal communication directed towards target
audiences and transmitted through various mass media in order to promote and present a product,
service or idea. The key difference between advertising and the other promotional tools is that it
is impersonal and communicates with large numbers of people through paid media channels.
Meidan (2006) states that organizations use advertising for either their short-term or its long-
term objectives.
Meidan (2006) states that organizations use advertising for either their short-term or its long-
term objectives. A company attempting to generate a long term build-up of its name would use
institutional advertising, while a company interested in promoting its brand name and its
different services would use a brand advertising policy. Meidan (2006) further states that the
institutional advertising consists of promotion of the firm’s image as a whole, and promotion of
16
the products offered, with extra emphasis on the specific firm’s name organization. The
organization seeks through its marketing communications, to build awareness and to impress
customers looking for the best range of products and services. Due to the former impression of
companies as impersonal institutions with no interest in their customers as people, and of various
services as abstract and quite similar, the institutional advertising has become more and more
important. Brand advertising follows closely in the footsteps of institutional advertising. Its
purpose is to create awareness of the companies name and to advertise the different services it is
offering. For insurance institution, they need to make it known to the public product offered, as
well as influence their decision making as to why they should choose one institution over the
other.
Since insurance institutions are serving a mass of people, the problems of service advertising are
to know who to advertise to, and how to advertise. While institutional advertising is directed
towards the whole population, the service advertising of particular products has to be much more
selective, since it has to show that the consumer will benefit from the product/service.
Furthermore, all the individual campaigns of brand advertising have to be compatible in tone and
presentation, and match the image the company has created through its institutional advertising
(Keller, 2007). Mortimer (2001) states that an important part of advertising is to reduce
perceived risk and provide a clear idea of what the product comprises. Furthermore she considers
it important to advertise consistently, with a clear brand image, in order to achieve differentiation
and encourage word-of-mouth communication.
17
Advertising objectives determine the methodology used. An objective is always either
institutional also known as corporate( when a company wants to promote itself) or productalso
known as brand where the advertising objective is to promote the brand itself. Corporate
advertising message focuses on creating a positive image, enhancing reputation, building
goodwill or sharing company information.(Meidan 2006).
Kenya Orient Insurance has focused on product advertising and the corporate awareness has
been created through ownership of the brand in the advertising.
The individual campaigns of brand advertising have to be compatible in tone and presentation,
and match the image the company has created through its institutional advertising (Keller, 2007).
Mortimer (2001) states that an important part of advertising is to reduce perceived risk and
provide a clear idea of what the product comprises. Furthermore she considers it important to
advertise consistently, with a clear brand image, in order to achieve differentiation and
encourage word-of-mouth communication.
2.2.1 Mass Media
According to Belch and Belch (2007), the media are an “organization whose function is to
provide information/entertainment to subscribers, viewers, or readers while offering marketers an
environment for reaching audiences with print or broadcast messages”, for example, television
stations, radio stations, magazines and newspapers. As media organizations communicate to a
large audience globally, it is therefore considered an effective channel to reach target sections of
society, like children, elderly and low socioeconomic groups (Belch and Belch, 2007). With such
a large audience and potential effect on the community, media organizations are an advertising
tool of choice for many organizations including insurance companies.
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According to Meidan (2006), there are two types of mass media advertising channels appropriate
for advertising. That is, above-the-line and below-the-line advertising. Above-the- line
advertising contains different channels of communication, such as television, radio, print
(newspapers) and Billboards. Fast moving consumer group (FMCG) companies have embraced
this form of advertising to attract new customers and retain the old ones.
2.2.2 Below the Line
Below the-line (or under-the –line) advertising constitutes a huge part of institution advertising
activities. It is conducted by the company itself. It is a non-media communication. It is
advertising that delivers a tactical incentive to purchase a product. This includes corporate
brochures, leaflets, pamphlets, explanatory guides and manuals that can be used to support
selling of a specific product, posters, in-store displays and banners Under-the-line advertising is
very easy and cheap to produce and can be easily distributed through the company’s established
clientele and distribution networks.
According to Kerfoot and Ward (2003) the best method to raise sales is using advertising and
promotion tools in the sales outlet where the consumer makes the final decision. He talks of the
importance of the promotions supported by displays and posters. Displays are defined as those
features or promotional activities at the point of sale that show the product and make aware
customers of their existence, such as cards, exhibitions and other instruments to induce the
purchase. As Newlands and Hooper (2009) explain, merchandising display factor tends to focus
on in-stores location and the shopping route to positively affect consumers’ propensity to
browse. In addition, attitudes towards visual product presentation influence purchasing behaviour
19
in the store. A positive attitude leads to more browsing and purchasing, whereas a negative
attitude towards the visual product presentation results in an immediate exit from the store.
2.2.3 Above the Line Advertising
Above the line advertising refers to traditional mass media advertising. These include television,
radio, print (newspapers) and Billboards and internet. Fast moving consumer group (FMCG)
companies have embraced this form of advertising to attract new customers and retain the old
ones. The primary goal for using above the line advertising is to build a brand. Above the line
advertising is very expensive in Kenya (buying space
Print media is considered to be one of the oldest mix elements (Pickton& Broderick 2001),
widely used in both B2C and B2B markets. Meidan (2006) argue that the effects of print
advertising are designed to be long-term, yet, something is happening in the short run, and
therefore, it can be measured. In the cognitive stage advertising provides information and can be
evaluated based on questionnaires, play-back analyses, brand awareness surveys, and aided
recall. The affective dimension ads are meant to change attitudes and feelings, thereby, rating
scales, image measurements, rank order of preference for brands and projective techniques are
the methods to evaluate the change. Finally, conative advertising that should stimulate desires
can be measured by market and sales tests, split-run tests, intention to purchase and projective
techniques.
2.2.4 Online (Website/Blogs)
Technology touches every part of our lives making our world faster, smarter and more mobile
than ever. Amidst the proliferation of online businesses, the Internet has made online business
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models and offerings transparent. Such transparency has two key results. First, competitive
advantages historically enjoyed by companies have diminished. Products and technologies that
were once unique can be now duplicated within months, while services can be copied within
days or even hours. Second, because of a Web site, there is a single source of company's
information for all, message inconsistencies are more easily discovered. If outgoing messages do
not align with product or service offerings, a company's brand is jeopardized.
Just as Internet technology has leveled the competitive playing field by providing a window into
the competition's strategy, technology has also placed the power of information in the customer's
hands. Today, customers are more knowledgeable and demanding than ever of marketplace
conditions. They are able to research product attributes, investigate competitors' offerings and
compare prices.
While technology gives increased power to competitors and consumers, the same technology
also enables the principles of IMC to operate on new levels. Mechanisms for two-way
communication are more efficient and fluid than ever. By using technology to support IMC
concepts, companies have ability to exceed customer expectations and outsmart the competition.
2.2.5 Social Media
Social media are still identified as a relatively novel concept and referred to a set of online tools
which support social interaction. The term allows differentiating from traditional media like
television or newspapers, where content is made and published by professionals. Through social
media tools users can collaboratively create, search, share and evaluate the large amount of
information available online, as well as connect to, inform, inspire and track other participants
(Hans et al., 2011).
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The implementation of the social media can be beneficial in many aspects and used by different
departments in the organization. In marketing it concerns the promotion of the products and
services in conversations through blogs, online communities, video or user-generated sites such
as YouTube. In sales it is an energizing approach of finding enthusiastic customers, who could
spread the positive opinions about the company on social networking sites or in communities
(Bernoff & Li, 2008).
Nowadays it has become popular to search for a product and check the results over the user-
created content. Digital platforms such Facebook and Twitter facilitate increasing importance of
consumer influence. Moreover, online opinions generally influence offline opinions, as they
move into the traditional media (Smith, 2009). This Web 2.0 revolution is felt all around, even
for those who are not actively involved in social media.
Although at the beginning social media were used by individuals only for peer-to-peer
communication, with the lapse of time professionals started to utilize Web 2.0 platforms for
business communications (Spekman, 2010). For example, 69% of the 1700 executives from all
over the world reported that their companies achieved measurable business benefits with the help
of Web 2.0, lowering costs and increasing marketing efficiency (Bughin, Chui & Miller, 2009).
Due to their specific character, B2B companies started to adopt social media tools later than B2C
organizations (Lehtimäki, Salo, Hiltula&Lankinen, 2009), however, not without a success. In
2009, 34% out of 500 fast-growing companies in the USA used social networking, 26 % -
Twitter, 36 % - blogs or videoblogs in their dialogue with vendors, suppliers or partners (Barnes
& Matsson, 2010).
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Social media platforms such as Twitter, Facebook and blogs are used to reach clients operatively,
directly and get a prompt feedback. Firstly, companies get connected through social media.
Secondly, they use Web 2.0 tools to engage the customers in communication, i.e. to interact and
build a positive relationship online with them (Society for marketing professional services,
2011).
