CAVENDISH UNIVERSITY ZAMBIA

School Of Business and Information Technology

THE IMPACT OF ADVERTISEMENT ON COMPANY SALES OF MOBILE PHONE

SERVICE PROVIDERS IN ZAMBIA:

A case-study of Zambia Telecommunications Company Limited (ZAMTEL).

By

Patrick Lunda

(ID. 003-215)

A dissertation Submitted in Partial fulfillment of the Requirements for the Award

Of the Degree of Bachelor of Business Administration (BBA) of Cavendish University

Zambia.

©2020

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ABSTRACT

Despite the vast research done globally on the relationship between advertisement and

company sales and profitability, little has been done locally in Zambia. This study investigated

the impact of advertisement on company sales and profitability. The profits of Zamtel have not

improved to the desired targets despite its efforts in advertising regularly. The sales and profits

in Zamtel for the past six years have been declining. The objectives of the study were to

determine the effects of Informative, Persuasive, and Reminder advertising on the profitability

of the company as well as to determine the media mixes that Zamtel uses to advertise its

products or services. The researcher used a cross sectional research design where quantitative

questions were used, this means that the questions were closed-ended and identified any causal

link between factors or variables. The research comprised of the employees of Zamtel from

regional head office in Ndola drawn from a target population of 96 workers and because the

researcher could not go to each and every employee, due to time factor and financial resources,

a sample was necessary and it was determined. The sample size in this study was 40 workers

of Zamtel, to whom the questionnaire was administered. This study used convenience and

purposive sampling criteria. They were used to select the forty (40) respondents because they

were easy to reach at their regional office in Ndola and had the information and knowledge

about the subject matter under study. The researcher used a questionnaire to collect data in the

field. The results from this research have revealed that the objectives of advertising at Zamtel

have been achieved. These results showed that there is a positive and significant relationship

between advertising and sales performance which results in company profitability. Zamtel

should take advantage of its presence in this industry to use the internet as one of the major

advertisement tool and create a more appealing website that receives a lot of traffic. It is further

recommended that Zamtel should review its operational costs and reduce this as much as

possible but must do this without affecting its effectiveness, for example downgrading the

travel class or expenses for CEOs and senior management officials. All financial leakages in

the system must be sealed. Additionally, generating revenue from clients that already know,

like, and trust the company’s brand is much more cost-effective than spending money acquiring

new customers.

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DEDICATION

I wish to dedicate this project to my beloved son Israel Lunda for his endurance during my

absence from home, my wife Janipher Kunda Lunda, my brother Dr. Kenneth A. Lunda for his

support. Above all I do thank the almighty Jehovah God for His love and grace.

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ACKNOWLEDGEMENT

I wish to thank the almighty God for keeping me alive and providing me with wisdom, capacity

and courage to go through the four year course successfully.

I appreciate and also humbled to give my special gratitude to my supervisor Mr. Mwale Beda.

Sir, thank you for your guidance, advice and time you accorded to me during the write up of

this report.

Special thanks to the management of Sino Metals Leach Zambia Limited and my boss Mr.

Chen Starrin for the leave days he was giving me to go in the field for this research.

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DECLARATION

I, Patrick Lunda, certify that although this research must have concurred with some other

person’s work, this work represents the views and opinion of the researcher as obtained in the

field and it has not been submitted in this form or any other form to this or any other institution for

examination purposes. Any quotation made has been referenced accordingly.

FULL NAME: ………………………………………………………….

SIGNATURE: ………………………………………………………….

DATE: ………………………………………………………………….

SUPERVISOR: ………………………………………………………….

SIGNATURE: …………………………………………………………...

DATE: ……………………………………………………………………

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APPROVAL

This project has been submitted for examination with my approval as the University

candidate’s supervisor.

Signature ……………………………………… Date………/…..…../……….

MR. MWALE BEDA.

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TABLE OF CONTENTS.

ABSTRACT ............................................................................................................................... i

DEDICATION.......................................................................................................................... ii

ACKNOWLEDGEMENT ..................................................................................................... iii

DECLARATION..................................................................................................................... iv

APPROVAL ............................................................................................................................. v

LIST OF TABLES .................................................................................................................. ix

LIST OF FIGURES ................................................................................................................. x

LIST OF ACRONYMS .......................................................................................................... xi

1.0 CHAPTER ONE: INTRODUCTION. ............................................................................ 1

1.1 Background to the Study ............................................................................................................... 1

1.2 Problem Statement ........................................................................................................................ 2

1.3 Purpose of the Study ..................................................................................................................... 3

1.4 Rationale/ significance of the study. ............................................................................................. 3

1.5 Research Objectives ...................................................................................................................... 4

1.5.1 General Objectives: .................................................................................................................... 4

1.5.2 Specific Objectives: ................................................................................................................... 4

1.6 Research Questions: ...................................................................................................................... 4

1.7 Scope of the Study: ....................................................................................................................... 4

2.0 CHAPTER TWO: LITERATURE REVIEW. ................................................................ 5

2.1 Overview of Literature Review. .................................................................................................... 5

2.2 Operational Definitions ................................................................................................................. 5

2.3 Conceptual framework: ................................................................................................................. 6

2.4 Theoretical Framework: ................................................................................................................ 7

2.4.1 Effectiveness of advertisement ................................................................................................ 10

2.4.1 Relationship between Advertising and Sales Performance ...................................................... 11

2.4.3 Importance of Advertising ....................................................................................................... 13

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2.4.4 The relationship between advertisement and profitability ....................................................... 14

2.5 Previous Studies. ......................................................................................................................... 18

2.6 Comparative studies. ................................................................................................................... 19

2.7 Research variables arising from literature .................................................................................. 20

2.8 Research Gaps ............................................................................................................................. 21

3.0 CHAPTER THREE: RESEARCH METHODOLOGY AND DESIGN .................... 21

3.1 Overview of research methodology. ........................................................................................... 21

3.2 Research Design. ......................................................................................................................... 21

3.3 Research philosophy and Approach. ........................................................................................... 22

3.4 Research Strategy ........................................................................................................................ 23

3.5 Research choice .......................................................................................................................... 23

3.6 Time horizon ............................................................................................................................... 23

3.7 Sampling Frame. ......................................................................................................................... 23

3.8 Sample Size. ................................................................................................................................ 24

3.9 Sampling Techniques. ................................................................................................................. 24

3.10 Data Collection Techniques. ..................................................................................................... 24

3.10.1 Data collection instruments .................................................................................................... 24

3.11 Operationalisation of Research variables .................................................................................. 25

3.12 Reliability and validity .............................................................................................................. 25

3.13 Ethical Consideration: ............................................................................................................... 26

3.14 The Limitations of the study. .................................................................................................... 26

4.0 CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA. ...................... 26

4.1 An Overview of Data analysis. ................................................................................................... 26

4.2 Demographic data. ...................................................................................................................... 26

4.2.1Presentation and analysis of the distribution of questionnaires. ............................................... 26

4.3 Advertisement data at Zamtel. .................................................................................................... 31

4.3.1 Presentation and analysis of data on the Advertisement at Zamtel: ......................................... 31

5.0 CHAPTER FIVE: DISCUSSION AND INTERPRETING OF FINDINGS. ............. 37

5.1 An Overview of the Interpretation of research findings: ............................................................ 37

5.2 Discussion and Interpretation of Demographic Information: ..................................................... 37

5.3 Discussion and interpreting of information on advertisement at Zamtel. ................................... 38

6.0 CHAPTER SIX: CONCLUSIONS AND RECOMMENDATIONS. ......................... 41

6.1 An Overview of this chapter. ...................................................................................................... 41

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6.2 Conclusions. ................................................................................................................................ 41

6.3 Recommendations: ................................................................................................................ 42

6.4 Suggested areas for future research. ........................................................................................... 43

REFERENCES: ..................................................................................................................... 44

APPENDIX A: advertisement and profitability questionnaire. .............................................. 48

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LIST OF TABLES

Table 4. 1 Distribution of questionnaire to respondents from whom data was collected. .................... 26

Table 4. 2 Distribution of respondents according to gender. ................................................................ 27

Table 4. 3 Distributions of respondents according to age. .................................................................... 28

Table 4. 4 Distributions of respondents according to occupation: ........................................................ 29

Table 4. 5 Distribution of respondents according to length of service. ................................................ 29

Table 4. 6 Distribution of respondents according to level of education. .............................................. 30

Table 4. 7 Zamtel advertises all its products and services .................................................................... 31

Table 4. 8 adverts by Zamtel are captured by the intended audience. .................................................. 32

Table 4. 9 Zamtel uses most current media mixes to advertise............................................................. 33

Table 4. 10 informative purpose and objectives of Advertising at Zamtel ........................................... 33

Table 4. 11 persuasive purpose and objectives of Advertising at Zamtel ............................................. 34

Table 4. 12 Reminder purpose and objectives of Advertising at Zamtel. ............................................. 35

Table 4. 13 the relationship between advertising and company profitability ....................................... 36

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LIST OF FIGURES

Figure 4. 1 Distribution of questionnaire to respondents from whom data was collected. ................... 27

Figure 4. 2 Distribution of respondents according to gender. ............................................................... 28

Figure 4. 3 Distributions of respondents according to age. ................................................................... 28

Figure 4. 4 Distributions of respondents according to occupation: ...................................................... 29

Figure 4. 5 Distribution of respondents according to length of service. ............................................... 30

Figure 4. 6 Distribution of respondents according to level of education. ............................................. 31

Figure 4. 7 Zamtel advertises all its products and services ................................................................... 32

Figure 4. 8 adverts by Zamtel are captured by the intended audience. ................................................. 32

Figure 4. 9 Zamtel uses most current media mixes to advertise. .......................................................... 33

Figure 4. 10 informative purpose and objectives of Advertising at Zamtel .......................................... 34

Figure 4. 11 persuasive purpose and objectives of Advertising at Zamtel ........................................... 35

Figure 4. 12 Reminder purpose and objectives of Advertising at Zamtel. ............................................ 36

Figure 4. 13 the relationship between advertising and company profitability ...................................... 37

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LIST OF ACRONYMS

CAZ Communications Authority of Zambia

ZICTA Zambia Information and Communication Authority

PTC Postal and Telecommunications Corporation

PF Patriotic Front

ZAMPOST Zambia Postal Services Corporation

ZAMTEL Zambia Telecommunication Company Limited

MTN Mobile Telephone Network

MMD Movement for Multiparty Democracy

MHSRIP May His Soul Rest in Peace

CUZ Cavendish University Zambia

ICT Information and Communication Technology

CEO Chief Executive Officer

IDC Industrial Development Corporation

SOE State Owned Enterprises

TV Television

NIM Net interest margin

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1.0 CHAPTER ONE: INTRODUCTION.

