Impact of extended marketing mix on customer purchase intention: Special reference to Sri Lanka Insurance Corporation limited in Vavuniya district

Impact of extended marketing mix on customer purchase intention: Special reference to Sri Lanka Insurance Corporation limited in Vavuniya district

Abstract This study aims to explain impact of extended marketing mix on customer purchase intention in Sri Lanka Insurance Corporation limited in Vavuniya district. Data were collected from 100 samples of insurance policy holders in Sri Lanka insurance, Vavuniya and usable questionnaire were 96. The data were analyzed using simple linear regression analysis. The results indicate that all the variables in the extended marketing mix have impact on customer purchase intention; especially the results conforms that physical evidence has more impact than the other variables. Further that the researcher has recommended in this study, the physical evidence of Sri Lanka Corporation limited and excellent employees‟ behavior are secrets to create customer purchase intention. Keywords: Extended Marketing Mix, People, Process, Physical Evidence, Purchase Intention

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CHAPTER ONE

INTRODUCTION 1.1 Background of the study Insurance is a means to spread the loss caused by particular risk over a number of people against some amount called premium. Insurance creates a fund under which many persons contribute some money called premium. Out of which the person who suffer losses are compensated (Shahzad 2009).In Sri Lankan context, the insurance sector is a crucial component for economic development. At present, there are 29 companies are offering insurance services to the customers. Out of these 29 insurance companies (insurers) registered with board as at 30th June 2015, four (04) are composite companies (dealing in both long term and general business), eleven (11) are registered to carry on long term (life) insurance business and fourteen (14) companies are registered to carry on only general insurance business. This sector GDP contribution for the first quarter of the year 2015 was 5.8 percentages (Institute of Bankers of Sri Lanka 2015). Insurance is very important part of personal financial planning because it is the quickest and easiest source of cash for family upon death and cover the any claim. The fund was used to compensate anyone in the group who suffered losses through any mishap (Shahzad2009). Further nowadays many customers are thinking ahead of insurance, therefore the customer acquisition and the customer retention are very complicated situations to the marketers with the tied competition. Marketers should retain their customers; otherwise the company can‟t make profit and they can‟t achieve organizations objectives. The management has to give more attention and care to the company-marketing program by developing effective services marketing mix elements that can createcustomers purchase intention. The best meet to the needs of its targeted market, The Insurance business deals inselling services and therefore due weight-age in the formation of marketing mix for theInsurance business is needed. The marketing mix includes 2

extended-mixes of the 7 P's ofmarketing i.e. the Product, its Price, Place, Promotion, People, Process andPhysical Evidence. Business investors who are aware of and are able to apply these 7P‟s in their service businesses are likely to welcome more customers among their competitors in similar areas (Lovelock &Writz 2002). 1.2 Statement of the problem The customer purchase intention is a very important part to insurance companies for their long term stability. Studying about the customers and make them informed about the services and promotions availability is much essential in competitive business environment. Due to the unique characteristics of services such as intangibility, heterogeneity, inseparability and perishability, service‟s organizations are used extended 3P‟s to effectively deliver their services (Bitner 1990); nevertheless, customer intent to purchase these services because of the extended 3P‟s (Zeithaml and Bitner, 2003). This extended 3P‟s has impact on Purchase intention (Kalaimani 2013). Even though studied are conducted in the other countries namely India, Tehran, Malaysia etc. (Mirabi&Akbariyeh2015), there is no published studies in Sri Lankan context related to identifying the impact of extended marketing mix on customer purchase intention specially in insurance related industry and this is the gap in the literature and this study attempt to fill this gap. The extended marketing mix is specially refers to the service organizations and it refers the people, process and physical evidence. The modern market trend and the customer buying behavior is changing continuously. Customers rely on the behavior of service employees when evaluating quality of services (Thurau 2004; Thusyanthy & Senthilnathan 2013; Thusyanthy 2014). Studying about the customers purchase intention is very important to the marketers and this study is also helps to the insurance industry to identify the factors affecting the customer purchase intention and evaluate the impact of the extended marketing mix on customers purchase intention. The insurance industry has suffered most compared to the manufacturing industry because of the lack performance of the industry. Although the development of this industry has stagnated for a considerable time because of the alterations to the customers. 3

Therefore in this study the researcher sought to analyze the impact of extended marketing mix strategy on customers purchase intention in the insurance industry. 1.3 Objectives of the study 1. To identify the impact of people on purchase intention in the Sri Lanka InsuranceCorporation limited inVavuniyadistrict. 2. To identify the impact of processon purchase intention in the Sri Lanka Insurance Corporation limited in Vavuniya district. 3. To identify the impact of physical evidence on purchase intention in theSri Lanka Insurance Corporation limited in Vavuniya district. 1.4 Significance of the Study According to Ranaweera and Prabhu (2003), customer interaction has increasingly become an issue of strategic importance that is not only limited to customer interfacing department and its roles, but to the entire company as a whole. It has been proposed that customer satisfaction of service value affect the purchase intentions and behavior intentions (Bolton & Drew 1991; Karunakaran & Thusyanthy 2016). These behavioral intentions may be either positive, for example customer retention, loyalty intention, and word of mouth, or negative. The insurance industries in Sri Lanka need to create a competitive advantage as a way of differing themselves from each other. The study will be very useful for Sri Lanka insurance since the study analyses about customer purchase intention, relates with the extended marketing mix strategy. In the competitive business environment there are several insurance companies are operating their business since, how the Sri Lanka insurance differentiate their insurance business and promote their products to the target customer by using this extended marketing mix Strategy will be analyzed. This study will help Sri Lanka Insurance to customize their marketing mix strategy in order to create the customer purchase intention. This study is an attempt to examine the present state of extended marketing mix towards the purchase intention in the insurance company and it highlight the customer‟s opinion towards the purchase of an insurance product and operational problems. This study will 4

be helpful not only for marketers and customers but also to the researcher in order to develop the knowledge in marketing. 1.5 Scope of the Study This study focus on extended marketing mix factors influence on customer purchasing decision, choosing an insurance company in Vavuniya district, special reference to the Sri Lanka Insurance company. The research instrument was primary data which collected through questionnaires. The data of this study were collected from 100 customers who have purchased at the selected Insurance firm. 1.6 Limitations of the Study The research has some limitations; the convenient sampling method was used, the findings may only consider the Sri Lanka insurance policy holders. In the data collection method the close ended questionnaire was the only source of information and only the Vavuniya branch was selected for this study, because of the time and cost, so the findings cannot be generalize to the whole population at large. If one branch from one district and open ended questionnaireswere selected for this study become more reliable. 1.7 Chapterization Chapter 01- Introduction The chapter outlines the background of the study, the research problem, objectives in relation to the study and other important aspects that stipulate foundation to the research. Chapter 02- Literature Review Chapter two presents a detailed review of literature on market orientation, customer orientation and the organizational performance, and the theoretical background relates to the study with reference to the previous studies.

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Chapter 03- Methodology Chapter three illustrates the research design and the methodology used by the researcher explaining conceptual framework, definition of variables, which are intending to be measured, population, sampling units, sampling frame,sample size, research context and techniques including methods that are used for analysis. Chapter04- Data Collection and Analysis Chapter four consists with the data analysis and interpretations in the way of achieving the objectives of the study by using the data analyzing techniques. Chapter05- Conclusion and Recommendations Chapter five includes the conclusion of the final finding for the results. As ending point, the chapter ended up with the recommendations and implications.

