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CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDYIt is without doubt that Nigeria is experiencing an incessant
increase in demand for consumer product occasioned by the
growing application of the various promotional mixes, all of
which are rampant phenomenon in the Nigerian business
environment. In trying to understudy this research work, it is
paramount that the remote roles of the promotion in marketing
consumer product be summarily evaluated.
(wikipedia.com) Promotion is a form of corporate
communication that uses various methods to reach a targeted
audience with a certain message in order to achieve specific
organizational objectives. Nearly all organizations, whether for-
profit or not-for-profit, in all types of industries, must engage
in some form of promotion. Such efforts may range from
multinational firms spending large sums on securing high-
profile celebrities to serve as corporate spokespersons to the
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owner of a one-person enterprise passing out business cards at
a local businesspersons meeting.
Like most marketing decisions, an effective promotional
strategy requires the marketer to understand how promotion
can be used to improve market performance of consumer
product in Nigeria.
Consequently, promotion decisions should be made with an
appreciation for how it affects other areas of the company. For
instance, running a major advertising campaign for a new
product without first assuring there will be enough inventory to
meet potential demand generated by the advertising would
certainly not go over well with the companys production
department (not to mention other key company executives).
Thus, marketers should not work in a vacuum when making
promotion decisions. Rather, the overall success of a
promotional strategy requires input from others in impacted
functional areas.
In addition to coordinating general promotion decisions with
other business areas, individual promotions must also work
together.
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(wikipedia.com) the marketing environment is constantly
changing and to take advantage of the opportunities there
must be marketing strategy and strategic plans. The fast and
effective access of promotion has become an Indispensable
factor for the success of any business project. Thus, this
profound statement above amplifies the need for promotion in
marketing of consumer product.
The application of promotion mix has played a crucial role in
improving business efficiency in the marketing environment.
In our complex society today, promotion is an integral part in
our social and economic system. The fragmentation of mass
market, the explosion of new technologies that are giving
consumers a greater control over the communication process,
the rapid growth of the internet and electronic commerce or E-
commerce, the emergence of global market and economic
uncertainties are all evidence of the changing market
environment and its contribution to the way companies
approaches marketing as well as promotion.
Developing marketing communication programs that are
responsible to these changes is critical to the success of every
organization. In fulfilling and meeting up the market target, a
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well-planned and executable marketing communication
strategy is very important. Hence, this project work is aim at
showing the role of promotion in marketing of consumer
product.
Balaure, V. (2003), A Company marketing communication
programme, known as the promotional mix, is a specific blend
of advertising, promotion, public relations, trademark use and
sales force tools, employed to achieve marketing and
advertising goals.
For a fiercely competitive industry of consumers product each
element of the promotional mix is of utmost importance.
Companies in consumer product sector should not limit their
goal to merely providing quality goods they should seek to
inform the consumers of the advantages of their products, and
to implant such advantages in the consumers with surgeon
precision. To that end, it is mandatory that businesses properly
employ mass promotional tools.
This research work will attempt to dissect and identify
promotional mix that can be adopted by marketing managers
with particular reference to marketing of consumer goods. This
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research work will attempt to dissect and identify marketing
strategies that can be adopted by marketing managers with
particular reference to promotion in marketing of consumer
goods. Efforts shall be made to unravel the objective of
promotion, types of promotional mix shall be enunciated, and
recommendation shall be made to organisation based on
scientific method, so as to aid and improve their marketing
activities.
1.2 STATEMENT OF RESEARCH PROBLEM
The role of promotion as a significant marketing strategy
of a company has severally been questioned by many authors,
researchers and different schools of thought, especially of its
efficacy in marketing of consumer goods. It is argued in some
quarters that it is an expensive venture not worth its while,
since sale increases caused by promotion only last as long as
the promotion. Another school of thought believes it is an
effective tool in marketing strategy for consumer goods.
Howard Danto (1976), representing the later school of
thought is of the view that although sales increases caused by
promotion occasionally last only as long as the promotion, but
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emphasized that it is not always the case. Promotion can be
used to establish new product, to increase the long term
marketing objectives of product and penetration for existing
products.
From the consumer perspective, many consumer products are
very similar in quality, quantity and attributes. Besides, many
brands are aimed at satisfying the same basic or similar needs.
In order to maximize customer satisfaction which is the only
reliable avenue to repeat purchases, manufacturers should, as
a marketing policy, use promotion to provide the informational
cues that customers need to differentiate their brands from
others. It is only when a customer gets the right product at the
right place and at affordable prices that customers satisfaction
can be achieved. However, the satisfaction is further enhanced
if the consumer has been able to differentiate among the
various alternatives and is able to make the right choices that
meets his needs and wants.
Therefore, in the light of the above, this study desires to
find out the role of promotion in the marketing of consumer
goods, empirically test the authenticity of the claim of it
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effectiveness, and with the aid of scientific analysis, its
inevitable need in marketing of consumer goods.
1.3 PURPOSE OF THE STUDY
The stand point of this study is to analyze the significant
roles promotion plays in the marketing of consumer products.
This study is to add to existing scholarly works already done in
the role of promotion particularly in marketing of consumer
goods in Nigeria.
Furthermore, the objectives of this study are:
1.To examine how efficient promotion can be in marketingof consumer product in Nigeria.
2.To investigate the current promotional activities and mixof marketing firms.
3.Attempt to recommend appropriate avenues firms can
employ to own a successful promotional campaign in
marketing of consumer product.
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1.4 SIGNIFICANCE OF THE STUDY
Promotion is not a new concept in the lexicon of marketing
activities in Nigeria. Taking cognisance of our study, firms in
different ramifications that make up the fabric of the Nigerian
economy are consistently seeking ways of efficiently marketing
and keeping their business in perpetual continuity.
For a fiercely competitive industry of consumers product each
element of the promotional mix is of utmost importance.
Companies in consumer product sector should not limit their
goal to merely providing quality goods they should seek to
inform the consumers of the advantages of their products, and
to implant such advantages in the consumers with surgeon
precision. To that end, it is mandatory that businesses properly
employ mass promotional tools.
