European Journal of Social Sciences Volume 24, Number 4(2011)

Impact of Rational and Emotional Factors in Creating Consumer Motivation, a Study of Policy Holders of State Life Insurance Corporation in KPK, Pakistan.
Engr. Owais Mufti Phd Scholar Qurtaba University of Science and I-T, Peshawar E-mail: Owaismufti@hotmail.com Tel:+92-91-3009597572; Fax: +92-91-9217451 Shahzad Khan Lecturer, Peshawar Business School E-mail: Saff_Shahzad@Yahoo.ie Tel: +92-91-3339405596 Zafar Zaheer Assistant Professor, Institute of Management Sciences, Peshawar E-mail: Zafar.zaheer@imsciences.edu.pk Tel: +92-91-03329978936 Abstract The study is an attempt to ascertain empirical relationship of rational and emotional factors on policy holders motivation in the field of insurance. In addition, this study attempts to identify the important factors that play a critical role in consumer purchase decision. Study uses framework consisting of rational and emotional factors on one side and consumer purchase decision on the other. These variables were then checked and relationship was established using multiple regressions. It was categorically furnished through 910 questionnaires that rational factors stimulate motivation more than emotional factors in KPK. The acquaintance from the results of this study serves as basis of recommendation for maximizing help to the state life insurance in particular and other insurance companies in general. The findings indicate that main factors of policy holders motivation are savings, celebrity endorsement and family care. Overall the rational factors are causing more motivation to purchase insurance policy from State Life Insurance Corporation than emotional factors.

Keywords: Emotional Motivation, Rational Motivation, Insurance

1. Introduction to Insurance
Insurance is basically a risk transfer activity and a service where losses are shared on the basis of mutual cooperation of policy holders Arshad (2007). Life Insurance provides financial security against unforeseen but named events. Its a service of protection against the uncertain and unfavorable events in which customer is ready to pay a particular amount of price known as premium. Furthermore, life Insurance is a Risk sharing scheme that depends on mutual co-operation of the client, against unexpected events such as fire, accident, illness or death, etc:

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European Journal of Social Sciences Volume 24, Number 4(2011) 1.1. Kinds of Insurance Life insurance Australia (2008) describes that Life and General Insurance are the two prominent categories of insurance where, former is a future financial plan that gives monetary coverage to the nominees in case of death of the purchaser/policy holder and on the other is General Insurance; that covers all non-life insurance businesses, and are related to high involvement products like automobiles, buildings, hotels and private institutions etc. 1.2. Difference between Life and General Insurance General insurance is a short term contract (for a year or so) while Life insurance is a long term contract. In general insurance the subject matter being insured is tangible, like; building, Vehicle, goods etc. Whereas, Life insurance deals with human aspects of life and the subject matter insured is; the timing of death that is intangible as described by Life Insurance Australia (2008). In Non-life (general) insurance the sum insured is only payable in the events of loss and damages whereas, in Life insurance, the sum insured is payable at the maturity of policy in case of the loss producing events such as death. 1.3. Types of Life Insurance State Life Rate book (2007) describe that Life Insurance is of two types; Individual Life Insurance (ILI) and Group Life Insurance (GLI). ILI is there to provide protection to individuals and on the other hand GLI covers a group of 10 or more employees. State Life Insurance Corporation provides both types of policies.

2. Previous Researches on Motivation

Park, C (1992) suggested that, in insurance business motivation is a primary factor that pushes consumers to buy a policy from the company. Where, consumer motivation is defined as the consumers desire or readiness to process brand information or purchase a product. Consumer motivation researches are focused primarily on consumers, their beliefs, attitudes and actions towards the purchase of goods and services, Corlett (1984). Conover, (1982) described motivation as consisting of four main types; positive, negative, rational and emotional motivation. (Where positive motivation is in favor of the organization and negative motivation is against the organization and its products). Alba and Houston (1987) are of the opinion that there can be only one type of motivation in a given time that can either be positive or negative. Similar action is valid for rational and emotional motivation where customer responses towards a product can be one of two. But this positive/negative motivation can be either rational or emotional as endorsed by Droge, Cornelia (1989). They hold credibility/reliability of the product as an important factor in creating consumer motivation and state that it all depends upon the efforts of organization to stress upon rational or emotional factors. 2.1. Difference between Rational and Emotional Motivation Mark R. Leary (2007), describes that the word emotion is derived from the French word emouvoir that means to move or to touch. Main focus of his research is pivoted around human emotions and its affective state of consciousness in which joy, sorrow, fear, love, feelings for children, and concerns about family are experienced. William, Patti (2005), explains in his study the basics of rationality and discussed that a person is known to be rational; if he is capable of drawing logical inferences, overpowering emotions and utilizing normal mental process of weighing pros and cons of an action-choice-decision (ACD). He further elaborated that rational behavior is guided more by conscious reasoning than by experience and is not adversely affected by emotions. A general assumption in business; is to coordinate the positive 547

