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THE EFFECTS OF PROMOTIONAL ACTIVITIES ON BRAND EQUITY

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Along with a rapidly growing economy, rising incomes and an enormous population, Nigeriais appreciated as one of the most attractive consumer markets in the world (Tong and Hawley, 2009). Meanwhile, with a growing interest in Guinness drinks by its consumers and the increase in Nigeria population along with increase drinking habit means more patronage.

Guinness Nigeria is currently certified to Quality Management System - ISO 9001:2008, Food Safety Management System - ISO 22000:2005, and on course for Food Safety Systems Certification - FSSC 22000:2009. We have also been awarded NIS Diamond, Gold and Silver awards for their brands.

Brand equity is one of the most important concepts in marketing science, and it has well-recognized as one of the most valuable intangible assets by most firms (Erenkol and Duygun, 2010). Brand equity is incremental utility and value endowed to a product or service by its brand name (Keller, 2003; Park and Srinivasan 1994; Marinova, Cui, Marinov & Shiu., 2011). High brand equity can lead customers into a positive or strong brand association; gain or increase their cash flow to the business, as well as make products differentiation in order to lead to competitive advantages (Keller, 1993; Marinova et al., 2011).

If the brewery marketers or firms could better understand the importance of brand equity, and then they would better gain competitive advantage, loyal their customers. Therefore, this study is mainly to investigate the relationship between selected promotional activities toward brand equity dimensions and creation of brand equity, thereby providing a conceptual framework for deeply understanding consumer based brand equity related to brewery industry.

In classical literature of economic, labor, capital and land, are the three basic elements of production, and the main source of wealth. But this model cannot explain, how a product with similar efficiently, quality and beauty will be sold three times higher than price of other goods (Nassiri et al; 2011).

In the era of increasing globalization, competitiveness is an important issue among policy makers of different levels (country, industry and company) in different parts of the world (Sayed, Javadin and Shams 2011). In the current situation of competitive markets, obtaining a proper position in the mind of consumers, in which the consumer being loyal to the company is very important. Perhaps the most prominent skill of a professional marketer is providing a brand, protecting it, reinforcing it and makes loyal customers to it (Khadang 2011). The brand loyalty is the ultimate goal of a firm that has a product with a special trademark (brand). When customers are proud about the company, will increase their volume of buying, will say positive things about company, and will recommend the company to their friends and relatives (Sobhani, 2011).

Research on customer loyalty, mainly has been concentrated on the product or brand loyalty. The brand loyalty is the ultimate goal of a firm that has a product with a special trademark (brand); prioritizing or preferring purchasing a specific brand on a shelf of product by customer is called brand loyalty. Customer, first purchases a product with specific brand to test it, and then, after consent and satisfaction, is willing to repeat and continue the purchasing the same trademark or brand, because now, they know that product and trust it (Sobhani, 2011)

Some studies indicate that the cost of retaining current customer, in practice, is much less than the cost of attracting new customers (Keller, 1993; Marinovaet al., 2011&Sobhani, 2011).Therefore, companies should believe that any attempt to retain customers is a useful activity.

1.2     Statement of problemDespite the increased relevance of promotional activities in marketing many people still believe it appears as a form of deception. The planning of advertising can be particularly problematic if the question as to whether advertising pay is often raised? However, it is not always true that we cannot determine the effectiveness of promotional activities.

Internet preparation in Nigeria is very low compared to Europe, South East Asia and the United States. However, many of the internet users are not taking advantage of the opportunities afforded by the internet, to purchase what they need, simply because they considered the products and services to be expensive and alien to their culture.

However, poor product communication to the final consumers could give competitors an edge in terms of loyalty to brands, sales volume and high market share. Consequence of this has been the major setbacks for matured industries. Given the increasing competition in the marketing environment, many firms are yet to recognize the roles and relevance of promotional activities on product demand.There is also an increasing challenge on how organizations can use promotional activities as a tool for marketing new products and obtaining the required results.

1.3     Research Objective

The general objective of this study is to determine the impact of promotional activities on brand equity.

Other specific objectives are to:

1.      Determine the nature of relationship between promotional activitiesandbrand equity

2.      Ascertain the extent to which celebrity endorsement impact on Brand Equity 

3.      Find out the extent to which Word of Mouth can impact on Brand Equity   

4.      Determine if the promotional activities of advertising (personal selling, sales promotion, public relation and publicity)have any significant influence on brand equity

1.4 Research Questions

The study was guided by the following research questions:

1.      What is the nature of relationship between promotional activities and brand equity?

2.      To what extent does celebrity endorsement impact on Brand Equity?

3.      To what extent does Word of Mouth impact on Brand Equity?

4.      To what extent do promotional activities of advertising (personal selling, sales promotion, public relation & publicity) influence brand equity?

1.5     Hypotheses

Based on the objective and research questions, the following hypotheses were formulated to guide this study:

HO1:  There is no significant positive relationship between promotional activities and brand equity.

HO2: There is no significant positive relationship between celebrity endorsement and Brand Equity

HO3: There is no significant positive relationship between Word of Mouth and Brand Equity

HO4: There is no significant positive relationship between promotional activities of advertising (personal selling, sales promotion, public relation & publicity) and brand equity.

1.6 Significance of the Study

Competition is the most fundamental factor that directly affects the brand emergence and growth. Today, the competition is fiercely in Nigeria market due to the threat of new entrances and rivals. Breweries with their brands always try to outperform their competitors to grab a greater share of market, thus, an appropriate marketing strategy is necessary. Here, brand equity is a concept in marketing field which plays an important role that affects developing business for a brand company. Hence, this study seeks to examine the effects promotional activities and brand equity in selected drink marketers in Delta State. The finding of this studywill help brewery marketers or companies to create positive brand equity in order to increase developing their future business growth and profit.

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