SALES PROMOTION AND ITS EFFECTS ON ORGANIZATIONAL EFFECTIVENESS IN NIGERIAN MANUFACTURING INDUSTRY

ABSTRACT

This study examines sales promotion and its effects on organizational effectiveness in Nigerian manufacturing industry. The study focuses on how sales promotion is used to generate higher sales, increased profitability and greater market share. The study focused on sales promotional tools and how NESTLE Nigeria Plc has adopted sales promotion to generate its effectiveness.

Sales promotion is an important component of any organization’s overall marketing strategies alongside advertising, public relations, and personal selling. The study is significant because, it will contribute to new knowledge by filling and reducing the gap that exist in the understanding of sales promotion by management and other stakeholders in the manufacturing sector. It will also serve as a source of reference to other researchers in this field. A descriptive survey research design was applied to describe sale promotion activities of the organization. The sample size employed was 205 respondents from NESTLE Food Nigeria Plc. Questionnaires were administered to the sampled respondents to collect primary data used for this study. However, the study made use of survey design and purposive sampling technique in selecting the respondents comprising management and staff of NESTLE Nigeria Plc.

The result of the study indicated that the beverage drink companies increasingly make use of sales promotions. Chi-square independence test was used to test the hypotheses stated. The results show that adoption of sales promotion strategies significantly influence the effectiveness of beverage drink industry. It was concluded that management may engage regularly in more promotional mix strategies, and also tend to be creative to consumers; this in turn would enhance and boost their sales revenue.

 

TABLE OF CONTENTS

        PAGE

Title Page …………………………………………………………………………   i

Certification………………………………………………………………………    ii

Dedication…………………………………………………………………………  iii

Acknowledgement…………………………………………………………………  iv

Abstract……………………………………………………………………………  v

Table of Content…………………………………………………………………… vi

 

CHAPTER ONE

INTRODUCTION

1.1       Introduction …………………………………………………………………….      1

1.2       Background of the Study ……………..……………………………………..           1

1.3      Statement of problem ………………………………………………………..           3

1.4      Objectives of the Study...……………………………………………….……           3

1.5      Research Questions …………………………………………………………..          4

1.6      Statement of Hypotheses ....……………………………………………….….          4

1.7      Significance of the Study …………………………..………………………….        5

1.8      Scope of the Study ……………………………..………………………………        6

1.9        Historical Background of the Study…………………………………………...       6

1.10       Definition of Terms ………..………………………………………………..         7

 CHAPTER TWO

LITERATURE REVIEW

2.1        Introduction……………………………………..…………………………..           10

2.2       Theoretical Framework …..……………………….………………………...           12

2.3       Conceptual Framework of Promotion …………………….………………....          12

2.4       Categories of Sales Promotion…………………….………………………….         15

2.5       Types of Sales Promotion …………………………………………………….         17

2.6       Aims and Objectives of Sales Promotion…………….………………………          19

2.7       Market Segmentation and Promotional Strategy ……………………………...        20

2.8       Concept of Consumer Behaviour ……………………….……….…………...         26

2.9       Tools of Promotion ..............................................................………………....          34

2.10     Relationship between Sales Promotion and Organisational Effectiveness ….          37

 

CHAPTER THREE

RESEARCH METHODOLOGY

3.0       Introduction    …………………………………………………………………        41

3.1       Research Design …………….…………………………………………………….  41

3.2       Data Collection Instrument …………………………………………………..          42

3.3       Population of the Study………………………………………………………..        42

3.4       Procedure for Analysing and Processing Collected Data ……………………          43

3.5       Limitations of the Study …..………………………………………………….         43

 

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.0        Introduction   ………………………………………………………….……….      45

4.2       Data Presentation and Findings of the Study……………………..…………           45

4.3       Testing of the Hypotheses ……………………………..……………………           45

4.4       Discussion of Findings ………………………………..………………………..      48

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.0      Introduction……………………………………………………………………         51

5.1       Summary of Findings……………………………………………………………     51

5.2       Conclusion………………………………………………………………………      52

5.3       Recommendations      ………………………………………………………….       53

5.4       Suggestions for Further Study ………………………..………………………..       55

Bibliography……………………………………………………………………………..     56

Appendix………………………………………………………………………………...     60

 

.  CHAPTER ONE

                                                  INTRODUCTION

1.1         Introduction

Modern marketing calls for more than developing a good product, pricing it attractively and making it accessible. Companies and individuals must also communicate with present and potential stakeholders, and the general public. For most companies and individuals, the question is not whether to communicate but rather what to say, how to say it, to whom and how often. But communication gets harder and harder as more and more companies clamour to grab the consumer’s increasingly divided attention. To reach target markets and build brand equity, holistic marketers are creatively employing multiple form of promotions.

