IMPACT OF MARKETING PROMOTION ON ORGANISATIONAL PROFITABILITY CASE STUDY: COCA COLA COMPANY NAIROBI BRANCH

 IMPACT OF MARKETING PROMOTION ON ORGANISATIONAL PROFITABILITY

CASE STUDY: COCA COLA COMPANY NAIROBI BRANCH

CHAPTER ONE

1.0 INTRODUCTION

In this chapter the number of sections will be clarified. These are the background of the study, which will analyze the genesis of the problem, followed by the local scenario, targeted group in the study and their consequences. This chapter will also be inclusive of statements of the problem, objectives of the study, research questions, justification, and scope of the study, limitation and definition of terms.

1.1BACKGROUND OF STUDY

Organizations need to be competitive to serve the chosen segments effectively in a meaningful and sustainable manner through developing appropriate marketing promotion techniques. In the present organizational environment market competitiveness is a function of how well firms can develop and implement strategies but competitiveness also can impact the nature of chosen strategy by the firm (Hugh and Elizabeth, 2006). To obtain the assets of organizational goals and achieve objectives, the organization should design and implement various techniques of marketing promotion to enhance profitability of the business. Marketing has been defined and conceptualized in various ways depending on the author's background, interest and education. For example marketing can be seen as a matrix of business activities organized to plan, produce, price, promote, distribute and market goods, service and ideas for satisfaction of relevant customers and clients. Marketing promotion is therefore important for the profitability of any organization whether it is service or product oriented. Marketing promotion is a method by which an organization attempting to research for its success and profitability uses to find out the demand of the customers. This is due to the need for attitude and competitor’s products are assessed and the firm concentrates its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage (Nymous, 2006). Marketing strategies must focus on delivering greater value to customers and the firm at a lower cost. However quantifying the return on investment from marketing expenditure on the activities such as advertising, promotion and distribution is one of the most complex issues facing decision makers. Marketing performance is central to success in today’s fast moving competitive markets and measuring marketing performance is critical to manage it effectively (Chiliya, 2009). In order to measure marketing promotion effectiveness, business has to break down its marketing promotion function into constituent parts, along with a mechanism through which to analyze the interruption between these parts. By doing this, the decision maker will finally be in a position to relate marketing expenses to shareholders value and to understand how to bring the marketing initiatives back to the value created for the company. Decision makers will be able to understand the internal motives that run the marketing value of the business. The manipulation of the following market variables namely price variable and price promotion, research, advertisement, product, differentiation, quality packaging and place will yield an increased return to the company. Marketing promotion in coca cola Company Nairobi branch serves as the fundamental component of marketing plans designed to fill the market needs and research marketing objectives. Marketing promotion also strategizes the careful scanning of the internal and external environments of the company. (Saleemi, 2002). The internal environmental factors include market mix plus performance analysis and strategic constraints, while external environmental factors include customer’s analysis, competitive analysis, target market analysis as well as evaluation of the elements of technological, economic, cultural or political/legal environment that are likely to impact on the profitability of the organization. Companies strategies their marketing promotion skills to create customers' value as well as to establish customers needs and to provide such needs in order to add more value to their service and gain competitive advantage (Saleemi, 1991). However there are challenges in measuring marketing promotion in relation to productivity indeed many researchers indicate that there is a gap in his regard (Okoh, 2009)

1.2 STATEMENT OF THE PROBLEM

Marketing promotion techniques are dynamic and interactive. They are partially planned as such most companies do not adhere to them strictly (Saleem, 2009). Most organizational components of marketing promotion are not in line with companies mission hence marketing promotion is a virgule and complex to comprehend. Due to this, implementing marketing promotion strategies in most organizations has become a big problem. This is evident in the fact that there are challenges in measuring marketing promotion in relation to organization profitability which several marketing literatures as well as journals have not gone through to address. Although several marketing promotions are conducted each year by the coca cola companies, marketing promotion managers are frequently confronted with the challenge of defending the question of the impact of marketing promotion activities on the profitability of the firm (Saleem, 2009). A view of literature also shows that much of the previous research in marketing promotion has focused on the consumer response to marketing promotion but has not incorporated the effect of marketing promotion on profitability of an organization.(Kopalle,mela and mash,1999 ,pouwel et al.2002.). For instance, lembeck (1999) suggested that only 40% of trade promotions are effective but there was no definition of success. As indicated by Blattberg and Neslin (2006), marketing promotions are effective demand boosters that do not incur the risks associated with new products. According to Honssens et al (2001), marketing promotion is relatively easy to implement and tends to have immediate and substantial effects on sales volumes. Consequently, the relative share of promotion in a firm's marketing budgets continues to increase (Curium and Schneider, 2009). However ,marketing promotion on the market rarely has persistent effects on sales ,which tends to return to pre-marketing promotion level after a few weeks or months. Decamped et al, (2009), Nibs et al, (2001), Powel et al (2000). Consequently promotion's effectiveness in stimulating long-term growth and profitability for the promoted brand is in doubt (Opole et al, 1999). The above study sought to examine the impact of marketing promotion on organization profitability specifically in the coca cola company Nairobi branch.

