THE IMPACT OF TRADE FAIR ON THE DEVELOPMENT OF THE NIGERIAN ECONOMY
CHAPTER TWO
LITERATURE REVIEW
2.1 Economic Development
Economic development encompasses progress in providing livelihood on a sustainable basis, access to education and basic healthcare for the majority of the population (Belshaw & Livingstone, 2002:3). The meaning of the term “development” becomes clearer with the understanding of the term “economic growth”. By economic growth, economists generally mean the increase over time in a country’s real output per capita. Though other measures can be used, output is most conveniently measured by the gross national product (GNP). This implies that economic growth is measured by the increase in a country’s per capita GNP. Economic growth is thus sustained expansion of production possibilities measured as an increase in the real GDP over a given period.
According to the United Nations Development Programme (UNDP, 1992:1), development should focus on human development. The UNDP argument stresses that economic growth must be managed and wealth distributed for the benefit of the majority of the country’s people. Central to this process of human development is the enlargement of people’s choices, most crucially in the areas of being able to live long and enjoy healthy lives to have access to education and to the varied resources needed for a decent standard of living. Progress in human development can also be measured by the degree of political freedom, guaranteed human rights and personal self-respect the citizens of the country enjoy. On the basis of this reasoning, the UNDP (1992:1) evolved the HDI, including component variables such as the standard of living (purchasing power based on real GDP, knowledge (adult literacy and more years of schooling) and longevity (life expectancy). Essentially, development is the increasing ability of a given society to productively manipulate her environment. This entails a rising level of social and scientific consciousness, and advancement in science and technology for the society in question (Adenuga, 2003:46). Kayode and Odusola (2001:17) see development as a process that results in improved economic status for a country. They say it is often measured by increased real per capita income and if possible should be sustained over a long period of time. Moreover, they note that development is a process involving elements of modernisation such as enhanced productivity, social and economic equalisation; improved knowledge, attitudes and institutions; and rationally coordinated policy measures that are capable of reviewing all obstacles to social economic transformation. Intuitively, economic development goes far beyond just real per capita GNP or national income. Its sustenance over time through the continuous increase in per capita and productivity. It is about who benefits from the fruits of economic growth, the vast majority of the populace or just a fraction of it (the high-middle-income population). Economic development could include changes in social, political and institutional structures in the economy, reflected in the character of the people and the attainment of better life for the majority of the population in a society. Economic development could also involve development in different sectors of the economy. It involves efficient economic management, good governance, sustainable development and poverty reduction; all of these are goals to which development stakeholders have to contribute (Sako, 2002:75). Ruttan (1997:225) explains that the basic needs approach represents a radical departure from conventional development strategy.
2.2 Trade Fairs or Trade Exhibitions
Trade shows & exhibitions provided a forum for companies to display and demonstrate their products to potential buyers who had a special interest in buying those products. The compacted time frame and concentrated location of trade shows were cost-effective for exhibiting companies and convenient for buyers. Trade shows and exhibitions were expensively used as prominent part of marketing strategy. The primary role of trade shows in the marketing strategy was that of a selling medium. Exhibitions provided a natural and nearly perfect plat form for the delivery of solutions to the buyers. There were two different types of trade shows. There was the business-to-business trade shows- whose exhibitions were in the areas of health care, computer products electronics, advertising specialties, heavy equipment, agriculture, fashions, furniture and toys-focus on goods and services within an industry or a specialized part of an industry or a specialized part of an industry. They were targeted to wholesalers and retailers with the intent of pushing products through the channel of distribution. There was the consumer trade shows which also had an industry focus.
