Advertising's Effect on Sales
Advertising's Effect on Sales
VOLUME OF A PRODUCT
A case study of Starcomms Plc, Nigeria.
Bachelor’s thesis
VALKEAKOSKI
Degree Programme in International Business
Global Marketing
The major aim of this thesis was to demonstrate the impact of advertising
on the sales and profit of a business organization taking Starcomms Plc as
a case.
Longe (2001) defined advertising as any personal paid form of non-
personal communication which is directed to the consumers or target
audiences through various media in order to present and promote a
product, services and idea.
Pages 32 p. + appendices 4 p.
CONTENTS
1 INTRODUCTION........................................................................................................1
1.1 Background Information......................................................................................1
1.2 Objectives of study...............................................................................................1
1.3 Research hypotheses and limitations of the study................................................3
1.4 Starcomms Nigeria Plc.........................................................................................3
1.5 Definition of key terms........................................................................................5
2 ADVERTISING IN NIGERIA....................................................................................7
2.1 Historical background of the study......................................................................7
2.2 Theoretical framework.........................................................................................7
2.3 Importance of advertising..................................................................................10
2.4 Purpose of advertising........................................................................................12
2.5 General impact of advertising on products and services of Starcomms plc......13
2.6 Advertising media used by Starcomms plc........................................................15
3 RESEARCH METHOD.............................................................................................18
3.1 Restatement of hypothesis..................................................................................18
3.2 Determination of respondents and sample size..................................................18
3.3 Methods of data collection.................................................................................18
3.4 Limitations of the research method....................................................................18
6 REFERENCES.............................................................................................................31
Appendix 1 Questionnaire
The Impact of Advertising on Sales Volume of a Product
1 INTRODUCTION
Advertisements can also be seen on the seats of grocery carts, on the wall
of airport walkways, on the sides of buses, airplane and train.
Advertisements are usually placed anywhere an audience can easily and/or
frequently a access visual and/or video. (Busari 2002)
This thesis is based on the drive to know the effect of advertising on the
sales volume of a product in a company and how this sales volume can
keep the company going in business.
1
In order not to deviate from the original intention and motive, the
following will therefore outline the objectives which the thesis intends to
achieve. They are as follows:
Marketing problems often have far reaching effects on any company and if
neglected can cause a great threat to the continued existence of the
company, especially in the area of advertising as an aspect of corporate
communication. (Giles 1997)
Research question
Does advertising have an impact on the sales volume of a company’s
products and services?
For the purpose of this study, the hypotheses available are as follows;
That the advertising programmes of Starcomms Plc have no impact on the
sales volume of their products.
That there is no positive on significant relationship between advertising
and sales volume.
That there are no benefits in various advertising programmes employed by
the organization.
Still in 2006, Starcomms took yet another giant leap when the Nigerian
Communications Commission (NCC) granted it a Unified License. This
enabled Starcomms to operate as a mobile CDMA network nationwide.
Tariffs for mobiles and the use of RUIM cards - offering subscribers full
mobility – subscribers can now roam from one Starcomms coverage city
to another on the same number and charging plan.
OUR VISION
To be among the 3 largest mobile operators and the premier provider of
world-class, fixed and wireless communications solutions.
OUR VALUES
PRIDE
PURSUIT OF PERFECTION
Attract and retain the best talent in the industry
Focus on growing profits and increasing returns
RESPECT
Our unity is in our diversity
Collaborate and integrate with customers, partners and ourselves
INNOVATION
Develop services and technical solutions driven by customer
needs Focus on providing complete solutions instead of selling
hardware DEDICATION
Demonstrate ownership and drive at every level
Focus and execution from inception to deployment
EXCELLENCE
Listen to our customers and partner with them
Continued refinement and re-engineering
STAFF: With over 820 employees nationwide, starcomms Plc boasts of a
strong team that's poised to build a great/customer friendly
telecommunication company across Nigeria.
Our success as a company is built on the strength of our team members
who consist of excellent professional manpower.
