THE IMPACT OF ADVERTISING ON SALES PERFORMANCE: A CASE OF MUKWANO INDUSTRY

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CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

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.

Mukwano is a manufacturing industry located in Kampala city along Jinja road near industrial area. It was established in 1980 and it deals in the production of a variety of beauty products for example smearing jelly, soaps, body lotions and creams. It also deals with the other domestic products like cooking oils, beverages and plastic containers.

Mukwano advertises using visual media for example the television and the Audio the radio, print media for example the news papers.   Mukwano has launched a new detergent powder to compete in East Africa common market through intensive advertising internationally Daily monitor April 2010, but there are some inefficiencies in the way these organization carries out its advertisements for example Mukwano advertisements in the visual media is done in local language i.e. (luganda) a language that can only be understood by a few people in the country, making the advertisement appealing only to a group of people. The advertisements lacks the unique selling proposition in the statements used to differentiate their products from competitors, they are   done in the same way as the competitors making it hard to differentiate its ads from others. Besides their advertisements don’t provide room for further information about their products for clarification (Daily Monitor April 2010)

For the past four years expected sales in Mukwano have differed from their actual sales as shown in the table below whereby in the year 2007 there was a slight increment in ales volume and started declining from year 2008 to 2009

Table 1: Annual report 2009 to 2010

SOURCE; Annual report 2009 to 2010

Mukwano expected 200m from sales in the year 2007 but the actual sales they had was 210m and in the year 2008 they expected 250m but they had 200m of sales, in the year 2009 the industry expected to sale goods worth 230m but only managed to sale goods worth 205m and lastly in the year 2010 they expected to get 210 out of the sales but they received only 198m

1.2 STATEMENT OF THE PROBLEM

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

Despite its efforts in advertising regularly   the sales of Mukwano industry have not improved to the desired targets. The sales in Mukwano for the past four years have been declining.

 1.3 PURPOSE OF THE STUDY    

The purpose of the study was to establish the impacts of advertising on sales performance.

1.4 OBJECTIVES OF THE STUDY

1. To examine the forms of advertising in Mukwano industry.
2. To establish the level  of sales performance in Mukwano industry
3. To establish  the relationship between advertising and sales in Mukwano industry

1.5 RESEARCH QUESTIONS

1. What are the forms of advertising used by Mukwano industry?
2. What is the level of sales performance of Mukwano?
3. What is the relationship between advertising and sales performance in Mukwano 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 centered at the Mukwano industry in Kampala 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 findings of the study were expected to benefit the following.

The findings of the study were used as references for future research work.

The results of the study are of surmountable information when drawing measures which would in turn lead to capture of substantial market share.

The study can be the source of reference on how to revive and adopt and also follow the adverts according to the dynamic markets.

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