According to Mangold and Faulds (2009), the role of social media channels in integrated
marketing communication cannot be underestimated. Web 2.0 enables not only companies to talk
to the customers, but even customers to communicate directly with each other. Sufficient
integrated marketing communication creates synergy, when the utilization of different marketing
channels achieves stronger combined effect than a sum of effects of those channels taken
separately. But to achieve synergy, marketers should take into account how chosen media
channels correlate with each other and what is the input of each of them into the campaigns’
effects
2.3 Effects of Sales Promotions on Performance
Koltler (2006) defines sales promotion as a collection of incentive tools mostly short term,
designed to stimulate quicker or great purchase of a particular product or services by consumers
or trade. Sales promotions are action-focused marketing events whose purpose is to have a direct
impact on the behavior of the firm’s customers. There are three major types of sales promotions:
consumer promotions, retailer promotions, and trade promotions. Consumer promotions are
promotions offered by service/product producers directly to consumers. Retailer promotions are
promotions offered by retailers to consumers. Trade promotions are promotions offered by
service/product producers to retailers or other trade entities (Mortimer, 2001). Sales promotion
23
adds a range of activities and tools such as coupons, discounts, refunds, demonstrations, contests,
prizes and more to the communications mix and, therefore, is able to target audiences better than
traditional forms of advertising
According to Brassington and Pettitt (2000) sales promotion is different tactical marketing
techniques with mostly short-term incentives, which are designed to add value to the product or
service, in order to achieve specific sales or marketing objectives. Sometimes, institutions will
offer discounts to their first customers. Furthermore, Meidan (2006) states that sales promotion
has two distinctive qualities. Firstly, it provides a bargain chance, since many sales promotion
tools have an attention-gaining quality that communicates an offer that will not be available
again to purchase something special.
The disadvantage, however, for sales promotion is that although they appeal to a wide range of
buyers, many customers tend to be less brand loyal in the long run. Secondly, if sales promotions
are used too frequently and carelessly, it could lead to insecure customers, wondering whether
the service is reliable or reasonably priced. Sales promotion is sometimes considered as an
activity of less importance but companies increasingly realize the importance of having a well-
planned and structured program for sales promotion (Jobber & Lancaster, 2006). Therefore, for
insurance institutions, cautions should be exercised to ensure that they don’t have an intake that
puts pressure on their available resources of space, human and equipment.
Meidan (2006) indicates that due to the conflicting ideas concerning the benefits of sales
promotions, an organization must base its decisions upon relevance and usefulness of sales
promotion, as well as cost-effectiveness. Peatti and Peatti (1994) claim that normally, coupons,
special offers and other forms of price manipulation are the dominant forms of sales promotion.
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However, price-based promotions are difficult and probably dangerous to use for insurance
institutions. This due to the fact that the price setting of a service is already a difficult process,
and that consumers often see lower prices as a result of lower quality. However, Meidan (2006)
states that sales promotion appears to be most effectively used in combination with advertising.
The primary objectives with sales promotion is to attract new customers, thereby increasing the
institution’s share of savings; to increase market share in selected market segments; and to lower
the cost of acquiring new customers by seeking to avoid direct price competition with other
institutions.
There are several theories which support the concept of reward as a motivator. The conditions of
sales promotion are classical and operant conditioning. Whereas classical conditioning is largely
associated with advertising operant conditioning is seen as an explanation for consumer
behaviour in relation to sales promotion. Operant conditioning suggests the response of the
customers is likely to be affected by positive reinforcement (reward or negative reinforcement
(punishment), although the affect is likely to cease when these reinforcements are taken away.
Edward Thorndike in (Furse, 2008) suggested that the ‘law of effect’, which had to do with
positive and negative consequences of actions, is also relevant to sales promotion. Thelma states
that the consequences of customers behavior now will govern the consequences of that behavior
in the future. In other words once a buying pattern is achieved it will continue into the future.
According to Meidan (2006), sales promotions have 3 distinct characteristics; communication –
They gain attention and usually provide information that may lead the consumer to the product
or service; incentive – They give certain concession, inducement or contribution that gives value
to the consumer and finally invitation as they send a distinct invitation to engage in the trend.
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2.3.1 Price Offs
Marketing managers use price-oriented promotions, such as coupons, rebates, and price
discounts to increase sales and market share, entice consumers to trial, and encourage them to
switch brands or stores. In insurance institutions, sales promotions are used to build loyalty and
increase sales volumes from the intermediaries (agents and brokers). These usually take various
forms.
2.3.2 Events Sponsorship
A company will sponsor an event that it believes will promote its brand, Events could be client
initiated, like golf tournaments at a club, or they could be initiated by others, and a compay
chooses to sponsor in exchange of getting brand visibility opportunities. Events sponsorships are
very effective in creating brand awareness and reinforcing brand loyalty. In the long run, events
sponsorships create long term goodwill for the company, especially if the events sponsored are
for community welfare.
Non-price promotions such as sweepstakes, frequent user clubs, and premiums add excitement
and value to brands and may increase brand attractiveness. In addition, consumers like
promotions. They provide utilitarian benefits such as monetary savings, increased quality (higher
quality products become attainable), and convenience, as well as hedonistic benefits such as
entertainment, exploration, and self-expression (Aldred, 2005).
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2.3.3 Refunds and Rebates
Refunds and rebates are a type of sales promotions that are easily measurable. They are used
when a company wants to sell certain products by a certain time or it could be an end of season
line, or just a reward to customer loyalty.
Quantitative measures can be obtained calculating coupon returns, take-up rates of particular
offers, sales increase in value and volume, while qualitative research can be conducted to
examine customers’ views on activities undertaken (Pickton& Broderick 2001). Evaluating other
activities, such as point-of-sale, might not be that easy because of additional direct and indirect
factors that affect sales. That is why sales promotions should be assessed against clear objectives
prior to a campaign as well as after one.
Agencies that specialize in sales promotions have seen a fundamental shift from their customers:
a need for a holistic approach to changing customer behavior which can be achieved only by
incorporating sales promotions in other marketing activities. Therefore, sales promotion is a
powerful tool in affecting customer behaviors and these should be at the core of measurement. In
addition, the success of a sales promotion campaign delivers consumer data which helps to
segment central database (Barrand, 2004).
2.4 Effects of Direct Marketing on Performance
Direct marketing allows businesses to communicate straight to the consumer using various
channels. The message on direct marketing seeks to drive a “specific call to action”. Direct
marketing emphasizes trackable, measurable responses from customers regardless of medium
(Wunderman 1967). Channels for direct marketing include direct mail, telemarketing, direct
selling, text messages, emails, interactive consumer websites, fliers, promotional letters and
27
outdoor advertising. Direct marketing is practiced by businesses of all sizes. It is easily
measurable and can provr their impact on organizations botton line.
2.4.1 Marketing without Middlemen (Agents and Brokers)
Incase of the insurance companies, this would mean selling their products directly to the
consumer without going through the agents and brokers. Over and above the above channels,
Kenya Orient Insurance does this by seeking audience with key decision makers in key potential
customers through breakfast meetings. Insurance companies are leaning more towards this
method of sales due to challenges posed by indirect sales methods. Each business wants to
understand and control its sales performance elements.
In order to better understand sales performance and its measurement, Zallocco et al. (2009)
conducted in-depth interviews with sales managers and salespeople representing B2B
organizations. Scholars concluded that the understanding of measuring sales performance is still
inconsistent and differs among the two major groups that work together: sales managers are more
concerned to measure concrete dimensions like price, revenue, managing cash and budgets
whereas salespeople link the measurement criteria to customer service level and personal
interaction with customers. Apparently, this fundamental shift of putting customer ahead of the
product has affected sales discipline to a great extent. This means that organizations will have to
consider both quantitative and qualitative measures while evaluating sales outcomes.
One can comprehend that due to a strong focus on a customer and organization’s relationship
with a customer, all four marketing-mix disciplines come closer than ever before and require
companies to develop integrated campaigns in order to achieve the best results. As a
consequence, marketing communications should reconsider existing measurement practice and
28
attempt to leverage each of the discipline to build the most efficient and effective measurement
tools.
2.4.2 Direct Responses from Marketers
The benefits of direct marketing communications for sales lie in the ability to precisely track its
spending and corresponding customer revenues. Simply put, having identified a group of
customers it is easier to measure how much is spent on them over the year and how much
revenue they generate for the company (Pickton& Broderick 2001).
2.4.3 Large Services Information Available
McCarthy and Wright (2004) notes that direct marketing has become a powerful tool at the time
when the cost of communication has fallen rapidly. The subsequent proliferation of low-cost
internet access opened up opportunities for companies to deal directly with thousands or millions
of individual customers in a way that was previously unimaginable, and only manageable
through the use of intermediaries. The cost of communication has continued to fall with new
communication channels emerging, presenting opportunities as well as challenges for direct
marketing. Universities have embraced direct marketing to open up their target market. Through
direct marketing, they are able to get to potential customers especially through social media.
The opportunities derive from the greater choice of low-cost means of communicating with
current and potential customers. But it is a challenge for firms to evaluate the effectiveness of
this proliferation of new channels. A more significant challenge is the lack of control over
communication which this increase of channels implies, as consumers are increasingly able to
communicate among themselves, and in this high load communication environment, the direct
29
marketer has to compete for attention with messages from a wide range of peer group-based
media (Muniz and O'Guinn, 2001).
