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SALES PROMOTION AS AN ANTECEDENT OF SALES VOLUME: A
STUDY OF SELECTED MANUFACTURING INDUSTRY IN IBADAN,
SOUTH WESTERN, NIGERIA.
Amusat W.A
Business Administration Department
Osun State Polytechnic, Iree
Adejumo D.A
Department of marketing
Osun State Polytechnic, Iree
Ajiboye F.A
Department of marketing
Osun State Polytechnic, Iree
Abstract
This research paper investigates the effect of sales promotion dimensions on sales volume with a
special reference to the selected manufacturing industry in Ibadan, south western Nigeria.
Structure questionnaire was used to collect data from eighty (80) respondents through simple
random sampling method. Regression analysis was used to analyze the data with the aid of
statistical package for social science (SPSS) version 20. Result shown that sales promotion
dimensions such as bonus, coupons, free samples, price promotion and premiums were joint
predictors of sales volume (F (5, 74) = 2.261; R2 = 0.13; P <.05). The predictor variables
jointly explained 13% of the variance of sales volume, while the remaining 87% could be due to
the effect of extraneous variables such as advertising, publicity, pricing, brand name, product
quality etc. It was concluded that management of Nigerian manufacturing industry should
increase budget on sales promotion dimensions and also set up more and effective sales
promotion department with experience staff.
Key words: Sales promotion, sales volume, coupons, bonus, and premiums
1.0
INTRODUCTION
Sales promotion has become an effective marketing tool that assists organizations to wax
stronger in a global competitive environment. Oyedapo et al,( 2012) identified sales promotion
as a key ingredient in marketing campaigns which assist organization to achieve its objectives.
The main aim of any organization is to maximize profit, have largest market shares and to
become leader in a market competitive environment. Okoli (2011) confirmed that the essence of
setting up a business organization is to make profit. Sales promotion simply exists to have a
direct impact on the behavior of the firm's customers (Blattberg and Neslin 1990).
Aworemi
(2008) in his research finding said that sales promotion plays a significant effect on sales volume
which help in achieving the organizational objectives. The role of sales promotion in achieving
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organizational stated objectives cannot be underestimated. The purpose of sales promotion is to
motivate the customers to immediately purchase a particular product thus enhancing its sales
volume ( Sadia and Syeda, 2012; Odunlami and Ogunsiji; 2011; and Aderemi, 2003).
According to Shimp (2003), sales promotion refers to any incentive used by a
manufacturer to induce the trade (wholesalers, retailers, or other channel members) and/or
consumers to buy a brand and to encourage the sales force to aggressively sell it. kotler (2003)
sees Sales Promotion
a key ingredient in marketing campaigns and consists of a diverse
collection of incentive tools, mostly short term designed to stimulate quicker or greater purchase
particular products or services by consumers. Sales promotions programmes are those activities
other than stimulate consumer purchase. Sales promotion is an important component of an
organizations overall marketing strategy along with advertising, public relations, and personal
selling. Sale promotion acts as a competitive weapon by providing an extra incentive for the
target audience to purchase or support one brand over another (Odunlami and Ogunsiji, 2011)
It is on this premises that this research work wishes to examine the effect of sales
promotion dimensions on sales volume with special reference to the selected manufacturing
industry in Ibadan, south western, Nigeria.
2.0
RELEVANT STUDIES
Sales promotion consists of a diverse collection of incentive tools, mostly short-term, designed to
stimulate quicker and/or greater purchase of a particular product by consumers or the trade
(Kotler 2003). Sales promotion is the direct inducement or incentive to the sales force, the
distributor, or the consumer, with the primary objective of creating an immediate sale. Sales
promotion is unique in that it offers an extra incentive for action (Adrian Palmer, 2004). Sales
promotion refers to those promotion activities other than advertising, publicity and personal
selling that stimulate interest, trial or purchase by final customers or others in the channel
(Bagavathi Pillai, 2007). The American Marketing Association (AMA) defined sales promotion
as those marketing activities other than personal selling, advertising, publicity that stimulate
consumer purchasing and dealer effectiveness such as display, shows and exhibitions,
demonstrations and various non-recurrent selling efforts not in the ordinary routine.
Sales
promotion represents those marketing efforts that are supplementary in nature, are conducted for
a limited period of time, and seek to induce buying (Davis et al, 1994). Blattberg and Neslin
(1990) defined sales promotion as an action-focused marketing event whose purpose is to have a
direct impact on the behavior of the firm's customers. Ailawadi and Neslin (1998) posted that
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sales promotion is to induce the present customers to visit the store more often. And Blattberg
and Neslin (1990) also agreed that sales promotion is to increase brand awareness, attract new
customers, and increase sales to present customers.
