Impact Of Sales Promotional Activities On The Consumption Of Soft Drink In Port Harcourt
A lot of beverages manufacturing companies in Nigeria are suffering from the piling up of unsold stocks. In recent years, Nigeria witnessed sales promotions by most beverage industries such as Nigeria Bottling Company Plc, 7up Bottling Company, Nigerian Breweries and Guinness Nigeria Plc., etc. Beverage industry such as NBC Plc. uses sales promotion for several reasons: to generate quick sales bursts, to build long-term awareness and maintain steady market shares, to gain increase in shelf space and better in-store display, etc. Does the success of sales promotional programme really justify the promoter’s efforts in terms of time, cost and benefits?The objective of this study is to examine the effect of personalsales promotion on the sales volume of the beverage industry and suggest ways sales promotional tools and techniques could enhance sales volume.
Table of Contents
- 1.1 Background of the Study
- 1.2 Statement of Problem
- 1.3 Purpose of the Study
- 1.4 Significance of the Study
- 1.5 Research Question/Hypothesis
- 1.6 Theoretical foundation of the study
- 1.7 Scope of the study
- 1.8 Limitation of the study
- 1.9 Definition of Terms
- 2.1 Theoretical Framework
- 2.2 Factors that contributes to sales promotion increase
- 2.3 Planning and Designing the sales promotion programme
- 2.4 Pretesting and post testing the sales programme
- 2.5 Budgeting for sales promotion
- 2.6 Sales promotions activity in Nigeria since independence
- 2.7 Sales promotion in Nigeria in the late eighties
Research Design and Methodology
- 3.1 Research Design
- 3.2 Sources of Data
- 3.3 Location of the Study
- 3.4 Population of the Study
- 3.5 Determination of Sample Size
- 3.6 Sampling Techniques
- 3.7 Method of Data Collection/Instrumentation
- 3.8 Method of Data Analysis
- 3.9 Validity and Reliability of Instrument
Data Presentation Analysis and Interpretation
- 4.1 Data Presentation
- 4.2 Analysis of Data
- 4.3 Testing of Hypothesis
- 4.4 Interpretation of Results
Summary of Findings, Conclusion and Recommendations
- 5.1 Summary of Findings
- 5.2 Conclusions
- 5.3 Recommendations
- 5.4 Suggest for Further Studies
List of Tables
- Questionnaire distribution and return analysis
- Effect of sales promotion on the sales volume and profit of company
- Sales promotional effect on consumer demand
- Sales promotional as an effective tool of product promotion
- The possibility of sales promotion exercise to cause increase in line of business set back
- Sales promotional periods
- Rate of percentage turnover
- Continence table were formed using question (18) of the questionnaire
- Chi-square computation
1.1 Background of the Study
Sales promotion is an indirect form of marketing promotion intended to stimulate quick action. It is those promotional activities other than personal selling, advertising and publicity that stimulate consumer purchasing and dealers effectiveness such as displays, shows and exhibitions, demonstration, coupons, contests, samples, premiums, trade allowance, point of purchasing displays, price cent-off pack and dealer allowance and other known routine selling efforts that are usually of short term activities.
According to Ebue (2000: 240) “sales promotion is that something extra that can arouse interest, creating a buying desire, sparks an immediate reaction from customers, middlemen or company sales force.
Sales promotion incentives are usually of short duration and the aim is to move sales of a particular product or brand above the existing level. Sales would increase if more customers are attracted to the shop, if non-brand users are attracted and if brand users are encouraged to buy more.
According to Nnolim (1979: 142) sales promotions is intended to aid both consumers pull and dealer push. They thus categorized sales promotions techniques in term of their consumer and dealer focus.
Consumer-pull promotion techniques are much activities like sampling, price incentives, refund or rebate, contest, premium like free in-mail pack of non-pack, self liquidators while trade push promotions techniques are such activities like merchandise allowance, money bonuses and gift, management assistance like training, inventory control displays and financial assistance.
According to Kotler (2003: 453-54) sales promotion, a key ingredient in marketing campaigns consists of a diverse collection of incentive tools, mostly short term design to stimulate quicker or greater purchase of particular products or services by consumers on the trade. Based on the sales promotion impact, the researcher used product life cycled theory.
Sales promotion holds a middle ground between advertising and personal selling. It is usually not directed as advertising but it is direct at much large groups than a typical personal selling effort.
