CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Sales promotion is an old marketing practice. Long before modern firms arrived in Nigeria, traders and producers used unorthodox methods to attract buyers. They travelled from hamlet to hamlet and from town to town with their goods, bargained over prices, and on market days rang bells in the market square to draw consumers, who would often end up buying a product at a reduced, bargained price. In present-day Nigeria, sales promotion remains common, and it is practised in auction sales, bazaars and during festive periods such as Christmas and Easter, and other special events. Multinational and local manufacturing firms have also used it widely to market goods and services to Nigerian consumers.

Sales promotion is an indirect form of marketing promotion that is meant to stimulate quick action. It covers the marketing activities, other than personal selling, advertising and publicity, that stimulate consumer purchasing and dealer effectiveness. Examples include displays, shows and exhibitions, demonstrations, coupons, sweepstakes, contests, samples, premiums, trade allowances, point-of-purchase displays, cents-off packs and dealer allowances. Most such activities are of short duration. Sales promotion can also be seen as a form of incentive marketing, which is a set of immediate or delayed incentives to purchase, in cash or in kind, offered over a short period, with the main objective of increasing the sales volume of a product or service.

Promotional techniques are usually divided into consumer-pull and trade-push techniques. Consumer-pull techniques are aimed at the final consumer and include sampling, price incentives or deals, coupons, cents-off offers, rebates, contests, sweepstakes and premiums. Trade-push techniques are aimed at dealers and include training, inventory controls, displays and financial assistance. Although most campaigns pursue short-term sales objectives, they can also support long-term objectives, because they build brand image, create awareness and communicate with the market.

Recent Nigerian studies show that sales promotion can have a strong effect on both consumers and firms. Ogunmuyiwa (2022) found that sales promotion, along with publicity, is a veritable tool for achieving organisational marketing goals in a competitive environment. In the beverage sector, Okolo et al. (2024), in a survey of beer consumers in south-eastern Nigeria, found that buy-one-get-one-free offers, specialty advertising and crown-cork scratch-and-win promotions each have a significant and positive effect on consumers' purchase decisions. Kabuoh et al. (2020) found that sales promotion has a positive effect on customer retention in selected food and beverage companies in Lagos State. Okonji et al. (2020) compared the sales of a Lagos-based manufacturing company before and after a promotion and found that sales promotion significantly increased sales volume and customer loyalty. Adefulu and Van Scheers (2015), in a study of Coca-Cola and 7UP in Lagos, found that sales promotion enhanced sales growth and helped to differentiate products from those of competitors.

These benefits come at a cost. The budgets that soft drink firms devote to sales promotion are large (Adefulu & Van Scheers, 2015), and economic conditions in Nigeria have made firms rely on promotion as a way of surviving in a competitive market (Okonji et al., 2020). It is therefore important to evaluate whether this expensive programme is cost-effective and how consumers respond to it. This study investigates the impact of sales promotion in a business organisation, using Nigerian Bottling Company Plc as the case.

1.2 Statement of the Problem

Sales promotion is used to increase the sales of a product, but its use raises several problems:

1. It is difficult to assess how sales promotion has grown and developed in Nigeria since independence.
2. It is difficult to determine the factors that have increased the adoption of sales promotion in Nigeria.
3. The prospects and problems of sales promotion are not well understood.
4. Firms find it hard to choose the best sales promotion tools for achieving their goals.
5. There are concerns about ethics, that is, about whether the offers advertised in promotions are genuine and are fulfilled.

Sales promotion can raise sales in the short run, but the extent to which a firm's sales can be attributed to promotion, and the effect on long-term demand, have not been fully established. Existing Nigerian studies concentrate mostly on consumer response in particular products or regions (Kabuoh et al., 2020; Okolo et al., 2024), and few examine how a single large bottling firm designs and manages its promotions or how consumers receive them. This study addresses these problems with Nigerian Bottling Company Plc as the case.

1.3 Research Objectives

Because of the high cost of sales promotion, it is necessary to evaluate its cost-effectiveness and the response to it. The objectives of the study are to:

1. determine the major types of sales promotion practised in Nigerian Bottling Company Plc;
2. determine how sales promotion activities are executed;
3. determine the prospects and problems of sales promotion;
4. determine the effect of sales promotion on consumers' long-term demand for the products or services promoted;
5. assess how acceptable consumers find sales promotion as a marketing strategy;
6. determine how sales promotion should be designed and managed; and
7. assess the ethical considerations that the firm observes when it engages in sales promotion.

1.4 Research Questions

The study is guided by the following questions:

1. What are the major types of sales promotion practised in Nigerian Bottling Company Plc?
2. How are sales promotion activities executed in the company?
3. What are the prospects and problems of sales promotion?
4. What effect does sales promotion have on consumers' long-term demand for the products promoted?
5. How acceptable do consumers find sales promotion as a marketing strategy?
6. How should sales promotion be designed and managed?
7. How ethical is the company in carrying out sales promotion?

1.5 Significance of the Study

The rapid growth of sales promotion shows its importance in the marketing of products. The share of a company's sales that can be attributed to the effectiveness of sales promotion is, however, not yet clear. Determining it will help companies to weigh the benefits against the cost and decide whether to continue. The results of the study will help sales promotion managers and directors to position their products and carry out their promotion strategies ethically. They will also contribute to wider understanding of the rationale of sales promotion campaigns, and they will serve as a reference for researchers who study sales promotion and consumer response.

1.6 Scope and Limitations of the Study

The study covers the sales promotion activities of Nigerian Bottling Company Plc, and it is carried out in the company's operations in Enugu State. Because of limited financial resources, the researcher chose this location because of its large population and its position in the country, and because it offers a sample size that the researcher can manage. The time available to complete the study was also short, so the researcher had to rely on an easily accessible population. Findings from a single company and location are indicative and cannot be generalised to all firms or regions.

1.7 Definition of Terms

Consumer-pull promotion: Promotion aimed at the final consumer to stimulate demand, for example sampling, coupons, rebates and contests.

Promotion: Activities carried out to increase the sales of a product or service.

Sales: The act or process of selling something.

Sales promotion: Short-term marketing activities, other than personal selling, advertising and publicity, that offer incentives to purchase and are intended to increase sales volume.

Trade-push promotion: Promotion aimed at dealers and distributors to encourage them to stock and sell a product, for example allowances, displays and training.

References

Adefulu, A., & Van Scheers, L. (2015). Re-examination of sales promotion effectiveness: A descriptive approach. Corporate Ownership & Control, 12(4-3), 337–343. https://doi.org/10.22495/cocv12i4c3p1

Kabuoh, M. N., Smith, O. M., Okwu, A. T., & Erigbe, P. A. (2020). Sales promotion and customer's retention in selected foods and beverages companies in Lagos State Nigeria. The Journal of Social Sciences Research, 276–285.

Ogunmuyiwa, M. S. (2022). The influence of publicity and sales promotion on marketing performance in Nigeria. Athens Journal of Business & Economics, 8(1), 65–78. https://doi.org/10.30958/ajbe.8-1-4

Okolo, V. O., Ikpo, K. P., Ogbolu, G., Oranusi, I. N., Nwankwo, E. C., Obeta, C. E., & Nwagbo, P. I. (2024). The philosophy behind boosting sales: Would sales promotion provoke the immediate sales of beer beverage brands in southeastern Nigeria? European Journal of Interdisciplinary Studies, 10. https://doi.org/10.26417/532bwh55

Okonji, P. S., Olayemi, O. O., & Oghojafor, B. E. A. (2020). Strengthening sales performance and consumer loyalty through sales promotion: An empirical investigation. Nigerian Journal of Management Studies.