([Link]
Outdoor Media: These cover the use of billboards, sign posts, posters,
handbills, etc. in communicating the advertising message to the
consumers.
Electronic Media: These include radio, television, the internet, etc and can
be either local or international.
In a sense, one can say that advertising just like other disciplines came via
our colonial master. However, this is not to conclude that we did not have
some form of traditional advertisements before the arrival of the
colonialist, there were e.g. town criers used by the king in the delivery
messages, in the past. For a message to go across to the members of the
public a town crier was sent out to do so. (Arowomole 2002)
Alonge (2001) feels that advertising can be defined as any paid form of
non-personal communication which is directed to the consumers or target
audiences through various media in order to prevent and promote product,
services and idea.
Harri Tuomola says in one his class that advertising must be paid for by an
identified sponsor and must be persuasive to influence consumers buying
behavior. (Hamk UAS, Finland)
Non Personal
First what is non-personal”? There are two ways to sell anything, personal
or non-personally. Personal selling requires the seller and buyer to get
together while non personal selling involves the use of various media to
reach the consumer/buyer.
The advertising is directed to group of people with no particular person in
mind and it thus non-personal in nature.
Communication
This means not only in speech or picture but any way one person can pas
information, ideas or feeling to another. Thus, communication uses all
these senses, smell, touch, taste, sound and sight. And of all the five only
two are really useful in advertising i.e. sound and sight.
Information
Information is described as knowledge, fact or news. However you should
bear in mind that one person’s information is another’s scam, particularly
when advertiser talk about their products. Information comes in many
forms it can be complete, it can be blare or deceptive.
Paid form
“Paid form” is a pretty straight forward meaning. It is advert created and
placed on the media, the costs of creation and time or space in the media
must be paid for. This is a major area in which advertising different from
public relations.
However, some advertisements are not paid for by their sponsors. Free
advertisements are exclusively for public service campaigns.
Identified sponsor
Identified sponsor means whosoever is putting out the advertising, must
tell audience who they are. Legally, a sponsor must identify herself as
sponsor of an advertisement.
The advert message is put into a symbolic form such as pictures, written
words or spoken words. The message is then transmitted to the consumer
via means of advertisement like television, radio, newspaper and so on.
But, advertisement cannot produce immediate sales; sales may come in the
long run, since consumers normally don’t switch from uninterested
individuals to convinced consumers in one instant move or day. (Richard
F.T., 1996)
Future of advertising
Advertising has gone through five major steps of development: domestic,
export, international, multinational and global. For global advertisers,
there are four potentially competing business objectives that must be
balanced when developing worldwide advertising: building a brand while
speaking with one voice, developing economies of scale in the creative
process, maximizing local effectiveness of ads and increasing the
company’s speed of implementation.
Born from the evolutionary stage of global marketing are the three
primary and fundamentally different approaches to the development of
global advertising executions: exporting executions, producing local
executions, and importing ideas that travels.
During this work, all effort were made to get some actual figures
regarding profit margin when the advertising hold very strong part of the
business and how the profits were negatively affected at the fall of this
practice but as part of the company policies, it was not allowed.
The economic effect of this on the sales volume is that it makes proper
identification of individual brand known and their advertisements easier
while the brands advertised are easily recognized at the point of purchase.
This has helped to build brand preference for Starcomms’s Talk de Talk
product all over Nigeria.
Advertising has effect because it has set the product apart as being
different and superior to other brands, it has been argued by Ferguson
(1974) that “advertising increase barriers to entry and reduces competition
on measured by increase in monopoly profit”.
