ABSTRACT
Rapid changes in technology, over production, shortened product life cycles, increased competition owing to reduced barriers to domestic and international trade, mass communication and globalization have all contributed to the need for a firm to have distinctive capabilities; which create a competitive advantage over others. We are inclined to believe that fully utilized, competent and well-articulated sales promotion strategies constitute a competitive advantage. With the notion that sales promotion strategies positively correlates with marketing performance, firms view sales promotion strategy incompetence with grave concern. The effect of poor promotion strategy performance is not limited to firms alone since organizations can and do experience sub-optimal or out-right poor performance; but also to the economy as a whole. The aggregate business performance of a country’s economic unit shapes its economy, since a nation’s wealth is measured mostly in terms of its GDP. Among the factors critical to business profitability; fresh concerns about the efficacy of Sales promotion strategies is sparsely researched. This informs the research interest in this regard, recognizing the unique role of sales promotion strategies that distinguishes it from other marketing communication methods, and its critical roles in pushing and creating traffic for the manufacturer’s product. With a survey research design, a Pearson’s Product Moment Correlation Coefficient model was formulated to incorporate four hypotheses of interests. Quantitative data were collected through a 5-point Likert-type scale questionnaire. A total of 140 copies of questionnaire were administered to top management staff of Nestle Nigeria Plc but only 120 copies were found valid for this study. We adopted Pearson’s ‘r’ to assess the relationship between sales promotion strategy and marketing performance and to know if Marketing Performance can be measured by Sales volume, Profitability and Market share. Our findings reveal that there is a significant relationship between Sales promotion strategies and marketing performance. We therefore recommend that Nestle Nigeria Plc should set up more and effective sales promotion department with experienced staff with the view of developing more promotional strategies in line with the company’s objectives. Sales promotion budgets should always be adequate in the organization.
TABLE
OF CONTENTS
Title page -i
Declaration -ii
Certification -iii
Dedication -iv
Acknowledgement -v
Table of contents -vi
List of tables -ix
Abstract -x
Chapter
One: Introduction
1.1 Background
of the study- - - - -1
1.2 Statement
of problem- - - - - -3
1.3 Objectives
of the study- - - - -4
1.4 Research
Questions- - - - - -5
1.5 Research
Hypothesis- - - - - -5
1.6 Significance
of study- - - - - -5
1.7 Scope
of Study- - - - - -5
1.8 Limitations
of study- - - - - -6
1.9 Definition
of terms- - - - - -6
Chapter
Two: Review Of Related Literature
2.1 Introduction- - - - - -8
2.2 Theoretical
Framework- - - - -8
2.2.1 Nature
and Concept of Sales Promotion- - - -8
2.3 Types
of Sales Promotion- - - - -11
2.4 Sales
Promotion Technique- - - - -12
2.4.1 Sales
Promotion method used by Retailers- - - -13
2.4.2 New
Product Sales Promotion Techniques- - - -13
2.4.3 Sales
Promotion method aimed at reseller- - - -13
2.4.4 Sales
Promotion Method for Established Product- - -13
2.5 Factors
that influence the choice of Promotional Devices- - -15
2.6 Promotional
Strategy- - - - - -16
2.7 Functions
of Sales Promotion- - - - -16
2.8 Importance
of Sales Promotion- - - - -17
2.9 Advantages
of Sales Promotion- - - - -18
2.10 Disadvantages
of Sales Promotion- - - - -19
2.11 Marketing
Performance- - - - -19
2.11.1 Sales Turnover- - - - -19
2.11.2 Market Share- - - - - -20
2.11.3 Profitability- - - - - -20
2.12 Communication
and Sales Promotion- - - -21
Chapter
Three: Research
Methodology
3.1 Research
Design- - - - - -23
3.2 Sources
of Data Collection- - - - -23
3.2.1 Primary Sources- - - - -23
3.2.2 Secondary Sources- - - - -23
3.3 Population
of the study- - - - -24
3.4 Sampling
Design- - - - - -24
3.4.1 Sample
Size Determination- - - - -24
3.4.2 Sampling Procedure/ technique- - - -24
3.4.3 Sampling Method- - - - -25
3.5 Statistical/
Analytical tool- - - - -25
3.6 Test
of Significance- - - - - -26
Chapter four: Data presentation,
analysis and discussion of findings
4.1 Data
presentation- - - - - -27
4.2 Analysis
of Data- - - - - -29
4.3 Testing
of Hypothesis- - - - -34
Chapter
five: Summary, conclusion and recommendation
5.1 Summary
of Findings- - - - -38
5.2 Conclusion- - - - - -38
5.3 Recommendations- - - - - -39
References
List
of Tables
Table 4.1 Distribution of questionnaires
Table 4.2 frequency distribution of respondents
according to age
Table 4.3: frequency distribution of respondents
according to gender
Table 4.4 frequency distribution of respondents
according to Qualification
Table 4.5 frequency distribution of respondents
according to occupation
Table 4.6 Sales Promotion Strategy variable scores
with Marketing Performance variables
Table 4.7 Result of Pearson Correlation
Table 4.8
Summary of responses on Relationship between Sales
Promotion Strategy and Marketing Performance
Table 4.9 Restated/pasted Table 4.7 Result of
Pearson Correlation
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Every business
organisation reaches to the customers through their goods or service. To sell
the products to the customers, a number of activities are being performed. This
is called marketing and it is an important function. Marketing is the activity
that directs to satisfy human needs through exchange process. Marketing starts
with the identification of a specific need of customers and ends with
satisfaction of that need. In marketing, a large number of activities are
performed and for easy understanding, these activities are divided into four (4)
for products and seven (7) for services. They are; product, price, place, and
promotion and three additional elements for services are; process, physical
evidence and people. These are called elements of marketing mix.
