Chapter one

Introduction

1.1 Background of the study

Organizations have to communicate with their existing and prospective customers about the new

development in the organization. This, indeed, is a phenomenal task in Nigerian market

environment due to their characteristic nature which is further sum up by the notion of Nigeria’s

economic, demographic, social, political, legal, religious, cultural and environmental forces.

Marketing communication is very important and at the same time challenging in the

organization. The marketing communication mix elements have become important players in the

life of any businesses be it small, medium or large. They help move market offerings (goods,

services and ideas) from manufacturers/sellers to consumers and build and maintain relationships

with customers, prospects and other stakeholders of the company, (Odunlami & Ogunsiji, 2011).

Nowadays, in an era where the word integration is used to express a variety of marketing and

communication-related activities, where corporate marketing is emerging as the next important

development and where relationship marketing is the preferred paradigm, marketing

communications now need to move beyond the product information model and become an

integral part of an organization’s overall communications and relationship management strategy

(Gronroos, 2004). The holistic marketing approach for services requires external marketing

which deals with the interaction of the company as a whole with the customers in terms of the

company’s product, price, distribution channels, and promotional activities, as well as with other

stakeholders (Lancaster & Reynolds, 2012).

To Fill (2005), marketing communications should be an audience-centred activity. In this sense,

it is important that messages be based on a firm’s understanding of both the needs and the

1
environment of the audience. Marketers have access to several forms of communication,

referred to collectively as the marketing communication mix. The mix elements include:

advertising, personal contact, publicity and public relations, sales promotion, instrumental

material and corporate design (Lovelock & Wirtz, 2010).

Thus, sales promotion is the main target of this study. The purpose of sales promotion is to

motivate the customers to immediately purchase a particular product hence enhancing its sales.

Notably, previous studies on the effectiveness of consumer sales promotion have focused on

monetary sales promotional tools (Dhar and Hoch 2011). However, in practice, both monetary

and non-monetary sales promotional tools are used widely. Even though there are important

differences between these two types: monetary promotional tools (e.g. shelf-price discounts,

coupons, rebates and price packs) tend to provide fairly immediate rewards to the consumer and

they are transactional in character; while non-monetary promotional tools (e.g. sweepstakes, free

gifts and loyalty programs) which tend to involve delayed rewards but are more relationship-

based. Hence, in assessing the effectiveness of sales promotions activities in an organization, it is

necessary to look at and ascertain the various sales promotional tools (Dhar and Hoch (2011).

Profitability on the other hand is a measure of organizational efficiency and effectiveness, it is an

element of an organizational performance which is describe as the totality of organization

goodness, a sum of such elements as production, cost performance, turnover, quality of output,

efficiency and the like (Katz and Kahn, 2009). It is the ability of an organization to achieve its

objectives and meet the needs of its various stakeholders (Khandwalla, 2012). Sales promotion

can promote organization effectiveness through increase in profitability from higher sales. Okoli

(2011) explains that the essence of setting up a business organization is to make profit. Without

2
profit, a business is bound to fail. Loudon and Bitta (2002) opined that sales promotion plays a

significant effect on decisions which help in achieving the organizational objectives.

However, in a free-market system such as Nigeria, businesses use promotional methods to

communicate information about itself and its products to consumers and industrial buyers

(Akande 2004). Hence, it would not be surprising if Nigerian Bakery industries will typically

adopt sale promotion as one of their strategic alternatives in their attempt to balance the three

goals of global efficiencies, multinational flexibility, and worldwide learning (Griffin & Pustay,

2007). However, the question remains as to whether; these goals would be achieved when sales

promotions are used as a tool in achieving higher financial performance and profitability in

Burutai Bakery industry of Damaturu yobe state. Hence, this study is therefore designed in an

attempt to examine the impact of Sales promotion on the profitability of Bakery industries in

Nigeria with reference to Burutai Bakery industry in Damaturu yobe state.

1.2 Statement of the Problem

The growing managerial importance of sales promotion has generated a great deal of research on

how sales promotion affects profitability. In Nigeria, sales promotions expenditures by various

companies if sum up is estimated to be in millions of Naira and the emphasis on sales promotion

activities by the various industry players continue to increase year on year. Although several

sales promotions researches are been conducted each year by bakery industries, promotional

managers are frequently confronted with the challenge of defending the question of the impact of

sales Promotions activities on the profitability of their firms (Manalel and Zacharias, 2007).

3
However, available literature search and review indicate that, there is little or no direct study

designed specifically to deal with sales promotion and organizational performance in Nigerian

Bakery industries. To date, majority of empirical studies such as researches conducted by

(Akanbi, & Ajagbe, 2011: Fill, and Kotler 2005) were all on different scope and area of study.

