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PROJECT TOPIC AND MATERIAL ON IMPACT OF MARKETING COMMUNICATION ON CONSUMER BRAND LOYALTY (A CASE STUDY OF NESTLE NIGERIA PLC AGBARA)
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The Marketing Communications (MC) concept has been largely regarded as an important marketing management issue. This is because to survive in the competitive marketing environment of today many companies try to adopt MC to improve the management and integration of the marketing communication programmes. But the term and concept of MC is so recent and “modern” that it is not known and accepted by all which can explain the lack of a generally accepted definition and common understanding of the whole concept. While some marketing managers are aware that marketing communications is an important resource of their business performance, others are very ignorant of the efficacy and prospects inherent in its application for effective business performance. This study therefore examined the relationship between Marketing Communications and companies’ sales and profits; examined the MC tools commonly used by the selected companies under study in boosting their sales performance; established how Marketing Communications save time, money and stress; found out the indicators the marketing executives and managers use in measuring the effectiveness of overall MC programmes. The study had a population of Eight hundred and three staff of the five selected companies, out of which a sample size of 267 top management officers was determined using Taro Yamane formula. The top management staff and middle managers were used because they have the adequate and relevant knowledge of the subject matter. The study made use of primary and secondary data. A total number of 267 copies of the questionnaire were distributed while 240 copies were collected. The descriptive research design was adopted for the study. Content validity and test-retest of reliability was done with coefficient of 0.96 indicating high degree of consistency. Four hypotheses were tested using Pearson’s Product Moment Correlation Coefficient, Chi-Square (X2) and Z-test statistical tools. The result of the analysis revealed that there was significant relationship between Marketing Communications and companies’ sales and profits. The study further showed that Marketing Communications save time, money and stress. Also the result revealed that there were suitable indicators such as sales growth, market share growth, profitability, sales income, price premiums, brand awareness, channel cooperation, customers’ satisfaction, brand loyalty among others, the marketing executives and managers used in measuring the effectiveness of overall MC programmes. It is concluded that MC is more than the coordination of companies’ outgoing message between different media. To this end, the study recommended that firms should develop their MC programmes in association with changes in order to cover the gaps created by changes.
1.1 Background of the Study
Marketing Communications (MC) concept has been largely regarded as an important marketing management issue since the beginning of the last decade because of the effectiveness of the integration of marketing communication tools for example, advertising, public relations, direct marketing, sales promotion, and personal selling to optimize the communications impact on target consumers, (Kotler, 2002:583; Schultz and Kitchen, 1997:469).
Additionally, there are several reasons for the growing importance of MC. These include; a change of marketing expenditures from media advertising to other forms of promotions, particularly consumers and trade-oriented sales promotions, a movement way from relying on advertising focused approaches which emphasize mass media to lower-cost, more targeted communication tools such as event marketing, sponsorship, direct mail, sales promotion and the internet. There are also shift in marketplace power from manufacturers to retailers, and the rapid growth and development of data base marketing; demands for greater accountability from advertising agencies and changes in the way agencies are compensated; the rapid growth of the internet, which is changing the nature of how companies do business and the ways they communicate and interact with consumers. There have been increased efforts to measure and improve marketing communications return on investment (ROI) by both clients and agencies (Belch and Belch, 2004:12; Cornelissen, 2001:7-15; Shimp, 2000:15). These factors have given rise to investigations into new ways of managing marketing communications.
Practitioners and academics have the notion that, improvements in the coordination and integration of marketing communications could lead to superior business performance (Kitchen and Schultz, 1999:1-17; McArthur and Griffin, 1997:19-27; McGoon, 1998:15-20). The common explanation is that through MC, a company can attain “synergy” between all of its marketing communication activities and decisions. Defined in terms of three constructs: “consistency”, “interactivity” and “mission” synergy ensures that the use of alternative communication tools are mutually reinforcing, leading to enhanced productivity and performance (Duncan, 1993:216; Duncan and Moriarty, 1997:311; Eagle and Kitchen, 2000:667-686, Hines 1999:25).
The implicit assumption of MC is that, through synergy, MC provides a cost-effective way to maximize the impact of communication by improving marketing decisions, (Duncan and Moriarty, 1997:313; Kitchen and Schultz, 1999:1-17; Hartley and Pickton, 1999:97-106; Stewart, 1996:147-153). Additional efficiencies are derived through improved cooperation between departments and service providers avoiding the duplication of information gathering, or “reinventing the wheel” in developing communication strategies (Hartley and Pickton, 1999:97-106). Other than efficiencies, benefits should also accrue through improved brand communications and positioning, bringing about opportunities for more profitable longer-term customer relationships (Keller, 2001:530).
1.2 Statement of the Problem
To survive in the competitive marketing environment of today and increased managerial expectations related to marketing, many companies try to adopt MC to improve the management and integration of their marketing communication programes (Reid et al 2002:22). But the term and concept of MC is so recent and “modern” that it is not known and accepted by all which can explain the lack of a general accepted definition and common understanding of the whole concept. The main objective of MC is to affect the perceptions of value and behaviour through directed communication. But the communication has to move from a tactic to a strategy, only strategically oriented MC can help companies succeed in the highly competitive and rapidly changing world of today. To be successful it also has to involve every one in the organization, from the top management down to all employees. The highest corporate strategy needs to be consistent with the every-day implementation of individual tactical activity (Reid, 2002:22).
