THE IMPACT OF ADVERTISMENT ON THE PROFITABILITY OF ...Francis, Eric, Gadaffi, Farouk and Humphrey...
Transcript of THE IMPACT OF ADVERTISMENT ON THE PROFITABILITY OF ...Francis, Eric, Gadaffi, Farouk and Humphrey...
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THE IMPACT OF ADVERTISMENT ON THE SALES PERFORMANCE OF
INSURANCE COMPANIES IN UGANDA
ACASE STUDY OF EXCEL INSURANCE COMPANY
BY
BBOSA ROGERS SAVIO
07 / U / 7400 / EXT
SUPERVISOR
MR. SATURDAY JOHN
ARESEARCH REPORT SUBMITTED TO MAKERERE UNIVERSITY IN
PARTIAL FULFILLMENT FOR THE REQUIREMENTS OF THE AWARD OF
THE DEGREE IN BACHELOR OF COMMERCE OF MAKERERE UNIVERSITY
JUNE 2011
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DECLARATION
This project is thoroughly original and never has it been submitted to any institution of higher
learning for any award. All the information contained in this work is based on my own findings.
O7 /U/ 7400 /EXT
207015094
Signature……………………………………..
BBOSA ROGERS SAVIO
Date:………………………………………………..
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APPROVAL
This is to certify that BBOSA ROGERS SAVIO carried out this research under my supervision
…………………………………………… …..…………………………………
MR SATURDAY JOHN DATE
(SUPERVISOR)
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DEDICATION
This work is humbly dedicated to my dia mum, Sisters; Nakiyingi Winnie Kyabaggu, Mrs
Nalunkuuma Arlen Kabunga and Mrs Nabbosa Jackie, Mr Kabunga John Roger, My brother Bbosa
Alex Salim, and my Family at large whose overwhelming support and encouragement have enabled
the production of this work, Glory be to God!
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ACKNOWLEDGMENT
I am grateful to the management of Excel Insurance Company especially the Internal Audit
Department who provided me with the information in compiling this research project.
Thanks to my supervisor MR SATURDAY JOHN for his kindness and tireless guidance during the
research process.
Special thanks to the entire staff of the Department of Distance Education under the Institute of
Adult and Continuing Education.
And finally special thanks to my precious friends especially Nanfuka Noor (Nana), Kayiga Charles,
Sebbaale Henry, Andy, Nantumbwe Dorothy, Nalumu Sarah, Muteza Micheal, Kenneth, Were
Francis, Eric, Gadaffi, Farouk and Humphrey who have encouraged and helped me academically and
in one way or another, each one in his own way and accepting me without any condition throughout
my years of my course.
GLORY BE TO GOD!
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TABLE OF CONTENTS
DECLARATION……………………………………………………………………….................i
APPROVAL……………………………………………………………………………………….ii
DEDICATION…………………………………………………………………………………….iii
ACKNOWLEDGMENT…………………………………………………………………………iv
TABLE OF CONTENTS…………………………………………………………………………v
LIST OF TABLES………………………………………………………………………………...vii
ABSTRACT………………………………………………………………………………………..viii
CHAPTER ONE
1.0 Introduction………………………………………………………………………………….......1
1.1 Background ……………………………………………………………………………...............1
1.2 Statement of the problem………………………………………………………...........................2
1.3 Purpose of the study……………………………………………………………………………...3
1.4 Objectives of the study…………………………………………………………………………..3
1.5 Research Questions………………………………………………………………………………3
1.6 Scope of the study………………………………………………………………………………..3
1.6.1 Subject scope…………………………………………………………………………………...3
1.6.2 Geographical scope……………………………………………………………………………..3
1.6.3 Time scope…………………………………………………………………………….………..4
1.7 Significance of the study………………………………………………………………….……...4
CHAPTER TWO
2.1 INTRODUCTION……………………………………………………………………………….5
2.2 ADVERTISING…………………………………………………………………………………5
2.2.1 Forms of Advertising………………………………………………………………………7
2.3 SALES PERFORMANCE……………………………………………………..………….…….8
2.4 RELATIONSHIP BETWEEN ADVERTISEMENT AND SALES PERFORMANCE………………10
2.5 CONCLUSION………………………………………………………………………………………..12
CHAPTER THREE
3.1 INTRODUCTION………………………………………………………………………………13
3.2 RESEARCH DESIGN………………………………………………………………………….13
3.3 SAMPLING DESIGN…………………………………………………………………………..13
3.3.1 Population of the study………………………………………………………………………..13
3.3.2 Sampling method…………………………………………………………………….………..13
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3.3.3 Sample size…………………………………………………………………………………….14
3.4 DATA COLLECTION…………………………………………………………………………14
3.4.1 Data sources…………………………………………………………………………...............14
3.4.2 Data collection Methods………………………………………………….…………………...15