Advertising has been a great weapon for Starcomms over the years and
this has really given them edge in their industry. Starcomms
Commercially launched in 1999, Starcomms is today the largest Fixed
Wireless Telecommunications provider in West Africa but gradually
falling from where they use to be. Advertising and much of promotional
activities has been great weapon adopted by Starcomms by very strong
marketing team. In 2006, Starcomms launched 3G EVDO mobile
broadband Data service that gives customers a smart, fast, convenient and
mobile access to the internet (a first in Nigeria, and in West Africa). This
followed the launch of the Value added services Fun Box; offering a
variety of services that enhance the lifestyle of our users. These services
include: 'Dash me credit' (airtime transfer), 'Talk Your Text' (Voice SMS),
Voice conferencing involving up to 30 users at a time. This product
package came with serious promotional gifts and basically aggressive
advertising. Almost every street of major cities in Nigeria like, Lagos,
Ogun, Ibadan, Abuja and Portharcourt felt the vibration of the aggressive
advertisement. Just about two months after these marketing activities, the
total number of customer sky rocket from 2million customers all over the
country. This gave Starcomms wide margin of profit in less than
24months. The sales volume rose with about 60% far above what the
recorded the previous year. There is no way advertising could be a dead
issue for any company leading in their industry and aiming to achieve their
corporate objectives.
Magazines: These are another division of the print media. These are
another division of the print media. There are various types of magazines
such as health magazines, beauty, gossip, entertainment, sports, etc.
Information about new and existing products is placed there to attract a
particular section of the society.
However, with all its effective and wider read television has one major
disadvantage, it is costly:
The picture and impression on television ads is to make lasting impression
on viewers.
The television and print media are not always left out in the race to capture
the widest market, though it’s very expensive to run an advert on a regular
basic, this producer will have no option than to expand its advertising
strategies in order to carry along all the consumers because of the
competitive nature of the industry.
Bill board: A billboard (also called a "hoarding" in the UK and many other
parts of the world) is a large outdoor advertising structure (a billing
board), typically found in high traffic areas such as alongside busy roads.
Billboards present large advertisements to passing pedestrians and drivers.
Typically showing large, ostensibly witty slogans, and distinctive visuals,
billboards are highly visible in the top designated market areas.
Starcomms have many of this all over the country and mostly on the
highways connecting different states. They always choose a strategic
position to erect their billboard in order to get the information across to the
target audience.
The factors that must be considered before arriving at the logical and
possible decision in the choice of media are;
Cost of medium: The cost of medium varies, while some are very costly,
some are relatively cheap. This must be weighted with the financial
resources made available for the advertisement to ensure compatibility.
Audience characteristics: This greatly influences the choice of not only the
message but also equally the mean of advertisement.
Location, Demography, Religion, etc: All these will determine the kind of
advertisement message can be distributed. However, advertising research
is key to determining the success of an ad in any country or region. The
ability to identify which demerits and /or moments of an ad that
contributes to its success is how economies of scale are maximized.
Once one knows what works in an ad, that idea or ideas can be imported
by any other market. Market research measures, such as flow of attention,
flow of emotion and branding moments provide insight into what is
working in an advert in any country or region because the measures are
based on the visuals not verbal elements of an advertisement. (Young
Charles, 2005, 130-136)
3 RESEARCH METHOD
In this chapter, the method of data collection and analysis is discussed.
The various steps which the study follows to solve the questions at hand is
discussed.
The sample size of this research work refers to the number of respondents
to whom the questionnaires were administered.
The data needed for this thesis work was collected through the use of
primary and secondary sources. A well designed questionnaire was used.
The questionnaires were administered to fifty-five (55) respondents
including staff of Starcomms Plc and customers constituting the sample
size. Responses to the questions were used to test the hypothesis.
Similar to any research, this study has several characteristics that limit the
generalization of its findings. There were some problems in collecting and
collating the distributed questionnaires on time because of the attitudes of
respondents. Secondly, a lack of funds made it very difficult to take the
questionnaire to the respondents personally. Some questionnaires were not
adequately completed either.
4 DATA PRESENTATION AND ANALYSIS.
The main objective of this chapter is to analyze, interpret and present the
data that was obtained from the findings.
A total 55 questionnaires were sent out and 30 were fully answered and
returned.