(Achumba, 2000), Marketing promotion practise are essential
and especially under conditions of imperfect competition, non
rational behaviour of customers or client and incomplete
market information. Intensified competition among different
industries and firms may well inform the need for serious
attention to marketing promotions. The emphasis to be placed
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on promotions has relevance for both products and services
marketing. The marketer needs to understand the environment
in which he functions, and to look at the marketing promotion
mix elements, both those he uses and those he must adjust.
Major aspects that form the very vertebra of the role of
promotion with respect to marketing of consumer products are:
y To inform the potential customer about a product.y To persuade potential customer select the brand
promoted in preference to other various competing
brand.
y Promotion also reminds customers who have bought anduse the brand that they have made the right choice. In
this context, promotion is widely used to fight or
counteract cognitive dissonance, and enhance repeat
purchases thereby increasing profitability.
In the light of the foregoing, this study will be of benefit to
the organization(s) which might in the time past doubted the
need and effectiveness of promotion or who are in doubt and
unaware of the sovereignty of consumers. It also seeks to
beam a searchlight to the imperative nature of promotion in
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marketing of consumer product. It will also encourage those
already making use of the various promotion tools/methods to
explore other areas within which promotion efforts could also
be of great help.
1.5 RESEARCH QUESTIONSIn order to validate research efforts, the following
research questions will be addressed:
y What is the role of promotion in marketing strategies?y What is the role of the management with regards to
promotion to marketing strategies of your organization?
y What is the contribution of workers in promotion ofmarketing strategies?
y What impact does the company have on the promoters aswell as workers with regards to promotion?
y Do companies need to increase budget for promotion?y How do customers respond to the various promotional mix
adopted by firms engaged in consumer product?
y Is promotion cost effective in a developing economy likeours?
y Why must companies embark on promotion despite its
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REFERENCES
Kotler P. Marketing Management Planning,
Analysis Implementation and Control.
New Delhi
Prentice Hall Ltd. (2001)
Koontz H. and Donnel C.Principles of Management
New York McGraw-Hill
Publishers (2003)
Pade Ayoola launching a new product in a
deregulated economy marketing
Journal July 1999.
Danton H. Questions and Answers in Marketing.
New York Longman inc. 1985 pg.142
Sergiu Bogdan role of promotion in milling and
bakery product sales.
Academy of economic studies,
Bucharest. 2007.
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CHAPTER TWO
LITERATURE REVIEW AND THEORETICAL FRAME WORK
2.0 HISTORICALBACKGROUND
Nigerian Bottling Company Plc (NBC) is one of the few multinational
organisations that had its beginning in Nigeria. From a small family owned
operation at inception, they have grown to become the predominant
bottler of alcoholic-free beverages in Nigeria, responsible for the
manufacture and sale of over 33 different Coca-Cola brands.
NBC Plc was incorporated in November 1951, as a subsidiary of A.G.
Leventis Group with the franchise to bottle and sell Coca-Cola products in
Nigeria.
Production began in 1953 at a bottling facility in Ebute-Metta,
Lagos. Over the years production capacity has grown and it presently has
13 bottling facilities and over 80 distribution warehouses located across
the country.
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Since production started, NBC Plc has remained the largest bottler
of non-alcoholic beverages in the country in terms of sales volume, with
about 1.8 billion bottles sold per year, making it the second largest
market in Africa.
Today, NBC Plc is a part of the Coca-Cola Hallenic Bottling Company
(CCHBC) one of the Coca-Cola Companys largest anchor bottler
worldwide. CCHBC operates in 28 countries, serving 540 million
consumers and selling over 1.3 billion units cases of beverage annually.
The company is driven by over 6000 employees, a culture of
passion for excellence, sophisticated technology and the best distribution
network in the country. With 13 high performing bottling plants, over 80
depots and over 200,000 sales outlets nationwide, they also supply some
of the most ubiquitous and best known brands including: Coca-Cola,
Fanta, Sprite, Scheweppes, Eva Water and Five Alive.
Everyday, every Nigerian community is being touched and refreshed
by NBC.
2.1 LITERATURE REVIEW
This chapter examines the past works, empirical and theoretical, of
other authors on the subject matter of the research. Each authors
contribution is viewed and analyzed with a relevant aspect of such work
to the present study.
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2.2 DEVELOPMENT OF SALES PROMOTION
(www.google.com) the concept of sales promotion was developed
in the United States of America in the early 1920s. Many of the
marketing activities which are now regarded as sales promotion were first
introduced by Benjamin Talbot Babbit, inventor and soap manufacturer in
America in the 19th century.
However, in Europe, the earliest recorded example of promotional
materials were in 1679 and belong to Jonathan Holder, a London shop
keeper who gave every purchaser who spent above a certain amount in
his shop a full list of items sold by him plus their relevant prices. His
pioneering decision to offer his customers something extra was not
universally welcomed. The newspapers of the day condemned this sales
promotion as a dangerous innovation and one which would be
destructive to trade, if shopkeepers lavished so much of their capital on
printing useless bills. Over 300 years later, trade still flourishes and so
do sales promotions, which now account for more capital than any
element of marketing communications except selling. Sales promotional
activities have become increasingly important and have evolved over a
century ago when Benjamin Babbit first introduced those activities which
are now regarded as sales promotion.
Baker (1971) stated that in recent years the growth of below the line
expenditure on sale promotion has increased remarkably to the extent
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that they now absorb more than 40% of advertising campaigns.
Avraham Shama (1993) in his article marketing strategies during
recession stated amongst other things that the response of marketing
managers to recession depends on how they perceive it meaning and
impact on their businesses. It is now therefore the responsibilities of
marketing managers to take different tactical and strategic sales
promotional measures to adjust to or even exploit changes in the
economic environment.
Tom OLeary (1974) opined that the heart of marketing; sales
promotion has moved to a stage where companies recognize it as a
competitive and important force in an organizations marketing mix.
Chris Ogbechi (1997) is of the opinion that in reviewing a depressed
economic climate like that of Nigeria, one must evaluate its effect in the
marketing horizon and identify the challenges it poses to marketing
practitioners.
2.3 DEFINITIONS OF SALES PROMOTION
The term sale promotion can be better appreciated if one takes
critical look at it from a larger perspective of what marketing as a
discipline comprises itself.
