CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Operations
of business are becoming more cumbersome on a daily basis due to the purpose of remaining competitive, profitable
and significant in their industry. Since the neophyte period of trade by barter
to stones down to plastic money, exchange of goods and services has changed a
lot (Mugrage, 2016).
This operation of the businesses is directed towards attaining a market share in
the financial context and non-financial context. The missing gap between the
corporate social responsibility and corporate productivity which has different
face has erupted question in the business journals (Cheng, Ioannou, and
Serafeim, 2014).
Corporate
Social Responsibility is the norm or
belief in the management literature that illustrate
how a company appreciates all the units
in the society where he earns from (Mugrage, 2016). The Corporate social responsibility has
moved from being just a norm to now become a function of an organization that tends to remain a going
concern. The validity in law for the corporate entity has been a major issue of discussion
within the individuals and the society in general. Corporate Social
Responsibility is attributable to a company moving outside the profit and
wealth maximization to being attentive to the welfare of his immediate
environment. CSR is a practice that is
directed towards implementing and organizing a phenomenon that directly
beneficial to all stakeholders in society.
More specifically CSR is like a firm’s commitment to the societal-wellbeing of
the peer group, religious organization, and
families that make up a society.
Company financial performance, in turn, is also a multidimensional construct, and
marketing performance is one of the dimensions (Carton and Hofer, 2010).
Market
performance can be either monetary or non-monetary (Frösén, Luoma, Jaakkola,
Tikkanen, Thomas., 2016;
Stewart 2009). A performance which is the
holistic return of an organization within a specified calendar year have been
examined in finance literature to include; sales profit, sales expansion, value-added on share, marketing productivity, the
return of turnover and return on capital
employed (Rahman, Serrano and Lambakin 2017).The most occurrence non-monetary
measures are the market share because it is a detailed proxy for the company’s profitability.
Market
Penetration is used for measuring market performance. It is a proxy that gave
business the knowledge of getting themselves aware of all their possible sales
from their actual sales during pre-production and post-production period
(Kobulnicky and Stoffle, 2009). Market
Penetration is measured by calculating all real sales within a period before
comparing the total sales of the particular good of another company within that
same period. Its sole aim is to increase the market share of a product in
the market. This increases can be achieved by combining all the internal and
external components like pricing, advertising, sales promotion to the advantage
of own company or organization. The most evident strategy that aid this
attainment is face-to-face selling.
Market penetration is arrowed so has to hit the target of market dominance. For
any company to grow its rate of turnover and market share, it has to employ
market penetration strategies to increase the usage of itsproducts by the final
consumers (Mwiti,
2011). It is important to know that the turnover of goods
may have increased but in the real sense, it may not have increased when the switching cost is been considered (Kobulnicky
and Stoffle, 2009).
The
insurance sector plays a critical role in financial and economic development.
By introducing risk pooling and reducing the impact of large losses on firms
and households, the sector reduces the amount of capital that would be needed
to cover these losses individually, encouraging additional output, investment,
innovation, and competition (Iyawe and Osamwonyi, 2017). By introducing risk-based pricing for insurance protection, the
sector can change the behavior of
economic agents, contributing inter alia to the prevention of accidents,
improved health outcomes, and efficiency gains. As financial intermediaries
with long investment horizons, life insurance companies can contribute to the
provision of long-term finance and more effective risk management. Before they
can perform their intermediary function accurately they have to induce the
entire organizational objective towards corporate social responsibility which
is part of their holistic responsibility in the surrounding where their located
(Iyawe and Osamwonyi, 2017).
The
insurance sector which a unit the financial system of the country, plays a
crucial role in economic and financial development through its risk management function. Their risk
management function reduces the amount of fund that will be needed to settle
losses suffered by corporate bodies and individuals additional encouraging them
to engage in investment and innovation of product and process which can spur
their productivity (Iyawe and Osamwonyi, 2017). As
financial intermediaries with long horizons for investment makes their risk
management prowess a contributive niche to the entire absorptive capacity of
the economy. While performing the
intermediation role and risk management capabilities they also have to know how
their executed corporate social responsibilities have benefited them in having
a market share in the market area within their industry.
Based
on this premise this study intends to investigate how the corporate social
responsibility of insurance companies have aided the market penetration of the
insurance sector in Nigeria.
