The Impact Of Sales Promotion On Organizational Performance (A Case Study Of Nigeria Bottling Company Plc.)

Project and Seminar Material for Marketing

The Impact Of Sales Promotion On Organizational Performance


Abstract


The analysis of research on impact of sales promotion on organizational performance. (A case study of Nigeria bottling company (NBC plc, coca cola Onitsha plant. revealed that the study is relevant in that it seeks to identify the role sales promotion plays in the marketing strategies and achievement of organizational goals and objectives. And have tried to expose the impact of sales promotion output and employees commitments on organizational activities.

Also serves as a guide to the company under examination and the entire soft drink company in Nigeria by given them an insight on ways in which planning and execution of sales promotion programme can be done to yield a better result. And will add to existing stock of knowledge in administrative science research and will equally help other researcher seeking adventure into sales promotion.


Table of Contents


Preliminary Page(s)

  • Title page
  • Approval page
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of contents

Chapter One:

Introduction

  • 1.1 Background of the study
  • 1.2 Statement of problem
  • 1.3 Objectives of the study
  • 1.4 Research question
  • 1.5 Significance of the study
  • 1.6 Scope of the study
  • 1.7 Limitation of the study
  • 1.8 Definition of terms

Chapter Two:

Literature Review

  • 2.1 Introduction
  • 2.2 Concept of sales promotion
  • 2.3 Types of sales promotion
  • 2.4 Designing and development sales promotion
  • 2.5 The concept of organization performance
  • 2.6 Components of organizational performance
  • References

Chapter Three:

Research Methodology

  • 3.1 Introduction
  • 3.2 Research design
  • 3.3 Population of the study
  • 3.4 Sampling procedure and technique
  • 3.5 Data collection method
  • 3.6 Questionnaire design and administration
  • 3.7 Description of data analysis/technique

Chapter Four:

Presentation and Interpretation of Data

  • 4.1 Introduction
  • 4.2 Analysis of number of questionnaires
  • 4.3 Analysis of questionnaire to management of NBC
  • 4.4 Analysis of questionnaire to consumer

Chapter Five:

Summary of Findings, Conclusion & Recommendations

  • 5.1 Restatement of the problem
  • 5.2 Summary of findings
  • 5.3 Conclusion
  • 5.4 Implication of the study
  • 5.5 Recommendation
  • Bibliography
  • Questionnaires

Chapter One


Introduction

1.1 Background of the Study

Business is like war in one respect. If its ground strategy is correct, any number of tactical errors can be made and yet the enterprise proves successful (Robert E. Wood).

The business in question could be private or public venture. It could be one man business (Sole proprietorship) or a world class multinational. Every business enterprises still operating as a going concern, must adopt its marketing strategy to meet the desired aspiration. In the same vein for any business to survive under the current unpredictable socio-eco-political dispensation in the country be it profit making or non-profit making, it has to effectively market its products or services which have to be promoted on a regular basis.

Apparently, one of the vehicles for conveying marketing strategies is sales promotion and its significant to organizational performance cannot be over emphasized. Sales promotion according to Kotler and Armstrong 2001:512, is a short term incentive to encourage the purchase of sales of a product or services.

Kotler (1984) posits sales promotion as consisting of a variety of promotional tools designed to stimulate earliest and/or stronger market response. Undoubtedly, sales promotion is an important element in making function. It forms part of the promotional mix. Sales promotion helps maintain a high level of awareness of the supplier and the brand in several ways. Not only does sales promotion win and help to maintain the patronage of customers but it also build the goodwill of dealers and distributors who enjoys increase in store-traffic and high rate of stock turnover, sales promotion also encourages the trail and repeat purchase of product and services. It forms an essential ingredient in motivating adoption process of products. Direct mail, shorts and catalogues which are component of sales promotion generates enquire for industrial goods and services leading to increase in re-order level.

It is quite evident level that no business organization that desire to survive can afford to neglect the importance of sales promotion in the marketing of its product or services. It is on the basis of this invaluable contribution to organizational success that this study is being carried out to focus on sales promotion and organizational performance in NBC plc (coca-cola) onitsha plant. The origin of sales promotion Nigeria Bottling Company Plc, this can be traced from the era of marketing philosophies/concepts and development of coca-cola product it self when Dr. Johnson pemberton first had an appreciation of advertising. Coca-cola the product that gives the world its best known task was developed under modest circumstance in Atlanta, Georgia on May 8th 1886 in United States. Dr. John Perberton first produced what to become coco-cola syrap in a three legged brass pot with a boat bar in his backyard. He carried the jg of few products down the street to jacob’s pharmacy where it was placed on sales for scent a glass as sode foundation drink.

