THE EFFECTIVENESS OF PROMOTIONAL MIX ELEMENTS ON PROFITABILITY IN THE TELECOMMUNICATION INDUSTRY (A Study of Globacom Nigeria Limited, Asaba)
1.1 BACKGROUND OF THE STUDY
Very often, individuals and organizations conceive promotion, narrowly as involving the process of persuading, buyers and casoling them to buy goods and services they showcase. Marketing develops as a society and it economy develops. The need for marketing them arises and grows as a society moves from an agrarian economy to a free marketing economy characterized by industrialization and competition.
Since products do not sell themselves, marketing then, has a basic challenges of presenting products in the market place as superior to their available substitutes. The downturn in the economy is pushing firms to begin to emphasize customers satisfying process rather than just merely goods and services producing process as it has been observed that consumers are becoming more rationale in their purchase decision, given the state of their dwindling disposal income.
Firms and producers on their part are further responding by developing superior strategy(s) aimed at pushing their products to the ultimate consumers. Here’s where contemporary marketing calls for more than developing a good product or services, pricing it adequately and making it available to target consumers (A chumba 2000) Firms should communicate and promote their goods and services with a view to winning the potential customers choice decision, as it is , the customer’s decision that determines whether the organization in the prosper.
Udel (1997) identifies marketing promotion as the most important facet of marketing strategy leading to success promotional mix are now accepted by top management as effective tools for firm to survive because product managers are under great pressure to in crease their current market share, product awareness and perception, consumer loyalty, organization sales volume and profit.
Promotional mix elements have become the most powerful weapon used by sales and marketing practitioners, and organization to build their brands and make the business or organization to survive the hard times, most especially in this recessionary periods. Promotion is an exercise of informing the purchase of products. Promotion relates to those activities, which are designed to bring a company’s goods or services to the awareness of the consumers or ultimate consumer to their favourable attention.
Viewed at the pedestal level, marketing promotion is the act of transmitting information for marketing purposes. This comprises the elements such as advertising, personal selling, sales promotions and public relations/publicity which are commonly referred to as the promotional mix. Promotional mix elements are not mutually exclusive. Firms will require strategic mix of two or more of these elements depending on their type of products or services, promotional objective, completion, budget and the potential target market.
The various combinations of activities directed at matching the promotional tools to achieve the overall corporate goals are referred to as promotional strategy (Ogbechie 1997). Promotional strategy will hence be time and company determined. The reasons why firms undertake goods and services producing process is usually the result of indentified need(s) and effort at satisfying these need(s), using available organizational resources, at a profit to the producer.
This study is therefore carried out to measure the effectiveness of promotional mix elements on organizational profitability.
1.2 STATEMENT OF THE PROBLEM:
This fundamental goal of promotion is to cause a bodily shift of the demand curve to the right, thus allowing more units to be sold at a practical price or the same units to be sold at a higher price. The presence of Economic turn down has increased the relevance of promotion. Expenditure on promotion by organization in the service or product sector is therefore soaring to an all time high. Promotional activities are assuming more sophistication and innovation (Kotler 1984).
Firms, especially those within the same industry are matching each other wit for wit, promotion for promotion to attract and retain their customers. Recession apparently makes consumers more responsive to promotion activities by firms resulting in firms doing a shift in the fit but to acquiring substantial market share, winning back lost prospects or customers and competitors customers.
According to Onanuga (1992), promotion should be intensified at recessionary periods because too many goods will be chasing the same way. Engel et al (1983) suggested that certain economic environments are better suited to certain promotional campaign. Money-off or other types of cash refunds seem to work well when the economy is depressed, while contest and premium or other forms of non-price incentive may be more effective at times of relative prosperity.
Religious and cultural values may impact differently and put to question the effectiveness of some promotional mix elements employed. For example, Muslim faithful express serious resentment on the consumption of alcoholic beverages.
Ignorance of the promotion or product attributes and general back of awareness may cause consumers to express apathy and doubts on the sincerity of the firm’s claims to honour its promise to give out prizes.
Another obvious purpose such as health, consumers may have a mixed reaction to promotional activities. Diabetes and other consumer mindful of their health may be indifferent to juicy promotional campaign incentives.
1.3 PURPOSE OF THE STUDY
The purpose of this study is:
i. To determine the extent to which promotional mix elements impact on an organization performance.
ii. To ascertain the level of relationship between promotional strategy and organizational profitability.
iii. To identify the most effective promotional campaign tool elements to be employed by the industry at recessionary periods.
iv. To attempt to establish a relationship if any between promotional campaign elements at recessionary periods on organizational profitability.
1.4 RELEVANT RESEARCH QUESTIONS
In a bid to accomplish the purpose of this study, attempts were made to fix appropriate answers to the following research questions.
1. To what extent will the expenditure in promotion by organization affect the organization’s profit?
2. What promotional strategy or strategies have been mostly adopted at these recessionary periods ad their effectiveness?
3. To what extent can religious and cultural values affect sales promotional activities employed by firms to achieve their aims?
4. To what extent does advertising create awareness on product attributes?
5. To what extent will public relations influence consumers perception of the brands or product on religious or health grounds?
1.5 TESTABLE HYPOTHESES
In addition to the stated relevant research questions given above, this study tested the following hypotheses.
1. Promotional strategy (Pragrammes) is a determination of organizational profitability
2. Company’s derives benefits from using the promotional mix elements/tools
3. There is a positive relationship between promotional programmes and sales volume.
1.6 SIGNIFICANCE OF THE STUDY
At times of depression, with its accompanying low level real per capital income, higher consumer awareness and resistance, it be comes imperative for firms to respond appropriately by adopting viable promotional programmes in a bid to increase her market share, retain consumers loyalty, turnover and margin.
Findings of the study provides information that will serves as a guide to prosper policy formulation, implementation and evaluation of promotional strategy by telecommunication firms at these austere period. Further more, it is expected to produce result which will enable professional marketers, policy maker, researchers and practitioners’ alike better apply and understand promotional strategies in terms of their functions and effectiveness on organizational objectives and profitability this is a frame work that will encourage further research endeavor in elevating the effectiveness of promotional programmes.
1.7 Scope and limitation of the study:
This study will attempt to measure the effectiveness of promotional campaign tool on organizational profitability in the telecommunication industry. Nigeria telecommunication industry is selected as a case study because of the enormous size, its domineering posture especially among the underdeveloped world. The study shall therefore be limited to Nigeria telecommunication industry because it is adequately a representative of other telecommunication firms spread a cross the globe. Attempt to cover virtually all the nation’s telecommunication firms will be very cumber some and take a longer time to accomplish.
1.8 Definition of terms
i. Effectiveness: this is the capability of producing a desired result. It also means achieving an intended or expected out comes.
ii. Telecommunication: It is the transmission of information over a distance to communicate. It involves the use of electrical dev ices e.g. the telegraph, telephone, teleprompter as well as the use of radio and microwave.
iii. Industry is the production of an economic goods or servicers within an economy.
iv. Profitability: Is the capacity to make a profit. The state or quality of being profitable.
v. Scales volume: The quantity or number of goods or servicers sold in the normal operation of a company in a specified period.
vi. Market share: Is the percentage of a market accounted for by a specific entity. It could be in terms of either in units or revenue.
vii. Organization: A social unit of people, systematical structured and managed to meet a need or to pursue collective goals on a continuing basis.
viii. Promotional mix: This connotes advertising personal selling, sales promotion, public relation /publicity, direct marketing.
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