Full Project – The effect of sales promotion on company’s operational performance

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CHAPTER ONE INTRODUCTION

1.0 BACKGROUND OF THE STUDY

The business environment has become very competitive in the 21st century due to the growth in technology, infrastructure and access to information around the globe. This has made the environment very complex and consumer preferences keep changing because of the low switching cost in the market. Due to the increasing demand of consumers in the market, management of business organizations have to increase their resources with attention focused more on attracting and retaining its customers.

The ever increasing competition in the global market has prompted organizations to be determined and ensure satisfaction of customer needs and wants more efficiently and effectively than ones competitors. Sales promotion is an initiative undertaken by organizations to promote and increase sales, usage or trial of a product or services. 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 is one to the promotional mix variable which forms the basis of all marketing and promotional activities. The rapid growth of sales promotion is due to the fact that product managers are faced with greater pressure to increase their current sales and sales promotion as viewer as an effective short-term sales tools. Again product manager faces more competition and competing brands are less differentiated increase, managers use sales promotion to differentiate their offer, more ever, sales promotion help to complement advertising efficiency which has been on decide as result of using cost media clutter and legal resents. It is used in combination with

other promotional tools. In other words, it is viewed as paling a secondary role to the major tools of advertising and personal selling. It is particularly effective in spurring product trials and unplanned purchases (Aderemi, 2003).Sales promotion is a marketing activity that adds to the basic value proposition behind a product(i.e. getting more for less) for a limited time in order to stimulate consumer purchasing, selling effectiveness or the effort of the sales force (Aderemi,

2003). This implies that, sales promotion may be directed either at end consumer or at selling intermediaries such as retailers or sale screws. Sales promotion can be an effective tool in a highly competitive market, when the objective is to convince retailers to carry a new product or influence consumers to select it over those of competitors. More so, sales promotion tend to work best when it is applied to items whose features can be judged at the point of purchase, rather than more complex, expensive items that might require hands of demonstration (Kotler and Keller, 2006). Sales promotion includes communication activities that provide extra value or incentives to ultimate customers, wholesalers, retailers or other organizational customers. It also stimulates sales product trial (Kotler and Keller, 2006). This study focuses on the effects of sales promotion on consumer buying behavior. The ultimate objective of every business is to increase the sale of goods that it deals in. Several methods can be adopted for the achievement of this goal; some direct while others indirect. Sales promotion is one of them. Sales promotion is defined as a “diverse collection of incentive tools, mostly, short-term designed to stimulate quicker and/or greater purchase of particular products/services by consumers” (Kotler, 1998).

According to Kotler (2003), Sales Promotion is a key ingredient in marketing campaigns and consists of a diverse collections of incentive tools, mostly short term designed to stimulate quicker or greater purchase particular products or services by consumers. Sales promotions programmers are those activities other than stimulate consumer purchase.

1.1 STATEMENT OF THE PROBLEM

Nigerian Bottling Company Plc needs to provide offerings or services that satisfy consumer needs and expectations to ensure the company’s economic survival. In order to achieve this, they need to understand consumer buying behavior to help them evaluate their service offerings. Consumers go through a cycle of decision making processes before making a purchase decision which define their behavior in the consumption of the products they purchase from these companies. The consumer buying process is a complex matter as many internal and external factors impact on the buying decision of the consumer (Aderemi, 2003). The consumer makes a purchase decision by examining alternatives before making the purchase. Sometimes, the purchase may differ from the purchase decision reached earlier. There is always post purchase evaluation by the consumers after purchasing and consumption of the service. Specific factors that may lead to altered consumer buying behavior are size and composition of the evoked set of alternatives, perceived risk, brand loyalty and attribution of dissatisfaction.

However, firms (using Nigeria Bottling Company as a case study) have the following challenges:

They have problem of Communication channel is a serious challenge; marketing vehicle is a specific tool for delivering a company’s advertisement to a target audience. Without marketing vehicles, there would be no way for businesses to ensure their marketing messages and advertisements reach the consumers.
Insufficient stocks in the store is a serious problem for Nigerian Bottling Company, when there is lack of stock to satisfy customers demand, if this issue is not addressed, the company will lose sales and disappoint its customers.
Again, poor timing, proper timing of your promotion is very important to producing a positive return on your marketing investment, reaching the right market with the right message through the right media at the wrong moment won’t generate sales.

1.2 OBJECTIVES OF THE STUDY

General Objective: The general objective of this study was to investigate the effect of sales

promotion on company’s operational performance

Specific objectives:

To identify the significance of communication channel to the performance of Nigerian

Bottling Company

To find out how insufficient stocks in the store affect the performance of Nigerian Bottling

Company

iii. To examine how poor timing of promotional activities affect the performance of Nigerian

Bottling Company.

1.3 RESEARCH QUESTIONS

In answering the objectives for the study, the following questions were asked:

To what extent has communication channel to the performance of Nigerian Bottling

Company?

To what extent has insufficient stock in the store affect the performance of Nigerian Bottling Company?

Does poor timing affect the performance of Nigerian Bottling Company?

1.4 STATEMENT OF HYPOTHESIS

In order to address the research objectives and questions and ascertain reliable outcome from the investigation, the following hypotheses stated were tested:

Hypothesis 1

Ho: Communication channel has no significance effect on the performance of Nigerian Bottling

Company

Hi: Communication channel has significance effect on the performance of Nigerian Bottling

Company

Hypothesis 2

Ho: insufficient stock has no significance effect on the performance of Nigerian Bottling

Company

Hi: insufficient stock has significance effect on the performance of Nigerian Bottling Company

Hypothesis 3

Ho: Poor timing does not affect the performance of Nigerian Bottling Company

Hi: Poor timing affect the performance of Nigerian Bottling Company

1.5 SIGNIFICANCE OF THE STUDY

This study will determine the effect of sales promotion on company’s operational performance. The findings of the study may be used by the marketing team, management and interested stakeholders in the designing, reviewing and implementation of appropriate mechanisms and policies to ensure that their customers are satisfied with the product offered.

This research will be available to the organization being researched, for the management to know the perception of their customer on products being provided to them and help improve on the service quality. Educational institutions, corporate entities, business policy makers and other researchers will also benefit from this research in making decision when it comes to sales promotion on company’s growth and performance.

1.6 SCOPE OF THE STUDY

The scope of this very wide if it has to be carried out in the entire Nigerian Bottling Company Plc. This study is therefore limited to Abuja; the research work was carried out at Nigerian Bottling Company Plc branch office, and located Abuja to study the effect of sales promotion on company’s operational performance.

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