THE IMPACT OF SALES PROMOTION ON BUSINESS PERFORMANCE (A STUDY OF NIGERIA BOTTLING COMPANY PLC)
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ABSTRACT
Despite the abundance of sales promotion tactics available to many firms, many have not yet grasped how to effectively and efficiently employ these sales promotion techniques to improve company performance. The purpose of this paper is to investigate the influence of sales promotion in a business organization, with a focus on Nigeria bottling Company Plc. The research employed a descriptive design. The estimated study population was 865 (management, personnel, and key distributors), and a sample of 160 was used (primary data). The key data sources were secondary and primary. Questionnaires were utilized to collect primary data, while financial documents from 1985 to 2014 provided secondary data. STATA 13 was utilized to conduct the analysis. The report suggests that NBC’s management include important distributors and supply chain participants in its sales promotion efforts. NBC’s management must also combine all promotional tools to ensure that all promotional objectives are met.
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PART I
– INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Due to the increasing managerial significance of sales promotion, a significant number of study has been conducted on the profitability effects of sales promotion (Loudon and Bitta, 2002; Perreault and McCarty, 2002; Schiffman and Kanuk, 2004). Without a doubt, sales promotions have become an indispensable tool for marketers, and their significance has grown substantially over the past 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 the various industry participants continues to grow annually (Hinson, 2005). Sales promotion is an endeavor done by organizations to promote sales, usage, or trial of a product or service that is not covered by other aspects of the marketing communication/promotional mix. Along with advertising, public relations, and personal selling, it is an integral component of a company’s entire marketing strategy (Schiffman and Kanuk, 2004). Sale marketing functions as a competitive weapon by offering an additional incentive for the target audience to acquire or support a particular brand over another. It is very helpful in encouraging product testing and accidental purchases (Aderemi, 2003).
According to Achumba (2002), sales promotion refers to marketing activities, excluding personal selling, advertising, and publicity, that encourage consumer purchase and dealer effectiveness, such as exhibitions, exhibits and expositions, demonstrations, etc. Sales promotion has been characterized as a direct enticement that delivers an 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). In a separate study, Strang (2006) analyzed important trends in the management of sales promotion in a selection of U.S. package goods companies. He recorded the transfer of monies from the advertising budget to the sales promotion budget. However, neither specific promotions nor specific success variables connected with promotions were investigated by the author. Peckham (1998) saw thousands of individual promotions through analyzing Nielsen data. He observed that sales promotions are most efficient at boosting sales throughout the brand’s debut and expansion phases. Peckham added that sales campaigns frequently mortgaged the brand’s future sales and that he had doubts about the profitability of numerous sales promotions. Similarly, Lembeck (1999) discovered that just 40% of sales campaigns are effective, but that neither success nor effectiveness were defined. Other studies indicate that sales promotions do not have a consistent or lasting impact on a company’s sales volume, which tends to return to its initial level before the sales promotion was issued (Dekimpe et al. 1999; Pauwels et al. 2002; Srinivasan et al. 2000). Still, other academics dispute the value of sales promotion, arguing that it is optional for it to enhance the long-term growth and profitability of brands for whom it is anticipated (Kopalle, Mela and Marsh, 1999). In contrast, Ailawadi and Neslin (1998) found that sales promotions encourage customers to make immediate purchases and have a beneficial effect on consumption volume. Using Nigeria Bottling Company (NBC) as a case study, this study intended to analyze the impact of sales promotion on organizational profitability within the aforementioned concerns.
1.2 PROBLEM STATEMENT
Although bottling firms perform numerous sales promotions annually, promotion managers are frequently faced with the issue of defending the influence of sales promotion efforts on the firm’s profitability. Literature study reveals that the majority of prior research on sales promotion has concentrated on the customer or retail trade response to promotions, but has not considered the influence 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) stated that just 40% of trade promotions are effective, although neither success nor effectiveness were defined. In light of the aforementioned, the purpose of this study was to investigate the impact of sales promotion on the profitability of Nigeria Bottling Company plc.
1.3 OBJECTIVES OF THE STUDY
This study aimed to investigate the impact of sales promotion on Nigeria Bottling Company plc’s profitability. The particular objectives include:
To investigate the sales marketing methods utilized by Nigeria Bottling Company plc.
Examine the connection between NBC’s sales promotion and financial performance.
To analyze the impact of sales promotion on the non-financial performance of a company.
Identifying obstacles associated with NBC’s sales marketing operations
1.4 RESEARCH QUESTION
These research questions are to be investigated:
What sales promotion strategies does Nigeria Bottling Company plc employ?
What is the connection between NBC’s sales campaign and its financial performance?
What impact does sales promotion have on NBC’s non-financial performance?
What obstacles impact NBC’s sales marketing efforts?
1.5 RESEARCH SCOPE
This study examines NBC’s sales promotion actions during the previous three decades (1985 – 2014). Specifically, the study examined the relationship between sales promotion and NBC’s sales performance, as well as the effect of sales promotion on NBC’s profitability. Additionally, the research investigated the non-financial impacts of sales promotional efforts for NBC brands. This study investigates the management, important distributors, and personnel of Nigeria Bottling Company Plc. Utilized both primary and secondary data. This is because sales data could be extracted from sales reports and financial records, while the success of sales promotion could be evaluated from the views of management and employees.
1.6 Importance of the Research
This study is important in three ways. First is its contribution to the brewing sector; as stated in the background statement, many managers, especially those with a little understanding of marketing, continue to question the exorbitant budget allocations for sales promotion. It is anticipated that this study will generate additional discussion and provide some answers on the impact of sales promotion on business profitability. The findings will offer numerous marketing managers with a reliable reference point for justifying sales promotion budget allocations. Although debatable, the significance of this study to the economy is evident in the adoption of promotional tactics that offer value for customers. Since the major purpose of every sales promotion is to influence sales and trial of new items, it is expected that greater sales will eventually translate into increased profits, all else being equal. Consequently, the government generates revenue through taxation. This study’s importance to academics is likewise unquestionable, as it provides a solid foundation for future research. In addition, it contributes to the current literature on sales promotion and its impact on firm profitability.
THE IMPACT OF SALES PROMOTION ON BUSINESS PERFORMANCE (A STUDY OF NIGERIA BOTTLING COMPANY PLC)
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