Dr. Perbertons partner and book-keeper Frank M. Robinson suggested the name “COCA-COLA” and designed the script that distinguishes the famous trademark. The first newspaper advertisement appeared in the Atlanta journal not only inducing and promising refreshment but also informed the public where to get it.

The idea of Dr. Perberton was by means of a free ticket “go for one drink and redeemable at soda foundation”. Since the slogan “Delicious and refreshing was introduced in 1886, coca-cola promotional activities have continued to reflect several of such slogan.

In Nigeria coca-cola sales promotion activities have taken several dimensions for instance the first promotional event was tagged “Animal kingdom”. A competition which offered its participants to win gifts. It lasted for a period of three months. It was a successful and rewarding promotion as it generated great awareness for coca-cola and its products.

Other subsequent sales promotion activities includes:

  • Under the crown promotion
  • The price reduction promotion
  • The coca-cola N20 million BIG BLAST sweepstake.
  • Instance redemption of price
  • Mega million

A “Drink, collect and win crown collection promotion.

Onitsha like her parent plant has also embarked on series of sales promotion activities focuses on fanta. The program was tagged “Fanta Actuation:. The sales promotion was aimed at stimulating the demand for fanta and it offered the consumer opportunity to win gift. There was also trade promotion in which dealers where given allowance to buy in large quantities and enjoy free additional cases of coca-cola.

The coca-cola fanta refreshment promotion programme embarked on by Nigeria Bottling Company Plc, was carried out nation wide and it offered its participants opportunity to win a returned ticked to south Africa. Winners were selected through raffle draw, consolation prize such as free drink, T-shirt, cap, were also given to customers. Another promotion had, was A “Drink, collect and win crown collection promotion. The exercise took place in April 2002 and it was tied in to the 2002 FITA world cup tournament in Korea/Japan, over 120 million Naira worth of prizes were awarded during the three months long promotion.

The mega million promotion was another promotional programme of NBC Plc. It took place in 2003 for just three months and it was held nation wide. The topic was taken so as to examine and appraise, critically the role of sales promotion and its efforts on both organizational performance of NBC Plc and the product being manufactured. Likewise, the research work orients to seek and analyze the problems inherent in efficiency and effectiveness of management in terms of profit realized as a function or result of the promotional activities.

Historical Background of the Study

The Nigerian Bottling Company (NBC), which is part of coca-cola HBC, was incorporated in November 1951 to bottle and sell carbonated non-alcoholic beverages. The company has the sale franchise to bottle coca-cola product in Nigeria. Product of coca-cola began in 1953 at a bottling facility in Lagos, and new plants at Kano, Port Harcourt and Ibadan were opened shortly afterwards. The company metta.

Nigerian Bottling Company (NBC) became a public company in 1972 with its shares coasted on the Nigeria stock exchange NBC generated its own power and is self sufficient in carbon dioxide and water product. Coca-cola’s range of products in Nigeria includes the following beverages all of which are bottle in returnable glass. Coca-cola, fanta in orange, lemon and black current flavours, sprite, Eva bottle water, five alive juice, and Schweppes in bitter lemon, club soda and tonic water (These, “Mixers” were previously bottled under the krest brand but NBC re-acquire the Schweppes franchise in August 2001).

However, the company has grown across the geographical blocks of Nigeria with about 16 bottling facilities (plants) around the country, and it uses 82 distribution warehouses and 200,000 distribution outlet. For instance, the onitsha plant is one its plails and it began production in 1987 at the commercial nerve centre of eastern region. It cover Anambra and Delta State. The plant supplies four (4) major depots located in Nnewi, Oba, Agbor and Ekwulobia, with numerous retailers over ten thousand currently its staff strength ranges between four hundred and fifty staffers. The success of the plant since its fourteen years of operation has put coca-cola product the ultimate in the eastern market.


1.2 Statement of the Problem

The beverage industry is influenced by seasoned fluctuations and climatic changes coupled with depression in the economy. This phenomenon puts soft drink. The sensitivity of the soft drink market often lead to sales decline, erosion of market share, low capacity utilization, reduction in overall industrial output and colossal loss of profit. Thus the success of any beverage firm that wishes to sustain the acceptability of its product hands on its intensive sale promotional activities.

Despite the magnitude and relative importance of sales promotion, comparatively, little attention is given to it by most business organization. Many view it a money consuming and a waste venture. So, the question is “could sales promotion if adopted as one of the problem solving behaviour help organization to achieve their marketing objectives”.

