THE IMPACT OF PROMOTIONAL STRATEGIES ON ORGANIZATIONAL PERFORMANCE
1.1 Background to the Study
In any organization, whether manufacturing or service industry, profit or non-profit oriented, the main purpose of its establishment is to achieve certain goals and objectives of the organization. Most companies today in Nigeria and the world at large operate in an increasing complex and unstable environment. Nigerian Breweries is one of the multinational companies that are involved in the brewing of alcoholic and non-alcoholic drinks. These brewery companies are spread all over the six geo-political zones in Nigeria. These breweries include: Champion Breweries Uyo, Akwa-Ibom state; Golden Guinea Breweries Umuaya Abia state; Guinness Nigeria Plc. Ikeja Lagos state; International Breweries Jos, Plateau State; Nigerian Breweries Plc. Iganmu, Lagos state; Premier Breweries Plc. Onitsha Anambra state; 7UP Bottling Company Plc., Ijora Lagos state. The Nigerian Breweries under this study is the Kakuri branch in Kaduna state.
Competition among these breweries has called for intense application of promotional tools that will appeal to customer for sustainable patronage by each of these breweries. Nigerian Breweries Plc. however, seems to be dominating the market with its numerous products in the past.
Challenges are facing companies to seek the best management and promotional strategies, to grow the company’s performance and increase shareholders value. Excellent companies are known not only by well-conceived promotional outlining where, when and how the companies will compete but also by their ability to execute the promotional decision option selected (Chris Fill, 2006). Appropriate and effective executed promotional strategy are required to productively guide the deployment of available resources where the company promotional abilities in pursue of desired goals and objectives (Michael P., 2002; Chris F., 2006; Rafael, 2014; Ayuba, 2005; Frances & Stephen, 2006; Michael R. Solomon, 1997). The customers are now better educated and the global whole of business today is a very complex one. In order to satisfy the changing need of customers, companies must first know their needs and that is where promotional strategy begins. For a company to survive in today’s competitive market, it has to strategize in satisfying customer’s needs more effectively and efficiently through promotional strategies.
However, promotional strategy is a marketing concept that has to do with the choice of a target market and formulation of the most appropriate promotional mix to influence and persuade the customer’s consumption pattern in order to improve the organizational performance and increase shareholder’s interest (Nzelibe, Moruku and Joseph, 2011).
Promotional strategy is aiming at the target heads of the household as they had the final say on where the disposable income will be spent. Marketing department is also saddled with the responsibility to determine the best promotional strategy to be employed in a given customer demographic environment.
Over the years, some notable authors such as Ayuba (2005), Chris Fill (2006), Akpan (2010) have regarded the promotional mix (advertising, personal selling, sales promotion, public relation and direct marketing) as having such roles as stimulating demand, boosting sales in a particular geographical area, improving profit, increasing market shares, countering competitor’s strategies and retaining customer loyalties and patronage in the organization. It is in line with this that the study was carried out on the impact of promotional strategies (advertising, personal selling and sales promoting) on organizational performance (profit, sales volume, market share and customer loyalty) of Nigerian Breweries.
1.2 Statement of the Problem
There has been a lingering problem in Nigerian Breweries Plc Kaduna regarding the right blend of promotional strategies to be used, at what time, at what place, and to whom?, to inform and persuade consumers about its products. This problem has resulted to decrease in profit level, sales volume, market share, customer loyalty and profit level (Nigerian Breweries Annual Financial Report, 2003, 2005, 2007, 2010, 2013 & 2015).
Apparently, there has been continuing researches in both the developed and developing countries with respect to the impact of promotional strategies that will inform, persuade, rebuild and restore confidence in customer’s buying pattern (Akpan B.A., 2010; Michael P., 2002; Chris F., 2006; Rafael, 2014; Ayuba, 2005; Frances & Stephen, 2006; Michael R. Solomon, 1997).
We want to investigate how the promotional strategies of advertising, personal selling and sales promotion can persuade customers to patronize the Nigerian Breweries products in order to improve the company sales volume, market share, customer loyalty and eventually profit.
