An assessment of the significance of Advertising in Sales Expansion
Abstract
Advertising is a form of communication that attempts to interpret the qualities of products, services, and ideas in terms of consumer needs and wants. Some companies or organizations embrace advertising to achieve goodwill, high market share and sales. This research work is on the impact of advertising on sales volume with particular reference to Nigerian Bottling Company. The objective of the study is to examine the impact of advertising as a tool for growth in the company’s sales, market share and profitability. It also seeks to study the nature of advertising as well as the relationship between advertising and sales. The statistical analysis techniques used for this study include student ‘t’ test and ordinary least square regression method. The secondary data were collected from the company’s annual financial records and account for eleven years covering 1999-2009. The major result showed that there is a significant relationship between advertising and the sales of the company. The study also showed that there is a significant improvement in the sales of the company as a result of advertising. It was recommended that organizations should educate the general public through advertising on the uses, functions, and benefits of their products
CHAPTER 1 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Various writers have viewed advertising from different perspectives. Advertising is a tool of marketing for communicating ideas and information about goods and services to an identified group, which employs paid space or time in the media or uses another communication vehicle to carry its message. It openly identifies the advertiser and his relationship to the sales effort (Wanoff, 1997). Advertising can also be defined as any paid form of non-personal communication about an organization, product, service or idea by an identified sponsor (Bennet, 2006). Advertising is any paid massage presented through various media, such as television, radio, magazines, newspaper, or billboards by an identified source. Advertising is a non-personal communication paid for by an identified sponsor who is relayed through various media with the aim of influencing people’s behavior towards the advertiser’s products and services at the lowest possible cost. (APCON, 2002). Frank (2005) defined advertising as the aim to persuade people to buy. Advertising is the dissemination of information concerning an idea, service or product to compel action in accordance with the intent of the advertiser. Advertising is a controlled identifiable information and persuasion by means of mass communication media (Borden, 2007). Advertising is the non-personal communication of marketing-related information in a target audience, usually paid for by in order to reach the specific objectives of the sponsor. (Bennett, 2006). Advertising is a message paid for by an identified sponsor and delivered through some medium of mass communication. It is not neutral, it is not unbiased; it says: I am going to sell you a product or an idea’. (Rusell, Rusell and Lane 2006). Going by the various definitions considered above, advertising is an indicator of the growth, betterment and perfection of the business environment. Not only does advertising mirror the business environment, it also affects and gets affected by our style of life. It is not at all surprising that advertising is one of the most closely scrutinized of all business institutions. In today’s environment, advertisers are closely examined by the target audience for whom the advertisement is meant for in the society. (Kazmi, 2005). Modern advertising is largely a product of the twentieth century, however, communication has been a part of the selling process ever since the exchange of goods between people started. (Kazmi, 2005) Historically, maximizing performance has largely been an exercise in uncertain intuition and gut feel’ for marketers, especially when they are under mounting pressure to account for their actions and spending. While advertising may have several objectives, ultimately marketing and business executors want to know, “how advertising has contributed to sales and ultimately to the company’s bottom line?” understanding and quantifying the benefits of advertising is a problem as old as advertising itself. The problem stems from the many purposes advertising serves; building awareness of products, creating brand equity and generating sales. Each of these objectives are not easily measured or related to the advertising that may have affected it. There has been an explosion in media alternatives from the traditional standbys of television, radio and prints into a broader spectrum of both offline and online options, with the internet clearly being the most visible example of this change. The choices within each medium have also expanded in an attempt to reach more targeted audience. Television, for example, has burgeoned from three primary networks to literally dozens of mainstream cable channels, all capable of reaching large audiences with brand massages or product promotions. Hundreds of new magazines now serve many special interest groups; whole web advertising presses the edge of one-to-one marketing. In addition, more and more companies are using integrated multi-media strategies to reach their desired audience, layering broadcast advertising over dried response campaigns or combining online with offline campaigns. All of this is making it harder to separate out the individual influences of each advertising effort. Consequently, most companies are no longer satisfied relying solely on traditional methods of measuring advertising effectiveness, namely awareness surveys and tracking studies. Hence they want more precise and concrete evidence to prove that their marketing investment is paying off. It is one thing to know how memorable an advert might be or how potential customers feel about a company or its products, but it is quite another to quantify the sales and profitability impact that advertising might produce. The defiantly means that measuring these effects may involve training advertising’s stimulus through a behavioral chain of events that may eventually culminate in a sales long after the advertising has been delivered. Furthermore, companies today are in a more competitive and faster-paced environment than were before, accelerating the need to understand the consequences of their marketing efforts. Marketers simply do not have the luxury any more to rest on their laurels or to assess how a set of campaigns performed months after they have been concluded. The market-place is evolving so rapidly in many cases that knowing what’s working and what’s not almost as fast as it is happening has great value. For these reasons, marketers have begun to seek new and effective measurement tools to help them estimate the impacts of their advertising mostly on sales volume.
CHAPTER 2 LITERATURE REVIEW
CONCEPTUAL FRAMEWORK
Nature of Advertising
Advertising is much more complex than could be really imagined. Placing cause and effect is much more difficult in advertising than in the physical science. This is because it is not easy to control the various factors that could be regarded as contributory in an advertising environment. For instance, a company cannot categorically claim that a particular advertising campaign was solely responsible for recorded increase in its sales at the end of the campaign. Other unrecognizable factors like higher income for potential customers, reduction problems of competitors, improved customer relation of distributors and retailers and other unnoticeable factors apart from the campaign may be responsible for the company’s improved sales. It is also difficult to classify advertising as either an art or a science. Neither practitioner nor academicians have ever agreed on an answer. This is because advertising has a bit of both. In general, creative people regard advertising as an art and themselves and artistes who through their creative ability device effective ways of communicating advertising ideas that will persuade potential customers to use a product, service or an idea. However, people who work in the area of advertising as part of marketing mix often emphasize the science of advertising. This is because they see advertising as part of a mixture of elements combined in a marketing plan to achieve an effect. This, of course looks quite scientific. Whether we emphasized the art or science of advertising, we must concede the fact that like many other fields of social endeavour, advertising is becoming more and more measurable and scientific source. But because it deals with people and its main products are artistic expressions of human creativity, it will never be an exact science but a social science. (Frank , 2005)
THE ROLE OF ADVERTISING
The main role of advertising is to make known the availability of a product or service to sell. In addition to this however, advertising performs some other useful and important roles in every society. (Sandage and Rotzoll 2001) stated that advertising plays the following roles: Provision of Employment Opportunities The advertising business is such a lucrative one that very many people are employed in the sector as specialists and non-specialists. Creation of Standards through Competition Advertising message often extol the good qualities of products or service. For consumers to continue to buy these product or service, manufactures or organization are compelled to adhere to the advertised qualities, for if they allow the qualities to drop, consumers will buy less of their products or services and patronize their competitors instead. This thus ensures that manufactures and organization do not allow the quality of their products or service to fall below a standard that is acceptable to consumers