European Journal of Social Sciences Volume 24, Number 4(2011) motivation process in such a way that maximum customers are drawn towards the organization products and services; on the other hand, negative motivation moves consumers away from the organization, Kardes and (1988). According to Park (1992) the factors like; price and quality of service creates positive motivation. William, H. Wandel (1992) describes saving, as an important ingredient in development of the package especially for banking and insurance businesses. On the other hand, if consumers are willing to purchase a product, but they are unable to get the opportunity/availability in the market, that may be another factor of consumer negative motivation. Meyer, Robert J. (1981) discussed that attribute of products are displayed/demonstrated in most of the products wherever possible, for enforcing a positive image on the customers. Similarly in insurance business to create extra ordinary motivation, attributes like; childrens education and family care are highlighted. Simion, Dinitz (1955), endorses the same about family care; and shows that it is one of the Emotional- Motivational- Factor (E-M-F) in insurance business. According to Speck (1990), factors like: humor, celebrities, pictures, and interactive images are the positive stimuli for the creation of motivation. For example; humor can be characterized according to its type, such as surprise/curiosity, parody and brand relevant strength.

3. Hypotheses
Based on two broad objectives and in order to test the hypotheses of the study, seven hypotheses were highlighted;
Objectives Relationship between consumer Motivation and emotional factor Hypothesis H:1 There is a positive relationship between motivation and Insurance plan Lack of availability/opportunity. H:2 Policy holders motivation is positively related to childrens education. H:3 There is a positive relationship between motivation and family care in absence. H:4 Motivation of a policy holder is positively related to price of an insurance plan. H:5 Motivation of a Policy holder is positively related to quality of service provided by an insurance corporation. H:6 There is a positive relationship between policy holders motivation and saving in an insurance plan. H.:7 There is a positive relation between motivation and celebrity endorsement.

Relationship between consumer motivation and rational factor

4. Research Methods
This research is an applied research in which primary aim is to find out the effect of rational and emotional factors on motivation of policy holders of state life insurance corporation. 4.1. Questionnaire Questionnaire instrument was used for data collection where, questionnaire items were designed based on rational & emotional motivational variables identified through interviews and previous literature survey. Price, quality service, saving and celebrity endorsement are sub factors identified under the heading of rational variable and sub-factors of emotional variable are lack of opportunity/availability, childrens education & family care in absence. Questionnaire was designed on five point Likert scale and distributed among insurance policy holders (respondents). 548

European Journal of Social Sciences Volume 24, Number 4(2011) 4.2. Reliability Correlation coefficient was used for measurement of reliability. The received questionnaires that amounted to 910 were measured for reliability and out of them, 816 questionnaires were considered valid for further analysis (rejection is due to errors and ambiguity posed by respondents in the questionnaire). The Cronbachs Alpha of research instrument was 0.765. 4.3. Data collection procedure The total policy holders in Kyber Pakhtunkhawa (KPK) for State Life Insurance Corporation for the year 2010 were 10, 859. A sample of 10% was drawn through systematic random sampling for analysis. Questionnaires amounting to 1000 were sent to the respondents; out of which 910 questionnaires were received after repeated reminders, the remaining 90 questionnaires were either discarded or never received.

5. Socio-Demographic Profile
Male and female policyholders of state life insurance corporation of 2010 were the respondents of this study. Out of the total number 94% of the policyholders (respondents) were male and remaining were female. Respondents age ranged from 20 to above 50 years. The data reveals that 32.7% of the respondents were in the age group of 20-30. While in 30-40 age range there were 43.3% respondents, in age of 40-50 only 21.4% respondents and only 2.6% respondents were above 50. With respect to respondents marital status 27.7 % of the respondents were single and 72.3% respondents were married. 60.2% of the respondents were serving in different organizations while only 1% of the respondents were house wives. Majority of the respondents were salaried people. 11.3% respondents earn between PKR. 11000-20000. 20.5% respondents earn between PKR. 20000-30000 per month. 25.6% respondents earn between PKR. 30000-40000. In respondents 27.1% earn between PKR 40000-50000, while only 15.6% respondents earn above 50,000.