1.3 OBJECTIVES

General objective: To determine the impact of marketing promotion on the organization's profitability.

Specific objectives.

1. To examine the relationship between marketing promotion and organization profitability.

2. To determine different methods of marketing promotion on organization profitability

3. To ascertain the challenges of marketing promotion on organization profitability.

1.4 RESEARCH QUESTIONS

1. What is the relationship between marketing promotion and organization profitability?

2. What are the methods of marketing promotion on organization profitability?

3. How to manage the challenges of marketing promotion on organization profitability

1.5 JUSTIFICATION

This study will contribute to the existing body of knowledge on the subject matter by showing the relationship between marketing promotion and organizational profitability. It will be good reference material to existing and upcoming companies, students and the general public. The study would also be beneficial to coca cola Company Nairobi branch and other beverages companies by improving their strategic planning especially as they utilize the finding of the study. The study will also serve as a basis for policy formulation to the coca cola company in Nairobi Kenya specifically in the marketing sector and other coca cola companies internationally.

1.6 SCOPE OF STUDY

The study covers the field of marketing promotion of coca cola Company Nairobi branch. In this regard the researcher shall examine the marketing promotion methods adopted by coca cola Company Nairobi branch as well as the optical marketing mix used in attaining organizational profitability in coca cola Company Nairobi branch. The study equally identifies the factors threatening marketing promotion used by coca cola Company Nairobi branch in Nairobi Kenya.

1.7 LIMITATION

There are difficulties in researching since books and other researching materials are insufficient. There are also limited sources to facilitate quick research.

1.8 DEFINITION OF TERMS

Marketing promotion: is the variety of communication activities to educate customers, increase awareness, demand, build brand value and recognition and provide differentiation.

Price: is the quantity of payment

Service: is the system of supplying public needs such as transport and communication.

Customer value: is a level of satisfaction of your customer towards your business. 

 

 

 CHAPTER TWO

LITERATURE REVIEW

2.1 INTRODUCTION

This chapter will entail theoretical review, conceptual framework, literature critique and summary.

2.2 THEORETICAL REVIEW

2.2.1 Relationship between marketing promotion and organization profitability

Fisher et al, (2006). Indicate that more labor at the store associated with substantially high sales in turn leads to profitability of an organization. Entrepreneurs hesitate adding labor because they associate it with increased cost rather than profit. (King and Lenox, 2002). Profit in the modern world seems to be connected with marketing promotion strategies. In this regard, some studies have found that profitability increased due to the marketing strategies employed than the effect of price, quality and place (Norman, (2010), Rust et al (2002)). Poor marketing promotion strategies with efficient marketing scarcities can be changed into the presence of both goods and services. The influence of marketing on profitability of an organization is thus evident. Marketing promotion strategies have been well implemented and would be profitable to organizations hence it worth to argue that marketing can influence profitability of an organization (MCPc earthy and Perrault 1993). Marketing involves some components such as marketing penetration which means attempting to increase sales of a firm's present products in its present markets which ultimately improves profit of the organization Of course, in some instances through a more aggressive marketing mix (Terry et al 1982). In addition (Palmer 2001) argued that marketing creates more profit in the developed organizations because these organizations invest much in the marketing of their goods and services. He adds that a large part of the growth in the service sector during the recent years has reflected the buoyancy of the manufacturing sector. Organizations such as coca cola company Nairobi branch have to market programmers for realization of the present profit. Some studies indicate that marketing promotion is stimulated by royal customers, who keep on maintaining their stance on using the same product or services irrespective of presence of new services (Haskell et al 1994). The importance of marketing promotion remains prudent in the profitability of an organization. (Zenithal et al 1993, 1985). The summary of relationship between marketing promotion and organization profitability lies on the main objective of marketing promotion process, which is discovering the needs of marketing prospective consumer, marketing does not stop at discovering prospective customers, it must concentrate its efforts on certain needs of specific group of potential consumers BARCO wits et al (1992).

