TABLE OF CONTENT

S.No Title Name Page No.

1 Chapter 1 Introduction 2-26

2 Chapter 2 Review of Literature 27-40

3 Chapter 3 Research Methodology 41-42

4 Chapter 4 Data Analysis & Interpretation 43-53

5 Chapter 5 Conclusion & 54

Recommendation

6 References 55-56

CHAPTER 1
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 INTRODUCTION

The term 'Advertising' originates from the Latin word 'advertere' that means, "to turn the
mind towards". The dictionary meaning of the term advertising is "to give public notice or
to announce publicity". This suggests that advertising acts as a marketing vehicle and is
useful for drawing the attention of people (prospects) towards a specific
product/service/manufacturer.

DEFINITION OF ADVERTISING

Advertising is defined differently by different authorities and the institutions dealing with
the subject of advertising. Advertising can be defined as "any paid form of non-personal
presentation and promotion of ideas, goods or services by an identified sponsor." This
definition suggests the following features of advertising.
Firstly, advertisement is paid for by the sponsor/advertiser. Naturally, he exercises control
over the advertisement.
Secondly, advertising is non-personal selling. It is a medium of mass communication for
large scale selling.
Thirdly, advertising acts as important marketing tool for presentation and promotion of
ideas, goods and services. Finally, advertising needs the sponsor of the message known.
Advertising will be meaningless if the advertiser is not clearly identified.

FEATURES OF ADVERTISING

1. Advertising provides information: The basic purpose of advertising is to

provide information about products/services to prospective buyers. The details of
products such as features, uses, prices, benefits, manufacturer's name, and instructions
to be followed while using the product are given in the advertisements. The
advertising message and brand name are also given. The information supplied gives
education and guidance to consumers and facilitates correct selection of goods by
them.

2. Paid form of communication: The advertiser has to pay to the media for giving

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 publicity to his advertising message. He pays for the advertisement and naturally, he
decides the size, slogan, etc. given in the advertisement. Advertising is a form of paid
communication.

3. Non-personal presentation: Advertising is non-personal in character as against

salesmanship which is personal (face-to-face communication) in character. In
advertising, the message is given to all and not to one specific individual. This rule is
applicable to all advertising media including press. However even in advertising target
consumers or target market can be selected for making an advertising appeal.

4. Gives publicity to goods, services and ideas: Advertising is for giving

information to consumers: This information is always related to the features and
benefits of goods and services of different types. Advertising gives new ideas to
consumers as its contents are meaningful. The aim is to make the ideas popular and
thereby to promote sales. For example, advertising on family planning, family welfare,
and life insurance is useful for placing new ideas before the people.

5. Basically for persuasion: Advertising aims at persuasion of potential customers.

Advertising attracts attention towards a product, creates desire to have the same and
finally induces consumers to visit the market and purchase the same. Advertising has
psychological impact on consumers. It influences the buying decisions of consumers.

6. Target oriented: It is possible to make intensive advertising by selecting a specific

market or specific segment of consumers (e.g. children, housewives, etc.) for the
purpose of advertising. This selection of a specific market is called target market.
Advertising becomes effective and result oriented when it is target oriented. The waste
in advertising can be minimized through such target oriented advertising.

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7. An Art, Science and Profession: It is now universally accepted that advertising
is an art, science and a profession. It is an art, as it needs creativity for raising its
effectiveness. Advertising is a science as it has its principles and rules. Advertising is
now treated as a profession with its professional bodies and code of conduct for
members. Advertising agencies and space brokers function as professionals in the field
of advertising.

8. Important element in marketing mix: Advertising is an important element in

marketing mix. It supports the sales promotion efforts of the manufacturer and makes
positive contribution in sales promotion provided other elements in the marketing mix
are reasonably favorable. This is natural as advertising alone is not adequate for
promoting sales. Many companies now spend huge funds on advertising and public
relations.

9. Creativity- the essence of advertisinig: Advertising is a method of presenting a

product in an artistic, attractive and agreeable manner. This is possible through the element
of creativity, which is the essence of advertising. Creative people (professional) in the field
of advertising can introduce creativity. They introduce new 5 technique for introducing
creativity. Without creativity, advertising will a body without a soul.

ADVANTAGES OF ADVERTISING
The advantages of advertising can be divided into two main groups. One group denotes
benefits to manufactures and other group denotes benefit to consumers. Let us find out
how each of them is benefited by advertising. Benefits of Advertising to Manufacturers:

1. Large-scale production and marketing: Advertising is useful as a sales

promotion technique. It gives information to consumers and encourages them to
purchase more. Manufacturers expand their production base due to higher market
demand created through advertising.

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2. Introduction of new products: Advertising facilitates the introduction of new
products. Due to advertising, information about new products is given to the prospects.
This creates demand and the manufacturer is able to sell new products along with the
existing ones.

3. Creates new demand: Advertising spreads information and encourages consumers

to purchase new products. Such advertising leads to the creation of new demand.
Various concessions are offered to consumers in the initial period. This gives positive
response from the consumers. Thus, advertising creates new demand from non-users.

4. Facilitates effective personal selling: Advertising creates proper background

for personal selling. It gives advance information to the prospects. They visit the shop
in order to purchase a particular product, which they know through advertising media.
The job of a salesperson becomes easy as consumers develop affinity to specific
products. In brief, advertising supports and supplements personal selling.

5. Builds brand image: Manufacturers introduce branding for making their products
popular with distinct personality. The brands are made popular through advertising. As
a result, consumers develop loyalty towards a specific brand. Advertising builds brand
image and this develops consumer loyalty towards a specific brand.

6. Reduces cost of production: Advertising creates demand and promotes sales.

This enables a manufacturer to conduct production on a large scale. This leads to
reduction in the cost of production and distribution. As a result, the profit margin of the
manufacturer increases.

7. Facing competition: A manufacturer can face market competition effectively and

can make his products popular through advertising. He can remove misunderstanding
among consumers about his products through appropriate advertising.

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8. Sales promotion: A manufacturer can make his sales promotion campaign
successful by using the support of advertising.

9. Goodwill builder: A manufacturer can build up goodwill and good image in the
business world and also among the consumers through advertising. The social welfare
programmes and community service activities can be given wide publicity through
advertising. Even the progress of the Organization can be brought to the notice of the
public through advertising.

The essence of being in business by any business outfits is to produce for sales and profits.
In order to remain in business an organization must generate enough sales from its
products to cover operating costs and post reasonable profits. For many organizations,
sales estimate is the starting point in budgeting or profit. It is so because it must be
determined, in most cases, before production units could be arrived at while production
units will in turn affect material purchases. However, taking decision on sales is the most
difficult tasks facing many business executives. This is because it is difficult to predict,
estimate or determine with accuracy, potential customers’ demands as they are
uncontrollable factors external to an organization. Considering, therefore, the importance
of sales on business survival and the connection between customers and sales, it is
expedient for organizations to engage in programs that can influence consumers’ decision
to purchase its products. This is where advertising and brand management are relevant.
Advertising is a subset of promotion mix which is one of the 4ps in the marketing mix i.e.
product, price, place and promotion. As a promotional strategy, advertising serves as a
major tool in creating product awareness and condition the mind of a potential consumer
to take eventual purchase decision.

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The Advertising Practitioner Council of Nigeria (APCON) says “advertising is a form of
communication through mass media about product, services or ideas paid for by an
identified sponsor”. Since communication is transfer of idea, attitude, information, mood,
and so on from one person to another through a medium: it may be quite correct to define
advertising as a form of communication. This is because in advertising, persuasive
messages about the products, service or idea are made through a channel. This no doubt is
similar to the communication process of a source sending a message through a channel to
a receiver for a feedback.

In today's fiercely competitive business landscape, where companies vie for consumer
attention amidst a barrage of marketing messages, advertising emerges as a crucial
instrument for organizations to carve out a distinctive identity, drive sales, and enhance
profitability. Advertising serves as the conduit through which brands communicate their

value proposition, differentiate themselves from competitors, and cultivate relationships

with consumers. However, while the merits of advertising are widely acknowledged, the
precise impact it exerts on sales and profitability remains a subject of considerable debate
and scrutiny.

The relationship between advertising expenditure and business performance is

multifaceted, influenced by a myriad of factors ranging from market dynamics and
consumer behavior to industry-specific characteristics and technological advancements.
Understanding this intricate interplay is essential for companies seeking to optimize their
advertising strategies and maximize the return on their investment.

At its core, advertising is intended to stimulate demand, persuade consumers to make

purchasing decisions, and ultimately drive revenue growth. By creating awareness,
generating interest, and instilling desire for a product or service, advertising endeavors to
propel consumers along the purchase funnel, culminating in transactions that contribute to
top-line revenue. However, the effectiveness of advertising in translating consumer
attention into actual sales is contingent upon numerous variables, including the relevance
of the message, the persuasiveness of the creative execution, and the strategic allocation of
media resources.

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Moreover, while advertising can exert a direct impact on sales, its influence on
profitability is subject to additional considerations. For instance, advertising campaigns
that focus solely on driving short-term sales volume may inadvertently erode profit
margins if they lead to unsustainable pricing pressures or excessive promotional
expenditures. Conversely, investments in brand-building initiatives aimed at fostering
long-term customer loyalty and premium pricing may yield more enduring profitability
gains, albeit over a more protracted timeframe.