Oyedapo et al, (2012 ) posited that sales promotion is a direct inducement that offers an
extra value or incentive for the product to the sales force, distributors or the ultimate consumer
with the primary objective of creating an immediate sale. Aham (2008) is of the opinion that
sales promotion emerged as a reaction by manufacturers marketers, and marketing strategies
alike to find a short term solution to the problems of excess stock of goods which are available in
variables manufacturer’s warehouses but are not demanded by consumers and organization.
Also, Blythe (2006) viewed sales promotion as any activity intended to generate a temporary
boost in sales. Shimp (3003) said sales promotion refers to any incentive used by a manufacturer
to buy a brand and to encourage the sales force to aggressively sell it. Totten and Block (1994)
stated that the term sales promotion refers to many kinds of selling incentives and techniques
intended to produce immediate or short-term sales effects. Sales promotion refers to those
promotional activities other than advertising, publicity and personal selling that stimulate
interest, trial or purchase by final customers or others in the channel (Bagavathi Pillai, 2007).
2.1
SALES PROMOTION DIMENSIONS
The following sales promotion dimensions were identified by Blattberg and Neslin (1990).
1. Coupons are paper offers that are available in magazines and newspapers, may be downloaded
from the Internet, or are available at the point-of-purchase and entitle the recipient to a reduction
in price for a product or service.
2. Premiums are items offered free or at a reduced price with the purchase of another item.
3. Bonus packs are offers by the manufacturer that provide additional product at the regular price
in an enhanced package.
4. free sample offer consumers discounts or free product rewards for repeat purchase or
patronage of the same product or company.
5. Price promotion offer a consumer cents or even naira off merchandise at the point-of-purchase
through specially marked packages.
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2.2
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EMPIRICAL STUDIES ON THE RELATIONSHIP BETWEEN SALES
PROMOTION DIMENSIONS AND SALE VOLUME
Previous studies on the effect of sales promotion dimensions on sale volume are inconclusive.
Most researchers agreed that sales promotion dimensions have no significant effect on sales
volume (Davis et al. 1992; Dekimpe, Hanssens and Silva-Risso 1999; Pauwels et al. 2002;
Gilbert and Jackaria, 2002; Srinivasan et al. 2000). While some research believed that sales
promotion dimensions have positive effect on sales volume (Ailawadi, 2001; Ailawadi and
Neslin 1998; Oyedapo et al, 2012; Odunlami and Ogunsiji, 2011; Bamiduro, 2001).
The findings of Bamiduro (2001) confirmed that there is positive significant relationship
between sales promotion dimensions and sales volume of the beverage industry. Oyedapo et al,
(2012) conducted a research on the impact of sales promotion on organization effectiveness in
Nigerian manufacturing industry and their findings revealed that the adoption of sales promotion
dimensions significantly influence the effectiveness of beverage drink industry. According to
Ailawadi (2001), sales promotions have a positive long-term effect on sales because promotions
persuade consumers to change brands and to buy in larger quantity. Odunlami and Ogunsiji
(20011) who researched on the effect of sales promotion as a tool on organizational performance.
They concluded that the effective implementation of sales promotion dimensions lead to increase
in sales volume.
Moreover, Wayne (2002) found a link between sales promotion dimensions and product
trial which eventually lead to increase in sales volume. Pauwels et al (2002) also discovered that
sales promotion dimensions have permanent effect on sales volume. However, long-term effects
are under an academic debate and different research shows opposing results. Some of the
research shows that after a promotional purchase probability for a repeat purchase is lower than
after a non-promotional purchase. Totten and Block (1994) found that sales promotion
dimensions have no long term effect on sales volume. Dekimpe, et al (1999) and Srinivasan et
al. (2000) their findings proved that sales promotion dimensions do not change the structure of
sales volume over the long run. Sales promotion dimensions are considered to be an external
stimulus and after when it is gone consumers are less likely to re-purchase (Dodson et al. 1978).
2.3
CONCEPTUAL FRAME WORK
After the careful study of literature review, the following conceptual model is formulated to
illustrate the relationship between sales promotion dimensions and sales volume.
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Sale Promotion Dimensions
Coupons
Premiums
Bonus
Sale volume
Free sample
Price
promotion
Figure 1: Relationship between sales promotion dimensions and sales volume model.