In Nigeria over the years, companies and individual service providers have been trying to improve on the creativity in their promotion so as to meet world standard and again create the necessary awareness that a product needs.

1.2       Background of the Study    

Promotion is a form of communication intended to persuade its viewers, readers or listeners to take some actions. It usually includes the name of a product or service and how that product or service could benefit the consumer, by persuading potential consumers and customers to purchase or to consume that particular brand. Modern promotion developed with the rise of mass production and increased competition in the late 19th and early 20th centuries.

Promotion could also be seen as an element of a marketing communications program. It is usually not the only one, or even the most important one, in terms of building brand equity. The promotion communication mix consists of six major modes of communication.

1.         Advertising:  Any paid form of non personal presentation and promotion of idea, goods or services by an identified sponsor.

2.         Sales promotion:  A variety of short term incentives to encourage trial or purchase of a product or service.

3.         Events and Experiences:  Company sponsored activities and programs designed to create daily or special brand-related interactions.

4.         Public Relation and Publicity:  A variety of programs designed to promote or protect a company’s image or its individual products.

5.         Direct Marketing:  Use of mail, telephone, fax, e-mail or internet to communicate directly with or solicit response or dialogue from specific customers and prospects.

6.         Personal Selling:  Face-to-face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions and procuring orders.

The above listed are the elements of a promotion communication mix. Therefore, the researcher wants to really find out what promotional strategy tools that organisations employ, hence the topic “Promotional Strategy Tools for Company Gods and Services Acceptability”. A case study of Nestle Nigeria Plc was used to find out how the strategies employed help the company achieve its promotional goals.

1.3       Statement of the Problem

The purpose of this research work is to thoroughly evaluate the strategies and tools that companies employ to ensure promotion of their goods and services an possibly, how that will commensurate with increased sales due to the use of the different tools. Inspite of the tight definition of sales promotion as an essential means of creating awareness of the product’s existence and characteristics and also the positive, psychological associations that can enhance the buyer satisfaction which add to the real value of the company's offering, little attention is being given to it by many business organisations in the country and they rarely promote their sales to the fullest.

Many firms pay little attention to sales promotion since they feel they can sell their product with little or no promotional activities. Likewise, despite the effects of sales promotion, there had been insufficient research and decision modeling devoted to it. In addition, there is an established negative perception of many firms as regards the cost of business promotion especially those whose benefits are not early and immediately reached.

Also, adequate records of sales and promotional cost are always neglected and some sales promotion programmes are introduced at the wrong time, which will therefore hinder the level of sales and profitability of the firm and thereby render sales promotions less important in the community and the country as a whole.

1.4       Objectives of the Study

The objectives of this research work are to:

  1. Identify various promotional strategies that will be useful for the management in decision making.
  2. Evaluate the advertising strategy that will increase sales turnover.
  3. Find out whether advertising is impacting positively or negatively to sales.
  4. Find out how the company that is Unilever Nigeria Plc determines its advertising model

1.5       Research Questions

The following research questions have been developed:

RQ1

What are the promotional strategies adopted by the beverage drink industry in Nigeria?

RQ2

What is the influence of sales promotion strategies adopted by the beverage drink industry on organizational effectiveness?

 

1.6       Statement of Hypothesis

Kerlinger F. (1976) defines hypothesis as a conjectural statement of a relationship between two or more variables. Hypotheses are usually gotten from research questions/problems and can be regarded as tentative solutions to research questions. Therefore, the researcher will test the following hypotheses

 

 

Hypothesis I

Null hypothesis (H0):  The beverage drink industry uses sales promotion strategies to achieve their set goals.

Alternative Hypothesis (H1):  The beverage drink industry does not use sales promotion strategies to achieve their set goals.

Hypothesis I1

Null hypothesis (H0):  The adoption of sales promotion strategies significantly influences the effectiveness of the beverage drink industry. 

Alternative Hypothesis (H1):  The adoption of sales promotion strategies does not significantly influence the effectiveness of the beverage drink industry. 