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CHAPTER TWO

LITERATURE REVIEW 2.1 Introduction

There are various literatures can be seen regarding the marketing mix and customer purchase intention. This chapter consists of past research articles which are related to extended marketing mix, introduction about the insurance industry in Sri Lanka, history of marketing mix, marketing mix theories and extended marketing mix theory, appropriate models for explain the dependent and independent variables and at the same time literature are provided different opinions about the independent and dependent variables from previous studies. 2.2 Insurance industries in Sri Lanka Regulation of the insurance industry is governed by the regulation of insurance industry Act, No.43 of 2000. Prior to the enforcement of this Act, the insurance industry was regulated by the controller of insurance acting under the powers vested by the controller of insurance Act, No. 25 of 1962. The Insurance Board of Sri Lanka has been established for the purpose of development, supervision and regulation of the insurance industry and to ensure that insurance business in Sri Lanka is carried out with integrity and in a professional and prudent manner, with a view of safeguarding the interests of policy holders and potential policy holders. There are twenty two companies registered under the board at the end of the year (Insurance Board of Sri Lanka 2015). Sri Lanka Insurance Corporation Limited was established in 1962 as a state own corporation. As the pioneering insurer, Sri Lanka insurance has the most experienced technical knowledge base in the country. The company‟s financial stability and strong reinsurance arrangement have paved the way for it to mark many historical milestones in the Sri Lankan insurance arena. Sri Lanka insurance has a wide branch network island wide to service the insurance needs. Sri Lanka Insurance Corporation limited Vavuniya is

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established to service their policy holders in Vavuniya district and they offer customized service to their customers (Sri Lanka Insurance Corporation 2015). 2.3 History of Marketing Mix Borden (1965) claims to be the first to have used the term “marketing mix” and that it was suggested to him by Culliton‟s (1948) description of a business executive as “mixer of ingredients”. An executive is “a mixer of ingredients, who sometimes follows a recipe as he goes along, sometimes adapts a recipe to the ingredients immediately available, and sometimes experiments with or invents ingredients no one else has tried” (Culliton1948).The early marketing concept in a similar way to the notion of the marketing mix, based on the idea of action parameters presented in 1930s. Rasmussen (1955) then developed what became known as parameter theory. He proposed that the four determinants of competition and sales are price, quality, service and advertising. Mickwitz (1959) applies this theory to the Product Life Cycle Concept. Borden‟s original marketing mix had a set of 12 elements namely: product planning; pricing; branding; channels of distribution; personal selling; advertising; promotions; packaging; display; servicing; physical handling; and fact finding and analysis. Frey (1961) suggests that marketing variables should be divided into two parts: the offering (product, packaging, brand, price and service) and the methods and tools (distribution channels, personal selling, advertising, sales promotion and publicity). On the other hand, Lazer and Kelly (1962) suggested three elements of marketing mix: the goods and services mix, the distribution mix and the communication mix. McCarthy (1960) refined Borden‟s (1965) idea further and defined the marketing mix as a combination of all of the factors at a marketing manger‟s command to satisfy the target market. He regrouped Borden‟s 12 elements to four elements or 4Ps, namely product, price, promotion and place at a marketing manger‟s command to satisfy the target market. 2.4 Marketing Mix Theory The four P‟s of marketing mix consist of price, place, product and promotion. Culliton (1948) wrote that a marketing decision should be a result of something similar to a recipe

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that is the origin of the marketing mix. McCarthy (1960) proposed the Four P‟s theory which is the most popular marketing concept, described in many textbooks and classes. The marketing mix model can be used by marketers as a tool to assist in defining the marketing strategy. Marketing managers use this method to generate the optimal response in the target market by blending 4 (or 5, or 7) variables in an optimal way. It is important to understand as that the marketing mix variables are controllable. The marketing mix can be adjusted on a frequent basis to meet the changing needs of the target group and the other dynamics of the marketing environment. The 7 P‟s or Extended Marketing Mix of Booms and Bitneris a marketing strategy tool that expands the number of controllable variables from the four in the original marketing mix model to seven. The traditional marketing mix model was primarily directed and useful for tangible products. The 7 P‟s model is more useful for services industries and for knowledge-intensive environments. 2.5 Traditional Marketing Mix Product means the good and service combination the company offers to the target market and product is the firm‟s tangible offer to the market, which includes the product quality, design, features, branding and packaging. Product is anything that can be offered to the market for attention, acquisition, use or consumption that might satisfy a need or want. This include:

Physical objects, place, persons, idea, services and so on

(Kotler2003). Moreover, product can be defined as goods and services that fill customers‟ needs. Every product is made of a set of tangible and intangible characteristics. The most obvious are features such as color, shape and Price. More subtle components include styling and quality levels. Most products are marketed under brand name that helps identify them for promotional purposes, Boone and Kurtz (1996) define that product is bundle of physical, service and symbolic attributes designed to satisfy consumer wants. Therefore, product involves package designs, brand names, trademarks, warranties and product images. According to Hirankitti, Mechinda, and Manjing (2009) the service product offers service which can be explained based in the core service which represents the core benefit, and the secondary service which represents both the tangible and augmented 9

product levels. Because service product show case features like intangibility, inseparability, Heterogeneity, indivisibility and perishable in nature hence, service Providers have devised a strategic means of solving the problems associated with the characteristics, this include but not limited to: stress tangible cues, engage in post purchase communications, create strong organizational image, use multisite locations, manage consumers, customize service, industrialize service use strategies to cope with fluctuating demand (Zeithaml, Parasuraman& Berry 1985). Price is the amount of money customer has to pay to obtain the product or service, such as house‟s price, house design, credit term and discount rate. Since price is the only element in the marketing mix that can be viewed as a source of income, and is very sensitive factor, affecting the customer buying decision, (Boone & Kurtz 1996); therefore, it is important to set the most reasonable price to maximize business profit. Due to the intangible nature of services, price becomes a crucial quality indicator (Zeithaml 1981). Price is considered as the most important measurement of repurchase intentions (Parasuraman&Grewal 2000). It has been proven the customers normally think whether they received their value for money or not (Zeithaml 1988). Therefore, customers usually buy products on the basis of price rather than other attributes (Peter &Donnely 2007). Place defined as the ease of access which potential customer associates to a service such as location and distribution (Hirankittiet al 2009). A firm should pay attention to place decisions, because of the importance of the service and consumption occurring at the same time and at the same place; a place that provides all information for customer, competition, promotion action, and marketing task. It should pay attention to how it can deliver the service at the right time and at the right place, and which channel should be used to deliver the service (Copley 2004). The strategy of place needs effective distribution of the firm‟s service among the channels of marketing (Copley 2004). With the contemporary service marketing, place can be termed to be offline i.e. shop, warehouse, location and online (i.e. internet). Promotion is considered as one of the important factors in the marketing mix and has a key role in market success, it defined as sales promotion, advertising, personal selling, 10