Promotion is one of the
elements. It is one of the variables through which information regarding
products or services is being communicated to customers to change their
attitude and behaviour. The methods include; Sales promotion, advertising,
publicity, personal selling and packaging. Sales promotion include incentive
offering and interest creating activities which are generally short term
marketing events other than advertising, personal selling, publicity and direct
marketing. The purpose of sales promotion is to stimulate, motivate and
influence the purchase and other desired behavioural responses of the firm’s
customers. Kazmi & Batra.
Sales promotion which is
a major force in marketing is widely accepted by beverage drink industries in
Nigeria, but as Nigeria is experiencing a down turn, there is increase in the
price of consumer goods that leads to an increase in beverage drink prices
(NESTLE Food Fact book, 2010; Bamiduro, 2001).
Sales promotion refers to
any extra incentives manufacturers, retailers and even not-for-profit
organisations use that could serve to change a brand’s perceived price value
temporarily (Shimp, 2010). These incentives are usually offered for a limited
time only; and they thus create a sense of immediacy, where customers have to
make a decision quickly. It is used to make quick sales and responses. Sales
promotion techniques, such as free samples, competitions, premiums, coupons,
price incentives, provide extra incentives to achieve immediate sales. These
are often referred to as value-added techniques, because they provide immediate
value to brands (Duplessis, Bothma, Jordan & Vanheeren, 2010).
The purpose of sales
promotion is to influence the purchasing behaviour of consumers by accelerating
purchasing or consumption, thereby providing them with an incentive to react
quickly to the promotional offer. Sales promotion can promote marketing
performance through increase profitability from higher sales. Okoli (2011)
explains that the “essence of setting up a business organisation is to make
profit. Without profit, a business is bound to fail.”
Association of Marketing,
America defines it as those marketing activities other than personal selling
that stimulates consumers’ purchasing power and dealer effectiveness such as
displays, shows, demonstrations, exhibitions and various non-recurrent selling
efforts not in the ordinary routine. The importance of excessive promotion in a
competitive market environment has generated a lot of interest in marketers and
firms to develop numerous and comprehensive promotional approaches (Adaramola,
2010). Bitta (2002) said that sales promotion plays a significant effect on
decisions which help in achieving the organizational objectives. It has been
established in literature that only consumers with repeat purchases are
profitable (Nagar, 2009). It is not every repeat purchase that is connected to
consumer’s commitment to a brand. However, consumer’s commitment is important
for a repeat purchase, Therefore, business operators need to develop marketing
program that will not only reinforce customer’s commitment but also encourage
repeat purchases.
Marketing performance has
to do with describing the analysis of the efficiency and effectiveness of
marketing. It is accomplished by focusing on the alignment of marketing
activities, strategies and metrics with business goals. Sales promotion
strategies positively correlate with marketing performance.
In competitive business
environment, organisations need to constantly stimulate sales through adoption
of incentive marketing techniques (Chevron, 1998); particularly those directed
at channel members (Narasimhan, 1990). These include trade contest, trade
fairs& Trade allowances; which when properly applied can lead to marketing
performance in terms of sales turn over, market share and profitability
(Buyline Report, 2008; Jackson, D.W, Schlacter, J.L, & Wolfe, W.G 1995;
Narasimhan, 1989). However, to achieve this, firms must operate within the
boundaries of core competencies of its strategies (Prahad & Hamel, 1990);
and within an understanding of the firm’s environment which can change over
time (Uzor, 2011).
1.2 Statement
of Problem
Researchers and experts
have been wondering whether sales promotion still serves its purpose (Ikem,
2011). Many a time, most organisation do not achieve the level of marketing
performance that will yield rents for them, hence, some organizations experience
sub-optimal or even out-right poor marketing performance. As a result, firms
get worried about the contributions of their promotion strategies to marketing
performance not with-standing the large budgets used to maintain it sometimes.
