CHAPTER ONE
INTRODUCTION
- BACKGROUND OF THE STUDY
Sales promotion is a diverse connection on short term incentives designed to stimulate quicker and a greater purchases by the customer.
The term Incentivzation meaning for the special reason has been used to describe sales promotion. Sales promotion, over the years has been involved as one major promotional tool for including demand, Business enterprises, Government, Large multinational corporations, even in some cases, non – profit making organizations has realized the importance of sales promotion and form empirical researches have been able to attach effectiveness with profitability with sales promotion.
There are other factors which could influence demand for a particular product, factors like cost and over competitors for example Price, Personal Selling Activities, Distribution Network etc.
Future organizational performances (profitability) depends on using all the tools efficiently, profitability refers to the maximum profit making by organization in relation to the objectives set by the firms. Sales promotion is an integral part of today’s marketing with a customer.
Everyday, it reaches out to the customers, salesman and retailers. Promotion techniques are used to market vast varieties of goods and services. In many markets, expenditures on sales promotion equal or exceed expenditures on advertising. In United Kingdom (UK), where it is of sample size of advertising, the amount spent on sales promotion is probably in excess of Six billion.
The importance is recent. Although,the techniques involved have been in use for decades and often for centuries, the spectacular question of promotion dates from the mid 1960’s with many market sales promotion expenditure (discounting inflation), has grown five times or more in the last twenty years. Such dynamics reflects a change in investment economics.
There has been a change from “Pull Purchasing” to “Push Selling” in the 1950’s and 1960’s the growth of consumer spending power accelerated by easily available credit, meant that people were keep to purchase whatever could be manufactured and retailed. With the showing and then the flattering of the demand trends, the company efforts has switched to “Push Selling” in other to maintain as far as possible the momentum of manufacturing and retailing.
The dramatic changes in how many brands, products or services are retailed to consumers have been responsible for fueling that trends. The advert of supermarkets, hypermarkets, self – services outlets (petrol stations), Banks and the like, have dramatically surfed the balancing of power between manufacturer and retails.
Never before have we had so many brands competing for consumer’s attention. As more inducement is now necessary to get people to purchase, sales promotions techniques have come into full pay, sales promotion techniques which makes brands shout (buy me), at the point of purchases.
Though, it is often argued that improved profitability and organizational performance is a result of what is commonly referred to as “Multiple Course Effect”. However, a close look at Profitability indicated that the impact of sales promotion on profitability cannot be over emphasized, that is why this study is researching into the effect of sales promotion.
1.2 STATEMENT OF THE PROBLEM
The recent upsurge in sales promotion activities and practices as means of influencing demand and increase profit stains from the fact that organizations that plans and implements sales promotion, therefore the specific issue to be addressed by the study can be summarized as follows:
- Does Sales promotion affect profitability?
- Does profitability justify sales promotion expenses?
- Does sales promotion actually increase sales?
This study will endeavor to critically evaluate the trend, pattern, influence and result of sales promotion to determine the extent to which sales promotion affects profitability.
1.3 RESEARCH QUESTIONS
The following shall be my research questions:
- Does your organization use sales promotion to promote its product?
- Does the budget for sales promotion affect the entire organization positively?
- Do consumers react to sales promotions favorably?
- What are the most common sales promotion techniques used by companies to reach its consumers?
1.4 PURPOSE OF THE STUDY
- Examine how budget for sales promotion affect the entire organization positively.
- Highlight how sales promotion is part of marketing tradition to encourage customer loyalty to the organization.
- The organization uses sales promotion to promote its products.
- To find out how most consumers react favourablyto sales promotions and techniques.
1.5 RESEARCH HYPOTHESIS
The hypothesis tested in this study is:
Ho Sales promotion does not have significant effect on the profitability of the organization.
Hi Sales promotion has significant effect on the profitability of the organization.
Ho Sales promotion does not affect the overall performance of the organization.
Hi Sales Promotion has an effect on the overall performance of the organization.
1.6 SCOPE AND DELIMITATION OF THE STUDY
The study was restricted to the inter – market Distribution Company Limited, Guinness Nigeria Plc.The research work does not link to treat sales as a topic but to extend it to show its effect on organizational profitability.
The time given for this project work is short to conduct thorough research work. However, every effort was made to carry out a credible study within the time schedule.
Another problem that poses a serious treat in the course of this project is shortage of fund due to the economic situation of the country.
Also, the respondent’s attitudes were not encouraging as they were not willing to reveal most of their company’s secrets.
1.7 SIGNIFICANCE OF THE STUDY
The study will be of immense significance to the society in general and particularly firms that already embark on sales promotion as a tool to increase profitability.
More so, society will benefit in the area of awareness been created as a result of company promotion and also improved profit of companies would bring government funds through taxes to provide social infrastructures needed by the society.
1.8 DEFINITION OF TERMS
- SALES PROMOTION: This is a catch all terms describing promotional activities other than personal selling, advertising and publicity.
- ADVERTISING: This is paid non – personal, promotional activity by an identified persons. Advertising is the marketers most viable activity.
- PUBLICITY: This consists of more paid communication about an organization or its products and services.
- PERSONAL SELLING: This consists of more oral communication with the prospective purchasers. The management and control of this activity is challenging since it involves face to face contact discussion between the seller and the buyers.
- SAMPLING: Is a small amount of a product given free of charge for the purpose of testing the product.
- MARKETING: Is the process of identifying, anticipating what consumer wants and making it available for satisfying this wants at a profit.
1.9 PROFILE OF GUINNESS NIGERIA COMPANY
This is the story of a truly successful company with a rich heritage and a great track record of growth and strong performance.
Guinness Stout was first exported to Sierra Leone in 1827 and soon became popular across West Africa. In 1963, Ikeja in Lagos, Nigeria was chosen as the first location outside the British Isles to brew the iconic dark beer. Two years later, in 1965, Guinness Nigeria was listed on the Nigerian Stock Exchange.
Steady growth in markets for Guinness stout and Harp Larger during the next 30 years prompted the building of three more major breweries in Nigeria.
In 1974, the company built a second brewery in Benin, where it produced Harp Larger beer. This facility was later expanded to accommodate a second stout brewery, commissioned in 1978.
In 1982, a fourth Guinness brewery was built in Ogba, Lagos State to brew Harp Premium Larger beer. This site too, was expanded to include Guinness Stout. Several years later, in 2004, Guinness Nigeria commissioned a new brewery at Aba, Abia state.
In 2011, the Benin and Ogba breweries were expanded for further increase capacity and to meet the growing demand for Guinness Nigeria products which include the acclaimed brands; Guinness Foreign Extra Stout, Guinness Extra Smooth, Malta Guinness and Harp Larger Beer, other brands includes Gordon’s spark, Smirn off ice, Snapp, Malta Guinness low sugar,
Guinness Nigeria is committed to enriching the communities in which it operates and plays a leading role in the socio – economic development of its host communities. To ensure that efforts can be as effective as possible and are sustainable, the company concentrates on these focus areas; the provision of clean potable water (through the Diageo water of life initiative), Health and Eductaion.
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