Furthermore, the advent of digital advertising has ushered in a new era of data-driven
marketing, enabling companies to measure and analyze the impact of their advertising
efforts with unprecedented granularity and precision. By leveraging sophisticated analytics
tools and metrics such as return on ad spend (ROAS), customer lifetime value (CLV), and
attribution modeling, businesses can gain deeper insights into the efficacy of their
advertising campaigns and refine their strategies accordingly.

Nevertheless, despite the growing sophistication of advertising measurement techniques,

quantifying the exact causal relationship between advertising expenditure and financial
performance remains a challenging endeavor. External factors such as economic
conditions, competitive actions, and shifting consumer preferences can confound the
results of advertising effectiveness studies, making it difficult to isolate the true impact of
advertising on sales and profitability.

Against this backdrop, this study aims to conduct a comprehensive analysis of the effect of
advertising on the sales and profitability of companies across diverse industries. By
synthesizing empirical research findings, theoretical frameworks, and practical insights
from industry experts, this research seeks to elucidate the complex dynamics underlying
the relationship between advertising investments and business outcomes. Through a
nuanced examination of the various mechanisms through which advertising influences
consumer behavior, brand equity, and financial performance, this study aspires to offer
valuable guidance for businesses seeking to navigate the intricacies of modern advertising
in pursuit of sustainable growth and competitive advantage

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According to William J Stanton (1994), advertising consists “all activities that involve
presenting to a group, non- personal, oral or visual sponsored messages regarding a
product, service or idea “Advertising is directed to groups of people and is therefore non-
personal. Companies usually sponsor advertising in order to convince the public that their
products will benefit them. In Nigerian economy, many manufacturers attempt to stimulate
the demand for their products (goods/services). They are not satisfied merely to produce
and trust to the chance that consumers will become aware of their products through the
impersonal interplay of the market.

The role of sales promotion in the form of advertising in promoting product and service
awareness among consumers cannot be overstressed. Advertisement provides a platform
for firms to create awareness about their products or services and how consumers can
make the best out of such products. Olusegun (2006) opined that all advertisement must be
honest and follow ethical standards and must not be perceived by the target consumer as
lie; otherwise it can batter the image of a company and hinder it from building successful
brands. Thus, for advertising to be effective, it must have an appeal, attract attention,
command interest, inspire conviction and must provoke interest (Frank, 2005). In the same
vein, Okeji (2008) posited that a good advert message should not be boring but rather
reflect the lifecycle of the product.

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He concluded that advertising must be exposed in the right medium as this will enable
organization to reach the right people with the right message. A number of studies such as
Herbert (1982), Nigel (1994), Gladson and Chinedu (2005) and Meshach (2007) have
shown that advertising is a major competitive tool in establishing position in the market
place. Companies use advertising not only to market and promote their products but to
among other things wade-off competitors, improve their brands and create a vintage-point
for their products in the presence of anticipated users, buyers or clientele. Persons,
organizations, groups, government agencies and different sectors of many economies
employ advertising to marshal messages to target 13 public. This is because a well-crafted
advertisement program can be a cost-effective way to disseminate messages and build
brand preferences. As is the trend globally, companies in Nigeria also rely on sales
promotion to get their existing and prospective consumers informed about their products
and services. Among all the tools of sales promotion in Nigeria, advertising has grown
over the years to become the most prominent and easily understandable to firms and the
general public (Haruna, 2005)

It is believed that if a better product is produced, consumers will not necessarily take
special pain of informing themselves of its existence, its worth, its satisfying qualities and
where it can be purchased. Advertising provides information that facilitates the job of the
seller, helps customer make quick decision, informs customer of the presence of a product,
price which it is being sold and placement (where it is available) thereby giving room for
economy of time, energy and money in trying to look for the product. It also announces a
new product, indicates new uses of existing products, reminds customer of an existing
product, about the desirable qualities, stimulates or generates enquires and builds corporate
image to mention a few. The effectiveness of these is expected to result in increased sales
and profit. Profit can be viewed as the excess of total revenue over and above the total
cost. Profit making in any organization is a function of many factors. There is prudence in
vigorously and diligently pursuing organizational goals and objectives. One of such goals
is maximization of the wealth of the owners in an environment where social responsibility
is openly embraced.

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The main objective of this study is to examine the effect of advertising on sales and profit
of the company. This research work is designed to achieve the following specific
objectives:

i. To determine the relationship between marketing expenses and profitability of the firm

ii. To determine the relationship between turnover and marketing expenses of the firm.

iii. To determine the relationship between inventory and profitability of the firm.

DECISION-MAKING IN ADVERTISING

While undertaking advertising campaign or while organizing an advertising programme

for products : consumer products, (tooth paste, chocolate, soap, face powder, skin cream,
etc.) or durable products, (car, TV, etc.) or industrial products, (machine, etc.) concerned
company has to take certain decisions and adjust the advertising activity accordingly.
Such advertising decision-making is a five-step process (Five Ms of advertising)
consisting of mission, money, message, media and measurement. In other words,
evaluation and broad decisions need to be taken in regard to these five areas while
organising an advertising programme/campaign. Five Ms of advertising are five basic
considerations, which need to be given proper attention to have positive/favorable effect
of advertising efforts. These considerations are particularly applicable to consumer
product marketing such as toothpaste, face powder, body creams, soaps, chocolates and
so on. Advertising will be effective/result oriented when it is made with proper planning
and appropriate decisions as regards the objectives, media used, funds provided and so
on. In short, advertising activity needs appropriate decision-making on various matters.
Such decisions constitute the steps in the advertising.

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FIVE M’s OF ADVERTISING

An advertiser takes decisions on the following aspects:

1. Mission: This refers to the purpose/objective behind advertising. The objectives

behind advertising are varied in character. They include sales promotion, information
and guidance to consumers, developing brand loyalty, market goodwill, facing
market competition effectively, making the products popular/successful and
introduction of a new product. Decision in regard to mission is a basic one as other
decisions are to be adjusted as per the mission, objective, or purpose of advertising
decided. For consumer products like chocolate, tooth paste, soap, the
mission/objective include facing market competition, sales promotion and making
the product popular in the market.

2. Money: This refers to the finance provided for advertising purpose (advertising
budget). It means the budget allocation made by the company for advertising. Money
provided is a limiting factor as effectiveness of advertising, media used, coverage of
advertising, etc. are related to the funds provided for advertising purpose.
Advertising is costly and companies have to spend cores of rupees for this purpose.
Advertising should be always within the limits of funds provided. Naturally,
decisions on advertising package should be adjusted as per the budget allocation for
advertising. It may be noted that consumer products like toothpaste or chocolate are
highly competitive with many substitutes easily available in the market. Naturally,
extensive advertising on TV, newspapers, radio, etc. is required. These media are 16
costly. Naturally, the manufacturing/ marketing company will have to provide huge
money for advertising purpose.

3. Message: Message is provided through the text of advertisement. The message is

given through written words, pictures, slogans and so on. The message is for the
information, guidance and motivation of prospective buyers. Attractive and
meaningful messages give positive results and the advertising becomes result
oriented. The services of creative writers, artists, etc. are used for giving attractive
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 message to the consumers.

Here, the advertiser has to decide the message to be given, the media to be used for
communicating the message, the extent of creativity, the specific customer group
selected for giving the message and so on. The message is also related to the
decisions taken as regards mission and money provided for advertising. For
advertising consumer product like chocolate, the message is important. The buyers
are mainly children and others of lower age groups or for the benefit (pleasure and
satisfaction) of younger generation. The advertising message should be simple and
easily understandable with the help of picture or slogan. It should be also attractive
and agreeable to younger generation. The pictures or slogans used should be short
and impressive.

4. Media: Media of advertising are already noted previously. The advertiser has to take
decision about the media to be used for advertising purpose. Media differ as regards
cost, coverage, effectiveness and so on. The selection of media depends on the
budget provided, products to be advertised, and features of prospective buyers 17
and so on. Wrong decision on media may make advertising ineffective and money
spent will be wasted. This suggests that media should be selected properly and
decision in this regard is important and critical. For advertising popular and
extensively used consumer items like chocolate, the media should be selected
properly. TV advertising particularly a cartoon channel, advertising in children
books or newspaper supplements for children, advertising on radio programmes for
children, etc.

5. Measure: Measure relates to the effectiveness of advertising. An advertiser will like

to make evaluation of advertisement in order to judge its effectiveness. If an
advertisement is not effective and purposeful, it will be modified or withdrawn. This
is necessary for avoiding expenditure on the advertisement, which is not effective or
is not likely to give positive results. An advertiser has to measure the effectiveness of
his advertisement programme / campaign and take suitable decisions. This decision-

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 making as regards effectiveness of advertising is equally important and essential.
Such testing facilitates introduction of suitable remedial measures, if required.