public relations and direct marketing (Borden 1965). Promotion is about a decision of how best to the related product to the target market and to persuade consumer to buy it (Lovelock, Patterson & Walker 1998). A communication program is important in marketing strategies because it plays three important roles: providing needed information and recommendation, persuading target customers to buy a specific product, and encouraging target customers to take action at specific times and place (Lovelock &Wirtz 2002). Promotion activities can influence consumer‟s way of thinking, their emotions, their experience as well as their purchasing. Promotion is a selling technique, in any marketing program; it should be involved with promotion activities. Therefore, effective use of well-planned and structured promotional activities towards specific target market equally enhances customer intention and their satisfaction. 2.6 Extended Marketing Mix Definition of services abound in marketing literature, services are deeds, processes and performances (Zeithaml & Bitner 2003). A service is an intangible product involving a deed, a performance or an effort that cannot be physically possessed (Lancaster &Massingham2001). Services are economic activities offered by one party to another, most commonly employing, time-based performance to bring about result in recipients themselves or in objects or other assets for which purchases have responsibility (Lovelock &Wirtz2002). This paper defines a service product as an economic activity though intangible in nature, but can be tangibilized in its delivery with the aim of producing time, place, form, and psychological utilities, that satisfy the goals of both the recipient and provider. A number of characteristics differentiate service products from physical products. Services are intangible and therefore, more difficult for both the service providers and the customers to measure and evaluate objectively. Intangibility of service therefore refers to the difficulty of communicating the service benefits. Services are perishable and consequently cannot be produced in advance of demand and held in inventory. Services are produced and consumed simultaneously, indicating that either the customer or a possession of the customer is involved in the process while the service is being delivered. Services are also difficult to patent and relatively easy to imitate (Zeithaml&Bitner 11

2003). Furthermore, we recognize that there is inconsistency in service delivery. Inconsistency refers to the difficulty of providing the same level of service quality each time a service is purchased. As services depend on experience and competence of people who deliver then, their quality varies with each provider‟s capabilities and everyday performance. These unique characteristics of service product require that they must be sold in a way distinctly different from that of physical products. In this regard, Kotler (1994) observed that traditional 4P‟s of marketing often work well for physical products, but suggest that additional elements are required to sell service products. Also, scholar of services marketing (Kotler 2003) agrees that the traditional marketing mix of 4P‟s needs to be extended to 7P‟s.Bitner and Booms (1981) recognize the extended marketing mix model namely, Product, Price, Place, Promotion, People, Process and Physical evidence specially for services marketing (see Figure 2.1). The Bitner and Booms Service marketing mix model below:

Product Physichal evidence

Price

7P's marketing mix

Process

People

Promotion

Figure 2.1 Service Marketing Mix Model Source: Bitner and Booms, (1981)

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Place

2.6.1 People 2.6.1.1 Definition of People Peoplerefer to the service personnel who produce and deliver the service. It is a fact that many services involve personal interactions between customers and the service employees, and they strongly influence the customer‟s perception of service quality (Hartline & Ferrell 1996). Personnel are important to the delivery of service to customers. If there is no support from the personnel, a customer-orientation is not possible to get achievement (Judd 2001). 2.6.1.2 Significance of People The personnel interaction is important, because it influences customer perception. In other words, the actions of all the personnel normally influence an organization‟s success, and more communication, training, skills, learning, and advice offered to personnel, they will achieve to display the optimum value of the product and the company. Hence, there is a need for service provider to appropriately train and motivate their personnel with right attitude because the reputation of the company image rests in people‟s hand (Chartered Institute of Marketing 2009). Consequent to the unique characteristic of service product „inseparability‟ it shows that production and consumption go simultaneously. Service heavily depends on the ability of contact personnel to be able to deliver the services. Service providers such as in the case of nurse, lawyer and financial institutions are involved in the real time production of service. In a nut shell, service is a role play event. 2.6.1.3 Model of People Kotler (2003) mentioned that employee‟s knowledge and skill helps customers happy because they can offer support and advice to customers. By doing this, it creates customer to think about the customized service and create customer purchase intention. Also he noted that the company should be customer oriented and their employees must be customer oriented for a service organization in order to deliver better service. In a view of significance of service employees‟ attitude and behavior in service encounters, customer 13

orientation in service firms is implemented through their service employees‟ interactions with customers by their attitude and behavior with the customers (Henning, 2004) (see Figure 2.2)

Customer Oriented

People Knowledge and Skills

Attitude and Behavior

Figure 2.2Model of People Source: Kotler (2003); Henning (2004). Customer orientation refers as a group of action taken by a business to support its sales and service staff in considering client needs and satisfaction of their major priorities. The customer orientation of service persons refers that those people are finding ways to understand, attract, retain and build intimate life relationship with customers (Gronroos 2005). Attitude and behavior generally defined as the way person responds to his or her environment, the knowledge and skills are required to perform a job and are generally demonstrated through qualifying service, education or training. this knowledge and skill required to induce the customers about their purchase decision.

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2.6.2 Process 2.6.2.1 Definition of Process Processcan be described the procedures, mechanisms and flow of activities by which the service is delivered and also the implementation of action and function that increases value for service with a low cost and a high advantage to customer, and it is more important for service than for goods. According to Hirankittiet al (2009) the process is clearly perceived by the customer and it forms the basis of customer satisfaction with the purchase. Therefore, process management ensures the availability and consistence of quality. The design and the implementation of process elements are crucial to the creation and delivering of product. 2.6.2.2 Significance of Process Many customers no longer simply buy a product or service, they invest in an entire experience that starts from the moment they discover the company last through to purchase and beyond. That means the process of delivering the product or service, and the behavior of those who deliver it, are crucial to customer purchase decision. A user friendly service system, waiting time, the information given to customer and the helpfulness of staff are vital to keep customer intention (Zeeshan, 2013). The value of a good first impression and designed service system makes the customer satisfied and induce them to repeated purchase. The system should design for the customer‟s benefit, not the organization‟s convenience. Customer‟s waiting time, availability of necessary information, organization‟s staff support and their interaction with the customer and other competitive advantages leads the positive word of mouth communications. 2.6.2.3 Model of Process Process is more important for service products in the insurance industry. Hirankittiet al. (2009) stated that the pace of process as well as the skill of the service providers to offer the information is clearly revealed to the customer. It also forms the basis of customer intention to the purchase. Therefore, process management ensures the availability and consistence of quality of service. Technology has remarkable influence on the service 15

delivery innovations (Zeeshan, 2013) and leads to feel the customer about the quality of the service organization. Poorly designed processes are likely to irritate customers when they experience slow, bureaucratic and ineffective service delivery.The process should be customer friendly and the speed and accuracy of payment is of greater importance. The processing method should be easy and convenient to the customers to ensure their repeated purchase (Zeeshan 2013) (see Figure 2.3).

