Full Project – IMPACT OF SALES PROMOTIONAL ACTIVITIES ON THE CONSUMPTION OF SOFT DRINK IN PORT HARCOURT

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CHAPTER ONE

INTRODUCTION

1.1         BACKGROUND OF THE STUDY

Sales promotion is an indirect form of marketing promotion intended to stimulate quick action. It is those promotional activities other than personal selling, advertising and publicity that stimulate consumer purchasing and dealers effectiveness such as displays, shows and exhibitions, demonstration, coupons, contests, samples, premiums, trade allowance, point of purchasing displays, price cent-off pack and dealer allowance and other known routine selling efforts that are usually of short term activities.

According to Ebue (2000: 240) “sales promotion is that something extra that can arouse interest, creating a buying desire, sparks an immediate reaction from customers, middlemen or company sales force.

Sales promotion incentives are usually of short duration and the aim  is to move sales of a particular product or brand above the existing level. Sales would increase if more customers are attracted to the shop, if non-brand users are attracted and if brand users are encouraged to buy more.

According to Nnolim (1979: 142) sales promotions is intended to aid both consumers pull and dealer push. They thus categorized sales promotions techniques in term of their consumer and dealer focus.

Consumer-pull promotion techniques are much activities like sampling, price incentives, refund or rebate, contest, premium like free in-mail pack of non-pack, self liquidators while trade push promotions techniques are such activities like merchandise allowance, money bonuses and gift, management assistance like training, inventory control displays and financial assistance.

According to Kotler (2003: 453-54) sales promotion, a key ingredient in marketing campaigns consists of a diverse collection of incentive tools, mostly short term design to stimulate quicker or greater purchase of particular products or services by consumers on the trade. Based on the sales promotion impact, the researcher used product life cycled theory.

Sales promotion holds a middle ground between advertising and personal selling. It is usually not directed as advertising but it is direct at much large groups than a typical personal selling effort.

Before the sixties, sales promotions had not become popular, but in recent years they had grown so rapidly between 1967 and 1976, and much more in the late eighties, nineties and beyond. Their rapid increase therefore and especially now that world economics like Nigeria are in down turns, have promoted or called the attention of the researcher to research and find out its “impact on soft drinks in Nigeria,” with particular emphasis on the Nigeria Bottling Company Plc and product such as coke, spirit and fanta soft drinks and malta.

Coca cola was found in 1886, and headquarters located in Atlanta Georgia in United State of America. In the year 1953, Nigeria Bottling Company started its operation in Nigeria by holding franchise for coca cola international which means that the formulation of the concentrate and recipe of the product have not been released to the Nigeria Bottling Company but the formula and syrup of the mixture is given to them to help them bottle the product in Nigeria.

However, coca cola is one of the world largest bottlers of coca cola product. They operate in 28 countries, 16 of which are members of European Union and serve a population of over millions consumers. Coca cola engages in the manufacturing, distribution and marketing of non-alcoholic beverage concentrate and syrups world wide, the company market its non-alcoholic beverage under various brand names includes coke, diet coke, fanta, sprite and also  sell its finished beverage products primarily to distributors, company sell its beverage concentrate and syrups to bottling and canning operations. Distributors fountain wholesalers and fountain retailers.

The company is departmentalized as follows: marketing plant production, administration, catering clinics, workshop, stores and security department. Under administrative department, we have accounts section and personnel the production or plant department, which is divided in two sections; the carbon-dioxide section and product section. The carbon dioxide section undertakes only in production of the carbondioxides, for the production of drinks. Product section undertakes the mixing of syrup to bring the final products. A manager who is subordinate to the plant manager heads each department.

In a journal interview, with the company Chairman Adedeji (1975) that Nigeria Bottling Plc is the largest producer of soft drinks in the country. According to one estimate by this company makes about 60% of such drinks consumed in Nigeria. as not to put all their heads in one basket according to Adedeji (1985) Nigeria Bottling Company has branched out to non-soft drinks branches mostly agriculture. He also reported that the company now has 60% of the “Agricultural Seeds Limited” based in Zaria and 40% of those of “Kupa farms limited based in Kwara State”.

It decided during the last trading periods in (1985) to increase its shares in Delta Glass Company and acquire a controlling interest of 51%.

