Promotional Strategy As A Tool Of Organizational Profitability

Project and Seminar Material for Marketing

Promotional Strategy As A Tool Of Organizational Profitability

Chapter One

1.0 Introduction

In this study, the main objective of promotional activities as stated by Engel et al (1979) is to facilities sales and also contribute to long run profit performance of an organisation. In economic terms, a firms goal in employing promotional programmes is to change both the shape and location of the demand pattern of it’s products. In this case it will not only increase it’s total demand at every price but will at the demand elasticity of the product, thus making demand inelastic when the price decreases.

For a business organisation to get it’s productions into the market and make significant market share, it takes the business organisation to communicate to both the present and potential customers about the existence of a particular product of all marketing activities it is only promotional programmes that gives the business firm the opportunity to communicate and link it’s present and potential customers. Basically, promotion is an existence in information persuasion, stimulation and communication. The promotion mix are inter-related and utilized in order to accomplish the overall objective of profit making, the two most widely used of these components are advertising and personal selling. Other promotional mix are as follows:

  1. Publicity and sales promotional tools
  2. Public relation
  3. Market strategies which include
    • Market segmentation and
    • Branding

For an effective marketing programme, the total promotional activities must be coordinated writing the product planning, pricing and distribution, when the promotional tools are used in promoting a particular product been existence, it will yield effective result in high rate of purchase.

1.1 Background Of The Study

Importance of promotion as one of the tools in marketing activities employed by business organisation in coping with competition so that the product of such company is continually demanded and huge return is realized on the investment.

Business organisations are facing massive competitive environment with economic recession and in other to service before they embark on marketing strategies that will create a way for their better competitive position. Today business organisations manufacture right products at right price and provide right distributive channel, but these are not enough they still need to communicate with the present and potential customers about the existence of such product where it can be bought and other information necessary for customer to love. Thus, of all marketing activities, its only promotion that gives the business firm the opportunity to communication and link with the customers.

Promotional activities helps the business achieve both it’s short and long run objectives by increasing sales volume and the profit of the company. To achieve over all goal therefore, management must coordinate other marketing programmes such as pricing, product, planning and place with promotion such that they work as a system for effective results.

Promotional programme cannot be emphasized, it is recognized as a powerful tool in both the servicing and manufacturing industries. The significance of promotion as a strategy is now on the increase unlike before. In recent times, expenditure on promotion like increased rapidly. Promotion programmes, while growing the importance is also being integrated into the total marketing programme and it is introduced right at the inception of the planning and not tackled on afterward.

Promotion activities, especially the “sales promotion” are receiving increasing management attention such that the instrument is now handled and treated as a “surviving campaign tool” in the Nigeria market. In recent times, Nigerian are witnessing series of promotion activities by both servicing and manufacturing companies. The idea is normally in two folds, both the advantages of the consumer and the organisation marketing the campaign. The consumers is given the chance to add value to his or her purchasing power through incentive or prizes, on the other hand, the company has the opportunity to increase it’s sales, profit, market shares and old a market leader position, thus making the competitors it’s followers. Promotion now occupies a central position in the total marketing system, communication process, it makes the business organisation to observe the marketing concept philosophy that is, it seeks to provide consumer with satisfying products, provide necessary information to the consumer and organisation and also provide profit to the company. A well-coordinated promotion programme tends to work systematically with other marketing mix and this gives a successful result. Promotion helps the organisation in the realisation of its numerous objectives. However, management is faced with the problem of deciding how much promotional effort economically justified in ensuring that the business form is placed and continuously occupy a better competitive position such that is various objectives are not least optimized.

It is no doubt that the finding in the study will be useful to the company and other companies of same manufacturing companies.

1.2 Scope Of The Study

This study focus on the effect of promotion strategy of a company in the performance of profit realisation on existence product in the market. It serves as an instrument to market and persuade the present and potential customers of their purchasing power, so as to company or the organisation to accomplished the right result.

1.3 Objectives Of The Study

Basically, promotional activities happens to be the main instrument used to facilitate sales and thus contribute to long run profit performance of an organisation. The forms of promotional mix that yields company’s profitability comprises of those campaign tools, such as:

  1. Sales promotion been the action – oriented and hysterical aim of marketing operation.
  2. Publicity and public relation which aim at image building for the organisation and it’s products.
  3. Advertising, which lays emphasis on information and has an effect, sales promotion is shorter and emphasis is on prompt purchase decision.

1.4 Purpose Of The Study

The purpose of this project is:

  1. To determine the impact of promotional strategies on an organisation profitability performance.
  2. To determine the response of sales to promotion activities.
  3. To determine the trend and changes in the company promotional activities in the recent companied to the effectiveness of control mechanism as regard the implementation of the promotional programme.
  4. To determine promotional as an element of marketing mix, it’s importance and relationship with other marketing tools as they work together as a system towards the realisation of both the marketing and organizational objectives.

1.5 Limitation Of The Study

It cannot be asserted that is on only promotion that has effect on profitability performance of an organisation, since there are other factors that can be use such as price, place, cost, demand, management and environment etc. The scope will be limited only to the effect of promotion of specified organisation on it’s profit performance, other factors are considered constant for proper analysis.

1.6 Definition Of Keyword

i. Marketing:

Is a designed to plan, price promotes and distribution of goods and services to customers of an organisation.

ii. Promotion Strategy:

It is a means used by companies to communicate to their promotion mix includes advertising, public relation, sales promotion as publicity.

iii. Promotion:

It is design and management of marketing sub-system of an organisation for the purpose of informing and persuading present and potential customer’s of the company.

iv. Sales Volume:

This is a detailed study of a company net sales volume, profit and lost statements.

v. Market Segmentation:

This is designed to determine the differences among potential buyers i.e. their buying habit or pattern.

vi. Branding:

This is designed to entails uniqueness of a particular product of an organisation.

vii. Advertising:

This media lays emphasis about passing information to the pubic about new product that is in existence, so as to create awareness and persuade the potential consumer for patronage.

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