The aggregate business
performance of a country’s economic units made by the firms shapes its entire
economy since a nation’s wealth is measured mostly in terms of its Gross
Domestic Products (GDP).Therefore, if the society depends on the marketing
performance of business organisations for
its living standards as defined by GDP, and these organizations, in
turn, depend on the competence of its sales promotion strategies to achieve
competitive advantage, it stands to reason then that incompetent or sub-stand
sales promotion strategies will affect the organization’s marketing performance
in particular and the human society’s economic well being in general. It
becomes apparent that the effect of poor sales promotion strategies is not
limited to firms alone but also to the economy by extension.
When sales promotion is
poorly carried out, it affects sales volume and profit. The problems of low
sales and demand have prompted producers to use sales promotion to compliment
the use of other promotional mix.
It has also been observed
that most producers do not employ the appropriate use of sales promotional
tools and methods, to enhance the achievements of stated goals and have
neglected the importance of marketing concept which is people oriented
philosophy that regards the customers as kings and the sole aim of the business
existence.
1.3 Objectives
of the Study
The main objective of the
study is to determine the relationship between sales promotion strategy and marketing
performance of Nestle Nigeria plc.
The specific objectives are:
(i) To
determine the extent to which sales promotion strategies relate to sales volume
of Nestle products.
(ii) To
know the extent of the relationship between sales promotion strategy and
Profitability.
(iii)
To assess the relationship between sales
promotion strategy and market share.
1.4 Research Questions
(i) To
what extent does sales promotion strategy relate to sales volume?
(ii) What
is the extent of the relationship between sales promotion strategy and
profitability?
(iii)
What is the extent of the relationship
between sales promotion strategy and market share.
1.5
Research Hypotheses
Ho1: There is no
relationship between sales promotion strategy and sales volume.
Ho2: There is no
relationship between sales promotion strategy and profitability.
Ho3: There is no
relationship between sales promotion strategy and market share
1.6 Significance
of Study
This
study is not a mere academic exercise. It would contribute in clarifying the
all concepts relating to marketing communication, marketing performance,
promotion mix, sales promotion, strategy relating to sales promotion, its
impact on sales, profit, return on investment, sales volume, market share and
goodwill of the companies. The beneficiary from the study of this topic would
be first of all self researchers, academicians, practicing managers, prospect
researchers and Nestle Nigeria plc. Nestle Nigeria plc may implement the
suggestions for improvement of sales for achieving sales target. It can be said
the benefits would be multi-dimensional for the above mentioned parties.
1.7
Scope of the Study
This study is relating to promotion mix
elements out of total marketing effort. It will cover mainly sales promotion,
methods for sales promotion, sales promotion strategies and marketing
performance. This study is limited to Nestle Nigeria plc, covering both head
office at 22/24, Industrial Avenue, Ilupeju and the factory at Km 32,
Lagos-Badagry Express Road, Agbara Industrial Estate, Ogun state.
1.8 Limitations
of the Study
To
carry out the research study, the following limitations were expected and faced
during the study:
(i) Salesmen,
distributors and managers were reluctant to share data.
(ii) Management
were also reluctant in sharing views on the topic.
(iii)
Time, cost and location factors became
major difficulties in completion of the research. This is due to the distance
between the company of interest and the researcher.
(iv) Sample
size is not the exact representative of the universe. There is possibility of
some error to a limited extent.
However,
to overcome the limitations and maintain the effectiveness of this research
work, sincere efforts were put.
1.9 Definition
of Terms
Promotion:
This is the communication element of marketing which aims at telling the
potential buyers that the products of the company are available and affordable
to them and that they stand to benefit more in buying the company product. It
aims at inducing trial for non-users and encouraging current users to not only
remain loyal but also to increase their rate of usage (Nwaizugbo 2004).
Sales promotion:
Nwaizugbo (2004) asserts that sales promotion is the term that include all
methods of stimulating demand not spefically identified as advertising or
personal selling instead sales promotion is designed to supplement and
compliment these promotional tools. Kotler (2001) describes sales promotion as
adverse collection of incentive tools, mostly short-term, designed to stimulate
quicker and/or greater purchase of particular brand, products, or service by
consumers or the traders.
Tools:
tools are referred to as equipments used by most organisations including
manufacturers, distributors, retailers, associations and non-profit
organisation such as political party. In sales promotion, the effective tool to
achieve an organisational aim or objectives.
Marketing mix:
This is a concept of marketing strategy which is based on product, price,
promotion, distribution, processing and packaging in an integrated marketing
programme.
Marketing communication:
Conveying of information from the marketing to the market with the aim of
creating awareness and obtaining favourable attitude towards the company and
its products and services.
Marketing Performance:
This is defined as the behaviour of an asset or security in the market place.
In the securities business, the market performance committee is a division of
the New York Stock Exchange which monitors how effective specialists are in
conducting an orderly market for stocks. The committee is also responsible for
listing and assignment of new issues.
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