The reasons why businesses are started are to produce goods or services for sale and profits.

To achieve this, a company must see to it that enough sales are generated from its products or

services to cover operating costs and make some reasonable profits. For many organizations,

sales estimate is the starting point in budgeting or profit realization. It is so because it must be

determined, in most cases, before production of goods could be arrived at, while production

units will in turn affect material purchases. However, taking decisions on sales is the most

difficult tasks facing many business managers. This is because it is difficult to predict, estimate

or determine with accuracy potential customers’ demands as they are uncontrollable factors

external to an organization. Considering, therefore, the importance of profits on business

survival, it is expedient for organizations to engage in programs that can influence consumers’

decision to purchase its products. This is where advertising and brand management are relevant.

In this chapter, therefore, the researcher begins by looking at the historical background of the

particular company facing the problem of sales and profit generation through advertisement.

The chapter also provides the statement of the problem, objectives of the study, significance of

the study, limitations as well as the way in which the research has been organized.

1.1 Background to the Study

Zambia was one of the first countries in Africa to embark on reforms in the telecommunication

sector in the nineties. The Telecommunications Act was enacted in 1994 (commsupdate,

2017), establishing the Communications Authority of Zambia (CAZ) now renamed Zambia

Information and Communication Technology Authority (ZICTA) and dividing the Postal and

Telecommunication Corporation (PTC) into Zambia Postal Services Corporation (ZAMPOST)

and Zambia Telecommunications Company Limited, (ZAMTEL).

ZAMTEL is one of the three mobile phone networks in the country; the others are Airtel

Zambia and MTN Zambia, initials standing for (Mobile Telephone Network), with a likelihood

of having a fourth mobile phone operator in the name of Uzi Zambia (itwebafrica, 2006).

ZAMTEL falls under the jurisdiction of the Ministry of Transport, Works, Supply and

Communications of the government of the republic Zambia and the head office of the company

is located in Zamtel House, at the corner of Chilubi Road and Church Road, in the Zambian

capital city of Lusaka. An article in the commsupdate (2017), an online media reported that in

2010, the Zambian government, under the Movement for Multi-Party Democracy (MMD)

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President, Rupiah Banda, sold 75% of the ZAMTEL to the Libyan company, LAP Green

Networks. The government claimed it had done so in order to keep ZAMTEL from shutting

down after plans to recapitalize it had failed. This was a contentious move, however, as some

critics claimed the company was still economically viable.

The newly elected government in 2011, under President Michael Sata the late (MHSRIP), set

out an inquiry into the sale of ZAMTEL because they believed it was sold fraudulently by the

previous government. The inquiry produced a report that showed irregularities in the manner

in which ZAMTEL was sold, alleging that LAP Green and RP Capitals, which was appointed

as financial advisor, bribed senior Zambian government officials; an allegation that both LAP

Green and RP Capitals denied. As a result of the findings, President Michael Sata ordered a

reversal of the $257 million deal and the government of Zambia seized control of ZAMTEL.

To date, MTN Zambia leads the market with approximately 6 million subscribers followed by

Airtel Zambia with 5 million customers and ZAMTEL with just about 3.3 million customers.

(itwebafrica, 2006).

On 3rd August, 2019 Minister of Transport and Communications Mutotwe Kafwaya announced

(The diggers, 2019) that ZAMTEL has not made profit since 20111 up-to-date. Mr. Kafwaya

was speaking in Parliament when Mufulira PF Member of Parliament Dr. Evans Chibanda

asked whether the ZAMTEL declared any profits from 2012 to 2019. Mr. Kafwaya said

ZAMTEL only declared profit of K15.98 Million in 2013 but that no profit was made in the

years that followed.

1.2 Problem Statement

The major objective of any organization is to make sufficient sales in order to satisfy

shareholders’ wealth maximization through profits. In doing this there must be a way of

bringing about an awareness of the products and services to the consumers through advertising.

Today’s business scenario is characterized by high competition especially amongst the three

major mobile phone providers namely Airtel Zambia Limited, MTN Zambia Limited and

ZAMTEL Limited. ZAMTEL has relied so much on advertising to create a brand and

1 A Statement of Comprehensive Income shows that the company recorded losses of K50, 648,000 in

2011 and K224, 039,000 in 2012. - https://www.lusakatimes.com/2015/02/13/zamtel-huge-losses-

firm-technically-insolvent-auditor-general/

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distinguish it from other products in the minds of consumers and eventually improve its

profitability. It has carried frequent advertising of its products and services through

advertisements in magazines, brochures, through visual media which includes billboards and

sponsoring sports. The company also advertises using, Radio, Television, social media

platforms and Newspapers (Habeenzu, 2010).

Despite its efforts in advertising regularly the sales of ZAMTEL have not improved to the

desired targets. The sales and profits in ZAMTEL for the past six years have been declining

(The diggers, 2019). It is for this reason that this study investigated the impact of advertising

on sales increase using ZAMTEL as a case study.

1.3 Purpose of the Study

The purpose of this study is to investigate the impact of advertisement and promotions on

company profitability using explanatory research and review any challenges ZAMTEL might

be facing with its advertising strategies. Explanatory research seeks to explain causal / effect

relationship of variables.

1.4 Rationale/ significance of the study.

Today’s business environment is characterized by high competition and operational

complexities in the telecommunication industry in Zambia which has three major mobile phone

service providers, namely Airtel Zambia Limited, MTN Zambia Limited and Zambia

Telecommunications Company Limited. These companies are doing a lot of advertising to

attract customers. Therefore, assessment of the impact of advertising on company profits and

adjusting its application in relation to the changing local markets need to be a continuous

process. As a matter of fact, most of the previous research was carried out in advanced countries and

very little research is conducted in developing countries like ours. This has prompted the author to

initiate an investigation into the impact of advertisements and promotions on company

profitability of mobile phone service providers in Zambia.

This study will benefit the firm in understanding the causal relationship between advertising

and profitability. In other words the company and management will be able to determine the

factors of advertising which impacts on the company’s sales and profitability. Hence this study

will offer perspectives for the company in planning for more effective advertising strategies to

promote its products and services and enhance their profits. Not only that, the research will

also contribute to the already existing ideas of advertising. Furthermore, the study will create

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debate among the students of Cavendish University Zambia (CUZ), students from other

universities and people who will come across the Study. Therefore, it will be a springboard for

further research in the field of Business management. Additionally, this study is significant to

the author as it is a partial fulfilment for the award of the Bachelors Degree in Business

Administration by Cavendish University Zambia (CUZ).

1.5 Research Objectives

This research was guided by the following general and specific objectives:

1.5.1 General Objectives:

The general objective of this research was to investigate the impact of advertisement and

promotions on profitability of ZAMTEL.

1.5.2 Specific Objectives:

The following are the specific objectives:

1. To determine the objectives of advertising at Zamtel.

2. To determine the effects of Informative, Persuasive, and Reminder advertising on the

profitability of the company.

3. To determine the media mixes that Zamtel uses to advertise its Products or services.

1.6 Research Questions:

In line with the above specific objectives, the following research questions will be addressed

in the course of this study:

1. What are the Objectives of Advertising (Informative, Persuasive and Reminder) at Zamtel?

2. What is the effect of Advertising on the profitability of Zamtel?

3. What are the Forms of Medias the Company uses to advertise its Product or services?

1.7 Scope of the Study:

This study utilised time series data for the period of 2011 to 2019. This study aimed to

understand advertising objectives that determine the profitability of Zamtel. To achieve this

aim the content scope of the study is to identify the different factors i.e. Informative,

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Persuasive, and Reminder advertising that affects the profitability of Zamtel. The population

of the study is not limited to one department only at Zamtel. The study covered advertising as

the independent variable and profitability as the dependant variable. The research was

conducted at Zamtel in Ndola because it is the provincial head office and former headquarters

of the company.

2.0 CHAPTER TWO: LITERATURE REVIEW.

2.1 Overview of Literature Review.

The review of literature is crucial in any research work. This is because it enables the researcher

to study different theories related to the identified topic and gain clarity of the research topic.

In this chapter, a detailed literature review on advertising and profitability is provided. The

chapter looks at conceptual framework, theoretical framework, previous studies, and research

variables arising from the literature and concludes by looking at the research gaps.

2.2 Operational Definitions

It is not very easy to define or rather give the meaning of advertising because it means different

things to different people depending on their perceptions of what it is. However, according to

Kotler (2000:37), advertising is any non-personal presentation and promotion of ideas, goods,

or services by an identified sponsor. An advertiser includes not only business firms but also

charitable organizations and government agencies that direct messages to target public

(Morden, 1991). Advertising can also be defined as any paid non-personal communication

about an organization, products, services or ideas by an identified sponsor (Bennet, 2006:78-

81). Additionally, Advertising is any paid message presented through various media, such as

television, radio, magazine, newspapers or billboards by an identified source (Keller, 2004).

All the aforementioned definitions made modest efforts to define advertising. However, this

research finds the definition by Bennet (2006) and Kotler and Armstrong (2010) – “that

advertising is any paid non-personal communication about an organization, products, services

or ideas by an identified sponsor” as a better one and hence it was adopted to be used in this

research.

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The above given definition sounds to be good for the purpose of this study, and encompasses

all the important dimensions to advertising such as the product, awareness, sales and

profitability among others. Until recently, business managers were solely expected to maximize

the firms’ wealth. That being the case, managers are now expected to take decisions that take

account of the interests of the firms in terms of profits. As a matter of fact measuring

profitability is the most important measure of the success of the business. Therefore, managers

must do their best to ensure that their firms are operating at marginal level of certainty of returns

to warrant profitability for the firm. Many advertisements are designed to generate increased

consumption of products and services through the creation and reinforcement of brand image

and brand loyalty. As explained above advertising is any paid form of non-personal

presentation and promotion of ideas and goods, or services by an identified sponsor (Kotler

and Armstrong, 2010).

2.3 Conceptual framework:

The conceptual framework is the researcher’s understanding of how particular variables in the

study connect with each other. Thus, it identifies the variables required in the research

investigation. It is the researcher’s “map” in pursuing the investigation (Editage, 2011). In

other words Conceptualization attempts to visualize the causality of the research problem prior

to understanding the research in detail (Sekaran, 2003). In this study the dependent variable

is the company profitability while advertisement is an independent variable. A dependent

variable is defined as the variable being tested in a scientific experiment (Saunders, Lewis

and Thornhill, 2012). The dependent variable is 'dependent' on the independent variable. As

the researcher changes the independent variable, the change in the dependent variable is

observed and recorded. A change in the independent variable (advertisement) directly causes a

change in the dependent variable (company profits).

