Effect Of Branding On Profitability In A Manufacturing Company (A Case Study Of Nigeria Bottling Company Ibadan, Oyo State)

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Effect Of Branding On Profitability In A Manufacturing Company (A Case Study Of Nigeria Bottling Company Ibadan, Oyo State)


Abstract


This research was carried out with the objective of determining the impact of branding in enhancing profitability in manufacturing sector. A case study of Nigerian bottling company. Data for the study was collected from both primary and secondary sources. Table was used to present the data and percentage was used to analyze the data.

The result revealed that branding enhances profitability in Nigerian bottling company. The study recommends that management should ensure that good branding strategies should be adopted to enhance profitability and sales volume.


Chapter One


Introduction

1.1 Background to the Study

The success of any business or consumer product depends in part on the target markets ability to distinguish one product from another. Branding is the principal instrument used by marketers and companies to distinguish their products from that of competitors. It is regarded perhaps that, the most distinctive skills of professional marketers is their ability to create, maintain, protect and enhance brands. For centuries, business people have been devising ways to identify their wares and to distinguish them from those of competitors. Pictures were used in the early years because many potential customers were illiterate. Meaningless product names such as Kodak as created in 1988 by George Eastman, however, branding goes beyond just choosing a product name. In effect, a brand can encompass a name, a phrase, a design, a symbol or any combination of these so as to distinguish one product from another. A brand name is that portion of the brand which can be spoken, including letters, words or numbers. A brand mark is that portion of the brand that cannot be expressed verbally, such as a graph design or a symbol. Some of the world‟s most recognize brands are Mercedes-Benz. A brand mark is often referred to as logo, but it must be noted that a logo can also refer to distinctive type or style such as coca- cola‟s elegant script. Many companies offer several brands under one company name. In developing a marketing strategy for individual products, the responsibilities rest on the shoulders of the seller to confront the branding decision. In product strategy, branding is one of the most important issues that must be considered.

This research work intends to identify the effect that brand (name) have on company‟s profit.

It is of great importance that companies create a name that could easily be identified by target market and also helps to distinguish the product in question from those of competing products. Brand is defined by the American Marketing Association as name, term, sign, symbol or combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.

The word brand according to Encyclopedia Britannica originated from the word TO BURN, which later passed into old English as BIERMAN and old French as BRINIER. The words quickly move from literal to metaphorical. The practice of marking or given identification to animals led to brand as a mark of ownership.

Branding begun many centuries before the word acquire its modern usage. The ancient Greek and Romans had various forms of promoting their goods. Messages would be written informing the public that this man who lived over there at this address could make shoes or was a scribe. In the early periods, advertising and marketing in the literal sense was done on personal basis with the name of particular individual as important as that of his products or services. The modern development of this can be seen in the name of a private shopkeeper over his shop. Some of the best name chain store names have originated as that over a single establishment. In the earliest days, shops as distinct from individuals were quick to sell their goods by using pictures. For example, in Rome, a butchers shop would display a sign depicting a row of hams, a shoemaker, one of a boot. Such pictorial promotion was the forerunner of many shops which are still familiar today. A more sophisticated and literate age has led to the use of virtual signs and pun to suggest and suggest the brand name concerned. Since the earliest times, producers have used their brands or marks to distinguish their products. By identifying their products, producers have provided purchasers with the means of recognizing and specifying them should they wish to purchase or recommend them to others.

Branding pre-dates modern marketing and is generally believed to have originated in agricultural practices of middle ages. Farmers who allowed their cattle to graze on open common land needed some means of distinguishing their cattle to graze on open common land needed some means of distinguishing their cattle from those which were owned by other farmers sharing common grazing rights. They therefore “branded” their animals with a branding iron leaving an indelible mark which would clearly identify to whom a particular animal belonged.

The overall branding of a company or product is traceable to its logo, symbol or even design features (e.g. regularly used colours or layouts, such as red and white in the case of Coca-cola) that identify the company or its products/ service. A strong brand projects an image of quality in a business; many people see the brand as a part of a product or service that helps to show its quality and value. Branding, being a part of marketing concept and process has contributed greatly to survival of many business organizations and in marketing environment because they all interrelated with products, finance as well as other business concepts. Therefore, an organization that fully utilizes branding effectively will survive in the competitive business environment.

The choice of a brand is a very critical decision because the name affects customers‟ image and attitude towards products and the firm. Thus, it is a contributing factor in making it a winner or loser in the competitive market. This is to say that organizations should consider a variety of issues when selecting a brand name which is the most difficult task facing marketing management. Branding should therefore, improve the company‟s image, boost sales and profit. It could therefore be said that there is a strong relationship (positive) between the introduction of new brand and increase or return on investment and the significant way it affects profitability of firms. Careful brand management seeks to make a product or service relevant to the target audience brands should be seen as more than the differences between the actual cost of a product and its selling price. They represent the sum of all valuable qualities of a product to the consumer.