ROLE OF MEASURING ADVERTISING EFECTIVENESS

The main objective of allocation of huge budget to advertising activity is to increase sales
and profits of the firm. The multivariable forces influencing sales make it almost
impossible to measure with high precision the sales effect of advertising. Consequently to
most advertising research measures the characteristics of an advertisement such as
exposure, the ability of receiver to comprehend, retain and believe in advertisement, it
can be inferred that the advertisement is effective in generating sales. Measuring the
effectiveness, however, is not an easy task, it is still a complex problem and no scientific

method call be applied precisely particularly, in Indian conditions where the advertising
industry is growing because its problems are closely related to the economic and cultural
problems of the country.

IMPORTANCE OF MEASURING THE EFFECTIVENESS OF ADVERTISING

(I) To Get the Cost Benefit of Advertising : The cost of advertising is mounting
day by day and consequently profits are being squeezed. So, the top management
should be concerned about the cost benefit of advertising in the various items of
expenditure in the balance sheet of the company, the contribution of which
cannot be measured in terms of sales or profitability. Its contribution in terms of
sales or profitability can only be estimated to reasonable extent. Due to high
costs of materials and wages, strangulated by higher overheads and taxes, the
management is reasonable in not approving any expenditure on advertisement,
which is not likely to bring an additional sale, resulting in additional profits. The
main concept is that additional cost of advertising must produce additional profit
and, therefore, the advertising should prove its contribution in total marketing
efforts like any other allocation of corporate resources or else the advertising

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 expenditure will be set arbitrarily or be slashed drastically. The cost must be
linked with the benefits derived. If contribution of any advertising campaign is
higher, it means the cost benefit is higher and the advertisement is effective.

(II) To Justify the Investment in Advertising—The expenditure on advertisements

is considered to be an investment. In any investment decision planning, there is
always a statement of objectives measuring advertising effectiveness.
Advertising is a marketing investment and its objectives should be spelt out in a
similar manner, clearly indicating the results expected from the campaign. The
rate and size of return should be determined in advance. If the expected rate of
return is achieved in terms of additional profits, the advertisement can be
considered an effective one. In order to justify the investment in advertising, the
management makes an attempt to measure the effectiveness of the advertisement.

(III) To Compare the Results with the objectives and Goals- An objective is a
broad aim; a goal is specific and quantified objective. Generally, the objectives
of advertising are warded vaguely in general terms such as to increase sales or
profits’ or ‘to expand our share of market’, or ‘to maintain a favourable attitude
of the company and its product. Evaluation of these objectives is not possible. If
these objectives are stated in terms of the quantity or the amount of sales or
percentage of total market shares, these are measurable in these terms and
effectiveness can be measured. If the goal have been achieved the advenising
may be said to be effective. The result (actual sales) are compared with the goals
and if the actual performance is better, the advertising is effective otherwise, it is
ineffective.

(IV) To compare two markets- Under this procedure, advertising is published in test
markets and results are contrasted with other market-so called control markets-
which have had the regular advertising programme. The measurement made to
determine results might be measurements of change in sales, change in consumer
attitude, change in dealer display, and depending upon the objectives sought by

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 the advertiser. Although experimentation is test markets provides an excellent
means for testing alternative advertising approaches to see if they are effective in
actual operations, the measurement made are actually measurements of the
effectiveness of the promotional programme as a whole rather than measurement
of the effectiveness of the advertising itself.

(V) To Know the Communication Effect– The effectiveness of the advertising can
be measured in terms of their communication effects on the target consumers.
The main purpose of advertising is communicate the general public, existing and
prospective consumers, various information about the product and the company.
It desirable to seek post measurements of advertising in order to determine
whether advertisements have been seen or heard or in other words whether they
have communicated the theme, message or appeal of the advertising. Clearly, in
advertisements are not seen or heard or are low in communication ability relative
to advertisements for comparable products, then the advertising probably is
ineffective and change is 22 called for. Thus, if advertisements succeed in
communicating the desired information and developing the favorable attitude, the
advertising is effective.

(VI) Basis for planning– Measuring the effectiveness of the advertising is done with
a view to improve the advertising plan by having a comparative view of the
objectives set out in the plan and the objectives or goals achieved during the
course of execution of the plan. If achievement is higher an attempt should be
made to maintain the position and if there is an unfavorable attitude, this should
be avoided by making the necessary adjustments in the goals or by improving the
functioning of the various activities. Thus measuring the effectiveness is
necessary for the planning. Thus, we can conclude that measurement of
effectiveness of advertising is necessary otherwise; the whole planning process
will be disturbed. For this purpose, many tests and surveys are conducted,
necessary data are collected and are used extensively in the decision making
process. On the basis of the information collected during the course of surveys,
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 management confirms the standards and improves them wherever necessary so
that it may fetch the maximum out of its limited resources.

The importance of this study is that it will bring to focus the importance of advertising in
an organization, because of high competitive environment and many brands, the
importance of advertising in winning customers and achieving brand loyalty cannot be
overemphasized. The findings of this study will be of importance to business people and
marketing companies whose product demand is very low because advertising has not been
included in its market mix.
Advertising has not only become a vital part of our culture and economy, but it has also
grown to tremendous proportions as a business activity and a social phenomenon through
time.
It has had an influence on society as a whole, not just the business sector. Bottoms of the
World Companies use advertising as a powerful marketing communication approach to
achieve their promotional objectives. It's a cold, impersonal style of advertising or promoting
goods, ideas, or services via sponsored media disguised as open sponsorship. When a sponsor
delivers a message termed an advertisement to a large number of potential users or consumers
of a product through one or more mass media, this is referred to as advertising. Advertising is
a critical marketing tactic that uses information and persuasion to promote goods, services,
images, and ideas. Many individuals believe that advertising is a more effective marketing
tactic than personal selling, sales promotion, or publicity.

Advertising, according to the Super Bottoms Marketing Association, is "any paid sort of non-
personal presentation and promotion of ideas, goods, and services by a recognised sponsor by
an identifiable sponsor."

According to Offiongodon A.M. (1991). According to this definition, advertising is a way of

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forcing beliefs, ideas, and expectations on clients. It is most effective when used to reinforce
consumers' pre-existing positive attitudes, values, and dispositions. Advertising is a highly
visible form of communication that gives a product gravitas while also implies a standardised
offering.

BENEFITS
The functions of advertisement, and that purpose its ethics, may be discussion below :
1. It leads to cheaper prices. "No advertiser could live in the highly competitive arena of
modern business if his methods of selling were more costly than those of his rivals."
2. It acquaints the public with the features of the goods and advantages which buyers will
enjoy.
3. It increases demand for commodities and this results in increased production.
Advertising :
a) Creates and stimulates demand opens and expands the markets;
b) Creates goodwill which loads to an increase in sales volume;
c) Reduces marketing costs, particularly product selling costs.
d) Satisfied consumer demands by placing in the market what he needs.
4. It reduces distribution expenses in as much as it plays the part of thousands of salesman at
a home. Information on a mass scale relieves the necessity of expenditure on sales promotion
staff, and quicker and wider distribution leads to diminishing of the distribution costs.
5. It ensures the consumers better quality of goods. A good name is the breath of the life to
an advertiser.
6. By paying the way for large scale production and increased industrialization, advertising
contributes its quota to the profit of the companies the prosperity of the shareholder the
uplifts of the wage earners and the solution of he unemployment problem.
7. It raises the standard of living of the general public by impelling it to use to articles of
modern types which may add to his material well being. "Modern advertising has made the
luxuries of yesterday the necessities of today ..................... It is a positive creative force in

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business. It makes two blades of grass grow in the business world where one grew before.
8. It establishes the goodwill of the concern for the test articles produced by it and in course
of time they sell like not cakes consumer search for satisfaction of their needs when they
purchase goods what they want from its beauty, superiority, economy, comfort, approval,
popularity, power, safety, convenience, sexual gratification and so on. The manufactures
therefore tries to improve this goodwill and reputation by knowing the buyer behaviour.
To sum up it may be said that advertising aims at committing the producers, educating the
consumer, supplementing the salesman converting the producer and the dealer to eliminate
the competitor, but above all it is a link between the produce and the consumer.

WHY & WHEN TO ADVERTISE

Advertising as a tool to marketing not only reaches those who buy , but also those whose
opinions or authority is counted for example a manufacturer of marble tiles and building
boards advertises not only to people who intend to build houses but also to architect and
engineers. While the manufacturers of pharmaceuticals products advertise to doctors as well
as to the general public. At time it is necessary for a manufacturer or a concern to advertise
things which it does not sell but which when sold stimulates the sales of its own product.
There are concerns like electric heaters, iron etc. because the use of these increases the
demand for their products.
Advertising should be used only when it promises to bring good result more economically
and efficiently as compared to other means of selling. There are goods for which much time
and efforts are required in creating a demand by sending salesman to prospective buyers than
by simply advertising them. In the early days of the cash register in America it was sold by
specially trained salesman who called on the prospective users and had the difficult task of
convincing them that they could no longer carry on with the old methods, and that they
urgently needed a cash register. In our country certain publishers have found it less costly to
sell their books by sending salesman from house to house among prospective buyers than to
advertise them. In these two examples the cost of creating demand would be too high if
attempted by advertising alone under such circumstances advertising is used to make the
salesman acceptable to the people they call upon to increase the confidence of the public in
the house. Naturals when there are good profits competitors will be attracted and they should

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be kicked out as and when sufficient capital is available by advertising on a large scale.
Immediate result may not justify the increased expenditure but it will no doubt secure future
sales.