It is in the light of this question that the researcher was motivated to conduct a study on sales promotion with reference on the Nigeria Bottling Company Plc. However, one excruciating hindrance of sales promotion is the difficulty in measuring its direct contributions to organizational performance.

Hitherto, the major problem is mobility to know the extent sales promotion can be used to stimulate organizational performance and operations, which can be viewed under the following sub-problems.

  1. Is sales promotion helping to improve sales?
  2. Does the promotional activity have position impact on organization?
  3. Is there any correlation between sales promotion and organization performance
  4. Could sales promotion be an incentive to sales force motivation
  5. Is sales promotion really influencing the activity and choice of distribution channel?
  6. Are there opportunities that organization has not taken advantage of?
  7. Are the existing customers satisfied with the company’s product?
  8. What are the criteria used in the application of the promotion to suit organizational operation?

1.3 Objective of Study

The objective of the study is to find out the impact of sales promotion on Nigeria Bottling Company Plc Onitsha within three months sales promotion and the contribution of sales promotion to the growth of soft drink industry in Nigeria.

Thus the research seeks the following:

  1. To find out how effective sales promotion is being used in the operation of NBC Plc with respect to profitability and market share.
  2. To find out the extent to which sales promotion can be used to improve consumer patronage, gather channel supports and motivate the sales force of NBC Plc and the entire soft drink industry in Nigeria.
  3. To establish whether the use of sales promotion activate the production level of soft drinks.
  4. To ascertain whether sales promotion helps to level sales peak and valley that might be brought about by seasonal fluctuation in the soft drink market.
  5. The research project would also expend the researchers’ knowledge and equip her basic skills in scientific problem techniques towards the fulfillment of her academic pursuit.

1.4 Research Questions

The research question for this study will cover the following:

  1. What effect does sales promotion have in the operating of NBC Plc, with respect to profitability and marketing share?
  2. What extent can sales promotion be use to improve consumer patronage, gather channel supports and motivate the sales force of NBC Plc?
  3. Does sales promotion activates the production level of soft drinks?
  4. Does sales promotion help to level sales peak and valley that arise as a result of seasonal fluctuation in the soft drink market?

1.5 Significance of the Study

The study is relevant in that it seeks to identify the roles sales promotion plays in the marketing strategies and achievement of organizational goals and objectives. The study tries to expose the impact of sales promotion on profit generation, production output and employees commitment to organizational activities.

The study will serve as a guide to the company under examination and the entire soft drink company in Nigeria by giving them an insight on ways in which planning and execution of sales promotion programme can be done to yield a better result.

It will furnish information which serves as reference points for organization that caries out sales promotion in motivating and gathering channel supports and consumer’s patronage. The findings and recommendation will be relevant to all firms in the soft drink industry.

Lastly, the study will add to existing stock of knowledge in administrative science research and will equally help other researcher seeking adventure into sales promotion.


1.6 Scope of the Study

The study will involve a view of sales promotion activities of Nigeria Bottling Company (Coca-cola) Onitsha plant, Onitsha metropolises of Anambra State (Eastern Nigeria).

The study will further cover the following:

  1. The relationship between sales promotion and organizational performance for a period of three months, which form the promotional period.
  2. The effect of sales promotion on the sales of major brands of the Nigeria Bottling company Plc. product.
  3. The effect of economic condition and the purchasing power of consumers at the time of sales promotion.
  4. The effectiveness and efficiency of management in term of profit generation and planning.
  5. Finally, the study would rely on the sampling opinion of management/staff of NBC plc, coca-cola Onitsha plant, the distributors/dealers and the consumers all within the Onitsha metropolis of Anambra State.

1.7 Limitation of the Study

Undoubtedly, any study that seeks to enrich human knowledge is certainly a difficult task. This project is not an exception. Many of the difficulties that could have jeopardized the success of the research was able to eliminated by the researcher but some constraints are still outstanding, these include:

Time

It is difficult to cover more areas than those itemized one to time constraints within which the study should be completed. It become an Herculean task to travel round various village and towns within Onitsha metropolis to collect the information and still meet up with demand of academic at school.

Finance

The cost of research materials were very exorbitant and grossly out of the researcher one to the prevalent economic situation in the country. Since accurate data gathering repeated calls on respondents, high cost of transportation, high cost of transportation greatly reduced the number of investiture schedules appointment with respondents.

Illiteracy

The level of awareness in the society of ours also affected the collection of data. Most respondent (consumers and distributions) were illiterate. Some of them could not even fill the questionnaire themselves. Hence, it demands greater time and effort to read and interpret the questionnaires to them to facilitate prompt response.

