The Effect Of Advertising On Sales Volume Of An Organization

Project and Seminar Material for Marketing

The Effect Of Advertising On Sales Volume Of An Organization


Abstract


This study examined the effect of advertising on sales volume of an organization with emphasis on Nigerian Bottling Company. The main objective of the study was to establish the extent to which advertising affects the sales volume and the profitability of the company. The study was cantered at the Nigerian bottling company industry in Lagos because it is the headquarter of the industry where marketing plan is carried out, and it has large sales volume. The data and information collected scientifically tested and analyzed in the course of the research. The following conclusions can be deduced from the study: (1) there is a significant relationship between marketing expenses and profitability of a firm. (2) There are significant relationships between turnover and marketing expenses of the firm. (3) There is also a relationship between advertising and profitability. The results of this study will help firms to adopt good advertising strategies and appealing brand designs to help get more consumers for their products and services in a growing economy like that of Nigeria and how successful advertising can keep businesses going even in the midst of tough competition.


Chapter One


1.0 Introduction

1.1 Background of Study

Advertising is any paid form of non-personal communication about an organization or it’s product to a target audience through a mass/broadcast medium by an identified sponsor. It should be observed that for any promotional activity to be called advertisement it must be paid for. In the real sense, it is the method used by companies for creating awareness of their products, as well as making new products known to the new and potential consumers. This thesis however, centers on the impact of advertising on the sales volume of a product. This work will shed light on how advertising can really affect a consumer’s buying decisions in a growing economy like that of Nigeria and how successful advertising can keep businesses going even in the midst a tough competition. More so, advertising as a promotional tool also tends to remind, reassure and influence the decisions of the consumers because an advertisement itself enlightens, educates and persuades consumers on their acceptability of the product offering. Advertisement in such a media as print (newspaper, magazines, billboards, flyers) or broadcast (radio, television) typically consist of pictures, headlines, information about the product and occasionally a response coupon. Broadcast advertisement on the other hand consists of an audio or video narrative that can range from 15seconds spots to longer segments known as infomercials which generally last 30 to 60 minutes. Advertisements can also be seen on the seats of grocery carts, on the wall of airport walkways, on the sides of buses, airplane and train. Advertisements are usually placed anywhere an audience can easily and/or frequently a access visual and/or video. Advertiser’s primary mission is to reach prospective customers and influence their awareness, attitudes and buying behaviour. They spend a lot of money to keep individuals (markets) interested in their products. To succeed, they need to understand what makes potential customers behave the way they do. The advertisers goals is to get enough relevant market data to develop accurate profiles of buyers-to-find the common group (and symbols) for communications this involves the study of consumers behaviour: the mental and emotional processes and the physical activities of people who purchase and use goods and services to satisfy particular needs and wants. Advertising is any paid form of non personal presentation and promotion of ideas, goods, or services by an identified sponsor (Kotler and Armstrong, 2010). There are various forms of advertising like informative advertising, persuasive advertising, comparison advertising, and reminder advertising. Informative advertising is used to inform consumers about a new product, service or future or build primary demand. It describes available products and services, corrects false impressions and builds the image of the company, (Kotler, 2010). Advertising can be done through print media which includes news papers, magazines, brochures, Audio media for example radio and visual media which includes billboards and television (Kotler and Armstrong 2010). Sales performance describes the trend of collections in terms of revenue when comparing different periods (MC Cathy, 1994). The sales may be in form of offering products or services to consumers. A service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything (Kotler and Armstrong, 2010). Sales volume is the core interest of every organization and is based on sales and profit .When volume goes up profits rises and management in organizations is made easier.


1.2 Statement of the Problem

The Nigerian Bottling Company carries out frequent advertising of their products to increase their sales volume, through taking part in charitable funds in Nigeria and even sponsoring sports. It advertises using radio, television and newspapers. Despite its efforts in advertising regularly the sales of Nigerian Bottling Company industry have not improved to the desired targets. It is on this note that the researcher intends to investigate the effect of advertising on sales volume of an organization


1.3 Purpose of the Study

The purpose of the study was to establish the impacts of advertising on sales volume of an organization.


1.4 Objective of the Study

The main objective of this study was the effect of advertising on sales volume of an organization, but for the successful completion of the study, the following sub-objectives were formulated:

  1. To examine the effect of advertising on sales volume
  2. To investigate the relationship between advertising and sales
  3. To investigate the role of advertising in attaining profitability
  4. To investigate the cost of advertising to the organization

1.5 Research Question

For the successful completion of the study, the following research questions were formulated:

  1. Does advertising has any effect on the organizations sales volume?
  2. Is there any relationship between advertising and sales volume?
  3. What are the role of advertising in attaining profitability?
  4. What are the cost of advertising to the organization?

1.6 Scope of the Study

The study covered advertising as the independent variable and sales performance as the dependant variable

Geographical scope:

The study was cantered at the Nigerian Bottling Company industry in Lagos because it is the headquarter of the industry where marketing plan is carried out, and it has large sales volume.

Time scope:

The study looked at five financial years back that is 2006 to 2010.


1.7 Significance of the Study

The study will help firms understand the importance of advertising, it will also enable them to structure their adverts and brands to make them more appealing in order to improve sales and lead to better performance. As this study gives a clear insight into how advertisement can influence consumer behaviour, many firms will be encouraged into using adverts to market their products. When firms start making more sales and profits as a result of advertising, the economy Nigeria will be boosted as more income from tax will be accrued to the government of Nigeria. The findings and recommendations of this study will go a long way in helping firms to adopt good advertising strategies and appealing brand designs to help get more consumers for their products and services.


