THE EFFECT OF ADVERTISING ON THE PROFITABILITY OF A MANUFACTURING COMPANY (A CASE STUDY OF NIGERIAN BOTTLING COMPANY PLC)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF STUDY

Advertiser’s primary mission is to reach prospective customers
and influence their awareness, attitudes and buying behaviour. They spend a lot
of money to keep individuals (markets) interested in their products. To
succeed, they need to understand what makes potential customers behave the way
they do. The advertisers goals is to get enough relevant market data to develop
accurate profiles of buyers-to-find the common group (and symbols) for
communications this involves the study of consumers behaviour: the mental and
emotional processes and the physical activities of people who purchase and use
goods and services to satisfy particular needs and wants. Advertising
is any paid form of non personal presentation and promotion of ideas, goods, or
services by an identified sponsor (Kotler and Armstrong, 2010). There are
various forms of advertising like informative advertising, persuasive
advertising, comparison advertising, and reminder advertising. Informative
advertising is used to inform consumers about a new product, service or future
or build primary demand. It describes available products and services, corrects
false impressions and builds the image of the company, (Kotler,
2010).Advertising can be done through print media which includes news papers
,magazines ,brochures ,Audio media for example Radio, and visual media which
includes billboards, and television (Kotler and Armstrong 2010).

Sales
performance describes the trend of collections in terms of revenue when
comparing different periods (MC Cathy, 1994). The sales may be in form of
offering products or services to consumers. A service is any activity or
benefit that one party can offer to another that is essentially intangible and
does not result in ownership of anything (Kotler and Armstrong, 2010).Sales
volume is the core interest of every organization and is based on sales and
profit .When volume goes up profits rises and management in organizations is
made easier.

1.1.1 ORGANIZATIONAL PROFILE

The Nigerian Bottling Company Ltd
is one of the biggest companies in the non-alcoholic beverage industry in the
country and is the sole franchise bottler of The Coca-Cola Company in Nigeria.

The Nigerian Bottling Company
serves approximately 160 million people by producing and distributing a unique
portfolio of quality brands, bringing passion to marketplace implementation,
and demonstrating leadership in corporate social responsibility.

NBC Ltd started operations in Nigeria in 1951. Based in the city of Lagos, it
operates 13 bottling plants across the country. In addition, we channel
products through 59 warehouses and distribution centres. The company employ
about 4,800 people and indirectly support the jobs of up to more than a million
more in our value chain.

Nigerian Bottling Company aims to
be customers’ most preferred supplier, and conduct programmes to support more
than 450,000 customers who sell their products to consumers.

The company is part of the
Coca-Cola Hellenic Group , one of the largest bottlers of The Coca-Cola
Company’s products in the world, and the biggest in Europe. Coca-Cola Hellenic
operations span 28 countries , serving more than 570 million people. The
company is headquartered in Athens and listed on the Athens, New York, and London
stock exchanges.

·       Products

·       NBC
produce, sell and distribute a wide range of beverages, most of which are
trademark products of The Coca-Cola Company. Our product portfolio consists of:

• leading brands Coca-Cola, Coca-Cola light,
  Fanta and Sprite
• local brands such as Schweppes, Five Alive,
  Limca and Eva

The Nigerian Bottling Company
continuously review opportunities to expand its product portfolio in order to
offer consumers in Nigeria an increasing range of choices. Every measure is
taken to ensure that its products are of the highest quality.

1.2 STATEMENT OF THE PROBLEM

The
Nigerian Bottling Company carries out frequent advertising of their products to
increase their sales volume, through taking part in charitable funds in Nigeria
and even sponsoring sports .It advertises using radio, television and
newspapers.

Despite
its efforts in advertising regularly  
the sales of Nigerian Bottling Company industry have not improved to the
desired targets. The sales in Nigerian Bottling Company for the past four years
have not been steady.

 1.3 PURPOSE OF
THE STUDY    

The
purpose of the study was to establish the impacts of advertising on sales
volume of an organization.

1.4
OBJECTIVES
OF THE STUDY

1.     To
examine the forms of advertising used by The Nigerian Bottling Company.

2.     To
establish the level of sales performance in Nigerian Bottling Company.

3.     To
establish  the relationship between
advertising and sales in Nigerian Bottling Company industry

1.5
RESEARCH
QUESTIONS

1.     What
are the forms of advertising used by Nigerian Bottling Company?

2.     What
is the level of sales performance of Nigerian Bottling Company?

3.     What
is the relationship between advertising and sales performance in Nigerian
Bottling Company industry?

Content scope

The
study covered advertising as the independent variable and sales performance as
the dependant variable.

Geographical scope

The
study was cantered at the Nigerian Bottling Company industry in Lagos because
it is the headquarter of the industry where marketing plan is carried out, and
it has large sales volume

Time scope

The
study looked at five financial years back that is 2006 to 2010

1.7
SIGNIFICANCE OF THE STUDY

The study will help firms
understand the importance of advertising. It will also enable them structure
their adverts and brands to make them more appealing in order to improve sales
and lead to better performance. As this study gives a clear insight into how
advertisement can influence consumer behaviour, many firms will be encouraged
into using adverts to market their products. When firms start making more sales
and profits as a result of advertising, the economy of Ghana will be boosted,
as more income from tax will be accrued to the government of Ghana. The
findings and recommendations of this study will go a long way in helping firms
to adopt good advertising strategies, and appealing brand designs to help get
more consumers for their products and services.

1.8 PLAN OF STUDY

Chapter
one of this study includes the general introduction, background information
about the study, statement of the problem, objectives of the study, research
questions, scope of the study, significance of the study, and the limitation of
the study.

Chapter
two reviews all relevant literatures relating to the study as well as the
researcher’s views concerning previous studies on the challenges of income
taxation.

Chapter
three includes the methodology applied in collecting and analysing data,
population definition, study site, and limitations.

Chapter
four presents the results of the study as well as data analysed, and the
interpretation of the analysed data.

Chapter
five includes a summary of the study, conclusion and recommendations based on
the findings from the study.

1.9 STUDY LIMITATION

The only limitation faced by the researcher in the course of carrying out this
study was the delay in getting data from the various respondents. Most
respondents were reluctant in filling questionnaires administered to them due
to their busy schedules and nature of their work. The researcher found it
difficult to collect responses from the various respondents, and this almost
hampered the success of this study.