CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Advertising is undertaking to increase campaign on sales, and this can be done only if the public have full knowledge of the product or service is aimed at customers. This is carried out through Radio, Television, Magazines, Journals, Directory, Newspapers, Poster, Film show etc. whatever from the advertising takes, the fundamental principle is to deliver the message to the right audience at the right time and at the lowest possible cost, so as to achieve positive result (goals).
We are in a very dynamic and complex world. The business environment is becoming sophisticated day by day and as such, decision-making is becoming more and more challenging and risky. Business organizations are failing due to poor decisions. Investors are losing their money and are unhappy. They are being discouraged and this is quite unhealthy to the economy. In some other instances, organizations are springing up in great numbers; some are successful in the marketing of their products and services, while others are still akin to the barber’s chair syndrome where all is motion but no movement; struggling to reach their target audience. Consumers are also faced with the challenge of choice making due to indecisiveness, skepticism, indifference and confusion which are among the key sales killers in business world.
However, the consumer perception challenge is the first and greatest hurdle that advertisers must cross. Perception guides all activities of the consumer from the people he associates with to the product he buys. In the business world, it has always been what people say about a product or service and not what the marketer says. How a consumer perceives each of the different brands in a category, determines which brand he chooses. So many companies spend so much money on advertising, sales promotion, point of purchase displays and other marketing communications only to discover that many people don’t even remember the product or the promotion. On the other hand, whether consumers ultimately purchase the marketer’s brand also depends on whether the promotion and marketing communication variables facilitate purchasing.
Today, it is no longer news that we are in a season of economic anomie. All that could go wrong have been going wrong with the global economies and having ripple effects on our local business environment. Reports about the current economic crisis have been terrific and scaring. More companies are recently reported to have shut down operations while some are planning their exit from the Country due to harsh economic conditions. In the face of all these, the few others in operation are engaged in fierce battle for the soul of the consumers. To succeed, they need to understand what makes potential customers behave the way they do.
This study therefore, seeks to evaluate the impact of advertisement of indomie noodles, a product of De-united Ltd on Consumer patronage. The brand indomie with its varieties of flavours such as Onion flavor, chicken flavor, Suya flavour has become a household name since the late 90s that even a child of 2years of age could pronounce it so fluent amidst other competing brands like Chikki noodles, ‘O’ noodles, Mimi noodles of May & Baker and now the latest of them all, the Golden Penny noodles of Flour Mills Plc. With these range of competing products, massive advertising budget becomes necessary for the indomie brand, which the researcher tends to evaluate its impact on the patronage and/or perception of the consumers.
1.1.1 BRIEF HISTORY OF DE-UNITED FOOD INDUSTRIES LTD
De-united food Industries limited was commissioned in Nigeria in 1995 as the first instant noodles manufacturing company with head office in Ota, Ogun State. The company is a joint venture between Salim group of Indonesia and Tolaram group of Singapore.
Salim group is the majority shareholder of PT Indofood Sukses Makmur, a listed company in Indonesia which owns the indomie trademark, technology and expertise in instant noodles manufacturing.
Tolaram group is a Singapore based group that has businesses in Nigeria and eleven countries around the world.
According to Mr. Ashish Checker, chief operating officer of De-united, the vision of the company is to become a leading instant noodles manufacturer in Africa, committed to customers’ satisfaction through a variety of products; increase stakeholder’ value and continuously develop its human capital and the community. The company’s mission statement also reads thus “To dominate the instant noodles market by providing a variety of quality products that meet customers’ satisfaction”.
1.2 STATEMENT OF PROBLEMS
Advertising is costly; often its effects are uncertain, and sometimes it takes a while before it makes any impact on consumers’ buying behavior. It is for these reasons that many companies think it appropriate, occasionally to reduce expenditures on advertising or to entirely eliminate it. On the other hand, some companies sometimes consider it unnecessary to advertise when their brands are already enjoying great success without advertisement.
Such behavior implicitly fails to consider the fact that advertising is not just a current expense or mere exercise but an investment.
Competition poses another problem area of this study. Prior to year 2004, indomie was the only noodles in the market, which means, absence of competition. Given this situation, the product recorded high sales within the afore-mentioned period. Today, the massive introduction of the noodles earlier mentioned had made way for competition as so many women who used to sell only indomie noodles now share their resources among the different brands in order to maximize profit. Also, identified was in the area of children who are seen as the chief consumers of indomie noodles. Before now, the indomie jingles (indomie, indomie, indomie noodles, delicious and tasty ……………) was sang often among them.
