Abstract

Promotion is an essential element of the marketing mix but identifying the promotional tool that best suits a company’s product offering is the most important. Personal selling has been adopted by some automobile insurance companies in marketing their products in the Buea Municipality but the growth rate of automobile insurance is still very slow.

Given that the public is not well informed about automobile insurance and being a speculative business; it becomes very difficult to convince a customer to buy a policy due to its complex nature. The main objective of this research work was to examine the influence of personal selling on the perception of customers in automobile insurance.

A closed-ended questionnaire was used to elicit responses from 195 respondents selected using a simple random sampling technique. An ordered logistic regression was conducted at a 95% confidence level and the result revealed that call rate and conviction which were used as parameters for personal selling have a significant positive influence on customers’ perception.

Persuasion was seen to have a negative influence on customers’ perception as automobile insurance agents in the course of persuading customers, do not exercise honesty and patience. It was recommended that automobile insurance companies should regularly train their sales agents on personal selling skills to effectively convince customers.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Personal selling is a person-to-person interaction between a buyer and seller in which the seller’s goal is to persuade the buyer of the product’s merits; convince the buyer of his or her need for it; and develop an ongoing customer relationship with the buyer as a result of sales and repeat sales (Kotler & Armstrong, 2008).

It is one of the most traditional forms of marketing communication. The origins of personal selling can be traced back to ancient Greece. Its evolution is linked to the period of barter trade when people traded goods for other goods (Osuagwu, 2002).

Personal selling was encouraged by the trade by barter system because one had to carry goods and go about looking for someone who had what he needed and needed what he had. Most of the time, salespeople traded their services of carrying goods and looking for what the owner needed for what the owner had. This encouraged face-to-face interaction before final sales were made.

The Industrial Revolution increased the demand for salespeople even more, and modern personal selling began in the early twentieth century. The Industrial Revolution began in Great Britain in the 18th century with the mass production of goods.

Local economies were no longer self-sufficient, and the need to find new customers to buy mass-produced goods grew (White, 2009). As a result, traveling salespeople were born. Salespeople were the primary source of paid personal communications with customers. As time passed, more and more goods, including services, were produced.

Automobile insurance dates back to the 1920s in the United Kingdom, following the First World War when many people learned to drive during the war and returned with a strong desire to drive.

There were so many cars produced, and with the increasing number of road accidents, there was a need for mandatory motor insurance (Birds, 1997). The Road Traffic Act of 1930 was enacted a few years later. The purpose of this act was to compensate victims of motor vehicle accidents.

This was to be provided through legal liability insurance, which would pay for damages to injured people (Helm, 2012). Other types of motor insurance coverage, such as comprehensive coverage, collision, and protection for injured persons, were later introduced, and more companies were established (Irukwu, 1991). These products and businesses had to be communicated to the general public.

By the mid-nineteenth century, insurance companies had spread throughout Africa, particularly in Cameroon. Prior to the arrival of colonial powers in Africa, however, traditional insurance existed in the form of ‘njangi’ groups in which individuals contributed money to help each other in times of need.

The modern insurance companies that spread into Cameroon were mostly branches of prominent insurance companies in Britain and France who colonized the territory. Today, there are over thirty-five insurance companies in Cameroon and about 20 of these are in the automobile insurance business (Tumnde, 2012).

When it comes to the number of companies, Cameroon is not wanting. Cameroon has a sound insurance sector though they are still to be effective and well managed as other countries (Kwanga, 2017).

Over the years, customer perception on automobile insurance has been and continues to be a burning issue amongst researchers, economic operators, and business analysts, which has been revealed in the lukewarm attitude of Cameroonians buying automobile insurance policies.

Customer perception is a major factor that influences consumer behaviour. It is a process whereby a customer collects information about a product and interprets the information to make a meaningful image of the product.

When a customer sees a product, an advertisement, or listens to a personal selling presentation, he develops an impression about the product which may either be positive or negative that has a huge influence on the buying decision of the customer. A good or service should respond positively to the marketing mix which will result in its full acceptance in the market (Tajudeen et al., 2012).

An important element of the marketing mix is promotion, otherwise known as marketing communications. This element awakes the consciousness of consumers on the existence of a good or service.

According to Oluyinka (2019), it further educates potential and actual buyers of a product on the usage, benefits, availability, price, and other features of the product. Products with relatively high prices, or with complex features, are often sold using personal selling which is a type of marketing communication. This justifies the need for personal selling in automobile insurance.

Also, the increasing number of insurance companies in Buea municipality and the numerous challenges faced a call for insurance companies to use powerful marketing communication such as personal selling to be able to succeed.

Personal selling could also be defined as, any retail and wholesale activity in which a salesperson actively presents a product to customers in seeking to make a  sale (Abayomi et al., 2012).

It is a two-way flow of communication between a  potential buyer and a salesperson, that is designed to identify the potential buyer’s needs, match these needs to one or more of the firm’s products or services and convince the potential buyer to purchase the product (Anyadighibe et al., 2014).