Information

One of the most obvious limitations is the size of the sample and the coverage. The research is limited to onitsha metropolis, which is a commercial centre. However, the number of total target population. Therefore, this limits the extents of which generalization could be made and create the need for further study that will take care of adequate sample size. Again, the research is affected by time and mobility for pressing issues, churches, services and domestic family clears which make it difficult, to collect more information likewise, sales manager was not very accessible because of his frequent trips outside the company to monitor the sales force and make contacts for more sales.

The relevant attitude of management staff of NBC plc Onitsha and the bureaucratic ways of the executives in granting request for interviews and their deliberate hold back of information to avoid industrial espionage, constituted a major set back for the research. Thus, there was problem of researcher trying to ascertain the exact income and turnover of the company over the period in question.


1.8 Definition of Terms

Advertising

Advertising is any paid form of non-personal presentation and promotion of ideas, goods and services by an identified sponsor.

Brand

This is a name, term sign, symbol or design or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of the competitors.

Brand loyalty

This is consumer unreserved willingness to choose a brand over the other brands and tendency to search for that particular brand when buying.

Coupon

These are pieces of paper from the manufacturer or his intermediary entitling its holder to a discount on a particular product. They are certificates that give buyers a saving when purchase a specific product merely to invite guest.

Dealers

Middlemen in the distribution chain. They buy goods in order to resell them. They include wholesalers and retailers.

Direct mail

Mailing of a price of information literature of any other promotional materials to selected prospects.

Effectiveness

Having the power to produce or producing a desire result. The act of producing a pleasing effect or actual rather than theoretical.

Efficiency

Producing satisfactory results. The quantity of a person capable of completing work within a relative short time.

Exhibition

Putting on display of a company’s product or service for promotional purpose particularly the gathering of number of such display which are either on view to the public in general or merely to invited quest.

Goods

Articles that are being offered for sales or produced for consumption.

Motivation

This is the drive that propels a person to act beyond normal expectancy or to achieve a goal or objective that he would not ordinarily. It is an inducement which propels or under action.

Organization

A business or profit oriented outfit that produces goods and services for the society.

Sales promotion

Short term incentives to encourage purchases or sales of a product or services.


Chapter Five


5.0 Summary of Findings, Conclusion and Recommendation

5.1 Restatement of the Problems

Despite the magnitude and relative importance of sales promotion, comparatively, little attention is given to it buy most business organization. Many view it a money consuming and a waste venture. So the question is could sales promotion if adopted as one of the problem solving behaviour help organization to achieve their marketing objectives”.

It is in the light of this question that the researcher was motivated to conduct as study on sales promotion with reference on the Nigeria Bottling Company Plc. However, one excruciating hindrance of sales promotion is the difficulty in measuring its direct contributions to organizational performance. Hitherto, the major problem is mobility to know the extent sales promotion can be used to stimulate organizational performance and operations, which can be viewed under the following sub-problems.

  1. Is sales promotion helping to improve sales?
  2. Does the promotional activity have position impact on organization?
  3. Is there any correlation between sales promotion and organizational performance
  4. Could sales promotion be an incentive to sales force motivation
  5. What are the criteria used in the application of the promotional to suit organizational operation
  6. Are the existing customers satisfied with the company’s products

5.2 Summary of Findings

The primary goal of embarking on this research work is to appraise the impact sales promotion has on the performance of organization in the soft drinks industry with respect of Nigeria Bottling Company Plc, coca-cola, onitsha plant anambra state. In order to achieve this purpose, adventure was made into review of related books and journals. Discussions were made on concept of sales promotion and organizational performance as well as their determinants.

Furthermore, in devising a means for the investigating the framework, data were collected from three sets of questionnaires administered to the staff of NBC plc (coca-cola), the distributors and the consumers all within the onitsha south local government area of anambra state. The qualitative responses of the respondents were translated to qualitative attributes which were used in analysis and interpretating the research. in line with the research conducted, the following findings were discovered.