1.3 Research Questions
Based on the above stated research problem, the following research questions have been formulated to guide the investigation:
- To what extent can advertising improve the performance of Nigerian Breweries Plc. in terms of profit?
- To what degree can personal selling promotes sales volume of Nigerian Breweries Plc.?
- How can sales promotion improve market share?
- To what extent do promotional strategies enhance customer’s loyalty?
1.4 Objectives of the Study
The main objective of this study is to investigate the impact of promotional strategies on organizational performance of Nigerian Breweries Plc., Kaduna State as a focus. The specific objectives are to:
- Examine the extent to which advertising can improve the Nigerian Breweries Plc. profit level.
- Determine the degree to which personal selling improves sales volume of Nigerian Breweries Plc.
- Investigate the extent to which sales promotion improves market share.
- Evaluate the extent to which promotional strategies enhance customer loyalty.
1.5 Statement of Hypotheses
Based on the proposed research problem, research question and the research objectives above, the following null and alternate hypotheses have been postulated:
H01: Advertising does not significantly improve Nigerian Breweries Plc.’s profit level.
H02: Personal selling does not significantly improve the sales volume of Nigerian Breweries Plc.
H03: Sales promotion does not significantly improve the market share of Nigerian Breweries Plc.
H04: Promotional strategies do not enhance customers’ loyalty.
1.6 Significance of the Study
This study is embarked on to determine the impact of promotional strategies on the performance of Nigerian Breweries Plc. Kaduna. It establishes the significant relationship that exist between promotional strategies and Nigerian Breweries performance with the understanding of strategies that best fit Nigeria Breweries manufacturing company for effective performance. This study contributed significantly to the application of three independent variable; advertising, personal selling and sales promotion for organizational performance of sales volume, market share, customer loyalty and profit. However, the study will be of significant value to the following:
Nigerian Breweries Plc. stands to gain or to know the right blend of promotional strategies (advertising, personal selling and sales promotion) that should be used at what time, on the right stage of Product Life Cycle (PLC), to who and the feedback about their product in order to remain relevant in the field of business. If not, competitors will write them off. Also, a research of this nature is not only going to be relevant, but also very significant, especially at the time when every effort is made to increase profit, sales volume, increase in market share of the organization, in other words Nigerian Breweries Kaduna branch stands to gain immensely from the findings and recommendations of this research.
Marketing Managers/Students of Marketing: It enables the marketing managers to understand in-depth of the strategic importance of promotional strategies (advertising, personal selling and sales promotion) to the organization and the need to systematically and strategically plan their promotional strategies campaign program in the light of the limited resources available.
Companies: It also helps companies in building up a sound promotional mix element in order to retain or capture potential or existing customers that will enable them remain relevant in business.
Potential/Existing Customers: Promotional strategy is able to make potential/existing customers aware of their products and services which normally lead to a more effective market, as consumers have more information available to them. Knowledge of a product or services increases consumer choice, leading to stable prices and improve profits, sales volume, market share and so on.
Business Administration: Promotional strategy creates awareness of the laws, responsibilities and consumer service needed to excel e.g. Employee communication, Enrollment and Changes. Reconciliation of provides Billing, Maintenance of employee benefits data also the ethical issues on the promotional mix elements.
Financial Analyst: Promotional strategy help financial analyst to formalize, usually in written form of the marketing plan. The essence of the process is that it moves from the general to the specific, from the vision to the mission, to the goals and to the corporate objectives of the organization, then down to the individual action plan for each part of the marketing program.
General Public: It creates more employment opportunities to the public in various job directly or indirectly e.g. advertisers, sales promotion force, marketers etc. thereby reducing crime in the society. It initiates a process of creating more wants and satisfying consumer on their need and improve higher standard of living.
Government Agencies (FIRS): The government will benefit in terms of taxes to be paid as part of internal fund raising by the government and thereby reducing crime from the society.
1.7 Scope of the Study
This study is restricted to Nigerian Breweries Kaduna. The company was selected because of the representation of companies and consideration of customers within the area coupled with its proximity to the researcher for collection of data for the study. This study covered three elements of promotional strategies namely; advertising, personal selling and sales promotion and four organizational performances namely; profit, sales volume, market share and customer loyalty. The organization under this study is Nigerian Breweries Plc. Kaduna branch. The study used correlation and regression analysis and Likert scale measurement as a tool for data analysis.
