IMPACT OF SALES PROMOTION ON ORGANIZATIONAL PERFORMANCE
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IMPACT OF SALES PROMOTION ON ORGANIZATIONAL PERFORMANCE
Chapter One: Introduction
1.1 Background of the Study
The expanding management relevance of sales promotion has prompted extensive research on how it affects profitability (Loudon and Bitta, 2002; Perreault and McCarty, 2002; Schiffman and Kanuk, 2004).
There is no doubt that sales promotions have become an essential tool for marketers, and their importance has grown dramatically over the last two decades.
In Nigeria, many companies’ sales promotion expenditures are projected to be in the thousands of Nigerian naira, and the emphasis on sales promotion activities by industry participants continues to rise year after year (Hinson, 2005).
Sales promotion is an initiative made by organisations to promote the sale, use, or trial of a product or service (initiations that are not covered by other aspects of the marketing communication/promotional mix).
It is a vital part of an organization’s entire marketing strategy, alongside advertising, public relations, and personal selling (Schiffman and Kanuk, 2004).
Sale marketing serves as a competitive weapon by giving the target audience an extra reason to buy or support one brand over another. It is especially successful at encouraging product trials and spontaneous purchases (Aderemi, 2003).
According to Achumba (2002), sales promotion includes marketing activities other than personal selling, advertising, and publicity that encourage consumer purchase and dealer effectiveness, such as exhibitions, shows and expositions, demonstrations, and so on.
Sales promotion is described as a direct inducement that provides additional value or incentive for the product to the sales force, distributors, or the end consumer with the primary goal of generating an immediate sale (George, 1998).
Similarly, Strang (2006) examined important trends in the management of sales promotion in a sample of US package goods companies. He tracked the transfer of monies from advertising to sales promotion budgets.
However, the author did not investigate individual promotions or success criteria related to promotions. Peckham (1998) examined Nielsen data and discovered thousands of individual promotions.
He observed that sales promotions are most efficient at increasing sales during the brand’s debut and expansion stages. Peckham also said that sales campaigns regularly mortgaged the brand’s future sales, and he questioned the economics of numerous sales promotions.
Similarly, Lembeck (1999) discovered that just 40% of sales campaigns are effective, although there is no definition of success or effectiveness. Other research imply that sales promotions do not have a steady or continuous influence on a firm’s volume of sales, which tend to drop and return to the level that existed before to the sales promotion (Dekimpe et al. 1999; Pauwels et al. 2002; Srinivasan et al. 2000).
Still, other scholars question the use of sales promotion, claiming that whether it supports long-term growth and profitability among the brands for whom it is intended is not required (Kopalle, Mela, and Marsh, 1999).
In contrast, a study done by Ailawadi and Neslin (1998) discovered that sales promotions encourage consumers to make immediate purchases while also increasing consumption volume.
In the midst of the aforementioned debates, this study intended to investigate the impact of sales promotion on organisational profitability, using Nigeria Bottling Company (NBC) as a case study.
1.2 PROBLEM STATEMENT.
Although bottling firms perform numerous sales promotions each year, promotion managers are frequently faced with the issue of defending the influence of sales promotion efforts on the firm’s profitability.
A review of the literature also reveals that much of the previous research in sales promotion has focused on the consumer or retail trade response to promotions but has not taken into account the effect of sales promotion on profitability (Kopalle, Mela, and Marsh, 1999; Ailawadi and Neslin, 1998; Dekimpe et al. 1999; Pauwels et al. 2002).
For example, Lembeck (1999) claimed that just 40% of trade promotions were effective, but there was no definition of success or effectiveness. In line with the foregoing, this study attempted to investigate the impact of sales promotion on the profitability of Nigeria Bottling Company Plc.
1.3 GOALS OF THE STUDY
This study aimed to investigate the impact of sales promotion on the profitability of Nigeria Bottling Company plc. The precise aims include:
To investigate the sales marketing strategies employed by Nigeria Bottling Company Plc.
The purpose of this study is to look into the relationship between sales promotion and NBC’s financial performance.
To investigate the impact of sales promotion on the non-financial performance of
To identify problems surrounding the sales marketing initiatives done by NBC.
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