STRATEGIC INFLUENCE OF PROMOTIONAL MIX ON ORGANISATION SALE TURNOVER IN THE FACE OF STRONG COMPETITORS

Ph.D Adebisi SUNDAY University of Ado Ekiti, P.M.B 5363, Ekiti State Nigeria. Email: [email protected] Babatunde BAYODE Osun State University, P.M.B 2008, Okuku, Osun State, Nigeria [email protected]

Abstract: This paper aim at study strategic influence of promotional mix on organisation sale turnover in manufacturing organisation. The research data were gathered through the use of secondary data and primary data, secondary data included 6years annual report comprising the sales turnover (2005-2009) and questionnaire which is an instrument of primary data collection. The questionnaires were administered to the workers of 7up Company and some customers in Solebo Estate in Lagos. The researcher adopted the simple percentage and regression model for the analysis of the collected data.. The result of the findings revealed that strategic promotional mix influences the sale turnover with little 25% while other variable not included in the variable tested takes the larger 75% that will rapidly lead to organisation growth. Since promotional mix constitute few % of variable that can push an organisation to the highest level, therefore other factors of mix such as product development, effective pricing, distribution of right quality and quantity to the consumers should be appropriately considered.

Key words: Strategic promotional mix, , Regression Model, push and pull strategy.

Introduction blend of , , It is not enough for a business to sales , public relation stool have good products sold at attractive sand direct marketing. prices. To generate sales and profits, The organization has to convey the the benefits of products have to be message about the product on offer to communicated to customers. In its consumers. This helps in sustaining marketing, this is commonly known as a perennial demand for the product and "promotion". Although promotion is not in suitably positioning it among the done only for these factors but for other target audience. The process of such as to build brand loyalty, to communicating the message is called reminds and reassure costumers, to promotion. It influences the purchase launch a new product and maybe to decision of the consumer. The different defend market share by responding to channels available to the organization competitors’ campaigns with their own for communicating the message advertising A business' total marketing constitute the promotion mix. It includes communications programme is called advertising, , and public the "promotional mix" and consists of a relations. The paper examines the different elements of the promotion mix Ross (2001) sees promotional mix and discusses the issues involved as “the total marketing communication therein. It also delves into the programme of a particular product”. advantages of using the Internet as a Adebisi (2006) defined promotional selling medium. mix as “any marketing effort whose It is very important for every function is to inform or persuades actual product to be promoted, that is to say it or potential consumers about the merit needs to be drawn to the attention of a product possess for the purpose of the market place and it’s benefit be inducing a consumer to either start identified. The aim of an organization buying or continue to purchases the promotional strategy is to bring existing firm’s product.” and potential customers to a state of relative awareness of the organization’s Elements of Promotional Mix product and a not just that but also to a Every product needs to be drawn state of adoption. to the attention of the target market, and The promotional mixes (sales its benefit identified. The principal promotion, , personal selling, methods are; advertising, public relation) have a • Advertising stage at which it will be most effective. • Personal Selling Advertising and publicity are suitable for • Sales promotion all stages while the remaining mix can • Publicity be effective from stage three. • Public relation The aim of an organization’s Literature review promotional strategy is to bring existing Cole (1996) defines promotional or potential from a state of relative mix as “the means use in bringing unawareness of the organization’s customers from a state of relative product to a state of actively adopting unawareness to a state of actively them. Several stages of customer’s adopting the product”. It means of behaviours have been identified. This communicating with individuals, groups, has been described in several ways, but or organizations to directly or indirectly in summary can be stated as follows in facilitate exchange of informing and Table 1. persuading one or more audience to accept an organization’s product.