Less waiting time

Information flow

Process

User friendly System

Innovative technology

Figure 2.3 Model of Process Source: Zeeshan (2013).. User friendly service process is a form of conceptual design which involves the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve the quality, quicker service and the interaction between service provider and customer (Zeithaml 1981). The information flow is a shorthand representation of access to integrated information to support business process improvements and aware customers about the service system. The process

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innovative technology refers that which new (or improved) technologies are developed and bought in to wide spread use. 2.6.3 Physical Evidence 2.6.3.1 Definition of Physical Evidence Physical Evidenceis defined as the environment in which the service and any tangible goods are delivered. It is hold the great importance for the customer normally judges the quality of the service provided through physical evidence (Rafiq& Ahmed 1995; Thusyanthy & Senthilnathan2012). In addition, according to Bitner (1990) adds other visible surroundings which can affect the impressions perceived by the customers about service quality. The appearance of the service employees can greatly affect a customer‟s satisfaction with a service experience (Rust, Zahorik, &Keiningham 1996). The environmental adornment and design also significantly influence the customer‟s expectations of the service. 2.6.3.2 Significance of Physical Evidence Service product i.e. core service that is intangible can create tangible in the mind of customers through it physical environment which invariably can lead to customer purchase decision such as: clean, tidy and well decorated reception, attitude and appearance of personnel, ambience, background music, comfort of the seating and physical facility layout of the service (Yazdanifard& Mercy 2011). Physical environment includes the appearance of physical structure landscaping, vehicles, interior furnishing, equipment, uniforms, signs, printed materials and other visible cues that provide evidence of service quality. Physical evidence is thus, an element of services marketing mix which enables the consumer to evaluate a firm (Yazdanifard& Mercy 2011). As it concerns insurance industry, we view physical evidence in terms ambience, personnel competence, and service systems design. Ambience in financial industry describes the nature of the environment in which the industry operates including the condition of the place. The ambience or physical facilities in the service encounter, customer waiting area, service station as well as inside the office 17

must be customer friendly to elicit continued patronage. How pleasant physical setting are determine the extent of overall customer satisfaction and loyalty (Ryu& Han 2010). Ambient music tones in the office, easier understanding of the staff by visuals, good refreshment and the provision high stranded conveniences are stimulate the customer purchase intention. 2.6.3.3 Model of Physical Evidence Physical evidence is a key element of success for all insurance companies, Physical evidence can be provided to insurance customers in the form of policy certificate, the ambience, the service personnel etc. of the company (O‟Brien 2002). Initially insurance was looked up on as a complex product with a high advice and service component. The physical component in the insurance industry should well arrange in order to reduce the purchase complexity and increase the customer purchase intention. According to Ryu and Han (2010) pleasant physical setting such as decoration, attractive information boards, physical layout, good refreshment and the provision high stranded convenience are stimulated the customer purchase intention (see Figure 2.4)

Physical Layout

Visual boards Environment Physical Evidence

Appearance of Personnel

Decoration

Figure 2.4 Model of Physical Evidence

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Source: O’Brien (2002); Ryu and Han (2010). The environment is the space by which consumers surrounded when they consume the service. This physical environment should be easier access to visit. The physical layout refers the arrangement of service equipment to facilitate the service delivery. The appearance of service personnel denotes their dress, professionalism, interaction with the consumers and their act in the service delivery process (Yazdanifard& Mercy 2011). According to Zeithaml (2003) the physical evidence is made up from its ambient, conditions, spatial layout and functionality, signs and symbols and artifacts for the decorations. The visual boards are passing the message of the service provider quickly to the customer with their first look. It always uses attractive and meaning full pictures to pass the information to the customer and create their intention to purchase the product or service. 2.7 Customer Purchase Intention 2.7.1 Definition of Purchase Intention Purchase intention is a kind of decision making that studies the reason to buy a particular brand by consumer (Shahetet al 2012). Tariq, Nawaz and Butt (2013) define purchase intention as a situation where consumer tends to buy a certain product in certain condition. Customer purchase decision is a complex process. Purchase intention usually is related to the behavior, perceptions and attitudes of consumers. Purchase behavior is a key point for consumer to access and evaluate the specific product. Gogoi (2013) states that purchase intention is an effective tool to predict buying process. Purchase intention may be changed under the influence of perceived quality, Risk and value. In addition, consumers are affected by internal or external motivations during the buying process (Gogoi, 2013). Researches have proposed six stages before deciding to buy the product, which are: awareness, knowledge, interest, preference, persuasion and purchase (Kotler& Armstrong, 2010).

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2.7.2 Significance of Purchase Intention The main fundamental aspect of consumer behavior is their purchase intention as the situation in which a customer is agreeable to make a transaction. According to Dodds,Monroe and Grewal (1991) purchase intention comes into deliberation when a customer is most likely attempting to purchase some product or service. For marketers purchase intention is of vast meaning as their forecasted consumer behavior is highly dependent on this purchase intention of the customers. Predicting consumer behavior is one of the most difficult tasks for any business as it keeps on altering under the influences of unknown and doubtful factors; therefore leading to a purchase intention which is difficult to measure under different conditions (Rizwanet al2013). Several studies claimed that purchase intention is a function of monetary deliberations too. And not only behavior furthermore, apparent affordability is an economic variable that can influence behavioral intention (Schlosser, White and Loyd 2006). Generally brand is a name and symbol; it is a very important tool to create a positive image in customers. Brand has a very important role in creating loyal customers and retaining companies‟ market share. Loyal customers are to brand, do repurchase and recommend brand to others. Brand loyalty means customers pay more money to particular brand against similar products (Erics, Unal, and Candan 2012). Previous studies show that repeated purchases of customers due to long-term loyalty leads to profitability and growth of companies (Molla& Licker, 2001). In previous studies, the relationship between brand equity and consumers‟ purchase intention is investigated (Erics, Unal&Candan. 2012; Thusyanthy & Tharanikaran 2015). There is a significant relationship between brand equity and the willingness to recommend brand purchase to others. Most of previous studies tested the influence of brand image on consumers' purchase intention and showed a significant relationship between these variables (Tariq, Nawaz & Butt 2013). Zeeshan (2013) in his study found that brand image has a significant effect on the purchase intention of men. Consequently, it is more likely that brand awareness leads to the increase of consumer decision to buy that brand (Tih& Lee, 2013). Kawa, Rahmadiani, and Kumar (2013) in their study showed that brand name has a significant impact on the purchase decision of customers. 20

Perceived quality is customer perception of general quality or superiority of one product or service - with attention to the purpose of that product or service- in comparison to other alternatives (Khraim, 2013). Perceived quality can be defined as the customer perception of general quality or superiority of one product or service in the light of its expected goal case in comparison to other alternatives. Perceived quality is a general and intangible feeling about brand. However, perceived quality is usually based on key dimensions that consist of product specification (reliability, performance and brand). The identification and measurement of its main dimension will be useful, but it should not be forgotten that perceived quality is a general perception (Kiya, 2012). The price is defined as the money that customers exchange in terms of service or product, or the value they receive (Kotler and Armstrong, 2010). It is important for a company to retain loyal customers who are willing to pay higher prices for their favorite brand and don‟t buy based on lower price (Levy &Weitz, 2012). Wickliffe &Pysarchik (2001) introduce product aspects as features that have an inherent impact on customer behavior such as brand and price. These two factors cover the major part of product features. Herman et al (2007) studies showed that price is one important factor in customer purchase; thereby it has a significant impact on customer satisfaction. Also, consumer satisfaction is affected by price perception directly and is affected by price fairness in directly. According to Khraim (2011), the price has a significant impact on brand loyalty which in turn effects on customers purchase intention. Based on the supposition that consumer behavior is the outcome of learning (Bentlar&Speckart, 1979), there is an argument among the researchers that consumers previous behavior can offered better predictions of behavioral intentions. DelgadoBallester and Munuera- Aleman (2005) build up that they believe developed through past experience becomes a crucial part of existing purchase and name the consumer as loyal furthermore serves as brand equity in future. 2.7.3 Model of Purchase Intention Consumers‟ buying decision is very complex. Usually purchase intention is related with consumers‟ attitude, behavior and perception. This purchase intention might be altered by 21

the influence of price, perceived quality, perceived value (Zeithamal 1988) and Grewalet al (1998) proposed that consumers will be interrupted by internal impulse and external environment during purchasing process (see Figure 2.5).