3.4.3 Data collection instruments………………………………………………………………..…...15
3.5 DATA ANALYSIS………………………………………………………….…………………..15
3.6 LIMITATIONS OF THE STUDY……………………………………………………………….16
CHAPTER FOUR
4.0 INTRODUCTION……………………………………………………………………………...17
4.1 DEMOGRAPHIC CHARACTERISTICS………………………………………………..……17
4.2 FINDINGS ON THE FORMS OF ADVERTISEMENT USED……………………………….19
4.3 FINDINGS ON THE SALES PERFORMANCE……………………………………………….20
4.4 FINDINGS ON THE RELATIONSHIP BETWEEN ADVERTISEMENT AND SALES
PERFORMANCE……………………………………………………………...……….……………21
CHAPTER FIVE
5.1 SUMMARY OF FINDINGS………………………………………………………………...…..24
5.2 CONCLUSION…………………………………………………………………………….……24
5.3 RECOMMENDATIONS…………………………………………………….…………….…….25
5.4 AREAS OF FURTHER RESEARCH………………………………………..…………….……25
APPENDICES
Appendix 1: Questionnaire to the respondents of Excel Insurance Company………...……….26
REFERENCES……………………………………………………………………………………..30
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LIST OF TABLES
TABLE 1: Distribution of sample size……………………………………………………14
TABLE 2: Class distribution of the sample………………………………………………17
TABLE 3: Class of respondents…………………………………………………………..17
TABLE 4: Academic Qualification of respondents………………………………………18
TABLE 5: Period of employment of respondents………………………………………..18
TABLE 6: Forms of Advertisement used in Excel Insurance Company………………..19
TABLE 7: Trend of sales for the past five years………………………………………….20
TABLE 8: Advertisement budgets for the years 2006 – 2010……………………………21
TABLE 9: Sales of Excel Insurance Company for 2006 – 2010…………………………21
TABLE 10: Computing the relationship between the two variables……………………22
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ABSTRACT
The study was about establishing the impact of advertisement on the sales performance of
Insurance Companies in Uganda with Excel Insurance Company as the case study. The study
was initiated after it was revealed that the sales performance of the Insurance industry was
deteriorating, this was evidenced by the low contribution to the Gross Domestic Product.
The study followed a descriptive survey design that was qualitative and quantitative in
nature. A sample of 40 respondents were selected out of the 160 employees of Excel
Insurance Company using stratified random sampling out of which 35 responded to the
questionnaires which were the major instrument in data collection. Both primary and
secondary data sources were used.
The study revealed that there are many forms of advertisement used in Excel Insurance
Company that included radios adverts, TV adverts, Bill boards, posters among others.
As for the level of sales trend, it was found out to have been declining but a strong positive
relationship was established between advertisement and sales performance. It was concluded
that the decline in sales was partly due to the amount invested in advertisement and
recommended that factors like increasing branches, quality of the services should be looked
at in order to overcome the problem.
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CHAPTER ONE
1.0 Introduction
This chapter presents the background to the study, statement of the problem, purpose of the study,
objective of the study, research questions, and scope of the study and significance of the study.
1.1 Back ground of the study
Excel Insurance Company Limited is a fully locally owned corporation with 100% Ugandan
shareholding. The Company was incorporated in 1997. Excel Insurance is one of the fast growing
insurance companies in Uganda and the region. It is registered under the Insurance Act of Uganda
and is authorized to underwrite all classes of general Insurance Business and is a corporate member
of the Uganda Insurers association and the Insurance Institute of Uganda. The Company has 64
branches country wide.
According to Koutsoyiannis (2002) advertising is one of the means of sales promotion.
Advertising is a policy variable which has been utilized at different levels depending on the objective
of the firm and the market structure under which it operates (Okoboi, 2000). The organization
promotes itself by advertising (Macibi, 2003) there are two forms of advertisement, which are,
informative and persuasive advertisement (Koutsoyiannis, 2002). Advertisement is defined as any paid
form of non-personal presentation and promotion of ideas, goods and services by identified person or
sponsor (Kotler, 1985). He also notes that advertising has become an important factor in any
organizational setup.