Source: Designed by Researchers
3.0
RESEARCH HYPOTHESIS
Ho: Sales promotion dimensions have no significant effect on sales volume
3.1
RESEARCH METHODOLOGY
Research design: The survey research design method was used in this study. It involves using a
self-design questionnaire in collecting data from the respondents.
Population of the study: the population of the study covered selected manufacturing industry in
Ibadan.
Sample size: The sample size for this study was eighty (80) respondents were randomly selected
from fifteen marketing managers of selected manufacturing industry, twenty (20) of their
distributors and forty –five (45) of their customers respectively.
Research Instrument: The instrument used in this study is a close-ended questionnaire that was
designed by the researcher.
Reliability and Validity: In order to establish the reliability of this instrument, a pilot study was
carried out on a sample of eighty respondents, using a test – retest method. The result of the
reliability test ware:
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Sales volume, 0.80; coupons, 0.75; premiums, 0.82; bonus, 0.79; free samples, 0.81; and price
promotion, 0.91 respectively, showing that the instrument is reliable. In confirming the validities
of the instrument, face and content validities were ensured the instrument was given to
professionals for scrutiny and evaluation. Regression analysis was used to analyze the data with
the aid of SPSS version 20.
Table 1.
Regression Result of sales promotion dimensions and sales volume (N=80)
Independent
b
Beta
T
R2
P
variables
DurbinWatson
( constant)
5.204
-
5.277
Coupons
0.085
0.107
0.107
Premiums
0.013
0.013
0.115
Bonus
0.214
0.225
1.912
Free samples 0.056
0.097
0.852
Price
0.096
1.807
0.173
P < 0.05
0.13
0.74
promotion
Dependent variable: Sales volume
Coupons
0.107
Premiums
0.013
Bonus
Free sample
0.22
5
0.09
7
Sale volume
0.096
Price
promotion
Figure 2: Sales Dimensions Model.
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INTERPRETATION OF THE RESULT
Looking at the Beta value of each independent variable in the model after taking out
standard error effect, it can be inferred that the bonus constitutes the most significant beta value
of 0.225 follow by coupons, 0.107; free samples, 0.097; price promotion, 0.096 and premiums,
0.013 respectively. This implies that bonus play important role in predicting sales volume with
(β = 0.225; t = 1.912; p <.05), coupons also contribute immensely to both short and long sales
turnover with (β = 0.107; t = 0.107; p <.05) while free sample, with (β = 0.097; t = 0.852; p
<.05), price promotion with (β = 0.097; t = 1.807; p <.05) and premiums with (β = 0.0.013; t =
0.115; p <.05) are also predict sales volume respectively. This result is conform to Odunlami and
Ogunsiji, (2011) who testified that sales promotion is back bone of any organization that wishes
to remain and survive in a global competitive environment.
The result shows that sales promotion dimensions such as bonus, coupons, free samples,
price promotion and premiums were jointly predictor of sales volume (F (5, 74) = 2.261; R2 =
0.13; P <.05). The predictor variables jointly explained 13% of the variance of sales volume,
while the remaining 87% could be due to the effect of extraneous variables such as advertising,
publicity, personal selling, public relation, pricing, brand name, product quality etc.
It can be deduced from this analysis that sales promotion dimensions were significantly factors in
predicting sales volume. This finding is in line with the results obtained by (Ailawadi, 2001;
Ailawadi and Neslin 1998; Oyedapo et al, 2012; Odunlami and Ogunsiji, 2011; Bamiduro, 2001)
who pointed out that sales promotion dimensions have positive effect on sales volume.
Therefore, null hypothesis is rejected, which says sales promotions dimensions have no
significant effect on sales volume, while alternative hypothesis should be accepted.
5.0
CONCLUSION AND RECOMMENDATION
This research work examined the effect of sales promotion dimensions on sales volume. The
result shows that all sales promotion dimensions are independently and jointly predict sales
volume. This implies that coupon, premiums, bonus, free samples and price promotion have
significant effect on sales volume. On the basis of the findings of this study, it can be concluded
that sales promotion dimensions have significant influence on sales volume.
The study found that bonus has strong influence on sales volume which means if
manufacturing industry wants to achieve its stated objectives, they should take cognizant of
bonus as well as other dimensions such as coupons, price promotion, free samples and premiums
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into consideration.
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Furthermore, management of Nigerian manufacturing industry should
increase budget on sales promotion dimensions and also organization should set up more and
effective sales promotion department with experience staff with the view of developing more
promotional strategies in line with the company’s objectives.
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