DESIGNING ADVERTISING CAMPAIGN :

An advertising is an organized series of advertising messages. It has been defined as "a
planned, co-ordinate series of promotional efforts built around a central theme and designed
to reach a specified goals." In other words, it is an orderly planned effort consisting of related
but self – contained and independent advertisements. The campaign may appear in one more
media . it has single theme or keynote idea and a single objective or goal. Thus, "a unified
theme of content provides psychological continuity throughout the campaign while visual and
oral similarity provide physical continuity. In short run, all campaign want pre-determined
psychological reaction in the long run, practically all campaigns have sales goal.
The series of advertisements used in the campaign must be integrated with the sales
promotional efforts and with the activities of the sales force.
Campaign vary in length some may run only for a few days, other for weeks, yet other for a
season or the entire year. Usually a range of 3 to 6 months includes many campaigns. Many
factors influences campaign length such as competitors advertising media, policies, seasonal
falls curves of the product involved, the size of the advertising funds, campaign objectives
and the nature of the advertisers marketing programme.

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OBJECTIVES OF CAMPAIGN
The advertising campaign, especially those connected with the consumers aims at
achieving these objectives :
i) To announce a new product or improve product.

ii) To hold consumers patronage against intensified campaign use.

iii) To inform consumers about a new product use.

iv) To teach consumers how to use product.

v) To promote a contest or a premium offer.

vi) To establish a new trade regional, and

vii) To help solve a coca regional problem.

The institutional advertising campaign on the other hand, have these objectives.

i) To create a corporate personality or image.

ii) To build a company prestige.

iii) To keep the company name before the public.

iv) To emphasize company services and facilities.

v) To enable company salesman to see top executive consistently when making sales calls,

and

vi) To increase friendliness and goodwill towards the company.

Developing the campaign programmes. The advertising campaigns are prepared by the
advertising agencies, which work an behalf of their clients who manufacture product or
service enterprises, which have services to sell. The word campaign is used because
advertising agencies approach their task with a sum Blanca of military fanfare in which one
frequently hears words like target audience logistics, zero in and tactics and strategy etc.

21
The account executive co-ordinates the work in a campaign. The creation of an advertising
campaign starts with an exploration of consumers habits and psychology in relation to the
product. This requires the services of statistical trained in survey techniques and of others
trained in social psychology. Statisticians select samples for survey which are done by trained
interviewers who visits individuals, included in the sample and ask question to find out about
their taste and habits.
This enquiry often leads to a change in a familiar product. For instance bathing soap may
come in several new colours or cigarette in a new packet or talcum powder in another size.
Such interviews are often quite essential to find out the appeal of advertising message for a
product that would be most effective with consumers.
David Ogilvy describes a consumers survey to find out the most meaningful benefit in which
women are interested when they buy a face cream. The largest preference as given to "Cleans
deep into pores" followed in order of importance by prevent dryness, "is a complete beauty
treatment, recommended by skin doctors" makes skin look younger' contains estrogenic
hormones, pasteurized for purity,

prevent skin form aging, smooth our wrinkles ogilvy concludes, form this voting come one of
Helena Rubinstein's most successful face creams. We christened it deep cleanser, thus,
building the winning form into name of the product.
After getting the data the account executive puts together the essential elements of his clients
brief, interprets the research findings and draws up what he calls the "advertising strategy".

STAGE IN ADVERTISING CAMPAIGN

Several steps are required to developed an advertising campaign the number of stages and
exact order in which they are carried out may vary according to an organisations resources,
the nature of its product and the types of audiences to be reached. The major stages/step are :
1. Identifying and analyzing the advertising.

2. Defining advertising objects.

3. Creating the advertising platform.

4. Determining the advertising appropriation.

5. Selection media plan.

22
6. Creating the advertising message.

7. Evaluating the effectiveness of advertising.

8. Organizing of advertising campaign.

1.Identifying & Analyzing the Advertising target :

Under this step it is to decided as to whom is the firm trying to reach with the message.
The advertising target is the group of people towards which advertisements are aimed at four
this purpose complete information about the market target i.e. the location and geographical
location of the people, the distribution of age, income, sex, educational level, and consumers
attitudes regarding purchase and use both of the advertising product and competing products
is needed with better knowledge of market target, effective advertising campaign can be
developed on the other hand, if the advertising target is not properly identified and analyzed
the campaign is does likely to be effective.

2.Determining the advertising objectives :

The objectives of advertisement must be specifically and clearly defined in measurable
terms such as "to communicate specific qualities about a particulars product to gain a certain
degree of penetration in a definite audience of a given size during a given period of time",
increase sales by a certain percentage or increase the firms market shares."
The goals of advertising may be to :
i) Create a favourable company image by acquainting the public with the services offered
available to the employees and its achievements.
ii) Create consumers or distributor awareness by encouraging requests providing information
about the types of products sold; providing information about the benefits to be gained from
use of the company's products or services; and indicating how product (or services) can be
used;
iii) Encourage immediate sales by encouraging potential purchasers through special sales
contests, getting recommendation of professional people about company's products etc.
iv) It secures action by the reader through associating ideas, repetition of the same name in

23
different contexts, immediate action appeal.
3.Creating the Advertising platform :
An advertising platform consists of the basic issues or selling points that an advertiser
wishes to include in the advertising campaign. A single advertisement in an advertising
campaign may contain one or more issues in the platform. A motorcycle producers
advertising platform should contain issues which are of importance to consumers filling and
such issues also be those which the competitive product do not posses.
4. Determining the Advertising Appropriation:
The advertising appropriation is the total amount of money which marketer allocates. For
advertising for a specific time period. Determining the campaign budget involves estimating
now much it will cost to achieve the campaigns objectives. If the campaign objectives are
profit relating and stated quantitatively, then the amount of the campaign budget is
determined by estimating the proposed campaigns effectiveness in attaining them. If
campaigns object is to build a particular type of company image, then there is little basis for
predicting either the campaigns effectiveness or determining the budget required.

5.Selecting the Media :

Media selection is an important since it costs time space and money various factors
influence this selection, the most fundamental being the nature of the target market segment,
the type of the product and the cost involved. The distinctive characteristics of various media
are also important. Therefore management should focus its attention on media compatibility
with advertising objectives.

Media Form
1. Press Advertising or Print
i) Newspapers City, Small town, Sundays, Daily,
weekly, Fortnightly, quarterlies,
financial and annuals, English,
vernacular or regional languages.
ii) Magazines General or special, illustrated or

24
 otherwise, English, Hindi,
Regional language.
iii) Trade & Technical Journals, Industrial year Circulated all over the country and
books, commercial, directories, telephone, among the industrialist and
Directories, references books & annuals. business magnates.
2. Direct Mail Circulars, catalogues, leaflets,
brochures, booklets, folders,
colanders, blotters, diaries & other
printed material.
3. Outdoor or Traffic Poster and bills on walls, railways
stations platforms outside public
buildings trains, buses.
4. Broadcast or radio and T.V. Spot, Sectional or national trade
cost
5. Publicity Movie Slides and films non
theatrical and documentary films
metal plates and signs attaches to
trees.
6. House to house Sampling , couponing, free gifts,
novelties, demonst-rations.
7. Dealer aids Counter and widows display
demonstration given by retailer or
the advertises goods.
8. Internet Today, Internet is a big spot for
advertising.

So these are the media of the advertising campaign of the selecting of the media.

6.Creating the Advertising Messages :

This is an important stage of advertising campaign. The contents of the message has to be
very carefully drafted in the advertisement. Characteristics of person in the advertising target
influence the message content and form. An advertisers must use words, symbols and
illustration that are meaningful, familiar and attractive to those persons. The type of media

25
also influence the content and form of the message.

7.Evaluating the Effectiveness of Advertising :

The effectiveness of advertising is measured for a variety of reasons :
a) To determine whether a campaign accomplished its advertising objects.

b) To evaluate the relative effectiveness of several advertisements to ascertain which copy,

illustrations or layout is best.

c) To determine the strengths and weaknesses of various media and media plans.

In other words, measuring advertising effectiveness is needed to determine whether proposed

advertisement should be used and if they will be now they might be improved; and whether

going campaign should be stopped, continued or changed. In accomplishing these purposes,

pretests and post test are conducted. The former tests before exposing target consumers to

advertisements and the letter after consumers have been exposed to advertisements and the

letter after consumers have been exposed to advertisements.

For an effective advertising programme, the advertising manager requires a basic

understanding of the medium that is going to carry it.

THE STUDY'S OBJECTIVE

1. To measure the extent of product awareness of a new product as a consequence of a

company's advertisement of the new product.
2. Determine the effectiveness of advertising in raising the volume of sales of the company's
goods.
3. To determine if advertising has a favourable impact on in domie instant profits.
4. Determine if advertising helps in the establishment and maintenance of the company's
image.
5. Determine if advertising is an effective source of information for potential indomie instant
consumers in the Enugu metropolitan.
6. To demonstrate how advertising encourages indomie quick to be purchased on a frequent
basis.