1.8 Plan of Study

  1. Chapter one of this study includes the general introduction, background information about the study, statement of the problem, objectives of the study, research questions, scope of the study, significance of the study, and the limitation of the study.
  2. Chapter two reviews all relevant literatures relating to the study as well as the researcher’s views concerning previous studies on the challenges of income taxation.
  3. Chapter three includes the methodology applied in collecting and analysing data, population definition, study site and limitations.
  4. Chapter four presents the results of the study as well as data analysed, and the interpretation of the analysed data.
  5. Chapter five includes a summary of the study, conclusion and recommendations based on the findings from the study.

1.9 Study Limitation

The only limitation faced by the researcher in the course of carrying out this study was the delay in getting data from the various respondents. Most respondents were reluctant in filling questionnaires administered to them due to their busy schedules and nature of their work. The researcher found it difficult to collect responses from the various respondents, and this almost hampered the success of this study.


1.10 Definition of Terms

Advertising

This is any paid form of non-personal presentation of idea, goods or services by an identified sponsor.

Advertising Agencies

These are usually independent business organizations comprised of creative and business personnel, who develop, prepare and place adverts for organizations so as to attract and influence consumers behaviour towards a product or service.

Consumer

This is the person(s) to which the advertisement and products/services are directed. Here they are also known as buyers of a company’s product.

Outdoor media

These cover the use of billboards, sign posts, posters, handbills, etc. in communicating the advertising message to the consumers.

Electronic media

These include radio, television, the internet, etc and can be either local or international.

Market

This is usually the strategic location or place where the company’s consumer/buyers are situated or where they go to buy the products/services of their choice, the market place offers different products/services to different consumers.

Producer

This is the organization or firm that provides a product or that delivers services for consumer consumption.

Sales volume

This is used to measure the amount, usually in cartoons/crates etc. of the product being sold at a given point in time, this is commonly used as well with products but it could be as used within a service company.

Transit advertisement

A relatively minor volume of the advertisement placed in or on public buses, taxis, cars and other commercial vehicles.

Product

This can represent anything a consumer acquires or might acquire to meet a perceived need. The need not necessarily need to be satisfactory. Some product might not satisfy their needs.

Sales

This is a process of selling something such as a product, ideas or services. It also covers the number of goods or services sold at a given point in time.


1.11 Organizational Profile

The Nigerian Bottling Company Ltd is one of the biggest companies in the non-alcoholic beverage industry in the country and is the sole franchise bottler of The Coca-Cola Company in Nigeria.

The Nigerian Bottling Company serves approximately 160 million people by producing and distributing a unique portfolio of quality brands, bringing passion to marketplace implementation, and demonstrating leadership in corporate social responsibility.

Nigerian Bottling Company Ltd started operations in Nigeria in 1951. Based in the city of Lagos, it operates 13 bottling plants across the country. In addition, we channel products through 59 warehouses and distribution centres. The company employ about 4,800 people and indirectly support the jobs of up to more than a million more in our value chain.

Nigerian Bottling Company aims to be customers’ most preferred supplier, and conduct programmes to support more than 450,000 customers who sell their products to consumers.

The company is part of the Coca-Cola Hellenic Group , one of the largest bottlers of The Coca-Cola Company’s products in the world, and the biggest in Europe. Coca-Cola Hellenic operations span 28 countries , serving more than 570 million people. The company is headquartered in Athens and listed on the Athens, New York, and London stock exchanges.

Products

NBC produce, sell and distribute a wide range of beverages, most of which are trademark products of The Coca-Cola Company. Our product portfolio consists of leading brands Coca-Cola, Coca-Cola light, Fanta and Sprite local brands such as Schweppes, Five Alive, Limca and Eva.

The Nigerian Bottling Company continuously review opportunities to expand its product portfolio in order to offer consumers in Nigeria an increasing range of choices. Every measure is taken to ensure that its products are of the highest quality.


Chapter Five


Summary Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study the effect of advertising on sales volume of an organization

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the effect of advertising on sales volume


5.2 Summary

Advertising is a persuasive communication which attempted to change or reinforce one’s prior attitude and it is basically done not only to inform customers about products, rather it is a process which further influences and persuades customers to purchase. This study sought to establish the extent to which advertising affect the sales volume and the profitability of Nigeria bottling company. From the literature and data analyzed it is apparent that there exist a very strong relationship between advertising and sales volume of the company, even though advertising comes with a cost.


5.3 Conclusion

The study examined the effect of advertising on sales volume of an organization with emphasis on Nigeria Bottling Company From the data and information collected scientifically tested and analyzed in the course of the research the following conclusions can be deduced from the study that there is a significant relationship between marketing expenses and profitability of the firm. There is a significant relationship between turnover and marketing expenses of the firm. Also, there is a significant relationship between advertising and profitability of the firm.


5.4 Recommendation

Based on the valid conclusions reached the following recommendations if implemented faithfully would assist in meeting the objectives set for the research. It will improve the advertising in Nigeria, such that; The advertising and personnel department should maintain an effective medium of advertising in consideration of cost and quality.

There should proper advertising mechanism that will foster the reputation of the company as well as the products. Organizations should use the best medium of advertising that will create easy awareness of usage of products. Organization should ensure that ways of determining the profit generated via effective advertising.


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