In this research it is planned to explain the relationship between Advertising and company

profitability. Based on the nature of the research objectives and the literature reviewed, the

framework postulates that, advertising create brand awareness and brand loyalty. It also

postulates that brand awareness and brand loyalty leads to sales increase which results into

profits. Lastly, the framework postulates that advertising which leads to product awareness,

product loyalty and later brand equity leads to achievement of company profitability.

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Therefore, the framework postulated a positive relationship between advertising and company

profitability.

2.4 Theoretical Framework:

Not only commercial firms do use advertising to sell their products and services, but also a

wide range of non-profit organizations, professionals and social agencies do advertise their

causes to various target publics (Bennett, 2006:34). Therefore, an advertising strategy for one

product might not be the same for the other product. The overall advertising objective is to help

build customer relationship by communicating customer value to a specific target audience

during a specific period of time. Identifying advertising objectives is the first step taken in

developing an advertising programme. These objectives should be based on past decisions

about the target market, positioning, and marketing mix which define the job that advertising

must do in the total marketing position. According to Robert (2016) and Kotler and

Armstrong (1999) there are various forms or purposes of advertising; that is informative,

persuasive and reminder advertising; and they are explained below.

Informative advertising is used to inform the customers about a new product or feature and to

build the image of the company (Kotler and Armstrong, 1999). Informative advertising is

often used when launching a new product, or for an updated or re-launched product. The

objective is to develop initial demand for a good, service, organization, or cause. It is used

when a new product is put on the market or when an old product has been re-launched or

updated. Informative advertising will tell the consumer and marketplace about the product,

explain how it works, provide pricing and product information, and should build awareness for

the product as well as the company (Kotler and Armstrong, 2010). The image of the product

and the company should be compatible and complementary. There should be enough

information to motivate the consumer to take some sort of action.

Persuasive advertising is one used to build selective demand for a brand by persuading

consumers that it offers the best quality for their money. Some persuasive advertising has

become comparison advertising, in which a company directly or indirectly compares its brand

with one or more other brands. Marketers use persuasive advertising to increase the demand

for an existing good, service, or organization. The idea is to persuade a target audience to

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change brands, buy their product, and develop customer loyalty. After the purchase, the quality

of the product will dictate whether or not the customer will remain loyal or return to the

previous brand. Persuasive advertising is highly competitive when there are similar products

in the marketplace, and products are competing for their share of the market. In this situation,

the winning product will differentiate itself from the competition and possess benefits that are

superior to, or compete strongly within the competition. Comparative approaches are common

place, either directly or indirectly (Kotler and Armstrong, 2010).

Reminder advertising is one used to keep consumers thinking about the product or service .it

is important for mature products or services. It reminds customers that the products May be

needed in their near future, where to buy the product and maintaining top of mind product

awareness. Reminder advertising reinforces previous promotional information. The name of

the product, testimonials of past customers, public response, and sales techniques are repeated

in the hopes of reminding past customers and garnering new ones. It is used to keep the public

interested in, and aware of, a well-established product that is most likely at the end of the

product life cycle (Kotler and Armstrong, 2010).

Having explained the three forms of advertising, it should be mentioned that Advertising may

be done through various media like visual, audio and print media. Visual media may include

television, bill boards, posters, giving prizes with company product name and broachers. Print

media may include newspapers, brochures, stickers, magazines, business cards and newsletters,

Audio media could be on television and the radio among others (Bendixen, 1993:118). Other

tools of advertising may include; infomercials, sponsoring events, taking part in trade shows,

celebrity advertising , placing corporate logos and personal recommendations like; “bring a

friend”, “ sell it”, mobile phone adverts such as WhatsApp group posting and social network

advertising (Robert, 2016)). The purpose of advertising as Fill (1999) puts it, is to inform the

consumers about the company’s product and services and convince customers that a company's

services or products are the best, enhance the image of the company, point out and create a

need for products or services, demonstrate new uses for established products, announce new

products and programs, reinforce the salespeople's individual messages, draw customers to the

business, and to hold existing customers.

A very significant and distinct feature of advertising is that the target population or audience

must understand the information and so it must be as simple as possible. Dunn et al. (1978)

viewed advertising from its functional perspectives; hence they define it as a paid, non-personal

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communication through various media by business firms, non-profit organization, and

individuals who are in some way identified in the advertising message and who hope to inform

or persuade members of a particular audience. Morden (1991) is of the opinion that advertising

is used to establish a basic awareness of the product or service in the mind of the potential

customer and to build up knowledge about it.

Kotler (1988) sees advertising as one of the four major tools companies use to direct persuasive

communications to target buyers and public noting that “it consists of non-personal forms of

communication conducted through paid media under clear sponsorship”. According to him, the

purpose of advertising is to enhance potential buyers’ responses to the organization and its

offering, emphasizing that “it seeks to do this by providing information, by channelling desire,

and by supplying reasons for preferring a particular organization’s offer. While writing on

advertising nature and scope, Etzel et al. (1997) compactly capture all advertising as having

four features: (a) A verbal and or visual message, (b) A sponsor who is identified, (c) Delivery

through one or more media, (d) payment by the sponsor to the media carrying the message.

Additionally, advertising drives sales and profitability of the company in two ways. First by

making consumers interested enough in the focal product that they would seek information

about it and, secondly, by converting information-seeking consumers into buyers (Hu et al.,

2014). By improving market awareness, advertising also improves the firm’s competitive

position, increases customer preferences, and strengthens the brand image (Koslow et al.,

2006; Kulkarni et al., 2003; Tellis, 2010). West et al. (2008), emphasize that “the creativity

in advertising is highly prized for its ability to gain consumer attention and bestow value to

brands,” particularly in markets with intense competition.

However, in other business literature, research also indicates that advertising does not

necessarily generate an expected sales return, rather it has a moderate influence on short- and

long-term sales (Berndt et al. 1995; Narayanan et al., 2004). Some argue for a concave or S-

shaped relationship between advertising and sales performance (Hanssens et al., 1999; Mesak,

1992; Simon and Arndt, 1980), suggesting that sales performance does not necessarily

increase with greater advertising spending. For example, the S-shaped relationship indicates

that initial spending on advertising has little impact on sales performance but with more

spending, advertising begins to have an effect (Johansson, 1979:13). This incremental gain

continues to a point, after which additional expenditures offer little or no returns. Hence, there

10

is an advertising threshold that firms must exceed to generate strong sales performance

(Hanssens et al., 1990). In view of contradicting findings in the literature, it is difficult to

hypothesize the nature and the direction of the relationship between advertising spending and

profitability.

2.4.1 Effectiveness of advertisement

Advertising effectiveness can be defined as the extent to which advertising generates a certain

desired effect (Bennet, 2006:87). Measuring the effects of advertising is very important, given

the amount of investments needed for advertising. While it is not possible to obtain a global

measure of the advertising effectiveness, we should seek to develop and apply methods and

measures for a partial verification of results. Regarding the difficulty of measuring the overall

effectiveness, it is believed that it is due essentially to the following considerations (Morden,

1991):

Advertising interacts with other business variables (behavior, marketing policies,

financial decisions etc.) and environmental variables (competition, economic

conjuncture etc.), hardly isolable;

The effects of advertising are varied and not always translatable into quantitative terms;

Advertising causes long-term effects, but not always, therefore, the results occur in the

same period in which are the costs.

There is need to Track retail traffic by counting the people who enter your store. Not

forgetting to monitor traffic before you start the ad campaign, so you’ll have a basis for

comparison.

Advertising often has a cumulative or delayed effect, so ad-driven sales may not

materialize immediately.

It is a well-known fact that there are some companies who advertise at very low level but still

their products are a hit and some companies indulge in very heavy advertisements but they

don’t get desirable results. But then, there are some traditional and modern tools to measure

the effectiveness of an advertisement through which the advertiser can or may get more and

more information about how their ads and product are performing in the market. As Kotler

and Armstrong (2010) the Gurus of Marketing puts it, there are two most popular areas which

need to be measured for knowing the effectiveness of advertisement and they are:

11

In print ads, include a coupon that customers can redeem for a discount or gift with

their purchase. Code the coupons so you can determine which ad or publication

generates the best results.

Offer an incentive for customers to tell you they’re responding to an ad: “Mention this

ad and get a 10% discount on your first order.” Put it on your website or in the local

newspaper, or use it as part of an ad on local TV or radio. It’s an easy way to know

where customers are finding out about you.

2.4.1 Relationship between Advertising and Sales Performance

The essence of advertising is to increase sales revenue, hence, improving sales performance

and profitability (David et al., 1982). Advertising combines with a host of other influences to

determine what contribution advertising makes to the buyers purchase decision. It is through

advertising or other forms of promotion that brands in different market segments can

effectively tell people in the market that a product is intended specially for them. The

significance of advertising is to let customers know that an established brand is still around and

it has certain characteristics, uses and benefits (Pride et al., 1998). Effective advertising can

increase sales of advertisers products and by so doing increase their profit. Advertising

provides consumers and other prospects with information about different products that are

available to them. This enables consumers to compare and to choose between the products and

encourage competition. Competition encourages companies to be more price and quality

conscious so as to retain customers and clients. (Cambridge International College training

manual, 2000).

Nevertheless, Sales in business terms are the actual sales in money value that a company

receives after necessary collections are made from different sales channels of the original total

production put on the market (Mc Cathy et al., 1994). It is sales that stimulates production in

a company and consequently profit which are affected by various factors some of which are

controllable like competition and general price changes. Sales performance is an integrated

frame work that enables organization to plan and model sales strategies (Berndt et al., 1995)

and ensure timely execution of sales initiatives while ensuring both front lines sales peoples

and decision makers have visibility into performance. Sales performance also refers to the total

amount of the firm’s output sold to the market especially on monthly or annually basis, this is

affected by many factors including customer relationship, marketing management of the firm

12

and sales force skills and motivation and even the pricing of the goods and services. Sales

revenue is the total amount of money that the firm gets from the sales of all its goods and

services in a given period of time (Cambell, 1995:239), this is usually six month or a year. if

a firm produced only one product or service, the sales revenue will be the price of the product

multiplied by the number of products sold. In the case of more than one product or service the

revenue from each needs to be added together.