26
THE PROBLEM'S STATEMENT
The issue that this research project will address is summarised in the following statement.
1. Lack of knowledge of the product's existence on the side of the client.

2. The company's market share is hampered by low sales volumes.

3. The company's negative impact on profit maximisation.

4. A company's image that isn't kept up to date or isn't kept up to date.

5. Inadequate information transmission to potential customers.

6. Customers do not buy on a regular basis.

CHAPTER 2
REVIEW OF LITERATURE
A well planned and organized advertising scheme has the potential of increasing
awareness of a business products or brands in the environment in which the business
operates, ceteris 6paribus. In consequence, the advertised brands or products increase their
share of the market. This increased share of the market will translate into increased
turnover, ceteris paribus. Under stable tax regime, profit after tax should increase and
profit attributable to shareholders should rise correspondingly under well managed
advertising. Advertising is used primarily to inform potential customer of; (1) the
availability of products or services, (2) when they are in season, (3) where you are located
and (4) anything special about your product.

2.1 Theoretical Literature:

According to Fill (1999), the purpose of advertising is to supply the means which
advertising, public relations and sales promotion are communication tools to be accessed
by marketers. One distinct feature of communication is that the target population or
audience must understand the information and so it must be as simple as possible. Dunn et
al. (1978) viewed advertising from its functional perspectives; hence they define it as a

27
 paid, non-personal communication through various media by business firms, non-profit
organization, and individuals who are in some way identified in the advertising message
and who hope to inform or persuade members of a particular audience. Morden (1991) is
of the opinion that advertising is used to establish a basic awareness of the product or
service in the mind of the potential customer and to build up knowledge about it. Kotler
(1988) sees advertising as one of the four major tools companies use to direct persuasive
communications to target buyers and public noting that “it consists of non-personal forms
of communication conducted through paid media under clear sponsorship”. According to
him, the purpose of advertising is to enhance potential buyers’ responses to the
organization and its offering, emphasizing that “it seeks to do this providing information,
by channeling desire,

and by supplying reasons for preferring a particular organization’s offer. While writing on
advertising nature and scope, Etzel et al. (1997) compactly capture all advertising as
having four features: (i) A verbal and or visual message, (ii) A sponsor who is identified,
(iii) Delivery through one or more media, (iv) Payment by the sponsor to the media
carrying the message.
The meaning of advertising cannot be definite as it means different things to different people
depending on their perceptions of what it is. According to Kotler (2000), advertising is any
non-personal presentation and promotion of ideas, goods, or services by an identified
sponsor. Advertiser includes not only business firms but also museums, charitable
organizations and government agencies that direct messages to target public. Advertising can
also be defined as any paid non-personal communication about an organization, products,
services or ideas by an identified sponsor (Bennet, 2006)

Advertising is any paid message presented through various media, such as television,
radio, magazine, newspapers or billboards by an identified source. Scholars such as
Sandage and Rotzoll (2002) have argued that advertising is a costeffective way to
disseminate messages, for instance to build brand preference for a product or to educate
people about government policies or to avoid consumption of hard 22 drugs. Companies
embark upon advertising not only to sell their products, promote their goods, but also to
create efficient defense to curtail competitors‟ moves. Frank (2005) saw advertising with

28
the aim to persuade people to buy. Modern advertising is a product of the twentieth
century; however, communication has been a part of the selling process ever since the
exchange of goods between people started (Kazimi, 2005). Modern commercial
advertising is the persuasive force that aims at changing customer‟s behaviors. This is
important because consumer wants and needs change as their economic positions improve
and as they pass through different stages. It is therefore desirable for advertisers to assess
the impact of advertisement on their products‟ performance from time to time (Kotler,
2000). Shimp (2007) in corroborating Richards and Curran (2002) defined advertising as a
paid, mediated form of communication from an identifiable source, designed to persuade
the receiver to take some action, now or in the future. A broad variety of rational motives
can be used as the source for advertising appeals such as convenience, economy, health,
sensory benefits, quality, performance, comfort, reliability, durability, efficiency, efficacy
etc; all of these are to stimulate the consumer to patronize a product (Duncan,2002).

Kotler, P., & Keller, K. L. (2016). Marketing Management (15th ed.). This
foundational text discusses the role of advertising in marketing strategies, including its
potential impact on sales and profitability. It provides theoretical frameworks and case
studies to illustrate the relationship between advertising investments and business
outcomes.

Ehrenberg, A. S. C. (2002). Marketing: Are You Really a Realist? This seminal work
challenges common marketing myths and emphasizes the importance of understanding
advertising's role in influencing consumer behavior and driving sales. It advocates for a
data-driven approach to advertising effectiveness evaluation.

Tellis, G. J. (2004). Effective Advertising: Understanding When, How, and Why

Advertising Works. This book offers insights into the factors that contribute to
advertising effectiveness, including message content, media selection, and consumer
response. It examines various advertising models and their impact on sales and
profitability.

Ambler, T., & Vakratsas, D. (1996). The Pursuit of Advertising Theory. This paper
reviews the evolution of advertising theory and explores different perspectives on how
advertising influences consumer behavior and contributes to company performance. It
highlights the need for empirical research to validate advertising theories.

29
Bertrand, M., Karlan, D., Mullainathan, S., Shafir, E., & Zinman, J. (2010). What's
Advertising Content Worth? Evidence from a Consumer Credit Marketing Field
Experiment. This study evaluates the impact of advertising content on sales and
profitability using a randomized field experiment in the consumer credit industry. It
provides empirical evidence on the effectiveness of different advertising messages.

Gupta, S., & Cooper, L. G. (1992). The Discounting of Discounts and Promotion
Thresholds. Focusing on pricing and promotion strategies, this research examines how
advertising promotions influence consumer behavior and purchase decisions. It discusses
the implications for sales and profitability.

Kumar, V., & Leone, R. P. (1988). Measuring the Effect of Retail Store Promotions
on Brand and Category Share. This study investigates the impact of retail store
promotions, including advertising, on brand and category sales. It provides insights into
the effectiveness of different promotional tactics in driving sales and profitability.

Duncan, T., & Moriarty, S. (1998). A Communication-Based Marketing Model for

Managing Relationships. This paper proposes a communication-based marketing model
that emphasizes the role of advertising and other communication channels in building
customer relationships and driving long-term profitability.

Rust, R. T., Lemon, K. N., & Zeithaml, V. A. (2004). Return on Marketing: Using
Customer Equity to Focus Marketing Strategy. This article introduces the concept of
customer equity and discusses how advertising investments can contribute to long-term
profitability by increasing customer lifetime value and loyalty.

Kumar, V., & Venkatesan, R. (2005). Who Benefits from Store Brand Entry?
Focusing on the retail industry, this study examines the impact of store brand advertising
on category sales and profitability. It explores the competitive dynamics between store
brands and national brands.

Hanssens, D. M., & Parsons, L. J. (2016). Market Response Models: Econometric and
Time Series Analysis (2nd ed.). This comprehensive book provides advanced techniques
for analyzing the impact of advertising and other marketing activities on sales and
profitability. It covers econometric and time series analysis methods.

30
Hoch, S. J., & Deighton, J. (1989). Managing What Consumers Learn from
Experience. This paper discusses how advertising can influence consumer learning and
memory, ultimately affecting purchase decisions and brand loyalty. It explores the
implications for sales and profitability in competitive markets.

Tellis, G. J. (2009). Generalizations about Advertising Effectiveness in Markets. This

review article synthesizes findings from empirical studies on advertising effectiveness and
identifies generalizable patterns across different markets and industries. It offers insights
into the factors that drive advertising ROI and profitability.

Nerlove, M. (1963). Returns to Scale in Advertising and the Theory of the Firm. This
classic paper explores the relationship between advertising investments, sales growth, and
profitability. It discusses the concept of returns to scale in advertising and its implications
for firm strategy.

Chattopadhyay, A., & Basu, A. K. (1990). Advertising Clutter and Brand

Perceptions: The Role of Advertisement Content. Focusing on the impact of advertising
clutter, this study examines how the content of advertisements influences brand
perceptions and purchase behavior. It discusses strategies for enhancing advertising
effectiveness in cluttered environments.

Tellis (2000) Opined that advertising is to encourage purchase by temporarily improving

the value of a brand. The main objective of advertising is to translate favourable attitudes
into actual purchase, improve attitude towards a brand and nurture brand loyalty at all
times. Donald (2000) stated that regardless of the exact technique employed, advertising
should attempt to accomplish four fundamental tasks:

1. Advertising objectives should relate to overall marketing and should be clearly

measurable. This requires that the promotional strategies should adequately define what
the promotion wishes to accomplish;

2. Advertising technique should be used to supplement sales and advertising efforts;

3. Advertising like other promotional forms should attract attention among those people

31
they are intended to influence; and

4. Advertising should generally persuade the target audience to place an order i.e. to really
close the sale and perhaps assume it has been done. There must be readily recognizable
link between the promotion and desirability of buying the particular product.

