PROMOTION AS A STRATEGIC INSTRUMENT IN THE SALES OF MALT DRINKS (A CASE STUDY OF GUINNESS NIGERIA PLC ENUGU METROPOLIS)

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

          The purpose of promotion is not to recover cost but to capture the value of the product in the minds of the customers. Promotion consist of co-coordinated sellers-initiated effort to establish channels of information and persuasion to forecaster the sales of goods and services.   Promotion means every means of communication a product or service to the buyer or final consumer.   It should be recalled that each of the marketing mix communicating means proper integration of the marketing mix variables and the promotional mix in the right proportion to achieve the market goals of the organization.   In other words Wibur Schram says that promotion as a communication tools is the process of establishing commonness or oneness of thought between the seller and the buyer.  The brighter understanding and knowledge of the product help to keep moving the product forward.

          Effective promotion pushes the product along different stages of response depending on the stage of the product on the product life cycle or the particular response demanded by the marketers.  The response can be awareness, liking, knowledge, preference, conviction and or purchase.

          It is also said that a company can have the best quality produce which price is considered reasonable, but without letting people know that such product exist and can be found at a particular place such product cannot get market patronage because it is suffering from major marketing problem of no promotion.  On the same vein, a product that doest not receive proper integration of the promotional mix at the optional level is equivalent to no promotion at all.  

          The promotional mix are advertising, sales promotion, personal selling, public relation and direct marketing.   Advertising:   is any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor.   It involves the use of mass medium they are Radio, Television, newspaper etc. Advertising could be carried out for different purposes; in that case there are competitive advertising (aimed at fighting competition), informative advertising (announcing the existence of a new product or service or a modification of existing brands), institutional advertising (to build up the company name, image and goodwill). Advertising has some distinct qualifies:   

a)                 Mass communication: The message is transmitted simultaneously to a large number of people through a media.

b)                Controlled:   The contents, time and direction of an advertising message are controlled by the advertiser.

c)                 Impersonal:   advertising is a monologue.

d)                Dramatization:advertising is characterized by sound, colour, and the use of prints.   This makes the message interesting and sometimes dramatizes the company and its products. Personal selling: Personal presentation by the firm’s sales force for the purpose of making sales and building customers relationships.   It is an effective tool for building up building up buyer’s preference, convictions and actions.

Its distinct features are:

Personal communication:        Personal selling involves close personal interaction between sellers and buyer.

Immediate feedback:      It is a dialogue it permits the prospect to raise objection, ask question or place order immediately.

Sales promotion:  Short term incentives to encourage the purchase or sales of a product or service. Sales promotion includes a wide assortment of tools like coupons, contest, lent-off deal premiums and other all of which have many unique qualities.   It attracts quick responses where as advertising says “buy our product” sales promotion says “buy it now”, sales promotion can be classified into consumer promotion (Sampling premium offer, price off etc.), trade promotions (dealer contests, free goods, merchandising allowance etc.) and sales force promotion (sales force contest, bonus etc.).

Its distinct features are:

a)                 Attention getting:  They produce direct and immediate concession and inducement to gain attention of the buyer and lead the buyer to the product.

b)                Product or image damaging:   A too-frequent use of sales promotion tools may convey the notion that the products being pushed are either inferior, ill-designed or even over priced.

Public Relation:    Building good relations with the company various publics by obtaining favourable publicity, building up a good corporate image and handling or heading off unfavourable rumours, stories and events.   Publicity appears in different ways they are press relation (placing news.  Worthy item in the news media), product publicity (launching a new product) lobbying (fighting undesirable government policies and supporting the desirable policies) corporate promotion (internal and external message to improve the understanding of the institution). 

Its distinct features are:

High Credibility:  The news stories and messages are not sponsored by the sellers so readers see it to be trustworthy and authentic.

Off-Guard:  Messages that appear as news are not paid for in the sense that the firm is not billed for the space or time.

Direct Marketing:Direct connections with carefully targeted individual consumers to both obtain an immediate responses and cultivate lasting customer relationships.   It is a non-public and its message is directed to a specific person.   It is immediate and customized and interactive.  Direct marketing is done through the use of telephone, mail, fax, email, internet etc.

          Promotion is one of the elements in marketing mix that represent cost.   Therefore any study or the subject would have to be stream lined in order to arrive at an acceptable and profitable policy.   In the liger of this, this project is set to determine promotion as an instrument in sales of malt drink with a special emphasis on Malta Guinness brewed by Guinness Nigeria Plc.  In other words, viewing promotion from the sales angle that is using sales as a parameter to measure the effect of promotion both on consumer, competitors, quantity demanded. 

1.2     HISTORICAL BACKGROUND (GNPLC)

          Guinness Nigeria Plc was incorporated in Nigeria in 1950 to import and distribute Guinness from Dublin for sales in Nigeria.

