Sales Promotion Strategies And Sales Performance Of Telecommunication Firms In Port Harcourt
Sales Promotion Strategies And Sales Performance Of Telecommunication Firms In Port Harcourt
Abstract
The growing managerial importance of sales promotion has generated a great deal of research on how sales promotion affects profitability. In Nigeria, sales promotions expenditures by various companies is estimated to be in thousands of NigeriaNairaand the emphasis on sales promotion activities by the various industry players continue to increase year on year. Although several sales promotions are conducted each year by Telecommunication companies, promotion managers are frequently confronted with the challenge of defending the question of the impact of sales promotions activities on the profitability of the firm. This study generally sought to examine the effect of sales promotion on the performance of Globacom Nigeria Ltd. The specific objectives include to; examine sales promotional activities used by Telecommunication Firms (GLO), examine the relationship between sales promotion and sales performance of GLO, examine the effect of sales promotion on non-sales performance of GLO and finally, identify challenges facing sales promotion activities undertaken by GLO. The study adopted a descriptive research design. The population of the study was estimated at 865 (management, staff and key distributors) out of which a sample of 160 was used (primary data). The main sources of data were secondary and primary. Questionnaires were used to collect primary data whilst secondary data was taken from financial statements of GLO from 1985 to 2014. STATA 13 was used for the analyses. The study found a positive and significant relationship between sales promotion and profitability. Thus, 1 percent increase in sales promotion was associated with 0.44 percent increase in sales turnover. There was however no significant relationship between sales promotion and non-sales performance. The study recommends that management of GLO involves key distributors and supply chain members in sales promotional activities. Management of GLO also needs to integrate all promotional tools to ensure that all promotional goals are achieved.
Chapter One
Introduction
1.1 Background of the Study
In any organization whether profit or nonprofit oriented the main purpose of the organization is to achieve its objective. The objectives cannot be achieved in a vacuum there must be a clearly set strategy that management should use in order to meet these objectives. Sales promotion became an essential motivating factor in the area of marketing in any organization whether in the Telecommunication firms or any other company.
Sales promotion is an initiative undertaken by organizations to promote and increase sales, usage or trial of a product or services (Aderemi, 2003). Sales promotion refers to the provision of incentives to customers or to the distribution channel to stimulate demand for a product. It is an important component of an organizations overall marketing strategy along with advertising, public relations and personal selling. Sales promotion acts as a competitive weapon by providing an extra incentive for the target audience to purchase or support one brand over the other. It is particularly effective in spurring product trials and unplanned purchases (Aderemi, 2003). Many businesses fail to realize that they cannot stay in business without any marketing strategies. This is because they were operating in a market that was monopolistic in nature. This means that there was no intense competition from other organization. But these days due to dynamic nature of the market, and consumer taste changes every day it has become imperative on the part of the business to look into their strategies and review them if at all they want to remain in business.
The marketing communication mix consists of the sub sets of marketing tools that are primarily communicational in nature. They are tools normally classified under promotion which is one of the controllable variables of the 4ps of marketing promotional mix, is made up of advertising, personal selling, sales promotion and publicity. The element in the promotional mix that is rapidly gaining additional recognition in most industries especially in the brewery industry in Nigeria is the sales promotion. It is not enough mostly in developing countries like Nigeria in manufacturing to merely produce and trust that consumers will become aware of such products.
The researcher intends to identify the level of depending on sales promotion and its importance to Telecommunication consumers and customer alike. The researcher deliberated on the effectiveness achievements and the results. The merits and demerits associated with sales promotion are also highlighted.
1.2 Statement of the Problem
Service providers like the Telecom operators’ needs to provide offerings or services that satisfy consumer needs and expectations to ensure the company’s economic survival. Intense competition among the telecommunication networks in Port Harcourt has led to the application of various marketing strategies and tactics to win a good share of the market. Sales promotion has been widely used by these networks in their attempt to outsmart their competitors. Mean while Sales Promotion which is a key ingredient in marketing campaigns and consists of a diverse collection of incentive tools is mostly short term designed to stimulate quicker or greater purchase of particular products or services by consumers but seen as lacking the capacity.
Against this backdrop, this research examines the extent to which sales promotion strategies and sales performance in the telecommunication industry in Port Harcourt.
1.3 Objectives of the Study
This study generally sought to examine the effect of sales promotion on the profitability of Globacom Nigeria Ltd. The specific objectives entail:
- To examine sales promotional activities used by telecommunication firms in Port Harcourt.
- To examine the relationship between sales promotion and financial performance of telecommunication firms in Port Harcourt.
- To examine the effect of sales promotion on non-financial performance of telecommunication firms in Port Harcourt.
- To identify challenges surrounding sales promotion activities undertaken by telecommunication firms in Port Harcourt
1.4 Research Question
The following research questions shall be investigated:
- What sales promotional tools are used by telecommunication firms in Port Harcourt?