They targeted the general public and were designed to stimulate end-user demand. The kinds of products exhibited at that open show included autos, housewares, antiques and crafts. Trade shows ranked second to advertising in the business marketing communications budget for many companies. That was why trade shows had emerged as an important component of business companies’ marketing strategies. Trade shows, also known as trade fairs, expositions, scientific/technical conferences, conventions or exhibits, were basically the gathering of an entire industry at a single location at a given point in time. Companies paid for a booth to expose their products and services at the trade show. To many companies, trade shows represented an effective way of doing business because they attracted huge crowds of visitors. Herbig et al. (1998) reported that whilst companies took on average five sales calls to close a sale if the prospect was found by the salesperson, it took only 0.8 sales calls on average to close a sale if the prospect was found at a trade show. A few other advantages of trade shows for exhibitors included among others, the introduction of new products to a large number of people, the enhancement of goodwill, uncovering of potential customers, promotion of existing products, reinforcement of existing customer relationships, gathering competitors information, general market research, and the improvement of corporate morale. Trade shows were obviously regarded as an important tool of marketing communications, yet relatively few studies had examined the effectiveness of the medium (Hansen 1999). This might be due to the difficulties of isolating the various factors involved in a successful promotion, the great variety of types of exhibitions or the well-established attitudes on the part of exhibitors and non-exhibitors (Blythe, 1999).
Promotion Mix
The strategy that the business used to persuade a person about their products was contained in the marketing communications programme or promotional mix. The communication mix consisted of a set of tools that could be used in different combinations and different degrees of intensity in order to communicate with a target audience. There were five principal marketing communication tools namely, Advertising, Personal selling, Direct marketing, Sales promotion and Public relations, Fill (2002).
The aim of organization’s promotional strategy was to bring existing or potential customers from a state of relative unawareness of organization’s products to a state of actively adopting them. To generate sales and profits, the benefits of products had to be communicated to customers. Equally, due to continued business competition, firms had to go for product differentiation besides diversification; all those had to be communicated to the customer in one way or another. This was achieved through an effective promotion in any business. Cole, (1996) suggested that the principle methods of doing these were; advertising, personal selling, sales promotion, and publicity.
West (1987) explained that the type of promotion to use depended largely on the nature of the industry and the nature of information. For instance, complex products such as cars required personal selling. While Pride & Ferrell (2003), contended that the organizations objectives, policies and budget influenced the type of promotion elements used in the promotion mix.
Marketing Promotion Mix decisions
Peter & Donnelly, (2004) explained that markets strived for the right mix of promotional elements to ensure that their product was well received. Batra Myers & Aaker (1996) argued that the different elements of the communication mix had to be used in a way that the strengths of one were used to offset the weakness of another. The aim of determining the combination of promotion mix was to ensure that the promotion programme was effective. Peter & Donnelly (2004) enumerated three basic factors that were necessary when devising promotion mix as; the role of promotion in the overall marketing mix, the nature of the product and the nature of the market. They further stated that the promotional mix was likely to change over time, and therefore needed continuous adapting to reflect changes in the market. Jefkins (2000) stated that advertising presented the most persuasive possible selling message to the right prospects for the product or service at the lowest possible cost. Kotler (2003) defined advertising as any paid form of non-personal presentation and promotion of ideals, goods or services by an identified sponsor.
In essence, advertising existed to inform, persuade and remind a buying public of a particular product or service and it did so at a lower cost per head to the organization than personal selling or exhibitions. Trade shows provided the right environment through which exhibitors could advertise their products and services. According to Kotler (2003) personal selling was face-to-face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions and procuring orders. Trade shows and exhibitions were the platforms for personal selling. Direct marketing was one of the latest additional elements to the traditional promotional mix tools. Advances made in the telecommunication sector had then opened new awareness where promotions could be carried out. That new medium incorporated the use of mail, telephone, fax, email, internet and other non-personal contact tools to communicate directly with or solicit response or dialogue from specific customers and prospects, Kotler (2003).
Peter & Donnelly (2004) indicated that sales promotion was an activity that offered customers, sales personnel or resellers a direct inducement for purchase of product. Jefkins (2000) stated that sales promotion covered special promotional schemes usually of limited duration at the point-of-sale or point-of-purchase. Batra et al, (2005), explained that sales promotions were key element in many communication programmes as they induce trial or repurchase where advertising had created awareness and favourable attitudes but failed to stimulate action. Action was elicited by the limited duration the promotion ran using the common communication platforms such as contest, games, sweepstakes, lotteries, premiums, sampling, fairs and trade shows, demonstrations, coupons, rebates, low-interest financing, and trade-in allowance, Kotler (2003). West (1987) explained further that to spend money effectively on promotion, the organization had to understand the following issues; first, the way advertising worked and what it could or could not achieve, secondly, the strategy of the organization and how promotion related to it, thirdly the type of promotional material available which best fitted the organization requirements and fourthly, the way the organization should structure the promotional investment in a particular year. According to Pride & Ferrell (2003) Public Relations was a broad set of communication efforts used to create and maintain favourable relationships between the organization and its stakeholders. Peter & Donnelly, (2004) viewed it as a non-personal form of a communication that sought to influence the attitudes, feelings and opinions of publics about the organization.