Accordingly, it is believed that the right sales approach consists of sales training that supports

a company sales methodology and related process (Kotler, 1998). Designing or adopting sales

methodology is critical. The selling methodology must be developed based on the company’s

unique situation in their market, their customer, how the customers buy the complexity and

price levels of the product and services the company offers. Most companies recognize that the

world and their buyers buying process probably have changed forever. But some companies

have not recognized the need to change their sales force. In dealing with falling or declining

sales, it is advisable to invest in some short terms training and advertisement to upgrade the

skills of sales and customers service staffs. (Trehan and Trehan, 2010) recommend

continuous training of sales staff and expose them to different marketing activities for them to

gain skills and experience. This is an investment you cannot afford to miss. Find training that

producers result tailored to get to your situation. It can be seminar or distance learning that

does not require time away from the property or the job. According to sales training, programs

encompasses a variety of necessary components, things like company policies, sales paper

work, customer relationship management, sales force automation, orientation, sales process,

company services, sales skill training and product features and benefits. Further, Drossos et

al. (2010) urge that even when companies do decide that sales training is a step in the right

direction, they do not always proceed forward for the right reasons in the right order or in a

way that result in them driving more sales revenue companies have learned how to employ

sales training as a strategic tool.

Those that are leaders in the industry offering their stakeholders maximum return on their input

are able to quickly adapt to change market conditions are respected by their customer and

provide rock, solid, consistent sales performance, the people that work for those companies are

motivated, stay at their jobs ignored and are proud to help in recruiting their friends who have

been successful selling or other companies. This therefore, leads to improved sales

performance (Tellis, 2010).

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The decision to advertise implies a decision to compete in a new and aggressive way within

the market. This means the provider will no longer rely too solely up on personal salesmanship

to gain an advantage in the distribution channel. Instead it implies his readiness to and intension

of speaking directly to consumer in broad countries. The decision to advertise also helps in

development of the product. Dunn (1968) points out that, the market needs are changing and

conditions are changing too therefore there is need for creativity in selling. This will show the

company what to produce so as to satisfy the needs of the users. When companies produce,

such a commodity and they advertise, there is an automatic high responses in consumption,

thus showing the relationship between advertising and sales performance. Morden (1991)

found out that advertising has a greater potential of building awareness of people hence

obtaining a high preferences in the market share because a big percentage of the population has

one or more of the mass medium such as radios and television. This fact introduces the

advertised company to many people. If the advertising is satisfying, it will lead to increase in

volume of sales (Pride et al, 1993).

Phillips and Raspberry (2008) observed that advertising often stimulates demand, thus

stimulating sales. For advertising to have a direct relationship with sales revenue, the entire

market mix must be viewed by the customer as the right recognizes that many scholars have

heard different views on the effect of advertising on sales performance, however most of them

agree that effective advertising will eventually increase revenue. Don (2009) has stated that in

a competitive society there is not only competition between rival advertisers but choice

between their products and services. Companies advertise to create familiarity with or of a

product which helps to create confidence in it if a product is simply made available, it is

important to inform people of, it’s existence.

2.4.3 Importance of Advertising

Goods and services are produced according to consumers growing and changing desires. They

are competitive tools for companies among their rivals. Companies involved in the commercial

production of goods and services need advertising for several important reasons. The first

reason is that advertising helps to publicize and promote their products to the public thereby

helping to improve sales. Secondly, advertising helps to reduce distribution costs. Because

advertising reaches a mass audiences, the cost of personal selling and distribution is greatly

reduced (Dominick, 2013). Through the various media advertising messages can go beyond

14

regional and national boundaries. Advertising has become greatly popular and even common

place in today’s world. According to Trehan and Trehan (2010), market is controlled by

consumers so companies have to persuade and attract the consumers for selling their products

and services. Thus, advertising has crucial role for communication. Advertising serves as a tool

for competition. In order to compete with others, companies use creative and appealing

advertisements to lure consumers to patronize their brands. Advertising plays very important

role for the producers and the sellers of the products, because:

Advertising helps increasing sales

Advertising helps producers or the companies to know their competitors and plan

accordingly to meet up the level of competition. If any company wants to introduce or

launch a new product in the market, advertising will make a ground for the product.

Advertising helps making people aware of the new product so that the consumers come

and try the product.

Advertising helps creating goodwill for the company and gains customer loyalty after

reaching a mature age. The demand for the product keeps on coming with the help of

advertising and demand and supply become a never ending process.

Advertising is also important for the society. Advertising helps in educating people. There are

some social issues also which advertising deals with, like child labour, liquor consumption, girl

child killing, smoking, family planning education, etc. thus, advertising plays a very important

role in society. However, Phillip and Raspberry(2008) argue that what counts is not what the

company says about itself but rather what people say about it as experience shows that

companies who trumpet virtues are barely average. Advertising simplifies the task of the

salesperson and helps consumers reach out to new products (Morden, 1991). In addition,

through advertising a company can compete with others. By Showcasing competitive prices or

the benefits of its products and services. Manufactures can also remove misunderstanding about

their products through appropriate advertising.

2.4.4 The relationship between advertisement and profitability

Theories have been formulated over the years to explain the variable of profitability. Few of

such theories to mention are dynamic theory of profit, compensation theory of profit, monopoly

theory of profit and innovative theory of profit. What this paper seeks to discuss is the dynamic

15

theory of profit. Don (2009) propounded that the dynamic theory of profit is the residue; the

difference between price and cost, due to the reductions in the cost effected by changes in the

economy such as population increase (this reduces wages), increased capital supply (this

reduces the interest rate charged and hence the cost of capital comes down), and technological

improvements (reduces the costs). This theory treats profits as a residue in price after deducting

costs. Furthermore, profitability is defined as either accounting profits or economic profits.

Accounting profits means net income, while economic profits, means net worth. (Hall and

Robert, 2012).

Profitability is the primary goal of all business ventures. Without profitability the business will

not survive in the long run. So measuring current and past profitability and projecting future

profitability is very important. Profitability is measured with income and expenses. (Drossos

et al., (2010). Income is money generated from the activities of the business. For example, if

copper and bicycle tires are produced and sold, income is generated. However, money coming

into the business from activities like borrowing money does not create income. This is simply

a cash transaction between the business and the lender to generate cash for operating the

business or buying assets. Profitability is measured with an “income statement” (Shimp and

Terence, 2003), this is essentially a listing of income and expenses during a period of time

(usually a year) for the entire business. An income statement is traditionally used to measure

profitability of the business for the past accounting period. However, a “pro forma income

statement” measures projected profitability of the business for the upcoming accounting period.

A budget may be used when you want to project profitability for a particular project or a

portion of a business. Whether you are recording profitability for the past period or projecting

profitability for the coming period, measuring profitability is the most important measure of

the success of the business. A business that is not profitable cannot survive. Conversely, a

business that is highly profitable has the ability to reward its owners with a large return on their

investment (Shakhov and Panasenko, 2012).

Increasing profitability is one of the most important tasks of business managers. Managers

constantly look for ways to change the business to improve profitability. For this reason they

are always advertising to a broader audience to maximize profits as individuals are exposed to

plenty of advertisements per day. Advertising practitioners use various tactics to cut through

the cluttered advertising scenario (Kotler and Keller, 2005) such as television. Many reputed

16

academicians and researchers supported this notion and argued that advertising plays and an

integral part in capturing viewer’s Attention, and not only that, it also inhibits positive buying

behavior and consumer response (Cambell, 1995 and Mitchell, 1981). But on the contrary,

writers of conflicting school of thought believe that advertising intentionally or unintentionally

attacks the consumer’s autonomy (Shimp, 2003). The use of advertising as an attention seeking

tactic is not new and scientists have argued that due to the advanced technology the use of

advertising by telecommunication companies is increasing day by day (Callcott and Lee,

1994). Despite of its immense popularity among marketers and advertisers empirical studies

provide some mixed results in support of practical usage. Critics of the usage of advertising by

telecommunications companies argued that evaluation of the advertising effectiveness is

limited to the general usage and no proper methodological instruments have been used to

analyze the effectiveness of Telecommunication Company advertising and its impact on

companies’ profitability (Dennis and Anna, 2012). To cater these complexities scientists have

now begun to focus on tools that would clarify the content and nature of company’s tools for

evaluation of advertising effectiveness and its relationship with telecommunications

companies’ profitability (Drossos et al., 2010). In correspondence to that recently scientists

have also started building theories to illustrate that how different elements of advertising affect

the consumer’s likelihood of choosing ascertain bank which is advertising instead of the bank

which is more conservative in approach towards advertising.

In their 2010 study, Hong and John looked at a range of companies in Japan with varying

ownership structures in order to study the factors affecting profitability between 2000 and 2007

and determined that capital adequacy ratio does relate positively to profitability. Conversely,

they found that the capital adequacy ratio has a negative correlation with the Net interest margin

(NIM). In a similar study examining the effects of specific factors related to Tunisian

commercial companies also studied the macroeconomic indicators for profitability and the

impact of the financial structure on the profitability of the telecommunication sector in Tunisia

between1980 and 2000. Their findings confirm that the capital adequacy ratio is a positive

indicator of profitability and that size has a negative impact on profitability. They find that

macroeconomic indicators have no effect on Tunisian telecommunication companies’

profitability. The Chinese phone company’ internal structures and macroeconomic indicators

were studied by Fadzlan and Muzaffar (2009) to discover their influence on profitability

during the period 2000-2005.

17

This study involved privately owned telecommunication companies, and state-owned phone

companies, and concluded that in state-owned companies, there is a positive correlation

between liquidity and profitability and capitalization and credit risk also have a positive impact

on profitability. The findings also reveal that there is a negative effect of cost on profitability

in telecommunication companies of joint stock. However, Fadzlan and Muzaffar (2009)

studied that there is a negative Impact of both size and costs in such companies. The effect of

diversification on profitability was found positive. Moreover, in China the impact of economic

growth is positive and there is a negative correlation between the growth of money supply and

profitability of both state-owned and privately owned phone companies. Deger and Adem

(2011) studied the impact of phone company specific and macroeconomic indicators on

profitability of four phone companies, listed in the Istanbul stock exchange Turkey between

2002 and 2010. The findings revealed that the size of assets has a positive effect on non-interest

income. However, the size and the credit portfolio has a negative impact on profitability and

the real interest rate was shown to have a positive effect on the profitability of Turkish phone

companies.

Donald et al. (2010) examined the impact of advertising and promotion on firms’ profits and

market share using profit function. Authors reported significant evidence of increasing returns

on sale due to higher marketing expenditure. Researchers have argued that advertising

strategies for increasing profits are effective and less risky when demand is growing (Hall,

2012:65). Other studies have maintained that consumers become more price conscious when

the demand for a product or service is growing and advertising strategies become less viable

(Doyle, 1968:143-147). Some marketing pundits define advertising by phone companies as a

tool to reduce the perceived risks and not only that they argued that advertising helps

telecommunications company especially mobile phone companies to build a rapport with the

clients and enhance company’s image (Rust et al., 1996 and Fugate, 1998). Research done in

the field mentioned the fact that retail phone service provision can be a two edge sword, if not

carefully handled can damaged the phone companies’ image and in turn companies’

Profitability. To support the point scientists argued that phone companies’ image and its

profitability goes hand by hand (Dennis and Anna, 2012:78).

