Effect Of Product Differentiation On Sales Of Soft Drink (A Study Of Bottling Company, Lagos State)

Project and Seminar Material for Marketing

Effect Of Product Differentiation On Sales Of Soft Drink (A Study Of Bottling Company, Lagos State)


Abstract


This study was carried out to examine the effect of product differentiation on sales of soft drink using Nigerian Bottling Co Plc, Lagos State as a case study. The study was carried out to determine whether product package differentiation strategy has a positive and significant effect on customer acceptability of soft drinks; determine whether product channel differentiation strategy has a positive and significant effect on product availability for adequate patronage; and determine whether product differentiation strategy has a positive and significant effect on sales performance of soft drinks. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of marketing staff of Nigerian Bottling Co Plc, Lagos State. In determining the sample size, the researcher conveniently selected 41 respondents and 35 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables. While the hypotheses were tested using Pearson correlation statistical tool, SPSS v23. The result of the findings reveals that product package differentiation strategy has a positive and significant effect on customer acceptability of soft drinks. Furthermore, the study also revealed that product differentiation strategy has a positive and significant effect on sales performance of soft drinks. Therefore, it is recommended that the company should enhance its packaging to for uniqueness and work closely with its agents to ensure that customers/consumers are getting its products from only authorized agents. To mention but a few.


Table of Content


  • Title Page
  • Certification
  • Dedication
  • Acknowledgement
  • Table of Content
  • List of Tables
  • Abstract

Chapter One:

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of the Study
  • 1.8 Limitation of the Study
  • 1.9 Definition of Terms
  • 1.10 Organisations of the Study

Chapter Two:

Review of Literature

  • 2.1 Conceptual Framework
  • 2.2 Theoretical Framework
  • 2.3 Empirical Review

Chapter Three:

Research Methodology

  • 3.1 Research Design
  • 3.2 Population of the Study
  • 3.3 Sample Size Determination
  • 3.4 Sample Size Selection Technique and Procedure
  • 3.5 Research Instrument and Administration
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis
  • 3.8 Validity of the Study
  • 3.9 Reliability of the Study
  • 3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

  • 4.1 Data Presentation
  • 4.2 Analysis of Data
  • 4.3 Answering Research Questions
  • 4.4 Test of Hypotheses

Chapter Five:

Summary, Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References
  • APPENDIX
  • QUESTIONNAIRE

Chapter One


Introduction

1.1 Background of the Study

The global business environment over the last two decades has been characterised by innovative changes associated with strategic management practices, creating new opportunities (Aremu, Aremu & Olodo, 2015) and enhancing competitive capabilities to influence performance and growth of various business concerns, amid increasing industry and market competitiveness (Mamman, Aminu & Adah, 2013). For firms operating within the processing and manufacturing industry such as the beverage industry, acquiring competitive advantage across core organisational functional areas is considered the current focus of firms with performance driven strategies (Mohammed & Nzelibe, 2014). In the beverage industry across the globe, the success of a firm’s differentiation strategies are indicators of viable innovations (Kamau, 2013), which very often leads to inflow of new entrants into the industry and increases imitations (Lynch, 2013). This affirms the assertion that regular introduction of innovative products by manufacturing firms results in the opening of different market niches (Mosey, 2009), essential for the continued existence of these firms. However, this is reliant on the capacity of the firm’s differentiation strategy to successfully maintain a balance between the product’s premium and its perceived unique (Slater & Olson, 2011), which is a basis to achieve competitiveness (Acquaah & Ardekani, 2006).

In the contemporary competitive market, firms that build distinctive and inimitable products develop competitive advantage which positions such firms for enhanced sales performance than competing rivals (Raduan, et al., 2009). This indicates that a firm’s strategy to optimizes sales performance can be achieved through differentiation of product(s) or services from similar ones offered by competitors, or by ensuring cost efficient manufacturing (Spencer & Salmon, 2009).

Differentiation strategies adopted by firms’ are often focused on offering customers unique products and value different from that of competitors so as to boast sales volume(Okeke & Ugwuegbu, 2018). The dominant perception behind a differentiation strategy is customers’ preparedness to pay more for the perceived value offered in the product that differentiates it from that of competitors (Dirisu, Iyiola & Ibidunni, 2013). However, regardless of the differentiation strategy adopted by firms, the strategy should be based on customers’ needs and the competitor’s core competence (Hitt, Ireland & Hoskisson, 2012). Differentiation is a strategy which seeks to provide products or services with inimitable or better benefits widely valued by buyers than that of a firm’s competitors’ and central to a firm gaining competitive advantage (Johnson, Scholes & Whittington, 2008). In adopting a differentiation strategy, firms are faced with product, price, channel, variety and package (image) differentiation strategies (Kotler & Keller, 2014). In view of above, this study seek to examine the effect of product differentiation on sales of soft drink.