Before the sixties, sales promotions had not become popular, but in recent years they had grown so rapidly between 1967 and 1976, and much more in the late eighties, nineties and beyond. Their rapid increase therefore and especially now that world economics like Nigeria are in down turns, have promoted or called the attention of the researcher to research and find out its “impact on soft drinks in Nigeria,” with particular emphasis on the Nigeria Bottling Company Plc and product such as coke, spirit and fanta soft drinks and malta.
Coca cola was found in 1886, and headquarters located in Atlanta Georgia in United State of America. In the year 1953, Nigeria Bottling Company started its operation in Nigeria by holding franchise for coca cola international which means that the formulation of the concentrate and recipe of the product have not been released to the Nigeria Bottling Company but the formula and syrup of the mixture is given to them to help them bottle the product in Nigeria.
However, coca cola is one of the world largest bottlers of coca cola product. They operate in 28 countries, 16 of which are members of European Union and serve a population of over millions consumers. Coca cola engages in the manufacturing, distribution and marketing of non-alcoholic beverage concentrate and syrups world wide, the company market its non-alcoholic beverage under various brand names includes coke, diet coke, fanta, sprite and also sell its finished beverage products primarily to distributors, company sell its beverage concentrate and syrups to bottling and canning operations. Distributors fountain wholesalers and fountain retailers.
The company is departmentalized as follows: marketing plant production, administration, catering clinics, workshop, stores and security department. Under administrative department, we have accounts section and personnel the production or plant department, which is divided in two sections; the carbon-dioxide section and product section. The carbon dioxide section undertakes only in production of the carbondioxides, for the production of drinks. Product section undertakes the mixing of syrup to bring the final products. A manager who is subordinate to the plant manager heads each department.
In a journal interview, with the company Chairman Adedeji (1975) that Nigeria Bottling Plc is the largest producer of soft drinks in the country. According to one estimate by this company makes about 60% of such drinks consumed in Nigeria. as not to put all their heads in one basket according to Adedeji (1985) Nigeria Bottling Company has branched out to non-soft drinks branches mostly agriculture. He also reported that the company now has 60% of the “Agricultural Seeds Limited” based in Zaria and 40% of those of “Kupa farms limited based in Kwara State”.
It decided during the last trading periods in (1985) to increase its shares in Delta Glass Company and acquire a controlling interest of 51%.
The Nigeria Bottling Company turnover has been growing from 14.3 Billion, 14.9 Billion, and 15.9 Billion as at 2004, 2005, and 2006 respectively. And the corresponding expenditure on sales promotion has grown also increased in 2004 to 2006 from 48 million in 2004 to 65 million in 2006. It is suspected that this increase in turnover might have come about partly as a result of high promotion activities.
1.2 Statement of Problem
In the course of this study, it is observed that companies (especially consumer goods producing/marketing companies – coca cola inclusive spend a lot of time, energy and money in designing and running promotion. But it seems that the impact to the company’s sales volume and profit are not still commensurate to the money spent.
So considering the enormous cost, it became necessary to evaluate this action to determine the cost effectiveness. Spending so much on sales promotion, the company may not really be getting the anticipated sales volume and profit margin.
1.3 Purpose of the Study
As sales promotions activities of soft drinks in Nigeria have expended rapidly in recent times, the researcher aims at carrying out a study on the Nigeria Bottling Company Plc with a view of finding out what impact sales promotion activities have on their sales volume and consequently the profit before promotions. During promotions and after promotions.
The following are objectives of this study:
- To find out the effect of sales promotions on sales volume and profit of industrial, with emphasis on the Nigeria Bottling Company Plc.
- To find out the effect of sales promotions on demand of the consumers
- The acceptability of sales promotion as a marketing strategy by the consumer.
1.4 Significance of the Study
The result of this study will be of importance to;
- The managers
It will help the managers in decision making
Also helps to bring positive statistical data to academics thereby contributing to the existing boy of knowledge.
It will help the business in evaluating the rightful balance of expenditure vis-à-vis market share growth.
1.5 Research Questions / Hypothesis Formulation
The research stud seeks to provide answers to the following:
- What are the effects of sales promotion on the sales volume and profit of companies?
- What are the effects of sales promotion on consumer demand?
- Is sales promotion an effective means of product promotion?
- Does sales promotion bring any increase when there is a set back on business?
