THE IMPACT OF ADVERTISING ON SALES PERFORMANCE: A CASE OF MUKWANO INDUSTRY
ABSTRACT
The study aimed at assessing the effect of advertising on the performance of an organization, case study being Mukwano industry in Kampala. The study was mainly looking at advertising and performance of Mukwano industry and if this was effective to the organization
The researcher used a cross sectional research design with both qualitative and quantitative methods with a population study of 150people out of which a sample size of 40 employees was chosen .Stratified sampling design was used to divide the employees into strata which were departments under which the employees worked ,and they included marketing ,operational, production and supply departments .Using simple random sampling respondents were chosen from the different departments selected and questionnaires distributed to the selected respondents from the four departments in the industry. Both the primary and secondary data was used during collection of data. Data was collected by use of questioners and observation method s and analyzed in form of tables.
Findings revealed that Mukwano advertises most of its products and it uses different forms of advertising and media, but the level of Mukwano’s sales was declining despite of their frequent advertisements. There was a strong relationship of(r= 0.9 0)between advertising and sales performance.
The industry should use most of the local languages commonly used in Uganda to win customers from all tribes, use of e marketing to be adopted by the industry to reach most of the people who can access the internet than listen to radios and televisions and also the use celebrities in advertising their products, and finally the researcher recommends the use of other forms of advertising for example sponsoring events and also the use of mobile phones to advertise.
TABLE OF CONTENTS
DECLARATION i
APPROVAL ii
DEDICATION iii
ACKNOWLEDGEMENT iv
TABLE OF CONTENTS v
LIST OF TABLES viii
ABSTRACT ix
CHAPTER ONE 1
1.1 Back ground 1
1.2 Statement of the problem…………………………………………………………...…2
1.3 purpose of the study……………………………………………………………...……3
1.4 0bjectives of the study………………………………………………………………...3
1.5 Research questions…………………………………………………………………….3
1.6 Scope of the Study 3
1.7 Significance of the study………………………………………………………………3
CHAPTER TWO: LITERATURE REVIEW 5
2.0 Introduction 5
2.1 Advertising 5
2.1.1 Advertising objectives 6
2.1.2 forms of advertising 6
2.1.3 Advertising media 6
2.1.4 Steps in choosing an advertising media 7
2.1.5 Steps taken in setting an advertising budget 8
2.2 Sales performance 10
2.2.1 Sales 11
2.2.2 Sales process 12
2.2.3 Effective sales process 13
2.2.4 Outcomes of sales processes 13
2.2.5 The outcome of the selling process 14
2.3 Relationship between Advertising and sales performance 15
2.4 Conclusion 17
CHAPTER THREE: METHODOLOGY 18
3.0 Introduction 18
3.1 Research Design 18
3.2 Sampling Design 18
3.2.1 StudyPopulation 18
3.2.2 Sampling size 18
3.2.3 Sampling method 18
3.3 Data Collection 19
3.3.1 Data sources 19
3.3.2 Data collection instruments 19
3.4 Data processing, analysis and presentation 19
3.4.1 Data presentation 20
3.5 Limitation of study 20
CHAPTER FOUR: PRESENTATION, ANALYSIS, AND INTERPRETATION OF THE FINDINGS 21
4.0 Introduction 21
4.1 Demographic characteristics 21
4.2 Findings on the forms of advertising used by Mukwano industry 24
4.3 Findings on the level of sales of Mukwano industry 30
4.4 Findings on the relationship between advertising and sales performance using Pearson correlation 32
CHAPTER FIVE: SUMMARY, CONCLUSION, AND RECOMMENDATION 34
5.0 Introduction 34
5.1 Summary of major findings 34
5.1.1 Findings on the forms of advertising 34
5.1.2 Findings on the Level of Sales in Mukwano Industry 34
5.1.3 Findings on the Relationship between Advertising and Sales 34
5.2 Conclusions 35
5.2.1 forms of advertising 35
5.2.2 Establishing the Level of Sales from Mukwano Industry 35
5.2.3 Relationship between Advertising and Sales 35
5.3 Recommendations 35
5.3.1 Areas for further research…………………………………………………..……36
REFERENCES 37
Appendices: Research Questionaire 39
CHAPTER ONE
1.1 BACKGROUND
Advertising is any paid form of non personal presentation and promotion of ideas, goods, or services by an identified sponsor (Kotler and Armstrong, 2010). There are various forms of advertising like informative advertising, persuasive advertising, comparison advertising, and reminder advertising. Informative advertising is used to inform consumers about a new product, service or future or build primary demand. It describes available products and services, corrects false impressions and builds the image of the company, (Kotler, 2010).Advertising can be done through print media which includes news papers ,magazines ,brochures ,Audio media for example Radio, and visual media which includes billboards, and television (Kotler and Armstrong 2010).
Sales performance describes the trend of collections in terms of revenue when comparing different periods (MC Cathy, 1994). The sales may be in form of offering products or services to consumers. A service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything (Kotler and Armstrong, 2010).Sales volume is the core interest of every organization and is based on sales and profit .When volume goes up profits rises and management in organizations is made easier.
Mukwano is a manufacturing industry located in Kampala city along Jinja road near industrial area. It was established in 1980 and it deals in the production of a variety of beauty products for example smearing jelly, soaps, body lotions and creams. It also deals with the other domestic products like cooking oils, beverages and plastic containers.