Attitude

Purchase Intention Perception

Behavior

Figure 2.5 Model of Purchase Intention Source: Bentlar&Speckart (1979). Delgado- Ballester&Munuera- Aleman (2005), Gogoi (2013) . The purchase intention refers through the attitude, perception and behavior of the service provider and consumer. Attitude is an expression of favor or disfavor towards a object. It refers the actions of the users and service provider; the perception is the organization, identification and interpretation of sensory information in order to represent and understand the environment; the behavior defines the range of actions and mannerisms made by individuals in conjunction with themselves or their environment. 2.8 Impact of Extended Marketing Mix on Purchase Intention Akekue, Asiegbu and Lgwe (2012) conduct the study about physical evidence and market performance of commercial airlines in Nigeria. This study concluded as physical evidence provided by airline operators in Nigeria aviation industry affects their marketing

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performance. Specifically ambience, personal competence and service system design positively correlated with their sales growth, market share and profitability. Andretiet al (2013) in a survey of analyze the factors people, process, physical evidence and service quality on customer buying decision of convenience store. The result shows that the physical evidence and the service quality have highest influence on customer buying decision of convenience store. Also the other factors influence on the buying decision of convenience store in Indonesia. Reni DiahKusumawati, Teddy Oswari and Vikas Kumar (2014) studied about the influence of 7P‟s of marketing mix on buying intention of music products in Indonesia. The study used seven marketing mix variables to determine the level of consumer buying intention in Indonesia to digital music online product. The test showed that all the variables of marketing mix consisting of product, price, promotion, distribution, people, process and physical evidence have significant effect on consumer buying intention of digital music online products. The art of putting the customer firs, anticipate the needs and problems, tailoring products and services to meet needs and establishing customer relationship is customer services, it is necessitated a need for the expansion of traditional marketing mix (4P‟s) as to have 7P‟s Gronroos (1987). These three extended marketing mix elements are cross-functional in nature. They are more concerned with relating the customer that catching the customer Kotler (1994). The 7P‟s comprise the modern marketing mix that is particularly relevant in the services industry, but it also relevant any form of business where meeting the needs of customers is given priority. The first two P‟s in the extended marketing mix are explicit (people & process) and the tired one (physical evidence) is an implicit factor, by offering a right product with the right combination of 7P‟s marketer can improve marketing effectiveness and customers purchase intention. 2.9 Summary This chapter reviews some of the literature related to services marketing mix and customers purchase intention with empirical evidence and this chapter includes the introduction, history of marketing mix, extended marketing mix and the factors reflects 23

customers purchase intention and relevant Models, through this review the researcher found the gap that there are less study about the purchase intention related to extended marketing mix and also the researcher found there is a gap in customer purchase intention relates on extended marketing mix in Vavuniya district. The researcher chooses Sri Lanka insurance and study about these variables.

24

CHAPTER THREE

METHODOLOGY 3.1 Introduction In this chapter researcher describe the methodology adapted to the research study. Therefore it deals with the research in respect of selecting the appropriate sample, hypothesis, operationalization, method of data collection and data analysis. 3.2 Conceptual framework This conceptual framework is the construction of the research. It‟s conduct vital role in the overall research area. This conceptual framework explains the relationship between extended marketing mix as independent variable and customer purchase intention as depended variable. Here the independent variable has three dimensions of service marketing mix which are derived from extended marketing mix model (Bitner& Booms 1981; Thusyanthy & Senthilnathan 2012) and it compare with insurance policy holder‟s purchase intention. This conceptual framework based on the narrow down scope of the literature review from the second chapter and the working knowledge of the researcher with the organization. The researcher has developed his own conceptual model for this research study.

Extended Marketing Mix People

Purchase intention

Process

Physical Evidence

Figure 3.1 Conceptual framework

25

Source: Henning (2004); Hirankitti et al (2009); Yazdanifard and Mercy (2011).

3.3 Hypotheses The hypotheses was developed based on the conceptual framework as follows, H1- People element has significant positive impact on purchase intention in Sri Lanka Insurance Corporation Limited in Vavuniya district. H2- Process element has significant positive impact on purchase intention in Sri Lanka Insurance Corporation Limited in Vavuniya district. H3- Physical evidence element has significant positive impact on purchase intention in Sri Lanka Insurance Corporation Limited in Vavuniya district.

3.4 Operationalization This section defines the variables into measurable factors. The operationalization is a process of defining the measurement of a phenomenon that is not directly measurable, though its existence is indicated by other phenomena. It determines how the research is going on to measure a concept. In this table there are three variables namely, people of insurance company, process and physical evidence operationalized to measure the concept “impact of extended marketing mix on customer purchase intention”. According to the variables questionnaire was developed to distribute among the respondents.

26

Table 3.1 Operationalization table Concept

Variable People

of

insurance

company

Indicators

Measures

Sufficient number of

Part. B Q2,Q3,Q6

employees. knowledge and

skills

for

Part. C Q18

employees Well

customers

complaints

Part. B Q4,Q5,Q12

handling

mechanism

Extended Marketing Mix

Process of insurance

Innovative

service

Part. B Q7,Q8,Q11

company

process

Part. C Q22

Use of technological

Part. B Q7, Q9, Q10, Q14

equipments Enough guidance for

Part. C Q26

customers.

Customer Purchase

Physical evidence of

Clean and neat service

insurance company

environment.

Attitude

Intention

Part. B Q13, Q15,Q16

Easy accessible layout

Part B Q14, Q17

for service

Part. C Q27

Familiar

with

this

Part. C Q18, Q19

company Perception

Trust and expectations

Part. C Q21, Q24, Q26

Internal and External Covert Behavior

Motives

Part. C Q25, Q26

Source: Authors own systemization 3.5 Sample design This study was designed as a descriptive study by collect the questionnaire in order to analyze whether and how customer purchase intention and extended marketing mix factors effecting or influenced the buying decision on Sri Lanka Insurance Corporation Limited in Vavuniya district. One of the most important requirements of data is that 27

collected data should be completed and accurate. This study had been organized to collect data from 100 sample of Sri Lanka Insurance Corporation limited. Convenience sampling technique was used for the sample selection. 3.6 Sample selection

Population Life insurance policy holders in Vavuniya district

15 Life insurance Company

Life insurance policy holders of Sri Lanka Insurance Corporation in Vavuniya district

Convenience sampling technique

100 Sample

Figure 3.2 Sample selection model Source: Authors own systemization 3.7 Data collection This study mostly depends on primary data sources. This primary data is collected through the structured questionnaire, was developed to be distributed among customers of Sri Lanka Insurance Corporation limited.