As a consequence of today’s competitive environment, low level of product differentiation, consumer perception of product quality performing at a similar standard, increased number of superior brands and alternative, more acceptance of generic and private label brand, low risk in brands switching and high customer expectation put companies in a challenging position where there is decline of loyal customer.
However, it have always been difficult to pinpoint exactly what factors that have motivated consumers to prefer a particular brand of product to another over the years. Marketers have on several occasions paid attention to only those factors which are salient as the determinant of consumer’s preference for their brand, while many other factors which play significant role are completely ignored in the execution of marketing programmes. But there are also barriers to overcome, as one problem that delayed the implementation of MC in companies was the difficulty of measuring the effects or exactly what benefits the companies gained from the implementation.
Another disturbing aspect of the application of Marketing Communications is that most marketing managers fail to appreciate the importance of monitoring and evaluating its impact in the discharge of their marketing activities. This neglect has made it impossible for the marketing managers to measure effectively the impact (positive or negative) Marketing Communications (MC), can make on their business performance.
Even when some companies are fully aware of the efficacy and prospects inherent in the application of Marketing Communications (MC), they are not committed to its application. Other companies are equally knowledgeable, but lack the financial wherewithal to apply the MC in their business operations. Equally the wrong choice and usage of non-professionals in the planning, organizing, execution, control and evaluation of the Marketing Communications (MC) in marketing activities of most firms is another aspect the marketing managers may have neglected in the promotion of products, as this may lead to waste of resources. Sequel to the above, it has become pertinent to evaluate the impact of Marketing Communications on consumer brand loyalty.
1.3 Objectives of the Study
The broad objective of the study is to examine the impact of Marketing Communications on consumer brand loyalty. The specific objectives are:
- To determine the relationship between Marketing Communications and companies’ sales and profits.
- To examine the MC tools commonly used by the selected companies under study in boosting their sales performance.
- To establish how Marketing Communications save time, money and stress for organizations.
- To find out the indicators the marketing executives and managers use in measuring the effectiveness of overall MC programmes.
1.4 Research Questions
Consequent upon the above objectives, the following research questions were developed.
- What is the relationship between Integrated Marketing Communication programs and companies’ sales and profits?
- What are the MC tools commonly used by the selected firms in boosting sales performance?
- To what extent does Marketing Communications save time, money and stress for organizations?
- What indicators are used by marketing executives and managers in measuring the effectiveness of the overall MC programmes?
1.5 Research Hypotheses
The under listed hypotheses stated in the null form were designed to further guide the study:
- There is no significant relationship between Integrated Marketing Communication activities the companies use and their sales and profits.
- Integrated Marketing Communication tools commonly used by firms are not effective in boosting their sales performance.
- Marketing Communications does not save time, money and stress for organisations.
- There are no indicators used by marketing executives and managers in measuring the effectiveness of overall MC programmes.
1.6 Significance of the Study
The significance of this study can be viewed from academic and practical stand points. Practically, this study will assist in broadening the knowledge of the market players on the essence, importance of MC and new media and channels available in disseminating marketing information. The marketing of goods and services is not done by guess work especially at this age of fierce competition among brand names of products. Rather, all serious minded companies and businessmen who are desirous of remaining in business and cutting a niche for themselves and who plan all their marketing activities ahead of time will adopt Marketing Communications as a tool. The study hopes to furnish additional information to help manufacturers in achieving high sales volume, saves time, money and adjusts production properly to sales within the context of the marketing concept. The core issue of modern marketing concept lies centrally on the understanding of the customer and making every effort to satisfy him. This study will also be of benefit to students and researchers in the field of marketing communications.
1.7 Scope of the Study
The research covered five selected company in the Nigeria consumer good and service industries in Nigeria. And also the study confirmed on concept of MC, benefits of MC, tools of MC, message of MC, reasons for growing importance of MC, evaluation of MC, sales effect of Marketing Communications, components of Marketing Communications and effect of Marketing Communications on organizational performance.
1.8 Limitations of the Study
In carrying out a research of this nature, it is not uncommon to encounter a number of constraints. Some of the limitations of the study included:
- Strike actions: In the course of this study so many strike actions were embarked upon by ASUU (Academic Staff Union of Universities). This prolong the period of the programe.
- Scanty related literatures: There were no much relevant literatures found on the topic. The researcher therefore limited herself to the few ones available.
- Financial constraints: The huge cost involved in carrying out a complete study of a whole organization, is not easily afforded by a student. The researcher therefore limited her study to only five firms in the country.
- Time constraints: The time required for this dissertation was not enough. This is because the research was done at the same time a serious course work was going on in school.
- Attitudes of respondents: Appointments with some of the top officers of the companies were difficult to achieve. Some of the respondents refused to answer the questions asked to them, while some refused out rightly to grant interviews, this posed limitations to the completion of the work.
