THE IMPACT OF ADVERTISING ON CUSTOMER PATRONAGE: A CASE STUDY OF CADBURY NIGERIA PLC.
1.1 Background of the Study
The essence of being in business by any business outfit 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 planning. It is so because it must be determined, in most cases, before production units will in turn affect material purchases.
Due to the dynamic nature of the environment in which businesses operate and the changing attitude of the consumer of their products, there is need for most companies to develop, modify or change their advertising strategies to suit the present changes. Companies must give more than consumers want from products; they must inform consumers and carefully position products in consumers’ minds.
Cadbury Nigeria Limited is a major manufacturing company in Nigeria; it produces a wide range of household consumables such as Bournvita, Éclairs chocolate, sweet, choco-milo, pronto etc. Its establishment in Nigeria dated back to the year 1956 when Cadbury Fry export, a United Kingdom based firm, began sales of Pronto at No 9, Orange Road,Apapa Lagos firm. Mr. George Heywood, export representative of Cadbury was sent to Nigeria from his base in the Gold Coast (Ghana) to report on the potentials to significantly increasing sales. His very enthusiastic report was accepted. Cadbury brothers then rented a warehouse at 10, Aerodrom Road,Apapa.
The success of Cadbury’s first product (Pronto) in the Nigerian market led to the introduction of Bournvita and Malt based food drink, which also was an instant success. In December 1963, the ware house was expanded to include a small production unit which packed bulk supplies of pronto and Bournvita from UK, iInto tins Cadbury Nigeria Limited was incorporated on the 9th of Jan. 1965 as an autonomous arm of Cadbury Schweppes group.
Cadbury Nigeria Limited has diversified into a wide range of household manufacturing activities which includes Tom-Tom sweets, Parazone bleach, Buttermint Sweet, Goody Goody and Tomapepe. Trust is a potent factor in the development of the company over the years. In 1964, sales volume of Bournvita and Pronto rose to such a level that a complete manufacturing scheme for the production of Bournvitaand Pronto was established and local production started in May 1965.
The company has a marketing division, economics research and development; computerization and efficient information management system have been introduced into the firm operation.The present factory established in 1966. It was nearing completion when the civil war in Nigeria broke out and this disrupted the project for some time. During the period, Cadbury recorded a sale decline as the Eastern states which were cut off accounted for over 50%of total sales. During the period however, the government placed a ban on the importation of finished goods/products. With its manufacturing facilities in place, Bournvita and Pronto then had the market to themselves. Production of Tom-Tom Sweets was introduced that same year, over 2million pounds was approved for new products, including capacity expansion of some brands Cadbury Nigeria Limited became a public company in 1976.The decision to go public was actually made ahead of the enterprise promotion decree of 1977.
The Jayes health and chemical arm was establishes also in 1976 to produce parazone bleach and other household chemicals. The following year, 1977, the first phase of a Malta extract plant was established to produce Malta extract from barley thus replacing import of Malta barley. Further sales of shares in 1978, in compliance with the decree, saw equity holding changing to 40% foreign and 60% Nigeria. Cadbury Nigeria Limited is investing in the future, a mark of confidence in the business. Its workforce has grown from a handful of 250men in Jan 1966 to over 2000 of which nearly 350 are management staff, of the 10 directors, 6 are Nigerians.
The company operates sales area offices in Lagos, Ibadan, Kaduna, Jos, Kano, Aba, Enugu, Asaba, Sokoto, Maiduguri and Ilorin. Trading records have been particularly impressive too. Growing from a turnover of one hundred and Twenty thousand pounds to Three Hundred and Thirty Seven Million Naira in 1989, the company had made huge investment in several manufacturing process, plant and equipment.
The success of any organization is the acceptability of its products by the consumers because manufacturing or production is incomplete until the product gets to the final consumers/buyers. A lot of studies have been carried out from the origin of advertising to its current trends. For instance, Holtje (1978) as quoted by Ewuola (2004), pointed out that modern advertising operation started during the American Colonial days corresponding with the time the colonial newspapers were accepting advertisement directly from people and institutions that needed their services. Some local post offices were also assisting in this respect by acting as agents for these newspapers.
1.2 Statement of Problem
One major fact is that we are bombarded with advertisement messages day-in-day –out from all imaginable media. The average consumer is exposed to a very large number of advertisements every day, particularly the urban and semi-urban population. Advertising has been perceived as a veritable medium of stimulating, motivating and influencing the purchase and other behavioural response of their prospective customers. How has advertising been able to achieve this and attract patronage of Cadbury products? Can it be said that Cadbury has made a success of its advertising based on what the consumers want? Is there any advertising strategy adopted by Cadbury in the advertisement of its products? Is there really a relationship that exists between advertising strategies in Cadbury Nigeria Plc; does Cadbury Nigeria Plc have any advertising strategy; is there any advertising strategy that would build brand loyalty among consumer?These and many other issues is what the research seeks to address and to find answers to.
1.3 Objectives of the Study
Theobjectives of this research are:
1. To determine the relationship that exists between the various advertising strategies employed by Cadbury Nigeria Plc.
2. To evaluate the effectiveness of Cadbury Nigeria Plc advertising strategies.
3. To examine the best advertising strategy that would build brand loyalty among consumers.
4. To analyze the factors that will influence the behavior of the consumer as it relates to advertising strategies.
1.4 Research Questions
In trying to sell their products, manufactures should first seek to understand the barriers and formulate strategies that address such obstacles. The following research question will be used to provide recommendation in the course of this study.
