ROLE OF SALES PROMOTION ON THE PROFITABILITY OF A FIRM’S PRODUCT IN A DEPRESSED ECONOMY
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ROLE OF SALES PROMOTION ON THE PROFITABILITY OF A FIRM’S PRODUCT IN A DEPRESSED ECONOMY
ABSTRACT
The purpose of this research is to determine the impact of sales promotion on the profitability of a company’s product in a down economy. The issues that prompted this study were around the fact that some organisations are unconcerned about the influence of sales promotion on Nigeria’s alcoholic beverage industry, as well as a downward economic trend.
Failure on the part of the organisation to assess consumers’ attitudes towards sales promotion can be seen as catastrophic. Because it is difficult to forecast the demand for the products,
other organisations have not been able to unearth the sales promotional strategy that can be used to increase profitability and sales volume in the organisations during the economic downturn.
There is also a mono-strategy syndrome in which organisations focus entirely on one sort of advertising method while failing to recognise the impact of sales promotion on turnover when compared to other forms of advertising.
The study population included all of the staff and customers. The Nigeria Brewery Company Plc, Edo State, from which a sample of 150 individuals from all levels and departments within the organisation were chosen for the purpose of inquiry.
The questionnaire was the primary instrument for gathering data from the staff; it was designed using a 5-point likert scale, and 200 respondents were served with the questionnaire, representing 100%. The data was then analysed using the chi-square test statistic.
The investigation found that sales promotion helped to enhance the market share of the organization’s sales during the recession. The product must be appropriate in terms of acceptability, availability, and cost.
The exposure for the sales promotion must also be adequate, and the magnitude of the incentive must be appealing but not overly so.
Chapter one
INTRODUCTION
1.1 Background to the Study
Promotion is a fundamental component of marketing strategy, and its importance is highlighted by current events both domestically and internationally. There is no denying that the country is experiencing an economic crisis that affects not just the general public but also its commercial organisations.
Business success is therefore critical and depends on an organization’s ability to produce its goods and services profitably; however, achieving this success is only a mirage for an organisation unless consumers or users are compelled to buy its products as a result of effective sales promotional efforts.
According to Ezek (2008), sales promotion is one of the methods that companies/cooperatives reward customers while also projecting the business to attract more clients. However, most businesses break from this and utilise sales promotions to abuse and harm customers.
Furthermore, rather than rewarding regular customers, some organisations reward individuals who hurried to the company because of the campaign, or those who intend to return after the promotion. As a result, after promotion, most businesses notice a decrease in sales patronage.
Essentially, promotion refers to activities intended at bringing a company’s goods and services to the notice of potential clients.
Divergent perspectives among writers on what constitutes the elements of the promotional mix.
In this context, the promotional mix refers to the basic combination of promotional methods employed by an organisation for a specific product.
It includes marketing initiatives other than personal selling, advertising, and public relations that encourage purchasing and dealer effectiveness. Displays, contests, demonstrations, presentations, and expositions are examples of non-traditional selling activities.
1.2 Statement of the Problem
Sales promotion is a critical component of any successful organization’s marketing strategy. As a result, businesses spend a significant amount of money on sales promotion. Some organisations with limited sales promotion budgets have experienced a significant drop in earnings, resulting in employee layoffs.
Some organisations are unaware of the influence of sales promotion on the alcoholic sector in Nigeria and the economy as a whole. Large organisations’ attitudes towards sales promotion might be viewed as disastrous, as the organisation cannot foresee product demand.
Other organisations have been unable to identify a sales promotion approach that can be used to boost profitability and sales volume growth in businesses amid economic downturns.
There is also a minor strategy syndrome in which an organisation focuses entirely on the sort of advertising method while failing to recognise the potential impact of sales promotion on turnover compared to other types of advertising.
There is also the issue of determining whether type of sales promotion activity is cost effective in a given situation.
1.3 RESEARCH QUESTIONS
Data analysis is utilised to answer the following questions on how sales promotion promotes profitability in a depressed economy.
1. Does sales promotion affect an organization’s sales during a down economy?
2. Does sales promotion affect an organization’s profitability during a recession?
3. What effect does sales promotion have on the overall economy during hold-rums?
4. What are the barriers to effective sales marketing during a recession?
1.4 Statement of Hypotheses
Ho: During a downturn in the economy, sales promotions have little effect on organisational profitability.
Hi: During an economic downturn, sales promotions have an impact on organisational profitability.
Ho: Sales marketing does not boost organisational sales during a recession.
Hi: Sales promotion boosts organisational sales during a recession.
1.5 PURPOSE OF THE STUDY
The primary goal of this study is to investigate the extent to which sales promotion can effect firm profitability, particularly in a down economy.
However, the precise aims are as follows:
1. Change the demand pattern for products and services.
2. To boost customer demand, stimulate the market, and improve product availability.
3. Serve as a link between advertising and personal selling, providing additional value that drives purchase when targeted at consumers.
1.6 SCOPE OF THE STUDY.
This research project is concerned with the validity of sales promotion and profitability.
It is also designed to look at sales promotion as a strategic technique for increasing sales volume by marketing organisations in Nigeria, using Nigeria Brewery Plc as a case study.
The study looks at how businesses employ sales promotion tools not only as a competitive tactic, but also to influence growth, consumer purchasing patterns, and turnover.
1.7 Significance of the Study
This study has proven that marketing tactics have a significant impact on the profitability of any firm; consequently, this study seeks to investigate the function of sales promotion programmes and the effectiveness of sales promotion in the market.
The study’s findings and recommendations increase organisational understanding, notably in the field of sales promotion. Management, students,
and academics can use the conclusions and recommendations based on this research as a marketable tool in a variety of specialised fields of study, as a reference point, and as a guide for future researchers in this subject.
1.8 Limitations of the Study
This study will focus on the impact of Edo State Brewery Plc, Benin City, on the role of sales promotion and profitability in a down economy.
The research effort does not extend to the sales promotion of other Brewery companies, such as the alcoholic industry, because they are covered in any research work.
1.9 Operational Definition of Terms
Some of the terminology used in this research are described here to help you understand it better.
MARKETING
Marketing, as defined by the American Marketing Association (AMA) in 2011, is the activity, collection of institutions, and processes for producing, communicating, delivering, and exchanging offerings of value to customers, clients, partners, and society as a whole.
Kotler (2011) describes marketing as the science and art of discovering, developing, and distributing value in order to meet the demands of a target market while making a profit.
Marketing is the process by which a company profitably converts consumer needs into revenue (Burgess, 2011).
COUPON
According to Olajide (2002), a coupon is a voucher connected to goods for sale that indicates that payment is required.
It serves as a precise reduction of a product and is used to encourage clients to try new and established brands.
Kotler (1984) sees it as a way to reward product consumers, re-engage past users, and stimulate large-scale purchases.
Marketing Mix
According to Kotler (2013), marketing mix refers to the contribution of four parts, or tactics, that are consistent in a company’s marketing system.
According to Kotler (2006), the marketing mix is the collection of marketing tools used by a company to accomplish its objectives. Each aspect of the marketing mix must blend and fit together in harmony with the others.
Stanton defines marketing mix as the mixture of the four inputs that make up the core of a company’s marketing system. The product, its pricing structure, advertising activity, and distribution system.
SWEEPSTAKES
Sweepstakes, according to Howard (2006), are prizes provided based on an event choice.
It is included in a price drawing. It is frequently used to increase sales and is sometimes combined with other sales marketing techniques (Amodu, 2006).
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