Today, it’s amazing how these children now sing the mimi noodles jingles more than the popular indomie jingles. This means that perhaps, these children hear more of the mimi jingles than that of indomie, and as a result, a good percentage of them would no doubt change from consumption of indomie to mimi. All these, have resulted in low sales of indomie noodles.
1.3 OBJECTIVES OF THE STUDY
This study is guided by the following objectives.
1. To determine the role of advertisement in marketing of consumer goods.
2. To understand consumers’ views and or opinions towards advertisement of consumer products in general and indomie noodles in particular.
3. To measure the extent to which advertisement influences the behavior of consumers of indomie noodles.
4. To ascertain if a consumer good can overcome competition without advertisement
5. To determine if advertisement increases consumer’s preference of a particular product to others.
6. To ascertain which medium of advertisement will make greater impact in advertisement of consumer goods
1.4 RESEARCH QUESTIONS
This study seeks to address the following questions:
1. Is advertisement an effective tool in marketing of indomie noodles or just a mere excercise?
2. To what extent do other promotional activities undertaken by the company impact positively on the consumers of the product?
3. Are there steps taken to ascertain the impact of advertisement of Indomie noodles on consumers?
4. Has advertisement improved consumer preference for the product to other noodles?
5. Has the company been able to overcome competition through advertisement?
6. Did advertisement play any role in defusing the bad publicity that was associated with the poisonous indomie in 2005?
1.5 STATEMENT OF HYPOTHESES
Oxford advanced learners dictionary defines hypothesis as an idea or a suggestion that is based on known facts and is used as a basis for reasoning or further investigation.
According to Uzochi (1998) there are two types of hypothesis, the Null (Ho) and the Alternative (Hi) hypothesis. The null hypothesis (Ho) is the one that says where there is no significant difference between the objects of contention while the alternative (Hi) hypothesis is the one that says there is significant different between the object of contention.
In this work, effort has been geared towards propounding three hypotheses, viz:
Hypothesis One
Null Hypothesis:
Ho:Advertisement has not improved consumer preference for Indomie noodles to other brands.
Alternate Hypothesis:
Hi:Advertisement has improved consumer preference for Indomie noodles to other brands.
Hypothesis Two
Null Hypothesis:
Ho:There has not been significant increase in sales of Indomie noodles as a result of advert.
Alternate Hypothesis:
Hi:There has been significant increase in sales of Indomie noodles as a result of advert.
1.6 SIGNIFICANCE OF THE STUDY
In this work, attempt has been made to identify its significance to: Business organizations, Academics and the Researcher.
Business Organizations:
The need for prudent management of financial resources in an organization is of great concern.
It’s amazing however; that at any time an organization is going through some hard times financially, first thing that runs into the mind of the management staff is a cut-down on advertisement and promotion budget or eliminate them entirely as a step to ameliorate their predicament. This study therefore, has been designed in such a way as to aid organizational managers realize that measurement is very important in advertising. Therefore, before decisions are taken on whether to eliminate advertisement or cut-down the budgets, efforts must be made towards ascertaining the impact of such advertisement, hence; a call for checks and balances.
To Academics:
Before this study, some past studies found that advert had increasing effect on consumer satisfaction; others found that advert had negative impact and led to consumer dissatisfaction. No research has ever found why conflicting results were obtained in this area of research. To academics therefore, this work will provide a basis for further research works. To further achieve this, relevant and authentic references have been cited.
1.7 SCOPE OF THE STUDY
This study was carried out only in Lagos State and the markets within the state apart from few visits made to the company in Ogun State. The study is limited to De-united Industries Ltd and its products indomie noodles. However, efforts were made to identify other competing brands of noodles such as Mimi noodles, Chikki noodles, O’ noodles and the golden penny noodles and at the end, conclusive reports were drawn for the success of this work.
