CHAPTER ONE INTRODUCTION AND BACKGROUND OF THE STUDY

1.0 Introduction

In recent years, there has been an increase in the use of mobile applications as marketing tools.
According to the Mobile Marketing Association (2008), mobile marketing provides
organisations with an opportunity to connect directly with their customers beyond traditional
marketing. The main purpose of this study is to investigate the uptake and usage of mobile-based
applications as a marketing tool in the Zimbabwean short-term insurance sector. This Chapter
will cover the background of the study, research problem, research objectives, research
assumptions and also note the limitations and delimitation of the study.

1.1 Background

The wave of technology advancement has in general overshadowed all sectors of Zimbabwe’s
economy and the world at large (reference). According to Nyoni (2016) technology is the use of
scientific knowledge for practical purposes or application.

This rapid technological advancement and rise of the internet of things has resulted in the
development of smart phones and applications that have brought about amazing advantages to
the world population. According to Statista (2022), as of January 2022, Morocco had an internet
penetration of approximately 84.1 percent, making it the highest internet penetration in Africa.
Seychelles ranked second, with 79 percent, followed by Egypt with approximately 72 percent.
As of August 2021, in Sudan about 89 percent of web traffic was generated via smartphones and
only 10 percent via PC devices. This was in part due to the fact that mobile connections are
much cheaper and do not require infrastructure that is needed for traditional desktop PCs with
fixed-line internet connections. In an article by Valentine (2021), The Zimstat and
POTRAZ 2020 ICT Access by households and individuals report revealed that mobile data is the
most widely accessible form of connectivity at 95.7% for narrowband with broadband at 93.1%.
This advancement in the tremendous adoption of smartphones and internet usage has seen
marketers diverting their communications to mobile apps neglecting traditional marketing
methods (Smith et al, 2020).
 Digital marketing which is aligned to Mobile Apps can therefore mean promoting and
communicating the buying or selling of products and services using the internet and online based
digital technologies such as computers, mobile phones and other digital devices (Warren et al,
2021). According to Sawicki (2016), a digital marketer is someone who exploits digital
technologies which are used to create channels to\ reach potential recipients, in order to achieve
the enterprise’s goals through more fulfilment of customer needs.

Stevens et al (2021) states that Mobile apps are defined as add-on software for handheld
devices, such as smartphones and personal digital assistants (PDA). Among the most popular are
games, social networking, maps, news, business, weather and travel information. Furthermore,
Lee et al (2021) states that, “Mobile Apps date back to the end of the twentieth century.
Typically, they were small arcade games, ring tone editors, calculators, calendars, and so forth.
The beginning of the new millennium saw a rapid market evolution of mobile content and
applications. Operating systems for smart phones (Windows Mobile, Symbian, RIM, Android,
Mac iOS), are open to the development of third-party software, unlike the conventional
programming environment of standard cell phones.” According to A. Gajic (2022), in the Q1 of
2022, internet users downloaded roughly 28.3 billion apps from Google Play only and around 8.5
billion downloads in the Apple Store. ClearlyGoogle Play platform seems to be a better option
but the Apple App Store has always been stronger in terms of revenue generation.

Duncan et al (2021) clarifies that the major mobile app is a mobile web app which is developed
with web technologies and delivered via a web browser. Morgan et al (2021) reported that, “A
branded app is a mobile application created by a company to promote its brand. Branded apps
typically reflect the brand's identity and feature its values, colours, logo, visual identity and style,
slogan, and more.” Branded Apps are generally owned by the launching company. In an article
by Minn et al (2021) data collected by Global System for Mobile Communications Association
(GSMA) Intelligence reviewed that from Zimbabwe’s 14.98 million people about 5.01 million
people use the internet. The internet penetration rate stood at around 30.6% of the total
population as at January 2022. GSMA Intelligence showed that there were 13.64 million cellular
mobile connections in Zimbabwe and that’s nearly 91% of the population.
NicozDiamond Insurance Pvt Ltd Company, one of the top 5Zimbabwe’s short-term insurance
giants launched its own mobile application in 2018 called NDI Connect. The online app is freely
available on GooglePlay and Appstore so that users can easily download and experience. Other
local short-term insurance companies also invested and launched their branded mobile Apps. Just
to mention a few, Cell Insurance with BuzzApp, CBZ Insurance with CBZ Touch, Champions
Insurance with Champ App, Econet Insurance with Moovah App and Old Mutual with Old
Mutual Insurance App. This drive also extended to broker’s and agencies and these are
intermediaries who sell insurance products on behalf of insurance companies. TelOne recently
launched it’s multi-agencies mobile app called InsurerMe that enables it to sell insurance
products on behalf of about 8 local short-term insurers.