It is also defined as a communication process that helps salespeople fulfill customers’ needs. This makes personal selling the most important part of marketing communication for most businesses especially automobile insurance.

The essence of every business is to identify, anticipate and satisfy customers’ needs; maximize profit, possess a competitive advantage, and remain relevant in the marketplace. This can only be achieved through the adoption of personal selling in a company’s operations (Gassen, 2016).

Personal selling plays a vital role in creating direct contacts and interactions between customers and sellers/producers, as well as changing public perception. Abayomi et al. (2012) posit that personal selling is the personal communication between a firm’s sales force and customers for the purpose of making sales and building customer relationships.

It is a process of assisting and persuading a prospective buyer to buy a product in a face-to-face situation. It involves direct and personal contact between the seller and his representative with the prospective buyers (customers); personal selling also adopts an individualistic approach that is designed to meet the specific needs of prospects. Personal selling is very interactive which makes it possible for the salesman to clear all the doubts of a prospective customer (Ahinful & Asomaning, 2017).

Personal selling is a unique element of marketing communication.  Unlike advertising and sales promotion which main focus are to create awareness about the existence of a  product or service  and provide information as to customers on the features of the products, its availability, and price on a mass basis,  personal selling is an individualistic approach that is designed to meet the specific need  of prospects.

It is usually directed to specific market segments. It goes beyond the fundamental role of marketing communication; it plays a significant role in the entire exchange process. That is, participating in the activities of each of the other elements of the marketing mix,  especially distribution (place).

Personal selling could be a suitable promotional tool to correct public misconceptions about automobile insurance because everyone thinks differently. It enhances quick customer response, but it is quite time-consuming and the most expensive of all the promotional mix elements (Gupta & Khanta, 2003; Donaldson, 1995).

Considering the nature of insurance product and the way it is perceived by the general public, particularly in Cameroon, personal selling seems to be a useful promotional tool for it.

Avila & Inks (2006) concluded that for years the insurance industry has placed great emphasis on personal selling and the ability of an agent to use the personal selling process to generate sales.

1.2 Statement of the Problem

The automobile insurance sector in Cameroon is one of the most challenging sectors. Being a service and a speculative business, it is very difficult to sell compared to any physical product. Despite the numerous benefits offered by automobile insurance and with the increasing number of vehicles one expects automobiles to be at their peak but the growth rate of automobile insurance is too slow (Kwanga, 2017).

Chowdhury et al. (2007) in finding the reason for the slow growth of automobile insurance recorded that, the public is not properly informed as far as automobile insurance is concerned. Most automobile insurance companies fail to recognize the importance of personal selling in marketing their products.

They tend to lay much emphasis on other promotional tools like advertising, publicity, and sales presentation. The general belief is that personal selling is expensive but they fail to recognize its effects.

Automobile companies in Cameroon revealed that most policyholders in Buea only insure against their civil liability in respect to third-party injury and damage to property probably because that is the only form of cover they are exposed to.

Avila & Inks (2006) revealed a low level of awareness and misconceptions characterize the automobile insurance sector. The general limitation of cover is strict to the requirement of the law which is indicative of their reluctance to insure. Apart from third-party liability, most people are not aware of the different products offered by automobile insurance companies.

Despite the effort of ASAC (Association des Societies d’Assurance du Cameroun) in regularizing the insurance sector; dissolving incompetent companies, ensuring the solvency of insurers, and providing better ways of selling insurance, lack of trust still exist in the sector.

The poor attitude of some automobile insurance companies of being prompt in collecting premiums and delaying or refusing to settle claims has caused many to consider automobile insurance as an expensive exercise that goes to enrich insurance companies.

In a similar study conducted by Oluyinka (2019) he observed that most automobile insurance companies have adopted personal selling in the sales of their product but the growth of insurance is still slow.

Automobile Insurance falls under the pure service category and being a speculative business makes it difficult to convince customers to buy. Agents fail to persuade prospects/customers to buy and do not even provide the necessary information that can change an individual’s misconceptions about insurance.

Udeagha (1999) affirmed that the problem is worsened by the fact that most agents do not have a good mastery of the product they sell. Thus, causing more harm than good by saying things that do not exist and giving fake promises that go to reduce the public perception.

Most salespeople lack self-confidence and the ability to express themselves properly. Hence, this calls for further research on how effective personal selling can influence customers’ perception of automobile insurance which is what this study seeks to establish.

1.3 Research questions

To what extent does personal selling influence customers’ perception of automobile insurance in Buea Municipality?

Specific research questions are as follows;

1. What is the influence of call rate on customers’ perception of automobile insurance in Buea Municipality?
2. To what extent does conviction influence customers’ perception of automobile insurance in Buea Municipality?
3. To what extent does persuasion influence customer’s perception of automobile insurance in Buea Municipality?