Performance is the quantitative or qualitative assessment of the degree at which the organization
functions and those employed therein to achieve the general or specific objectives assigned to them
(Lysons, 1998). However, Sales Performance describes the trend of such collection in terms of
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revenue comparing different periods (Mc Cathy, 1994). Sales Performance is the ability of an
organization to make a profit after costs and overheads (Malcolm, 2003).
Scheme and smith (1980) insists that it is not enough to produce a good service or product and you
don’t market it, advertisement makes it accessible to customer, stimulates consumption, purchase
and conversely the sales performance improves. William J.S et al (1998) states that, fundamentally,
the only reason for advertisement is to sell a product, service or an idea. Advertisement also
facilitates the introduction of a new product/service, expands the industry and the company sales,
building goodwill for the firm hence improving its reputation regarding the service/product and
consequently improved sales performance. Advertisement is one of the major tools that companies
use to persuasively communicate to target market to improve its sales performance. Advertisement
leads to increased demand hence increased sales (Michael Baker).
1.2 Problem statement
The Insurance industry in Uganda is experiencing undesirable sales performance as evidenced by the
low insurance coverage which is only 0.5% of Uganda’s Gross Domestic Product. The major factors
contributing to this undesirable sales performance are probably; low levels of awareness, general
poverty levels and low incomes of the clients (Annual Insurance Market report 2009).
In an effort to increase sales performance, managements of some insurance companies like Excel
Insurance Company, Rio insurance company among others have tried to run adverts over televisions
and newspapers but the sales performance is still undesirable and if the situation continues, some of
the insurance companies may be pushed out of business.
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1.3 Purpose of the study
The study was to establish the effect of Advertisement on the sales Performance of Insurance
Companies in Uganda with Excel Insurance Company as the case study.
1.4 Objective of the study
i. To find out the forms of Advertisement used by Excel Insurance Company.
ii. To establish the level of sales performance of Excel Insurance Company.
iii. To establish the relationship between Advertisement and sales performance of Excel
Insurance Company.
1.5 Research questions
i. What are the forms of advertisement in Excel insurance company?
ii. What is the level of sales performance of Excel Insurance Company?
iii. What is the relationship between advertisement and sales performance of Excel Insurance
Company?
1.6 Scope of the study.
1.6.1 Subject scope
The research involved advertisement and sales performance as independent and dependent variables
respectively.
1.6.2 Geographical scope
This study was conducted in Excel Insurance Company located on Crest house, Plot 2D Nkrumah
Road, Kampala.
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1.6.3 Time scope
The study covered the period of 5years from 2006 to 2010.
1.7 Significance of the study.
i. The study findings will offer a basis for organizations of evaluating advertisement techniques
towards enhancing organizational sales performance.
ii. The findings will provide an insight to influence positively the techniques of advertisement,
hence a basis for policy and decision design in marketing mechanisms regarding
advertisement which constitute a big proportion of the organizations’ transactions.
iii. Being an academic study it will generate knowledge in the field of insurance and help in
amending the areas badly affected.
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CHAPTER TWO
LITERATURE REVIEW
2.1 INTRODUCTION
This chapter highlights the ideas put forward by some of the researchers about the subject under
investigation and their findings.
2.2 ADVERTISEMENT
Advertising is a policy variable which has been utilized at different levels depending on the objective
of the firm and the market structure under which it operates. Advertisement like price, product/service
variation and any other policy variable, aims at the attainment of the goals of the firms. In this respect,
the use of advertising by firms is governed by similar considerations to the application of other
competitive weapons (Okoboi, 2000). Similarly according to Macibi (2003), the organization
promotes itself by advertising. The organization sells what it needs through advertising and focused
advertisement helps to reach the right people. It reflects the priorities and philosophy of the
organization; small organizations use the adverts to sell themselves.
Advertising is a form of communication intended to persuade an audience (viewers, readers or
listeners) to purchase or take some action upon products, ideas or services. It includes the name of a
product/services and how that product/service could benefit the consumer to persuade a target market
to purchase or to consume that particular brand. These messages are usually paid for by sponsors and
viewed via various media. Advertising can also serve to communicate an idea to a large number of
people in an attempt to convince them to take a certain action. (Louis V. Gertner, 2007)
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Advertising is also another aspect of widening the market base by going through the media. The way a
product/service is packaged also determines its demand and this increases the market share hence sales
performance (Alm, 2000).
Commercial advertisers often seek to generate increased consumption of their product/services
through branding, which involves the repetition of an image/product name in an effort to associate
related qualities with the brand in the mind of consumers. Non-commercial advertisers who spend
money to advertise items other than a consumer product/service include political parties, interest
groups, religious organizations and governmental agencies. Non-profit organizations may rely on free
modes of persuasion, for example, a public service announcement (Bitner Jo Mary, 2006).