In recent years a number of studies suggest that a firm’s advertising (Frieder and
Subrahmanyam 2005; Grullon, Kanatas, and Weston 2004; Joshi and Hanssens 2007,)
directly affects stock returns. This is in addition to the indirect effect of advertising
through increase in sales revenues and profits.

Srinivasan and Hansens (2007) carry out an extensive literature survey on the impact of
advertisement on market and firm value. The effect of the advertising on consumers rests
on the theory of message repetition. It can be classified into three main effects: a current
effect on behavior, a carryover effect on behaviour and a non behavioral effect on attitude
and memory (Pechmann and Stewart 1988; Sawyer 1981; Sawyer and Ward 1976).
Researchers have tried to estimate the effects of advertising on brand sales using field data
(Leone and Schultz 1980; Vakratsas and Ambler 1996). Most of these studies focus on
many technical issues involved in efficiently capturing the unbiased effects of advertising,
given the limitations of field data (Hanssens, Parsons, and Schultz 1990). Deeper analysis
of these studies finds that the effects of advertising are significantly greater than zero but
do vary by market and product characteristics (Assmus, Farley, and Lehmann 1984;
Sethuraman and Tellis 1991).

Few studies have addressed the effect of advertising effects on sales. Little has been
researched on capturing the impact of how the effects vary by creative medium or vehicle,
and time of day for broadcast advertising (e.g., Bhattacharya and Lodish 1994). In
particular, no study has researched the effects of advertising by these three factors

32
simultaneously. While marketers know that that consumer behavior is influenced by
multiple factors, yet little research has been done on understanding the impact using the
integrated marketing mix model ( Sethi 1977, Feichtinger, Hartl and Sethi, 1994). This is
attributed to the fragility of advertising’s effects and the complexities involved in getting
bias-free estimates.

Naik and Raman (2003) present an insight as to how a marketer or a shareholder is keen
on measuring the impact of marketing (advertising investment) on market performance. To
assess these effects marketers often use regression analysis. Arguing that OLS models
introduce biasing effects, they put forward the Weiner Kalman Filter(WKF) that provides
estimates that are closer to the true parameters. Advertising's effectiveness lies in its
capability to help stimulate or maintain sales (Eachambadi 1994; Mantrala, Sinha, and
Zoltners 1992; Naik, Mantrala, and Sawyer Sethi 1998; Vidale and Wolfe 1957). Thus,
advertising is frequently used as an independent variable in explaining changes in sales
(Lilien 1994).

Abraham and Lodish (1990) believe that advertising effectiveness has to be captured by
the additional sales of a product over and above those that would have happened in
absence of any advertising or promotion. Although advertising managers have long
believed that advertising's impact on sales can persist longer than the current period
(Clarke 1976), the tendency to assume that advertising's effect on sales is short-term is yet
prevalent. They further argue that the longer uses of advertising are better than less and
shorter uses of it irrespective of the nature of contribution of advertisement to sales (Jones
1992, 1995). The inability of measures to differentiate the impact of advertisement
between its short term and long term effects have resulted in wastage of advertising
expenditure (Abraham and Lodish, 1990; Bass 1969). Eechambadi (1994) uses the analogy
of capital budgeting process to capture the effectiveness of ad spending on sales and
profitability. He suggests that the brand managers be allowed to spend as much as they
want on advertising if the return they generate is able to beat an internally agreed hurdle.
His belief rests on the premise that absolute size of the ad budget does not matter but the
return on that budget is the criteria for ad effectiveness. The basic duopoly model leads to
an equilibrium which can be determined analytically (Dixit, 1979); this basic model does
not demonstrate any dynamic behavior. Introducing advertising into the model allows
33
firms endogenously alter demand which does invoke dynamic behavior but is analytically
intractable.

Graham and Ariza (2003) present a model that optimizes allocation of firm advertising
expenditure using a simulated annealing approach. Sterman et al (2007) use an approach
that combines duopoly theory with the behavioural theory of the firm. Research on the
response to advertising had primarily looked at the shape of the response function (Aaker
and Carman 1982; Simon and Arndt 1980; Mesak 1999), the dynamics of advertising
effects (Simon 1978), and the interaction of advertising with other promotional mix
elements (Winder and Moore 1989; Wildt 1977).

Luo and Donthu (2001) apply DEA – Data Envelopment Analysis – to the question of
how to measure the efficiency of the advertising in the traditional media. Further Yunjae
Cheong (2006) uses the similar model to carry out a study on the evaluation of ad media
spending efficiency. This model focused on how one could measure, maximize and
benchmark the effects of advertising media spending thereby improving the effectiveness
of advertising.

Yew, Keh and Ong ( 2005) report that intensive investment in advertising contributes
positively to the one-year stock market performances of non-manufacturing firms.
However their results were inconclusive whether manufacturing firms benefit from
investment in advertising as measured by the three-year stock market performance.

Mathur and Mathur (1995) using event study methodology concluded that investors
react positively to announcements of advertisement changes leading to higher market
value for the firms.

Graham and Frankenberger (2000) examined the asset value of advertising

expenditures of 320 firms with reported advertising expenditure for each of the 10
consecutive years ending in 1994, seeking to determine the impact of advertising
expenditures on the financial performance. They used the changes in year to year
differences in advertising expenditure to measure the impact on asset value and subsequent
market value of the publicly traded firms.

34
Boddewyn & Leardi, (1989, p. 365), states the following sales promotional types:
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 programmes.
All these are employed by companies to increase the profitability through motivating
consumer’s to make an immediate purchase. Another form of sales promotion is a group
promotion. A group promotion would be to offer two complementary but different
products (for example/- soap and toothpaste) being sold together maybe at a reduced price
for a limited time. Some researches prove that sales promotions do not have a constant or
continued effect on volume of sales of a firm which tend to diminish and come at the
initial level at which it was before the sales promotion is being offered (Dekimpe,
Hanssens and Silva-Risso 1999; Pauwels et al. 2002; Srinivasan et al. 2000). However the
usefulness of sales promotion, that whether it promotes, the long term growth and
profitability among brands for which it is projected is not compulsory. (Kopalle, Mela and
Marsh, 1999).

Research conducted by Ailawadi and Neslin (1998) revealed that sales promotions
motivate the consumers to make immediate purchases and also positively impacts the
consumption volume. A research conducted by Dekimpe et al. on four different product
categories to find out the permanent and temporary effects of sales promotions on sales
volume. Their research has proved that there are rarely any permanent affect of sales
promotions on the volume of sales. Thus showing that sales promotion does not change the
structure of sales over the long run, this implication is analyzed through our research also.
However the long run profitability of sales promotion is largely linked with the cost
parameters and magnitude of response, but we have made brand loyalty the benchmark of
long term impact, because it is consumer’s brand loyalty that ultimately increases the
customer lifetime value, i.e. an important indicator of future profitability. Dekimpe et al.
also revealed in the research that the diminishing impact of sales promotion may also be

35
because of choice of brand, quantity which is purchased and category incidence. This
dimension is also covered in our research through the analysis of extraneous variables. In
another research conducted by Koen Pauwels (2002) he has examined the permanent
impact of sales promotion on accumulative annual sales for the two product categories
which include storable and perishable products. It was found that perishable and storable
product categories lack permanent effects of sales promotion. Furthermore it is revealed
that affects of sales promotion are short lived and persist only on average 2 weeks and at
most eight weeks for both product categories. The research’s results prove the common
concept that sales promotion makes only benefits which are temporary for the established
brands.

Okeji (2008) evaluated is effective advertising as an effective marketing tool in Nigeria:

Evidence from food and beverages industry. He employed a total sample of fifty members
of staff of the Nigerian Bottling Company as respondents to investigate their perception
regarding the effectiveness of advertising as a marketing tool in the company. The
responses were analyzed using correlation and the Chi-square statistic. The study found
that advertising contributes positively to sales of the Nigerian Bottling Company Plc as
depicted by 100% response rate. The weakness of the study lies in its arbitrary drawing of
sample size without recourse to any objective criteria.

Thus it becomes very difficult and unsafe to generalize based on the findings of the study.
Abiodun (2011) examined the impact of advertising on sales volume of Starcomms Plc.
The study used frequency tables, percentages and Chi-square to establish relationship
between advertising and sales volume of the company. Despite the attempt made by the
study to establish relationship between advertising and sales volume of the company, the
study suffers from a number of weaknesses. The study failed to clearly reveal the impact
of advertising on the sales volume of the firm because it utilized primary data that does not
adequately capture the impact of relationships. Similarly, the sampling procedure of the
study and the absence of validity and reliability test for the research instruments may have
affected the data collected and by implication the findings of the study. Lastly, the number
of questionnaire copies filled and returned was not adequate by any systematic standard

36
for the test of hypothesis. In a related study, Akanbi and Adeyeye (2011) examined the
relationship between advertising and sales volume of Nigerian Bottling Company Plc
between 1999 and 2009. Using the OLS regression technique and t-test on annual time
series data of advert costs and sales volume as surrogates; the study found a significant
relationship between advertising and sales volume of the company.