The term promotion is derived from the Latin word promo verse
meaning to move forward. The fact that nothing happens until exchange
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through negotiations occur and a sale is made, depicts the importance of
promotion in todays dynamic competitive and recessionary economic
climate.
Kotler (2009) defines sales promotion as a key ingredient in
marketing campaign which consists of a collection of incentives tools,
mostly short term, designed to stimulate quicker purchase particularly
product or service by consumers or the trade.
David Jobber (2006) defines sale promotion as a technique use
by organisations as a part of their marketing tool.
Strang (1976) in his comprehensive research on sale promotion
defined sale promotion as all other forms of sponsored communication,
apart from activities associated with personal selling. It thus includes
trade shows and exhibitions, trade allowances, sales incentives, consumer
education and demonstrations activities, rebates, points of sales and
direct mails.
Cundit and Still (1972) contended that sales promotion is a
communication process that is to say, a process of delivering messages
about the product or service from the market to the potential buyers. it
was stressed that most useful or want satisfying product will turn out to
be a market failure if no one knows it is available, hence one of the vital
purpose of sales promotion is to disseminate information to the
consumers.
Feree (1974) opined that the inducement to actions has continued
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to be important characteristics of sales promotion. It consists of
immediate or delayed incentives to purchase, expressed in cash or kind.
Its role is to achieve a specific number of new or additional purchases on
a limited period.
However, the very probable authentic definition came in the 1960s
from the American Marketing Association (AMA), they defined sale
promotion as comprising all the marketing activities except personal
selling, advertising and publicity, that stimulate the consumer and
increases the business getting activities of retailers displays,
demonstrations and various incidental sales promotional measures that
fall outside the normal routine.
The three key elements of these definitions are that sales
promotions are:
(a) Non-standard: Promotions are usually temporary, and may be
limited to certain customer groups (such as airline frequent flier
schemes) or specific to a particular distribution channel (as in
tailor-made promotions involving a producer and a single retailer).
(b) Response orientated: Promotions seek a direct response from
customers, or those who deal with customers on the producers
behalf. The direct response sought is not necessarily a sale.
Promotions may encourage consumers to send for a brochure, visit
a dealer or consume a sample. The ultimate aim is always sales, but
this is true of marketing generally.
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(c) Benefit orientated: Promotions offer their targets additional
benefits, beyond the standard marketing mix. The enhanced mix
could include extra product, a reduced price or an added item,
service or opportunity.
2.4 REASONS FOR THE DEVELOPMENT OF SALES PROMOTION
Various reasons have been adduced to the growth of sales
promotion. Reasons given include the fact that sales promotion is
becoming increasingly important in marketing based on the following:
(a) Boosting sale of a particular geographical area.
(b) Appealing to a special segment of the market.
(c) As a way of increasing the demand for new products.
(d) As a substitute for price competition.
(e) As a way of differentiating products.
(f) It is also used to penetrate new market for a product.
(g) Stimulating new use of a product.
(h) It also helps in assisting sale force presentation.
The changes in the marketing environment are exactly upwards,
pressure on the demand for sales promotion, also dissatisfaction of
customers with retail selling could be reduced wi th the effect of a good
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sales promotional programme.
Chukwuma (1987) states that the Nigerian Market has ceased
to be a sellers market which came about through scarcity of supply and a
build up demand not fully met, the economy now witnesses a buyers
market characterized by goods purchased with costly raw material and
thereby high price. The most useful product or brand will be a failure if no
one knows it is available. Distribution channels are often long; a product
may pass through many hands between a producer and consumers.
Therefore, a producer must inform middlemen as well as the ultimate
consumers or business users about the product. Wholesalers, in turn must
inform the retailers and the retailers must inform the consumers. As a
number of potential customers grow and the geographical dimensions of a
market expand, the problems of cost of informing the market also
increases.
The intense competition among different industries puts tremendous
pressure on the promotional programmes of sellers. Even a product
designed to satisfy a basic need requires strong persuasive promotion,
because consumers have many alternatives to choose from. Consumers
also must be reminded about the products availability and its potential to
satisfy. Sellers bombard the market place with hundreds of messages
everyday in the hope of attracting new customers and establishing
markets for new product. Given the intense competition for consumers
attention, even an established firm must constantly remind people about
its brand to retain a place in their minds. Much of a firms sales promotion
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may be intended simply to offset competitors marketing activity by
keeping its brand in front of the market.
Halloway and Hancos (1977) see sales promotion as those
marketing activities other than selling advertising and purchasing that
stimulate consumer purchasing and dealer effectiveness, such as displays,
shows and exhibitions, demonstration and various non - recurrent efforts
in marketing.
2.5 PURPOSE AND OBJECTIVE OF SALES PROMOTIONKotler (2009) stated that sales promotion tools vary in their
specific objectives. Sellers use incentive type promotion to attract new
triers, to reward loyal customers, and to increase the repurchase rates of
occasional users. Sales promotion often attracts brand switchers, who are
primarily looking for low price, good value, or premiums.
The basic goals and objectives of sales promotion are either
identical or very similar to the objectives of advertising and personal
selling.
According to Stanton (1964) the three specific purposes of sales
promotion are:
(a) To communicate: This involves the dissemination of ideas and
information especially through advertising and to create clear
communication channels as well as to create effective messages to
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be transmitted. Sales promotion should attract the attention of
target audience. If the prices, discounts, off-season facilities and so
on are not adequately and effectively communicated, the efforts of
sales promotion will be wasted. A point to be noted here is that the
audience evaluate not only the message but also the source of the
message in terms of credibility. The purpose of communication is to
persuade potential customers to purchase the product. The sale
manager determines the message to be aimed at the target market
to gain product acceptance. The overall marketing objectives define
the role of communication in sales promotion. Identifying the target
audience is the main task of a sales promotion communication. The
audiences response to the message source helps the effectiveness
of the response.
The sales promotion strategy is an important element in the
overall marketing strategy. Sales promotion strategy involves
identification of objectives, effective communication for attracting
attention, allocation of budget, determining the correct promotional
mix, introduction of strategic approach and finally evaluation.
The marketer should determine his sales promotion
objectives. He should determine what is to be accomplished and
what kind of buyer responses are desired. Sales promotion tasks
should be objective oriented. These tasks are informing, persuading
and reminding the customers about the products. The sales
manager should inform consumers about his product and should
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highlight its special features. He has not only to inform the
customers but persuade them to buy.