Advertisement is the non-personal communication of information usually paid for and usually
persuasive in nature about products (goods and services) or ideas by identification sponsor through
various media (Arenes, 1996). Advertisement is any paid form of non-personal communication about
an organization, product, service or idea from an identified sponsor (Blench & Blench, 1998). Also
advertisement is the paid non-personal communication from an identified sponsor using mass media to
persuade and influence an audience (Wells, burnett & moriaty, 1998).
Bechman (2009) states that, in each industry, there is a certain amount of advertising expense that
must be incurred by each firm in order to stay in the market and maintain its market share. Larger
firms have the advantage of being able to spread this cost over a larger output, so that the unit cost of
advertising is less for larger firms than smaller firms. As a result, smaller firms including most entrants
are placed at a strong disadvantage.
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Advertisement is the element of the marketing communication mix that is non-personal paid for by an
identified sponsor and disseminated through mass channels of communication to promote the adoption
of goods, services or ideas (Bearden, Ingram & Laforge, 1998). It can also be defined as an
informative or persuasive message carried by anon-personal medium and paid for by an identified
sponsor, whose organization or product/service is identified in some way (Zikmund & d’amico, 1999).
Advertisement is the impersonal, one way communication about a product/service or organization that
is paid by a marketer (Lamb, Hair & Mc.Danniel, 2000).
2.2.1 Forms of advertisement
Koutsoyiannis (2002) presents two forms of advertising, which are; informative and persuasive
advertising. Informative advertising aims at giving factual information to potential and existing
consumers about the specific attributes (price, quality, conditions of sales and product locations).
While persuasive advertising aims at manipulating the tastes of consumers and making them believe
that some products are superior in some sense to others.
Advertising consists of media messages paid for and signed by the form of business institutions that
wish to increase the probability that those to whom this message reaches, will behave or believe as
the advertisers wishes them behave or believe (Garry Armstrong, 1996).
Philip Kotler and Garry Armstrong (1996) suggested four significant decisions. They include;
What media should be involved?
What message should be conveyed?
What should be the company’s overall advertising budget?
How does the firm know that advertising is achieving its objective?
According to David w et, al (1988), effective advertising decisions are aimed at supporting the
marketing strategy for a company’s services/products and also influence the buyer’s purchase
decisions.
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Many companies use such straight forward methods in determining advertising appropriations as
percentage of sales, standard expenditure per unit, the task method or advertisement/market share
relations between advertisement and sales revenue. Advertising may not necessarily increase sales
revenue since there are many other factors that determine the sales revenue of a Company, such as
price, perception towards the product or even the advertising campaign itself may not be good
enough. (Kotler & Armstrong, 1996).
Advertising can take a number of forms, including advocacy, comparative, cooperative, directmail,
informational, institutional, outdoor, persuasive, product, reminder, point-of-purchase, and specialty
advertising. (www. google .com)
2.3 SALES PERFORMANCE
According to Oxford English Dictionary, performance is “accomplishment, execution, carrying out,
working out of anything ordered or undertaken.” This refers to outputs/outcomes (accomplishments)
but also states that performance is about doing the work as well as being about the results achieved.
Bates and Holton (1995) defined performance as a multi-dimensional construct and the measurement
which varies depending on a variety of factors. There are different views of what performance is as it
may be simply regarded as a result of outcomes achieved by an organization and on an individual basis
it is a record of the person’s accomplishments.
Performance is also defined as the outcomes of work because it provides the strongest linkages to the
strategic goals of the organization, customer satisfaction and economic contribution. This definition is
enforced by Campbell (2008) who believed that performance is behavior and should be distinguished
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from the outcomes because they can be contaminated by the system factor. However, a more
comprehensive view of performance was achieved by Brumbach (1988) who defined sales
performance to mean both behaviors and results.
Huselid (1995) finally concluded that the simple adoption of high performance practices is more
important than the efforts to ensure that these are internally consistent with a firm’s competitive
strategy.
And Sales, in business terms are actual sales in money value 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 stimulate production in a company and consequently profits and
they are affected by various factors some of which are controllable like quality and others are non-
controllable like competition and general price changes.
According to Tickler (2002) sales performance refers to consistent and satisfactory turnover of
goods/services produced and put on market by an organization or company. It’s the sole economic
goal of companies to have as much goods/services sold on the market. This facilitates the rate of
goods/services turnover and consequently sales performance.