This therefore, tends to create a seeming gap in academic literature which is needed to be filled.

This study is therefore design to fill the existing gap in the literature by finding answers to some

baffling research questions as to whether there is a relationship between sales promotion and

organizational profitability performance with special reference to to Burutai Bakery industry in

Damaturu yobe state.

1.3 Objectives of the Study

The main or the fundamental objectives of this study is to examine the impact of sales

promotional on the profitability of Bakery industries with reference to Burutai Bakery industry in

Damaturu Yobe state. However, the specific objectives are:

I. To examine the impact of consumer sales promotion on the profitability

performance in Burutai Bakery industry of Damaturu Yobe state.

II. To investigate the impact of trade promotion on the profitability performance in

Burutai Bakery industry of Damaturu Yobe state.

III. To evaluate the impact of sales force promotion on the profitability performance

in Burutai Bakery industry of Damaturu Yobe state.

1.4 Research Questions

In an attempt to achieve the above research objectives, this study seeks to find answers to the

following research questions.

4
 I. Does sales promotion have any impact on the profitability performance in Burutai

Bakery industry of Damaturu Yobe state?

II. Does trade promotion have any impact on the profitability performance in Burutai

Bakery industry of Damaturu Yobe state?

III. Is there any positive effect of sales force promotion on the profitability

performance in Burutai Bakery industry of Damaturu Yobe state?

1.5 Scope and Limitations of the Study

This study will mainly focus on evaluating the impact of sales promotional on the profitability of

Bakery industries with reference to Burutai Bakery industry in Damaturu Yobe state. Therefore,

the area coverage of this study is the Burutai Bakery industry in Damaturu Yobe state. Hence

discussions in this research work shall be made only within the scope of the effect of sales

promotion on the profitability of bakery industry in Damaturu Yobe state for the period of two

years (2022-20203), as justify base on convenient. As such this study will be concentrating

mainly on the management key distributors and the staff (both senior and junior) of the bakery

industry Damaturu from which all required information will be sourced.

1.6 Significance of the Study

With limited literatures on this subject matter, the study on impact of sales promotion on the

profitability of Bakery industries with reference to Burutai Bakery industry in Damaturu Yobe

state becomes necessary. However this study will significantly contribute and will benefit the

following people in following ways:

I. To the Managers of Burutai Bakery Industry: As presented in the background

statement, many managers particularly those with less appreciation for marketing

continue to challenge the excessive budget expenditures in the area of sales

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 promotion. Hence the findings of this study will help to provide a solid reference

point for many marketing managers to defend allocations made to sales promotion

activities.

II. To the Bakery Industry: The findings of this study will enable the industry to

uncover some other various ways in increasing their performance in terms of

increase in sales/turn-over as well as profitability.

III. To the Nigeria Economy: The contribution of this study to the economy though

arguable can be seen in the adoption of promotional tools that create value for

customers. Since the primary objective of every sales promotion to influence sales

and trial of new products, it is expected that increased sales will trickle down into

profits “ceteris paribus”. By extension, government generates revenues from

taxation.

IV. To The Government: The finding of this study will contribute to the pooled

information needed by the government in making relevant economic policies of

the country.

V. To Students and Researchers: It could also serve as a good source of reference

to other business students who might consults it for academic purpose, as the

contribution of this study to academia is also not in doubt as it will provides a

good premise for future research. It can also add to existing literature on sales

promotion and its effects on firm profitability.

VI. To The General Public: This study will be useful in sensitizing the generality of

Nigerian intellectuals, civil societies and all concern individuals within the case

6
 study on the effects and impact of sales promotion on the profitability of Burutai

Bakery industry Damaturu Yobe state.

1.7 Definition of key Terms

In order to improve the quality of this study and provide a detail understanding to the users of

this research information, the following key terms are briefly defined.

I. Sales promotion: This is an initiative undertaken by organizations to promote,

increase in sales and usage of a product or services. The purpose of sales

promotion is to motivate the customers to immediately purchase a particular

product hence enhancing its sales.

II. Trade Promotion: A marketing activities that are executed in retail between two

partners. It is a marketing strategy aim at increasing demands for products in a

retail store based on special pricing, display fixture and demonstration as well as

value added bonuses.

III. Profitability: This is the ability of a company to use its resources to generate

revenues in excess of its expenses.

IV. Firm Performance: Firm performance implies the organizational performance

including the general functioning of all its units, performance of its employees

and the outcomes of their work in total.

V. Cetris-Paribus: As use in this study this is an economic term, meaning other

things been equal.