In their 2011 study, Dennis and Taisier investigated 10 Middle Eastern and North African

countries between 2000 and 2008 and made a comparison between accounting profitability

18

measures and economic determinants. The former represents return on assets and return on

equity, whereas the latter are related to the efficiency of cost and profit. They found that the

size of the company has a positive effect on its profitability accounting measures. There was a

high profitability in those companies studied and little negative correlation between the

Cost and profit efficiency, despite being smaller. The larger the phone company is, the greater

the increase in efficiency of cost and profit. Furthermore, cost efficiency was found to have a

negative effect on profitability. This is peculiar to those Middle Eastern and North African

companies, which are not found to be as efficient as their European counterparts in cost

efficiency terms, although they are similar to those in developing countries. The profitability

of Thai phone companies between 1999 and 2005 (post-financial Asian crisis) was studied by

Fadzlan (2010), who examined the effects on profitability of both the internal factors as well

as the macroeconomic indicators. Having conducted a regression analysis, Fadzlan found that

there was a positive correlation between both size and capitalization and profitability; however,

overhead costs, non-interest income and credit risk were all found to have a negative impact

on profitability.

2.5 Previous Studies.

A lot of empirical studies have been carried out on advertising, one of such was carried out by

Habeenzu (2010). , he said a company’s ultimate goal is to sell product and make profit and

one of the ways which he could achieve this is through advertising. The researcher noted the

fact that there are stiff competitions in the market especially with advertising messages

reaching the ultimate consumers first. Kantumoya (1991) believed in his tentative findings

that consumers are not helpless victims of advertisement once they are constantly exposed to

various kinds of advertisement, they become motivated. Johansson (1979) in his own study,

says that men of the world who want the best wherever they find it know that advertised goods

are invariably the best of its kind for reliable product can stand up to intensive publicity. The

manufacturer who makes a public claim must be able to prove it by advertising goods that are

good for buying.

Also, Galbraith (1963) states that advertising has an effect on the rising sales of brand product

categories and therefore increases the profit of the product. In a study undertaken to find out

the role of social status in decision process, Kassarijian et.al. (1995) stated that increased

19

social interaction permits the more rapid spread of new ideas and that there is a relationship

between advertising appeals and social character. It may be necessary to mention that

marketing activities are interwoven and no one’s activities are in stage and except one stage is

completed the company may not go over to the next stage. This has resulted in people seeing

marketing as an integrated system. Stanton (1978) in one of his books sees marketing as a total

system in which we price, promote, and distribute satisfying goods and services to potential

customers. Arising from Stanton’s definition, it becomes evident that marketing activities are

all geared toward consumer’s wants, needs, and satisfaction with a view to making some level

of profit. Satisfying the needs of target market brings one to the use of 4p’s in marketing

otherwise known as marketing variable. When discussing the marketing variable many talk

about the types of product, the price attached to the product, the advertising aspect to create

product awareness, persuasion and finally, the place or distribution/logistics. For any good

organization, the satisfaction of the needs of target market is highly dependent on its fashion

and how it manipulates the four utilities to suit the needs of the consumers and the organization.

As a matter of fact, Young (1965) says profit making should not be the primary objective of

any organization but rather provision of quality products will satisfy consumer’s needs and

enhance repeat purchase. Definitely the company will make some profit in order to remaining

business. This is also applicable to the telecommunication industry, it is pertinent to mention

that this will only be achieved when a company produces a quality product and this product is

reasonably priced based on its value to the consumers and a good promotion employed to

inform and create product awareness and the product is within the reach of the target

consumers. Accordingly advertising does not only inform the public that a product exists but

also promotes its benefits, it also persuades, induces people to like, prefer and buy a product.

2.6 Comparative studies.

The decision to advertise implies a decision to compete in a new and aggressive way with in

the market. This means the provider will no longer rely too solely upon personal sales man ship

to gain distribution. Instead he implies his readiness to and intention of speaking directly to

consumers in abroad countries. The decision to advertise also helps the marketer to expand his

share in the market. Advertisement helps in development and expansion of the market and the

consumer acceptance of the product.

20

In his studies, Dunn (1968) points out that the market needs and conditions are changing;

therefore there is need for creativity in selling. This will show the company what to produce so

as to satisfy the needs of the users. When companies produce such a commodity and they

advertise, there is an automatic high response in consumption. Thus showing the relationship

between advertising and sales performance. Penchman (1992) found out that advertising has

a greater potential of building awareness of people hence obtaining a high preference in the

market share because a big percentage of the population has one or more of the mass medium

such as radios and television. This fact introduces the advertised company to many people. If

the advertising is satisfying it will lead to increase in volume of sales. In his research, Pride F

et al (1989) observes that advertising often stimulates demand thus stimulating sales. For

advertising to have a direct relationship with sales revenue, the entire market mix must be

viewed by the customer as the right one. (Engel et al 1991, mc Cathy and perveault, 1988).

Gordon (1993) states that companies advertise in order to compete in a new and aggressive

way with in the marker, to increase their market share through increased customer , utilize the

low cost way of teaching customers to create marketing approaches. David et al (1988)

recognizes that many scholars have heard different views on the effect of advertising on sales

performance .however most of them agree that effective advertising will eventually increase

revenue. Jefikins (1990) has stated in his studies that in a competitive society there is not only

competition between rival advertisers but choice between their rival products and services.

Also people forget very easily and therefore, the biggest advertiser in the world will get

bankrupt very easily if he stopped advertising.

2.7 Research variables arising from literature

The following are some of the variables identified from the literature that was discussed and

analysed above in order to understand the topic of this study:

(a) dependent variable: sales performance

Independent variable: Company's product. ...

Marketing strategy of the company. ...

Marketing Personnel of the company. ...

Technology and Innovation. ...

(b) dependent variable: market share

21

Independent variable: Cost of Goods/Service Sold

Expected Win Rate

Competition

2.8 Research Gaps

From the theoretical framework and the empirical framework covered, approximately ninety

percent of the research was carried out in developed countries. Not much has been done on this

topic locally. There is a need to do a research locally as business environments differ in terms

of its consumer composition. A consumer’s buying behaviour is influenced by cultural, social,

and personal factors. Of these, cultural factors exert the broadest and deepest influence.

Therefore, this study was designed to address this gap of regional difference and make policy

recommendations on how local phone companies can strategies in the way they select

advertising media that can reach the intended audience.

3.0 CHAPTER THREE: RESEARCH METHODOLOGY AND DESIGN

3.1 Overview of research methodology.

This chapter looked at the Research design, population study, sampling design, data collection

methods, data analysis and the limitations experienced during the study.

3.2 Research Design.

A research design is a general plan of how you are going to collect data, how data is going to

be presented and analysed in answering the research questions and the description of the

instruments or tools to be used (Saunders, 2007). The researcher used a cross sectional

research design where quantitative questions were used, this means that the questions were

closed-ended and identified any causal link between factors or variables, and it allowed the

examining of the effects of advertising on company sales and profitability; it is one in which

the investigator primarily uses positivist claim for developing knowledge (i.e. cause and effect

thinking, reduction of specific variables and questions, use of measurement and of theories,

employs strategies of inquiry such as experiments and survey and collects data on

predetermined instruments that yield statistical data (Cresswell, 2003).

22

The design was appropriate in assessing the conceptual and theoretical frameworks as well as

the relationship between the variables. In other words, the research design articulates what

data is required, what methods are going to be used to collect and analyse this data, and how

all of this is going to answer the research questions.

3.3 Research philosophy and Approach.

The study adopted the positivism philosophy. This philosophy says that there is only one

objective or definite reality to any research phenomenon regardless of the researcher’s

perspective or opinion (Kothari, 2004). Because of this the positivist remains detached or

neutral from the participants of the research. Positivism philosophy results into a deductive

research approach which uses a quantitative research method.

A research approach could either be deductive or inductive, and its selection would often

depend on the research purpose and the nature of the research topic. A topic, on which there is

a wealth of literature from which you can define a theoretical framework and a hypothesis,

lends itself more readily to deduction. That is why the precise purpose of reading and reviewing

the literature depends on the approach that is intended to be used in research. (Saunders,

Lewis and Thornhill, 2009). For some research projects literature is used to help identify

theories and ideas that could be tested using data to be collected. This is known as a deductive

approach. A deductive research approach is concerned with coming up with theories and

hypotheses which are then tested against the findings and ends with a conclusion to see if there

is any support for the theory or hypothesis (Sekaran, 2003). Any researcher using deductive

reasoning would start with theory and move on to research question or hypothesis which is

tested through data collected. In the end, findings derived from the collected data would either

confirm or reject the research question theory or hypothesis. This research approach tends to

flow from generic to specific.

Saunders, Lewis and Thornhill (2009) further say, with research into a topic that is new, is

exciting much debate, and on which there is little existing literature, it may be more appropriate

to work inductively by generating data and analysing and reflecting upon what theoretical

themes the data are suggesting. This is known as an inductive approach. In an inductive

approach to research, a researcher begins by collecting data that is relevant to his or her topic

of interest. Once a substantial amount of data have been collected, the researcher will now take

time to analyse the collected data while looking for patterns in that data, so as to develop or

build a theory that could explain those patterns (Kothari, 2004).

23

Thus when researchers take an inductive approach, they start with a set of observations and

then they move from those particular experiences to a more general set of propositions about

those experiences. In other words, they move from data to theory, or from the specific to the

general. However, for this particular research a deductive research approach was used

(Sekaran, 2003).

3.4 Research Strategy

The research strategy used in this research was the survey type of research strategy. A survey

design often results from a deductive approach and uses a questionnaire to collect data. This

survey strategy allowed the researcher to collect quantitative data which was used to suggest

possible reasons for particular relationships between variables and to produce models of these

relationships.

3.5 Research choice

The study chose quantitative research in order to analyse the impact of advertisement on company

sales and profitability. This is a mono method of research choice as it used only one method of

data collection and analysis method. This was because of the variables that were identified from

the research objectives. The variables required quantitative or statistical analysis in order to

establish the relationship between variables. According to Saunders et al. (2007: 146), the two

main methods of data collection are quantitative data collection and qualitative data collection.