Sales Performance has to increase demand of the product/service, which in turn stimulates further
production. Michael Baker emphasizes that advertisement leads to increased demand of the
product/service and hence increased sales. Tickler (2002) observed that aggressive companies have
sales representatives in place to promote and introduce products/services to various segments of the
population.
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2.4 RELATIONSHIP BETWEEN ADVERTISEMENT AND SALES PERFORMANCE
Pride F. (2005) observed that advertising often stimulates revenue. For advertising to have a direct
relationship with the sales revenue, the entire marketing mix must be viewed by the consumer as the
right one. (Engel et al, 1991, McCathy and perreault, 1987).
Penchman (1992) found out that advertising has a greater potential for building awareness to people
hence obtaining a high preference in the market share because a big percentage of the population has
access to one or more of the mass media such as radios and televisions. This fact introduces the
advertised company to many people. If the advertisement is satisfying, it would lead to an increase in
the volume of sales. However there are authors who have shown that advertising can fail to have a
positive effect on the sales of the company.
Koutsoyiannis (2002) claimed that advertising should be credited for facilitating research and
development, innovation and growth. He reasoned that, by informing the public about new
products/services, innovative firms are able to tap large markets rapidly, thus reaping profits from
innovation and increasing their sales performance.
Gordon (1993) stated that companies advertise in order to; compete in a new and aggressive way
within the market. To increase their market share through increased customers, companies increase
and utilize this low cost way of reaching customers compared to other marketing approaches.
Dunn (1968) points out that the market needs and conditions are changing therefore there is need for
creativity in selling. This will show a 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. This shows that advertising is coordinated with sales.
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Advertising has been known as the main means by which a firm builds its name and goodwill
gradually over time. Advertising expenditure built up a goodwill that depreciates at a rate 12% to 15%
(Tesler, 1962). Paida (1964) found out that the Lydia Pinkham Insurance company realized 95% of
advertising generated sales within approximately seven years. Even when Weiss (1969) had
capitalized the advertising expenditure over a six year period, there still remained appositive
relationship between advertising and sales performance.
A number of studies have been undertaken in an effort to measure the role of advertising on demand
and sales performance. Most if not all these were empirical and utilized econometric tools of analysis
(Ward and Lambert, 1993).
The essence of advertising is to increase sales revenue. David et.al (1988) points out that the
relationship between sales and advertisement is difficult to sort out. Advertising combines with a
host of other influences to determine what contribution advertising makes to the buyer’s purchase
decision. The retailer John Wanamaker is said to have remarked that he knew only half his
advertising was effective but he was unable to determine which half it was.
Advertising provides consumers and other prospects with information about different
products/services that are available to them. This enables consumers to compare and choose between
the products/services. Further, in helping consumers to choose between products/services of
competing firms, competition is encouraged. Competition encourages companies to be more price and
quality conscious so as to retain customers and clients (Cambridge International college training
manual, 2000).
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David et al (1988) recognized that many scholars have different views on the impact of advertising on
the sales revenue. However, most of them agree that effective advertising will eventually increase
revenue. Ntayi (1998) agrees that effective advertising will increase the sales of the company.
Jefikins (2007) has written that in a competitive society there is not only competition between rival
advertisers but choice between their rival products/services. Also that people forget very easily and
therefore the biggest advertiser in the world would get bankrupt very quickly if he stopped
advertising. Companies advertise to create confidence in it. If a product/service is made available, it
is necessary to tell people of its existence.
2.5 CONCLUSION
The literature reviewed and discussed revealed that there are several approaches to advertisement and
sales performance. It’s also evidenced from literature that advertisement if well directed could lead to
improved sales performance. Also Koutsoyiannis (2002), concluded that “on balance, the statistical
evidence is that, sales performance is positively related to advertisement” hence advertising can be
regarded as a stimulant to sales performance because its impact can last for several years and its
returns have been found to be over and above the breakeven.
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CHAPTER THREE
METHODOLOGY
3.1 INTRODUCTION
This chapter on the methodology of the research, research design, the sampling design, instruments
used for collecting data, methods of data analysis, problems faced in the research and the solutions.
3.2 RESEARCH DESIGN
The study used a descriptive survey design with both qualitative and quantitative methods. This
design was appropriate in investigating the empirical and theoretical relationship between the
variables.
3.3 SAMPLING DESIGN
3.3.1 Population of the study
The target population was the employees of Excel Insurance Company. The company has 160
employees all together. These comprised of; top-level managers, employees from the Accounting
and Finance department and the marketing department.
