EFFECT OF ADVERTISING ON SALES VOLUME OF AN ORGANIZATION
A case study of Nestle Company
CHAPTER ONE
Introduction
1.1 Background to the study
All over the world, sales volume has been the primary motive behind any organizational strategies. Organizations in France has continues to stay relevant in the competitive market by introducing approaches that will improve their sales volume. The current researcher is of the presupposition that advertising remains one of the most effective tool for driving increased sales all over the word. Sales volume describes the quantity of items sold within the period being reported. This value is supervised by investing stakeholders to know whether an enterprise is growing or losing. In an organization, sales volume can be observed at the echelon of the goods, clients, product line, branches, or sales expanse. These facts can be utilized to change the business assets targeted at any of these region.
Advertising means a message meant for a particular audience of a good or service via a platform of communication and supported financially by a sponsor/promoter. A general feature of advertisement is that it requires money (being paid for). On another note, it is a tool adopted by organizations for generating awareness of their goods, as well as making new goods known to the fresh and upcoming clients.
This research however, centers on the effect of advertising on the sales volume of an organization. Therefore, the purpose of this research is to examine the role advertisement plays in deciding what consumers buy in an expanding economy like that of Nigeria and how effective advertising can keep organizations going even in the midst of tough competition.
Consequently, advertising being one of the tools of promotion performs the functions of reminding, encouraging and persuading the decisions of customers, by informing, educating, creating awareness and enlightening both existing and prospective customers of the presence of a new product; and equally spurs them to purchase it. All these together are variables that enhance sales volume of any organization.
Advertisement using the print media (newspaper, magazines, billboards, flyers) or broadcast (radio, television) typically consists of pictures, headlines, information about the product and occasionally a response coupon. Advertisement aired on the broadcast media, which is either an audio or video narrative that can range from 15seconds spots to longer sessions called infomercials, usually span for 30 to 60 minutes (Busari 2002).
Advertisements are also placed at very strategic places and things commonly used by people like on grocery carts, pasted on airport walkways, on the sides of buses, airplane and train. Advertisements are usually displayed in public places where people are freely and constantly exposed to videos (Busari 2002).
Advertising can have both immediate and long term effects on the company’s sales volume, depending on the organizational objectives. It is quite observable that Short-term sales promotions lead to increase in sales volume speedily, compared to long-term brand management advertising which guarantees increase in sales; alongside profits over time. Sales volume is typically measured in either total naira or number of units sold. Higher sales volume usually means the company is getting higher profit margin or increasing demand and the number of units sold. More cash for use in expanding the business is one key benefit of generating higher sales volume through effective use of sales promotions or long-term advertising.
The practice of advertising is as old as man. According to Keller (2005), the need to create awareness about products and services seems to be a part of human nature evidenced since ancient times. The first ever form of advertisement used by humans was ‘signs’. Craftsmen of the Stone Age made use of signs to pass messages about their products; a good example is the Phoenicians who planted commercial messages on prominent rocks. They led to the use of advertising in modern day sales of goods and services.
However, excavations at Pompey reveal that the people at that time had the initiative of advertisement through making inscriptions at the entrance of their business premises to direct people on the type of products sold or services offered.
A remarkable scenario in the expansion of advertising is the discovery of a system of casting moveable type by the German, Johannes Guterberg in early 1938. The event revolutionized communication methods for the whole world (Keller 2005).
History was made in 1478, when a printer by name William Catton printed the first handbill regarded as the first printed English advert. Printed on the handbill was an advert of his book called “Salisbury Pye”, handbook of ruler for the guideline of the clergy at Easter (McHugh, 2000).
1.2 Statement of the problem
Issues of marketing often have far reaching effects on the sales volume of any company and if neglected can cause a great threat to the continued existence of the company, particularly advertising as a branch of business communication (Giles 1997).
In view of the above statement, examining the effect of advertising on the sales volume of an organization, with sypjgroups.com as a case is therefore a significant undertaking. The market comprises consumers with different tastes which are differentiated, alongside maintenance of standard service quality amidst rising cost of needed factors. The market is equally made up of a multiplicity of advertisements. Advertising of various competing brands in the major oil and gas, engineering and construction segments is increasing very rapidly and consumers are now more knowledgeable.
Nestle company is faced with both a competitive and dynamic market setting; notwithstanding, the company has measures in place to preserve leadership role in the industry. The company has also adopted integrated marketing concepts as the basis for its marketing operations. This is important because the brand’s customers need to be reminded and informed about the differences that exist among its competitors in the market. For every business organization to succeed, its promotion, distribution and sales of its services must be effective. In order to fully understand the situation the problem has to be determined if advertising has any effect on the volume of sales for the consumer preference of a particular service. It has been wide acknowledged that advertising means a paid form of non-personal communication which co-ordinates all seller’s initiated efforts to educate, inform and persuade in order to make easy the sales and acceptance of products and services or ideas. To this end this research would focuses on the effect of advertising on the sales volume of Nestle company.
1.3 Research objectives
The following are the objectives of this study:
- To examine the effects of advertising on sale volume of Nestle company.
- To identify the major advantages and disadvantages of advertising.
- To examine the effects of advertising on patronage of Nestle company.
1.4 Research question
- What are the effects of advertising on sale volume of Nestle company?
- What are the major advantages and disadvantages of advertising?
- What are the effects of advertising on patronage of Nestle company?
1.5 Research hypothesis
HO: There is no significant relationship between advertising and sale volume of Nestle company
1.6 Significance of study
The following are the significance of the study:
- The outcome of this study will be useful for business administrators and managers of organizations on ways by which advertising can be used as a tool to enhance the sales volume of an organization.
- This research will be a contribution to the body of literature in the area of the effects of advertising on sales volume of an organization, thereby constituting the empirical literature for future research in the subject area.
1.7 Scope of study
This study is limited to the employees of Nestle company. It will assess the effect of advertising on sales volume of the organization.
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