Mobile Apps have brought insurance convenience to a higher level through new interactive
website.The platforms allow users to get insurance on the go by downloading branded mobile
applications from Google Play and App Store. This service offers a more convenient way of
accessing insurance services at all times. Traditionally, insurance has been a sold under brick-
and-mortar channels where clients have to visit the insurer or broker’s office to buy insurance.
With technology becoming more prominent mobile apps has brought insurance to the client’s
fingertips. Pandemics like Covid 19 fueled the need to go digital and slowly move away from
physical interactions. These branded apps are meant to offer a wide variety of services and some
of them include the following:
 Access all their policy details such as dates of coverage, items that are on cover, sums
insured and other policy conditions.
 View their registered claims, claim amount as well as settlement progress.
 Get details of their past claims experience or Loss Ratios.
 Get insurance quotations from the uploaded product catalogues.
 Buy their insurance policies and pay for it online. Some applications provide various
payment options which include Visa, MasterCard, Zimswitch, Ecocash and Telecash
which allow for cashless transactions.

According to Y.Chang (2016), the following are the key drivers of mobile apps:
Innovation in mobile space such as proliferation of smart phones, higher bandwidths offered by
3G (Third generation) and 4G (Fourth generation) technologies powering mobile devices.
Consumer behavior: Customers are more used to mobile devices and is easy for them to access
information on the move.
Personalized content delivery: Enterprise can leverage the location and sensors to offer more
contextualized, relevant and personalized content, offers and advertisements.
Mobile ecosystem: An explosive growth in Mobile Applications stores such as Apple store,
Google Play store, Windows marketplace store was coupled with availability of games, utilities
and other apps.
Social Networking: With the popularity of web 2.0 and social media technologies such as
Facebook, Twitter, Facebook, Instagram users are increasingly using the social media platforms.
However, the researcher believes thatin as much as mobile applications are one of the best digital
marketing tools, implementing them is no easy road. Top shelve drawback is that they are costly
to develop and to administer. In an article by R.Mariana (01 July 2020), a median price to create
m-apps by expert agencies is USD$171,450.00. She added that, there are fees for listing mobile
applications, the initial developments costs, the cost of launching and running the app.

S.Parker, 23 May 2022, cited that most Mobile Apps are online and insureds shun from them
because internet data is costly. This is the case especially in Zimbabwe where one would need at
least USD$2.00 worth of internet data to download, successfully install and access an online
application. Most Apps would first require visiting a company’s website to get a direct link to
their app and possible tips on how to use it. This also consumes data.

Furthermore, it means Mobile Apps can not substitute a website. It also means a company must
have both running simultaneously. That is double the effort and double the money which has a
strong bearing on operational expenses.

S.Parker also reviewed that some customers might actually have troubles finding and using the
application. She said, “sadly, most applications never make their first download. Without
downloads, consumer reviews to bump up ratings and positioning aren’t possible, leading to a
vicious cycle of no downloads, no reviews, no visibility, and again – no downloads.” She added
that Many consumers, all over the world are becoming less inclined to download new
applications. They mostly prefer to conserve their device resources. To support this notion a
Zipwhip 2019 State of Texting Report found that 61% of consumers would not install a new
application to communicate with a business.The report added that typical consumer struggles
with data management and 21% of consumers abandon new applications after a first download.
Plus, a massive 77% of consumers never use an application again 72 hours after installing it.
This poses a question on launched mobile apps.

According to L.Deed, 12 July 2022, there is also need for organizations to budget for extra
marketing pressure. Every launched mobile apps needs to be well marketed and constantly
remind clients of its existence. This has a potential of driving clients towards its usage.

Since technology is never static, mobile apps also need to be updated and maintained. L.Deed
explained that customers would possibly need to update their software or redownload the newer
version. Also new products and services would need to be uploaded.

The aforementioned reviewed that within the generalized smooth mobile app road there might be
potholes, unevenness or bumps that companies need to consider. In this research, we would want
to unpack the uptake, usage and profitability ofMobile Apps within Zimbabwe’s short-term
insurance market.

1.2 PROBLEM STATEMENT

Given the above, how effective is the uptake, usage and profitability of Mobile Apps in
marketing short-term insurance services and/or products within Zimbabwe?

This is not a problem statement. A problem statement must indicate the PROBLEM, the
stakeholders affected by the problem, the suspected cause of the problem, and the goal of
improvement. Use this table below to construct the problem statement (the problem statement
flows from the background of the study).