The study also covered fifteen (15) marketing years or financial statements 2001 to 2015 owing to the fact that a lot of reforms and Breweries companies have taken place within the period and also to understand the most recent trend in respect to promotional strategy as practiced by Nigerian Breweries in relation to organizational performance. The target respondents are management staff, mostly top management of marketing department, production department, human resources department and customers of the Nigerian Breweries within the area of the study. The study considered the most patronized products of the Nigerian Breweries: such as Goldberg, Gulder, Maltina, Betalmalt, Gold Malt, Maltex, Fayrous, Dubic Malt, Heineken and others (Nigerian Breweries/Customer’s Forum, 2016).
The reason for the study of Nigerian Breweries is that Nigerian Breweries in the Northern part of Nigeria (Kaduna branch), is experiencing decrease in profit, decrease in sales volume, decrease in market share, decrease in customer loyalty in recent time unlike Nigerian Breweries in the Southern part of Nigeria (Lagos). Due to the tradition of the Northerner ,culture and religion play a vital key in their lifestyle because an average Northerner do not consume alcoholic drinks also the complexity of the environment, high concentration soft drink industry in the area of the study can go a long way affecting Nigerian Breweries performance. The numerous numbers of product produced by Nigerian Breweries can attract researchers on the management of such products with competitors in the market. The study considered the impact of promotional strategies (that is, advertising, personal selling and sales promotion) on the performance indicators (profitability, sales volume, market share and customer loyalty).
1.8 Limitations of the Study
- The unwilling nature of some respondents to timely respond to the questionnaire given to them resulted into uncountable number of repeated visits to the factory. This can be very frustrating. Though some gave reasons for such delays as; lack of time due to their tight official schedules.
- The cost and risk associated with transportation and other logistics involved in photocopying, typing among others.
- The bureaucratic nature encountered in the course of data collection. This resulted in delay in making data available.
1.9 Definition of Operational Terms
Advertising: is any paid form of non-personal presentation and promotion of ideas, goods and services through mass media such as newspaper, magazine, television or radio by an identified sponsor.
Communication: is the process of establishing a commonness or oneness of thought between a sender and a receiver.
Four P’s of Marketing: these are marketing strategies that are independent variables that determine organizational performances.
Integrated Marketing Communication: is a process of which involve the management and organization of all agents in the analysis, planning and implementation and control of all marketing communication contacts, media, messages and promotional tools focused at selected target audiences in such a way as to derive the greatest economy, efficiency, effectiveness and coherence marketing communication effort in achieving predetermined product ad corporate marketing communication objectives.
Marketing Communication: is a management process through which an organization engages with its audiences.
Marketing Communication Mix: can also be seen as promotional mix.
Market Share: is the percentage of an industry or market’s total sales that is earned by a particular company over a specified time period.
Organizational Performance: refers to organizational developmental indices; which include: organizational profit, sale volume, market share, customer loyalty or increase in customers, increase in earning per-share, increase in organizational size etc.
Personal Selling: is a two-way communication tool between a representative of an organization and an individual or group, with the intention to inform, persuade or remind them, or sometimes serve them to take appropriate actions.
Profit: is a financial gain especially the difference between the amounts earned and amount spent in buying, operating, or producing something
Promotional Mix: is the combination of the promotional elements such as advertising, personal selling, sales promotion, public relation and direct marketing.
Promotional Strategy: is the use or application of various marketing communication mix that attempts to introduce, build, persuade, inform, and encourage customers of the product or services that is available, which tend to focus on where to get it, how to get it, to whom to get it, its advantages in such a way that it enhances customer benefits and improves organizational performance.
Pull Factor: is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product.
Push Factor: is the use of a company’s sales force and trade promotion activities to create consumer demand for a product.
Sales Promotion: seeks to offer buyers additional value as an inducement to generate an immediate sale.
Sales Volume: the quantity or number of product sold or services provided by a company in a particular period of time.
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