The Nigeria Bottling Company turnover has been growing from 14.3 Billion, 14.9 Billion, and 15.9 Billion as at 2004, 2005, and 2006 respectively. And the corresponding expenditure on sales promotion has grown also increased in 2004 to 2006 from 48 million in 2004 to 65 million in 2006. It is suspected that this increase in turnover might have come about partly as a result of high promotion activities.

1.2         STATEMENT OF PROBLEM

In the course of this study, it is observed that companies (especially consumer goods producing/marketing companies – coca cola inclusive spend a lot of time, energy and money in designing and running promotion. But it seems that the impact to the company’s sales volume and profit are not still commensurate to the money spent.

So considering the enormous cost, it became necessary to evaluate this action to determine the cost effectiveness. Spending so much on sales promotion, the company may not really be getting the anticipated sales volume and profit margin.

1.3         PURPOSE OF THE STUDY 

As sales promotions activities of soft drinks in Nigeria have expended rapidly in recent times, the researcher aims at carrying out a study on the Nigeria Bottling Company Plc with a view of finding out what impact sales promotion activities have on their sales volume and consequently the profit before promotions. During promotions and after promotions. The following are objectives of this study:

1.    To find out the effect of sales promotions on sales volume and profit of industrial, with emphasis on the Nigeria Bottling Company Plc.

2.    To find out the effect of sales promotions on demand of the consumers

3.    The acceptability of sales promotion as a marketing strategy by the consumer.

1.4         SIGNIFICANCE OF THE STUDY

The result of this study will be of importance to;

a)    The managers

b)    Academics

c)    Business

The managers:  It will help the managers in decision making

Academics: Also helps to bring positive statistical data to academics thereby contributing to the existing boy of knowledge.

Business: It will help the business in evaluating the rightful balance of expenditure vis-à-vis market share growth.

1.5         RESEARCH QUESTIONS/HYPOTHESIS FORMULATION

The research stud seeks to provide answers to the following:

1.    What are the effects of sales promotion on the sales volume and profit of companies?

2.    What are the effects of sales promotion on consumer demand?

3.    Is sales promotion an effective means of product promotion?

4.    Does sales promotion bring any increase when  there is a set back on business?

It is in consideration of the problems stated above and the objectives of the study enumerated that the researcher put forward the following:

Hypothesis 1

Ho:      Sales promotion does not have positive effect on the sales volume and profit of industries.

Ho:      Sales promotion has a positive effect on the sales volume and profit of industries.

1.6       THEORETICAL FOUNDATION OF THE STUDY 

The theories upon which this research work is founded existed to reason the concrete facts and data put forward in critical examination of the issue in discourse. The established theory of sales promotion as an indirect form of marketing promotion which intends to stimulate quick action is subjected to scholarly reasoning of vital authors like Ebue (2000:240).

In his book titled “marketing communication”. Narrated the subject matter to be something extra which can arouse  interest to create a purchasing desire as regards consumer’s behaviour. This postulation stand factual over time as it set the basis for new  entrants, already existing over ones and scholars to this establishment reasoning.

Furthermore, the work of “Nnolim (1979: 144) in principles and practice of marketing 11 also address the subject matter as being intended to help both consumers pull and dealer focus. This foundational idea that is dependable for its logical position smoothens the path way for all shade of opinion on this topic, to base their considerations to the relevance  of this theory.

Summarily, to adapt by accurate data and historical balancing, the theories of these academicians had done a great deal of exposure in sharing area of the topic. Therefore, the theory upon which this study is based agrees with their postulation that relationship above between sales promotion and sales volume/profit of an industry.

1.7       SCOPE OF THE STUDY

This research work is limited only to Port Harcourt metropolis which constituted Port Harcourt local government of Rivers State and Obio-Akpo Local Government. It is a survey study limited only to consumers, wholesalers (SSD & HVS0, conventional outlets, managers, staff and the case study Nigeria Bottling Company Plc in Port Harcourt.

1.9       DEFINITION OF TERMS

1.         Sales promotion:      This is an indirect form of marketing project

intended to stimulate quick action.

2.         Consumer promotion:         These type of promotion are targeted at the

ultimate user’s of the product.

3.         Trade promotion:      These are buying allowance introduced to

stimulate middlemen to increase sales effort.

4.         Sales force promotion:        These sales force promotion activities are

intended to motivate sales people to increase over all sales.

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Full Project – IMPACT OF SALES PROMOTIONAL ACTIVITIES ON THE CONSUMPTION OF SOFT DRINK IN PORT HARCOURT