(b) To convince: It is not enough to merely communicate ideas. The
ideas must be convincing to compel the consumer to take the
demand action. It is the purpose to sales promotion to enter into
the consumer decision process by providing information or
stimulating to convince the consumer that he should reach a
decision favourable to the advertiser. Sales promotion may adopt
different methods for approaching people. Strategic values are
taken into account while deciding a particular method of sales
promotion. Consumer promotion have been considered a very
effective mode of sales promotion; potential consumers are offered
samples, coupons etc, to promote sales. The point of purchase
display is a silent strategy to trigger off buying decisions. Retailers
rely on in-store displays to familiarize customers with their product.
A showroom display makes it easy for prospective buyers to
familiarize themselves with different features of the product.
(b) To compete: A companys promotional effort is the cutting edgeof its entire competition programme.
Schwartz (1973) has identified the following objectives of sale
promotion:
(1) To introduce new products or to induce buyer to accept it for resale.
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Sampling or giving away of free samples is a sales promotion
techniques frequently used to introduce products to consumers.
(2) Sales promotion is also used to increase sales by informing and
inducing them to take the demand action. Individual buyers and
retailers respond to inducement such as price reduction, increased
quantity for same price or competing in an event t o obtain a free
price.
(3) Sale promotion is also a good technique used by many
organizations to increase the stock of customers that demand for
their products. A key objective of such sale promotion activity is to
increase the size of their distributorship and the demand for their
products. The one of all important objectives of sales promotion is
usually to complement personal selling and advertising.
(4) Sales promotion can be used to induce present customers to buy
more by knowing more about a product, its features and uses.
(5) It is a veritable tool used by firms to meet competition from similar
firms.
(6) Buyers may be encouraged to use the product in off seasons by
showing them the variety of uses of the product.
2.6 FORMS OF SALES PROMOTION
There are different forms of sales promotion. Each of them is
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appropriate for different circumstance and each has it merits and
demerits.
Kotler (2009) classified sale promotion into three action based
groups that are mutually exclusive.
Consumer/Selling Trade Promotion
Trade/Dealer Promotion
Sales Force Promotion
2.6.1 Consumer/Selling Trade Promotion: Consumer promotion is
usually used to ensure on or more of the following:
(1) Increasing sale volume.
(2) Ensuring trial of the product.
(3) To create awareness to the target market segment.
(4) Enhancing brand switching.
Consumer promotions are usually targeted directly at the
consumers to elicit immediate demand and increase sales. The
types of consumer offers are:
(a) Samples: Samples are offers of a free products or trial of aproduct to consumers. The sample might be delivered door to
door, sent in mail; pick up in a store, found attached to another
product or featured in an advertising offer. Sampling is the most
effective and most expensive way to introduce a new product.
(b) Coupons: Coupons are certificates entitling the bearer to astated saving on the purchase of a specific product. Coupons can
be mailed, enclosed in or on other products or inserted in
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magazines and news paper advertisements. Coupons can be
effective in stimulating sale of mature brand and inducing early
trial of a new brand.
(c) Cashrefunds offers orrebates: These are like coupons exceptthat the price reduction occurs after the purchase rather than at
the retail shop. The consumer sends a specified proof o f
purchase to the manufacturers, who in turn refunds part of
the purchase price by mails.
(d) Pricepacks: These are offers to consumers in form of saving offthe regular price of a product on the label or package. They
make the product in form of a reduced-price pack, which is in
single packages sold at a reduced price (such as two for the price
of one) or a banded pack, which is two related products banded
together (such as tooth brush and tooth paste). Price packs are
very effective in stimulating short term sales, even more than
coupons. Price packs can come in these forms:
i. Premiums or gifts: These are merchandise offered at arelatively low cost or free as an incentive to purchase a
particular product. Sometimes the package itself is a
reusable container which may serve as a premium. A self
liquidating premium is an item sold below its normal retail
price to consumers who request for it.
ii. Prizes: These are offers of the chance to win cash, trips ormerchandise as a result of purchasing something.
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iii. Patronageawards: These are values in cash or in otherforms that are proportional to ones patronage of a certain
vendor or group of vendors.
iv. Free trials: Free trials consist of inviting prospectivepurchasers to try the product without cost in the hope that
they will buy the product. Thus, often we see, auto dealers
encourage free test drives to stimulate purchase interest.
v. Point ofsalesdisplays:These take place at the point ofpurchase or sales. Display of visible mark or product at the
entrance of the store is an example.
vi. Product demonstrations: These promotion tools showthe product in action. Consumers can visit the store and
see the usages of the product in live action so that doubts
of the consumers can be clarified in the store itself.
2.6.2 Trade/Dealer Promotion: This promotion is usually focused at
the wholesalers, distributors and retailers, with the main aim of
encouraging the middlemen to stock up more of the product
variety of the organization. Trade promotion through buying
allowance, free goods, merchandise allowances, and push money
etc help to enhance sales by retailers and traders. Packaging is
another important form of promotion, particularly for consumer
goods. It may carry selling messages and information about the
product. A good package design attracts the shoppers; attention
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away from other products. It is a proper blend of colour, design
and shape.
Manufacturers seek the following objectives in awarding money
on the trade:
I. Trade promotion can persuade the retailer or wholesaler tocarry the brand.
II. Trade promotion can persuade the retailer or wholesaler tocarry more than it normally carries.
III. Trade promotion can induce the retailer to promote thebrand through featuring displays and price reduction.
IV. Trade promotion can stimulate the retailers and their clerksto push the product.
Manufacturers use several promotional tools. Some of which are:
(a) Price off: This is a straight discount off the list price on
each case purchased during a stated period of time. The offer
encourages dealers to buy a quantity or carry a new item that
they might not ordinarily buy. The dealers can use the buying
allowance for immediate profit or price reduction.
(b) Allowance: Manufacturers may offer an allowance in return
for the retailers agreeing to feature the manufacturers
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product in some way. An advertising allowance compensates
retailers for advertising the manufacturers product. A display
allowance compensates them for carrying a special display of
the product.
(c) Free goods: Manufacturers may offer free goods, which are
extra cases of merchandise to middlemen who buy a certain
quantity of items.