Mukwano advertises using visual media for example the television and the Audio the radio, print media for example the news papers. Mukwano has launched a new detergent powder to compete in East Africa common market through intensive advertising internationally Daily monitor April 2010, but there are some inefficiencies in the way these organization carries out its advertisements for example Mukwano advertisements in the visual media is done in local language i.e. (luganda) a language that can only be understood by a few people in the country, making the advertisement appealing only to a group of people. The advertisements lacks the unique selling proposition in the statements used to differentiate their products from competitors, they are done in the same way as the competitors making it hard to differentiate its ads from others. Besides their advertisements don’t provide room for further information about their products for clarification (Daily Monitor April 2010)
For the past four years expected sales in Mukwano have differed from their actual sales as shown in the table below whereby in the year 2007 there was a slight increment in ales volume and started declining from year 2008 to 2009
Table 1: Annual report 2009 to 2010
YEARS
EXPECTED SALES
ACTUAL SALES
2007
200m
210m
2008
250m
200m
2009
230m
205m
2010
210m
198m
SOURCE; Annual report 2009 to 2010
Mukwano expected 200m from sales in the year 2007 but the actual sales they had was 210m and in the year 2008 they expected 250m but they had 200m of sales, in the year 2009 the industry expected to sale goods worth 230m but only managed to sale goods worth 205m and lastly in the year 2010 they expected to get 210 out of the sales but they received only 198m
1.2 STATEMENT OF THE PROBLEM
Mukwano carries out frequent advertising of their products to increase their sales volume, through taking part in charitable funds in Uganda and even sponsoring sports .It advertises using radio, television and newspapers.
Despite its efforts in advertising regularly the sales of Mukwano industry have not improved to the desired targets. The sales in Mukwano for the past four years have been declining.
1.3 PURPOSE OF THE STUDY
The purpose of the study was to establish the impacts of advertising on sales performance.
1.4 OBJECTIVES OF THE STUDY
To examine the forms of advertising in Mukwano industry. To establish the level of sales performance in Mukwano industry To establish the relationship between advertising and sales in Mukwano industry
1.5 RESEARCH QUESTIONS
What are the forms of advertising used by Mukwano industry? What is the level of sales performance of Mukwano? What is the relationship between advertising and sales performance in Mukwano industry?
1.6 SCOPE OF THE STUDY
Content scope
The study covered advertising as the independent variable and sales performance as the dependant variable.
Geographical scope
The study was centered at the Mukwano industry in Kampala because it is the headquarter of the industry where marketing plan is carried out, and it has large sales volume
Time scope
The study looked at five financial years back that is 2006 to 2010
1.7 SIGNIFICANCE OF THE STUDY
The findings of the study were expected to benefit the following.
The findings of the study were used as references for future research work.
The results of the study are of surmountable information when drawing measures which would in turn lead to capture of substantial market share.
The study can be the source of reference on how to revive and adopt and also follow the adverts according to the dynamic markets.
CHAPTER FIVE
SUMMARY OF FINDINGS CONCLUSION, RECCOMENDATION
5.0 INTRODUCTION
This chapter summaries the field discoveries, draws completion and recommendations and ends with areas of further research. The objective of the research were examining the forms of advertising used by Mukwano industry , establishing the level of sales of Mukwano industry and finding the relationship between advertising and sales performance.
5.1 SUMMARY OF MAJOR FINDINGS
5.1.1 Findings on the forms of advertising
The forms of advertising used by the industry are television, radios, magazines, brochures, newspapers, stickers and posters. Most of these forms are interrelated although some like radios and televisions are more used than the others.The findings revealed that the industry uses television in advertising than other forms It was also found out that Mukwano advertizes through all media types which included visual, audio and print media .
5.1.2 Findings on the level of sales of Mukwano industry
From the findings it was established that the level of sales is declining by the decline sales revenue. This was due to failure to involve the public and use of advertising media that is not accessible by most Ugandans. Failure of the industry’s adverts reaching the intended audience was also seen to be major cause of decline in the sales volume.
5.1.3 Findings on the relationship between advertising and sales
From chapter four, it was established that there is a strong relationship between advertising and sales. This is supported by a [positive relationship established by Pearson correlation (0.9) together with the positive responses from the questionnaires.
5.2 CONCLUSIONS
5.2.1 Forms of advertising
From the finding of the study, it is evident that there are various forms of advertisements used by the organization. But according to the responses there are some forms which are mostly used than others ,this includes radios and televisions. These have helped the organization to raise awareness about the existence of various types of products produced by the company.
5.2.2 Establishing the level of sales from Mukwano industry
The level of sales in Mukwano is declining as indicated in table number 23 where by 37.7% of the respondents agreed that the sales level in Mukwano is declining. In the year 2007 the industry recorded the highest sales volume but as the years went on the sales started declining.
5.2.3 Relationship between advertising and sales
The relationship between advertising and sales is very strong. This is shown by person correlation analysis(r=0.9) supported by the responses from the questionnaires.
Where most of the respondents agreed that the media used reach the intended audience.
5.3 RECOMMENDATIONS
Mukwano industry should use other forms of adverting like sponsoring events and use of mobile phone advertising. This will increase awareness about the various products produced by the industry.
The industry should choose the most effective media for advertising. A media that is affordable by many people for example radios.
The industry should use different common local languages used in the country so that every individual can get the messages from the adverts.
E-marketing should also be used to reach most the people who spend time on the internet and have no timer to listen to radios or watch televisions.
The industry should also use celebrities in the country to help them advertise their products for this can attract big crowds from which potential customers can be found.
5.3.2 Suggested areas for further research.
Due to limited time, this research is not conclusive as such. It is therefore important that further research be carried out on he following.
1. Employees motivation and sales performance
2. Effects of e-marketing on sales volume
3. Impacts of employees training on sales
.