1.7       Significance of the Research Study

This research work has much significance but some of them are:

  1. This research work will improve and expand the knowledge and understanding of the researcher on issues surrounding or pertaining to advertising
  2. It will provide relevant information for management of any organization in making decision related to advertising.
  3. It will help in seeking solution to all problems that arise from poor advertising.
  4. It will educate, especially advert personnel on how adverts are really impacting to company’s goods and services, sales revenues.
  5. It will serve as reference material to any scholar/student who is willing to know or to add to his/her knowledge and insight of what the real impact of advertising is.

1.8       Scope of the Study

It is generally known that promotion covers a wide range area, but for the purpose of this research work, it will be limited to studying the strategies employed by Nestle Nigeria Plc in promoting its goods.

1.8       Historical Background of the Study

Nestle Nigeria Plc began its foray in Nigeria, with the first sale of Nestlé products in Nigeria dating back to the beginning of the 20th century. This was through local importers who placed their orders directly with British trading companies active in the country. Imports were at first sporadic, but became regular from the 1920s when Nestlé decided to formally organize the importation and distribution of products. In 1961, one year after the Nigerian independence, “Nestlé Products (Nigeria) Limited” was officially created. This meant the start of the Nestlé operations in Nigeria as a locally based subsidiary of Nestlé.

Today, Nestlé’s activities in Nigeria amounts to around 59 billion Naira (CHF 457 million) with over 3,300 employees working from 2 factories: Agbara Manufacturing Complex and Flowergate. It has 1 Distribution Centre in Otta, Ogun State and produces a wide range of products:

Infant cereals: Nestlé NUTREND, Nestlé CERELAC (Maize).

All Family Cereal: Nestlé GOLDEN MORN

Beverage drink: Nestlé MILO

Confectionary: Nestlé CHOCOMILO

Bouillon: MAGGI cube, MAGGI Chicken, MAGGI Crayfish, MAGGI MIX’PY

Table Water: Nestlé PURE LIFE

Coffee: NESCAFÉ Classic, NESCAFÉ Creme 3-in-1, NESCAFÉ Breakfast

Full cream milk: Nestlé NIDO

Nestlé Nigeria is part of Nestlé’s Central and Africa Region (CWAR) which is headquartered in Accra (Ghana)

Nestle Nigeria Plc continues to heavily invest in the development and improvement in the nutritional profile of all its products, using science-based solutions, to improve quality of life through food and diet, contributing to the health and wellbeing of consumers, including those with specific nutritional needs and those at the ‘base of the income pyramid’ offering products with accessible portion sizes and higher nutritional value, at lower prices.

Nestle has been creating Shared Value by creating long-term value for shareholders and the society, through Nutrition, Water and Rural Development.

 

1.10                 Definition of Terms

  1. SALES PROMOTION: Sales promotion can be defined as a broad label that applies special kinds of sales accelerating activity not necessarily classed as advertising and direct selling.
  2. BUSINESS: Business can simply be defined as the totality of all economic activities that are undertaken in the process of producing and distributing goods and services for the purpose of making profit.
  3. ORGANIZATION: Robine (1987) said an organization is a consciously coordinated social entity with a relatively identifiable boundary, that functions on a relatively continuous basis to achieve a common goal or set of goals.
  4. MARKETING: This is the task of creating, promoting, and delivery of goods and services to consumers and businesses.
  5. PRODUCT:  Anything that can be offered to a market to satisfy a want or need.
  6. PRICE/PRICING:  This is the amount of money for which goods or services is brought or sold, as selected by the company as final price from its range of prices.
  7. COMMUNICATION:  this is the act of delivering and receiving messages from people. This includes newspaper, magazine, radio, Television e.t.c.
  8. ADVERTISING:  A form of Communication intended to persuade its viewers, readers, or listeners to take some actions on a product or service.
  9. STRATEGY:  These are plans designed to achieve a long term aim and objectives.
  10. SALES TURNOVER:  This is the rate at which goods are sold.
  11. CONSUMER:  Is a person who buys goods or services that is, the final person who uses a product.
  12. SATISFACTION:  It is a feeling of fulfillment that is gotten from the use of a product.
  13. COMPANY:  This is referred to as a firm. That is, commercial business.
  14. MANAGEMENT:  An act of managing (i.e planning, staffing, controlling etc) all resources available to the business for the achievement of goal and objective of a company.

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