Abstract
M.Com. (Business Management)
The study focuses on the return on marketing investment (ROMI) in the life insurance industry in South Africa. Although this is a growing industry, it is characterised by high competitiveness and similar product offerings from the different insurance providers. Therefore, in competing for the larger market share, the companies differentiate themselves by relying more on their unique strengths. They compete by promoting themselves and their products through various above-the-line and below-the-line marketing activities and campaigns in order to drive sales, build awareness, manage reputations, and to be top of mind to consumers.
This study focuses on establishing whether these various marketing activities are measured to determine whether they contribute to the bottom line/ profit margins (basic purpose of ROMI) and to what extent. The ultimate goal is to establish whether ROMI is considered as being important to measure in the life insurance industry and whether spending on marketing activities does contribute to profit margins.
A total of 16 recognised life insurance companies were identified and a sample size of seven companies selected. The sampling frame consisted of marketing managers, who happened to be heads of departments in this case. Structured interviews were conducted with these managers, and feedback was transcribed and analysed. Only marketing managers were interviewed as they are directly responsible for the marketing budget, and are accountable for marketing spending and the overall success of the department.
It was identified in the study that in order to measure ROMI, it starts by being accountable for the marketing spending. The overall results of the study indicate that spending on marketing does contribute to profits margins and that ROMI is considered by the life insurance industry as important to measure. The study was limited only to the Gauteng province, thus it can be generalised to the life insurance companies in South Africa, but cannot be generalised to other insurance industries, e.g. short-term insurance, thus allowing for the possibility of a comparative study in the future, in addition to future studies listed in chapter 5.