Summarizing the above, they conclude that “advertising then consist of all the activities
involved in presenting to an audience a non-personal, sponsor-identified, paid-for message
about a product or organization”. Those views of Etzel et al., (1997) coincide with the
simple but all-embracing definitions of Davies (1998) and Arens (1996). For instance,
while Davies states that “advertising is any paid form of non-personal media presentation
promoting ideas/concepts, good s or services by an identified sponsor. Arens expressing
almost the same view describes advertising as “the personal communication of
information usually paid for and usually persuasive in nature about products (goods and
services) or ideas by identified sponsors through various media”.

From the preceding, it could be concluded that the purpose of advertising is to create
awareness of the advertised product and provide information that will assist the consumer
to make purchase decision, the relevance of advertising as a promotional strategy,
therefore, depends on its ability to influence consumer not only to purchase but to continue
to repurchase and eventually develop brand loyalty. Consequently, many organizations
expend a huge amount of money on advertising and brand management.

2.2 Empirical Literature:

A lot of empirical studies have been carried out on advertising, one of such was carried out
by Karounwi (1998), he said the producer’s ultimate goal is to sell product and make

37
profit and one of the ways which he could achieve this is through advertising. The
researcher noted the fact that there are stiff competitions in the market especially with
advertising messages reaching the ultimate consumers first. Wright (1991) believed in is
tentative findings that consumers are not helpless victims of advertisement once they are
constantly exposed to various kinds of advertisement, they become motivated.

Olawuyi (2004) in his own study, says that men of the world who want the best wherever
they find it know that advertised goods are invariably the best of its kind for reliable
product can stand up to intensive publicity. The manufacturer who makes a public claim
must be able to prove it by advertising goods that are good for buying.

Also, Galbraith (1963) states that advertising has an effect on the rising sales of brand
product categories and therefore increases the profit of the product. In a study undertaken
to find out the role of social status in decision process, Kassarijian et.al. (1995) stated that
increased social interaction permits the more rapid spread of new ideas and that there is a
relationship between advertising appeals and social character. It may be necessary to
mention that marketing activities are interwoven and no one’s activities are in stage and
except one stage is completed the company may not go over to the next stage. This has
resulted in people seeing marketing as an integrated system.

Stanton (1978) in one of his books sees marketing as a total system in which we price,
promote, and distribute satisfying goods and services to potential customers. Arising from
Stanton’s definition, it becomes evident that marketing activities are all geared toward
consumer’s wants, needs, and satisfaction with a view to making some level of profit.

Satisfying the needs of target market brings one to the use of 4p’s in marketing otherwise
known as marketing variable. When discussing the marketing variable many talk about the
types of product, the price attached to the product, the advertising aspect to create product
awareness, persuasion and finally, the place or distribution/logistics. For any good
organization, the satisfaction of the needs of target market is highly dependent on its
fashion and how it manipulates the four utilities to suit the needs of the consumers and the

38
organization.

As a matter of fact, profit making should not be the primary objective of any organization
rather, quality product will satisfy consumer’s needs and enhance repeat purchase.
Definitely the company will make some profit in order to remain in business. This is also
applicable to the beverage industry, it is pertinent to mention that this will only be
achieved when a company produces a quality product and this product is reasonably priced
based on its value to the consumers and a good promotion employed to inform and create
product awareness and the product is within the reach of the target consumers.

According to Young (1965), advertising does not inform the public that a product exists
but promotes its benefits, it also persuades, induces people to like, prefer and buy a
product to others.

39
 2.2.1 RELATIONSHIP BETWEEN ADVERTISING, SALES AND PROFIT:

With companies investing millions of naira or dollars in marketing communication

including advertising, it is but natural to examine its impact on the bottom line of the firm.
With markets becoming powerful, practitioners and researchers have turned their attention
towards examining the impact of communication activities like advertising on firm
valuations.

Moreover, interest is rising in quantifying the impact of marketing activities on firm’s

profitability and value providing the framework for linkages between marketing, finance
and strategy. This study focuses on studying these relationships by seeking to measure the
impact of advertisement spending by a firm on the firm’s sales and profitability.

In today’s competitive era one is constantly bombarded with advertisements. Empirical

studies show that advertisements have an influence on the purchase behavior of
consumers. Consumers purchase decision is also influenced by the “value” they feel they
would derive from purchasing that particular product or service. Consumers expect a
return on investment (price Vis a Vis value). In other words, consumers expect value for
each kobo they spend. At the other end of the spectrum the marketers expect a return on
the investment they make on advertising. This is natural given the fact that promotion
activities do cost the firms a lot. The return may be in the form of increased profitability
and an increase in firm’s turnover. Every year companies invest millions of naira or dollars
in marketing communication. A bulk of this obviously goes into advertising expenditure.
Naturally, marketers expect a return on investment (ROI) on this. Their expectation stems
from the likely impact, marketing investments have on the market performance and thus
the profitability of the firm. Raymond (1970) argues that the effectiveness of advertising
conveys different meanings to different meanings to different groups. To a manager, it
would obviously mean the impact the advertising strategy has on the firm’s profitability.
With marketing communication used for creating awareness and building a long lasting
relationship, many studies have focused on copy and media effects and awareness building
about the product.

40
A metrics have been developed to assess and measure consumer awareness and loyalty.
Besides many studies use the AIDA or its adaptations that has been around from the early
20th century (Strong 1925). Few research studies concentrate on measuring the sales and
profit effects (Gattigon 1993, Montrala 2002; Naik et al 2007). A cursory glance at this
suggests that these effects have been studied on the US consumers and markets. It
therefore is imperative to study the impact of spending on advertisements on the sales and
profitability of the firm.

CHAPTER 3
RESEARCH METHODOLOGY
3.1 Data Analysis Techniques:
41
In the analysis of data and testing of hypothesis, the researcher shall make effort to study
every available document. In order to analyze the data, the regression analysis was used to
test the hypothesis of the variables involved in the study.

3.2 Model Specifications:

The researcher used regression analysis with the following model specification.

Y= inventory

β0= Coefficient of the equation

β1β2 β3= coefficient of

variable X1, X2, X3 µ=
error term
X1=
Profi
t
after
tax
X2=t
urno
ver
X3= earnings per share

F-test is the proposed model to be used in analyzing the attainable data,

Anova is used to assess whether the expected values of a quantitative variable within several
pre-determined groups differ from each other.

42
F =
Explai
ned
varian
ce
Unexp
lained
varianc
e

CHAPTER 4
DATA ANALYSIS & INTERPRETATION

43
Test of Research Hypotheses:

Having given a careful analysis of the data obtained from the Annual report and accounts
of Securities and Exchange Commission, PZ Cussons Plc, May & Baker Plc, Nigeria
Bottling Companies Plc, UAC Plc and Unilever Plc the hypotheses earlier formulated in
the first chapter of this study will now be tested and the results fully discussed below. In
all, there are two hypotheses, which are to be tested, and in doing so, SPSS version 17.0,
specifically regression, is employed, with a value of 0.05 (level of significance) that
corresponds to a 95% confidence level. Therefore, all tables presented are SPSS analysis
outputs.

Hypothesis One:

Ho: There is no significant relationship between marketing expenses

and profitability of the firm. The linear Regression analyzed through
SPSS is presented below: Regression
PZ CUSSONS PLC

Model Summaryb

Mod R R Adjusted R Std. Error of the Durbin-

el Squar Square Estimate Watson
e

1 .898a .807 .711 10.03941 1.653

a. Predictors: (Constant), Turnover/Revenue

b. Dependent Variable: Profit after Tax

Source: Field Study 2014

MAY & BAKER PLC

44
 Model Summaryb

Mod R R Adjusted R Std. Error of the Durbin-

el Squar Square Estimate Watson
e

1 .839 .602 .498 83857.98705 2.994

a

a. Predictors: (Constant), Turnover/Revenue

b. Dependent Variable: Profit after Tax

Source: Field Study 2014

NIGERIA BOTTLING COMPANY

Model Summaryb

Mod R R Adjusted R Std. Error of the Durbin-

el Squar Square Estimate Watson
e

1 .464 .316 .177 8.66568E5 3.159

a

a. Predictors: (Constant), Turnover/Revenue

b. Dependent Variable: Profit after Tax

Source: Field Study 2014

45
UAC NIGERIA PLC

Model Summaryb

Model R R Adjusted R Std. Error of the Durbin-

Square Square Estimate Watson

1 .614a .501 -.500 1.84148E6 3.352

a. Predictors: (Constant), Turnover/Revenue

b. Dependent Variable: Profit after Tax

Source: Field Study 2014

UNILEVER GROUP

Model Summaryb

Mod R R Adjusted R Std. Error of the Durbin-Watson

el Squar Square Estimate
e

1 .769a .591 .387 258.15979 1.874

a. Predictors: (Constant), Turnover/Revenue

b. Dependent Variable: Profit after Tax

Source: Field Study 2014

46
PZ CUSSONS INUDSTRY- Y = -178.708+ 2.374x1

MAY & BAKER PLC- Y = 131596.527– 0.02x1

NIGERIA BOTTLING COMPANY- Y = 1159784.628- 0.019x1

UAC NIGERIA PLC- Y = 2565114.472– 0.003x1

UNILEVER GROUP- Y = 1061.924+ 0.079x1

The results of the Regression show that at the 5% level of significance, only the
coefficients of the intercept and Turnover/Revenue are statistically significant. The
analysis of the coefficients of multiple determinations (R 2) which measures the goodness
of fit of a model revealed R 2 of about 0.807, 0.602, 0.316, 0.501 and 0.591 respectively
which implies that 80.7%, 60.2%, 31.6%, 50.1% and 59.1% of the systematic variations in
the Profit after Tax are being explained by the variations in Turnover/Revenue.