A brand which is widely known in the market place acquires brand recognition. When brand recognition builds up to a point where a brand enjoys a critical mass of positive sentiments in the market place, it is said to have achieved brand franchise. Brand recognition is most successful when people can state a brand without being explicitly exposed to the company‟s name but through visual signifiers as mentioned earlier like logos, slogan‟s and colours.
Nigerian Bottling Company Plc is one of the few multinational organizations that had its beginning in Nigeria. From a small family owned operation at inception, it has grown to become the predominant butler of alchohol-free beverages in Nigeria responsible for the manufacture and sale of thirty-three(33) different Coca-cola brands. The company was incorporated in November, 1951 as a subsidiary of the A.G. Leventis group with the franchise to bottle and sell Coca-cola products in Nigeria and currently the company is part of the Coca-cola bottling company operating in 28 countries and serving more than 560 million consumers. Some of the ubiquitous and best known brands of the company includes: coca-cola, fanta, sprite, Schweppes, Eva water, five alive just to mention a few.
However, the importance of money in enhancing organizational activities cannot be overemphasized. This suggests that the level of success to be attained by any organization is largely determined by the amount of liquid cash available for their operations. Modern business organizations were set up with definite goals which must align with their corporate mission of meeting consumer‟s needs and while the organization in return makes profits. Hence, to adequately and effectively meet their aspirations, various marketing concepts, systems and process of product branding must be utilized to reflect the company‟s short and long term goals.

Branding is an effective tool in marketing strategy to promote goods and services for optimum turnover and profitability of industrial and household products. Therefore, branding of goods and services calls for product differentiation in the market which originality is traceable with trademark to their respective producers. Branding also determines the survival of organization products in the competitive business environment.

In any business organization, the choice of a brand is a very critical decision as the name affects customers‟ image and attitude towards the product and the firm. Thus, it is a contributing factor in making it a winner or loser in the competitive market. This suggests that organizations should consider a number of factors when selecting a brand name, which is one of the most difficult tasks in marketing operations. Branding should therefore, improve the company‟s image, boost sales and increase profits. It could therefore result into a strong and healthy relationship between the introduction of new brands and increase on return and investments.

This study primarily focuses on branding and increased profitability and based its premises on manufacturing industries.

This study examined the impact of branding in enhancing profitability in manufacturing industries. This is with a view to highlighting the various branding strategies put in place by organizations to build, sustain and enhance profitability as well as assessing its impact on the firm.


1.2 Statement of Problem

Branding is an important issue in any organization. This is because without a proper branding of a firm‟s products, it‟s difficult for the firm to run its operation smoothly for profit. As consumer become more sophisticated, manufacturers place more emphasis upon promoting their brands directly to consumers (rather than to distributors) spending considerable sums on advertising the high quality of their products thus profitability.

Furthermore branding has been a major issue especially in developing countries. As a result in order to explain the relationship between branding and profitability in developed countries.

However, despite the above importance this issue failed to attract the attention of researchers in Nigeria. Thus, while searching on internet, browsing through the books and journals the researcher didn‟t find directly related research topics carried out in Nigeria.

Manufacturers also believe that they will be less susceptible to demand from distributors for extra discount to stock their brands. For some products (e.g.) perfumes and alcoholic drinks), considerable effort has been devoted to promoting brands to reflect the personality of their likely purchasers.

Marketing research has indeed shown that for these products consumers can be persuaded to buy brands that enhance the image they have of themselves.

Manufacturers believe that if they invest in the quality of their brands they will build up a brand image to which consumers will respond by asking for their foods by their brand names and by being willing to pay a premium for them.

Therefore the researchers believed that the problem is almost untouched and there is a knowledge gap on the area. It is against this background that the research seeks to investigate whether branding adds to the profitability of manufacturing company.


1.3 Objective of the Study

The broad objective of the study is to examine the impact of branding on profitability in manufacturing industry. the study also have the following specific objectives:

  1. To find out the extent to which manufacturers engages in sales promotional activities including branding.
  2. To evaluate the different branding strategies adopted by management of Nigerian bottling company.
  3. To identify the extent that product branding has led to increased in profitability and return on investment in the company.
  4. To find out the extent to which brand name has influence on consumers purchase decisions.

1.4 Research Questions

  1. What is the extent to which manufacturers engages in sales promotional activities including branding?
  2. What are the different branding strategies adopted by management of Nigerian bottling company?
  3. What is the extent that product branding has led to increased in profitability and return on investment in the company?
  4. What is the extent to which brand name has influence on consumers purchase decisions?

1.5 Research Hypothesis

  • H0: Branding has no significant effect on the profitability of Nigerian bottling company.
  • H1: Branding of products has a significant effect on the profitability of Nigerian bottling company.

1.6 Significance of Study

This study by its substantive examination of past literature has contributed to the richness of the past studies. Furthermore, it has reinforced some past knowledge, updated information in studies relating to branding and how it enhances profitability in a manufacturing industry. However, it does not pretend to be a new breakthrough in the frontier of knowledge. This work can be retrieved for use by other researchers and writers particularly in related fields such as the social science and psychology. For these stated reasons, it is hoped that the effort and time expended on this study has been worthwhile.


1.7 Scope of Study

The study limits its scope on the manufacturing sector of Nigeria only and precisely on how branding in a manufacturing sector enhances profitability (case of Nigeria Bottling Company). Here, attempts are made to look at concept of branding, product branding, branding strategy, effects of product branding or their significant contribution on organizational profitability.


1.8 Limitations of Study

A study of this nature cannot be effectively carried out without certain constraints. However, these constraints do not have any prejudice on the result of the findings in the course of the study.

The major limitations of this study include inadequate resources; the unwillingness of some respondents to give all necessary information required. This work is not conclusive on its own; it is still open to further research studies.


1.9 Definitions of Key Terms

Profit:

This is the money made in business or by selling things especially after paying the cost involved. It could also be seen as inflow of assets into the firm as a result of sales of goods and or service by such firm.

Brand:

Brand is defined as the totality of product features such as a name, term, symbol, colour, design, mark or combination of things that distinguish it from other products or a means by which the firm identifies it to consumers.

NBC:

Nigerian bottling company.


1.10 Organization of the Studies

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.


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