2.2.2 Methods of marketing promotion on organization profitability.

Advertising takes up a significant portion of a company's budget allocated towards marketing promotion, it includes the development and paid delivery, brand or product messages through media. Companies usually have an internal advertisement department that designs and develops ads or they work for an advertising firm, who specialize in the advertising process. Since you pay for ads placement in the media such as television, radio, newspaper and magazines you generally have more control over the messages than you do through some other promotional methods (Saleemi, 2009). Public relations can also be reviewed as a method of marketing promotion that enhances the profitability of an organization. Maintaining goodwill with the public is an important long-term strategy for both small and larger organizations. Variety of public relation tactics are used to reach out customers through unpaid media messages. Press releases are one of the most common and routine of public relation tactics. This is when a company sends an overview of a major change or event product launch or other news reports and newsletters are other common public relation tools. A general objective of public relation is to keep your brand in front of people even beyond paid ads. The challenge is you cannot always control the public relation messages, are delivered (Neil kokemuller, 2007). Selling is another method of marketing promotion that enhances the organization's profitability. While a business typically engages in some level of advertisement and public relation the use of personal selling tactics varies considerably. Some small businesses do not employ active sales associates based on the small scale products or services they sell. Companies with big-ticket items, such as electronics and appliances but mostly coca cola company Nairobi branch associates to stress the benefits of products to customers and to overcome their concerns. Selling is one of the most active and interactive forms of marketing promotion. The key to profitability is marketing (Duncan (2005)). The evolution of the internet and related technologies has given rise to digital and interactive method of marketing promotion. Email marketing promotion, online advertisement and mobile advertisement have all become common components of marketing promotion campaign. These methods after relatively affordable for small businesses offer direct connections to savvy consumers who spend significant time online. Social media portals such as Twitter, Facebook and YouTube also provide inexpensive ways to interact with customers in real time. Marketing promotion is described as the specific effort to encourage customer to tell others about their services Zeinthamlet Al 1995

2.2.3challenges of marketing promotion on organizational profitability.

Each and every company bears problems in exercising marketing promotion to verge into the common goal which is profit gaining.  The obvious challenge to most companies including the coca cola company Nairobi branch is lack of planning. Every company, large, small or medium has an established schedule they know when will allow their staff to go on vacation. They know when to pay their taxes, when to buy new products, but few companies; small and medium, have marketing promotion plans. It is vital to know which product or service should be advertised to encourage the sales or when they should do it. To create an effective marketing plan you will need to know when it's best to sell something (Ismail Ruiz, 2018). Securing enough budget is also a pressing challenge for marketing promotion globally and often getting more budget is easier said than done especially for small organizations that are not working with sizable nor flexible marketing spend. But to secure more money for your team might not be that complex.  Here is what you can do; the key to unlocking budget lies in being able to prove the road of marketing efforts.  According to our reports, organizations that can calculate Roe are more likely to receive a higher budget. Again success with inbound marketing also plays a large role in driving higher of the budget effective strategies obviously produce results and our data shows those who feel confident in their marketing strategy. Our inbound marketing is a long game. If you get off to a slow start you should not back off in fact you might consider doubling down (Lindsay Colwich, 2017). Generating traffic and leads was a top marketing challenge according to the 2017 state of inbound report. Clearly marketers are struggling with producing enough demand for their content.  And as year’s progress and competition stiffen, this will only become truer with so many options of platforms for marketers to publish their content and even more ways to promote it comes to creating content that produces enough traffic and leads to what marketers should do as themselves. Two questions are, are they truly creating high quality content the type of content people would pay for and do you know the type of content your audience actually wants?  Once you know you are creating the type of content your audience wants.  The focus shifts to promote in a way that may make the audience take notice more than ever before people become flooded with content consumers. Don’t have to use search engines to find answers instead articles fill their news feed via notifications (Inbound state report 2017).