VI. Sales force promotion: This is a strategy design to motivate the sales force and

its selling effort more effective

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 Chapter Two

Literature Review

2.0 Introduction

This chapter reviews various relevant literatures relating to the impact of sales promotion on the

profitability of Bakery industries in Nigeria. This is undertaken in order to provide a theoretical

background to the study and to be acquainted with the subject matter of the study. The chapter is

divided into parts beginning with this introduction. The second part is the conceptual issues

which deals with the definitions of the basic concepts related to the subject matter. The third part

is the review of empirical studies that were previously carried out by other researchers on the

subject matter, while the last part presents the theoretical framework that gives support to this

work. Hence From the review of the literature the researcher will be able to identify the existing

gap in the literature, thereby directing the study toward filling this identified gap.

2.1 Conceptual Literature

Here, the general concept of sales promotion and its impact on the profitability of Bakery

industries in Nigeria will be discussed, the purpose of which is to give readers an insight of what

sales promotion is all about, it tools and strategies and also to explore some of the relationship

between sales promotional activities and sales performance of bakery industries in Nigeria as

well as to examine whether this sales promotional tools and activities has significant impact on

the profitability of the Nigerian Bakery industries.

2.1.1 The Concept of Sales Promotion

The power of sales promotion at influencing sales and customer's patronage has been

acknowledged in the literature of marketing and sales management by number of academic

scholars in the field of management. Notably Hardie (2010) explains that sales promotion is a

8
marketing strategy that gives a short-term inducement of value offered to arouse interest in

buying a good or service. It is offered to intermediaries as well as consumers inform of coupons,

rebates samples and sweepstakes etc. Foskett (2011) argues that sales promotions cannot the sole

basis for campaign because gains are often temporary and sales drop off when the deal ends so

that advertisement is often used to convert the customer who tried the product because of sales

promotion into a long-term buyer.

Achumba (2012) defined sales promotion as those marketing activities, other than personal

selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness,

such displays, shows and exposition, and demonstration. Sales promotion is one of the ways used

by firms to communicate with intended target audience. Sales promotion is unique in that it

offers an extra incentive for action (Adrian, 2010). It also includes a combination of all

marketing devices or techniques, special reductions, trade gift, premium offers, contests, and

other such short-lived promotional activities directed towards consumers and retailers, aimed at

motivating sales. In other words, it encourages immediate purchases. Blanchard (2013) in his

definition also opine that view sales promotion as the array of short-term promotional techniques

that marketers use to stimulate an immediate purchase Likewise, sales promotion can be

described as materials that act as a direct inducement, offering added value, or incentive for the

product, to resellers’ sales persons or consumers.

In similar vein, Nwankwo (2009) observes that sales promotion as those marketing activities

other than personal selling, advertising and publicity, which stimulate consumer purchasing and

dealer effectiveness, such as display, shows and exposition, demonstrations and various

nonrecurring selling efforts not in the ordinary routine. Equally, the International Chamber of

Commerce (ICC) defines sales promotion as “Marketing devices and techniques which are used

9
to make goods and services more attractive by providing some additional benefit, whether in

cash or in kind, or the expectation of such a benefit. However, according to Manale, Jose and

Zacharias (2010), Sales promotion has become a vital tool for marketers and its importance has

been increasing significantly over the years.

Finally Kothari (2011) noted that, when organizing sales promotion, firms can direct sales

promotion to ultimate consumers, that is, Consumer-oriented sales promotion to support a

company’s advertising and personal selling. On the other hand firms can also direct their sales

promotion to traders like the wholesalers, retailers or distributors. This can be done by giving the

traders allowances and discounts. They can also carry out cooperative advertising whereby

manufacturer pays a percentage of the retailers’ local advertising expenses for advertising the

manufacturer’s products and lastly, firms can train distributor sales forces to increase their

performance

Therefore, based on the above literature definitions, it is reasonable to conclude that sales

promotion is a marketing strategies that is designed to attract a customer to take a specific action

such as creating a purchase that usually occur for adequate period of time to help create a sense

of necessity. In other word sales promotion is promotional activities other than personal selling,

advertising, publicity/public relation, and direct marketing that stimulate interest, trial, or

purchase by end users (final consumers)

2.1.2 Types of Sales Promotion

Boddewyn & Smith (2012) essentially categorized sales promotions into three types depending

on the initiator and the target of the promotion. These includes:

a. Consumer promotions (premiums, gifts, competitions and prizes etc)

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 b. Trade promotions (point-of-sale materials, free pens and special terms, diaries,

competition prizes, etc)

c. Sales force and retail promortion (firms can use train distributor sales forces to increase

their performance)

A. Consumer Sales promotion

According to Bamiduro, (2011), consumer promotion are those efforts aimed at influencing the

trial consumer. They are promotions offered by manufacturers directly to consumers, such

promotions are designed to motivate consumers to engage in an immediate. Consumer's

promotion techniques can be used to draw people into a particular store, to induce new product

or to promote established products. To accomplish this task, markets have to develop quite a

variety of sales promotion techniques or tools.