- What is the relationship between sales promotion and financial performance of telecommunication firms in Port Harcourt?
- What is the effect of sales promotion on non-financial performance of telecommunication firms in Port Harcourt?
- What challenges affect sales promotional activities undertaken by telecommunication firms in Port Harcourt?
1.7 Significance of the Study
This study is useful to telecommunication firms in Port Harcourt as they get to know the extent to which sales promotion influences customers’ choice of network. This study would be significant in the promotion of products and services by the telecom operators in Port Harcourt. It shall also guide us to know how to improve more on the program encouraging more students to take part in the program-for the achievement of fundamental rights. It will also help the firms to properly utilize their resources, increase their profitability and growth. The firms will then decide whether to continue to invest a good portion of their resources into sales promotion or to redirect these scarce resources into other areas that provide relatively substantial customer value. The research work will also serve as guide to customers of the industry, especially tertiary students as they will want to buy from networks with the most attractive sales promotional packages considering the dependent nature of their purchasing power. Therefore, this work will add to the little that exists which will serve as a relevant source of reference to future researchers of related topics. More importantly, the study has discovered other areas which need further exploration by interested researchers. Owing to this, students, researchers and research organizations can benefit substantially from the recommendations of the findings of this study as it will provide a basis for future research in the area of sales promotion and its effects on consumers.
1.8 Scope of the Study
This study is specifically delimited to investigating the extent of Sales Promotion Strategies and Sales performance in telecommunication firms in Rivers State and the strategies for providing effective Sales Promotion Strategies in Rivers State.
1.9 Limitations of the Study
The limitations of this research work include difficulty in getting relevant materials. Also, only small geographical area is covered in this study. As a result of the small geographical area covered, national generalization may be limited and also time and semester workload.
Time: Is a very serious factor in this researcher, time is transient and for that reason. In the process of undertaking, this research work, a number of problems both directly or indirectly have affected the study. It has been the intention of the researcher to cover all other branches of telecommunication firms to determine to what effect sales promotion has on sales performance. The time is a major constraint to the study.
1.10 Definition of Terms
Sales Promotion:
May be described or defined as the use of short term incentives periodically to stimulate or encourage consumers to buy product
Price Reduction:
A price reduction allows customers to buy your products at a lower price for a specified period of time
Coupons:
Coupons can be used as a way to attract new customers or to develop customer loyalty
Personal selling:
The process of making oral commercial representation during a buying / seller interview situation. This is collegially referred to as face to face selling or known as buyer / seller interface
Sales performance:
Sales performance can indicate the rate of customer loyalty to the business or a specific employee
Performance: Performance refers to the accomplishment of a given task measured against present known standards of accuracy and completeness.
Sales:
The activity or business of selling products or services.
Growth:
Growth is the process of improving some measures of an enterprises success.
Telecommunication:
Telecommunications is the exchange of information over significant distances by electronic means.
Chapter Five
Summary of Findings, Conclusion and Recommendations
5.1 Introduction
This chapter presents summary of findings, conclusion and recommendations for the study.
Specifically, the study sought to examine sales promotional activities used by Telecommunication Firmsin port Harcourt (GLO), the relationship between sales promotion and sales performance of GLO, examine the effect of sales promotion on non-sales performance of GLO and identify challenges affecting sales promotion activities undertaken by GLO.
5.2 Summary of Findings
Summary of findings from the previous chapter are presented as follows.
5.3 Conclusion
Whilst some researchers found a positive relation between sales promotion and sales performance (Anderson et al (1999; Kumar et al (2005), others found otherwise (Vecchio et al. 2006). For this study, the researcher found a positive and significant relationship between sales promotion and profitability. The study concluded that 1 percent increase in sales promotion was associated with 0.44 percent increase in sales turnover. In other words, a 100 increase in sales promotion was associated with a 44 percent increase in sales turnover. However, when it comes to non-sales performance, the study found that sales promotion did not significantly affect new product development.
Finally, the relationship between sales promotion and customer acquisition was positive and significant. The coefficient is elastic and implied that, 1 percent increase in sales promotion expenditure is associated with 0.09 percent increase in customer acquisition.
5.4 Recommendation
Based on the above findings, the researcher recommends the following.
- Management of GLO should ensure effective integration of communication tools to ensure that the intended objectives for all promotional tools are achieved.
- It is equally important for management to fully utilize technology to attract consumers to the Globacom Nigeria brand. Social media tools have become more appealing to the youth hence GLO must explore its full benefits.
- To deal with the question of whether sales promotion affects sales performance, the study supported the position that sales promotion has a positive and significant effect on profitability. However, it is recommended that management periodically evaluates the contribution of sales promotion relative to other promotional tools.
- Finally, the study recommends that management of GLO involves key distributors and supply chain members in sales promotional activities if they need to meet the goals stipulated for such campaigns. This is because distributors and retails deal directly with consumers hence they can give adequate feedback on promotional activities used.
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