Table 1 Stages Behaviours One Unawareness of product Two Awareness of product Three Interest in product Four Desire for product Five Conviction about value of product Six Adoption/purchases of product Source: Ross (2001) Stages of Product Awareness

Advertising commercial television, direct mail, Advertising is the process of commercial radio and outdoor. communication, persuasive information Objective of Advertising about a product to the markets by A company’s objective for means of the written and spoken word. embarking on advertisement can There are five principal media of therefore be on any of the following advertising as follows; The press, objectives enumerated below; 68 (i). To introduce a new product face.The personal selling consists of a or service; here advertisement attempt selling process, which is illustrated to present to the prospective buyers a below.Personal selling is the most new product or service and this usually expensive form of promotion. Company near a costly and dramatic launching of that use more of personal selling are a new product or service. said to be adopting push strategy while (ii). To expand the market to new that of advertising are using pull buyers; advertisement is done to strategy. introduce a product to new buyers who Sales Promotion might find interest or usefulness of it. Sales promotion activities are a (iii). To announce modification; a form of indirect advertisement, designed product that is already in the market to stimulate sales mainly by the use of might want to be given a new face, and incentives; Free sample, Twin-pack then there is need for advertisement to bargain, Temporary price reduction, highlight to the consumers that Special discount bonus. modifications had been done. Publicity (iv). To announce a price change; Publicity differs from other advertisement can be done if the promotional mix in that it is costless organization’s product or service price is most of the time. Publicity according to increased or decreased so that the Cole (1996) is “news about the consumer might be informed. organization or its products reported in (v). To introduce a new the press”. Publicity sometimes cost but packaging; packaging identification at its cost is always related with the point of sales is always important advertisement. Publicity is a very and is a reason why packages are necessary tool because it creates the shown in advertisement. good will of an organization. (vi). To stimulate sales promotion; Use of publicity advertising maybe make special offer Publicity when properly managed when business environment is static. It by the Public Relation Officer of an could be a gift of cup or biro etc at the organization can serve the following purchase of such product. purposes; it can be used to attract (vii). To educate consumers; the public attention, it can also be used to educational advertisement is necessary maintain public visibility and used for when a commodity, service or an offer the provision of information to the needs careful explanation. public. Publicity often takes the form of (viii). To maintain sales; customers news released or press conferences, product which had been in the market appearance or event sponsorship. use advertisement to maintain sales. Public Relation (ix). To challenge competition; the Public relation is another form of purpose of some advertisement are to promotion. It is the means by which the challenge the competitors in the organization related or communicates presence of buyers. with the environment. Public relation is aimed at better customer relations and Personal Selling immediate feedback (Table 2). This is the process by which the seller sells to the consumer face to

69 Table 2 Personal Advertiseme Sales Direct Public Selling nt Promotion Marketing Relation Advan- Permit Reaches a Produces an Generates an Creates a tages measurement large group of immediate immediate positive of potential consumer response. attitude effectiveness. buyers for a response. Covers a wide towards a Elicit an relative low Attracts audience with product or immediate price. attention and targeted company. response. creates advertising. Enhances Tailors the Allows strict product Allows credibility of a message to fit control over awareness. complete, product or the customer. the final Allows easy customized, company. Personal message. measurement personal contact Can be of result. message. adapted to Provides short Produces either mass time sales measurable audience or increase. results. specific audience segment. Disadvan- Relies almost Does not Is non- Suffers from May not tages exclusively permit total personal in image permit upon the accurate nature. problem. accurate ability of the measurement Is difficult to Involves a measurement sales person. of result. differentiate high cost per of effect on Involve high Usually from efforts. reader. sales. cost per cannot close Depends on Involves much contact. sales. quality and effort directed accuracy of towards non- mailing lists. marketing oriented goals. Source: Adebisi (2006)

Promotional Mix Strategy use in this strategy is advertising and Marketing managers may choose sales promotion. between two alternative strategies to (b)Pull strategy: In this strategy use when promoting their product, the produce the final consumers to which are; Push strategy and Pull induce them to buy the product. If the strategy (figure 1). strategy is effective, the consumers (a)Push strategy: When a market demand for the product from channel uses the pull promotion, it means that members (middlemen). This is the most the product involves “pushing” through used strategy. distribution channel till it gets to the final In this strategy, consumer’s consumers. The strategy involves the demand pulls the product through the producer directing his marketing channel. activities towards channels members to The two strategies can be applied induce them to bring the product or simultaneously. However the B2C promote the product to the final (business to consumer) use more of pull consumers. One major promotional mix strategy while the B2B (business to business) use more of the push strategy.