2.4 literature critique

From the thoughts of Fisher ET Al (2006) that more labor at the store associated with substantially high sales in turn leads to the profitability of an organization. This is false as per my mind in that if the labor is increased in the sector of sales and marketing promotion, it will result in more expenses such as payment of salaries and wages, machine maintenance and cost of expansion which will in turn interfere with the profit of an organization. The key to profitability of an organization is marketing promotion as said by Duncan (2005). This is the fact that for an organization to expose the product to the market he should engage in promotion to make the customers familiar with the product being produced and this will increase the sales hence profit. To create an effective marketing promotion, planning is one of the challenges that are encountered during the process as said by Ismail Ruiz (2018). This is the fact that one is supposed to plan on how he is going to work out for marketing and also find out what is being demanded by the consumers for him to take total control over the market.

2.5 summaries

The relationship between marketing promotion and organizational profitability has been well documented and analyzed in prior research and has been a topic of major discussion for scholars. It is becoming increasingly apparent from the literature that marketers need to consider customers' level information when they generate a marketing promotion strategy for the organization.  In this article, the author developed a customer focused framework that uses marketing strategy with an overall objective of maximizing the profit of an organization.  Recent studies on marketing strategies have called for research that links product pricing, promotion and distribution standardization of overall performance of an organization towards profitability. More specifically, the firm sale, customer and performance. This research operationalizes the moderating effects of product homogeneity, competitive intensity and stage of product cycle and examines its relationship with organizational profitability. It is the first empirical research to personalize the above mentioned methods of marketing promotion with the moderating variables and the relationship with organizations profitability. Several suggestions for future research are offered to explore and harness this newly available evidence. According to the resources based view of the firm product, pricing, promotion and distribution standardization should directly influence organization profitability. This overall research shows that all the variables included in our study would have an impact on the organization profitability.

CHAPTER 3

3.1 introductions

This chapter will entail the following sections: research design, target population, data collection techniques and data analysis.

3.2 Research design

According to (Schindler (2003)), cross-sectional descriptive design aims to define a subject by creating a profile of marketing promotion in relation to company's profitability through collection of data and analyzing the frequencies of research variables.  The study adopted this survey design of cross-sectional descriptive. A survey was deemed appropriately to enable the researcher to make comparisons based on the relationship between marketing promotion and organizational profitability. Further research design was structured to investigate questions and parts of formal studies. Saunders ET al (2007) identified three main types of research designs. They include exploratory research, this is used in a situation where exploring is required as the name suggests. This method does not offer a final and conclusive solution to the existing problem. It is usually conducted to determine the nature of the problem. It only helps to have a better understanding of the problem (Brown 2006)

3.3 Target population

Population refers to an entire group of individuals having common characteristics that can be observed and measured (in 2003). Also population is a complete set of items that share at least one property in common that is the subject of statistical analysis (vans 2001). According to current study the population comprises the management and staff of coca cola Company Nairobi branch. According to statistical analysis of this company in the year 2002 they had a control of 2m to 8m of the market sections including other subsections of this branch of coca cola Company Nairobi branch. The study was successfully covered in this company.

3.4 Data collection technique

The study used primary data that was collected through a personal administered questionnaire containing closed and open questions. The questionnaire was selected according to the project topic of impact of marketing promotion on organizational profitability and administered through drop and pick methods. Questionnaire as the data collection method of choice was favorable and administered and also provided a relatively simple and straight forward approach to the study of impact of marketing promotion on organizational profitability in coca cola Company Nairobi branch since they were direct communication with the management and have in-depth knowledge on marketing promotion strategy to organizational profitability. The questionnaires were designed in likert scale format. The researchers conducted a pretest on the questionnaires to ensure the validity of the instrument. The questionnaire contained at least two sections whereby the first section was a direct question and the second section was to give clarity as to why the first answer was given.

3.5 Data analysis

In research, measure comes before analysis and the process of moving from one to the other is often complicated. As per (Bursting, 1999) mind the variables often are measured at different levels. Marketing promotion may be measured at different levels. Staff, management and even from the market owners. The unit of measurement may be simple to determine; issues related to the unit of analysis are not as straightforward. Here the researcher must determine the appropriate way to prepare data for use in statistical analysis (Adler, 1991). The unit of analysis is the level at which data are used to represent one data point in an analysis. This is a complicated issue because often the data are at different levels, and the research design and the assumption of the analysis may demand an analysis unit that is different from the measurements unit. The unit of analysis chosen has consequences for research design, the number of participants and the confidence we can place in the results. For this study, the researcher is interested in marketing promotion in relation to the profitability of the organization which is the coca cola Company Nairobi branch.

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