EFFECT OF ADVERTISEMENT AND SALES PROMOTION ON CONSUMER BEHAVIOUR IN NIGERIAN BOTTLING COMPANY

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 CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

The role play by advertising in the sales growth of an organization cannot be treated with just a wave of hand. Sales promotion in the form of advertising in promoting product and service awareness among consumers cannot be overstressed. Advertisement provides a platform for firms to create awareness about their products or services and how consumers can make the best out of such products. Olusegun, (2006) opined that all advertisement must be honest and follow ethical standards and must be perceived by the target consumer as not lies; otherwise it can batter the image of a company and hinders it from building successful brands. Thus, for advertising to be effective, it must have an appeal, attract attention, commands interest, inspire conviction and must provoke interest. In the same vein, Okeji (2008) posited that a good advert message should not be boring but rather reflect the lifecycle of the product. He concluded that advertising must be exposed in the right medium as this will enable organization to reach the right people with the right message.

According to one school of thought, advertising increases profits and reduces consumer welfare by creating spurious product differentiation and barriers to entry, while the other school of thought focuses on the informative character of advertising. This makes markets more competitive and reduces profits by informing the customers about prices and quality (Greunes, 2000). The business environment is becoming sophisticated day by day and as such, decision-making is becoming more and more challenging and risky. Business organizations are failing due to poor decisions. Investors are losing their money and are unhappy. They are being discouraged and this is quite unhealthy to the economy. In some other instances, organizations are springing up in great numbers; some are successful in the marketing of their products and services, while others are still akin to the barber’s chair syndrome where all is motion but no movement; struggling to reach their target audience. Consumers are also faced with the challenge of choice making due to indecisiveness, skepticism, indifference and confusion which are among the key sales killers in business world.

As is the trend globally, companies in Nigeria also rely on sales promotion to get their existing and prospective consumers informed about their products and services. Among all the tools of sales promotion in Nigeria, advertising has grown over the years to become the most prominent and easily understandable to firms and the general public (Haruna, 2005). It is therefore not surprising that resources committed to advertisement by firms in Nigeria have grown astronomically over the years. Studies by Akanbi and Adeyeye, (2011) have posited that in Nigeria, advertising is more prominent among manufacturing firms, especially those in the food and beverages sector as awareness regarding their products can reach the consumers more rapidly through this channel. They also argued further that the companies listed under food and beverages sector stand distinct as a model for the use of advertisement to rapidly reach out to consumers.

However, the consumer perception challenge is the first and greatest hurdle that advertisers must cross. Perception guides all activities of the consumer from the people they associates with to the product they buys. In the business world, it has always been what people say about a product or service and not what the marketer says. How a consumer perceives each of the different brands in a category, determines which brand they chooses. So many companies spend so much money on advertising, sales promotion, point of purchase displays and other marketing communications only to discover that many people don’t even remember the product or the promotion. On the other hand, whether consumers ultimately purchase the marketer’s brand also depends on whether the promotion and marketing communication variables facilitate purchasing.

The foregoing has shown clearly that advertising does not take place without the organization incurring some costs to that effect. Hence, many are of the belief that the desirability or otherwise of advertisement by firms in Nigeria could also be established when it is related in the context of sales and the profits that advertising companies realize at the end. Against this backdrop of controversy, it became very pertinent to examine the effect of advertisement and sales promotion on consumer behaviour in Nigerian bottling company.

1.2       Statement of the Problem

It is an established fact that advertising plays a very significant role in creating product or service awareness in the market place. Advertisement is one easy way to educate existing and prospective consumers about a product or service. Although it is common for people to relate the performance of a company with the priority it gives to advertising, people tend to forget that advertising budgets are a huge source of costs for the organization. In fact, the amount of resources committed by firms to advertising has steadily grown over the years because of the increased awareness and sophistication of consumers (Kotler, 2009).

Companies in Nigeria, particularly those in the manufacturing sector consider advertising as an inevitable tool for survival in highly competitive market. Empirical evidence has proven that most products in Nigeria have close substitutes that are either locally produced or imported. This implies that companies would have to rely heavily on advertising to create a brand and distinguish it from other products in the minds of consumers. Thus, advertising in Nigeria has become the gateway to survival and the acquisition of market share.

However, the need for survival, the desire to control larger market share and the dream of creating brand loyalty in the minds of consumers have made successful manufacturing companies in Nigeria, like the food and beverages firms, to pay much attention to advertising programmes without recourse to the extent to which advertising has been able to commensurately improve their performance.