70

Producer’s marketing Resellers’ Marketing Activities Activities Producer Middlemen Consumers

Push Strategy

Demand Demand Producer Middlemen Consumers Producer’s marketing activities.

Pull Strategy

Figure 1. Push strategy versus Pull strategy Source: Cole (1996).

Developing an optimal special public or the general public. The Promotional Mix target audiences are one of the major The blending of all mix of determinants of what mix is to be used? promotion (personal selling, Step 2; determine the needs: advertisement, public relation, sales after having identified the target promotion and publicity) is what leads to audience, the next thing to do is to know the achievement of marketing what their basic needs are and is the objectives. Qualitative measures can be product relevant for the audience? used to determine the effectiveness of a Step 3; determine the mix components in a given market promotional objectives: the segment. The choice of a proper mix of promotional activities should have a promotion elements present one of the target to be meant which is referred to most difficult tasks for a marketer. as objective. Is it to increase sales? Or Steps to developing optimal is it to just create awareness? It should Promotional Mix be clearly stated. An organization must make sure Step 4; choose the mix: after the that is promotional mix is effective, if it expected response is determined, then will benefit from it. The following are the the marketer can look critically at all mix steps involves in having an optimal and identify which can best satisfy their promotional mix. objectives. Step 1; identify the audience: a For a promotional mix to lead to marketing promotion starts with clear purchase, it must have pass through target audiences in mind. The audience some stages which is illustrated in the may be potential buyers or current diagram below: users, it may be individuals, group,

71

Brand Ignorance Awareness Knowledge

Conviction Purchase Liking Preference

Figure 2. The buying readiness stages Source: Cole (1996) “The Buying Readiness Stage”

Measuring the effectiveness Methodology of promotional mix Methodology is a vital process of If an organization cannot measure carrying out empirical study. It forms the it’s effectiveness in terms of promotion, background in which the procedures it cannot say precisely if the activities employed in carrying out a research are had been successful. For an designed. It is the procedure that organization to measure the follows a step after one another of effectiveness of it promotional activities, which data gather for a research is this can be done in either of the being analyzed”. following ways; Population of the Study • Direct sales result; this The case study of this organization method reveals the sales revenue for has many plants in Nigeria in places like each amount input into promotion. That Ibadan, Ijora, Kano, Ikeja and so on. is, it measures the rate of sales to the The researcher therefore picked the expense on promotion. Ikeja plant as the case study. Marketing • Indirect evaluation; this department personnel were sampled in method focus on quantitatiable the organization since it is related with indicators of effectiveness. For instance, the topic under study. The number of the effectiveness is measured based on employees in the marketing department the organization study of the number of is forty two as given by Mr. Wemimo the audience that actually heard about the sales manager. product during the promotional Sampling Procedure activities. Sampling method is the study of a • Returns method; this method fragment of the entire population when it is the work of Professor Don Schutz. He is not feasible to carry out the study on said promotional effectiveness should the entire population. The study used be measured based on the returns of the random sampling method because it the period of promotion. What is the allows equal chance for every element profit like during promotion and when of the population and therefore the there is no promotion? sample size was thirty while the • Direct response method; this consumers were fifty. method is concentrating on having a Data Collection Instrument way of getting response from the This research work is both targeted audience and this response qualitative and quantitative in nature, should be used to measure the and as such data were collected via the effectiveness of promotion. use of both primary data and secondary data.