1. What relationship exists between the various advertising strategies employed by Cadbury Nigeria Plc?
2. What is the effectiveness of Cadbury Nigeria Plcadvertising strategies?
3. What is the best advertising strategy that will build brand loyalty among consumers of Cadbury Nigeria Plc?
4. What factors influence the behavior of the consumer as it relates to advertising strategy?
1.5 Scope and Limitation of study
This study is limited to Cadbury Nigeria Plc, being a major player in the consumer goods manufacturing sector. It is designed to cover both practical and theoretical effects of advertising on consumer behavior. Geographically, the study will cover Lagos State.
1.6 Significance of Study
The significance of this study cannot be over emphasized. The research work would be of great assistance to marketing practitioners, producers and the consumer of goods, especially beverages.
1. The research work is intended to throw light into the real situation of the premise on which advertising policies/strategies are based vis-à-vis consumer goods.
2. It would also help to know whichadvertising will apply to which particular strategy.
3. It will help marketers to adopt new advertising strategies, particularly on consumer goods.
4. It will provide additional literature in the area of advertising strategy.
1.7 Definitions of Terms
1. Advertising: Any paid form of non-personal presentation of goods and services and ideas by an identified sponsor.
2. Consumer: A consumer can be defined as any individual that buys goods for ultimate consumption (that is the household buyer) but not for any other purpose.
3. Consumer Behavior: This can be defined as the behavior that consumers display in searching for purchasing, using and evaluation products, services and ideas which they expect to satisfy their needs.
4. Marketing: Marketing can be defined as a process of finding out what consumers want while determining the best way to price, promote and distribute the goods or services profitability.
5. Strategy: Pattern of decisions that determine and reveal the objectives, purposes or goals and plans for achieving them.
1. Cole A. A. (1977) Behavioral aspect of marketing 1st edition, Lagos: Beyus Consult
2. Harper M (1995) The Role of Advertising; USA: Marion Harper Association Inc.
3. Kotler P (1006) Marketing management 7th Edition Percale Hall International.
4. Stanton W.J. (1982) Fundamentals of Marketing 7th Edition, USA: McGraw Hill Inc,
SUMMARY, CONCLUSION AND RECOMMENDATIONS
In chapter one, an introduction to the study was given, highlighting the research question and hypothesis, purpose of the study and significance of the study. Chapter two presented a review of other relevant works that have been done on the subject of advert consumer behavior while chapter three specifies the methodology adopted in conducting this research.
This chapter presents the summary of the study and the conclusions. It also contains the recommendations onthe impact of advertising on consumer patronage: a study of Cadbury Nigeria Plc.
The study evaluated the impact that advertising has on consumer patronage. Specifically the study was interested in the impact of advertising on one of the leading beverage companies in Nigeria, Cadbury Nigeria Plc.
Chapter one presented a background to the study, the purpose and significance as well as the statement of the problem. Four research questions were raised in relation to the problem presented. In chapter two, relevant literatures inadvertising and consumer behaviour were reviewed. Theories relevant to the study were also discussed to provide a theoretical framework for the study.
Chapter three comprised the methodology sued in gathering and analyzing data for the study. The survey design was adopted and the major instruments were questionnaire.
Chapter four presented findings in relation to the research questions earlier raised. The data collected were analyzed in this chapter through the use of frequency and simple percentages.The study used both quantitative and qualitative data in the analysis.
This chapter is concerned with the major findings that have been stated in chapter 4 of this study, four research questions were tested, accepted and supported, on the basis of the data analysis. Subsequently, recommendations were made to help beverage companies improve their implementation of advertising influence/motives.
5.2 Summary of Findings
The analysis of data presented in chapter four revealed the following:
1. The study found that consumers buy Bournvita than other types of beverages.
2. It reveals that consumers have preference for particular brand.
3. The study found that consumers of the brand find it difficult to change or switch brand when they are hooked to a particular brand.
4. Findings of the study show that advertising is considered as a factor in brand preference by consumers.
5. The study further reveals that consumers are actually aware of Bournvita beverage.
6. Study equally shows that consumers’ awareness of Bournvita is based on the role played by advertising.
7. It is revealed by the study that consumers look out for size and price in their choice of a brand.
8. Study further shows that advertisement motivates / influence consumers to purchase Bournvita more.
9. It is revealed by the study that no children make the buying decision in the purchase of beverages at home..
10. Study reveals that additional income of the consumers may lead to increase in their purchase ofBournvita.
11. Lastly, the study shows that advertising motivates consumers to buy more of the product.
Formal advertising policy that motivates/influences the buying decision of consumers must consider and adverts that appeal to them must be initiated. Also emphases must be made on the comparative advantage of the product. Price is an important factor a reduction to price must be properly communicated to the consumer adverts this will educated the consumer on the fact that the price reduction is not at the expense of quality showed be initiated. Finally, the disposable income of the household is the motor determinant of their buying patter. The more the disposable income the more a product consumer can buy.
Based on the findings, it is therefore recommended that:
i. Prices of product can be reduced to gain market share however such price reduction must be followed to proper advertising campaign to first bring thereduction of price to the knowledge of the consumers.
ii. Consumers will buy more of a product with same quality at a reduced price
iii. There is need for companies to embark on advert campaign that appeal to children and mothers usingjingles that arouse the interest of children.
iv. In formulating advertising policies, companies must emphasize the advantage of the product in terms of price/ size and the product quality, benefit and durability.
v. There is need for an improvement in the economy to empower the consumers to enable them carry out more purchase of the Bournvita product.
vi. Children should be adequately rewarded through promo by beverage manufacturing companies..