(d) Push money: Manufacturers offer push money which is cash
or gifts to dealers to push their goods out into the market.
(e) Specialty advertising items: Manufacturers may offer
specialty advertising to the retailers that carry the companys
name such as pens, pencils, calendars, paper weights and
memo pads.
2.6.3 Sale force promotion: This sales promotion is focused on the
marketing department and sale force of the organisation so that
they strive for mastery and invariably increase the quantity of the
organization product that is sold. Tools that can be use d for sale
force promotions are: Trade show and sales contest. As a number of
sale promotions have increased, frictions have been created
between companys sales force and its brand mangers. The sales
force say that retails will no keep products on the shelf unless they
receive more trade promotion money, while brand mangers want to
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spend the funds on consumer promotion and advertising. But,
managers utilize the sales force promotion method to combat
excessive trade promotion money by dealers, wholesalers and
retailers.
2.7 MAJOR DECISIONS IN SALE PROMOTION
Kotler (2009) states that before a company can effectively use
sales promotion, it must establish its objectives, select the tools, develop
the program, sales promotion budget, pre-test the program, implement
and control, and evaluate the results.
2.7.1 Establishing the Objectives
Sales promotion objectives derived from broader promotion
objectives include encouraging purchase of larger-sized units,
building trial among nonusers, and attracting switchers away form
competitors brands. Ideally, promotions with consumers would
have a short-run sales impact as well as long run band equity
effect. For retailers, objectives include persuading retailers to carry
new items and higher levels of inventory, encouraging off -season
buying, encouraging stocking of related items, bui lding brand
loyalty and gaining entry into new retails outlets. It is therefore
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very vital and important that the marketers should determine his
sale promotion objectives, what is to be accomplished and what
kind of buyer responses are desired. The tasks are informing,
persuading and reminding the customers about the product. These
are keys to the survival of sales promotion activity. The sales
manager should inform consumers about his product and should
highlight its special features.
2.7.2 Selecting Consumer Promotion Tools
The promotion planner should take into account the type of market,
sales promotion objectives, competition conditions, and each tool cost
effectiveness. Some of these forms have been earlier enumerated.
Manufacturers promotion in the auto industry for instance includes
rebates, gifts to motivate test drives and purchases, and high value trader
in credit. Retailers promotion includes price cuts, feature advertising,
retailer coupons, and retailers contests or premiums.
2.7.3 Selecting Trade Promotion Tools
Manufacturers use a number of trade promotion tools to improve on
their sales promotion activities especially, when sale seems to dwindle
like in depressed economy. They award money to trade to do the
following:
1. Persuade the retailer or wholesaler to carry the brand.
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2. Persuade the retailers or wholesales to carry more units than the
normal amount.
3. To induce the retailers to promote the brand by featuring, displays,
and price reductions.
4. To stimulate retailers and their sales clerks to push the product.
2.7.4 Selecting Sales Force Promotion Tools
Companies have continually increased budget on business and sales
force promotion tools to gather business leads, impress and reward
customers, and motivate the sales for a greater effort. They typically
develop budget for tools that remain fairly constant from year to year. For
businesses who want to get the attention of the target audience, trade
shows are an important tool.
2.7.5 Developing the Program
In planning sales promotion programs, marketers are increasingly
blending several media into a total campaign concept. In deciding to use
a particular incentive, marketers must first determine the size of the
incentive, marketing managers must also establish condition for
participation, the duration of the promotion must be decided upon, the
channel of distribution must also be chosen, the timing of the promotion
must be established and the total sales promotion budget must be
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determined.
2.7.6 Sales PromotionBudget
One of the most difficult marketing decisions facing companies is
how much to spend on promotion. It is not surprising that industries and
companies vary considerably in how much they spend on promotion. It is
important to determine the sales promotion budget, before resorting to
sales promotion activities. The resources and sales potentials are
estimated before the formulation of the budget. Sales promotion budget
should be adequate so that they achieve the promotion objectives. The
following are some of the budgeting method of sales promotion:
2.7.6.1 Affordable method:
Many companies set the promotion budget at what they think
the company can afford. This method of setting budgets completely
ignores the role of promotion as an investment and the immediate
impact of promotion on sales volume. It leads to an uncertain
annual promotion budget, which makes long range market planning
difficult.
2.7.6.2 Percentage ofsales method:
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Many companies set their promotion expenditures at a specific
percentage of sales or of the sales price. For instance, automobiles
companies typically budget a fixed percentage for promotion based
on the planned price. A number of advantages are claimed for this
method.
I. Percentage of sales method means that promotionexpenditure are likely to vary with what the company can
afford which satisfies the financial manager who feels that
expenses should bear a close relation to the movement of
corporate sales over the business cycle.
II. This method encourages management to think in terms of therelationship between promotion cost, selling price and profit
per unit.
III. The major drawback of this method is that it does not providelogical basis for choosing the specific percentage except what
has been done in the past or what competitors are doing. It
also does not encourage building up promotion budget by
determining what each products and territories deserve.
2.7.6.3 Competitiveparity method:
Some companies set their promotion budget to achieve share
of price parity with their competitors. Two arguments are advanced
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for this method. One is that the competitors expenditure represents
the collective wisdom of the industry. The other is that maintaining
a competitive parity helps prevent promotion wars.
There are no grounds for believing that the competitors know
better than the company itself what it should be spending on
promotion. Company reputations, resources, opportunities and
objectives differ so much that their promotion budgets are hardly a
guide. Further more, there is no evidence that budgets based on
competitive parity discourage promotional wars from breaking out.
2.7.6.4 Objectiveandtask method:
The objective and task method call upon markets to develop
their promotion budgets by defining their specific objectives,
determining the tasks that must be performed to achieve these
objectives and estimating the costs of performing these tasks. This
method has the advantage of requiring management to spell out its
assumptions about the relationship between the amount spent,
exposure levels, trial rates and regular usage.
2.7.7 Promotion Mix
Companies face the task of distributing the total promotion budget
over the four promotion tools of advertising, sales promotion, publicity
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promotional strategy, developmental promotional strategy or promotional
appropriation.