1.8 LIMITATIONS OF THE STUDY
The researcher’s efforts to obtain intensive and conclusive information necessary for a comprehensive work on this study were restrained by the following;
- Attitude of Respondents:Most of the responsible officials of De-United were reluctant to divulge some vital information which they claimed might be used in favour of their competitors. The high level of illiteracy amongst the market woman who sell indomie noodles poised another threat, in that some of these woman felt being disturbed in their businesses and were not ready to waste their time in answering questions that would not profit them. On the other hand, other individuals who sell both indomie noodles and other noodles were just indecisive.
- Cost:Efforts to obtain expensive but very relevant materials were not met due to lack of sufficient fund. This factor also restricted the researcher’s study in only Lagos State, apart from few visits to the company in Ogun State, as he could not afford the high transportation cost of visiting other areas. Most of the visits in some areas were made on motorcycle with its attendant risks.
- Time:It was also very difficult for the researcher to combine this work with his official duties in the place of work. Sometimes, the few hours permission he got from his superior officer in the office were not enough to carry out a comprehensive study for this topic. Another time constraint was in the area of some respondents giving attention at their convenience and as a result, the researcher was often asked to come back next time for attention.
1.9 DEFINITION OF TERMS
Advertising:According to Arens (2004:7), advertising is the structured and composed nonpersonal communication of information, usually paid for and usually persuasive in nature, about products (goods, services or ideas) by identified sponsors through various media.
Consumers:are people who purchase and use goods or services to satisfy particular needs and wants.
Consumer patronage:are the level at which individuals directly involved in obtaining and using economic goods and services. (Nwaizugbo 2004:66)
Perception:this refers to the personalized way people sense, interpret and comprehend various stimuli.
Impact:The Oxford Advanced Learners Dictionary defines impact as the powerful effect that something has on something or somebody.
Market:the set of all actual and potential buyers of a product or service. Kotler and Armstrong (2007:7).
Brand:This is a name, term, symbol, design, mark or a combination of these that identifies the product of a manufacturer or differentiates it from those of competitors. Nwaizugbo (2004:113)
Brand Equity: this refers to the added value endowed to products and services. Kotler & Keller (2006:276)
Brand promise:Is the marketer’s vision of what the brand must be and do for consumers. Kotler & Keller (2006:278).
Brand Interest:An individual’s openness or curiosity about a brand
Brand awareness:Is an issue of whether a brand name comes to mind when consumers think about a particular product category and the ease with which the name is evoked. Shimp (2000:8)
TABLE OF CONTENT
PAGE
TITLE PAGE i
CERTIFICATION ii
DEDICATION iii
ACKNOWLEDGEMENTS iv
ABSTRACT v
RESUME vi
TABLE OF CONTENTS vii - x
CHAPTER ONE: INTRODUCTION 1
1.1 Background to the study 1 - 5
1.2 Statements of problems 6 - 7
1.3 Objectives of the study 7 - 8
1.4 Research questions 8
1.5 Statement of hypothesis 9 - 10
1.6 Significance of the study 10 - 11
1.7 Scope of the study 12
1.8 Limitations of the study 12 - 13
1.9 Definitions of terms 14 - 15
CHAPTER TWO: LITERATURE REVIEW 16
2.1 Introduction 16
2.2 Meaning of Advertising 16 - 20
2.3 Functions of Advertising 20 - 21
2.4 Purpose of Advertising 21 - 22
2.5 Types of Advertising 23
2.6 Classification of Advertising 24 - 27
2.7 Overview of a consumer 27
2.7.1 Importance of knowing the consumer 27 - 28
2.7.2 Factors influencing consumer patronage 28 - 30
2.8 Impact of advertising on consumer patronage 30 - 32
CHAPTER THREE: RESEARCH METHODOLOGY 33
3.1 Introduction 33 - 34
3.2 Sources of data 34
3.3 Design and administration of questionnaire 35
3.4 Sample size determination 35 - 36
3.5 Sample technique 36
3.6 Operational measures of variables 36 - 37
3.7 Method of Data Analysis 37 - 38
3.8 Decision Criteria for Validation of Hypothesis 38 - 39
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND
INTERPRETATION 40
4.1 Introduction 40
4.2 Data Presentation and Analysis 40 - 48
4.3 Test of Hypothesis 48 - 53
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATION 54
5.1 Summary of finding 54 - 55
5.3 Conclusion 56
5.4 Recommendation 60 - 69
Bibliography 70 - 75
Appendixes 76 - 79