Batra, Myers & Aaker (1996) emphasized that more organizations were turning to public relations to reach the hard-to-reach consumers who try to avoid advertising unlike before when it was used as a way to build a corporation’s is public image. They were of the view that public relations was more credible because it was more subtly delivered compared to advertisements. Jefkins (2000) noted that public relations activities helped to bridge gaps between advertising campaigns and assisted to maintain long-term brand recognition.
Promotion objectives of trade shows and exhibitions
Maitland (1997) advised that it was of paramount importance for a firm to be aware of its goals. He pointed out that an organization should only attend an exhibition if it fitted in with its overall plan and assisted in obtaining set business objectives.
Patten (2001) enumerated some of the marketing objectives that organizations could use to exhibit in shows as; selling more products, launching a new line, finding distributors or outlets in a new territory and finding agents. Others were attracting new market, repositioning ones company in the market, giving support to field agents, collecting feedback on a projected new range of products, re-establishing links with clients whom the organization did not see often and public relations to strengthen the organization’s position in the market place.
Factors that influence the choice of trade shows and exhibitions as a method of promotion
The company’s choice for the appropriate medium for promotion was very important since the promotional tool was highly dependent on the marketing budget. The firm needed to maximize exposure to the target audience to ensure return to investment. Therefore, the choice of medium used is influenced by a number of factors:
Promotional objectives
The choice of trade shows as a promotional tool was often influenced by the company’s promotional objectives. Yeshin (2006) noted that there were a variety of reasons why companies participated in trade shows. Major objectives being building awareness, introducing new products, reach customers cost effectively, generate additional sales, gain information about competitors among others. Exhibitions being a direct face-to-face medium provide a good platform to collect feedback on a projected new product for one could see lots of prospects in a short time, Patten (2001).
Nature of the product
The nature of the product either, consumer or industrial played a crucial role in determining participation in trade shows. Maitland (1997) explains that large industrial products could be displayed under controlled conditions. They may also be demonstrated, touched, tested, examined and operated by exhibition attendees.
Target market
Reaching the target market effectively was crucial to the marketer. The promotional medium used was therefore highly dependent on how well it was able to reach the target market. Exhibitions were flexible marketing medium in that they represented the market in one place and time. They brought together suppliers, buyers, and the media among others. Exhibitions may be effective if the audience was specialized and targeted effectively.
Competitors’ behavior
Marketers were constantly looking for ways to find creative ways to separate their promotions from those offered by their competitors.
The Conceptual Framework of Economic Impact of Industry Activities
Economic impacts are defined in this study as the changes in economic activity resulting from the activities in the trade exhibition industry. These changes have been expressed in terms of industrial output, value added, employment, foreign exchange earning and good and service taxes (GST).
Traditionally, an important use of the economic impact assessment tools is to measure or predict the economic effects of changes in tourism development and activity. Spending of tourists in a host community or region creates sales, income, jobs, tax revenues, and related economic activity. Recently, many such economic impact studies have been applied to exhibition industry as it not only includes the feature of tourism industry but also stimulate other export-related income from sectors such as freight transportation, advertisement and other business services.
The exhibition industry can have successive and magnified influences on a local economy in three ways.
• The initial injection of the exhibition spending (including spending from companies involved in the exhibitions and from exhibitors and visitors) provides direct revenues for organisers, contractors, venue operators, freight forwarders, hotels, food & beverage, retailers, airlines, sightseeing and creations, telecommunications and other local services.