72 Regression Method of Analysis b = slope Adebisi (2006) defined regression ui = error term. as “the statistical method of predicting The regression model will build on, and determining the probable value of Hypothesis One; dependent (α) given the value of α (dependent variable) sales independent (β).The hypothesis turnover gathered for this study will be tested at β (independent variable)Strategic 5% level of significance. promotional mix. The regression formular is: Hypothesis Two; α =a + bβ + ui Where; α (dependent variable) market α = dependent variable share and growth β = independent variable β (independent variable)Strategic a = intercept promotional mix Table 3 Years Turnover Selling and Distribution Expenses 2004 14937371 2931311 2005 17346662 2207731 2006 22071731 4557690 2007 27309123 5576791 2008 30572218 6364557 2009 34022650 8230830 Source: 2003-2009 7up Nig Plc statement of income and expenditure bulletin,

Hypothesis one the face of full competition. For this Ho- Strategic promotional mix hypothesis the six years financial report does not influence sale turnover rate of 7up was used and 45% of selling positively in the face of full competition. expenses was taken as promotional H1- Strategic promotional mix mix. influence sale turnover rate positively in Table 4 Years Turnover Selling and % taken as Distribution promotional Expenses expenses 2004 14937371 2931311 1319089.95 2005 17346662 2207731 993478.95 2006 22071731 4557690 2140960.5 2007 27309123 5576791 2509555.95 2008 30572218 6364557 2864050.65 2009 34022650 8230830 3212302.50 Source: Data analysis 2010.

Regression analysis showing the strategic influence of promotional mix on sales turnover. Table 5 Model B Std. T Sig.t R R2 F Error Constant 1.2E 8.6E + 1.416 .230 +08 07 Strategic .173a .030 .123 Promotional mix -6.752 19.268 -.350 .744 Source: Data analysis 2010 73

The estimated regression model is result shows that t-value is .350 at 0.05 given as: level of significant (t=.350: α=f(β) p<0.05).Therefore the null hypothesis α = a + bβ + ui accepted while the alternative is =0.000000012+6.752 β + ui rejected. Hence, strategic promotional Std. error = (0.00000086) (19.268) mix has significant influence on sales t =(1.416)(.350) turnover, since the t-tabulated (2.571) is The result of the regression greater than t-calculated. analysis shows that the regression The overall regression model is not coefficient (R) is .173a. It implies that significant in terms of its goodness of fit there is positive and strong influence (f=.123 p<0.05) since f-tabulated (7.71) between strategic promotional mix and is also greater than f-calculated. sales turnover in 7up manufacturing company. The result also reveals that Hypothesis two the coefficient of determinant (R2) is Ho- Strategic Promotional mix .030, it connotes that about 3% variation used by a firm does not determine the in sales turnover could be explained by market share and growth. promotional mix. The remaining 97% H1- Strategic Promotional mix were largely due to other variables used by a firm determine the market outside the regression model that also share and growth affects sales turnover. Regression analysis showing the Testing the effect of independent impact of promotional mix on sales variable ( strategic promotional mix) on volume dependent variable (sales turnover) the