Original problem or
 Insolvency/Failure of Zimbabwean property insurers
focusing question
Stakeholders who are most  Insurers and insuring public
affected by the problem
Suspected cause of the  Inadequate risk management and poor capitalization of
problem
Goal for improvement and  Improving the solvency of insurance companies, this will
long-term impact
Proposal for addressing the 
problem
Final problem statement
1.3 OBJECTIVES
insurance companies
enable them to pay claims and increase security
Effective use of reinsurance, in particular, setting
appropriate retentions
The Zimbabwean insurance industry is facing a number of
environmental and sector specific challenges which has seen
more than 10 property and casualty insurance companies
collapsing since 2010. Poor capitalisation and inadequate
risk management have been blamed for the failure of these
institutions. The collapse of these companies not only led to
great losses to policyholders but also damaged the reputation
of the insurance industry.
Reinsurance has been hailed as an effective capital and risk
management tool for insurers which can bring stability and
create value for insurers. Through effective use of
reinsurance, the Zimbabwean insurance companies can
reduce their insolvency risk, stabilise loss experience,
protect themselves against unexpected losses, strengthen
their balance sheets and improve their profitability. The
mainstay of every reinsurance programme is the retention. In
the absence of universal formulas and rules of determining
retentions, insurers are putting different emphasis on the
various factors in determining the optimum retentions.
Various retention levels have been reported among
insurance companies in Zimbabwe. Within this context, a
question then arises on the factors that determine the
retention limits.
The main purpose of thisresearch is to evaluate the effectiveness of mobile Apps used by short-
term insurance companies in Zimbabweas a marketing tool versus traditional marketing tools in
promoting insurance products. Traditional marketing tools include the use of intermediaries
(brokers and agents), bancassurance, opening branches and physical client visits just to mention
a few. These methods have been yielding positive results and making companies profitable.

1.3.1 Primary objectives:

To assess the effectiveness of mobile apps in marketing short-term insurance products within
Zimbabwe.
1.3.2.Secondary objectives:
 To evaluate the effectiveness of mobile apps in promoting short-term insurance products.

 To identify factors driving the need to invest in mobile apps within short-term insurance
markets.

 To assess the uptake and usage of branded mobile apps within short-term insurance this
should be your first secondary objective

 To identify challenges associated with mobile apps and disadvantages of shunning

traditional marketing methods

 To recommend the possible solutions to best manage mobile apps.

1.4 RESEARCH QUESTIONS

 How effective are mobile apps in promoting short-term insurance products?

 What are the key drivers of investing and launching mobile apps for short-term insurance
services?

 Can short-term insurance companies completely go digital and move away from
traditional marketing methods and what are the implications?

 What challenges are short-term insurance companies facing in the uptake and usage of
mobile apps?

 What are the possible solutions to best invest and manage mobile apps?
1.5 JUSTIFICATION OF THE STUDY

This findings of the study are expected to help insurance companies and other financial service
providers who want to invest and those who already have mobile Apps. Instead of just following
the wind, this project will outline instruments that needs to be considered before making such
huge investments and how best can an institution enjoy mobile app fruits. Justification of the
study must be based on the findings of the study

1.6 SCOPE OF STUDY

The study will be conducted in Harare, Zimbabwe where the majority of short-term insurance
companies retain their headquarters. The departments to be covered are the underwriting
department, risk management department, marketing and the claims department. All targeted
respondents are the key areas where mobile App functions are useful. The study will specialise
onlyon local short-term insurance companies.

1.7LIMITATIONS
a) Financial constraints may hinder the researcher from accomplishing research objectives as
scope cannot be widened to a larger geographical scale.

b) The research cannot cover extensively all insurance companies within Zimbabwe as this
would require enormous data compilation.

c) Sensitivity of information write this in full.

d) Company bureaucracy may hinder the accessibility of all the relevant information for the
study

1.8ASSUMPTIONS OF STUDY
The following assumptions will be made in this study:
  The respondents will have insight on the subject under study. The respondents/ insurers
will respond truthfully in answering the questions asked such that the findings are
credible, complete and relevant.

 The sample to be used in the study is a representative of the whole insurance market in
Zimbabwe

1.9 DISSERTATION OUTLINE

Chapter 1: Introduction and background to the study

This chapter will provide a background to the area under study and will provide the objectives
and hypotheses upon which the study will be hinged upon. It will also give a justification of the
study under research and the outline of the study.

Chapter 2: Literature Review

This chapter will review relevant literature on the concept of leadership qualities. It will also
look into research that has been done by other scholars in the same field and will provide a
critique of the theory research.

Chapter 3: Research Methodology

This section focuses on the methods and tools that were adopted in the research study. It will
bring out the research strategy, sampling methods, data credibility, and ethical issues for
consideration.

Chapter 4: Data Presentation and Analysis

Data collected is processed and analysed. The results are presented, interpreted, and discussed in
the chapter.

Chapter 5: Summary of Findings, Conclusions and Recommendations

This is the last chapter of the study and will focus on the conclusions of the study the researcher
will bring out recommendations based on the research findings and areas of the future research
study.
1.10 CHAPTER SUMMARY
The study's context has been established by this study, which also highlights the problem
statement, the research objectives, and the research questions. The analysis makes it abundantly
evident that there is value in carrying out this investigation; hence, the study may find a place in
further research.