1.2 Statement of Problem
Although
the research findings are mixed (Cheng, Ioannou and Serafeim 2014), a number of
studies have reported a positive effect of CSR on company performance (Wang,
Chen, Yu, and Hsiao, 2015). A significant proportion of the benefits identified
may be considered marketing related (Bhattacharya and Sen, 2010; Maignan,
Ferrell, and Ferrell, 2005). Researchers have suggested, for example, that
engaging in CSR activities creates a reputation for the company as honest and
reliable and that customers consider the products and services of such
companies as more reliable and of better quality (McWilliams and Siegel, 2001).
Engaging in CSR activities also enhances the purchase intention of potential
customers (Fagerstrom, Statton and Fox 2015).
However,
market penetration and corporate social responsibility have generated various
unsettled justification based on the notion if CSR has a positive effect or negative effect on company
performance (Cheng., et al 2014; Wang,
Chen, Yu, and Hsiao, 2015). This
performance oo benefit has been pointed
out to marketing related and market share determined (Bhattacharya and Sen,
2010; Maignan, Ferrell, and Ferrell, 2005). Studies
have singled out the benefit of CSR by employing the companies that engage in
the modern trend that it aids the reputation of their company, which spur
customers to consider their products and services has a better quality to
purchase (McWilliams and Siegel, 2001). Engaging
in CSR will encourage the purchase movement of potential consumers (Fagerstrom,
Statton and Fox 2015).
Corporate
Social Responsibility can be pointed to has a germane marketing tool (Chahal
and Sharma, 2006; Fagerstrøm et al., 2015), and efficient deployment of
this instrument will aid attain
competitive advantage in product and sales, leading to improvement of marketing performance which
is good factor of how the product or services have penetrated the market to the
heart and hands of potential customers (Vorhies and Morgan, 2005). Successful
marketing penetration which has the challenges of industry competition,
consumer preference, market location, availability of raw material, lack of
innovation and poverty are determent that can stifle the successful strategies
that will encourage market penetration and financial performance (Lai, Chu,
Yand and Pai 2010).
(Lai,
Chu, Yand and Pai 2010) examined and resulted that CSR activities of the
company have a positive effect on brand
improvement as well a product and sales performance (Lai et al.,
2010).CSR does not only have a positive
effect customer, but has a positive effect of stakeholders within the corporate
environments (Torres, Bijmolt, Tribó, and Verhoef, 2012). Other studies have mirrored a significant
positive impact on marketing performance within the short and long period of
time.
Based
on the challenges of corporate social responsibility this study intends to investigate into the effect of
corporate social responsibility on market penetration which shows the market
performance of a company (penetration pricing, customer’s satisfaction, market
segmentation, and customer retention).
1.3 Objectives of the Study
This
broad objectives of the study intend to examine the effect the corporate social
responsibility on the penetration of insurance sector in Nigeria. The specific
objectives include;
1. Determine
the extent of corporate social responsibility on the penetration pricing
2. To
know the extent at which corporate social responsibility have influenced
customer satisfaction
3. How
has corporate social responsibility aided market segment in the market?
4. To
what extent has corporate social responsibility aided customer retention
1.4 Research Question
1. What
effect does corporate social responsibility has on penetration pricing?
2. Does
corporate social responsibility have an effect
on customer satisfaction?
3. Has
corporate social responsibility aided company market segment?
4. What
impact does corporate social responsibility has on customer retention?
1.5 Research Hypothesis
The
hypothesis is in null form;
Hypothesis
H0=
Corporate social responsibility has a significant
impact on market segment
Hypothesis
H0=
Corporate social responsibility has a significant
impact on customer retention
1.6 Significance of the Study
This
study will be of significance for the
following stakeholder which include; Customer, Society, and Insurance
companies.
Customers
will benefit from the study of by getting accurate knowledge on the on
corporate social responsibility and market value. The customer will know from
the study relevance of corporate social responsibility and how it influences their decision in remaining a
customer of the corporate bodies.
Society
will benefit from the study to know the different market strategies corporate
bodies employ performing their corporate social responsibility within the
environment where they locate their company.
Insurance
companies will from the study know the
market penetration tenets which they have to improve on so has to enhance a
relative market share which has a
holistic effect on the market performance which is a quantitative component of financial performance.
1.6 The scope of the Study
This
study will employ (5) five insurance companies for the area of the study. The
customers will in the insurance companies be the respondent which the
structures questionnaire will be given to. The study will employ a descriptive research design. The simple
percentage and the simple linear regression.
1.7 Definition of Terms
Market;
this
is a location where buying and selling transaction takes place.
Market
Penetration; it can be defined as the percentage of a
company product in the market sales and patronized by the customer.
Corporate
Social Responsibility; it is the external responsibility
of a company to his immediate environment.