Direct marketing is defined as the use of consumer-direct (CD) channels to reach and deliver
goods and services to customers without using marketing middlemen (Kotler and Keller, 2006).
It allows marketers a more direct response from consumers (generally an order), allows
marketers to better target niche markets, and allows marketers to sell a product without the
expensive and lengthy process of getting it into traditional channels. Direct marketing also
presents many benefits to consumers, including avoiding the hassles of traffic congestion,
parking headaches, lack of time, shortage of retail help, and lines at checkout counters.
Consumers can browse through a larger selection of products than retail outlets generally carry
and price shop by browsing through mail catalogs and online shopping while in the comfort of
their home or office.
There is a dilemma faced by companies planning to interact with social networks. On the one
hand, they may seek to control the communication environment within the network, in an effort
to make sure that their brand message comes through clearly. They may also be attracted by the
availability of demographic and lifestyle information available to improve their targeting to
individual members of the network. But on the other hand, a true social network implies
members feeling a sense of ownership of the community, and there is evidence that individuals
may be resentful of corporate intrusion into what is perceived to be their own community space
(Croft, 2008; Hitwise, 2008). Individual online social networks have often gone through very
rapid life cycles of growth, maturity and decline as communities are first seen as vibrant and
30
attractive, and then lose their appeal to members of the community as they become dominated by
commercial interests (Boyd and Ellison, 2007).
Chandler (2000), direct marketing cuts through the confusion and uncertainty of mass marketing,
segmentation, and niches and goes right to the customer. Direct marketing is about focused,
targeted communication with strategic customers to promote the purchase of a good or service.
Meeting standards of excellence in business has always been important, but in today's
marketplace, it is absolutely essential for a company's success and survival. To meet those
standards of excellence, a company and every one of its representatives in every one of its
departments must have a customer-driven orientation and provide customer-driven service.
These are essential in today's marketplace (Cateora and Graham 2005). Customers will give their
business to where they find the greatest value, and a company's customer-driven orientation will
give them that competitive advantage, therefore, direct marketing also works to the advantage of
the organization (Engardio, Roberts and Bremner, 2004).
According to Caslione and Thomas (2002), direct marketing is aimed at the individual market
(the target market). The individual market is the customer. Caslione and Thomas noted that the
dentist's office calls to remind you about your appointment. The closest grocery store asks for
your card in order to record your purchases. These are all examples of the impact of direct
marketing in everyday life. Very quietly and often without much fanfare, the most visible
applications of direct marketing have changed the way we go about living, and there is no
evidence to suggest that the impact will lessen. Therefore, when customers portray interest in
certain institutions, the insurance institution takes their contacts and does follow-up thereafter.
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2.5 Effects of Personal Selling on Performance
2.5.1 Direct Interactions (Offers Immediate Feedback)
Scholars agree that sales effectiveness can be defined as a summary of organizational outcomes,
most frequently being sales volume, market share, profit contribution, return on assets and
customer satisfaction (Piercy et al. 2011). Thus, listed outcomes can show the contribution of
sales unit efforts to the overall business. Yet, sales as a discipline has seen a major shift from
transactional based selling to relationship marketing (Pickton& Broderick 2001). So the
emphasis is placed on building the relationship with prospects and retaining the existing ones
rather than trying to sell the product or service in order to increase sales. In other words, this
conceptual change implies that relationship marketing measures could be also adopted by sales
practitioners.
2.5.2 Innovation and Credibility of Information given as it can Easily be Verified
Datta and Datta (2006) define personal selling as face to face interaction with one or more
prospective customers for the purpose of making sales and building customer relationships.
Brassington and Pettitt (2000) define personal selling to be a two-way communication tool
between a representative of an organization and an individual or group, with the intention to
inform, persuade or remind them, or sometimes serve them to take appropriate actions.
Furthermore, personal selling is a crucial element in ensuring customers post-purchase
satisfaction, and in building profitable long-term buyer-seller relationships built on trust and
understanding. Insurance institutions are known to participate in this a lot. This is done through
career days in their institutions.
32
Verhallenet al. (1997) state that the increased competition within the fast changing environment
of products/services has lead companies to develop and maintain comprehensive relationships
with their customers. Furthermore, Julian and Ramaseshan (2004) state that the long-term
person-to-person relationship is an important factor for a company to achieve a competitive
advantage. Meidan (2006) points out that once a customer has chosen a company, he is unlikely
to switch to another. As such, institutions of higher learning participate in organized career
forum in high schools to tap a market from the source. This way, these institutions are able to
influence decision making of the young mind and they are therefore unlikely to change their
minds. Thus, personal selling is probably the most important element in the communication
process within the insurance arena. Lee (2002) state that personal selling can be performed either
face-to-face or through technological aids such as the Internet.
According to Julian & Ramaseshan (2004) the relationship between the salesperson and the
customer is perceived as being of great importance for the marketing of a company. Hence, the
sales force within the industry needs not only to be trained in the art of selling, but also to be
aware of all the products available and be able to clearly explain what each offers. Since
customers’ needs and motivation are likely to be complex, and their ability to assess alternative
courses of action without professional assistance is likely to be limited, it is of great significance
for the sales force to know their customers, as well as their products. Verhallenet al. (2007)
indicate that companies should see the selling as a problem-solving process in which the sales
force engages and co-operates towards the customer, trying to find a solution to the customers’
problem, rather than only persuading him to purchase the products or services. In addition,
33
Meidan (2006) claims that it is up to the sales force to enhance the company’s reputation by
looking after its customers.
2.6 Chapter Summary
Chapter two has explored the concept and the nature of IMC. The literature has emphasized the
strategic role of IMC on enhancing organizational performance. The concepts of IMC have been
aligned with the research questions outlined in chapter one.
Chapter three shall discuss the research methodology that was adopted in line with the research
purpose outlined in chapter one. The variables in chapter two were used to guide the choice of
research methodology.
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CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter highlights the research design, the study variables, the study area, the study
population, sampling techniques and sample size determination, construction of research
instruments, pilot study, validity and reliability of the instruments, methods of data collection
and data analysis.
3.2 Research Design
Research design refers to the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in the procedure
(Babbie, 2002). In addition Kothari (2004) observed that research design is a blue print which
facilitates the smooth sailing of the various research operations, thereby making research as
efficient as possible hence yielding maximum information with minimal expenditure of effort,
time and money. A descriptive research design was used this study. The design was chosen since
it is more precise and accurate since it involves description of events in a carefully planned way
(Babbie, 2002). The design therefore was used to establish the relation between the independent
variables (advertising, sales promotion, personal Selling and direct marketing) and the dependent
variable (organizational performance).
35
3.3 Population and Sampling Design
3.3.1 Population
Target population for in statistics is the specific population about which information is desired.
According to Ngechu (2004), a population is a well defined or set of people, services, elements,
events, group of things or households that are being investigated. The target population was of
384 respondents comprising of 82 staff in different managerial levels currently employed at
Kenya Orient Insurance Limited and 302 agents. This population was chosen since the people in
the management are the ones involved in the day to day running of the company and thus are
well conversant with the effects of integrated marketing communication on performance.
Mugenda and Mugenda, (2003), explain that the target population should have some observable
characteristics, to which the researcher intends to generalize the results of the study.
Table 3.1: Target Population Distribution
Level Frequency Percentage
Top level managers 10 2.6
Middle level managers 72 18.8
Agents 302 78.6
Total 384 100.0
Source: Kenya Orient Insurance Limited, (2013)
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3.3.2 Sampling Design
3.3.2.1 Sampling Frame
Ngechu (2004) underscores the importance of selecting a representative sample through making
a sampling frame. From the population frame the required number of subjects, respondents,
elements or firms was elected in order to make a sample. The sampling frame describes the list
of all population units from which the sample is selected (Cooper and Schindler, 2003). The staff
in different managerial levels currently employed at Kenya Orient Insurance Limited and agents
were the sampling units.
3.3.2.2 Sampling Technique
Stratified proportionate random sampling technique was used to select the sample. According to
Mugenda and Mugenda, (2003), stratified proportionate random sampling technique produce
estimates of overall population parameters with greater precision and ensures a more
representative sample is derived from a relatively homogeneous population. Stratification aimed
to reduce standard error by providing some control over variance. The study grouped the
population into three strata i.e. top managers, middle level managers and agents.
3.3.2.3 Sample Size
From each stratum the study used simple random sampling to select 77 respondents by taking
20% from each group. According to Cooper and Schindler (2003), random sampling frequently
minimizes the sampling error in the population. This in turn increases the precision of any
estimation methods used.
37
Table 3.2: Sampling Frame
Level Frequency Percentage Sample size
Top level managers 10
20 2
Middle level managers 72
20 14
Agents 302
20 60
Total 384
77
3.5 Data Collection Methods
Primary data according to Kothari (2004) is the data collected a fresh for the first time while
secondary data is that data that has already been collected and passed through statistical process.