Also, the Analysis of the T-Statistics (T-TEST) which is expressed as the ratio of
estimated parameter to its standard error was used to test for the individual significance of
individual estimated parameters. The model is statistically significant given the F-value
computed is 8.375, 5.003, 6.550, 6.120 and 2.891 respectively which is greater than 2.82
from the F- table. The Durbin-Watson statistics revealed 1.653, 2.994, 3.159, 3.352 and
1.874 respectively which is approximately the criteria of 2.0 and it can be deduced that
there is an absence of serial correlation between the variables observed for this study.

INTERPRETATION:

Fcal 8.375, 5.003, 6.550, 6.120 and 2.891 respectively > F tab 2.82, we therefore reject H o
and therefore there is a significant relationship between marketing expenses and
profitability of the firm. Alternatively, the level of significance 0.05 is greater than the
asymptotic significance value (P-value) of 0.030, 0.037, 0.008, 0.016 and 0.005
respectively we therefore reject Ho and accept Hi that there is a significant relationship
between marketing expenses and profitability of the firm.

47
 Hypothesis Two

Ho: There is no significant relationship between turnover and

marketing expenses of the firm. Regression

PZ CUSSONS PLC

Model Summaryb

Mod R R Adjusted R Std. Error of the Durbin-

el Square Square Estimate Watson

1 .987a .974 .923 5.18474 2.116

MAY & BAKER PLC

Model Summaryb

Model R R Adjusted R Std. Error of the Durbin-

Square Square Estimate Watson

1 .9 .821 .464 50144.47182 2.944

06
a

NIGERIA BOTTLING COMPANY

Mode R R Adjusted R Std. Error of the Durbin-

l Square Square Estimate Watson

1 .854 .729 .186 7.20670E5 2.535

a

48
UAC NIGERIA PLC

Model Summaryb

Model R R Adjusted R Std. Error of the Durbin-

Square Square Estimate Watson

1 .865a .533 1.600 2.42449E6 3.007

UNILEVER GROUP

Model Summaryb

Mod R R Adjusted R Std. Error of the Durbin-

el Square Square Estimate Watson

1 .77 .593 -.221 364.28457 1.840

0a
a. Predictors: (Constant), Turnover/Revenue, Inventory

b. Dependent Variable: Profit after Tax

Source: Field Study 2014

49
PZ CUSSONS INUDSTRY- Y = 26.547–
0.84 x1+ 1.711x2 MAY & BAKER PLC- Y =
339993.589– 0.272 x1+ 0.024x2
NIGERIA BOTTLING COMPANY- Y = -3855616.390+
2.095 x1- 0.188x2 UAC NIGERIA PLC- Y = 1.36407– 0.254
x1- 0.060x2
UNILEVER GROUP- Y = 276.529+ 0.171 x1- 0.080x2

The results of the Regression show that at the 5% level of significance, only the
coefficients of the intercept and Turnover/Revenue and Inventory are statistically
significant. The analysis of the coefficients of multiple determinations (R 2) which
measures the goodness of fit of a model revealed R 2 of about 0.974, 0.821, 0.729, 0.533
and 0.593 respectively which implies that 907.4%, 82.1%, 72.9%, 53.3% and 59.3% of the
systematic variations in the Profit after Tax are being explained by the variations in
Turnover/Revenue and Inventory.

Also, the Analysis of the T-Statistics (T-TEST) which is expressed as the ratio of
estimated parameter to its standard error was used to test for the individual significance of
individual estimated parameters. The model is statistically significant

50
given the F-value computed is 18.949, 2.901, 11.343, 7.077 and 7.728 respectively which
is greater than 2.82 from the F- table. The Durbin-Watson statistics revealed 2.116, 2.944,
2.535, 3.007 and 1.840 respectively which is approximately the criteria of 2.0 and it can be
deduced that there is an absence of serial correlation between the variables observed for
this study.

INTERPRETATION:

Fcal 18.949, 2.901, 11.343, 7.077 and 7.728 respectively > F tab 2.82, we therefore reject Ho
and therefore there is a significant relationship between turnover and marketing expenses
of the firm.

Alternatively, the level of significance 0.05 is greater than the Asymptotic significance
value (P-value) of 0.016, 0.023, 0.021, 0.031 and 0.038 respectively we therefore reject H o
and therefore there is a significant relationship between turnover and marketing expenses
of the firm.

51
 Hypothesis Three

Ho: There is no significant relationship between inventory and

profitability of the firm. Regression
PZ CUSSONS PLC

Model Summaryb

Mode R R Adjusted R Std. Error of the Durbin-

l Square Square Estimate Watson

1 .81 .670 .505 13.13852 2.216

8a

MAY & BAKER PLC

Model Summaryb

Mod R R Adjusted R Std. Error of the Durbin-

el Square Square Estimate Watson

1 .819a .672 .507 48099.51007 2.633

NIGERIA BOTTLING COMPANY

Model Summaryb

Model R R Adjusted R Std. Error of the Durbin-

Square Square Estimate Watson

1 .55 .313 -.031 8.11113E5 3.312

9a

UAC NIGERIA PLC

52
 Model Summaryb

Model R R Adjusted R Std. Error of the Durbin-

Square Square Estimate Watson

1 .722 .704 -.389 1.77244E6 2.965

a

UNILEVER GROUP

Model Summaryb

Mod R R Adjusted R Std. Error of the Durbin-

el Square Square Estimate Watson

1 .6 .501 -.500 403.67869 2.702

10
a

a. Predictors: (Constant), Inventory

b. Dependent Variable: Profit after Tax
Source: Field Study 2014

PZ CUSSONS INUDSTRY- Y = 299.284– 1.443 x1

MAY & BAKER PLC- Y = 392767.246– 0.218 x1

53
NIGERIA BOTTLING COMPANY- Y = 453328.483+ 0.227 x1

UAC NIGERIA PLC- Y = 6703745.099– 0.145 x1

UNILEVER GROUP- Y = 5051.329– 0.041 x1

The results of the Regression show that at the 5% level of significance, only the
coefficients of the intercept and Inventory are statistically significant. The analysis of the
coefficients of multiple determinations (R 2) which measures the goodness of fit of a model
revealed R2 of about 0.670, 0.672, 0.313, 0.704 and 0.501 respectively which implies that
67.0%, 67.2%, 31.3%, S70.4% and 50.1% of the systematic variations in the Profit after
Tax are being explained by the variations in Inventory.

Also, the Analysis of the T-Statistics (T-TEST) which is expressed as the ratio of
estimated parameter to its standard error was used to test for the individual significance of
individual estimated parameters. The model is statistically significant given the F-value
computed is 4.058, 4.088, 5.910, 4.159 and 4.000 respectively which is greater than 2.82
from the F- table. The Durbin-Watson statistics revealed 2.216, 2.633, 3.312, 2.965 and
2.702 respectively which is approximately the criteria of 2.0 and it can be deduced that
there is an absence of serial correlation between the variables observed for this study.

INTERPRETATION:

Fcal 4.058, 4.088, 5.910, 4.159 and 4.000 respectively > F tab 2.82, we therefore reject H o
and therefore there is a significant relationship between inventory and profitability of the
firm.

Alternatively, the level of significance 0.05 is greater than the Asymptotic significance
value (P-value) of 0.030, 0.037, 0.008, 0.016 and 0.005 respectively we therefore reject H o
and therefore there is a significant relationship between inventory and profitability of the
firm.

54
 CHAPTER 5

CONCLUSION & RECOMMENDATIONS

Conclusion: The study examined the issue of “examine the effect of advertising on sales
and profit of the company (Nigeria Bottling Company Lagos, UAC Lagos, PZ Lagos, May
& Baker Lagos and Unilever Group Lagos)”. From the data and information collected
scientifically tested and analyzed in the course of the research the following conclusions can
be deduced from the study that there is a significant relationship between marketing
expenses and profitability of the firm. There is a significant relationship between turnover
and marketing expenses of the firm. Also, there is a significant relationship between
inventory and profitability of the firm.

Recommendations:

Based on the valid conclusions reached the following recommendations if implemented

faithfully would assist in meeting the objectives set for the research. It will improve the
advertising in Nigeria, such that; The advertising and personnel department should
maintain an effective medium of advertising in consideration of cost and quality.There
should proper advertising mechanism that will foster the reputation of the company as well
as the products.Organizations should use the best medium of advertising that will create
easy awareness of usage of products.Organization should ensure that ways of determining
the profit generated via effective advertising.

55
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