3.3.2 Sampling method
Stratified random sampling was used to select the participants. Respondents were stratified as Top-
level, Accounting and Finance department and Marketing department. Simple random sampling was
used to select respondents from each
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3.3.3 Sample size
The sample size comprised of 40 respondents from the target population. The distribution of this
sample size was as follows;
Table1: Distribution of sample size
Class of Company staff No. of respondents
Top level 5
Accounting and Finance department 15
Marketing department 20
TOTAL 40
Out of the 40 respondents, 35 responded giving a response rate of 87.5% which was good enough to
represent the expected number of respondents’ views.
3.4 DATA COLLECTION
3.4.1 Data sources
The research used both primary and secondary data. Primary data was collected using a mixture of
in-depth interviews and questionnaires administered to the respondents. Primary data was used
because it was the only source of data which could provide accurate and up-to-date information that
was required as far as the study was concerned.
The secondary data was collected from the already existing annual reports, journals, published
magazines, company records and the internet. Secondary data used to supplement on primary data
because it was already available and was less costly than other sources of data.
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3.4.2 Data collection methods
The main method used for data collection was face to face in-depth interviews with the company
employees. This was used because it could provide room for clarification of some questions that
could not be provided for in the questionnaire. In addition, interviews were used because they tend
to increase the response rate and it also helps in collection of first hand information from the
respondents.
3.4.3 Data collection Instruments
The main instrument used was the questionnaire. This was a self-administered questionnaire which
had both structured and semi-structured questions. To increase the response rate, the questionnaires
were simple worded and short but comprehensive. Control questions were in built in the
questionnaire to cross check, ensure correctness and consistence of the respondents. Open ended
questions were used to gather additional information, helpful comments and suggestions. The
questionnaire method was used because it could allow the respondents to answer at their own
convenient time and also provided room for them to include their own views. In addition,
questionnaires also made it possible for respondents to maintain anonymity so that there were high
chances of revealing accurate information.
The response to a large extent depended on the methods used to collect the data being appropriate
and not inconveniencing the respondents.
3.5 DATA ANALYSIS
The data collected was first edited with the view of checking completeness and accuracy. Data was
coded and there after simple descriptive statistics, frequencies and percentages were computed to
help in the discussion of findings. Pearson’s correlation coefficient was used to determine the
relationship between the variable. Discussions were done in accordance with the study objectives
after which conclusions and recommendations were made on each objective as well.
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3.6 LIMITATIONS OF THE STUDY
i. The researcher faced a problem of financial inadequacy to cater for transportation costs,
typesetting and printing given that the research was privately sponsored.
ii. The time given to the researcher was not enough to finish the exercise. The time constraint
was overcome by employing critical path analysis and then merging activities to fit within
the time available for the research.
iii. Some respondents failed to co-operate and others were reluctant to answer some questions
and in providing the information needed.
iv. Confidentiality. The respondents were suspicious of the questions and hence hesitated in
giving the information especially that regarding the company’s performance.
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CHAPTER FOUR
PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS
4.0 INTRODUCTION
Under this chapter presentation and analysis of findings is done in relation to the study objectives. For
precision, the following codes are used strongly Agreed (SA), Slightly Agree (SLA), Uncertain (UC),
Slightly Disagree (SLD), Strongly Disagree (SD).
4.1 DEMOGRAPHIC CHARACTERISTICS
Table 2: Staff distribution in the sample
Sex of respondents Frequency Percentage
Male 7 20.00
Female 28 80.00
Total 35 100.00
Source: Primary data
From table 2 above, response indicated that the majority of respondents were female who accounted
for (80%) and male respondents accounted for (20%).
Table 3: The class of respondents
Class of Company staff Frequency Percentage
Top level 4 11.43
Accounting department 12 34.29
Marketing department 19 54.29
Total 35 100.0
Source: Primary data
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Table 3 shows that, most respondents (54.29%) belonged to the Marketing department. Top
management had the least number of respondents at 11.43% followed by the accounting department at
34.29%.
Table 4: Academic qualification of respondents
Academic qualification Frequency percentage
Above Degree level 5 14.3
Degree level 25 71.4
Diploma level 5 14.3
Below diploma level _ _
Total 35 100.0
Source: primary data
Table 4 shows that most respondents were degree holders (71.4%), 14.3% of the respondents were
above degree level and the same percentage was below the diploma level.
