EFFECT OF SALES PROMOTION ON ORGANIZATIONAL PERFORMANCE

(A STUDY OF NIGERIA BOTTLING COMPANY PLC IJORA LAGOS)

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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Marketing as a concept is the philosophy that emphasized that firms should analyze the needs of their customers and then makes decisions to satisfy those needs, better than the completion. Today according to Internet Center for Management Business Administration, most firms have adopted the marketing concept, but this has not always been the case. The term ˜’marketing’’ has been defined by different scholars and practitioners all definitions pointing to the fact that it involves personal or organizational relationship involving an exchange or transaction (ICMBA, 2002).

Owing partly to the position of Adam Smith in his book titled The Wealth of Nations, he wrote that the needs of producers should be considered only with regards to meeting the needs of consumers. While this philosophy is consistent with the market concept, it would not be adopted widely until nearly 200years later.

Sales promotions however, are marketing strategies companies use chiefly to increase sales temporarily to gain sales volume and market share (Lisa, 2009). They are occasionally used to clear out year-end inventory before new models arrive in showrooms as often done in the automobile industry. Sales promotions are also used as a competitive strategy to under-cut competition by offering a lower price or other incentive.

Although sales promotions usually produce sales volume over and above what is typically the case, they do not build brand identity and loyalty (Lisa, 2009).

Without mincing words, early trade by barter which involves exchanging of goods for goods reflected an economic situation in which most economies were called agrarian economies, which later matured into exchange economies. Emphasis then was on production which was then largely manual.

The industrial revolution according to Brunett resulted from various innovations on technology and management that generated vast increase in production. The vast increase in production that most manufacturers recorded mass production of their products and there was no significant problem of disposing them. Manufacturers were in charge and usually produce goods against orders. The seller’s market prevailed throughout this period. Also deficit was noticed in the U.S.A during the 20^th century. These deficit market conditions disappeared in U.S.A between 1900 and 1920s as most manufacturers moved into surplus production of goods.

Shortly after the period of sellers marketing, demand ran behind the industry’s ability to produce and this further warranted a system of mass distribution. There was need, therefore to design better method for marketing the excess goods, this brought about the growth of marketing specialist.

However, it is against the background of this study to examine the feasible effects of sales promotions on sales performance using Nigeria Bottling Company as a reference study.

1.2 STATEMENT OF THE PROBLEM

Recent economic depression no doubt has had significant effects on most organizations’ economic activities, among which decrease in sales (i.e. sales drop) stands out.

In some cases, there are no sales for a long period of time, which leads to closure or liquidation of such companies, since customers are unaware of the organization’s product offerings or home developed a strong habitual behavior on the use of a particular product thereby leading to the death of close substitute in the market place. The significance of sales promotion becomes unavailable.

In the face of all the strategies being used by an organization to achieve its goals and objectives, problems confronting the companies, as they do not operate in a vacuum, they operate in an environment which has its own effect on the performance of these organizations.

 1.3 AIM AND OBJECTIVES OF THE STUDY

The main thrust of this study is to examine the feasible effects of sales promotions on sales performance. However, to achieve this objective, the following shall therefore serve as the specific objectives of the study which include;

1. To evaluate the influence of price discount on organizational profitability.
2. To examine the effect of bonus packs on organizational sales volume.
3. To examine the effect of jingles on consumer purchase decision.
4. To examine the perceived effect of low price on organizational performance.

1.4 RELEVANT RESEARCH QUESTIONS

1. Does price discount has any effect on organizational profitability?
2. Does sales bonus packs affect the organizational sales volume?
3. Can jingle influence consumer purchase decision?
4. Does perceived low price has any effect on organizational performance?

 1.5 RELEVANT RESEARCH HYPOTHESIS

HYPOTHESIS 1

H_o:     There is no significant relationship between price discount and organizational profitability.

H₁:     There is significant relationship between bonus packs and organizational sales volume.

HYPOTHESIS 2

H_o:    There is no significant relationship between price discount and organizational performance.

H₁:    There is significant relationship between price discount and organizational performance.

 1.6 SCOPE OF THE STUDY

This study is not an attempt to claim that sales promotion is the only marketing strategy that can be used by organization to increase their sales performance, rather it is only geared toward the successful application of sales promotion by consumer-oriented organization as a way forward to achieving their organizational goals and objectives. The study for reasons of limited resources and time constraints will be carried out using the staff of Nigeria Bottling Company Plc in Lagos.

The conclusion may however be reflective of the perception of the people on the application of sales promotion as a marketing tool for higher sales performance.

1.7 SIGNIFICANCE OF THE STUDY

The business of consumer-oriented organization is the provision of goods and services and thus existence. Therefore, it is the duty of this organization to determine how they are doing to motivate the consumers in the face of intense competition of various brands or related brands. The significance of a study of this nature is to find out if sales promotion can be an effective tool for a higher sales level; to create awareness about a new product to increase sales performance to stimulate demand and to convert potential buyer into actual buyers and if it can perform all listed functions, it is recommended.

1.8 DEFINITION OF TERMS

Consumer: A consumer is a person or group of people that are the final users of products and or services generated within a social system. A consumer may be a person or group, such as a household.

Decision: Decision can be regarded as the mental processes (cognitive process) resulting in the selection of a course of action among several alternative scenarios. Every decision making process produces a final choice.

 Environment: Environment (systems), the surroundings of a physical system that may interact with the system by exchanging mass, energy, or other properties.

Influence: Influence is the action or process of producing effects on the actions, behavior, opinions, etc., of another or others.

Purchase: This refers to a business or organization attempting for acquiring goods or services to accomplish the goals of the enterprise.

Promotion: something devised to publicize or advertise a product, cause, institution, etc., as a brochure, free sample, poster, television or radio commercials, or personal appearance.

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