Qualitative data that is used in research would be usually a non-numerical data. It has open-ended

information. Example: Pictures or video clips. Quantitative data that is used in data would be

numerical data consisting of graphs or statistics. It includes close-ended information such as

attitude, behaviour of performance instruments (John and Vicki, 2007).

3.6 Time horizon

The time frame for this research was cross sectional. The cross-sectional time horizon is when

there is a pre-set time established for the collection of data.

3.7 Sampling Frame.

The research comprised of the employees of Zamtel from regional head office in Ndola drawn

from a target population of 96 workers and because the researcher could not go to each and

every employee, due to time factor and financial resources, a sample was necessary and it was

determined.

24

3.8 Sample Size.

The sample size in this study was 40 workers of Zamtel, to whom the questionnaire was

administered. These were respondents the researcher thought could provide relevant

information to the problem under study.

3.9 Sampling Techniques.

This study used convenience and purposive sampling criteria. They were used to select the

forty (40) respondents because they were easy to reach at their regional office in Ndola and

had the information and knowledge about the subject matter under study.

A convenience sample is a type of non-probability sampling method where the sample is taken

from a group of people easy to contact or to reach. There is no criteria to calculate or determine

sample except that people should be available and willing to participate. (Kothari, 2004).

Purposive sampling, also known as selective or subjective sampling, relies on the judgment of

the researcher when choosing who to ask to participate. In purposive sampling, the researcher

samples with a purpose in mind. He or she usually would have one or more specific predefined

groups they are seeking (Purposive-sampling, 2016). In purposive sampling personal

judgment needs to be used to choose cases that help answer research questions or achieve

research objectives.

3.10 Data Collection Techniques.

Secondary data was the one obtained from sources which already exist about sales, profitability

and the company and had been used before, for example information from journals, books and

internet. The Primary data was collected from Zamtel’s employees during a cross sectional

survey using questionnaires. Top managers, middle managers and unionised workers from

various departments were interviewed.

3.10.1 Data collection instruments

These are self-administered, structured and semi structured formalized questions used in the

survey to collect information which is later analysed to provide results necessary for solving a

given research problem (Kothari, 2004).

For this study the questionnaire was prepared in line with the objectives of the study mentioned

above. The questionnaire was organized in four sections. The first section was designed to

25

obtain personal or demographic data of the respondents, the second section contained questions

on the advertisements at Zamtel, the third section contained questions on informative

advertising, Persuasive advertising, and reminder advertising. This was designed to obtain

relevant data regarding the company’s advertising objectives. Lastly but not the least, the fourth

section contained company profitability related questions that were aimed at obtaining data and

assess whether advertising affected it or not. These four sections allowed respondents to choose

from alternatives that were provided by the researcher.

3.11 Operationalisation of Research variables

Conceptualization attempts to visualize the causality of the research problem prior to

understanding the research in detail (Sekaran, 2003). In this study the dependent variable is

the company profitability while advertisement is an independent variable. A dependent variable

is defined as the variable being tested in a scientific experiment (Saunders, Lewis and

Thornhill, 2012). The dependent variable is 'dependent' on the independent variable. As the

researcher changes the independent variable, the change in the dependent variable is observed

and recorded. A change in the independent variable (advertisement) directly causes a change

in the dependent variable (company profits). In this research it is planned to explain the

relationship between Advertising and company profitability.

3.12 Reliability and validity

Reliability and Validity are important concepts in research as they are used for enhancing the

accuracy of the assessment and evaluation of a research work (Tavakol and Dennick, 2011:

53). They have different meanings under the different types of research i.e. quantitative and

qualitative research (Creswell, 2014, 201). Reliability refers to the consistency, stability and

repeatability of results; that is, the result of a researcher is considered reliable if consistent

results have been obtained in identical situations but different circumstances (Twycross and

Shields, 2004, 36). On the other hand, validity is the extent to which any measuring instrument

measures what it is intended to measure (Thatcher, 2010, 125). It is possible for a

measurement to be reliable but invalid; however, if a measurement is unreliable, then it cannot

be valid (Thatcher, 2010, 125; Twycross and Shields, 2004, 36). This study ensured all

stipulated methods in this chapter were followed in order to ensure that reliable and valid results

are obtained and are free from biasness.

26

3.13 Ethical Consideration:

Ethics in business research refers to the set of behavioural principles and norms that governs

the behaviour of a person in deciding what is right or wrong (Kothari, 2004). The ethical code

of conduct should reflect the behaviour of every one participating in the research project,

researcher, participants or moderators (Sekeran 2003). In order to keep the confidentiality of

the data given by respondents in this study, respondents were not required to write their names

on the questionnaire and were assured that their responses will be treated in confidentiality.

The purpose of the study was disclosed in the introductory part of the questionnaire. The

researcher in this study considered the following ethical research codes: respect and

confidentiality, beneficence and justice. The respondents also had the right to withdraw from

the research at any time.

3.14 The Limitations of the study.

Gathering of secondary data about the impact of advertisement on sales and profitability of

Zambian companies was difficult in that this area of study has not been researched enough in

Zambia and since this research project was the researcher’s self-sponsored, the researcher had

financial constraints to cover the national headquarters of Zamtel. The researcher experienced

unwillingness from the respondents in providing the much needed information.

4.0 CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA.

4.1 An Overview of Data analysis.

This chapter focuses on the presentation and analysis of demographic data and data on the

relationship between advertising and company profitability. It is based on the objectives of the

research which includes examining the forms of advertising, establishing the level of sales and

relationship between advertising and profitability. It is presented in form of tables and figures

such as pie, column and bar charts. The data in this chapter was obtained mainly using

questionnaires. 40 questionnaires were issued out but only 38 were filled in as in the table

below.

4.2 Demographic data.

4.2.1 Presentation and analysis of the distribution of questionnaires.

Table 4. 1 Distribution of questionnaire to respondents from whom data was collected.

Variable No. of

questionnaires

No. Returned

questionnaires

Response rate

(%)

Top Management 04 04 10.0

27

Middle Management 06 06 15.0

Unionized Workers 22 20 50.0

Unclassified 08 08 20.0

Total 40 38 95.0

Source: Field Survey, 2020

Figure 4.1 Distribution of questionnaire to respondents from whom data was collected.

Source: Table 4.1

Out of 40 copies of questionnaires distributed to respondents from whom data was expected,

only 38 questionnaires were returned representing a return rate of 95%. 5% did not respond to

the questionnaires. This shows an excellent turn up of the respondents.

Table 4. 2 Distribution of respondents according to gender.

Variable No. of respondents Percentages (%)

Male 25 65.79

Female 13 34.21

Total 38 100

Source: Field data, 2020

Figure 4.2 Distribution of respondents according to gender.

Top Managemen

t10%

Middle Managemen

t16%

Unionised Workers

53%

unclassified21%

28

Source: Table 4.2

According to table 4.2 above, 65.79 % of the respondents who participated in the study

were male, while 34.21% were female.

Table 4. 3 Distributions of respondents according to age.

Variable No. of respondents Percentages (%)

20-30 years 09 23.68

31-40 years 11 28.95

41-50 years 11 28.95

51-60 years and over 07 18.42

Total 38 100

Source: Field Survey, 2020

Figure 4.3 Distributions of respondents according to age

Source: Table 4.3

Male Female

66%

34%

24%

29%

29%

18%

20-30 years

31-40 years

41-50 years

51-60 years and over

29

Table 4.3 above indicated that Age range 31-40 years and 41-50 years of the respondents

who participated in the study recorded 28.95% respectively. Age 20-30 years recorded

23.68%, while age range 51-60 years and over noted 18.42%.

Table 4. 4 Distributions of respondents according to occupation:

Variable No. of

questionnaires

No. Returned

questionnaires

Response rate

(%)

Top Management 04 04 10.0

Middle Management 08 08 20.0

Unionized Workers 22 20 50.0

Unclassified 06 06 15.0

Total 40 38 95.0

Source: Field Survey, 2020

Figure 4.4 Distributions of respondents according to occupation:

Source: Table 4.4

According to the table 4:4 above 50% of the respondents who participated in the study were

unionized workers while 20%, were unclassified workers. 15% were in middle management

and only 10% were in top management.

Table 4. 5 Distribution of respondents according to length of service.

Variable No. of respondents Percentages (%)

Below one (1) year 02 5.26

Top Managemen

t, 10%

Middle Managemen

t, 15%

Unionised Workers,

50%

Unclassified, 20%

30

1-5 years 12 31.57

6-10 years 16 42.10

Over 15 years 06 15.78

Other 02 5.26

Total 38 100

Source: Field Survey, 2020

Figure 4.5 Distribution of respondents according to length of service.

Source: Table 4.5

Table 4.5 above indicates that 42.10% of the respondents who participated in the study had 6-

10 years length of service, followed by 1-5 years length of service who scored 31.57%. Those

who served over 15 years had 15.78%. Below I year and “other” category scored 5.26%

respectively.

Table 4. 6 Distribution of respondents according to level of education.

Variable No. of respondents Percentages (%)

Grade 12 02 05.2

Certificate 05 13.2

Diploma 05 13.2

Under graduate degree 19 50.0

Post graduate degree 07 18.4

Total 38 100

Source: Field Survey, 2020

Figure 4.6 Distribution of respondents according to level of education:

Below 1 year5%

1-5 years32%

6-10 years42%

Over 15 years16%

other5%

31

Source: Table 4.6

According to table 4.6 above, 50% of the respondents were first degree holders, followed by

post graduate degree holders who were 18.4% and certificate and Diploma holders noted 13.2%

respectively, followed by grade 12 certificate holders who noted 5.2% respectively.

4.3 Advertisement data at Zamtel.

4.3.1 Presentation and analysis of data on the Advertisement at Zamtel:

Table 4. 7 Zamtel advertises all its products and services

Variable No. of respondents Percentages (%)

Strongly disagree 02 5.26

Disagree 12 31.57

Neutral 06 15.78

Agree 16 42.10

Strongly agree 02 5.26

Total 38 100

Source: Field Survey, 2020

Figure 4.7 Zamtel advertises all its products and services

Grade 12 Certificate Diploma UnderGraduateDegree

PostGraduateDegree

5%13% 13%

50%

18%

32

.

Source: Table 4.7

From Table 4.7 42.1% of respondents agreed that Zamtel advertises all its products. 31.6% of

them disagreed, 15.8% were not sure, and 5.3% of the respondents strongly Disagreed and

some strongly agreed.

Table 4. 8 adverts by Zamtel are captured by the intended audience.

Variable No. of respondents Percentages (%)

Strongly disagree 10 26.32

Disagree 14 36.85

Neutral 6 15.79

Agree 5 13.15

Strongly agree 3 7.89

Total 38 100

Source: Field Survey 2020

Figure 4.8 adverts by Zamtel are captured by the intended audience.