Andre (2004) explains that primary data is data that is used for a scientific purpose for which it
was collected. The researcher used primary data for this study and collected using
questionnaires. The questionnaires included closed and open ended questions. Closed ended
questions were used in an effort to conserve time and money as well as to facilitate an easier
analysis as they are in immediate usable form; while the open ended questions were used as they
encouraged the respondent to give an in-depth and felt response without feeling held back in
revealing of any information. With open ended questions, a respondent’s response gives an
insight to his or her feelings, background, hidden motivation, interests and decisions. The
questionnaire had two parts: part A focused on the demographic information of the respondents
while Part B focused on the study variables.
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3.6 Research Procedures
The questionnaire designed by the researcher based on the research questions was pilot tested to
refine the questions before it can be administered to the selected sample. A pilot test was
conducted to detect weakness in design and instrumentation and to provide proxy data for
selection of a probability sample. Mugenda and Mugenda (2003) asserted that, the accuracy of
data to be collected largely depended on the data collection instruments in terms of validity and
reliability. Content validity which was employed by this study is a measure of the degree to
which data collected using a particular instrument represents a specific domain or content of a
particular concept. To establish the validity of the research instrument the researcher sought
opinions of experts in the field of study especially the lecturers in the department of business
administration. The researcher intends to selected a pilot group of 15 individuals from the target
population to test the reliability of the research instruments. In order to test the reliability of the
instruments, internal consistency techniques was applied using Cronbach’s Alpha. The alpha
value ranges between 0 and 1 with reliability increasing with the increase in value. Coefficient of
0.6-0.7 is a commonly accepted rule of thumb that indicates acceptable reliability and 0.8 or
higher indicated good reliability (Mugenda, 2008).
The researcher administered the questionnaire individually to all respondents. Care and control
by the researcher was exercised to ensure all questionnaires issued to the respondents are
received. To achieve this, the researcher maintained a register of questionnaires, which were
sent, and which were received. The questionnaire was administered using a drop and pick later
method to the sampled respondents. The researcher made follow up calls to the respondents after
administration and also visited them during off time hours to increase the response rate.
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3.7 Data Analysis Methods
After data collection data analysis was done. This process is important as it makes data sensible.
Data analysis tool used is dependent on the type of data to be analyzed depending on whether the
data qualitative or quantitative. The quantitative data in this research was analyzed by descriptive
statistics using statistical package for social sciences (SPPS). Descriptive statistics includes
mean, frequency, standard deviation and percentages to profile sample characteristics and major
patterns emerging from the data. Completeness of qualitative data collected was checked for and
cleaned ready for data analysis. Content analysis was used in processing of this data and results
presented in prose form.
In addition, a multivariate regression model was applied to determine the relative importance of
each of the four variables with respect to performance of the Kenya Orient Insurance Limited.
Multiple regressions is a flexible method of data analysis that may be appropriate whenever
quantitative variables (the dependent) is to be examined in relationship to any other factors
(expressed as independent or predictor variable). Relationships may be non-linear, independent
variables may be quantitative or qualitative and one can examine the effects of a single variable
or multiple variables with or without the effects of other variables taken into account, (Cohen,
West & Aiken, 2003). The regression model was as follows:
Y = β0 + β1X1 + β2X2 + β3X3 + β4X4 + ε
Where:
Y = Organizational performance
β0 = Constant Term
40
β1, β2 and β3, = Beta coefficients
X1= advertising
X2= sales promotion
X3= personal Selling
X4= direct marketing
ε = Error term
3.8 Chapter Summary
Chapter three discussed the research methodology that was adopted in line with the research
purpose outlined in chapter one. The variables in chapter two were used to guide the choice of
research methodology. The population, sampling design, data collection methods and research
procedures were highlighted.
Chapter four shall explore the responses given by the various respondents on research questions.
The findings gave an overview of the impact of transformational leadership on a company’s
competitiveness.
41
CHAPTER FOUR
4.0 RESULTS AND FINDINGS
4.1 Introduction
This chapter covers analysis of data and the findings of the study. The main objective of the
study was to assess the effect of integrated marketing communication tools on business
performance in the insurance industry, focusing the Kenya Orient Insurance Limited. The study
focused on Kenya Orient Insurance Limited.
4.1.2 Response Rate
The sample respondents comprised 77 staffs in different managerial levels currently employed at
Kenya Orient Insurance Limited and agents. Out of 77 targeted staffs and agents 52 respondents
filled and returned the questioners making a response rate of 67.53%. A response rate of 60%
and above is a good response rate for statistical reporting (Mugenda and Mugenda, 2003).
4.3 Background Information
The background information has indeed been considered meaningful by the researcher, this is
because of the role it plays in enabling the understanding of the logic of the responses given by
the respondents.
4.3.1 Gender of the Respondents
Table 4.1 provides a summary of the gender of the respondents as a result of the responses given
by the respondents.
42
Table 4. 1: Gender of the Respondents
Frequency Percentage
Male 25 48.08
Female 27 51.92
Total 52 100.00
According to the findings, 51.92% of the respondents were female while 48.08% were male.
This implies that gender equality was observed at Kenya Orient Insurance when employing
staffs.
4.3.2 Age of the Respondents
The study sought to find out the age of the respondents. This was illustrated in Table 4.2 below.
Table 4. 2: Age of the Respondents
Frequency Percentage
Under 25 years 4 7.69
26 – 35 15 28.85
36 – 45 20 38.46
46 – 55 8 15.38
56 and Above 5 9.62
Total 52 100.00
From the findings, 38.46% of the respondents were aged 36 – 45 years, 28.85% of the
respondents were aged 26 – 35 years, 15.38% of the respondents were aged 46 – 55 years, 9.62%
of the respondents were aged 56 years and above and 7.69% of the respondents were aged under
25 years.
4.3.3 Education Level of the Respondents
The study sought to find out the education level of the respondents. This was illustrated in table
4.3.
43
Table 4. 3: Education Level of the Respondents
Frequency Percentage
Diploma/certificate 6 11.54
Bachelors’ degree 46 88.46
Total 52 100.00
According to the findings, 88.46% of the respondents had a bachelors’ degree and 11.54% of the
respondents had a diploma/certificate.
4.3.4 Period the Respondents had been Working with the Company
It was important for the study to establish the period the respondents had been working with the
company.
Table 4. 4: Period the Respondents had been Working with the Company
Frequency Percentage
Less than 1 year 4 7.69
1-10 years 28 53.85
10-20 years 12 23.08
20-30 years 5 9.62
Over 30 years 3 5.77
Total 52 100.00
From the findings illustrated in table 4.4 above, 53.85% of the respondents had been working in
the company for 1-10 years, 23.08% of the respondents had been working in the company,
9.62% of the respondents had been working in the company for 20-30 years, 7.69% of the
respondents had been working in the company for less than 1 year and 5.77% of the respondents
had been working in the company for over 30 years.
44
4.4 Effects of Integrated Marketing Communication on Performance
4.4.1 Advertising
Advertising is any paid form of non-personal communication directed towards target audiences
and transmitted through various mass media in order to promote and present a product, service or
idea. The key difference between advertising and the other promotional tools is that it is
impersonal and communicates with large numbers of people through paid media channels.
The study sought to find out the extent that advertising of institutions services/products
influenced the company performance.
Table 4. 5: Extent that advertising of institutions services/products influenced the company
performance
Frequency Percentage
Very great extent 11 21.15
Great extent 32 61.54
Moderate extent 6 11.54
Low extent 2 3.85
Not at all 1 1.92
Total 52 100.00
According to the findings, 61.54% of the respondents indicated that advertising of institutions
services/products influenced the company performance to a great extent, 21.15% of the
respondents indicated that advertising of institutions services/products influenced the company
performance to a very great extent, 11.54% of the respondents indicated that advertising of
institutions services/products influenced the company performance to a moderate extent, 3.85%
of the respondents indicated that advertising of institutions services/products influenced the
company performance to a low extent and 1.92% of the company performance. Mortimer (2001)
states that an important part of advertising is to reduce perceived risk and provide a clear idea of
45
what the product comprises. Furthermore she considers it important to advertise consistently,
with a clear brand image, in order to achieve differentiation and encourage word-of-mouth
communication.
The study sought to find out the extent that forms of advertising influenced the company
performance. A 5 point likert scale was used where 1-1.499 = not at all, 1.500-2.499 = low
extent, 2.500-3.499= moderate extent, 3.500-4.499 = great extent and 4.500-5.000 = very great
extent.
Table 4. 6: Extent that forms of advertising influenced the company performance
Mean Stdev
Online (Website/Blogs) 3.824 0.427
Road-shows 3.624 0.802
Wall Branding/Billboards 4.405 0.261
Information Leaflet(FAQ) 4.392 0.173
According to the findings, wall branding/billboards and information leaflet (FAQ) influenced the
company performance to a great extent as shown by a mean of 4.405 and 4.392 respectively. In
addition, online (website/blogs) and road-shows influenced the company performance to a great
extent as shown by a mean of 3.824 and 3.624 respectively. As Newlands and Hooper (2009)
explain, merchandising display factor tends to focus on in-stores location and the shopping route
to positively affect consumers’ propensity to browse. In addition, attitudes towards visual
product presentation influence purchasing behaviour in the store. A positive attitude leads to
more browsing and purchasing, whereas a negative attitude towards the visual product
presentation results in an immediate exit from the store.