Table 5: Period of employment of respondents
Period of employment Frequency percentage
Over 5 yrs 15 42.8
3 – 5 yrs 9 25.7
1 – 3 yrs 8 22.9
Less than 1 yr 3 8.6
Total 35 100.00
Source: Primary data
Table 5 shows that 42.8% of the respondents had spent over 5years, 25.7% had spent 3-5years, 22.9%
had spent 1-3years and 8.6% of the respondents had spent less than 1year.
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4.2 FINDINGS ON FORMS OF ADVERTISING USED IN EXCEL INSURANCE LTD
Table 6: Forms of advertisement used in Excel Insurance Company Ltd
Forms of
Advertisement
SA SLA UC SLD SD Total
frequency
Total
%age
Television
f
35
%
100
f
---
%
----
f
----
%
---
f
----
%
--
f
---
%
---
35
100
Posters 33 94.3 2 5.7 ---- ----- ---- ---- ----- ---- 35 100
Magazines 30 85.7 4 11.4 ---- ---- ---- ---- ----- ----- 35 100
Radios 35 100 ---- ---- ---- ---- ---- ---- ---- ---- 35 100
Bill boards 28 80 2 5.7 2 5.7 3 8.6 ---- --- 35 100
News papers 32 91.4 3 8.6 --- --- ---- ---- ---- ---- 35 100
Business cards 25 71.4 ---- ---- 2 5.7 3 8.6 5 14.3 35 100
Stickers 34 97.1 1 2.9 ---- ---- ---- ---- ---- ---- 35 100
Giving out gifts
with company
brand
5 14.3 10 28.6 15 42.8 3 8.6 2 5.7 35 100
Source: primary data
Results in table 6 above shows that all (100%) respondents strongly agree that Televisions and Radios
are common forms of advertisement used in Excel Insurance Company. 94.3% strongly agree that
posters is a form of advertisement used and 5.7% slightly agree, 85.7% strongly agree that Magazines
are used as a form of advertisement in Excel Insurance Company, 11.4% slightly agree and 2.9%
strongly disagree. 80% strongly agree that Bill boards are used as a form of advertisement used in
Excel Insurance Company,5.7% are uncertain and 8.6% slightly disagree. 91.4%strogly agree that
Newspapers are a form of advertisement used in Excel Insurance Company but 8.6% slightly disagree
about this. 71.4% strongly agree that business cards are also used as a form of advertisement in Excel
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Insurance Company, 5.7% are uncertain,8.6%slightly disagree and 14.3% strongly disagree. 97.1%
strongly agree that stickers are used as a form of advertisement in Excel Insurance Company but 2.9%
slightly disagree. 14.3% strongly agree that giving out gifts containing the company brand of Excel
Insurance Company, 28.6% slightly agree, 42.8% are uncertain, 8.6% slightly disagree and 5.7%
strongly disagree.
These findings match Kotler’s(1985), he identified forms of advertisement that range from televisions
to giving out gifts containing the Company brand, respondents named such gifts to include; T-shirts,
pens, books etc.
On other forms of advertisement used by the Company apart from the above, respondents mentioned
of sales promotional tours in almost all parts of the country.
4.3 FINDINGS ON THE LEVEL OF SALES PERFORMANCE IN EXCEL INSURANCE
COMPANY LTD.
Table 7: The trend of sales for the past 5years
Trend Frequency Percentage
Increasing _ _
Uncertain 28 80
Declining 7 20
Constant _ _
Total 35 100
Source: Primary data
Results in table 7 above, show that most respondents (80%) were uncertain about the sales trend while 20%
revealed a declining trend.
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4.4 RELATIONSHIP BETWEEN ADVERTISEMENT AND SALES PERFORMANCE OF
EXCEL INSURANCE COMPANY
Table 8: Advertisement budgets of Excel Insurance Company from 2006 – 2010
Year Budgeted Annual Advertisement cost (millions)
2010 13.44
2009 19.2
2008 21.48
2007 21
2006 21.6
Source: Internal Audit Reports
Table 9: Sales of Excel Insurance Company for the past 5years
Year Sales (billions)
2010 5.9
2009 6.1
2008 6.95
2007 6.8
2006 7.1
Source: Internal Audit Reports
According to Excel Insurance Company’s Internal Audit department, in 2007, the advertisement cost
reduced by 2.8% and the sales decreased by 4.2%, in 2008, the advertisement cost increased by 2.3%
and the sales increased by 2.2%, in 2009, the advertisement cost dropped massively by 10.6% and the
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sales also dropped massively by12.2%, in 2010, advertisement cost was reduced by 30% and the sales
dropped by only 3.3%.