5%

32%

16%

42%

5%

Strongly disagree

Disagree

Neutral

Agree

Strongly agree

Strongly disagree,

26%

Disagree, 37%

Neutral, 16%

Agree, 13%

Strongly agree, 8%

33

Source: Table 4.8

From Table 4.8, 36.8% of the respondents disagreed that Zamtel adverts reach the intended

audience. 26.3% strongly disagreed while 15.7% did not state their opinion and only 13.1%

agreed that adverts of Zamtel reaches the intended audience. This implies that there is a

possibility that advertisements do not reach the intended audience.

Table 4. 9 Zamtel uses most current media mixes to advertise.

Variable No. of respondents Percentages (%)

Strongly disagree 05 13.15

Disagree 03 7.89

Neutral 06 15.79

Agree 10 26.32

Strongly agree 14 36.85

Total 38 100

Source: Field Survey, 2020

Figure 4.9 Zamtel uses most current media mixes to advertise.

Source: Table 4.9

Table 4.9, depicts the media mixes that are used by Zamtel to advertise its product. As can

be seen from the table 36.8% strongly agreed that Zamtel uses most media mixes, 26.3%

agreed, and 15.7% were not sure whether Zamtel uses most current media mixes. 13.1% of

the respondents strongly disagreed while 7.8% of the respondents disagreed.

Table 4. 10 informative purpose and objectives of Advertising at Zamtel

13%

8%

16%

26%

37%

Strongly disagree

Disagree

Neutral

Agree

Strongly agree

34

Variable No. of respondents Percentages (%)

Strongly disagree 09 23.68

Disagree 11 28.95

Neutral 0 0

Agree 7 18.42

Strongly agree 11 28.95

Total 38 100

Source: Field Survey, 2020

Figure 4.10 informative purpose and objectives of Advertising at Zamtel

Source: Table 4.10

From table 4.10 28.9% respondents strongly agree and disagree respectively, 18.4%, Agree

that adverts of Zamtel are for informative purposes and none of the respondents were neutral.

Only 23.6% strongly disagreed. This implies the in formative purpose of advertising is

achieved.

Table 4. 11 persuasive purpose and objectives of Advertising at Zamtel

Variable No. of respondents Percentages (%)

Strongly disagree 04 10.5

Disagree 04 10.5

Neutral 0 00

Agree 17 44.7

Strongly agree 13 34.2

Total 38 100

Source: Field Survey, 2020

Stronglydisagree

Disagree Neutral Agree Stronglyagree

24%29%

0%

18%

29%

35

Figure 4.11 persuasive purpose and objectives of Advertising at Zamtel

Source: Table 4.11

From table 4.11, 44.7% respondents agreed, 34.2% strongly agreed and 10.5% strongly

disagreed and agreed respectively. This implies the Persuasive purpose of advertising is

significantly met. In other words the output obtained showed that all most all the respondents

agreed that the persuasive purpose of the company’s advertisement is achieved.

Table 4. 12 Reminder purpose and objectives of Advertising at Zamtel.

Variable No. of respondents Percentages (%)

Strongly disagree 05 13.15

Disagree 03 7.89

Neutral 06 15.79

Agree 10 26.32

Strongly agree 14 36.85

Total 38 100

Source: Field Survey, 2020

Figure 4.12 reminder purpose and objectives of Advertising at Zamtel (bar or pie chart) below

10%

11%0%

45%

34%Strongly disagree

Disagree

Neutral

Agree

Strongly agree

36

Source: Table 4.12

From table 4.12, 36.8% of respondents strongly agree, 26.3% Agree and 15.7% of the

respondents were not sure while 13.1 strongly disagreed and only 7.8% disagree. This implies

the Reminder purpose of advertising is served.

Table 4. 13 the relationship between advertising and company profitability

Variable No. of respondents Percentages (%)

Strongly disagree 02 5.26

Disagree 02 5.26

Neutral 06 15.78

Agree 12 31.57

Strongly agree 16 42.1

Total 38 100

Source: Field Survey, 2020.

Figure 4.13 the relationship between advertising and company profitability

13%

8%

16%

26%

37%

Strongly disagree

Disagree

Neutral

Agree

Strongly agree

37

From table 4.13, 42.1% respondents strongly agree, 31.57%Agree and 15.7% were not sure

while 5.2 strongly disagreed and disagreed respectively. This implies that advertising

influences company profitability.

5.0 CHAPTER FIVE: DISCUSSION AND INTERPRETATION OF

FINDINGS.

5.1 An Overview of the Interpretation of research findings:

This chapter summaries the field discoveries, it discusses and interprets the findings of this

research. The objectives of the research were to examine the forms of advertising used by

Zamtel, establishing the level of sales at Zamtel, determining the media mixes used to advertise

the products and services of Zamtel and lastly to assess the impact of adverting on company

profitability.

5.2 Discussion and Interpretation of Demographic Information:

This was an investigation into the impact of advertisement on company sales and profitability

of Zamtel. The study focused on sales and profitability. The results showed that the majority

of the respondents were males represented by 65.8% with only 34.2% being females as

illustrated in Table 4.2. One may assume that gender mainstreaming policy has not yet been

adopted by the company. The disparities between men and women have resulted in women

often bearing the burden of development needs, and as a result, gaining fewer benefits from

development interventions. Gender inequalities are costly to the economy and development of

countries; these inequalities undermine productivity, trade performance, and women’s capacity

to contribute to the global economy. (Hoffmann and Freitas López, 2016).

5.00%

5.20%

15.78%

31.57%

42.10%

Strongly disagree

Disagree

Neutral

Agree

Strongly agree

38

Zamtel has a youthful workforce. The data obtained from the field revealed that there were

more of the respondents in the 31+ age groups And 41+ age groups respectively representing

28.9% followed by those in the 20 – 30 years age group (23.7%). Only 18.4% from the age

group of 51- 60 and over participated in the research as shown in table 5.1. This could also be

as a result of the country being dominated mainly by the youths. The respondents were asked

in what occupation category they were falling in at Zamtel and it was indicated that the majority

(50%) of the respondents were unionized workers. This was followed by those who stated that

they were in middle management with 20%. This was good for the survey as the information

required for the survey needed to be more accurate and reliable. Furthermore, the respondents

were asked how long they have worked for Zamtel the table indicated that 42.1% of the

participants have been with Zamtel for over 6 years. This implies that the industry retains its

employees. It’s clear that having proper retention strategies is key in order to retain skilled and

qualified employees. And the Participants in this category have rich experience to understand

the performance of the company.

Meanwhile 31.5% represents those respondents that have worked for Zamtel for less than 5

years. 15.7% of the respondents have worked for 15 + years for Zamtel while 5.6% represents

those who have been with Zamtel for less than 1 year and those with unknown period

respectively. This could be that those in the unknown category recently joined Zamtel.

Similarly the trend of Zamtel in retaining its workers can be seen through the majority of the

qualified employees who participated in the survey. Table 4.6 reveals that majority of the

workers who participated in the study were degree holders (50%), which was good for this

study as degree holders have a better understanding of the subject matter. Those with post

graduate qualification were represented by 18.4%, while certificate and diploma holders were

represented by 13% respectively. Respondents who hold grade 12 certificates were represented

by 5.2%.

5.3 Discussion and interpreting of information on advertisement at Zamtel.

This chapter discusses the results of the study on advertisement. The study aims to assess the

impact of advertising (i.e. informative, persuasive and reminder advertising) on sales and

profitability of Zamtel. The media mixes that the company uses to advertise have been

examined too. As a matter of fact, a lot of empirical studies have been carried out on

advertising, one of such was carried out by Karounwi (1998), he said the producer’s ultimate

goal is to sell product and make profit and one of the ways which he could achieve this is

39

through advertising. Another researcher, Wright (1991) believed in his tentative findings that

consumers are not helpless victims of advertisement once they are constantly exposed to

various kinds of advertisement, instead they become motivated. This is in line with the data

obtained in the field on whether Zamtel’s advertisements reach the intended audience.

As can be seen From Table 4.7, 42.1% of respondents agreed that Zamtel advertises all its

products. 31.5% of them disagreed, 15.8% were not sure, and 5.3% of the respondents strongly

Disagreed and some strongly agreed. This implies that Zamtel carries out advertising on all its

products. It also shows the consideration that the company gives to the advertisement of its

product to get the attention of customers. The respondents were further asked whether the

advertisements reached the intended audience. The results showed that 36.8% were not sure

whether the advertisement of Zamtel reached the intended audience and 26% strongly

disagreed and 15.9% disagreed. This implies that there is a possibility that advertisements do

not reach the intended audience. However, the major purpose of advertising is to drive sales

and profitability of the company. First by making consumers interested enough in the focal

product that they would seek information about it and, secondly, by converting information-

seeking consumers into buyers (Hu et al., 2014). By improving market awareness, advertising

also improves the firm’s competitive position, increases customer preferences, and strengthens

the brand image (Koslow et al., 2006; Kulkarni et al., 2003; Tellis, 2010). West et al. (2008),

emphasize that “the creativity in advertising is highly prized for its ability to gain consumer

attention and bestow value to brands,” particularly in markets with intense competition. If the

intended audience is not reached there is no way they can become interested in the products or

services as mentioned above by Hu et al. (2014). The possibility that the intended audience is

not reached could be the reason why for some time now the company has not been making

profits despite advertising all its products and services. Furthermore, Only 13.1% strongly

agreed and 7.8% agreed respectively that the advertising reached the intended audience.

Figure 5.1 Some of the products that Zamtel advertises on social media.

40

Source: Zamtel Facebook page2.

The field data shown in Table 4.9 shows that, 36.8% strongly agreed that Zamtel uses most

current media mixes that are available today, 26.3% simply agreed, and 15.7% were not sure

whether Zamtel uses most of the media mixes. However, 13.1% of the respondents strongly

disagreed while 7.8% of the respondents simply disagreed. That illustrates the media mixes

that are used by Zamtel to advertise its product. As can be seen from category 1and 2 of the

media types in the questionnaire, Television, Posters, Newspapers, Magazines, Billboards,

Sponsoring events are mostly used. Other forms of advertising are used with lesser

consideration. The three most dominant form of advertising used by Zamtel are Radio,

Sponsoring event, and Television. Internet/website form advertising is less or never used by

the company.