2.7.8.1 Pushandpullstrategies:The push and pull promotional strategies may be used to
enhance sales. The push strategy concentrates on retailers and
middlemen who push the sales of the product to the final
consumers. This strategy covers cooperative advertising, attractive
terms of sales, coupons and discount facilities.
The pull strategy is directed towards the final buyers. It
persuades the buyers to go to the sellers to buy. Sales promotion,
and particularly customer promotion, is an important form of the
pull strategy. Customer promotion may call for the offer of samples,
money refund offers and price offs premiums and so on.
The push strategy asks the sellers or retailers to attract
buyers. Trade promotion is thus the main form of push strategy.
Trade promotion refers to buying allowances, free goods,
cooperative advertising, push money, sales contests and so on. The
marketing manager has to adopt both these strategies to promote
sales.
Push strategies depend upon mass communication. Products
are literally pulled by buyers through the channels on the basis of
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mass promotional efforts. In pull strategy, the product is pulled
through the channel by creating end user demand. Customers
force retail shops to stock those mass promoted products. In turn,
retailers demand the high advertised product from wholesalers. The
firms having well known brands can exercise control over channels
through pull promotion strategies. Personal salesmanship plays a
secondary role in pull promotion. Marketers rely on intensive
distribution. Dealer margins are also lower in pull promotion.
Industrial marketing strategies are mostly the push type
strategies relying primarily on personal selling. For instance, in the
sale of medical products and in life insurance, marketers have to
employ a lot of salesmen to call on prospects for a life insurance. In
push type promotion, personal selling expenses are considerable
and dealer margin is also higher. In this, after-sales service is also
important and marketers rely on selective distribution. Push
strategy can be successfully used when:
i. There is a high quality product with unique selling points .ii. Where we have a high priced product.
iii.
Adequate financial incentives can be offered to middlemen
and their salesmen.
2.7.9 Pre-testing, Implementing and Controlling
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Although most sales promotion programmes are designed on the
basis of experience, pre-tests can determine whether the tools are
appropriate, the incentive size optimal, and the presentation method
efficient. Consumer can be asked to rate or rank different possible deals,
or trial tests can be run in limited geographical areas. Marketing manager
must prepare implementation and control plans that cover lead time and
sell-in time for each individual promotion. Lead time is the time necessary
to prepare the programme prior to launching it. Sell-in time begins with
the promotional launch and ends when approximately 95% of the deal
merchandise is in the hands of the consumers.
2.7.10 Sustaining Promotional Campaigns
The main reason why marketing managers should sustain a
promotional campaign is to stabilize the market share. Sales promotion
becomes necessary to sustain a market share if the competitors are
seriously competing to be the market leader. Unless appropriate steps are
taken by the marketer to curb this scenario he may find out that the
market may be slipping away from his products. But this sustenance
strategy can be adopted only after employing the penetrating strategy.
That is, the market share should not decline after a higher level of sales
has been attained. The sustaining promotional strategy stabilizes the
market share. Sales force promotion by the way of bonus and other
incentives may contain the market from slipping away and sustaining the
market share. Steps must also be taken to prevent the sales force from
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going across to the competitors. Brand loyalty of custo mers is fostered
and reinforced when efforts made to sustain promotional efforts. The
introduction of new products may require expansion of the market.
Innovators need to have a developmental strategy. New products or
brands are popularized by offering trade discounts, cash rebates,
premiums, money refunds etc. The promotional mix for a brand not yet
popular may require emphasis on both personal selling and sales
promotion.
Promotional objectives determine promotional appropriation. The
forms of promotion, the cost of each component of promotion, the
activities to be performed and appropriation on personal selling, sales
promotion, advertising and publicity are determine under this strategic
approach of sustaining promotional campaign. The marketing manager
has to arrive at the optimum promotional mix of the given objective, and
this requires planning and programme evaluation.
2.7.11 Evaluating Sales Promotion
The evaluation of sales promotion cannot be overemphasized. This
is due to the increasing expenditure and budget set aside to actuate the
objectives of sales promotion. Inspite of the crucial nature of evaluation
of sales promotion to management, many marketers still neglect the
positive result attached to the marketing activity of sales promotion in
terms of profit.
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Sales promotion strategies have two points of evaluation. First, at
the stages of implementation and secondly after the final performance
because implementation control will suggest improvements during the
application of the promotional strategy, while performance control will
guide the sale promotion activity in the future. Implementation control is
very important because it covers initial planning, objectives, promotional
packages, and printing of special premiums and packaging materials,
distribution to retailers etc.
Hantand Common (1978) stated that sales promotion can easily
be evaluated when compare with other marketing techniques, and the
commonest reason for this evaluation is to see how effective it has been
in achieving the firms objectives of increased sale and profitability
amongst other things, and how well it can perform when placed
analogously with other marketing techniques particularly in a depressed
economy.
Iyanda (1988) in his view stated that sales promotion unlike
advertising and publicity often calls for specific action on the part of the
audience. They may be required to fill a coupon or send specified
evidence of recent purchase. It is usually relatively easy to measure the
effect of sales promotion efforts on sales. He further suggested four
methods companies can use to measure consumer promotion which are:
(1) Salesperformance movement: This is the most common method
of evaluating consumer promotion activities. Sales or market share
before, during and after a promotion is compared to identify
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differences in sales records.
(2) Customersampling: This is when a sample of customers within a
target market are selected as sample to learn how many consumers
recall the promotion, what they thought of the promotional activity,
how many of the customers took advantage of the sales promotion
and how it affected their subsequent brand choices. This technique
is usually used to research the effect of a pa rticular type of sales
promotion on consumers.
(3) Consumer panel data analysis: This is used to evaluate the
consumer responses to sales promotion. This has showed severally
that sales promotion generally enhances brand switching.
(4) Experimentstudy: This evaluation technique experiments on sales
promotion using incentive values, deals duration and deals
distribution media that are varied so as to see their different level of
response.
Experiments needs some follow up, consumer study to understand
the reasons why the deals produced different level of responses.
But, it must be noted that extraneous factors have to be controlled
in conducting experiment which are not totally possible in social
surveys.
Expenditures on sales promotion are increasing from year to
year and moreover the use of sales promotion alongside the promotion
mix is more rapidly experienced. Therefore, there is need to evaluate
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sales promotion programme so as to know whether companies are getting
adequate returns for their effort and venture into sales promotion
particularly in a distressed economy.
