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EFFECT OF PROMOTIONAL TOOLS IN MARKETING NEW PRODUCTS IN FOOD AND BEVERAGES INDUSTRY

CHAPTER ONE

INTRODUCTION

1.01     Background to the Study

 The business environment is becoming sophisticated day by day and as such, decision-making is becoming more and more challenging and risky. Business organizations are failing due to poor decisions. Investors are losing their money and are unhappy. They are being discouraged and this is quite unhealthy to the economy (James, 2017). In some other instances, organizations are springing up in great numbers; some are successful in the marketing of their products and services, while others are still akin to the barber’s chair syndrome where all is motion but no movement; struggling to reach their target audience. Consumers are also faced with the challenge of choice making due to indecisiveness, skepticism, indifference and confusion which are among the key sales killers in business world (Achumba, 2016).

Marketing as a business concern is much more than developing a good product, pricing it correctly, and ensuring easy and ready availability of the product to customers. It also entails the development of a good programme of promotion. According to Latif, and  Abideen, (2011) promotion is one of the four major components that make up the marketing mix popularly known as the 4ps of marketing. It has to do with the marketers’ means of communicating his product offerings, marketing programmes and activities to the actual and potential customers. Through marketing promotion, consumers are informed about the existence of a product and equally persuaded to buy (Latif, and Abideen, 2011). It is therefore a very potent means of educating consumers, creating good image for the firm and its products, and increasing level of patronage. It embraces all information between buyers and sellers in order to influence their attitudes and behaviours.

Promotional strategy is the direct way an organization tries to reach its publics.  Promotional strategy has remained the only way firms gain competitive edge in the market. Promotional strategy involves the five elements of the promotion mix that is advertising, sales promotion, personal selling, public relations, and public relation (Barry and Howard, 2015). In order to keep up with the competition and changing consumer needs and wants, firms are forced to adopt effective promotional strategies to promote growth beyond boarders thus  creating awareness and increase usage rates of their products and services. Promotional strategies enable firms to attract and retain customers thus increased growth in terms of return on investments due to expanded client base (Kotler, 2013). To survive in the competitive business environment, both small and large organizations need to adopt promotional strategies in order to attract and retain customer hence long term relationships and growth in terms of productivity (Khaniwale, 2015).

1.02   Statement of the Problem

Gsmoore (2011) state that marketing communication is the promotional tools that are used to communicate favourable information about the organization and its products to the target markets, but these days organization face the challenge of how to appropriately combine and coordinate their business communication tools which has seriously posed some challenges in the performance results of the organizations, also companies have not been able to get proper information about the target markets they want to serve before they put marketing communication in place.

The Nigerian business environment is characterized by fluctuation and decline in consumers’ purchase of different goods and turnover in. Different reasons are adduced for these, ranging from high prices and little or no inducement to purchase, lack of managerial efficiency at the little promotional activities. There is also the problem that some managers think given high quality performance and feature, a product is able to sell itself (Folarin, 2012).

There are challenges faced by food and beverage products that will influence on customer’s decision making and there are also limited study that focus on types of sales promotion in  food and beverage products and influences of sales promotion on customer’s decision  making. Hence, this concern had formed the underlying problem of this study: whether the  sales promotion can influence customer’s decision making on food and beverage products  and the effectiveness of sales promotions affect customer’s decision making in purchasing  food and beverage products. The past researchers the Wilson (2013) found that there are many challenges faced by food and beverage products in the development. There are many uncertain elements such as high price and lack of confidence towards product characteristics (Austin, Schultz and Robinson, 2017). When there is poor presentation of product information, it will result in distrust or unwillingness to buy.

Customers find it is difficult to understand the true information of food and beverage products which lead to the purchase decision (Tang, Genchev and Todorova, 2014). In other words, it is quite difficult to convince customers to purchase food and beverage products when they didn’t  receive any benefits or understand the products before making a decision. Kitchen (2014) thus argued that it is necessary to develop and execute promotional strategies to provide information for customers, which then helps customers to make purchase decisions as an important issue for future food and beverage products studies. This study therefore focuses on the effect of promotional tools in marketing new products in food and beverages industry

1.03  Objectives of the Study

The main Objective of the study is to investigate the effect of promotional tools in marketing new products in food and beverages industry: A study of some selected foods and beverages industry in Agbara Axis, Ogun State. Other specifics objectives of the study are:

      i.         To examine the effect of advertising campaign on customer patronage of foods and beverages industry in Agbara Axis, Ogun State

     ii.         To determine how trade discount influences sales growth of selected foods and beverages industry in Agbara Axis, Ogun State

   iii.         To ascertain if personal selling increase market share of selected foods and beverages industry in Agbara Axis, Ogun State

1.04     Research Questions

This project intends to answer to the following questions:

      i.         What is the effect of advertising campaign on customer patronage of selected foods and beverages industry in Agbara Axis, Ogun State ?

     ii.         How does trade discount influences sales growth of selected foods and beverages industry in Agbara Axis, Ogun State?

   iii.         To what extent has personal selling influence market share of selected foods and beverages industry in Agbara Axis, Ogun State?

1.05     Research Hypotheses

The following hypotheses would be tested.

H1: Advertising campaigns have effect on customer patronage?

H2: Trade discount does not influences sales growth

H3: Personal selling does not increase market share

1.06          Significance of the Study

The study of promotional tools and new products in food and beverages industry is hoped to be of benefits to students, business men, corporate organization, and De United Foods Industries Limited, Agbara, Nestle Nigeria Plc, Agbara, and Choppee Fruit Drink & Industries Limited, Agbara. The study also hopes to highlight the problem associated with promotional tools to make use of the analysis to improve the marketing of new product thereby increasing organizational market share.

This research will work helps selected foods and beverages industry in Agbara Axis, Ogun State to identify the problems involved in promotional tools and suggest everlasting solutions. It will also help them to increase the sale volume, profit and market share. It will enable the researcher to ascertain the problem associated with the sales promotion and how sales promotion impact on new product.

The findings in this study will have both theoretical and practical contributions by adding to the existing knowledge on research that has already been done in relation to promotional tools and new products.

1.07          Scope and limitation of the Study

This research work focuses on three foods and beverages industry in Agbara Axis, Ogun State, but with particular reference to De United Foods Industries Limited, Agbara, Nestle Nigeria Plc, Agbara, and Choppee Fruit Drink and Industries Limited, Agbara. The scope of promotional tools and new product will be fully discussed.   The researchers faced some constraints which limited to study area it focused on. Such limitations consist of Time constraints, materials constraint, and financial constraint.

1.08          Definition of Key Terms

 Advertising Campaign – Is impersonal communication that the sponsor has paid for and in which the sponsor is clearly identified. The most familiar forms of adverts are found in the broadcast (TV and Radio) and print (Newspaper and magazines) media

Personal Selling – Is the direct presentation of a product to a prospective customer by a representative of the organisation selling it. Personal selling takes place face-to-face or over the phone, and it may be direct to a middleman or a final consumer.          

Market share: It represents the percentage of an industry, or a market's total sales, that is earned by a particular company over a specified time period. Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period.

 Sales Promotion – Is demand stimulating activity designed of supplement advertising and facilitates personal selling it is paid for by the sponsors and frequently involves temporary incentives to encourage a sale or purchase.

Trade Discounts: The most common type of sales promotions is consumer discounts or trade discounts. Discounts refer to when products are temporarily offered at a lower price

Organization: This entity comprising multiple people, such as an institution or an association that has a collective goal and is linked to an external environment.

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