1.2 Statement of the Problem

Business firms worldwide have attempted to imitate products of their competitors or make slight changes to their products to convince or confound their customers. This may bear fruits in a short run but the long term effects may not realize the intended objective. Product differentiation in business is not given by nature, but a firm’s choice for the purpose of enhancing its sales performance. Most firms have had their market share dwindle or fail to grow because of challenges in product differentiation and lack of strategies to enhance product differentiation so as to boost sales performance, and this is the case among soft drink producing companies in Nigeria. However, it is not clear whether adopted differentiation strategies have any effect on the sales performance in terms of annual sales revenue. No research has been carried out to determine the effect of these product differentiation on the sales performance of soft drink producing companies, and thus a gap of knowledge. This therefore justifies the need for further research in this area. Thus, this study seek to examine the effect of product differentiation on sales of soft drink.


1.3 Objectives of the Study

The overall aim of this study is to examine the effect of product differentiation on sales of soft drink. Hence, the study will be channeled to the following specific objectives;

  1. Determine whether product package differentiation strategy has a positive and significant effect on customer acceptability of soft drinks.
  2. Determine whether product channel differentiation strategy has a positive and significant effect on product availability for adequate patronage.
  3. Determine whether product differentiation strategy has a positive and significant effect on sales performance of soft drinks.

1.4 Research Questions

  1. Does product package differentiation strategy have a positive and significant effect on customer acceptability of soft drinks?
  2. Does product channel differentiation strategy have a positive and significant effect on product availability for adequate patronage?
  3. Does product differentiation strategy have a positive and significant effect on sales performance of soft drinks?

1.5 Research Hypothesis

  • Ho: There is no significant positive relationship between product differentiation and the sales of soft drinks
  • Ha: There is a significant positive relationship between product differentiation and the sales of soft drinks

1.6 Significance of the Study

Because of the complex nature of some firms, this study gives a comprehensive approach of firms employing Product differentiation usage in beverage manufacturing firms in Lagos State. A thorough understanding and knowledge of the factors that have impact on Product differentiation are very useful in guiding eateries owners and managers to design and deliver the right offering and strategies. The study findings also provide the owners of the Organizations with an opportunity to further understand available Product differentiation that can be employed to boost sales performance.

This research project will therefore be of immense advantage or benefit to the management of companies, and other business organization using product differentiation.


1.7 Scope of the Study

The scope of this study boarders on the effect of product differentiation on sales of soft drink. Geographically, this study will be carried out in Nigerian Bottling Co Plc, Lagos State.


1.8 Limitation of the Study

Like in every human endeavour, the researcher encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.

Moreover, the case study method utilized in the study posed some challenges to the investigator including the possibility of biases and poor judgment of issues. However, the investigator relied on respect for the general principles of procedures, justice, fairness, objectivity in observation and recording, and weighing of evidence to overcome the challenges.


1.9 Definition of Terms

Product Differentiation:

A marketing process that showcases the differences between products. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products

Sales Performance:

Sales performance is usually for a certain period of time the employee has worked.

Product Quality:

The group of features and characteristics of a saleable good which determine its desirability and which can be controlled by a manufacturer to meet certain basic requirements.

Product Design:

Product design as a verb is the process of creating a new product to be sold by a business to its customers. A very broad concept, it is essentially the efficient and effective generation and development of ideas through a process that leads to new products.

Market Share:

The percentage of an industry or market’s total sales that is earned by a par.


1.10 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows.

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five


Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on the effect of product differentiation on sales of soft drink using Nigerian Bottling Co Plc, Lagos State as a case study. The chapter consists of summary of the study, conclusions, and recommendations.


5.2 Summary of the Study

In this study, our focus was to examine the effect of product differentiation on sales of soft drink using Nigerian Bottling Co Plc, Lagos State as a case study. The study was specifically carried out to determine whether product package differentiation strategy has a positive and significant effect on customer acceptability of soft drinks; determine whether product channel differentiation strategy has a positive and significant effect on product availability for adequate patronage; and determine whether product differentiation strategy has a positive and significant effect on sales performance of soft drinks.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 35 responses were validated from the enrolled participants where all respondent were marketing staff of Nigerian Bottling Co Plc, Lagos State.


5.3 Conclusions

Based on the findings of this study, the researcher concluded that;

  1. Product package differentiation strategy has a positive and significant effect on customer acceptability of soft drinks.
  2. Product channel differentiation strategy has a positive and significant effect on product availability for adequate patronage.
  3. Product differentiation strategy has a positive and significant effect on sales performance of soft drinks.

5.4 Recommendations

Based on the findings of the study, the following recommendations are proffered.

  1. The company should enhance its packaging to for uniqueness and work closely with its agents to ensure that customers/consumers are getting its products from only authorized agents.
  2. Manufacturing companies should should also enhance their product present quality, and features of the product packages to influence consumers’ acceptability; and strengthen the product supplies to target markets through the differentiated channels

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