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IMPACT OF ADVERTISING ON CONSUMER PATRONAGE

CHAPTER ONE

INTRODUCTION

1.1    Background of the Study

The essence of being in business by any business outfit is to produce for sales and profits. In order to remain in business, an organization must generate enough sales from its products to cover operating costs and post reasonable profits. For many organizations, sales estimate is the starting point in budgeting or profit planning. It is so because it must be determined, in most cases, before production units will in turn affect material purchases.

Due to the dynamic nature of the environment in which businesses operate and the changing attitude of the consumer of their products, there is need for most companies to develop, modify or change their advertising strategies to suit the present changes. Companies must give more than consumers want from products; they must inform consumers and carefully position products in consumers’ minds.

Cadbury Nigeria Limited is a major manufacturing company in Nigeria; it produces a wide range of household consumables such as Bournvita, Éclairs chocolate, sweet, choco-milo, pronto etc. Its establishment in Nigeria dated back to the year 1956 when Cadbury Fry export, a United Kingdom based firm, began sales of Pronto at No 9, Orange Road,Apapa Lagos firm. Mr. George Heywood, export representative of Cadbury was sent to Nigeria from his base in the Gold Coast (Ghana) to report on the potentials to significantly increasing sales. His very enthusiastic report was accepted. Cadbury brothers then rented a warehouse at 10, Aerodrom Road,Apapa.

The success of Cadbury’s first product (Pronto) in the Nigerian market led to the introduction of Bournvita and Malt based food drink, which also was an instant success. In December 1963, the ware house was expanded to include a small production unit which packed bulk supplies of pronto and Bournvita from UK, iInto tins Cadbury Nigeria Limited was incorporated on the 9th of Jan. 1965 as an autonomous arm of Cadbury Schweppes group.

          Cadbury Nigeria Limited has diversified into a wide range of household manufacturing activities which includes Tom-Tom sweets, Parazone bleach, Buttermint Sweet, Goody Goody and Tomapepe. Trust is a potent factor in the development of the company over the years. In 1964, sales volume of Bournvita and Pronto rose to such a level that a complete manufacturing scheme for the production of Bournvitaand Pronto was established and local production started in May 1965.

          The company has a marketing division, economics research and development; computerization and efficient information management system have been introduced into the firm operation.The present factory established in 1966. It was nearing completion when the civil war in Nigeria broke out and this disrupted the project for some time. During the period, Cadbury recorded a sale decline as the Eastern states which were cut off accounted for over 50%of total sales. During the period however, the government placed a ban on the importation of finished goods/products. With its manufacturing facilities in place, Bournvita and Pronto then had the market to themselves. Production of Tom-Tom Sweets was introduced that same year, over 2million pounds was approved for new products, including capacity expansion of some brands Cadbury Nigeria Limited became a public company in 1976.The decision to go public was actually made ahead of the enterprise promotion decree of 1977.

          The Jayes health and chemical arm was establishes also in 1976 to produce parazone bleach and other household chemicals. The following year, 1977, the first phase of a Malta extract plant was established to produce Malta extract from barley thus replacing import of Malta barley. Further sales of shares in 1978, in compliance with the decree, saw equity holding changing to 40% foreign and 60% Nigeria. Cadbury Nigeria Limited is investing in the future, a mark of confidence in the business. Its workforce has grown from a handful of 250men in Jan 1966 to over 2000 of which nearly 350 are management staff, of the 10 directors, 6 are Nigerians.

          The company operates sales area offices in Lagos, Ibadan, Kaduna, Jos, Kano, Aba, Enugu, Asaba, Sokoto, Maiduguri and Ilorin. Trading records have been particularly impressive too. Growing from a turnover of one hundred and Twenty thousand pounds to Three Hundred and Thirty Seven Million Naira in 1989, the company had made huge investment in several manufacturing process, plant and equipment. 

The success of any organization is the acceptability of its products by the consumers because manufacturing or production is incomplete until the product gets to the final consumers/buyers. A lot of studies have been carried out from the origin of advertising to its current trends. For instance, Holtje (1978) as quoted by Ewuola (2004), pointed out that modern advertising operation started during the American Colonial days corresponding with the time the colonial newspapers were accepting advertisement directly from people and institutions that needed their services. Some local post offices were also assisting in this respect by acting as agents for these newspapers.

1.2     Statement of Problem

One major fact is that we are bombarded with advertisement messages day-in-day –out from all imaginable media. The average consumer is exposed to a very large number of advertisements every day, particularly the urban and semi-urban population. Advertising has been perceived as a veritable medium of stimulating, motivating and influencing the purchase and other behavioural response of their prospective customers.  How has advertising been able to achieve this and attract patronage of Cadbury products? Can it be said that Cadbury has made a success of its advertising based on what the consumers want? Is there any advertising strategy adopted by Cadbury in the advertisement of its products? Is there really a relationship that exists between advertising strategies in Cadbury Nigeria Plc; does Cadbury Nigeria Plc have any advertising strategy; is there any advertising strategy that would build brand loyalty among consumer?These and many other issues is what the research seeks to address and to find answers to.

1.3     Objectives of the Study

Theobjectives of this research are:

1.     To determine the relationship that exists between the various advertising strategies employed by Cadbury Nigeria Plc.

2.     To evaluate the effectiveness of Cadbury Nigeria Plc advertising strategies.

3.      To examine the best advertising strategy that would build brand loyalty among consumers.

4.     To analyze the factors that will influence the behavior of the consumer as it relates to advertising strategies.

1.4   Research Questions

In trying to sell their products, manufactures should first seek to understand the barriers and formulate strategies that address such obstacles. The following research question will be used to provide recommendation in the course of this study.

1.     What relationship exists between the various advertising strategies employed by Cadbury Nigeria Plc?

2.     What is the effectiveness of Cadbury Nigeria Plcadvertising strategies?

3.     What is the best advertising strategy that will build brand loyalty among consumers of Cadbury Nigeria Plc?

4.     What factors influence the behavior of the consumer as it relates to advertising strategy?

1.5     Scope and Limitation of study

This study is limited to Cadbury Nigeria Plc, being a major player in the consumer goods manufacturing sector. It is designed to cover both practical and theoretical effects of advertising on consumer behavior. Geographically, the study will cover Lagos State.

1.6     Significance of Study

The significance of this study cannot be over emphasized. The research work would be of great assistance to marketing practitioners, producers and the consumer of goods, especially beverages.

1.     The research work is intended to throw light into the real situation of the premise on which advertising policies/strategies are based vis-à-vis consumer goods.

2.     It would also help to know whichadvertising will apply to which particular strategy.

3.     It will help marketers to adopt new advertising strategies, particularly on consumer goods.

4.     It will provide additional literature in the area of advertising strategy.

1.7 Definitions of Terms

1.     Advertising:  Any paid form of non-personal presentation of goods and services and ideas by an identified sponsor.

2.     Consumer:  A consumer can be defined as any individual that buys goods for ultimate consumption (that is the household buyer) but not for any other purpose.

3.     Consumer Behavior:  This can be defined as the behavior that consumers display in searching for purchasing, using and evaluation products, services and ideas which they expect to satisfy their needs.

4.     Marketing:  Marketing can be defined as a process of finding out what consumers want while determining the best way to price, promote and distribute the goods or services profitability.

5.     Strategy:  Pattern of decisions that determine and reveal the objectives, purposes or goals and plans for achieving them.

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