28

3.7.1 Questionnaire development The questionnaire were collected primary data from a total of 100 respondents who are interested to buy and who will make a decision to buy Sri Lanka insurance corporation Ltd in Vavuniya district, by answering the formal questionnaire. This questionnaire consists of three parts which specifically design to collect necessary information from the respondents. In section one, the questionnaire refer about the respondent‟s demographic characteristics. From section two, the questionnaire refers about the extended marketing mix (people, process & physical evidence). In section three, the questionnaire refers the purchase intention (Attitude, Perception & Behavior). There are 27 statements given in this questionnaire by asking them to score each of the five appropriate answers on Likert scale of 1 to 5. 3.7.2 Measurement scale Strongly disagree

-

1

Disagree

-

2

Neutral

-

3

Agree

-

4

Strongly Agree

-

5

3.8 Method of data Analysis For the data analysis the researcher use the following statistical techniques. And the researcher use Statistical Package for the Social Science (SPSS 20.0) software program to statistically transform the raw data and process the data. 3.8.1 Descriptive Analysis The descriptive statistics analyses the data and to assist them to describe, show, or to summarize the data that are collected from the primary source in a meaningful way. It can 29

also be stated that descriptive statistics analyses the data of the entire population. Entire population contains the total set of possible data as opposed to the sample of these subjects. Where a large amount of data can be simplified using this quantitative approach. 3.8.2 Inferential Statistics Regression analysis is used to achieve the objectives of the study, (in terms of purchase intention). The following formulas are used to calculate the impact of extended marketing mix on customer purchase intention. I.

To calculate the impact of people PI = β0 + β1PE + ɞ Where PI = Purchase Intention 𝛽0 = Constant value 𝛽1 = Regression coefficient 𝑃𝐸 = People ɞ = Error terms

II.

To calculate the impact of process PI = β0 + β1PR + ɞ Where PI = Purchase Intention 𝛽0 = Constant value 𝛽1 = Regression coefficient 𝑃𝑅 = Process ɞ = Error terms

III.

To calculate the impact of physical evidence PI = β0 + β1PH + ɞ Where PI = Purchase Intention 𝛽0 = Constant value 30

𝛽1 = Regression coefficient 𝑃𝐻 = Physical Evidence ɞ = Error terms

3.9 Summary This chapter explains the methodology that was used the researcher, it includes the conceptual frame work, hypothesis, operationalization of variables, sample design, sample selection and explanations about the statistical procedures which used to analyzed the data.

31

CHAPTER FOUR

DATA ANALYSIS AND FINDINGS

4.1 Introduction This chapter consists with the output of the research. According to this research, the impact of extended marketing mix on customer purchase intention in Sri Lanka insurance corporation Ltd was analyzed. First the reliability test was done to ensure the research questionnaire‟s strength. Then the over view to the sample was provided and descriptive analysis was presented in this chapter. Finally, a regression analysis was under taken to fit the research conceptual model. 4.2Data collection and analysis Concerning on this research study, primary data were collected from 100 respondents who have life insurance policy in Sri Lanka insurance corporation Ltd in Vavuniya district and four questionnaires were rejected due to the incompleteness. Descriptive analysis was used to summarize the demographic data including gender distribution, age distribution, education level, monthly insurance premium and how long being with the company. This analysis describes by using relevant statistical analysis and appropriate tables. 4.3 Validity Test. 4.3.1 Content validity. Content validity refers to how accurately an assessment or measurement tool taps into the various aspects of the specific construct in question with the previous literature supports. The Table 4.1 shows that the measurement scales adopt from the literature.

32

Table 4.1 Content validity table. Item

Scale items Measurement Extended Marketing Mix 1. People.

Source

Q1 Q2

The company has a sufficient number of employees at work. Their employees have required knowledge and skills to answer customers‟ questions. I agreed that the employees provide enough information to you (standards and features) about their insurance product and service? The employees are friendly, Polite, and service minded: they ensure your needs are met. The employees are having contact with you after your purchasing

Jad2001; Chartered institute of marketing (2009)

Q3 Q5 Q6

Brown et al. (1999) Hartile& Ferrell, (1996)

2. Process Q7

The insurance company demonstrates smooth service process, for example, less waiting time to the customers for consulting services. Zeeshan, 2013

Q8 Q9

The insurance company provides information through e-mail or SMS. The insurance company provides enough guidelines in the first service Henning, 2004 encounter. The insurance company use new technological equipment for faster Dabholkar&Bagozzi, 2002 service.

Q10

3. Physical Evidence Q17

The insurance company‟s physical facility layout of service meets Shostack, 1977 functional requirements

Q18

I am familiar with this insurance company and its employees.

Q20 Q21 Q22 Q23

I choose this insurance company because of my economic status. I trust that I will get best value for my money. I feel this insurance company service has more quality. I never feel any risk when I purchase this insurance service.

Purchase Intention

Hartline & Ferrell, 1996 Schlosser et al., 2006 Gogoi, 2013 Kiya, 2012 Gohoi, 2013

Source: Authors own systemization 4.4 Reliability Test. The reliability of the data assess by using a reliability test. This test carried out to know the acceptance of the data which was collected through the questionnaires. Cronbach‟s Alpha Coefficient is calculated for statements of each of the dimensions.

33

Table 4.2 Reliability test, Cronbach’s Alpha Coefficient,

Number of

Cronbach’s Alpha

Statements

Coefficient

People

06

0.711

Process

06

0.714

Physical Evidence

05

0.815

Attitude

03

0.775

Perception

04

0.812

Behavior

03

0.748

Dimensions / Variables

Total

0.704

Source: Survey Data

The results indicates that the reliability of data collected can be confirmed when Cronbach‟s Alpha Coefficient is more than or equal to 0.7 (Thusyanthy & Senthilnathan 2012 cite Godard, Ehlinger and Grenier 2001). However, the results indicate that the data collected have reasonably acceptable reliability. All the variables (people, process, physical evidence, attitude, perception and behavior) show the acceptable level of reliability as shown in the Table 4.1. It shows the validation involved in the research constructs, internal consistency and reliability of measures. 4.5 Demographic characteristics of respondents This section includes the respondent‟s gender, age, education, insurance premium expenses and year stay with the company. The Table 4.3 shows the sample profile of this study: 34

Table 4.3 Sample profile Demographic characteristics

Frequency

Percentage

Male

60

62.5%

Female

36

37.5%

18<28

33

34.4%

28<38

38

39.6%

38<48

15

15.6%

48<58

10

10.4%

O/L

20

20.8%

A/L

32

33.3%

Degree

30

31.3%

Post- graduation

14

14.6%

Bellow 25000

60

62.5%

25000< 35000

34

35.4%

35000< 45000

01

1%

55000 and above

01

1%

Less than 4

54

56.3%

4<7

38

39.6%

7<10

04

4.2%

Gender

Age

Education

Premium expenses

Year stay with the company

Source: Survey Data Table 4.3 shows the sample profile (this format is adopted from Thusyanthy 2016). According to this male life insurance policyholders are higher than the female life insurance policyholders. There are 62.5 % of male respondents and the remaining of 37.5 35