Table 6 Model B Std. T Sig.t R R2 F Error Constant 2.050 3.898 .526 .692

.500a .250 .333

Strategic .500 .866 .577 .667 Promotional mix Source: Data analysis 2010

The estimated regression model is coefficient of determinant (R2) is .250, it given as: connotes that about 25% variations in α=f(β) market share and growth could be α = a + bβ + ui explained by promotional mix. The =2.050+.500β + ui remaining 75% were largely due to Std.error= (3.898)(.866) other variables outside the regression t=(.526)(.577) model that also affect the market. The result of the regression Testing the effect of independent analysis shows that the correlation variable (Strategic promotional mix) on coefficient (R) is .500a. It implies that dependent variable (market share and there is positive and strong influence growth) the result shows that t-value is between strategic promotional mix, .577 at 0.05 level of significant (t=.577: market share and organisation growth. p<0.05),there is positive influence. The The result also reveals that the overall regression model is not 74 significant at 5% since it significant is bought by the targeted market. The 69.2% and in terms of its goodness of fit promotion of any product must be (f=.333 p<0.05) since f-tabulated (7.71) accessible to the people that the is also greater than f-calculated. product will be useful for and at the same time, must be able to encourage Findings new customers to purchase and From the above result, the finding repurchase the products. reveals three major hypotheses tested. In conclusion, every organization The result of hypothesis one shows must have a proper and well monitor that, the t-test calculated is lower to the promotional activities and must be able result of the t-test tabulated and not to tailor it in such a way that it will significant at 0.05, therefore, increase it sales thereby increasing the promotional mix has significant profit of the organization. influence on sales turnover. In this case appropriate choice of promotional mix Recommendations will perfectly enhance the sale and In view of the findings, the boost the good image of an following recommendations are organisation. provided. The finding also revealed that 1. The management of an proper application of promotional mix organisation should find out the actual will increase the market share and choice of promotional mix that will be improve organisation growth in the face appropriate for the survival of their of strong competition. Though with the business. level of 25% variation from the table, 2. Organisation should carry out there are still other strong variation that periodic measurement of the impact of can seriously and rapidly increase the its promotional activities in order to market share and organisation growth correct it to earn more gain. which are silent with in the model. 3. Nigeria’s companies might need Having discovered all these to increase its funding for adverts therefore, strategic promotional mix has knowing fully well the importance of positive influence on sales turnover in promotional mix on potential and manufacturing company especially existing customers. where competition is the order of the 4. To other organizations, they day. should not depend on a particular Conclusions strategy for promotional mix, this will Every organization that must give room for other strategies to be put continue to survive in its operating to test to see if their impacts might be environment must be able to adequately higher than the previously used promote its product. For the strategies. organization to achieve its aim of profit 5. Since promotional mix constitute making as a manufacturing few % of variable that can push an organization, it must make sure that, its organisation to the highest level, promotional activities achieve its aim of therefore other factors of marketing mix making the product acceptable and should be appropriately considered.

REFERENCES

Adebisi, Y (2006). “Essential of Marketing Management, 1st ed.”Lagos: Cilgal Publication. Adeniyi, A (1999). “Marketing Principle and Practice, 1st ed”. Malhouse Press Ltd.

75 Aluko, T (2001). “Principle and Practice of Marketing” Lagos: Tunbuk venture. Aluko, T (2002). “Marketing Research and Material Management, 2nd Ed.” Ado: Afusco Printer and Publishers. Ajayi, L. (2002). “Principle of Business Management” Lagos: Libra Publishers. Akpoyomare, B (1991). “Introduction to Management” Lagos: Pancf Press. Best, S (2000). “Principle of Marketing” New York: Prentice Hall. Boone, L and Kurty, D (1980). “ Contemporary Marketing” Hinscdale, Illinofs Dry Press. Chris, F (2006). “Simply Marketing Communication” New York: Prentice Hall. Crimp, M (1985). “The Marketing Research Process 2nd Ed.”, UK: Prentice Hall. Schewe, D (1987). “Marketing Principle and Strategies, 2nd Ed.” USA: Mcgraw - Hills. Engel, B and Kollat, G (1978). “” Hinsdale Illions: The Dry Press Reliable Publishers. Eunice, A (2001). “Practical Guide to Research Writing”. Ibadan: Might Babs Production. Frain, J (1986). “Principle of Marketing”, London: Pitman Publishing. Cole ,G (1996). “Management Theory and Practice, 5th Ed.” Great Britain: Martins the Printers. Kotler, P (2007). “Marketing Management, 12th Ed”. New York: Pretice Hall. Stanton, J (1981). “Fundamental of Marketing, 6th Ed.”. New York: McGraw Hill Book Company. Ross T (2001) Marketing as a concept; New York practice Hall press. Williams, J (1974). “Fundamental of Marketing” .Tokyo: McGraw Hill. Wole A (1988). “Business Management”: An introduction, Lagos: Macmillan Nigeria Publisher Limited. Mecnaghan, T (1991). “The Role of Sponsorship in Marketing Communication Mix, International Journal of advertising”. www.africafinancial.com www.financeonnet.com

76