4.1.1 Section 1
Question 1: Sex
Table 1 Sex
Variable Frequency Percentage %
Male 16 53.3
Female 14 46.7
Total 30 100
The above analysis (table 1) indicates that of the respondents who filled
and returned the questionnaires males were 53.3% and female is 46.7%
Question 2: Age
Table 2 Age
Variable Frequency Percentage %
18-25 16 53
25-35 12 40
46-above 2 7
Total 30 100
It can be seen in the above analysis (table 2) that 18- 25years was the age
of 53% of the respondent, age group 25- 25 years formed 45% and 46
years and above were 7% of the respondents.
Question 4: Designation
Table 4 Designation
Variable Frequency Percentage %
Manager 8 27
Head of Department 15 50
Staff (Junior & Senior) 7 23
Total 30 100
The table above (table 4) reveals that best of the respondents 50% were in
the middle managerial level.
of service
Variable Frequency Percentage %
18-25 16 53
25-35 12 40
46-above 2 7
Total 30 100
The above table (table 5) shows that most respondents had been working
for a period of 5 – 10 years which stands at 37%, below 2years 33% while
respondents with work experience above 10 years were 30%
Table 6 Advertising
Variable Frequency Percentage %
Strongly Agree 10 34
Agree 12 40
Undecided 7 23
Strongly Disagree 0 0
Disagree 1 3
Total 30 100
The table above (table 6) reveals that 34% of the respondents strongly
agreed that advertising increases an organization’s target and boosts its
sales, 40% agreed, 23% were undecided and 3% disagreed.
Question 2: Consumer buying attitude can be influenced through
consistent advertising
In the above table (table 7) 34% of the respondents strongly agreed, 43%
agreed, 10% were undecided and 13% disagreed with the argument that
advertising influences customer buying attitude.
Table 8 Audiences
Variable Frequency Percentage %
Strongly Agree 18 60
Agree 11 36.7
Undecided 0 0
Strongly Disagree 0 0
Disagree 1 3.3
Total 30 100
The table (table 8) shows that 60% of the respondents strongly agreed that
advertising is a powerful tool capable of reaching and motivating large
audiences, 36.7% agreed and 3.3% disagreed.
Table 9 Product
Variable Frequency Percentage %
Strongly Agree 7 23
Agree 21 70
Undecided 0 0
Strongly Disagree 0 0
Disagree 2 7
Total 30 100
In the table above 23% of the respondents strongly agreed, 70% agreed
and 7% disagreed with the argument that without advertising no products
can survive competition.
Question 5: The existing facilities and services in the advertising
organization are considered inadequate to face any competition.
Table 10 Considered
Variable Frequency Percentage %
Strongly Agree 0 0
Agree 4 13.3
Undecided 3 10
Strongly Disagree 16 53.3
Disagree 7 23.3
Total 30 100
In the table above (table 10) 13.3% of the respondents agreed, 10% were
undecided, 53.3% strongly disagreed and 23.3% disagreed with the
argument that existing facilities of the advertising organization were
inadequate to face any competition.
Table 11 Advertising
Variable Frequency Percentage %
Strongly Agree 10 33.3
Agree 17 56.7
Undecided 1 3.3
Strongly Disagree 2 6.7
Disagree 0 0
Total 30 100
The data above (table 11) indicates that 33.3% of the respondents strongly
agreed, 56.7% agreed, 3.3% were undecided and 6.7% strongly disagreed
with the argument.
Table 12 Selection
Variable Frequency Percentage %
Strongly Agree 21 70
Agree 7 23.3
Undecided 0 0
Strongly Disagree 0 0
Disagree 2 6.7
Total 30 100
The above table (table 12) shows that 70% of the respondents strongly
agreed, 23.3% agreed while 6.7% disagreed with the argument that
selection of advertising media is the primary concern to an organization.
Table 13 Advertisement
Variable Frequency Percentage %
Strongly Agree 10 33.3
Agree 13 43.3
Undecided 0 0
Strongly Disagree 0 0
Disagree 7 23.3
Total 30 100
The analysis above (table 13) shows that 33.3% of the respondents
strongly agreed, 43.3% agreed while 23.3% disagreed with the argument
that an organization must consider it financial status before embarking on
advertisement.