Firms which were unknown before and had hardly any imprint or impact on global market place, now create enormous demand for their products and services through media and information technology. Questions arise whether advertising adds value to firms. The study therefore seeks to examine the effect of advertisement and sales promotion on consumer behaviour in Nigerian bottling company.

1.3       Objectives of the Study

The main objective of the study is to examine the effect of advertisement and sales promotion on consumer behaviour in Nigerian Bottling Company. The specific objectives of the study are to:

1. Measure the extent to which advertising and sales promotion influences consumer behaviour in Nigerian Bottling Company.
2. Determine the role of advertisement in marketing of product of Nigerian Bottling Company.

• Determine if advertisement increases consumer’s preference of any product of Nigerian Bottling Company.

1. Examines the extent to which sales promotion employed by Nigerian Bottling Company could enhance their profitability.

1.4       Research Questions

For this research work, the following questions were used to guide the study:

1. To what extent does advertising and sales promotion influences consumer behaviour in Nigerian Bottling Company?
2. What is the role of advertisement in marketing of product of Nigerian bottling company?

• Does advertisement increases consumer’s preference of any product of Nigerian Bottling Company?

1. To what extent does sales promotion employed by Nigerian Bottling Company could enhance their profitability?

1.5       Research Hypotheses

The following null hypotheses will be used in this study:

H₀:      Advertising and sales promotion will not significantly influence consumer behaviour in Nigerian Bottling Company.

H₀:      Advertising will not significantly influence consumer’s preference of any product of Nigerian Bottling Company.

H₀:      Sales promotion employed by Nigerian Bottling Company will not significantly influence profitability of the company.

1.6       Significance of the Study

The study expects to yield a number of desirable benefits, the most essential of which is contribution to existing knowledge. Specifically, the findings of the study will provide direction as to the effect of advertising costs or expenditures on the sales revenue and profit of manufacturing companies, especially those in the food and beverages sector.

Thus, the study is expected to contribute to the not-so-well-developed body of knowledge regarding the association between advertising expenditures and the sales and profitability of manufacturing companies in Nigeria by empirically ascertaining the effect of such costs on the sales revenue and net profit of the Nigerian Bottling Company Plc.

Similarly, the study also hopes to expand the frontiers of knowledge in the area of conducting its analysis through the use of techniques that have been hitherto overlooked by previous researchers on the effect of advertising on the sales of companies in Nigeria.

Finally, the study is also expected to be of immense utility to shareholders whose primary goal is to maximize their wealth. The findings of the study will help shareholders in their bid to monitor managers and ensure that only costs that will ensure the maximization of shareholders’ wealth are incurred by managers on behalf of shareholders.

1.7       Scope of the Study

This study is concerned with the effect of advertisement and sales promotion on consumer behaviour in Nigerian bottling company. The study will be restricted to some selected staff in Nigerian Bottling Company Plc. in Lagos State.

1.8       Limitations of the Study

The researcher’s efforts to obtain intensive and conclusive information necessary for a comprehensive work on this study were restrained by the following;

1. Attitude of Respondents: Most of the responsible officials of Nigerian Bottling Company Plc might be reluctant to divulge some vital information which they claimed might be used in favour of their competitors.
2. Cost: Efforts to obtain expensive but very relevant materials might not be met due to lack of sufficient fund. This factor also will restrict the researcher’s study in only Lagos State.

• Time: It will also very difficult for the researcher to combine this work with his official duties in the place of work. Sometimes, the few hours’ permission that will be giving from his superior officer in the office might not enough to carry out a comprehensive study for this topic.

 1.9       Operational Definition of Terms

Advertising: It is a method used to attract the attention of the consumers or audience to a product. It is a means of persuading them to buy your view, opinion, ideas and products which are usually done by a sponsor either an individual, firm or government.

Consumer: Is the final destination of all products, produced, before a product is said to be successfully distributed, it must reach the consumers.

Nigerian Bottling Company Plc: Is a company deals with the production of beverages and nonalcoholic drinks in Nigeria and owned by Nigerians.

Products: Are the finished goods of a raw material done by a well defined company for consumption by the consumers.

Sales promotion: Is one level or type of marketing aimed either at the consumer or at the distribution channel (in the form of sales-incentives). It is used to introduce new product, clear out inventories, attract traffic, and to lift sales temporarily.

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