B. Trade promotions

Trade promotions according to Bamiduro, (2011), are promotions offered by manufacturers to

retailers or other trade entities. They are the aspect where the manufacturer is concerned not only

with promoting the product to the consumers but also with wether the product is on the retailers’

shelves when the customers go to the store to buy (Osuala, 2009). Retailer promotion and

consumer promotion are directed toward the consumers by retailers and manufacturers,

respectively. However, the manufacturers direct trade promotion to the retailers.

C. Sales Force and Retailer Promotions

Retailer promotions are promotions offered by retailers to consumers. These include allowances

and discounts, factory-sponsored in-store demonstration, trade shows, sales contests, cooperative

advertising, etc While lastly sales force promotion which is an aspect of sales promotion that has

to do with firms training distributor sales forces to increase their performance.

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2.1.3 Sales Promotional Tools

Previous studies on the effectiveness of consumer sales promotion have focused on monetary

sales promotional tools (Dhar and Hoch 2011). However, in practice, both monetary and non-

monetary sales promotional tools are used widely. Even though there are important differences

between these two types: monetary promotional tools (e.g. shelf-price discounts, coupons,

rebates and price packs) which tend to provide fairly immediate rewards to the consumer and

they are transactional in character; non-monetary promotional tools (e.g. sweepstakes, free gifts

and loyalty programmes) that tend to involve delayed rewards and are more relationship-based.

However, Dhar and Hoch (2011) opined that in assessing the effectiveness of sales promotions

activities in an organization, it is necessary to look at the various sales promotional tools which

include the following:

a. Coupon

In most cases, one method of sales promotion featuring a certificate that entitles the bearer to

stated savings off a product’s regular price is called in promotional mix as “couponing”. It is

argued that, this may be utilized to motivate customers to try new product, to attract customers

away from competitors, or to induce current customers to buy more of a product (Ricky2013. In

essence, the sales promotional technique of “couponing” ensures development of brand loyalty.

In that, as a technique, it ingeniously attracts customers from brand competitors. By so doing it

induces current customers to buy more. This invariably develops customers’ recognition of,

preference for and insistence on buying the product with same brand name.

b. Point-of-Purchase Displays

In order to draw attention of many customers to a particular product’s brand, many business

organizations employ the use of “point-of-purchase” (POP) technique. This is a type of sales

12
promotional tool in which a “product display” is so located in a retail store so as to encourage

consumers to buy the product (Ricky 2013).

. More important, in this day of advancement in technology, this can be equally achieved with

the use of the internet. Here, the Retail outlet can open a web site where prospective customers

can view new displays from time to time. The implication here is that, customers do not

necessarily have to personally visit retail stores before they can have access to products being

displayed for the first or continuous times.

c. Premium

This is a method of sales promotion in which some items are offered free or at a bargain price to

customers in return for buying a specified product. This technique therefore offers a product for

free or at a lower price to induce the customers to buy. Mostly, the effective premiums are

closely tied to the product or brand being sold (Blanchard, 2012). In some instances, free

samples of the product are offered free to customers in order to enable them try the product.

They may be given out at local retail outlets. It must however be noted that, “premiums” may not

work as well as originally hoped, since some customers may switch to a competitor’s brand to

get the premiums that company is offering”.

d. Trade shows and Sponsorships

Trade show is a variant of sales promotion, and periodically, industries sponsor trade shows for

their members and customers (Griffin 2012). They therefore promote products to marketing

intermediaries. More importantly, trade shows are relatively inexpensive and are very effective,

since the buyer comes to the seller already interested in a given type of product, as a result

international trade shows are becoming more important. From the above discussion, it is

recognized that there are many sales promotional techniques at the disposal of the organizations.

13
However, each comes with its advantages and disadvantages. It is therefore incumbent on the

organization in question to take due diligence when it comes to the issue of which sales

promotional technique to use.

It must be emphasized moreover that, apart from the above mentioned techniques, one can also

employ sweepstakes, contests and loyalty programs (Ricky and Blanchard, 2013). These are all

are sales promotional tools that can have effect on organizational performance be it financial,

market share or shareholder returns (Richard 2009).

