A CASE STUDY OF SLEEPING BABY COMPANY

CHAPTER ONE

1.0 Introduction.

This chapter will present the background to the study, problem statement, purpose of the study, objectives of the study, the research questions, the scope of the study, the significance, and operational definition of terms and finally the conceptual framework of the study.

1.1 Back ground of the study.

Nowadays competition among firms has grown stiffer as every firm seeks to achieve their objectives, to enhance performance which can be translated through achieving greater sales and profit. As a result, majority of the companies in the current society are adopting advertising as an effort to boost their profits.

The basic goal of any organization is to increase its sales. Different method is used to achieve this purpose it may be direct or indirect. Advertising is one of them. Sales promotion is diverse collection of incentive tools, mostly, short term design to stimulate quicker and/or greater purchase of particular products or services by consumers (Kotler, 2002).

Sales performance describes the trend of collections in terms of revenue when comparing different periods. The sales may be in form of offering products or services to consumers. A service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything (Kotler and Armstrong, 2002).

Sales volume is the core interest of every organization and is based on sales and profit. When volume goes up profits rises and management in organizations is made easier

Advertising is a major component of integrated market communication and it considered to be the most visible and expensive marketing activity. It is also considered to be among great traditional promotional mix strategies which have been established by many companies nowadays.

 

 

Advertisement is simple and easy to adopt and apply in the market and enhance the volume of the sales (Hanssens, Parsons and Schultz, 2001). The budget portion of the organization relating to the marketing department increases constantly (Mollahoseyni, 2012)

Advertisement has direct impact on the minds of the consumer to consume greater portion of the product and quick consumption. Advertisement also increases the profitability of the organization (Ailawadi and Neslin, 1998). Advertisement is beneficial in both short run and long run businesses although in long run it is most valuable, it increase the value of the product and organization (Pwaels, Silva-Risso & Hanssens, 2003).

Consumer promotion is a type of advertisement which consists of free samples, prizes for contest’s winners, different packages and price plans. Advertisement is used to enhance the consumption of the consumers (Kotler and Armstrong, 2002).

Advertisement consists of some kinds of advantages while some are communicative according to their nature. Brand loyalty is major requirement of the advertisement. With the advertisement we can easily enhance the loyalty of our customer.

In Latin, ad vertere means “to turn toward. The purpose of advertising may also be to reassure employees or shareholders that a company is viable or successful”. Advertising messages are usually paid for by sponsors and viewed via various traditional media; including mass media such as newspaper, magazines, television commercial, radio advertisement, outdoor advertising or direct mail; or new media such as blogs, websites or text messages. Modern advertising was created with the innovative techniques introduced with tobacco advertising in the year 1920, most significantly with the campaigns of Edward Bernays, which is often considered the founder of modern marketing (Kazmi, 2005).

Advertising is a tool of marketing for communicating ideas and information about goods and services to an identified group, which employs paid space or time in the media or uses another communication vehicle to carry its message. It openly identifies the advertiser and his relationship to the sales effort (Wanoff, 1997)

 

Advertising is also any paid form of non-personal communication about an organisation, product, or ideas by an identified sponsor (George and Michael2007;P 17), There are various forms of advertising like informative advertising, persuasive advertising, comparison advertising, and reminder advertising. Informative advertising is used to inform consumers about a new product, service or future or build primary demand. It describes available products and services, corrects false impressions and builds the image of the company, (Kotler, 2010).Advertising can be done through print media which includes newspapers ,magazines ,brochures ,Audio media for example Radio, and visual media which includes billboards, and television (Kotler and Armstrong 2010).

According to Clow and Blaack (2006), advertising represents an important mean by which organisations communicate with their customers, both current and potential. Thus, having clear objectives for advertising will aid operational decision making for advertising programs in effectively convey the intended message to the audience. The objectives of an advertising campaign may adopt many forms such as the following, increasing brand awareness of existing brand or create awareness of new brand, building brand image, increases customer traffic, increasing retailer or wholesaler orders, responding to inquiries from end users and channel members, providing quality information.

Advertising plays a significant role in developing an international presence for well-known brands around the world. If we were to make a list of some of the internationally well-known brands, household brands such as Sony, Marlboro, McDonalds, Nike, Disney, Kodak, and Coca-Cola are likely to come up (Hackley,2005). These are the companies that, as matter of fact, have invested heavily and regularly in advertising to become the internationally renowned brand that they currently are. It is quite impossible to conceive these brands in the same way had they not relied on advertising mode of communication.