- Power supply: The researcher also had problem with the epileptic power supply in the country. It was difficult to access the internet without steady light. What the researcher had wanted to download was not all possible. And some materials relevant to the work could not be accessed because of the international mode of required payment. Again, the typing of the work was unnecessarily delayed because of the same power supply problem. The use of the generating machine for alternative power supply hiked the budget cost of the work. This was not anticipated in the planning stage of this work.
1.9 Profiles of the Selected Companies
NESTLE NIGERIA PLC
The key factor which drove the early history of the enterprise that would become the Nestlé Company was Henri Nestlé’s search for a healthy, economical alternative to breastfeeding for mothers who could not feed their infants at the breast. In the mid-1860s Nestlé, a trained pharmacist, began experimenting with various combinations of cow’s milk, wheat flour and sugar in an attempt to develop an alternative source of infant nutrition for mothers who were unable to breast feed. His ultimate goal was to help combat the problem of infant mortality due to malnutrition. He called the new product Farine Lactee Henri Nestlé. Nestlé’s first customer was a premature infant who could tolerate neither his mother’s milk nor any of the conventional substitutes, and had been given up for lost by local physicians. People quickly recognized the value of the new product, after Nestlé’s new formula saved the child’s life and within a few years, Farine Lactee Nestlé was being marketed in much of Europe. Henri Nestlé also showed early understanding of the power of branding. He had adopted his own coat of arms as a trademark; in his German dialect, Nestlé means ‘little nest’. One of his agents suggested that the nest could be exchanged for the white cross of the Swiss flag. His response was firm: “I regret that I cannot allow you to change my nest for a Swiss cross …. I cannot have a different trademark in every country; anyone can make use of a cross, but no-one else may use my coat of arms.”
Meanwhile, the Anglo-Swiss Condensed Milk Company, founded in 1866 by Americans Charles and George Page, broadened its product line in the mid-1870s to include cheese and infant formulas.The Nestlé Company, which had been purchased from Henri Nestlé by Jules Monnerat in 1874, responded by launching a condensed milk product of its own. The two companies remained fierce competitors until their merger in 1905.
Some other important firsts occurred during those years. In 1875 Vevey resident Daniel Peter figured out how to combine milk and cocoa powder to create milk chocolate. Peter, a friend and neighbor of Henri Nestlé, started a company that quickly became the world’s leading maker of chocolate and later merged with Nestlé. In 1882 Swiss miller Julius Maggi created a food product utilizing legumes that was quick to prepare and easy to digest. His instant pea and bean soups helped launch Maggi & Company. By the turn of the century, his company was producing not only powdered soups, but also bouillon cubes, and sauces and flavorings.
The world’s leading Nutrition, Health and Wellness Company. Our mission of “Good Food, Good Life” is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night.
We believe that leadership is about behaviour, and we recognise that trust is earned over a long period of time by consistently delivering on our promises. Nestlé believes that it is only possible to create long-term sustainable value for our shareholders if our behaviour, strategies and operations also create value for the communities where we operate, for our business partners and of course, for our consumers. We call this ‘creating shared value‘. The Nestlé Corporate Business Principles (pdf, 1 Mb) are at the basis of our company’s culture, developed over 140 years, which reflects the ideas of fairness, honesty and long-term thinking. The Company was founded in 1866 by Henri Nestlé in Vevey, Switzerland, where our headquarters are still located today. We employ around 280 000 people and have factories or operations in almost every country in the world. Nestlé sales for 2010 were almost CHF 110 bn.
Most people know us through our brands. Our portfolio covers almost every food and beverage category – giving consumers tastier and healthier products to enjoy at every eating occasion and throughout life’s stages including times of special nutritional need. Here is a sample of some of our brands.
- Definition of Terms
Business Performance: This is an accomplishment of an organization given task measured against preset standards of accuracy, completeness, cost and speed (Bendall-Lyon and Powers 2003:154).
Event Sponsorship: This is cash or in kind fee paid to a property (which may be a sports, entertainment, or non profit event or organization) in return for access to the exploitable commercial potential associated with that property (Arens, Weigold and Arens 2008:350).
MC: It is a process of building and reinforcing mutually profitable relationships with employees, customers, other stakeholders, and the general public by developing and coordinating a strategic communications programme that enables them to have a constructive encounter with the company/ brand through a variety of media or other contacts (Arens, Weigold and Arens 2008:248)
Interactive Media: These are channels or media that allow consumers participate in the communication by extracting the information they need, manipulating what they see on their computers or TV screens in the real time, and responding in the real time OR an inter-reactive media systems that allow customers and prospects to control both the content and the pace of the presentation to order merchandise directly from the system (Arens, Weigold and Arens 2008:318).
Mass Customization: A situation whereby a company can make a product or deliver a service in response to a particular customer needs in a cost effective way. (James and Joseph 1997:90-101).
New Advertising: The process of using promotional tools in a unified way so that a systematic communications effect is created (O’Guinn, Alen, and Semenik 1998:28).
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