2.1.4 Techniques of Sales Promotion

Onyejiaku, Nwanneka (2010) identify the following as the most common type of sales

promotional techniques used across all industries;

a. Discounts - Trade/Consumer: This is the most common technique for sales promotions

because it actually works. If there is 5% discount on a product for the consumers, then it is

known as the consumer’s discount. However, if there is a 5% discount to the dealer when he is

purchasing from the company, it is known as trade discount. The dealers know the importance of

achieving sales volume hence the pass on discounts to customers whenever they receive trade

discounts.

b. Gifting - This is another way to increase the sales of the products because customers have

anticipation that they might win a gift from the store. This is normally done to promote your

store during festival time or when there is huge walk in expected is Gifting.

c. Financing - It is a combination of various factors. Companies with huge resources generally

act as financers. They allow customers to purchase a product on EMAILor on different financing

option. Such financing helps the dealer to liquidate the product faster and also helps the customer

in making purchasing decisions.

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d. Sampling - It is an excellent way to introduce your product in the market and at the same time

to increase the awareness of the product.

e. Bundling - This is when you put a combination of products on sale for the same price. The

disadvantage of bundling is that customer might think one of the products is of poor quality.

f. Refunds - As the name suggests, refunds are a marketing tactic when you get a partial amount

refunded to you based on an action you have taken.

g. Exchange offer - in exchange offer, you can exchange an old product for a new product. You

will receive a discount based on the valuation of your old product. Sales promotions are vital for

companies to increase sales and project their brand names. When used moderately with careful

planning, sales promotion increases sales, even after the promotions period is completed. When

sales promotion is overdosed, the emotion that surrounds them disappears.

2.1.5 Objectives of Sales Promotion

According to Jain, (2014) the most important objective of sales promotion is to bring about a

change in the demand prototype of products and services. Essentially, sales promotion has three

precise objectives. First, it is meant to give significant marketing information to the prospective

buyers. The second objective is to induce and influence the potential buyers through convincing

measures. Thirdly, sales promotion is meant to operate as an influential tool of competition. The

specific objectives of sales promotion according to Jain, (2014) are:

i. Add to the stock of the dealers: Dealers like wholesalers and retailers usually deal

with a multiplicity of goods. Their selling activity becomes easier when the

manufacturer supplements their efforts by sales promotion measures. When a product

or service is well supported by sales promotion, dealers are automatically induced to

have more of such items.

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ii. Attract new customers: Sales promotion measures also play an important role in

attracting new customers for an organization. Typically, new customers are those

persons that are won away from other firms. Samples, gifts, prizes, etc. are used to

encourage consumers to try a new brand or shift their patronage to new dealers.

iii. Helps the firm to remain competitive: Most of the companies undertake sales

promotion activities in order to remain in the competitive market. Therefore, in the

modern competitive world no firm can escape the responsibility of undertaking sales

promotion activities.

iv. Increase sales in off-seasons: Many products like air-coolers, fans, refrigerators, air

conditioners, cold drinks, room heaters, etc. have seasonal demand. Manufacturers

and dealers dealing with such type of goods make every effort to maintain a stable

demand throughout the year. In other words, firms try to encourage the purchase of

such goods in off-seasons also. That is the main reason behind discounts and

offseason price reductions of such items in the market during slack seasons.

v. Induce existing customers to buy more: Sales promotion devices are most often

used to induce the existing customers of a firm to buy more. Product development,

offering three products at the cost of two, discount coupons, are some of the sales

promotion devices used by firms to motivate the existing buyers to buy more of a

specific product.

vi. Introduce new products or services: Sales promotion is often used to motivate

prospective consumers to try new products and services. Dealers are also induced to

introduce new products and services in the market. More often than not, free samples

are provided through dealers during such introduction. Likewise, discounts in cash or

16
 goods may also be offered to dealers to stock new products or deal with new services.

Free samples, trade discounts, cash discounts are basically sales promotion measures

2.2.6 Measuring Performance and Profitability

Measuring performance under this perspective according to Connolly, (2012) poses that a firm is

as efficient as its ability to respond to its stakeholder’s requirements. So, to measure firm

performance it is necessary to identify the firm’s stakeholders and its demands. Hence based on a

wide review on stakeholder’s management, present a model to define the main stakeholders of a

firm. They do not state, but rather suggest that investors, employees, customers, community and

government are the relevant parts that a firm must manage. So, high performing firms are the

ones attending the demands of investors, customers, employees, government and the society.

However, financial performance is a way to satisfy investors and can be represented by

profitability, growth and market value (Venkatraman & Ramanujam, 2011). Market value and

profitability measure a firms` future and past ability to generate returns (Glick, Waschburn &

Miller, 2010), while growth is the increase in firm’s size (Whetten, 2013). Therefore, if we

consider performance as a manifestation of competitive advantage, it is possible to invoke a

conceptual reason to use growth and profitability simultaneously. Peteraf and Barney, (2013)

propose that an organization has a competitive advantage when it can create more economic

value than the marginal competitors of the same product market.