% female respondents. Age distribution of this sample describes the higher level of respondents in the sample from the age between 28-38 years which represent 39.6 %. Next the age group 18-28 represents 34.4% of this sample, whilst 15.6% are between the ages of 38-48 years and the remaining group of respondents between the age of 48- 58 is 10.4%. The education level presents that there is 33.3% of the sample have advanced level qualification and 31.3% of the sample has degree in their education level. There are 20.8 % of the sample with Ordinary level qualification and more on those with a postgraduation 14.6 % in the sample.In terms of monthly life insurance premium expenses around 62.5% of the respondents are spending below 25000 per month, 35.4% of the respondent spending between 25000- 35000 and 1% of the respondents spending 3500045000 and above 55000. Finally the table shows that 56.3% of the respondents are being with this company less than 4 years, followed by 39.6% between 4-7 years. And 4.2% of the respondents are between 7-10 years in the sample respondents. 4.6 Descriptive Statistics The descriptive statistics (mean, slandered deviation) are used to evaluate the agreement level of respondents on the extended marketing mix (people, process and physical evidence), customer purchase intention (attitude, perception and behavior) and overall customer purchase intention. (see Table 4.4 & Table 4.5). Table 4.4 Level of agreement of Extended Marketing Mix Mean

Standard Deviation

People

4.1215

0.50696

Process

3.0330

0.66606

Physical Evidence

4.1333

0.51230

Source: Survey Data The mean value of People is 4.1215 and the standard deviation is 0.50696, the mean value of Process is 3.0330 and standard deviation is 0.66606 which is low mean value in 36

these variables and Physical Evidence has the mean value of 4.1333 which is high mean value in these variables and standard deviation of 0.51230. Table 4.5 Level of agreement of Purchase Intention

Mean

Standard Deviation

Attitude

3.8264

0.62871

Perception

3.9297

0.45841

Behavior

4.1319

0.50374

Purchase Intention

3.9627

0.33423

Source: Survey Data The mean value of Attitude is 3.8264 and the Standard deviation is 0.62871, and this is the low of these variables, the mean value of perception is 3,9297 and standard deviation is 0.45841, Behavior has the high mean value of the variables as 4.1319 and the standard deviation of 0.50374. The mean value of total purchase intention is 3.9627 and the standard deviation of 0.33423.

4.7 Relationship between Extended Marketing mix and purchase Intention

4.7.1 The impact of “People” H0- People element has not significant positive impact on purchase intention on Sri Lanka Insurance Corporation limited in Vavuniya district. H1- People element has significant positive impact on purchase intention on Sri Lanka Insurance Corporation limited in Vavuniya district. To test this hypothesis the regression analysis was used (see Table 4.6). The summery model of the regression analysis as follows: 37

Table 4.6 Summary of People towards Purchase Intention Model Summary Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

1

.385

a

.161

.142

.32203

a. Predictors: (Constant), People

Source: Survey Data Regarding the regression analysis from Table 4.6, It explains that independent variable (people) can explain about 16% variation of the depended variable (Purchase intention) where it‟s explained by R square. Table 4.7 Regression of People towards Purchase Intention Coefficients Model

Unstandardized Coefficients

Standardized

t

Sig.

Coefficients B (Constant)

Std. Error 3.187

.271

.298

.065

Beta 11.778

.000

2.886

.005

1 People

.385

a. Dependent Variable: PI

Source: Survey Data PI = β0 + β1PE + ɞ PI = 3.187 + 0.298PE + ɞ As indicated in the regression formula, which is the application of regression Table 4.7, the People affects customer purchase intention, and with a positive direction. The people have approximately 30% of the impact on customer purchase intention. And the significance level is 0.005 which is below level of significant or the alpha level (a= 0.05).

38

Therefore there is enough evidence to reject H0 and accept H1. Thus people have impact on purchase intention. According to Andretiet al. (2013); Reni DiahKusumawatiet al.(2014) people element in the extended marketing mix impact on customer purchase intention. And this study also consists with previous studies, especially in Sri Lanka Insurance Corporation limited in Vavuniya district. 4.7.2Process impact on purchase intention H0- Process element has not significant positive impact on purchase intention on Sri Lanka Insurance Corporation limited in Vavuniya district. H2- Process element has significant positive impact on purchase intention on Sri Lanka Insurance Corporation limited in Vavuniya district. To test this hypothesis the regression analysis was used (see Table 4.8). The summery model of the regression analysis as follows: Table 4.8 Summary of Process towards Purchase Intention

Model Summary Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

1

.0218

a

.079

.072

.33595

a. Predictors: (Constant), Proccess

Source:Survey Data

Regarding the regression analysis from Table 4.8, It explains that independent variable (process) can explain about 8% variation of the depended variable (Purchase intention) where it‟s explained by R square.

39

Table 4.9 Regression of Process towards Customer Purchase Intention Coefficients Model

Unstandardized Coefficients

a

Standardized

t

Sig.

Coefficients B

Std. Error

(Constant)

3.990

.161

Proccess

.188

.060

Beta 14.839

.000

.177

.033

1 .218

a. Dependent Variable: PI

Source: Survey Data PI = β0 + β1PR + ɞ PI = 3.990 + 0.188PR + ɞ The above regression formula, which is the application of regression Table 4.9, The Process affects customer purchase intention, and with a positive direction. The process has approximately 19% of the impact on customer purchase intention. And the significance level is 0.033 which is below level of significant or the alpha level (a= 0.05). Therefore there is enough evidence to reject H0 and accept H2. Thus, process has impact on purchase intention. According to Andretiet al. (2013); Reni DiahKusumawatiet al.(2014) process element in the extended marketing mix impact on customer purchase intention. And this study also consists with previous studies, especially in Sri Lanka Insurance Corporation limited in Vavuniya district. 4.7.3Physical Evidence impact on purchase intention H0- Physical evidence element has not significant positive impact on purchase intention on Sri Lanka Insurance Corporation limited in Vavuniya district.

40

H3- Physical evidence element has significant positive impact on purchase intention on Sri Lanka Insurance Corporation limited in Vavuniya district. To test this hypothesis the regression analysis was used (see Table 4.10). The summery model of the regression analysis as follows: Table 4.10 Summary of Physical Evidence towards Customer Purchase Intention

Model Summary Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

1

.842

a

.210

.230

.33579

a. Predictors: (Constant), Physucal evidence

Source: Survey Data Regarding the regression analysis from Table 4.10, It explains that independent variable (Physical Evidence) can explain about 21% variation of the depended variable (Purchase intention) where it‟s explained by R square. Table 4.11 Regression of Physical Evidence towards Customer Purchase Intention

Coefficients Model

a

Unstandardized Coefficients

Standardized

t

Sig.

Coefficients B (Constant)

Std. Error 3.866

.280

.517

.067

Beta 13.804

.000

.348

.000

1 Physical evidence a. Dependent Variable: PI

Source: Survey Data

PI = β0 + β1PH + ɞ PI = 3.866 + 0.517PH + ɞ

41

.842

As indicated in the regression formula, which is the application of regression Table 4.11, The Physical Evidence affects customer purchase intention, and with a positive direction. The physical evidence has approximately 51% of the impact on customer purchase intention. And the significance level is 0.000 which is below level of significant or the alpha level (p= 0.05). Therefore there is enough evidence to reject H0 and accept H3. Thus, physical evidence has impact on purchase intention. According toAkekueet al. (2012); Andretiet al. (2013); Reni DiahKusumawatiet al.(2014) physical evidence element in the extended marketing mix impact on customer purchase intention. And this study is also inconsistent with previous studies, especially in Sri Lanka Insurance Corporation limited in Vavuniya district 4.8 Summary In this section, the analysis shows that the result of hypothesis testing is analyzed on Purchase Intention and Extended Marketing Mix. Table 4.12 explains summary for all Hypotheses. Table 4.12 Summary of research hypothesis Research hypothesis

Test result

H1- People element has significant positive impact on purchase

Hypothesis

intention

Moderately supported

H2- Process element has significant positive impact on purchase

Hypothesis Lowly

intention

supported

H3- Physical evidence element has significant positive impact on Hypothesis Highly purchase intention

supported

42

CHAPTER FIVE

CONCLUSION AND RECOMMENDATION

5.1 Introduction This chapter will conclude the previous data analysis results. The researcher‟s intention to identify the impact of extended marketing mix on customer purchase intention. The researcher has occupied Sri Lanka Insurance Corporation Limited for this study. The extended marketing mix has taken as independent variable and customer purchase intention has taken as dependent variable for the data analysis. 5.2 Conclusions This study verifies that the extended marketing mix (People, Process, and Physical Evidence) has significant impact in services industry, on purchase intention. For this study Sri Lanka Insurance Corporation limited is considered and about 100 customers chosen to respond the questionnaire.