2.8 LIMITATION AND RATIONALE OF SALES PROMOTION
Having seen the various functions performed by sales promotion
and the important roles it places in business, one cannot but identify
some of its limitation when compared with other marketing tools and how
efficiently it can perform in the present global economic financial crises.
(1) No amount of sales promotion will induce buying a product if the
need for the product does not exist
(2) Despite its inducing ability, it cannot force people to but what they
firmly do not want to buy. Most loyal brand buyers may decide
firmly not to change their buying pattern as a result of sales
promotion by a competitor of their product brand.
(3) Sales promotion cannot be used as a cover up for defect in product
style, design, quality, or value.
The rational of sales promotion may be analyzed under the
following points:
(a) Shortterm results: Sales promotion such as coupons and tradeallowances produce quicker, more measurable sales results.
However, critics of this strategy argued that these immediate
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benefits come at the expense of building brand equity. They
believe that an over emphasis on sales promotion may
undermine a brands future.
(b) Competitive pressure: If competitors offer buyers pricereductions, contest or other incentives, a firm may feel forced to
retaliate with its own sales promotion.
(c) Buyers expectations: Once they are offered purchaseincentives, consumers and channel members get used to them
and soon begin expecting them.
(d) Low quality ofretailselling: Many retailers use inadequatelytrained sales clerks or have switched to self service. For these
outlets, sale promotion devices such as product displays and
samples often are the only effective promotional tools avail able
at the point of purchase.
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CHAPTER THREE
RESEARCH METHODOLOGY
This chapter focuses on the methods of data collection and techniques
used in analyzing the data. The concise description of the method of
enquiry employed for this study is also explained. It begins with the basic
restatement of research questions which is sine qua non to the work
being understudied. The description will further entail the design,
research instrument, research design and procedure for data analysis.
3.1 RESTATEMENT OF RESEARCH QUESTIONS
The following are the basic and fundamental aspects of the research
questions addressed by this study:
(1)
Do companies need to increase budget for sales promotion
despite the global financial crisis?
(2) How do customers respond to sales promotion in this period ofeconomic depression?
(3) Is sales promotion cost effective during economic boom than
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when an economy is facing recession?
(4) Why must companies embark on sales promotion despite itshuge cost when undertaken?
(5) What alternative efforts are put in place by organisations whensales promotion efforts fail to achieve its objectives?
3.2 RESEARCH DESIGN
A simple analytical tool was used for the study of the research
results. They were also analyzed using tabular forms, simple averages
and arithmetic simple percentage to aid influence and decision making .
3.3 POPULATION DESCRIPTION
It is often said that the best sample is a complete census of the
population itself because every element of the population is represented
in the population itself. Representativeness then is the hallmark of a
good sample.
The target population for this study is primarily large (private)
organizations, particularly a manufacturing organization. However, due
to the large size of the population it was impossible to draw information
from it. Thus a sample frame of NBC Plc located at Agindingbi, Ikeja,
Lagos was taken as a case study.
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3.4 SAMPLE AND SAMPLING TECHNIQUE
The sampling design to be used for this research shall be excised
over the marketing department of Nigerian Bottling Company Plc. Due to
the complex nature of NBC and the cost of using the entire company; a
sample 100 respondents were used as a representation of the total
population and was used for the analysis of the questionnaire.
3.5 RESEARCH INSTRUMENT
The questionnaire will form the major instrument for gathering the
requisite data needed for analysis. It shall also be complemented with the
use of personal interview.
3.6METHOD OF DATA COLLECTIONThis research will use both primary and secondary research method;
it will also use personal interview and direct observation.
3.7 DATA ANALYSIS
The method to be used in analyzing the data collected from
respondents for the purpose of this research are the chi -square and also
percentage statistical method will be used.
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3.8 LIMITATION OF THE METHODOLOGY
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS OF RESULT
4.1 DATA PRESENTATION
An introduction of the study was given in chapter one, highlighting
the research question, purpose/objective of the study and the significance
of the study.
In this chapter, attempts are made at reducing the large volume of
statistical information (gathered from respondents) to manageable
amount as a means of preparing them for other stages of analysis.
Achumba (1994), A primary purpose of the data analysis in this study
is to reduce the data to intelligible and interpretable form so that the
result can be studied and tested.
TABLE 4.1
AGE AND SEX DISTRIBUTION/LITERACY LEVEL
SEX LITERACY LEVEL
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promotional device can still maintain and increase volumes of sales and
motivate consumers in Nigeria.
Nigerian firms should therefore ensure that they employ a dynamic
sale promotional and professional marketing strategies to achieve the
goals set to be achieved by sales promotion.
In spite of the above, the following recommendations are made on the
findings:
5.3.1 MARKET RESEARCH
A market research should be undertaken to determine the problems
and needs of consumers before embarking on sales promotion.
When a product is exposed to stranger and stiff competition from
other substitute, product efforts should be made to improve upon such a
product.
Sales promotion may induce a lot of consumer to make purchases and
discover improvements in such products and if the consumers are
satisfied, then there might be repeat purchase or post purchase feeling.
5.3.2 TARGET MARKET
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The target market for which sales promotion effort are meant for must
be specified. This is in following the pattern specified by the marketing
concepts; a marketing plan must have a targeted objective.
Markets are made up of people who are concentrated according to
geographic segmentation, demographic segmentation, categories and
industrial buyers.
Once the targets for the marketing efforts have been defined, the
appropriate sales promotion schemes should be employed accordingly.
5.3.3 SHORT TERM AND LONG TERM GOALS
The short term and long term goals of sales promotion should be
defined. If the objective of a company is to increase sales in the short
run, the company would employ the short term strategies such as
organising contest, awarding scholarship, presentation of gifts etc.
While a long term goal would include long term strategies like,
repackaging and development of product.
5.3.4 SALES PROMOTION
Sales promotion should be employed in such a manner that would
complement the other elements of promotional mix. In other words, sales
promotion is just a unit of promotional mix. As such it works best when
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combined with other units in good proportion. For instance, advertising
during sales promotion.
No sales promotion efforts will achieve maximum success unless it fits
well with the other elements of the promotional mix.