  1. Sales promotion is an essential tool in the marketing strategies of NBC plc.
  2. Promotion output and capacity increased during sales promotion exercise (see table 4.4) extra working hours were instituted to cope with the increase production capacities.
  3. The sales recorded on NBC Plc, products (coca-cola) as a result of the sales promotion exercise was higher than that which was recorded before the sales promotion (see table 4.2). Thus the research showed that there was more cash flow during the 3 months of sales promotion exercise.
  4. Distributors of NBC plc replenished their stock at a faster rate when there is sales, promotion than the period when there is no sales promotion (see table 4.12
  5. The quest to win gift accelerates the consumption pattern of consumers of NBC products (coca-cola) during the sales promotion (see table 4.24)
  6. Despite the noise being made by sales promotions, substantial number of the consumers interviewed about 68% of them have not benefited because the incentive were not evenly distributed (see table 4.25)
  7. The research showed that 54% of the consumers interviewed prefer coca-cola brand to all other brands offered by NBC plc, (See table 4.19) likewise sales force and consumer prefer free gift to any other sales promotional incentives.
  8. The research shows the study revealed that they visited the redemption centres and distributors warehouse (office promptly).
  9. Sales promotion expand the market coverage of the sales force and exert negative effect on competing product in the soft drink industry.
  10. Sales promotion complements advertising and personnel selling thus having a positive impact on organization performance of NBC plc.

5.3 Conclusion

The ability of any organization to get its production its target audience or consumers depend very much on the effective use of promotional strategies and the ground strategy referred to as “40s’. Among the element of promotion of NBC plc. And the soft drink industry, sales promotion stands out distinctively to be key to organizational success as it offers the incentives to buy a given the reason to buy. However, if any organization must service, succeed and maintain its position in the fluctuating soft drink market, must sensitize its environments both internal and external and accept sales promotion as vehicles to its organizational objectives. Undoubtedly, if sales promotion objectives are harmonized with the purpose of an organization, consumers will beat path to the doorstep of such organization. From the research work, not only does sales promotion help to improve sales, productivity consumer patronage, cash flows, it also, ensure that employees and distributors or channel actors are motivated. This sales promotion cannot be divorced from organizational performance and activities.

Finally, a deep study and understanding of this research would afford any organization an opportunity to know the vital areas to concentrate its efforts for improvement and development as regards sales promotion. It is also the view of the research that the study will be a panacea to poor planning and execution of sales promotion programme in the soft drink industry in Nigeria.


5.4 Implication of the Study

The wide scope of the concept “organizational performance” and limitation of time, wide condition of the study would not allow a complete adventure into the impact of sales promotion plays as a function of organizational performance. Hence the researcher opined that attention should be paid to the follow related topics or areas in future studies.

  1. Sales analysis
  2. Brand positioning analysis
  3. Profit distribution and cost analysis
  4. Distribution analysis
  5. Sales force analysis/job evaluation

It is expedient to state here that financial constraints has limited the scope of study to cover just onitsha south local government and one organization. NBC plc, subsequent research should expand the scope of the study and concentrate on more areas. Two or more companies within the soft drink industry can be selected for comparative analysis.


5.5 Recommendation

In spite of the myriad of benefit derived from sales promotion efforts, it is quite imperative for NBC and the soft drinks industry to seek further improvement. This is necessary if the must be a continual and consistent positive impact form sales promotion. It is the opinion of the research that firms within the soft drinks industry must seen their business environment and discover opportunities and threat which may shape their sales promotion activities. This must be material with their strength and weakness. However, based on the outcomes of the research two, essential areas must be given adequate attention.

Internal Consideration
  1. NBC plc should examine itself before embarking to any sales promotion exercise. The objective of any sales promotion exercise must be the first, consideration pricing policies, must be flexible must be determined. Likewise, the resources available for the execution of the programme. In view of this, the company has to be consumer oriented and embark on market research before designing future sales promotion. The incentive to the consumer needs since the research revealed that consumer want value incentive and non just more gift.
  2. Since sales promotion programme affects the totality of organizational activities NBC plc should embark on integrated marketing strategies and ensure that all functional area within it organization are involved in the planning and implementation of sales programme. They could form a consortium.
  3. The company should improve on the distribution of incentive so that more consumers can benefit from the sales promotion programme, sales force should be trained and motivate to enhance absolute commitment and increase their productivity.
  4. Sales promotion should be employed to build brand loyalty for fanta and other less patronized brands. However, market intelligent gathering can be carried out before embarking on such exercise.
External Consideration
  1. Due to the seasonality in the soft drink industry the objective of the sales promotion must be linked with the prevent climatic condition and sales. This will enhance efficient and effective evaluation of performance. In addition, force of demand and supply must be borne in mind with NBC formulates its sales promotion policies.
  2. NBC plc, should provide additional warehouse facilities to its distributors during sales promotion to reduce traffic conjunction and cope with high rate of stock replenishment. Lastly, NBC should give adequate advertising message to increase extensive awareness of the sales promotion exercise before it is embarked on.

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