The People, Process and physical evidence

elements of extended marketing mix have positive impact on customer purchase intention, It compare with the extended marketing mix element, here the physical evidence element has highly impact on purchase intention in Sri Lanka insurance Corporation Limited in Vavuniya district. According to the objectives of this study the impact of extended marketing mix on purchase intention in Sri Lanka Insurance Corporation Limited in Vavuniya district, the conclusion from overall study is shown in the Table 5.1;

43

Table 5.1 Conclusion of overall study Hypothesis H1

H2

H3

Test result

Literature

Hypothesis

Objectives

Strongly supported

Objective achieved

Strongly supported

Objective achieved

Strongly supported

Objective achieved

supported Hypothesis supported Hypothesis supported

5.3 Recommendations In this part, the researcher will inform recommendation from this study to the Sri Lanka insurance corporation limited. In this study it is concerned about impact on extended marketing mix on customer purchase intention in Vavuniya district. The researcher has derived positive relationship between the independent and dependent variable, In terms of Extended Marketing Mix (People, Process and Physical Evidence) on purchase intention. In order to strategic Movement of their business and create competitive advantages in business environment Sri Lanka insurance Corporation limited has to study the market continuously. The physical Evidence has better fit to the purchase intentions. It creates positive customer behavior and marketer can improve to catch the market share.

The next independent variable taken to measure the purchase intention is Process. In insurance industry it is very important element. So the company should give much priority to provide better experience to the customers. Even it has a positive relationship, compared with other two independent variables process having relatively low relationship. So Sri Lanka insurance should have to develop better system to improve the service process.

The People variable has positive impact with purchase intention. Company should initiate continuous training programs to their employees about their products and also on customer relationship. This is very important to give proper training and improve their 44

skills because the inseparability of the service characteristics. This service organization has to perform the service activities by using their service personnel, so the proper motivation and necessary trainings should be provide and the personnel competence also here measure as a physical evidence to create the customer purchase intention.

Based on the finding of this study marketing mix, Sri Lanka Insurance Corporation limited should focus on the people, process and physical evidence of marketing mix. These three factors have significant relationship with customer purchase intention in insurance services in Vavuniya district. This study can be used by Sri Lanka Insurance Corporation limited in Vavuniya when they make new strategic plans for their marketing activities and take a correct direction for their marketing activities. 5.4 Implications for future research. This study measures customer purchase intention in Sri Lanka Insurance Corporation limited in Vavuniya district relation to extended marketing mix (people, process and physical evidence) as it variables. Future studies can include that possible other variables which were not considered here that may have significant impact on customer purchase intention such as service quality dimensions.

Future studies can also consider the customer purchase intention by comparing two or more companies in the same industry as a comparative study to find out the competitive advantages from various users. This study was conducted by selecting one branch in Vavuniya district; future studies may do the research by selecting at least one branch in a province or district in Sri Lanka, so that will be much reliable than this study.

45

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APPENDIX I am Nifras.M.R (2010/BS/127) , a final year student who is currently reading for Bachelor of Business Management Degree Program at vavuniya campus of the University of Jaffna. In order to partial fulfillment of it, I am conducting a research on “Extended marketing mix on customer purchase intention on insurance companies in vavuniya District”. Please be kind enough to give your cooperation to fill this questionnaire based on your views. Further I will assure that this information is only used for the research purpose and your response will be kept strictly confidential.

QUESTIONNAIRE Instructions: please answer all questions by ticking

mark of your own opinion.

Part A - Demographic questions 1. Gender

Male

Female

2. Age Below 18 years

18<28 years

38<48 years

48<58 years

28<38 years O

over 58 years

3. Level of Education O/L A/L Degree Post-Graduation 4. Monthly life insurance premium expense Below 25000

Rs. 25000 – 35000

Rs. 45000 - 55000

Above Rs.55000

5. How long have you been with your company?

54

Rs. 35000 – 45000

i. ii. iii. iv.

<4 4-5 6-10 >10

Part B – Extended Marketing mix

Please answer each statement below by putting a circle around the number that best

03

04 05

06

07

08

55

Strongly Agree

02

The company has a sufficient number of employees at work. Their employees have required knowledge and skills to answer customers‟ questions. Do you agree that the employees provide enough information to you (standards and features) about their insurance product and service? I am satisfied with the way company‟s employees respond me The employees are friendly, Polite, and service minded: they ensure your needs are met. The employees are having contact with you after your purchasing Factor 02: Process The insurance company demonstrates smooth service process, for example, less waiting time to the customers for consulting services. The insurance company provides information through e-mail or SMS.

Agree

01

Neutral

Factor 01: People

Disagree

Sr.no

Strongly Disagree

reflects your degree of agreement or disagreement with that statement.

1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

09 10

11 12

13

14 15

16

17

The insurance company provides enough guidelines in the first service encounter. The insurance company use new technological equipment for faster service. The insurance company is innovative in introducing new service systems. The insurance company has Prompt & Efficient complaint handling mechanism.

1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

2

3

4

5

2

3

4

5

2

3

4

5

2

3

4

5

2

3

4

5

Factor 03: Physical Evidence The insurance Company‟s physical environment is very clean, tidy and good 1 ventilated. The insurance company is equipped with 1 noticeable sign boards. The insurance company‟s employees are 1 well dressed and appear neat. The insurance company employee‟s knowledge, skills, consideration and their 1 behavior shows the competent to serve the customer. The insurance company‟s physical facility layout of service meets the 1 functional requirements.

Part C – Customer purchase intention

Disagree

Neutral

Agree

Strongly Agree

Strongly Disagree

Sr.no

I am familiar with this insurance 1 company and its employees. I always trust this insurance company. 1

2

3

4

5

2

3

4

5

20

I choose this insurance company because 1 of my economic status. Perception

2

3

4

5

21

I trust that I will get best value for my 1 money

2

3

4

5

Attitude 18 19

56

22 23 24

25 26

27

I feel this insurance company service has 1 more quality. I never feel any risk when I purchase this 1 insurance service. I think this company services are worth 1 for buying Behavior

2

3

4

5

2

3

4

5

2

3

4

5

The outside referrals induce me to 1 purchase the service The information referred from this company induce me to purchase the 1 services I will recommend others to buy this 1 insurance services

2

3

4

5

2

3

4

5

2

3

4

5

57