5.4 LIMITATIONS OF STUDY
5.5 SUGGESTED FURTHER RESEARCH
In other to carry out further research on this area of study, the
following suggestions are made:
1.The sample size could be enlarged.
2. To obtain a more objective study, more time and resources shouldbe provided.
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REFERENCES
1. Achumba I.C. and Osuagwu L. (1994) Marketing Fundamentals and Practice.Al-marks Educational research Inc. Rock Hills U.S.A.
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3. Asika N. And Osuagwu H. (1997) Research Method for Marketing Decisions.Nigeria. Malthouse Press Limited.
4. Baker M.J. (1971) Marketing: An Introductory Text. London Macmillian Presslimited.
5. C. B. Gupta, Vijay Gupta (2006) An Introduction to Statistical methods. VikasPublishing House PVT. Ltd.
6. Dayo Odukoya and Oladunjoye Oludotun (2007) Research Methodologyguidelines for undergraduate Students. Awo ye Art Publicity.
7. Dixon-Ogbechie Bolajoko N. (2002) Research Methods & Elementary Statisticsin Practise. Philglad Nigeria Limited.
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8. Dunton H. (1985) Questions and Answers in Marketing. New York. LongmanInc.
9. E. O. Esan and R. O. Okafor (1995) Basic Statistical Methods. University Press.10.Evans K.M (1978) Planning small scale Research. Oxford NFER Publishing
Company.
11.Harris R. et al (1962) Advertising and The Public. London. Andre Dentsch Ltd. 12.Kaufman W.A (1979). The Theory of Buyer Behaviour. Weily Fredrick . Fell
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13.Kelly T. Williams (1971) Handbook on Modern Marketing. Macmillian Inc.14.Kerlinger F.N. (1983) Foundation of Behavioural Research. New Delhi.Subject
Publication.
15.Koontz and ODonnel (1977) Principle of Marketing. New York, Macg raw Hill.16.OLearry Tom. (1974) Handbook ofConsumer Sales Promotion. London Kluvier
Harrap Books.
17.Ologbuseye R. I. (1986) A Guide to Research Work for study. Gbak PublishingCompany, Kaduna, Nigeria.
18.P. O. Olaiwola (2007)Simplified Research Writing and Defence. Nigeria B Print.19.Pade Ayoola (July 1992 December 1993) Launching a new product in a
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20.Quelch, J. A. Cannon (1983) Better Marketing at the Point of Purchase.Harvard Business Review.
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22.Salvatore D. (1982) Theory and Problems of Statistic and Econometrics.Schaumen Outlines. Macgraw Hill Inc. U.S.A.
23.Shapiro, P. Benson (1977) Sales Program, Management Formulation andImplementation. McGraw Hill Book Company.
24.Schwatz D. (1973) Marketing Today: A basic Approach. New York. HarcourtBrace.Jovanovich Inc.
25.Starng A. R. (1983) Sales Promotion Fast growth, Faulty Management.Harvard business Review.
26.Uche Aligbe (June 16 22, 1997) Adverts slots are down. Policy pg 18.27.Yoshiro M.Y. (1971). The Japanese Marketing System Adaptation and
Innovation, Massachuesettes. The MIT press. Pg 109.
28.Igbage A. (Oct.1995)Strategic Marketing Practices ofCooperative Institutionsin a Depressed Economy. Case study of Selected Co-operative in the Lagos
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Administration.
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QUESTIONNAIRE
Kindly indicate your answers by ticking () in the box opposite each option
SECTION A
PERSONAL DATA
(1) SEX MALE ( ) FEMALE ( )
(2) AGE
A. 20 - 29 yrs ( )B. 30 - 39 yrs ( )C. 40 - 49 yrs ( ) D.50yrs and above ( )
(3) MARITAL STATUS
A. Single ( ) B. Married ( ) C. Divorced ( )
(4) EDUCATIONAL QUALIFICATIONS
A. Primary Education ( )
B. Secondary Education ( )
C. OND/NCE ( )
D. HND/BSC ( )
(5) How long have you been in the employment of this company?
A. Less Than 3 Yrs ( )
B. 3 Yrs - 10 Yrs ( )
C. Above 10 Yrs ( )
SECTION B
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c. Undecided ( )
9. How do you consider sales promotion expenses in your company?a. Reasonable ( )b. Expensive ( )c. Cheap (
)
d. Unreasonable ( )10.What alternative marketing strategy would you suggest in place of sales promotion
that will be cost effective and achieve the corporate goal at the same time?
a. Personal selling ( )b. Advertising ( )c. Public relations ( )d. Publicity ( )
11. Are you aware of sales promotional strategy employed by competing firm?a. Yes
( )
b. No( )
12. If your answer is Yes above, please specify briefly............................................................................................................................. ............
...................................................................................... .............................
13.How often does your company engage in sales promotion campaign?a. Severally ( )
b. When necessary ( )c. Continuously ( )
d. Response to competitors ( )
14.Do you consider sales promotion worthwhile in a distressed economy?a. Yes ( )b. No ( )
15.What sales promotional budget does your company employ?a. Affordable method ( )
b. Percentage of sales ( )
c. Competitive parity method ( )d. Objective and task method ( )
16.Do you consider sales promotional activity a relevant marketing tool in this period offinancial meltdown as a means of achieving the sales communication process?
a. Yes ( )b. No ( )
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17.If your answer above is No above, comment briefly on the marketing tool youwould have preferred
............................................................................................................................. ............
.................................................................................................... ...............
18.How would you qualify the responses of customers/consumers of your companysproduct as a result of sales promotion?
a. Favourable ( )b. Unfavourable ( )c. Indifferent ( )
19.Comparing your companys promotional activities with that of your competitors,which would you candidly, qualify as effective?
a. My companys ( )b. The competitors ( )c. Equally effective. ( )
20.What duration and frequency is sales promotion employed by your company?a. Short term and infrequent. ( )
b. Short term and frequent ( )
c. Long term and infrequent ( )
d. Long term and frequent ( )
21.Would you emphatically agree that sales promotion activity definitely increases salesvolume of your companys product?
a. Strongly agree ( )b. Agree (
)
c. Undecided ( )d. Disagree ( )e. Strongly disagree
( )