CHAPTER ONE
1.0 INTRODUCTION
- BACKGROUND OF THE STUDY
Advertising touches nearly all aspect of human activities at different points in time. For any organization to advertise there must be a problem which must be a fact and nonfiction. It is very rare to have no reason for advertising, while the list of reasons cannot be exhaustive. It is better to limit the number of reason in order not to deviate from the main reason.
F.B Bishop concluded by saying that information by advertising is generally incidental to their main purpose which is persuasion.
Basically, therefore, the aim of advertising is to stimulate the need for a product, awareness of a product or a particular brand, goods or to convince the consumer and finally lead him to action in form of making a purchase as it is related to profit making. Having seen this, the researcher was prompted into studying the impact of advertising to sales and profitability, A case study of cocoa industries limited Ikeja Lagos.
Cocoa industries limited was established in 1967. It was situated on cocoa industries road, ikeja industries Estate, Ikeja Lagos state. It was then owned by the western region which comprises of Oyo, Ondo and Ogun state. Then, it was involved in cocoa processing which processing into butter, cake and power for export. About 30,000 tones of cocoa was processed in a year. Catter the management of the industry was transferred to odua investment also owned by then three western states.
In 1981, the company diversified into production of food drink known as vitalo from now cocoa bean. Sales of this product and others is organized through distributors all over Nigeria. They are district offices in Kaduna, Ibadan, Onitsha and Lagos. The present staff strength of the company is approximately 350 (Three hundred and fifty).
The company was recently private. 60% of the company shares is own by private owner4s while the remaining 40% owned by the odua investment limited liability company.
According to the study, the company started advertising in 1982 with the introduction of a new product (vitalo) utilizing the services of insight communication limited (An advertising agency). They advertised in both prisit and electronic media. They also use outdoor advertising such as posters, personal selling and sales promotional activities.
Six months after launching and introducing vitalo the company stop advertising. This led to a drastic fall in sales, leading to about one hundred and fifty cartons of vitalo on sold in their warehouse in 1987. The drop in sales made the company to embark on advertising again but this time the company employed the services of advertising agency which is adhoc in nature. They continue advertising from 1987 to 1990.
Moreover, intensive advertising for three years increase sales to the extent the company could cope with high demand for their product and invariably made the company to face production problem in 1991. The company as a result of production problem advertising in the same year.
Moreover, the company’s main competitors in beverage production and cadbury’s bournvita, Nestle foods Nigeria limited, milo and overtine. The cadbury’s bournvita has about 75% market share in Nigeria followed by Nestle food limited and overtine. Vitalo came third with 10%share that was around 1991. In cocoa processing, there are just two other company’s processing it, one in Ede and other in Ileohuje but in present day Osun state.
The finished vitalo product are not directly exported by the company itself. It finds its way into foreign market through women who from Nigeria and take them abroad. The cocoa butter and cake are ex ported to Europe, American and also use3d in Nigeria by some other manufacturing companies as raw material.
- STATEMENT OF PROBLEM
Based on the above, the researcher made the following statement of problems.
- Ineffective advertising has led to drop in sales volume
- There are cases of unsold finished goods due to competitors.
- Loss of market shares to competitors.
- There is lack of motivation of employees which is due to poor sales owing to the ineffective advertising.
- There is reduction in profit level due to lack of product awareness by the consumers.
1.3. PURPOSE OF THE STUDY
1) To determine if ineffective advertising can lead to drop in sales volume.
2) To know if advertising has any effect in consumers buying behavior.
3) To determine if ineffective advertising can lead to loss of market share.
4) To determine how the employees can be motivated in order to be effective.
5) To determine other factors that can help the company
increase their profit level.
1.4 SIGNIFICANT OF THE STUDY
The study is expected to increase the efficiency and profitability of the company if properly studied and imple3mented. Also, the study will enable marketing practitioners in taking decision concerning advertising especially the management of cocoa industries limited Ikeja. Furthermore, the study will contribute to a body of knowledge to scholars who are also studying similar work.
1.5 RESEARCH QUESTIONS
The following questions are expected to be answered in the process of carrying out this study
- Can ineffective advertising lead to drop in sales volume of firms product?
- Does advertising have any effect on consumer’s buying behavior?
- Can ineffective advertising lead to the market share?
- Can motivation improve the efficiency of the employees?
- Does the cost of advertising affect the company’s profit level?
1.6 THE SCOPE OF THE STUDY
This research work is meant to cover Ikeja Area in Lagos state with particular attention to cocoa industries limited as a business entity in order to discover the effect of advertising on sales and profitability.
1.7 DEFINITION OF TERMS
1) Advertising: Advertising is a paid form of non- personal communication by an identified sponsor through a media, which announces the availability of goods and services to the audience.
2) Advertising Agency: is an independent firm which helps to plan advertisement and buys media space and time on behalf of its client.
3) Marketing practitioner: someone who regularly does marketing activities.
4) Competition: The act of producing or selling the same product by two or more persons or firms.
5) Warehouse: A place where goods are kept until they are sold.
6) Handbill: A small printed notice that is given to people.
7) Launching: The act of introducing a new product into the market.
8) Sales promotion: Those marketing activities other than advertising, personal selling, publicity that helps to stimulate consumer demand for a product.
9) Outdoor Advertising: is the use of bill board, signs and posters as a way of reminding or reinforcing earlier product claim in the prisit or electronic media.
10) Product: Anything (goods or services) offered to the market for attention.
11) Poster: A large prisited notice, picture or photograph, used to advertise something or as a decoration.
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