Economic value is defined as the difference between the customers’ willingness-to-pay and the

economic cost of the company. Price divides the economic value in the economic profit

appropriated by the company - difference between economic cost and price - and in the customer

surplus - difference between willingness-to-pay and price (Barney & Clark, 2012). Hence, if the

company has a higher economic profit than its competitors, it will experience higher

17
profitability. On the other hand, if the customer surplus is higher when compared with the

market, customers will prefer the firm, what will manifest in higher growth rates. In this sense,

growth is a complementary dimension to profitability.

2.1.7 Impact of Sales Promotion on Organizational Performance and Profitability

The effect that sales promotions have on the organizational performance and profitability

according to Odunlami and Ogunsiji (2011) are:

i. Building brand loyalty: Sales promotion helps to build brand loyalty by giving the

seller the chance to draw a loyal and profitable set of customers which provides

sellers some protections from competition and greater control in planning their

marketing mix (Shira, 2013)

ii. Encouraging off season buying: Sales promotion has also encouraged off season

buying especially during the festive periods, people tend to buy more of a particular

product because of the added value, compared to normal season.

iii. Encouraging purchase of large size unit: Sales promotion consists of diverse

collection of incentive tools, mostly short term designed to stimulate quicker or

greater purchase of products or service by consumer e.g. the use of premiums,

product warranties etc. stimulate consumer purchase in larger quantities

(Rotimosho,2003 as cited in Odunlami & Ogunsiji, 2011)

iv. Generating trials among non-users: Trials among non-users of a product are generated

through invitation of potential purchasers to try the product without cost or little cost

with the hope that they will buy the product.

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 v. Influencing retailers to carry new items and higher level of record: Sales

promotion persuades retailers to give shelf freedom to original products. Companies

provide retailers with financial motivation to stock novel products.

Categorically, sales promotion has been seen to Centre on customer relationship management,

free gifts, free sample, and price discount. If an organization successfully gear sales promotion

techniques, it will not only push large purchase but it will also boost the sales performance as

well as the profitability of a company, consistently leading to the realization of the declared

objectives.

2.1.8 Relationship between Sales Promotion and Organization Effectiveness

The relationship between sales promotion and organizational effectiveness is controversial. The

nature of the impact is inconclusive. While some authors believed that the impact of sales

promotion on organizational performance (profitability, efficiency and effectiveness) is minimal

and non-significant, others believe that the impact is high and significant (Hanssens and Silva-

Risso, 2012).

However, it has been established in literature by some authors that there is a nexus between sales

promotion and organization effectiveness. Syeda, (2012), opined that the following sales

promotional types such as: reduced prices and free offers, premium offers of all kind, vouchers

and samples, the supply of trading tramples, promotions which are linked with charity, and

furthermore promotions related to prize of different kinds, including some other incentive

programs employed by companies affect profitability through motivating consumer’s to make an

immediate purchase. Similarly, Ailawadi and Neslin (2011) following a survey of the recent

empirical literature on this subject matter found that, with respect to the earlier contributions,

there is more agreement about the positive effect of sales promotion on organization

19
effectiveness. They established that consumer promotions motivate the consumers to purchase

larger amount and consume it faster; causing an increase in sales and ultimately profitability.

2.1.9 Models on the effects of Sales Promotion

There are very few models that explain cross-cultural consumer behavior but some models have

gained acceptance and are widely referred in the literature. The models regard culture as one of

the potent factors responsible for consumer behavior.

2.1.9.1 A-B-C-D model

Raju (2010) has developed a framework known as A-BC- D paradigm to study and understand

consumer behavior. The acronym A-B-C-D stands for the four stages of the paradigm namely

access, buying behavior, consumption characteristics and disposal. Access is the first step of the

paradigm which refers to providing the physical and economic access of the products and

services to consumers within a culture. The buying behavior refers to all the factors like

perceptions, attitudes and consumer responses having effect on the decision making and the

choices available within a culture. The third stage which is consumption characteristics refers to

the type of products and services consumed within a culture and depend on the cultural

orientation, social class, reference group and patterns of urban versus rural sector consumption.

The last stage of the paradigm disposal refers to the resale, recycling and remanufacturing, social

and environmental considerations of product disposal. The customers world over are becoming

environmentally conscious and so marketers need to be socially and environmentally

responsible.