According to table 4.10, 28.9% respondents strongly agree and disagree respectively that

Zamtel achieves informative purpose of Advertising, 18.4% Agreed and none of the

respondents were neutral. Only 23.6% strongly disagreed. From this data it can be said that the

informative purpose of advertising is achieved but since it got the same score for those that

disagreed it could imply that Zamtel must pullup socks on the informative purpose of

advertising. Informative advertising is used to inform the customers about a new product or

feature and to build the image of the company (Kotler and Armstrong, 1999). Informative

advertising is often used when launching a new product, or for an updated or re-launched

product. The objective is to develop initial demand for a good, service, organization, or cause.

If Zamtel is not doing so much in informative purpose of advertising as can be seen in the

scoring between those that agreed and those that disagreed, it implies that Zamtel is not in the

business of developing new products ot adding new features to existing products. Meanwhile

2 Official Zamtel Facebook page @

https://web.facebook.com/OfficialZamtel/posts/2993937273987057

41

from table 4.11, 44.7% of the respondents agreed that the persuasive purpose of advertising at

Zamtel is achieved, 34.2% strongly agreed while 10.5% strongly disagreed and agreed

respectively. None of the participants were unsure. This implies the Persuasive purpose of

advertising is significantly met. The respondents were further asked to indicate whether the

reminder purpose of advertising is achieved or not. (From table 4.12), 36.8% respondents

strongly agreed, 26.3% simply agreed and 15.7% were not sure. Then 13.1% strongly disagreed

and only 7.8% disagreed. This implies that the Reminder purpose of advertising is served. But

because the informative purpose of advertising is not very aggressive as shown above this

reminder might be affected too.

Methodically, table 4.13, indicates that 42.1% of respondents strongly agreed, while 31.5%

simply agreed that advertising influenced profitability and then 15.7% of the participants were

neutral. Only 5.2% disagreed or strongly disagreed. The results indicated that in the long term

advertising contributes to the increase in sales volumes and profitability. This result was in

line with the findings of Galbraith (1963) who investigated the relationship of advertising and

company sales and profitability. His findings were that advertising has an effect on the rising

sales of brand product categories and therefore increases the profit of the product. This implies

that advertising influences company profitability.

6.0 CHAPTER SIX: CONCLUSIONS AND RECOMMENDATIONS.

6.1 An Overview of this chapter.

The purpose of this study was to investigate the impact of advertisement on company sales

using exploratory research and review any challenges Zamtel might be facing with its

advertising strategies. This chapter discusses conclusions and recommendations drawn from

the study.

6.2 Conclusions.

This study was designed and carried out in order to identify the underlying objectives of

advertising at Zamtel. According to the research findings, the three main forms or purposes of

advertising: informative, persuasive, and reminder advertising were identified as having an

impact on sales of Zamtel because these purposes were achieved although Zamtel does not

offer new products and services to the consumers or adding new features to the products as can

be illustrated from the scores on informative purpose of advertising where scores of those who

42

agreed and those who disagreed were equal. It is said that advertising drives sales performance

in two ways. First by making consumers interested enough in the focal product that they would

seek information about it and secondly, by converting information seeking consumers into

buyers. And certainly the results from the research have confirmed the above assertion and

therefore, it can be concluded that there is a positive and significant relationship between

advertising and sales performance. The data analysis showed that the most significant factor or

form of advertising (from informative, persuasive and reminder) is reminder advertising, it

scored higher than the other forms of advertising, this shows that the company’s advertising

objective lies on reminder objective. However, the reminding activity falls on deaf ears because

the advertising messages does not reach the intended audience according to results presented

above. Persuasive advertising was found to be the second significant factor and informative

advertising was found to be the third significant factor.

Findings on the media mixes that the company uses to advertise its product showed that, Zamtel

used Television, Radio, sponsoring event, billboards, and posters. The conclusion can be drawn

that the company uses both visual, audio and print media to advertise its product. In the

contrary, however, the company did not use the internet. From the findings of this study, based

on the positive relationship between advertising and sales performance and profitability, it

entails that the more consumers are exposed to Zamtel’s advertising through the internet, the

company’s sales performance will increase and result into profits.

6.3 Recommendations:

Zamtel should review its operational costs and reduce this as much as possible but without

affecting its effectiveness, for example downgrading the travel class or expenses for CEOs and

senior management officials. All financial leakages in the system must be sealed. Furthermore,

generating revenue from clients that already know, like, and trust the company’s brand is much

more cost-effective than spending money acquiring new customers. Nevertheless, this is not to

say, in any way, that Zamtel should stop advertising to get more new customers; but by

providing existing clients with a superior experience, customers would want to continue doing

business with the company in the future and will likely send referrals to the company.

It is highly recommended that Zamtel should consider growing their customer base unlike

relishing on the same old customers. As things stand Zamtel has the smallest customer base

43

which is about 2.3 million subscribers as at February, 2020 compared to their competitors,

Airtel Zambia and MTN Zambia with 5.6 million and 5.2 million subscribers respectively. And

since Zamtel provides quality phone services and their advertisement to reach their intended

audience is achieved just like their competitors, however, the prices of some of their products

and services are below the competitors pricing strategies, therefore they should not fear to

increase the prices and charges on some of their products and services in order to raise more

revenues

Government has given IDC direct mandate and authorisation to oversee performance and

accountability of the SOEs (State Owned Enterprises) on its behalf. The IDC’s oversight

responsibilities include all aspects of governance, commercial, financing, operational and all

matters incidental to the interests of the State as shareholder. One of the key responsibilities

mentioned here is the financing aspect of the SOE. For this reason Government, through the

IDC, which is the current parent company to Zamtel, should absorb all current liabilities of the

company, embark on a turnaround strategy, undertake a feasibility study on business viability

and invite equity partners to help strategize on the turnaround exercise.

6.4 Suggested areas for future research.

This research was conducted to investigate the impact of advertising on company sales and

profitability of Zamtel. Due to limited time and financial resources, this study is not conclusive.

It is therefore important that future research be carried out to further assess the impact of other

variables on sales performance and profitability and also the effect of advertising on sales

performance on different companies in the telecommunication industry. Furthermore, there is

need to conduct a detailed study to unveil and understand the factors that weaken the causal

link between advertisement and company profitability.

44

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APPENDIX A: advertisement and profitability questionnaire.

RESEARCH QUESTIONNAIRE

Dear sir / madam,

I am a student of Cavendish University Zambia carrying out a research on the impact of

advertising on company profitability as part of the requirement for the partial fulfilment for the

award of a degree of Bachelor of Business Administration. I therefore, humbly request you to

spare some of your time and fill in this questionnaire. Please be assured that all information

you give here will be strictly for academic purposes and will be treated with great

confidentiality. Do not write your name on this questionnaire.

Section I: General or demographic Information

For the next six questions, tick in the box for the appropriate response.

1. Age of respondent.

20 - 30 31 - 40 41 - 50 51 – 60 and over

2. Gender

Male Female

3. Level of education

Grade 12 certificate diploma undergraduate Post graduate

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4. Marital status

Married Separated Divorced Widowed Single

5. Level of Occupation at Zamtel

Top management Middle management Unionized workers unclassified

6. Number of years worked at Zamtel (length of service).

Below 1 year 1 - 5 years 6 - 10 years Over 15 years other

Section II: Data on the advertisements at Zamtel

(a) To what extent do you agree Zamtel advertises all its products and services? Tick 1-

for strongly disagree, 2-Disagree, 3- Neutral, 4-Agree and 5-Strongly agree.

ZAMTEL PRODUCTS AND SERVICES 1 2 3 4 5 Internet services Land phone services Mobile phone services Airtel or talk time Mobile phone services Phone gadgets or handset and accessories Mobile internet services

(b) To what extent do you agree that Zamtel’s advertisements are captured by the

intended audience? Tick 1-for strongly disagree, 2-Disagree, 3- Neutral, 4-Agree and

5-Strongly agree.

1 2 3 4 5

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(c)To what extent do you agree Zamtel uses the following media mixes in advertising? Tick

1-for strongly disagree, 2-Disagree, 3- Neutral, 4-Agree and 5-Strongly agree.

TYPES OF MEDIA - 1 1 2 3 4 5

Television

Posters

Newspapers

Magazines

Billboards

TYPES OF MEDIA - 2 1 2 3 4 5

News letter

Brochures

Stickers

Radio

Giving prizes with company name

Website/ internet

TYPES OF MEDIA - 3 1 2 3 4 5

Business

Workshop

Mobile advertising

Sponsoring

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Cards

Any other, please specify

Section III: Objectives and purpose of Advertising at Zamtel To what extent do you agree with the following regarding Zamtel’s advertising purposes?

Tick 1-for strongly disagree, 2-Disagree, 3- Neutral, 4-Agree and 5-Strongly agree.

FOR INFORMATIVE PURPOSES 1 2 3 4 5

Zamtel advertises all its products

Media used are accessed by the target audience

Advertising provides a good knowledge about

Zamtel

Zamtel advertising provides products differentiation

Zamtel advertising provides enough information

about its products

Used to make audiences laugh, but provides little

information about the product or service

FOR PERSUASIVE PURPOSE 1 2 3 4 5

Adverts of Zamtel Meet the intended audience.

Dishonest tactic in which a salesperson lures

customers into a store with the promise of a bargain

Uses a celebrity or famous person to endorse a

product

Make viewers feel certain emotions, such as

excitement, sadness, or fear

Emphasizes highly valued beliefs, such as patriotism,

peace, or freedom

Appeals to consumers’ desire to be different from

everyone else; the opposite of the bandwagon appeal

FOR REMINDER PURPOSE 1 2 3 4 5

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Brief messages are designed chiefly to keep a

product in the mind of the consumer once the

product is already familiar

Uses an extensive advertising campaign seasonally 1 2 3 4 5

Advertising is designed to remind consumers of the

benefits of a product or of their current need for

those benefits.

Advertising inform its existing customers regarding

its products or services already existing in market

seldom

Advertising keeps updating knowledge of the

customers regarding products availability in the

markets.

Section IV: Company profitability To what extent has advertising influenced profitability? Tick 1 for-Strongly disagree, 2-

Disagree, 3-Neutral, 4-Agree and 5-Strongly agree.

PROFITABILITY -1 1 2 3 4 5

Encourage purchase of large size unit

Generate trials among non-users

Encourage off season buying

Build brand loyalty& Equity

Advertising motivates sales people to get squarely

behind a product

PROFITABILITY - 2 1 2 3 4 5

Combination of various types of promotional strategies helps

the company to achieve their set goals.

Increase the number of customer

Increase profitability

Increase competitiveness

The end, thank you for your time.

53

APPENDIX B: Action Plan

ACTIVITY TIME FRAME

Feb March April May June July

Development of a topic

Proposal development

Literature review

Data collection

Data entry & cleaning

Report writing

Submission of a report