Table 14 Effect/impact
Variable Frequency Percentage %
Strongly Agree 18 60
Agree 11 36.7
Undecided 1 3.3
Strongly Disagree 0 0
Disagree 0 0
Total 30 100
In the table (table 14) above 60% of the respondents strongly agreed,
36.7% agreed, 3.3% were undecided with the argument that effect of
advertising can change as the market grows older.
Table 16 Hypothesis 1
Gender Male Female Total
Positive 11 13 24
Female 5 1 6
Total 16 14 30
Expected value
Therefore
c = 27.52
Table 19 Hypothesis 2
Gender Male Female Total
Positive 13 16 29
Female 1 0 1
Total 14 16 30
Expected value
Table 20 Required Frequencies
Significance table
Optiom
SA 1 6 -5 25 4.16
A 11 6 5 25 4.16
U 0 6 -6 36 6
SD 18 6 12 144 24
D 0 6 -6 36 6
Total 44.32
Therefore
c = 44.32
TEST FOR HYPOTHESIS 3: That there are no benefits in the various advertising
programme employed by the organization.
Table 22 Hypothesis 3
Gender Male Female Total
Positive 13 14 27
Female 3 0 3
Total 16 14 30
Male Positive = Negative
Expected value
Table 23 Required frequencies
Optiom
SA 0 6 -6 36 6
A 0 6 -6 36 6
U 3 6 -3 9 1.5
SD 12 6 6 36 6
D 15 6 9 81 13.5
Total 33
Therefore
c = 33
Decision: Since then the hypothesis that the various advertising programme
employed by the organization is of no benefit is rejected.
5 SUMMARY OF FINDINGS, CONCLUSION AND
RECOMMENDATION.
Advertising helps in that it carries the message far and wide to a scattered
target audience that the advertiser or producer could not have reach it at
once so easily.
It was gathered from the responses of the respondents who filled the
questionnaire that the organization is unrelenting in its efforts to ensure
effective advertising programmes for their various services and products.
In the mind of the consumers the company was also using advertising
strategies suitable for the company as well as the market in which it exists.
More so, the findings reveal that the advertising position of a product or
service is strong in the mind of the consumer in order to encourage
repeated purchase of the product, so that the competitors will not have an
edge over them. This also creates brand loyalty and product
differentiation.
According to various sources, the past experience and state of mind of the
person subjected to advertising may determine the impact that advertising
has on him/her.
5.2 Conclusion
Advertising has taken Starcomms Plc far in their industry and built up a
strong image for the company but recently, due to relent in their
advertising effort, some little problems have been identified there.
5.3 Recommendation
Having analyzed, discussed and interpreted the data collected in this study,
the author therefore recommends the following:
Due to the competitive nature of the industry the marketing manager of
Starcomms Plc must develop and formulate marketing programmes that
will satisfy the needs of the consumers. Since other service providers have
similar advertising messages, it is recommended that for a more
distinguished and effective response from the customer, other forms of
advert should be used.
For over fifteen months, there has been a slight backward shift in the
market position of Starcomms Plc and also there is fall in the regular rate
of increase in turnover as a result of negligence from angle of advertising.
It is thereby recommended that Starcomms Plc should get back to their
intensive and aggressive advertising practice to keep their pace of growth.
QUESTIONNAIRE
SECTION A
Instruction: Please tick or mark where applicable.
Sex: (a) Male ( )
(b) Female ( )
Age Distribution: (a) Below 25years ( )
(b) 25 – 35 years ( )
(c) Above 46 years ( )
Marital Status: (a) Single ( )
(b) Married ( )
Designation: (a) Manager ( )
(b) Head of Department ( )
(c) Staff [Junior & senior] ( )
(d) Others ( )
Qualification: (a) Primary School ( )
(b) Secondary School ( )
(c) NCE/OND ( )
(d) HND/BSC ( )
(e) Others ( )
Year(s) Spent in the company:
(a) Below 2years ( )
(b) 5 – 10 years ( )
(c) Above 10 years ( )
Strongly Disagree
Strongly Agree
Disagree
Undecided
Agree
SECTION B