2.1.9.2 Manrai and Manrai model

Manrai and Manrai structure the cultural component of the person in terms of marketing

communications (sales promotion) act as a moderator of the effect of culture on consumer

20
behavior and can even influence the consumer attributes and processes, and the cultural

components of behavior in consumer behavior domains (Moiij, 2014). According to The Moiij

(2014) culture is influenced by the income and in turn gets influenced by the culture. The ‘who’

refers to what the people are. The components of ‘who’ are self-study of what a person thinks

who he is, his identity, image, attitudes and the lifestyle. The ‘how’ refers to the processes that

influence peoples’ thinking, perception, learning and motivation. The self is shaped by culture

and in turn, it strongly influences social behavior through individual’s perceptions, evaluations

and values. The self is the intermediary variable for understanding behavior.

2.1.9.3 Luna and Gupta model

Luna and Gupta (2009) in their model recognize the influence of cultural value systems on

behavior. Culture is manifested through values, heroes, rituals and symbols. Values are the core

of culture and it influences the consumer behavior. The term ‘heroes’ is refers to persons dead or

alive, real or imaginary, who are revered and prized in culture. In marketing, the products are

associated with heroes as they may influence the consumer behavior. Rituals involve

consumption that is important in consumer behavior. Symbols may be absent or their meaning

may be different in cultures. The consumers in order to define themselves indulge in symbolic

consumption. The consumer behavior constitutes of three elements-cognition, affect and

behavior. The cognition refers to the memory processes, affect refers to the attitude formation

process and the behavior includes the individual behavior and consumption patterns. Marketing

communications act as a moderator of the effect of culture on the consumer behavior and may

affect consumer behavior independently of culture

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2.2 Theoretical Framework.

This section of the literature review, is aimed at providing an insight on the theoretical

background on the concept of sales promotion and firm profitability. However the three theories

below are found to be relevant theories to this particular study. Among the three theories

highlighted below (Combination Theory, Congruency theory of Sales Promotion and planned

behavior theory) this study will anchor or adopt the planned behavior theory.

2.2.1 Combination Theory

This theory is anchored on the push and pull’s theories. Using push theory can increase sales by

creating incentives to wholesalers or retailers to sell more of the firm’s product. Dick (2017)

posits that in this method, discounts are offered to wholesalers or retailers who buy their product

in bulk. Giving them discount “pushes” them to buy more products at lower prices in order to

increase the money they make. In turn, they will “push” the company’s products to customers

because they will make a better return on them than on similar products supplied to them by their

competitors. The Pull theory is about trying to market directly to customers to increase their

demand for the firm’s product. Advertising is the key strategy. The theory goes that if you

increase the demand if your product by customers, they will in turn demand the product from

retailers, retailers will demand more of your product from wholesalers and wholesalers will

demand more products from you. In this way, increase your sales without decreasing the sale

value of your merchandise. The “push” is used to get products into the hands of retailers and

wholesalers while sales promotion dimensions and product tie-ins with other products are used

as a “pull” to get more people to want to buy the product. Grocery stores often use this tactic.

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2.2.2 Congruency theory and Sales Promotion

The basic principle of congruency theory is that changes in evaluation are always in the direction

that increases congruity with the existing frame of reference (Osgood and Tannenbaum, 1995).

In other words, people have a natural preference for consistent information. The principle has

been examined in many marketing contexts, including studies of brand extensions and

advertising appeals. Applying the congruity principle to sales promotions, it is expected that

sales promotions will be more effective when they provide benefits that are compatible with the

benefits sought from the promoted product. For example, Dowling and Uncles (1997) suggested

the effectiveness of loyalty programs is enhanced if programme benefits directly support the

value proposition of the brand. Roehm, (2002) went on to show that loyalty programs are indeed

more successful if they provide incentives that are compatible with the brand. Congruency

effects for consumer sales promotions were directly tested and confirmed by Chandon, (2000),

who showed that: monetary promotions are more effective for utilitarian products as they

provide more utilitarian benefits, which are compatible to those sought from utilitarian products;

and non-monetary promotions are more effective for hedonic products as they provide more

hedonic benefits, which are compatible to those sought from hedonic products. For example,

price cuts are more effective than free gifts for influencing brand choice of laundry detergent (i.e.

a utilitarian product), whereas sweepstakes are more effective than price cuts for influencing

brand choice of chocolates (i.e. a hedonic product). However, it is noted that there are other

factors that may have an impact on the congruency effects, including the product life cycle,

purchases situations and consumer demographics. Another possible factor, and the focus of this

study, is culture at the ethnic-group level.

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2.2.3 Planned Behavior Theory

The relevant theory of this study is the Planned Behavior Theory. According to the Planned

Behavior Theory, behavior may be modified by sales promotion stimuli, which change beliefs,

attitudes and eventually intentions and behavior. If the intervention influences customers, it

changes intentions and eventually changes the behavior.