• Second, the recipients of these direct expenditures spend some of that money to purchase the necessary inputs such as labour and materials. For instance, contractors purchase materials to build exhibition equipment and facilities; hotels purchase raw food for their restaurants, etc. This economic activity constitutes the indirect effect. One may have to notice the subtle revolving effect of these changes resulting from the initial trade exhibition activities between all economic sectors. Simply speaking, the 3 indirect effect would also feed back to the industries initially involved in the trade exhibitions in many rounds. Hence, the multiplier effect is named to account such revolving effect of changes in all sectors. If these multiplier effects, for example in sales revenue, are added to the above direct sales revenue of the industries initially involved in the trade exhibitions, the total sales revenue of these industries from trade exhibitions should become obviously more than their initial sales revenue. One will see very soon that such distinction between the original sales revenue and the total sales revenue from trade exhibitions is quite critical while considering the multiplier impact of trade exhibitions in the whole economy.
• Third, the beneficiaries of these direct and indirect revenues in turn spend their newly acquired income on unrelated goods and services, such as, housing, transportation and entertainment. This activity spurs successive rounds of purchases, with each round having diminishing effects because of leakage due to savings and purchase of imported products and services. This third type of spending creates the induced effect that is usually termed as the Keynesian consumption multiplier effect.
Taking together, the total effect of successive rounds of spending is a multiplier of original sales revenue from industries involved in the trade exhibitions. A simple measure of economic impact of trade exhibition would be the total effect itself. This simple measure means that the opportunity cost or the benefit forgone for not having the trade exhibition industry is the total effect. However, if one would like to measure the multiplier impact of the trade exhibition activities in the whole economy, there are two alternative measures:
(a) The total effect over the original sales revenue from industries initially involved in trade exhibitions.
(b) The total effect over the total sales revenue from industries initially involved in the trade exhibition.
As explained above, the total sales revenue should be higher than the original sales revenue. Hence, the first measure of multiplier impact should have higher magnitude than the second.
KADUNA INTERNATIONAL TRADE FAIR
Kaduna International Trade Fair is the most important annual event in the calendar of Kaduna Chamber of Commerce. Kaduna Nigeria International Trade Fair is one of the largest international trade exhibitions in Nigeria that gathers producers and manufacturers of goods and services exhibiting their latest products for sales purposes and business promotion.
The event which is first of its kind started as domestic fair, emphasizing on agricultural sector in 1974 on a biannual basis, the event continued until 1978 when three (3) domestic fairs were carried out in 1974, 1976 and 1978, respectively. In 1979 the Trade Fair becomes International, organized on annual basis. The first Kaduna International Trade Fair was held in February, 1979, at Murtala Mohammed Square where a total of 205 exhibitors participated. From the period, the event continued to grow bigger, providing avenue for:
a. The promotion and encouragement of industries and industrial inputs.
b. The promotion of all aspects of economic sectors through national and international co-operation.
c. The provision of access to research findings, new technologies and ideas for actualization by industrialists and policy makers through face to face interaction.
d. The creation of conducive atmosphere between Nigeria and other nations for joint venture project in all facets of the economy.
e. The provision of channel through which the government policies and programmes are made known and consequently attract international and local investment.
It accommodates both local and international businesses ranging from manufacturers to retailers, suppliers, distributors and more. International companies from China, India, Egypt, Bangladesh, Iran, Pakistan, Cameroon, and Niger Republic also participate in the fair. The fair features expositions of latest products and technology on electronics, phones, herbal supplements, kitchen equipment and wide varieties of Nigerian and international made products. This international trade fair in Kaduna has also create job opportunities for the unemployed youths and also boost the economic activities of the state.
The event continued to develop greatly providing an avenue for the promotion of every aspect of economic sectors through international and national partnership. It also provides and encourages development of industries and industrial inputs; the event also creates a conducive atmosphere between Nigeria and other nation for joint venture project in all areas of the economy. It is a unique event that occurs annually in Kaduna state, because it plays a very crucial role in the overall economic, social, as well as industrial development of nation's economy.
The fair attracts producers and manufacturers of goods and services from across the globe to exhibit their products, which help in promotion of business. The fair also boost all aspect of economic sectors through the cooperation of national and international sectors.