Advertisement in such a media as print (newspaper, magazines, billboards, flyers) or broadcast (radio, television) typically consist of pictures, headlines, information about the product and occasionally a response coupon. Broadcast advertisement on the other hand consists of an audio or video narrative that can range from 15seconds spots to longer segments known as infomercials, which generally last 30 to 60 minutes. (Busari 2002)

 

Advertisements can also be seen on the seats of grocery carts, on the wall of airport walkways, on the sides of buses, airplane and train. Advertisements are usually placed anywhere an audience can easily and/or frequently a access visual and/or video. (Busari 2002)

Sleeping Baby Company started in 1995 from Kampala, a capital city of Uganda. It thrived greatly and enabled the opening of other branches to do branding and packaging in order to boost production for the high demands of the products. This led to the startup of the Sleeping baby factory Mbale branch in 1998 in the industrial division council by the signing of the memorandum of understanding between the company and the division offices to meet one another’s terms and condition. That led to good relationship of the company and the community members up to date and it deals in the production of a variety of beauty products for example smearing jelly, soaps, body lotions and. It also deals with the other domestic products like cooking oils, beverages and plastic containers.

Sleeping baby advertises using visual media for example the television and the Audio the radio, print media for example the newspapers. But there is some inefficiency in the way this organization carries out its advertisements for example Sleeping baby adverts in the visual media are done in local language i.e. (Luganda) a language that can only be understood by a few people in the country, making the advertisement appealing only to a group of people. The advertisements lacks the unique selling proposition in the statements used to differentiate their products from competitors, they are   done in the same way as the competitors making it hard to differentiate its ads from others.

1.2 Problem statement

The use of advertising is effective to boost firm’s performance. This is evidenced from the usage of advertising and the expenditure on advertising which has been increasing along years. In Uganda, most companies are spending money in advertising their company products or services’ brands and expect that consumers or those who read the advertisement will react positively towards their products or service brand and hence increase their profitability , however there is no measurement or evaluation of the effectiveness of advertising, whether it is able to boost the sales of the products, or just simply to build brand awareness, to put it in simpler term, with the amount of resources poured in for advertising. Does it actually boost up a firm performance is questionable, For the last three years the sales performance of Sleeping Baby Company has been going down despite the enormous advertising being done by the marketing department of the company. there  have been decline in sales performance  for example, the  external auditor’s report(2013) revealed that Sleeping baby company had made profits of 105 million shillings, the report of (2014) by the same audit firm showed that the profits in that year were 75 million, The report recommended that management of the company  should adopt extensive advertising of its products using various channels available to increase their sales volume,  such channels include, through taking part in charitable funds in Uganda and even sponsoring sports,  advertising using radio, television and newspapers.

However a recent audit report presented  by Wade & partners, the firm that the company contracted to carry out the audit of 2015  revealed that the company profits had tremendously reduced by almost half from that of 2014, the audit report( 2015) showed a profit of 38 million shillings.

Despite all efforts advanced by sleeping baby through advertising regularly, the sales of the company have not improved to the desired targets. It is incumbent upon this that the researcher developed a desire to undertake a study to establish if there is any positive relationship between advertising and sales performance of firms.

1.3 Purpose of the study    

The purpose of the study will be to establish the effect of advertising on sales performance of Sleeping Baby Company.

1.4 Specific objectives of the study

1. To establish the forms of advertising adopted by sleeping baby company.
2. To access the level of sales performance in Sleeping Baby company.
3. To investigate the relationship between advertising and sales performance in Sleeping Baby company.

 

1.5 Research questions

1. What are the forms of advertising adopted by Sleeping Baby Company?
2. What is the level of sales performance in Sleeping Baby Company?
3. What is the relationship between advertising and sales performance in Sleeping Baby Company?

1.6 Scope of the study

1.6.1 Geographical scope

The study will be carried out in sleeping Baby Company in Mbale, located along Maluku road in industrial area.

1.6.2 Content scope

The study will concentrate on o information concerning advertising as the independent variable and sales performance as the dependent variable.

1.6.3 Time scope

The study will be undertaken for four months,

1.7 significance of the study

• The study may help the management of Sleeping Baby Company to discover the effect of advertising on sales performance. This will help them to select better advertising medium and procedures which will result into improved sales performance.
• The study may be significant in adding on the existing literature on effects of advertising on sales performance of firms hence providing reference for future studies carried out on the same problem.
• The research may be of great importance to me as a researcher because I hope to acquire research skills which I can apply to conduct research in other subjects. Skills like developing questionnaires, interacting with new people and get the necessary information and analyzing data

 

1.8 Operational definition of terms.

Advertising:

This is any paid form of non-personal presentation of idea, goods or services by an identified sponsor.

Product:

This can represent anything a consumer acquires or might acquire to meet a perceived need. The need not necessarily need to be satisfactory. Some product might not satisfy their needs.

Sales:

This is a process of selling something such as a product, ideas or services. It also covers the number of goods or services sold at a given point in time.

Sales Volume:

This is used to measure the amount, usually in cartoons/crates of the product being sold at a given point in time. This is commonly used as well with products but it could be as used within a service company.

 Sales performance

This refers to measuring the results of a firm’s policies and operations in monetary terms. These results are reflected in the firm’s return on investments on assets, value added among others