          Following the great success of the product in Nigeria, a decision to build a Brewery in the country was taken in 1960 and the stout brewery in Ikeja was constructed in 1962, hence, the new enterprise (Ikeja brewery) eventually became the third Guinness brewery in the world producing Guinness stout apart from Public and Loudon.  With the increased demand for their high quality product the brewery was expanded as a result they entered into the lager beer market with the construction of Harp brewery in Benin in 1974.  To meet the even growing demand for Guinness stout, the third brewery was also built to cater for the huge market demand in the Eastern Zone.  The contribution of Guinness Nigeria Plc to the national economy lies not only in providing direct employment to over 5,000 (five thousand) employees, but also in the indirect employment it generate four thousand of other Nigerians engaged in the production of bottles, crow cocks, crates, cantons, labels and also transporters of their supplies and finished goods as well as contractor who service their breweries.   The firm also generates considerable internal revenue for government through the payment of Excise Duties, import Duties and company tax, which in a normal year amounts to an average of 14 million per month excise duty alone.   The first Nigeria to heed the firm was appointed in 1975, in person of Chief (Dr.) A. K. Ubeku. On 1st September, 1986 the company was formally reorganized into three main divisions – Brewery division, Guinness firm division and Guinness processing division.   The company has being aligned with government policy on impart substitution and at the same time committed to the maintenance of high quality products, while at the same time, it has been a good corporate citizen by building and maintaining age hospitals and as well as supporting the development of sports throughout the federation.

          With the success story of Brewing in the country, the firm added yet another line of product to its existing one in 1990 and Nnamed it Malta Guinness.   Purposely to capture the segment of the market that does not drink alcoholic product.   It is of importance to mention here that till the date of writing.   This product, Malta Guinness is doing fine among its competing brands in the market. 

          Due to proper direction of the Board of Directors, their technical partners’ support the hard work of the management and staff couple with customers’ continuous patronage, the company’s turnover has risen from N286 million in 1986.   The headquarters of the firm is located in Ikeja and is responsible for overall planning, co-ordination and control of the whole company.

1.3     STATEMENT OF THE PROBLEM

          Guinness Nigeria Plc was incorporated in Nigeria in 1950.  With the success story of the brewing in the country, the firm added yet another line of product to its existing line in 1990 and Named it Malta Guinness.   Guinness Nigeria Plc is the leader in the Malta drinks industry in Enugu Metropolis.   The company has other products like Guinness stout and harp, both of them are alcoholic.

          Malta Guinness has been selling well in Nigeria for many years and the performance of the product in the market has been satisfactory. Most consumers prefer the product to other competing brands of malts.  

Why do consumers prefer it to other competing brand upon the fact that the price is higher when compared with other Malta drinks? 

Why has Malta Guinness been so successful in the market:  Is the success as a result of the product quality, taste, company’s trademark or name, pricing system or promotional system.

1.4     OBJECTIVE OF THE STUDY

          Promotion is one of the controllable mix in marketing and its importance cannot be over emphasized because it is one of the revenue generating mix.   The management therefore has to be more stringent in planning this mix.   Therefore the objective of the study are:

·                    To find out whether the company’s promotional mix strategies affects the sales volume of the product.

·                    To identify how competitors promotion system is affecting the company sales volume.

·                    To know whether promotion decision really constitute a complex web in business organization.

·                    To suggest ways of improving the promotional mix strategies in order to improve the overall objective of the firm. 

1.5     RESEARCH HYPOTHESIS

          Based on the statement of problem developed at the early parts of this work, this study will be tested on the following hypothesis.

1)                That Malta Guinness is preferred to other competing malt drinks because of its superiority.

2)                That the promotion of the product hinges largely on the goodwill of Guinness trade name.

3)                That the promotion of the product has influenced its share of the market.

1.6     SIGNIFICANCE OF THE STUDY

          The outcome of this study will be useful to Guinness Nigeria Plc and other malt drinks in using promotion strategy as a yardstick to enhance the sales of their products in the country.

          The study is also aimed at determining the best promotion method/strategy to be adopted in sales of malt drinks.

          Also it will try to solve the problems encountered by the management in its product promotion policy.

          Furthermore, this project will be helpful to any student who wishes to carryout similar study in future.

1.7     SCOPE OF THE STUDY

          In order to make this work a perfect on base on time constraint, the work will be restricted within Enugu Metropolis.

1.8     NEED FOR THE STUDY

          The topic promotion as a strategic instrument in the sales of malt drinks has been chosen in order to identify if there is any uniqueness in the promotion of Malta Guinness, in relation to some other malt drinks in the country.   Promotion of Malta Guinness will be regarded unique if there is a distinct characteristic that cannot be compared to other malt drinks being a new product.

          I would like to find out as well whether Guinness Nigeria Plc promote this product putting into consideration the promotion of other competing malt drinks in the market or it is promoted in custom with the company age long goodwill. 

1.9     DEFINITION OF TERMS

PROMOTION:        Means activities that communicate the merits of the products and persuade target customer to buy it.

MARKET STAGE:         The proportion of a market which preferred to buy a company’s product (usually in percentage).

PROMOTIONAL MIX:  This is the effective combination of the components of the promotional tools to achieve the promotional objectives.

OPTIMAL PROMOTION STRATEGY:       The combination of different promotion tools such that maximum benefits or returns is achieved.

PRODUCT LIFE CYCLE:        This is different stage a product pass through during it’s life time.

CONSUMER:       The end or actual users of a product or service.

METROPOLIS:        This is the Chief or capital city of a state or country or zone.