It is in consideration of the problems stated above and the objectives of the study enumerated that the researcher put forward the following:
- Ho: Sales promotion does not have positive effect on the sales volume and profit of industries.
- Ho: Sales promotion has a positive effect on the sales volume and profit of industries.
1.6 Theoretical Foundation of the Study
The theories upon which this research work is founded existed to reason the concrete facts and data put forward in critical examination of the issue in discourse. The established theory of sales promotion as an indirect form of marketing promotion which intends to stimulate quick action is subjected to scholarly reasoning of vital authors like Ebue (2000:240).
In his book titled “marketing communication”. Narrated the subject matter to be something extra which can arouse interest to create a purchasing desire as regards consumer’s behaviour. This postulation stand factual over time as it set the basis for new entrants, already existing over ones and scholars to this establishment reasoning.
Furthermore, the work of “Nnolim (1979: 144) in principles and practice of marketing 11 also address the subject matter as being intended to help both consumers pull and dealer focus. This foundational idea that is dependable for its logical position smoothens the path way for all shade of opinion on this topic, to base their considerations to the relevance of this theory.
Summarily, to adapt by accurate data and historical balancing, the theories of these academicians had done a great deal of exposure in sharing area of the topic. Therefore, the theory upon which this study is based agrees with their postulation that relationship above between sales promotion and sales volume/profit of an industry.
1.7 Scope of the Study
This research work is limited only to Port Harcourt metropolis which constituted Port Harcourt local government of Rivers State and Obio-Akpo Local Government. It is a survey study limited only to consumers, wholesalers (SSD & HVS0, conventional outlets, managers, staff and the case study Nigeria Bottling Company Plc in Port Harcourt.
1.9 Definition of Terms
1. Sales promotion:
This is an indirect form of marketing project intended to stimulate quick action.
2. Consumer promotion:
These type of promotion are targeted at the ultimate user’s of the product.
3. Trade promotion:
These are buying allowance introduced to stimulate middlemen to increase sales effort.
4. Sales force promotion:
These sales force promotion activities are intended to motivate sales people to increase over all sales.
Summary, Conclusion and Recommendation
It is important to ascertain that the objective of this study was to evaluate the impact of sales promotional activities on the consumption of soft drinks in port Harcourt.
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 challenges of the impact of outsourcing on employee’s engagement.
This study has focused on the impact of sales promotional activities on the consumption of soft drink. In carrying out this research study Nigeria bottling company Plc. Port Harcourt producer of coca-cola was used as a case study. The researcher made the choice because the company is regarded as second to none in terms of sales promotional activities when compared to other soft drinks industries in the country. The ongoing coca-cola mega million promotions is a living witness.Sales promotion referred to as a special selling effort employed by different organizations to boost the image of their products in the competitive market and hence achieve high sales, maximizing profit and at the same time gaining competitive advantage over other companies of the same trade.
To conclude, The Coca Cola company has implemented good strategies, the managers of the company clearly understand the importance of meeting its customer needs, and enhancing its brand image to retain and remind customers of its good brand, hence the need for such a large expenditure on promotional campaigns, it utilizes the marketing mix well, through the adoption of competitor pricing strategy, it realizes its success can be easily threatened by competitors such as Pepsi, and substitute non-alcoholic beverages such as Coffee and tea. Through its current attitudes and good usage of the marketing mix variables, it is certain this business will continue to dominate and likely double their revenue as they have plan to do so by 2020, however external influences such as social cultural and economic influences could lead to a failure, regulatory bodies imposing restrictions could stop the business from reaching its potential if it continues on producing ‘misleading’ advertisements, however the worldwide recognition of its branding and along with individual brand images, this demonstrates the business has the potential to reach their goal.
Based on the research findings the following recommendations’ are made: Sales promotion objectives should be well defined and staff should be well informed in order to achieve the stated objectives. Sales promotion program should be properly planned and well designed. Records of each promotion exercise should be well kept after the promotion in order to evaluate the result. Nigerian Bottling Company Plc. should keep on updating their sales promotion activities and increase their retail outlets for prospective and existing customers in order to enhance more consumption rate.Promotion exercise should be more of rewards in order to guarantee customer loyalty since anyone who wins in a particular promotion exercise would feel that he/she has gained from continuous purchase of NBC Plc. products thereby encourage continuous patronage.
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