Investigating factors affecting positive word of mouth advertising in insurance agencies in Pasargad, Gilan province

Academic Thesis for obtaining a master's degree in the field: business management, insurance orientation

Abstract

Today, consumers have become a suitable advertising tool for companies. A customer satisfied with the goods and services of an economic enterprise can stand against all its competitors and attract existing customers in the market. One of the most effective and efficient methods of advertising is word of mouth. Word-of-mouth advertising can have a significant impact on consumers' buying behavior and their satisfaction with company products and services, because most customers are more confident and trusting in communications that are not from marketers. On the other hand, marketing related to discovering the needs of customers can lead to their loyalty and reduce company costs. In this research, we intend to examine the factors affecting positive word of mouth advertising in the insurance industry. The current research is applied in terms of purpose and descriptive (non-experimental) in terms of execution with emphasis on the causal model. The statistical population is customers and visitors to insurance agencies in Pasargad. In this research, available sampling method is used. The sample size is 384. A standard questionnaire was also used to collect data. To analyze the research hypotheses, structural equations were used using LISREL software. The results of the analysis showed that there is a positive and significant relationship between relational marketing and customer satisfaction and loyalty, as well as between trust and word of mouth advertising. At the end, some suggestions are provided.

Keywords: Relationship marketing, perceived value, service quality, trust, customer satisfaction, customer loyalty, word-of-mouth advertising.

Introduction

Word-of-mouth advertising is communication about products and services between people who are considered independent of the company providing the product or service. These communications can take the form of conversations or one-way testimonies. But the essential element is their occurrence among people who have received a small commercial benefit in encouraging another person to use the product. And therefore, they lack a specific motivation to change reality in favor of the product or service. Word of mouth advertising is thousands of times more powerful than conventional marketing; Because word of mouth marketing basically uses the traditional marketing technique to talk positively about the service. Word-of-mouth marketing is more valid than other marketing techniques because most of the common people believe the approval of family, friends or colleagues for services or products because they know that they do not have any special benefit in it (Ghaffari Ashtiani and Mousavi, 2018, p. 27).

Nowadays, consumers have become a suitable advertising tool for companies. A customer satisfied with the goods and services of an economic enterprise can stand against all its competitors and attract customers in the market Mazzarol et al. 2008, p1476). One of the most effective and useful advertising methods is word of mouth. Therefore, in this research, we examine the factors affecting word-of-mouth advertising, and in this chapter, we first discuss the issue and problem, and the importance and necessity of conducting research. And then, by stating the theoretical framework and extracting the conceptual model of the research, we will formulate the research hypotheses, conceptual and operational definitions, goals and scope of the research.

1-2) Statement of the problem

Verbal advertising [1] can have a significant effect on the purchasing behavior of consumers and their satisfaction with the company's products and services, because most customers have more confidence and trust in communications that are not from marketers (Bahrinizadeh and Ziaei, 2011, p. 103). In an environment where trust in organizations and advertising has decreased, word of mouth is a way to gain a competitive advantage. Word of mouth is a type of informal communication about the characteristics of a business or a service in a community. Influencing the opinions of other people has significant benefits for organizations that supply goods and services ((Sweeny et al, 2007, p344). Verbal advertising allows a person to influence the evaluation and purchase intentions of similar consumers in terms of information and norms (Rangebrian et al., 1390, p. 48).

Relational marketing [2] with the discovery of needs customers, can lead to their loyalty and reduce company costs.. Research has shown that the cost of providing services to a loyal customer is much lower than the cost of attracting and providing services to a new customer. (Ndubisi, 2007, p99)

Relational marketing tries to establish a close relationship with the customers and by doing this accurately and adequately understand the needs of the customers and solve them. In addition to its ability to understand the needs of customers, relational marketing helps to increase market share, profitability and reduce costs. (Beerli and Quintana, 2011, p237)

Consumers' loyalty to the brand name and positive word of mouth are among the components that show the power of the brand name in the market (park et al, 2010, p2). Loyalty to the brand name has many benefits, including creating barriers to enter the market for potential competitors, increasing the company's ability to respond to competitors' threats, increasing sales and profits, as well as consumers being less sensitive to competitors' marketing efforts. As a result, the interests of loyalty and its formation process have been taken into consideration for a long time. (Bahrinizadeh and Ziyai, 2011, p. 103). As a result, marketers are looking for methods that stimulate positive word-of-mouth in relation to their desired brand and reduce negative word-of-mouth in order to increase the power of that name and brand (krohmer et al, 2011, p35).

In service industries where service delivery requires communication and interaction with customers, customer satisfaction[3] is based on how they encounter and experience the organization. Therefore, it is not surprising that companies spend considerable resources on measuring and managing customer satisfaction (Fernandez-Gonzalez and Prado, 2007, p500). In order to improve customer satisfaction and loyalty, economic enterprises must research the factors affecting customer satisfaction and repeat visits and achieve their loyalty through ensuring customer satisfaction. Complete knowledge of the customer, his needs and demands requires establishing close relationships with the customer. Service quality [4], customer value and satisfaction are equally some of the most important factors of commercial competition between manufacturers and service providers. With the increasing and intense competition for customers in today's service industry, these factors have high management priorities (Olorunniwo and Hsu, 2006, p100).

Trust [5] is also considered as the tendency of a group to be vulnerable to the actions of other groups and is based on the expectation that the trustee will perform a specific and important action for the counterparty, regardless of the ability to check or control the other group (Chen & etal, 2012, p400). Previous studies have shown that if the buyer trusts the seller. The complexity and cost of exchange can be significantly reduced (Gefen, 2000, p201). Trust is a central structure for determining customer attitudes and behaviors. The customer's perception of trust on customer satisfaction also affects the customer's evaluation of a retailer and ultimately repurchase intention (Zboja and Voorhees, 2006, p98).

Customer perceived value[6] is important for improving relationships in service delivery (Kang et al. 2007, p108). Perceived value is the customer's point of view or evaluation of the features or performance of the product in the purchase process or work situation. The customer's perceived value is his overall evaluation of the use of a product or service based on the understanding of what was received and what was given. Regardless of the definition of perceived value, researches state that perceived value is a more powerful predictor than perceived service quality in service evaluation (Chen & etal, 2012, p402).

Service quality [7] is the most powerful predictor of customer satisfaction (Santouridis et al. 2009, p134). The desire to provide high-quality services plays an important role in service industries such as insurance, because the quality of services is considered vital for the survival and profitability of the organization. The issue of quality has been widely considered in the fields of production and industry, which is the mediator of its tangible feature, but in the service sector, due to its intangible feature, this issue has been less addressed. The level of awareness of clients has increased about the quality of other organizations' services, and with the increase in the number of competitors, clients are no longer receptive to any service as in the past. Therefore, such a competitive situation is the most suitable strategy for organizations to have an approach to improve service quality (krohmer et al, 2011, p35).