6. Theoretical Frame Work of the Study

Motivation is dependent upon two important independents variables; rational which carries four subfactors (Price/Premium, Quality of Service, Saving and celebrity endorsement?? and emotional variable that is dependent on three sub-factors; (Lack of opportunity/availability, childrens education and family care in absence).
Motivation Emotional Independent Rational

Price Lack of opportunity. or availability

Quality of Service

Childrens Education. Purchase Decision Family care in absence.

Saving

Celebrity Endorsement

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European Journal of Social Sciences Volume 24, Number 4(2011)

7. Results and Analysis

The following results were obtained after fitting the multiple linear regressions.
Table I: Multiple Regression Results for Variables of the study.

Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .930a .865 .864 .14370 a. Predictors: (Constant), CELEBRITY, FAMILYCARE, AVALIBILITY, CHILDSEDU, PRICE, QUALITY, SAVING.

The adjusted R-square in the table shows that the dependent variable, (motivation) is affected by 86.4% by independent variables (emotional & rational factors). It shows that emotional and rational factors are responsible for creating a massive part of motivation and persuading policyholders to act. The overall model was also significant, tested with the help of ANOVA. The results are given in the following table.
Table II: ANOVA Results.

ANOVAb Model Sum of Squares Df Mean Square F Sig. 1 Regression 107.026 7 15.289 740.417 .000a Residual 16.685 808 .021 Total 123.711 815 a. Predictors: (Constant), CELEBRITY, FAMILYCARE, AVALIBILITY, CHILDSEDU, PRICE, QUALITY, SAVING. b. Dependent Variable: MOTIVATION

ANOVA table is showing the level of significance. Through the table it is clear that all subfactors like; saving, celebrity endorsement, family care, etc: are related to motivation and that the relationship between them is significant as compared to alpha value=0.05. Table III shows the coefficients of all independent variables included in the model. Along with their respective P-values
Table III: Regression Co-efficient
Coefficientsa Unstandardized Coefficients Standardized Coefficients Model B Std. Error Beta 1 (Constant) .517 .039 PRICE .126 .010 .203 QUALITY .128 .011 .187 SAVING .153 .010 .256 AVALIBILITY .091 .010 e.145 FAMILYCARE .139 .010 e.230 CHILDSEDU .111 .010 e.181 CELEBRITY .084 .005 .245 a. Dependent Variable: MOTIVATION

t 13.353 12.547 11.402 15.497 9.452 14.038 11.478 17.567

Sig. .000 .000 .000 .000 .000 .000 .000 .000

All the sub factors in the inventory under the heading of emotional and rational are significant. In the table, un-standardized coefficient shows that the sub-factors are positively affecting the motivation and is showing comparative figures of the motivation and the factors causing motivation in the purchase of life insurance policy. As is clear from the table, each and every factor is significantly related to motivation. Under the standardized coefficients it is evident that: Saving is the one major and most important sub-factor causing motivation in policyholders with a standardize coefficient of 0.256 in order of importance second important variable is celebrity endorsement with a standardize coefficient of 0.245. The third 550

European Journal of Social Sciences Volume 24, Number 4(2011) important variable is price with a standardize coefficient of 0.203. Hence there are three main factors that are responsible in order of preference for creating motivation in consumers, which are saving; price and celebrity. Other sub-factors of the emotional variable create weak motivation to act and purchase but still they hold a positive relation like; children education ( = 0.181), lack of availability/opportunity ( = 0.145). As the table shows positive values and sub factors are significant at value=0.05 it is concluded that the entire list of hypothesis is endorsed.

8. Conclusion
This study was exclusively considering the policyholders of Sate Life Insurance Corporation for the year 2010 to trace out latest trends in consumer motivation in Khyber Pakhtunkhawa (KPK) but the results of the study could be generalized to other similar insurance companies serving in KPK. Furthermore, from the research it can be concluded that motivation of policy holders is affected by two identified factors; rational & emotional. The impact of emotional factor is relatively lower than rational factor as is evident from the results displayed in the tables. Among rational variable that is creating more consumer motivation the most important sub factor is saving aspect of the consumer highlighted by the policy holders. Other important rational sub factors in order of importance are celebrity endorsement, price & quality. Among emotional sub-factors family care is the most important one, followed by childrens education and lack of availability/opportunities. Overall the rational factors are causing more consumer motivation to purchase insurance policy from State Life Insurance Corporation than emotional factors. Hence all insurance companies similar to this one, should concentrate to exploit emotional factors more than rational factors as consumers are motivated more by those packages which highlight saving as an important factor and the second factor is the type of celebrity endorsement through which consumers acquire influence.

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