46
The study sought to find out the extent that social media influenced the company performance. A
5 point likert scale was used where 1-1.499 = not at all, 1.500-2.499 = low extent, 2.500-3.499=
moderate extent, 3.500-4.499 = great extent and 4.500-5.000 = very great extent.
Table 4. 7: Extent that Social Media Influenced the Company Performance
Social media Mean Stdev
Facebook 4.108 0.169
Twitter 3.021 0.248
LinkedIn 3.719 0.371
YouTube 3.901 0.219
From the findings, Facebook, Youtube and Linked in influenced the company performance to a
great extent as shown by a mean of 4.108, 3.901 and 3.719 respectively. In addition, twitter
influenced the company performance to a moderate extent as shown by a mean of 3.021. Online
opinions generally influence offline opinions, as they move into the traditional media (Smith,
2009). This Web 2.0 revolution is felt all around, even for those who are not actively involved in
social media.
The study sought to find out the extent that electronic media influenced the company
performance. A 5 point likert scale was used where 1-1.499 = not at all, 1.500-2.499 = low
extent, 2.500-3.499= moderate extent, 3.500-4.499 = great extent and 4.500-5.000 = very great
extent.
Table 4. 8: Extent that Electronic Media Influenced the Company Performance
Electronic Media Mean Stdev
TV 4.264 0.251
Radio 4.023 0.147
47
According to the findings, TV and Radio influenced the company performance to a great extent
as shown by a mean of 4.264 and 4.023 respectively. As media organizations communicate to a
large audience globally, it is therefore considered an effective channel to reach target sections of
society, like children, elderly and low socioeconomic groups (Belch and Belch, 2007). With such
a large audience and potential effect on the community, media organization are an advertising
tool of choice for many organizations including insurance companies to make their products
known to the general public.
The study sought to find out the extent that print media influenced the company performance. A
5 point likert scale was used where 1-1.499 = not at all, 1.500-2.499 = low extent, 2.500-3.499=
moderate extent, 3.500-4.499 = great extent and 4.500-5.000 = very great extent.
Table 4. 9: Extent that Print media Influenced the Company Performance
Print media Mean Stdev
Newspaper Adverts 4.318 0.504
Magazines/newsletters 4.105 0.259
From the findings, newspaper adverts and magazines/newsletters influenced the company
performance to a great extent as shown by a mean of 4.318 and 4.105 respectively. Meidan
(2006) argue that the effects of print advertising are designed to be long-term, yet, something is
happening in the short run, and therefore, it can be measured. In the cognitive stage advertising
provides information and can be evaluated based on questionnaires, play-back analyses, brand
awareness surveys, and aided recall.
The study sought to find out the extent that Pr/media relations influenced the company
performance. A 5 point likert scale was used where 1-1.499 = not at all, 1.500-2.499 = low
48
extent, 2.500-3.499= moderate extent, 3.500-4.499 = great extent and 4.500-5.000 = very great
extent.
Table 4. 10: Extent that Pr/Media Relations Influenced the Company Performance
Pr/Media relations Mean Stdev
Press Briefings/conferences 3.624
0.612
Press releases 3.814
0.713
Feature articles 3.291
0.105
Press coverage for events 3.701
0.284
Media interviews in both print and electronic(TV, radio newspapers,
magazines etc) focusing on business related programs 3.834
0.341
Pictorials/captions 3.182
0.246
Continuous engagement with the media even when there is no major news 4.593
0.812
According to the findings, continuous engagement with the media even when there is no major
news influenced the company performance to a very great extent as shown by a mean of 4.593.
In addition, media interviews in both print and electronic (TV, Radio, newspapers, magazines
etc) focusing on business related programs and press releases influenced the company
performance to a great extent as shown by a mean of 3.834 and 3.814 respectively. More over,
press coverage for events and press briefings/conferences influenced the company performance
to a great extent as shown by a mean of 3.701 and 3.624 respectively. Also, feature articles and
pictorials/captions influenced the company performance to a moderate extent as shown by a
mean of 3.291 and 3.182 respectively. The affective dimension ads are meant to change attitudes
and feelings, thereby, rating scales, image measurements, rank order of preference for brands and
projective techniques are the methods to evaluate the change. Finally, conative advertising that
49
should stimulate desires can be measured by market and sales tests, split-run tests, intention to
purchase and projective techniques (Meidan, 2006).
4.4.2 Sales Promotions
Sales promotion is a collection of incentive tools mostly short term, designed to stimulate
quicker or great purchase of a particular product or services by consumers or trade. Sales
promotions are action-focused marketing events whose purpose is to have a direct impact on the
behavior of the firm’s customers.
The study sought to find out the extent that sales promotions practiced by Kenya Orient
Insurance influenced the company performance.
Table 4. 11: Extent that Sales Promotions Practiced by Kenya Orient Insurance Influenced
the Company Performance
Frequency Percentage
Very great extent 15 28.85
Great extent 30 57.69
Moderate extent 7 13.46
Total 52 100.00
According to the findings, 57.69% of the respondents indicated that sales promotions practiced
by Kenya Orient Insurance influenced the company performance to a great extent, 28.85% of the
respondents indicated that sales promotions practiced by Kenya Orient Insurance influenced the
company performance to a very great extent and 13.46% of the respondents indicated that sales
promotions practiced by Kenya Orient Insurance influenced the company performance to a
moderate extent. Meidan (2006) states that sales promotion has two distinctive qualities. Firstly,
it provides a bargain chance, since many sales promotion tools have an attention-gaining quality
50
that communicates an offer that will not be available again to purchase something special.
Meidan (2006) states that sales promotion appears to be most effectively used in combination
with advertising.
The study sought to find out the extent that forms of sales promotions influenced company
performance. A 5 point likert scale was used where 1-1.499 = not at all, 1.500-2.499 = low
extent, 2.500-3.499= moderate extent, 3.500-4.499 = great extent and 4.500-5.000 = very great
extent.
Table 4. 12: Extent that forms of sales promotions influenced company performance
Mean Stdev
Discounts 3.804 0.307
“ Win a plot/car/holiday promos 4.625 0.105
Training 3.839 0.842
Customer service week (Reward activities) 4.317 0.424
Price offs 4.423 0.364
Events sponsorship 3.728 0.748
From the findings, “win plot/car/holiday promos influenced the company performance to a very
great extent as shown by a mean of 4.625. In addition, price offs; customer service week (reward
activities) and training influenced the company performance to a great extent as shown by a
mean of 4.423, 4.317 and 3.839 respectively. Edward Thorndike in (Furse, 2008) suggested that
the ‘law of effect’, which had to do with positive and negative consequences of actions, is also
relevant to sales promotion. Thelma states that the consequences of customers behavior now will
govern the consequences of that behavior in the future. In other words once a buying pattern is
achieved it will continue into the future. More over, discounts and events sponsorship influenced
the company performance to a great extent as shown by a mean of 3.804 and 3.728 respectively.
Sales promotion is sometimes considered as an activity of less importance but companies
51
increasingly realize the importance of having a well-planned and structured program for sales
promotion (Jobber & Lancaster, 2006).
The study sought to find out the respondents’ agreement level on statements that regard sales
promotions. A 5 point likert scale was used where 1-1.499 = strongly disagree, 1.500-2.499 =
Disagree, 2.500-3.499= Neutral, 3.500-4.499 = Agree and 4.500-5.000 = strongly agree.
Table 4. 13: Statements that Regard Sales Promotions
Mean Stdev
Sales promotion speeds up awareness process and therefore maximize sales 4.205 0.572
Sales promotion involves some type of incentives and motivation that offer
clients a reason to buy the company products 4.462 0.321
Sales promotion can be implemented quickly and has an immediate impact
on sales 3.936 0.601
Sales promotion is extremely versatile, different forms can be used with
various groups to achieve different effects. 4.618 0.207
Mainly, sales promotions are triggered by increased promotional sensitivity,
service proliferation, and increased competition. 4.561 0.382
From the findings, the respondents strongly agreed that sales promotion is extremely versatile,
different forms can be used with various groups to achieve different effects and mainly, sales
promotions are triggered by increased promotional sensitivity, service proliferation, and
increased competition as shown by a mean of 4.618 and 4.561respectively. In addition, sales
promotion speeds up awareness process and therefore maximizes sales, sales promotion can be
implemented quickly and has an immediate impact on sales and sales promotion involves some
type of incentives and motivation that offer clients a reason to buy the company products as
shown by a mean of 4.462, 4.205 and 3.936 respectively. Peatti and Peatti (1994) claim that
normally, coupons, special offers and other forms of price manipulation are the dominant forms
52
of sales promotion. However, price-based promotions are difficult and probably dangerous to use
for insurance institutions.
4.4.3 Direct Marketing
Direct marketing emphasizes trackable, measurable responses from customers regardless of
medium. Channels for direct marketing include direct mail, telemarketing, direct selling, text
messages, emails, interactive consumer websites, fliers, promotional letters and outdoor
advertising. Direct marketing is practiced by businesses of all sizes.