2.3 Empirical Reviews

This part of the chapter focuses on examining literatures pertinent to the objectives of this study.

However, the following are some of the relevant and related empirical studies done so far with

respect to this subject matter.

Mbogo (2013) carried out a study on influence of promotion mix strategies on the growth of

customers of Pathologists Lancet Kenya. The objectives of the study is to determine the

influence of advertising, sales promotion, public relation, personal selling and direct marketing

on the growth of customers of Pathologists Lancet Kenya. The study adopted a descriptive

research design. The target population was clustered into 4 regions of Nairobi Country (Nairobi

East, West North and South) on Pathologists Lancet Kenya’s customers. Ten respondents were

chosen from each region. Forty customers were sampled and semi-structure questionnaire

administered. Data analysis involved the use of descriptive statistics: mean, standard deviation,

frequency and percentages. Pearson correlation and multiple linear regression analysis were done

to test the relationship between promotion and customer growth. The findings reveal that

Pathologists Lancet Kenya as a brand is associated with product quality and cheap price that both

adds value and satisfaction to its customers. The Company uses flyer and brochure, websites,

newspapers, television and radio to advertise in addition to several public relation, personal

selling and direct marketing. The study revealed that promotion strategies (advertising, sales

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promotion, public relations, personal selling and direct marketing) positively influence customer

growth. This study recommended that Pathologists Lancet Kenya should embrace the importance

of promoting their services in their businesses in order to survive in the dynamic business

environment and that the government should recognizes the importance of this sub-sector and

initiates legislation.

Festus, (2016), conducted a research on the impact of sales promotion on organizational

performance of Guinness Ghana Breweries Limited. The specific objectives include to; examine

sales promotional activities used by Guinness Ghana Brewery Limited (GGBL), examine the

relationship between sales promotion and financial performance of GGBL, examine the effect of

sales promotion on non-financial performance of GGBL and finally, identify challenges facing

sales promotion activities undertaken by GGBL. The study adopted a descriptive research

design. The population of the study was estimated at 865 (management, staff and key

distributors) out of which a sample of 160 was used (primary data). Questionnaire was used to

collect primary data whilst secondary data was taken from financial statements of GGBL from

1985 to 2014. The study found a positive and significant relationship between sales promotion

and profitability. Thus, 1 percent increase in sales promotion was associated with 0.44 percent

increase in sales turnover. There was however no significant relationship between sales

promotion and non-financial performance. The study recommended that management of GGBL

involves key distributors and supply chain members in sales promotional activities. Management

of GGBL also needs to integrate all promotional tools to ensure that all promotional goals are

achieved.

Gbolagade, Adesola, and Oyewale, (2013), conducted a study on the impact of marketing

strategy on business performance a study of selected small and medium enterprises (smes) in

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Oluyole local government, Ibadan, Nigeria. The survey research design method was used in this

study which involves using a self-design questionnaire in collecting data from one hundred and

three (103) respondents. The instrument used in this study is a close-ended questionnaire that

was designed by the researchers. Correlation coefficient and multiple regression analysis were

used to analyze the data with the aid of statistical package for social sciences (SPSS) version 20.

The results show that the independent variables (i.e Product, Promotion, Place, Price, Packaging

and After sales service) were significant joint predictors of business performance in term of

profitability, market share, return on investment, and expansion.(F(6, 97) = 14.040; R2 = 0.465;

P< .05). The independent variables jointly explained 46.5% of variance in business performance.

Subsequently, recommendation were made to SMEs operators to produce quality products;

charge competitive prices, position appropriately, use attractive package for the product, engage

in after sales service and provide other distinctive functional benefits to consumers. Nadeem,

Naveed, Muhammad and finally

Komal, (2013), carried out a study on the role of sales promotion on sales volume in the context

of fast moving consuming goods (FMCG) industry in Dera Ghazi Khan. The study adopted a

survey design. Structured Questionnaire is used to collect information from 120 respondents

through random sampling method. Data is analyzed with the help of SPSS. The result shows that

all sales promotion dimensions are independently and jointly predict sales volume, which implies

that premiums, bonus, have significant effect on sales volume. The study recommended that the

firm should take off bonus as well as other dimension premiums.

2.4 Summary of Literature and Research Gap

It is evident that most of the highlighted studies from the empirical review do not explicitly

address the effect of sales promotion on the profitability of bakery industries in Nigeria.

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Therefore a scarcity of literature in the area of this study exists. The few that have been

conducted have eluded criticism in the criteria, title, scope; methodology used hence the research

gaps in terms of literature.

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