THE IMPACT OF SALES PROMOTION ON THE PROFITABILITY OF BUSINESS ORGANIZATION. (A CASE STUDY OF NIGERIAN BOTTLING COMPANY KADUNA)

Business Administration

CHAPTER ONE:- INTRODUCTION

  1. Background to the Study

The economic situation of the country in both the past and present year has affected the financial and commercial activities of business organization as a whole, which has resulted in decline level of sales and profitability. In view of these facts, many business organizations are therefore involved in different type of measure such as sales promotion in order to increase their sales and also to remain in business since there is doubt that without adequate sales promotion, most of the business objective will not be reached.

During the past decades or thereafter, business organizations know their environment customers and market first hand. Reason being that the environment and the business organization were small with the increasing complexity of the business  environment, and systematic approach to studying the increase problems of management; it becomes all the more important that the environment  need be  studied.

It is obvious that the principal function of management is to make decision and without doubt marketing decision seems to be the most difficult and therefore, its effect is felt throughout the business.

With growing needs supply, individuals and organization needs and inevitably bridge the gap between the producers and the customers or users of the product, organizations equally need to research into the growing needs of these groups. Also, since there is the greatest need for the organization to maintain market share, there is the need to create awareness so as to increase their level of sales, productivity and profitability. Due to this reason, there is the greatest need to understand the impact of sales promotion in the profitability of business organizations.

Due to the increase acceptance of sales promotion by firms as a very important element of the promotional mix and its expenditure also being on the rise, it has become very import to examine whether sales promotion is actually making any impact on the volume of sales. This paper specifically evaluates the effect of sales promotion on the profitability of business organization with particular reference to  Nigerian Bottling Company as the case study.

  1. Statement of the Problem

In spite of the tight definition of sales promotion as an essential means of creating awareness of the product existence and characteristics and also the positive, psychological associations that can enhance the buyer satisfaction which adds to the real value of the company’s offering. Irrespective of this, Little attention is being given to it by many business organizations in the country and they rarely promote their sales to the fullest.

Many firms pay little attention to sales promotion since they feel they can sell their product with little or no promotional activities. Likewise, many firms which could not afford the huge cost of the promotional programmes would entail and despite the effects of sales promotion, there had been insufficient research and decision modeling devoted to it. In addition, there is an established negative perception of many firms as regards the cost of business promotion especially those whose benefits are not early and immediately reached.

Also, adequate records of sales and promotional cost are always neglected and some sales promotion programmes are introduced at the wrong time, which will therefore hinder the level of sales and profitability of the firm and thereby render sales promotions less important in the community and the country as a whole.

Specifically, the statement of the problems is as follows:

  1. To examine the level at which business organizations in Kaduna and the country as a whole create awareness about the existence of the products and services.
  2. To examine the level of satisfactions the customers received from the consumption of the company’s products.
  3.  To assess the rate of attention given by firms towards the promotion of their products.
  4. To assess the type of promotional programmes most business organization adopt towards the promotion of their own products.
  5. To investigate if firms and other business organization keeps adequate record of their sales and promotional cost.
    1. The Objectives of the Study

The general objective of this research work is to examine the impact of sales promotion on the profitability business organizations with special reference to Nigerian Bottling Company Plc Kaduna. The specific objectives of the research work include:

  1. To identify the combination of promotional tools that should be adopted to enhance promotion.
  2. To determine the usefulness of sales promotion.
  3. To explore rationale behind sales promotion by examining consumer behaviour
  4. To pose challenges ahead  of sales promotion
  5. Identify conditions under which sales promotions influence purchase behavior
  6. To determine how long the company has been carrying out sales promotion.
  7. To find out the media used by the company in conveying sales promotion programmes.
    1. Research Question

This study tends to investigate and provide answers to the following questions.

  • Does Sales Promotion have significant effect  on organizational profitability?
  • Does sales promotion influence consumer purchase behaviour?
  • Do consumers really benefit in sales promotion?
  • What are the implications of defective sales promotion in a Business organization?
  • What are the main factors that affect sales promotion in a business organization?
    • Research Hypothesis

To provide answer to the research questions arising from this study, the following hypotheses are postulated.

Hypothesis One

H0There is no significant relationship between sales promotion and Business organizational profitability.

H1:  There is a significant relationship between sales promotion and business organizational profitability.

Hypothesis Two

H0Sales promotion does not influence consumer purchase behavior.

H1:  Sales promotion influences consumer purchase behavior

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