The study sought to find out the extent that direct marketing influenced the company
performance.
Table 4. 14: Extent that Direct Marketing Influenced Company Performance
Frequency Percentage
Very great extent 10 19.23
Great extent 37 71.15
Moderate extent 5 9.62
Total 52 100.00
According to the findings, 71.15% of the respondents indicated that direct marketing influenced
the company performance to a great extent, 19.23% of the respondents indicated that direct
marketing influenced the company performance to a very great extent and 9.62% of the
respondents indicated that direct marketing influenced the company performance to a moderate
extent. The benefits of direct marketing communications for sales lie in the ability to precisely
track its spending and corresponding customer revenues. Simply put, having identified a group
of customers it is easier to measure how much is spent on them over the year and how much
revenue they generate for the company (Pickton& Broderick 2001).
53
The study sought to find out the extent that aspects of direct marketing influenced the company
performance. A 5 point likert scale was used where 1-1.499 = not at all, 1.500-2.499 = low
extent, 2.500-3.499= moderate extent, 3.500-4.499 = great extent and 4.500-5.000 = very great
extent.
Table 4. 15: Extent that aspects of direct marketing influenced the company performance
Mean Stdev
Peer group-based communication 3.826 0.304
Direct B to B (to agents and brokers) 3.704 0.701
Direct responses from Business and end consumer 3.873 0.184
Large services information available 3.906 0.259
From the findings, large services information available and direct responses from business and
end consumer influenced the company performance to a great extent as shown by a mean of
3.906 and 3.873 respectively. In addition, peer group-based communication and direct B to B (to
agents and brokers) influenced the company performance to a great extent as shown by a mean
of 3.826 and 3.704 respectively. Customers will give their business to where they find the
greatest value, and a company's customer-driven orientation will give them that competitive
advantage, therefore, direct marketing also works to the advantage of the organization (Engardio,
Roberts and Bremner, 2004).
4.4.4 Personal Selling
Personal selling is a two-way communication tool between a representative of an organization
and an individual or group, with the intention to inform, persuade or remind them, or sometimes
serve them to take appropriate actions. Personal selling is a crucial element in ensuring
customers post-purchase satisfaction, and in building profitable long-term buyer-seller
54
relationships built on trust and understanding. Insurance institutions are known to participate in
this a lot. This is done through career days in their institutions.
The study sought to find out the extent that personal selling practiced by Kenya Orient
influenced the company performance.
Table 4. 16: Extent that personal selling practiced by Kenya Orient influenced the
company performance
Frequency Percentage
Very great extent 8 15.38
Great extent 24 46.15
Moderate extent 17 32.69
Low extent 2 3.85
Not at all 1 1.92
Total 52 100.00
According to the findings, 46.15% of the respondents indicated that selling practiced by Kenya
Orient influenced the company performance to a great extent, 32.69% of the respondents
indicated that selling practiced by Kenya Orient influenced the company performance to a
moderate extent, 15.38% of the respondents indicated that selling practiced by Kenya Orient
influenced the company performance to a very great extent, 3.85% of the respondents indicated
that selling practiced by Kenya Orient influenced the company performance to a low extent and
1.92% of the respondents indicated that selling practiced by Kenya Orient did not at all influence
the company performance. Personal selling is a crucial element in ensuring customers post-
purchase satisfaction, and in building profitable long-term buyer-seller relationships built on trust
and understanding. Insurance institutions are known to participate in this a lot (Brassington and
Pettitt, 2000).
55
The study sought to find out the extent that aspects of personal selling by Kenya Orient
influenced the company performance. A 5 point likert scale was used where 1-1.499 = not at all,
1.500-2.499 = low extent, 2.500-3.499= moderate extent, 3.500-4.499 = great extent and 4.500-
5.000 = very great extent.
Table 4. 17: Extent that aspects of personal selling by Kenya Orient influenced the
company performance
Mean Stdev
Direct interactions (offers immediate feedback) 4.207 0.235
High level of customer attention 3.854 0.612
Reliability 3.790 0.204
Innovation and credibility of information given as it can easily be verified 4.356 0.521
From the findings, innovation and credibility of information given as it can easily be verified and
direct interactions (offers immediate feedback) influenced the company performance to a great
extent as shown by a mean of 4.356 and 4.207 respectively. According to Julian &Ramaseshan
(2004) the relationship between the salesperson and the customer is perceived as being of great
importance for the marketing of a company. In addition, high level of customer attention and
reliability influenced the company performance to a great extent as shown by a mean of 3.854
and 3.790 respectively. Julian and Ramaseshan (2004) state that the long-term person-to-person
relationship is an important factor for a company to achieve a competitive advantage.
4.5 Organizational Performance
The study sought to find out the trend in the business for the last five years. A 5 point likert scale
was used where 1-1.499 = Greatly decreased, 1.500-2.499 = Decreasing, 2.500-3.499= Constant,
3.500-4.499 = Improved and 4.500-5.000 = Greatly Improved.
56
Table 4. 18: Trend in the business for the last five years
Mean Stdev
Market share 4.271 0.318
Profitability 4.369 0.821
Number of employees 4.571 0.107
Sales turnover 4.731 0.429
According to then findings, the trend of sales turnover and number of employees had greatly
improved for the last five years as shown by a mean of 4.731 and 4.571 respectively. In addition,
the trend of profitability and market share had improved for the last five years as shown by a
mean of 4.369 and 4.271 respectively.
4.6 Regression Analysis
In this study, a multiple regression analysis was conducted to test the influence among predictor
variables. The research used statistical package for social sciences (SPSS V 17.0) to code, enter
and compute the measurements of the multiple regressions
Table 4. 19: Results of multiple regression between organizational performance (dependent
variable) and the combined effect of the selected predictors
Model R R Square Adjusted R Square
Std. Error of the
Estimate
1 .793 .726 .678 .2076
a. Predictors: (Constant), advertising, sales promotion, personal Selling and direct marketing.
R-Square (coefficient of determination) is a commonly used statistic to evaluate model fit. R-
square is 1 minus the ratio of residual variability. The adjusted R2, also called the coefficient of
multiple determinations, is the percent of the variance in the dependent explained uniquely or
57
jointly by the independent variables. 73% of the changes in the organizational performance
variables could be attributed to the combined effect of the predictor variables.
Table 4.3: ANOVA results of the regression analysis between organizational performance
and predictor variables
Model Sum of Squares df Mean Square F Sig.
1 Regression 12.223 3 3.112 3.671 .001
Residual 92.876 49 .641
Total 115.099 52
a. Predictors: advertising, sales promotion, personal Selling and direct marketing.
b. Dependent Variable: organizational performance.
The probability value of 0.001 indicates that the regression relationship was highly significant in
predicting how advertising, sales promotion, personal Selling and direct marketing influenced
organizational performance. The F critical at 5% level of significance was 3.671 since F
calculated is greater than the F critical (value = 2.8387), this shows that the overall model was
significant.
58
Table 4. 20: Regression coefficients of the relationship between organizational performance
and the four predictive variables
Model
Unstandardized Coefficients
Standardized
Coefficients
B Std. Error Beta t Sig.
1 (Constant) 2.770 0.451 4.307 0.000
Personal Selling +0.332 0.121 0.146 3.333 0.025
Direct marketing +0.433 0.079 0.126 3.214 0.025
Sales Promotion +0.248 0.073 0.045 3.329 0.032
Advertising +0.142 0.073 0.142 3.425 0.021
a. Dependent Variable: organizational performance
The regression equation above has established that taking all factors into account (advertising,
sales promotion, personal Selling and direct marketing) constant at zero organizational
performance will be 2.770. The findings presented also show that taking all other independent
variables at zero, a unit increase in direct marketing would lead to a 0.433 increase in the
organizational performance. Further, the findings shows that a unit increases in personal selling
would lead to a 0.332 increase in organizational performance. In addition, the findings show that
a unit increase in advertising would lead to a 0.248 increase in organizational performance. The
study also found that a unit increase in sales promotion would lead to a 0.142 increase in
organizational performance. Overall direct marketing had the highest effect on performance of
Kenya Orient followed by personal selling, then sales promotion while advertising had the least
effect on performance of Kenya Orient Limited.
59
4.7 Chapter Summary
In this chapter the researcher provides the findings with respect to the information given out by
the respondents. The first section provides the study findings based on the respondent’s
background. This was followed by the findings on the specific objectives. The next chapter
provides the conclusion, summary as well as the discussions and the recommendations.
60
CHAPTER FIVE
5.0 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
This chapter consists of four sections, namely summary, discussion, conclusions, and
recommendations following that order. The initial section provides a summary of the important
elements of the study which includes the study objectives, methodology and the findings. It also
provides the recommendations for further studies.
5.2 Summary
The general objective of was to assess the effect of integrated marketing communication tools on
business performance in the insurance industry, focusing the Kenya Orient Insurance Limited.
The study was guided by the following research questions in regards to the business performance
in the insurance industry: To what extent does advertising affect performance of the Kenya
Orient Insurance Limited?; What are the effects of sales promotion on performance of the Kenya
Orient Insurance Limited?; How does personal Selling affect performance of the Kenya Orient
Insurance Limited?; What influence does direct marketing have on performance of the Kenya
Orient Insurance Limited?.
