THE EFFECT OF ADVERTISING ON SALES VOLUME OF AN ORGANIZATION

CHAPTER ONE

1.0 Introduction

Advertising is any paid form of non-personal communication about an organization or its product to a target audience through a mass/broadcast medium by an identified sponsor. It should be observed that for any promotional activity to be called advertisement it must be paid for.

In the real sense, it is the method used by companies for creating awareness of their products, as well as making new products known to the new and potential consumers.

This thesis however, centers on the impact of advertising on the sales volume of a product. This work will shed light on how advertising can really affect a consumer’s buying decisions in a growing economy like that of Nigeria and how successful advertising can keep businesses going even in the midst a tough competition.

More so, advertising as a promotional tool also tends to remind, reassure and influence the decisions of the consumers because an advertisement itself enlightens, educates, and persuades consumers on their acceptability of the product offering.

Advertisement in such a media as print (newspaper, magazines, billboards, flyers) or broadcast (radio, television) typically consist of pictures, headlines, information about the product and occasionally a response coupon. Broadcast advertisement on the other hand consists of an audio or video narrative that can range from 15seconds spots to longer segments known as infomercials, which generally last 30 to 60 minutes. (Busari 2002)

Advertisements can also be seen on the seats of grocery carts, on the wall of airport walkways, on the sides of buses, airplane and train. Advertisements are usually placed anywhere an audience can easily and/or frequently a access visual and/or video. (Busari 2002)

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

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

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

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

1.5 RESEARCH QUESTIONS

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

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

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

1.6 SCOPE OF THE STUDY

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.

1.10 Definition of terms

Advertising: This is any paid form of non-personal presentation of idea, goods or services by an identified sponsor.

Advertising Agencies: These are usually independent business organizations comprised of creative and business personnel, who develop, prepare and place adverts for organizations so as to attract and influence consumers’ behaviour towards a product or service.

Consumer: This is the person(s) to which the advertisement and products/services are directed. Here they are also known as buyers of a company’s product.

Outdoor Media: These cover the use of billboards, sign posts, posters, handbills, etc. in communicating the advertising message to the consumers.

Electronic Media: These include radio, television, the internet, etc and can be either local or international.

Market: This is usually the strategic location or place where the company’s consumer/buyers are situated or where they go to buy the products/services of their choice. The market place offers different products/services to different consumers.

Producer: This is the organization or firm that provides a product or that delivers services for consumer consumption.

Sales Volume: This is used to measure the amount, usually in cartoons/crates, etc, of the product being sold at a given point in time. This is commonly used as well with products but it could be as used within a service company.

Transit Advertisement: A relatively minor volume of the advertisement placed in or on public buses, taxis, cars and other commercial vehicles.

Product: This can represent anything a consumer acquires or might acquire to meet a perceived need. The need not necessarily need to be satisfactory. Some product might not satisfy their needs.

Sales: This is a process of selling something such as a product, ideas or services. It also covers the number of goods or services sold at a given point in time. (Arowomole, 2001, 17-25)