The researcher targeted Kenya Orient Insurance Limited. The company management,
supervisory staff and intermediaries (brokers and agents) are the main point of focus. This study
was important in that it sought to establish the effectiveness of IMC in relaying marketing
information to potential customers and thereby increasing customer acquisition rates resulting in
more sales. The study would be of particular importance to the management in Kenya Orient
61
Insurance Limited as it would draw recommendations that the company might employ to boost
their sales turnover and profits. Government agencies and policy makers may use the results to
formulate positive national policies on a framework that is relevant and sensitive to the market
forces influencing the insurance industry in Kenya and the East African region. Investors would
have confidence in Kenya Orient Insurance Limited and this shall translate to improved value.
The research results would also be important to scholars and researchers as it would add to the
existing pool of knowledge in effects of IMC on marketing.
A descriptive research design was used this study. The design was chosen since it is more precise
and accurate since it involves description of events in a carefully planned way. The target
population was of 384 respondents comprising of 82 staff in different managerial levels currently
employed at Kenya Orient Insurance Limited and 302 agents. This population was chosen since
the people in the management are the ones involved in the day to day running of the company
and thus are well conversant with the effects of integrated marketing communication on
performance. Stratified proportionate random sampling technique was used to select the sample.
Stratification aimed to reduce standard error by providing some control over variance. The study
grouped the population into three strata i.e. top managers, middle level managers and agents.
From each stratum the study used simple random sampling to select 77 respondents by taking
20% from each group. The researcher used primary data for this study and collected using
questionnaires. The questionnaires included closed and open ended questions. On the primary
data, questionnaires were used to collect data. The researcher administered the questionnaire
individually to all respondents. The quantitative data in this research was analyzed by descriptive
statistics using statistical package for social sciences (SPPS). Descriptive statistics includes
62
mean, frequency, standard deviation and percentages to profile sample characteristics and major
patterns emerging from the data. Content analysis was used in processing of this data and results
presented in prose form. A multivariate regression model was applied to determine the relative
importance of each of the four variables with respect to performance of the Kenya Orient
Insurance Limited.
The study found that advertising of institutions services/products influenced the company
performance to a great extent. Wall branding/billboards and information leaflet (FAQ) influenced
the company performance to a great extent. In addition, online (website/blogs) and road-shows
influenced the company performance to a great extent. Facebook, Youtube and Linked in
influenced the company performance to a great extent. In addition, twitter influenced the
company performance to a moderate extent. TV and Radio influenced the company performance
to a great extent. Newspaper adverts and magazines/newsletters influenced the company
performance to a great extent. Continuous engagement with the media even when there is no
major news influenced the company performance to a very great extent. In addition, media
interviews in both print and electronic (TV, Radio, newspapers, magazines etc) focusing on
business related programs and press releases influenced the company performance to a great
extent. Moreover, press coverage for events and press briefings/conferences influenced the
company performance to a great extent. Also, feature articles and pictorials/captions influenced
the company performance to a moderate extent.
The study found that sales promotions practiced by Kenya Orient Insurance influenced the
company performance to a great extent. “Win plot/car/holiday promos influenced the company
performance to a very great extent. In addition, price offs; customer service week (reward
63
activities) and training influenced the company performance to a great extent. Discounts and
events sponsorship influenced the company performance to a great extent. Sales promotion is
extremely versatile, different forms can be used with various groups to achieve different effects
and mainly, sales promotions are triggered by increased promotional sensitivity, service
proliferation, and increased competition. In addition, sales promotion speeds up awareness
process and therefore maximizes sales, sales promotion can be implemented quickly and has an
immediate impact on sales and sales promotion involves some type of incentives and motivation
that offer clients a reason to buy the company products.
The study found that direct marketing influenced the company performance to a great extent.
Large services information available and direct responses from business and end consumer
influenced the company performance to a great extent. In addition, peer group-based
communication and direct B to B (to agents and brokers) influenced the company performance
to a great extent.
The study found that personal selling practiced by Kenya Orient influenced the company
performance to a great extent. Innovation and credibility of information given as it can easily be
verified and direct interactions (offers immediate feedback) influenced the company performance
to a great extent. In addition, high level of customer attention and reliability influenced the
company performance to a great extent.
The study found that the trend of sales turnover and number of employees had greatly improved
for the last five years. In addition, the trend of profitability and market share had improved for
the last five years. The regression equation above has established that taking all factors into
account (advertising, sales promotion, personal Selling and direct marketing) constant at zero
64
organizational performance will be 2.770. Overall, advertising had the least effect on
organizational performance and direct marketing had the highest effect.
The findings presented also show that taking all other independent variables at zero, a unit
increase in direct marketing would lead to a 0.433 increase in the organizational performance.
Further, the findings shows that a unit increases in personal selling would lead to a 0.332
increase in organizational performance. In addition, the findings show that a unit increase in
advertising would lead to a 0.248 increase in organizational performance. The study also found
that a unit increase in sales promotion would lead to a 0.142 increase in organizational
performance. Overall direct marketing had the highest effect on performance of Kenya Orient
followed by personal selling, then sales promotion while advertising had the least effect on
performance of Kenya Orient Limited.
5.3 Discussions
5.3.1 Advertising
Organizations use advertising for either their short-term or its long-term objectives. The
organization seeks through its marketing communications, to build awareness and to impress
customers looking for the best range of products and services. Due to the former impression of
companies as impersonal institutions with no interest in their customers as people, and of various
services as abstract and quite similar, the institutional advertising has become more and more
important. Mortimer (2001) states that an important part of advertising is to reduce perceived
risk and provide a clear idea of what the product comprises. Furthermore she considers it
important to advertise consistently, with a clear brand image, in order to achieve differentiation
65
and encourage word-of-mouth communication. As media organizations communicate to a large
audience globally, it is therefore considered an effective channel to reach target sections of
society, like children, elderly and low socioeconomic groups. With such a large audience and
potential effect on the community, media organization are an advertising tool of choice for many
organisations including insurance companies to make their products known to the general public.
According to Meidan (2006), fast moving consumer group(FMCG) companies have embraced
this form of advertising to attract new customers and retain the old ones. The best method to
raise sales is using advertising and promotion tools in the sales outlet where the consumer makes
the final decision. Merchandising display factor tends to focus on in-stores location and the
shopping route to positively affect consumers’ propensity to browse. Attitudes towards visual
product presentation influence purchasing behaviour in the store. A positive attitude leads to
more browsing and purchasing, whereas a negative attitude towards the visual product
presentation results in an immediate exit from the store. The effects of print advertising are
designed to be long-term, yet, something is happening in the short run, and therefore, it can be
measured. Today, customers are more knowledgeable and demanding than ever of marketplace
conditions. They are able to research product attributes, investigate competitors' offerings and
compare prices. In marketing it concerns the promotion of the products and services in
conversations through blogs, online communities, video or user-generated sites such as
YouTube. In sales it is an energizing approach of finding enthusiastic customers, who could
spread the positive opinions about the company on social networking sites or in communities.
Through social media tools users can collaboratively create, search, share and evaluate the large
amount of information available online, as well as connect to, inform, inspire and track other
participants (Hans et al., 2011). Digital platforms such Facebook and Twitter facilitate increasing
66
importance of consumer influence. Moreover, online opinions generally influence offline
opinions, as they move into the traditional media (Smith, 2009). Social media platforms such as
Twitter, Facebook and blogs are used to reach clients operatively, directly and get a prompt
feedback.
5.3.2 Sales Promotions
Sales promotion adds a range of activities and tools such as coupons, discounts, refunds,
demonstrations, contests, prizes and more to the communications mix and, therefore, is able to
target audiences better than traditional forms of advertising. According to Brassington and Pettitt
(2000) sales promotion is different tactical marketing techniques with mostly short-term
incentives, which are designed to add value to the product or service, in order to achieve specific
sales or marketing objectives. Sales promotion provides a bargain chance, since many sales
promotion tools have an attention-gaining quality that communicates an offer that will not be
available again to purchase something special. Sales promotions are used too frequently and
carelessly, it could lead to insecure customers, wondering whether the service is reliable or
reasonably priced. Sales promotion is sometimes considered as an activity of less importance but
companies increasingly realize the importance of having a well-planned and structured program
for sales promotion (Jobber & Lancaster, 2006). Sales promotions have 3 distinct characteristics;
communication – They gain attention and usually provide information that may lead the
consumer to the product or service; incentive – They give certain concession, inducement or
contribution that gives value to the consumer and finally invitation as they send a distinct
invitation to engage in the trend.
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5.3.3 Direct Marketing
Direct marketing allows businesses to communicate straight to the consumer using various
channels. Kenya Orient Insurance seeks audience with key decision makers in key potential
customers through breakfast meetings. Insurance companies are leaning more towards this
method of sales due to challenges posed by indirect sales methods. Each business wants to
understand and control its sales performance elements. Due to a strong focus on a customer and
organization’s relationship with a customer, all four marketing-mix disciplines come closer than
ever before and require companies to develop integrated campaigns in order to achieve the best
results. Direct marketing allows marketers a more direct response from consumers (generally an
order), allows marketers to better target niche markets, and allows marketers to sell a product
without the expensive and lengthy process of getting it into traditional channels. Direct
marketing also presents many benefits to consumers, including avoiding the hassles of traffic
congestion, parking headaches, lack of time, shortage of retail help, and lines at checkout
counters. Consumers can browse through a larger selection of products than retail outlets
generally carry and price shop by browsing through mail catalogs and online shopping while in
the comfort of their home or office. Chandler (2000), direct marketing cuts through the confusion
and uncertainty of mass marketing, segmentation, and niches and goes right to the customer.
Direct marketing is about focused, targeted communication with strategic customers to promote
the purchase of a good or service. Direct marketing is aimed at the individual market.
5.3.4 Personal Selling
Sales as a discipline has seen a major shift from transactional based selling to relationship
marketing (Pickton& Broderick 2001). Emphasis is placed on building the relationship with
68
prospects and retaining the existing ones rather than trying to sell the product or service in order
to increase sales. Increased competition within the fast changing environment of
products/services has lead companies to develop and maintain comprehensive relationships with
their customers. The long-term person-to-person relationship is an important factor for a
company to achieve a competitive advantage. Meidan (2006) points out that once a customer has
chosen a company, he is unlikely to switch to another. Personal selling is probably the most
important element in the communication process within the insurance arena. Personal selling can
be performed either face-to-face or through technological aids such as the Internet. According to
Julian &Ramaseshan (2004) the relationship between the salesperson and the customer is
perceived as being of great importance for the marketing of a company.
5.4 Conclusions
The study concludes that advertising of institutions services/products influenced the company
performance to a great extent. Wall branding/billboards, online (website/blogs), road-shows and
information leaflet (FAQ) influenced the company performance to a great extent. Social media
influenced the company performance to a great extent. Electronic media influenced the company
performance to a great extent. Print media influenced the company performance to a great extent.
The study concludes that sales promotions practiced by Kenya Orient Insurance influenced the
company performance to a great extent. “Win plot/car/holiday promos, price offs; customer
service week (reward activities) and training influenced the company performance to a very great
extent. Sales promotion speeds up awareness process and therefore maximizes sales.
The study concludes that direct marketing influenced the company performance to a great extent.
Large services information available, peer group-based communication, direct B to B (to agents
69
and brokers) and direct responses from business and end consumer influenced the company
performance to a great extent.
The study concludes that selling practiced by Kenya Orient influenced the company performance
to a great extent. Innovation and credibility of information given as it can easily be verified,
direct interactions (offers immediate feedback), high level of customer attention and reliability
influenced the company performance to a great extent. The study finally concludes that direct
marketing had the highest effect on performance of Kenya Orient followed by personal selling,
then sales promotion while advertising had the least effect on performance of Kenya Orient
Limited.
5.5 Recommendations
5.4.1 Recommendations for Improvement
The Management at Kenya Orient Insurance Limited must increase their advertising initiatives
and must advertise consistently, with a clear brand messaging to create awareness of their
products and also to increase their sales ( attract new customers and retain the old).
The Company needs to maximize the use of social media platforms such as Twitter, Facebook
and blogs to communicate, inform and encourage feedback from a new unexploited target
market, the Generation Y.
Kenya Orient must continue to use sales promotions as a very effective tool to enhance loyalty
and increase sales volumes from the intermediaries (agents and brokers).
The company should continue with the one to one interaction with their key customers for
retention and enhancing the positive customer relationships.
IMC must remain an integral component of senior management business strategy as a tool to
achieve the Company’s business objectives.
70
The Kenya Orient should seek to control the communication environment within the network, in
an effort to make sure that their brand message comes through clearly. A company and every one
of its representatives in every one of its departments must have a customer-driven orientation and
provide customer-driven service.
The company should continue with the direct personal selling approach (face to face interaction)
with one or more prospective customers for the purpose of making sales and building customer
relationships. The company needs to establish long-term personal relationship with its customers.
The company also needs to enhance the company’s reputation by looking after its customers.
5.4.2 Recommendations for Further Studies
This study has explored the effect of integrated marketing communication tools on business
performance in the insurance industry, focusing the Kenya Orient Insurance Limited. The overall
effect of integrated marketing communication can therefore not be ignored at any cost. There is
therefore need to put in place the integrated marketing communication tools. This study has
recommended adoption of various reforms in the insurance industry and other organizations to
ensure maximum business performance. The study further recommends that another study needs
to be done with an aim of investigating the effectiveness of integrated marketing communication
tools in other industries.
71
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APPENDICES
Appendix I: Questionnaire
Dear Respondent,
I am a student pursuing a master’s degree in Business Administration and I am undertaking a
research titled “EFFECTS OF INTEGRATED MARKETING COMMUNICATION ON
PERFORMANCE OF THE KENYA ORIENT INSURANCE LIMITED”. I request your full
participation and information collected will be treated with confidentiality and only used for
academic purposes.
Section A: Demographic Information
1) Gender Male [ ] Female [ ]
2) Your age bracket (Tick whichever appropriate)
Under 25 years [ ] 26 – 35 [ ]
36 – 45 [ ] 46 – 55 [ ]
56 and Above [ ]
3) What is your education level? (Tick as applicable)
Primary [ ] Secondary [ ]
Diploma/certificate [ ] Bachelors’ degree [ ]
Others-specify……………………………………………..
4) Years of service/working period with the company (Tick as applicable)
Less than 1 year [ ] 10-20 years [ ]
1-10 years [ ] 20-30 years [ ]
Over 30 years [ ]
78
SECTION B: EFFECTS OF INTEGRATED MARKETING COMMUNICATION ON
PERFORMANCE
Advertising
1. To what extent do you think advertising of institutions services/products influences the
company performance?
Very great extent [ ] Great extent [ ]
Moderate extent [ ] Low extent [ ]
Not at all [ ]
2. In your own opinion, what is the extent to which the following forms of advertising
influences the company performance? Where 1 = not at all, 2 = low extent,3 = moderate
extent, 4 = great extent and 5 = very great extent.
1 2 3 4 5
Online (Website/Blogs)
Road-shows
Wall Branding/Billboards
Information Leaflet(FAQ)
Social media
YouTube
Electronic Media
TV
Radio
79
Print media
Newspaper Adverts
Magazines/newsletters
Pr/Media relations
Press Briefings/conferences
Press releases
Feature articles
Press coverage for events
Media interviews in both print and electronic(TV, radio
newspapers, magazines etc) focusing on business related
programs
Pictorials/captions
Continuous engagement with the media even when there
is no major news
Sales Promotions
3. To what extent do you think sales promotions as practiced by Kenya Orient insurance
influences the company performance?
Very great extent [ ] Great extent [ ]
Moderate extent [ ] Low extent [ ]
Not at all [ ]
80
4. To extent do the following forms of sales promotions influence its performance? Where 1 =
not at all, 2 = low extent,3 = moderate extent, 4 = great extent and 5 = very great extent.
1 2 3 4 5
Discounts
“ Win a plot/car/holiday promos
Training
Customer service week (Reward activities)
Price offs
Events sponsorship
5. Indicate your level of agreement with the following statement that regard sales promotions.
Where 1= strongly disagree, 2 = Disagree, 3 = Neutral, 4 = agree and 5= strongly agree.
1 2 3 4 5
Sales promotion speeds up awareness process and therefore
maximize sales
Sales promotion involves some type of incentives and motivation
that offer clients a reason to buy the company products
Sales promotion can be implemented quickly and has an
immediate impact on sales
Sales promotion is extremely versatile, different forms can be
used with various groups to achieve different effects.
Mainly, sales promotions are triggered by increased promotional
sensitivity, service proliferation, and increased competition.
Direct Marketing
6. To what extent do you think direct marketing by your company influences its performance?
Very great extent [ ] Great extent [ ]
Moderate extent [ ] Low extent [ ]
81
Not at all [ ]
7. In your own opinion, to what extent do the following aspects of direct marketing by your
company influence the company performance? Where 1 = not at all, 2 = low extent,3 =
moderate extent, 4 = great extent and 5 = very great extent.
1 2 3 4 5
Peer group-based communication
Direct B to B (to agents and brokers)
Direct responses from Business and end consumer
Large services information available
Personal Selling
8. In your own opinion, to what extent do you think personal selling practiced by Kenya Orient
influences the company performance?
Very great extent [ ] Great extent [ ]
Moderate extent [ ] Low extent [ ]
Not at all [ ]
9. In your own opinion, towhat extent do you think the following aspects of personal selling by
Kenya Orient influences the company performance? Where 1 = not at all, 2 = low extent,3 =
moderate extent, 4 = great extent and 5 = very great extent.
1 2 3 4 5
Direct interactions (offers immediate feedback)
High level of customer attention
Reliability
Innovation and credibility of information given as it can easily
be verified
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Organizational Performance
1) What is the trend of the following in your business for the last five years?
Greatly
Improved
Improved Constant Decreasing Greatly
decreased
Market share
Profitability
Number of
employees
Sales turnover
Thank you for participating!