Karl Pearson’s correlation coefficient is given by the formula
r = ∩∑xy - ∑x∑y
√{∩∑x2 - (∑x)
2} {∩∑y
2 – (∑y)
2}
Where
r- Is the correlation coefficient
n- Stands for the number of items
x- Stands for the independent variable (Advertisement cost)
y- Stands for the dependent variable (sales)
Table 10: Computing the relationship between the two variables
Year x y X2 y2 xy
2010 13.44 5.9 180.63 34.81 79.3
2009 19.2 6.1 368.64 37.21 117.12
2008 21.48 6.95 461.39 48.3 149.29
2007 21 6.8 441 46.24 142.8
2006 21.6 7.1 466.56 50.41 153.36
∑x=96.72 ∑y=3285 ∑x2=1918.22 ∑y
2=216.97 ∑xy=641.87
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r = 5 x 641.87 – 96.72 x 32.85
√[5 x 1918.22 – (96.72)2] [5 x 216.97 – (32.85)
2]
= 32.098
√(9591.1 – 9354.8) (1084.85 – 1079.12)
= 32.098
√1353.999
r = 0.87
r2
= (0.87)2
r2
= 0.7569
r2
= 75.69%
The Pearson’s correlation coefficient (r) of the above data is 0.87 which implies that there is a strong
positive relationship between advertisement and sales performance for the years 2006 – 2010 in
Excel Insurance Company Ltd. The coefficient of determination (r2) is 75.69% which shows that
75.65% of the variation in sales performance is due to the variation in advertisement costs and the
24.31% is due to other factors.
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CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.0 INTRODUCTION
Under this chapter, the researcher summarizes the findings, concludes and recommends as per the
study objectives.
5.1 SUMMARY OF FINDINGS
5.1.1 Findings on the forms of advertising
Findings revealed that there are many forms of advertising used in Excel Insurance Company Ltd.
Among these were television, posters, newspapers, magazines, radio, billboards, business cards,
stickers and giving out gifts with company product brand.
5.1.2 Findings on the level of sales performance
On the trend of sales performance, it was established that there has been a decline in sales
performance for the last five years.
5.1.3 Findings on the relationship between advertising and sales performance.
On the relationship between advertising and sales performance, a strong positive relationship of 0.87
Magnitude was revealed between the variables.
5.2 CONCLUSION
From the above findings, it can be concluded that;
Excel Insurance Company Limited employs different forms of advertising that include print and
electronic media, for instance television, radio and newspapers, stickers, billboards etc. On the trend
of sales performance in Excel Insurance Limited, sales trend has been declining. The failure to
achieve improved sales trend is attributed to advertising since the relationship between the two is
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strong and positive. This implies that the decline in sales performance is due to the amount invested
in advertisement.
5.3 RECOMMENDATIONS
The research showed that there is decreasing sales performance and 75.69% of this is caused by the
amount spent on advertising. In order to increase the sales performance, the Company needs to look
at the following factors
i) Increase the amount spent on advertising since there is s strong positive relationship between
advertising and sales performance.
ii) Company’s branches: The Company needs to increase its branches from 64 Country wide.
iii) The look at the actions of competitions.
iv) Look at the quality of the services.
After thorough analysis of the above factors, the problem of the declining sales could be solved.
5.4 AREAS FOR FURTHER RESEARCH
In the due course of the study, the researcher felt that these areas need more research.
i) Relationship between Advertising and Profitability.
ii) Relationship between training and sales performance.
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APPENDICES
APPENDIX 1: QUESTIONNAIRE TO THE RESPONDENTS OF EXCEL
INSURANCE LIMITED
Dear respondent,
This is questionnaire on the impact of advertising on sales performance, a case of Excel Insurance
Company. You have been scientifically selected to participate in the study that is for pure academic
purposes. You are even assured of the utmost good faith as far as the confidentiality of the
information provided is concerned. Please assist and answer the following questions to the best of
your knowledge.
Use: Strongly agreed (SA), Slightly Agree, (SLA) Uncertain (UC), Slightly Disagree (SLD)
Strongly Disagree (SD), where applicable, otherwise tick in the box provided or fill in the lines
provided.
PART 1: BACKGROUND INFORMATION
3 State your sex
a) Male b) Female
4 Which class of Company staff do you belong to?
a) Top level Management b). Marketing Department
c) Accounting and Finance Department
3. State your academic qualification
a) Above Degree level b). Degree level
c). Diploma level d). Below Diploma
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4. For how long have you been working with Excel Insurance Company?
a). Over 5 years b). 3 – 5 years
c). 1 – 3 years d). Less than a year
PART II: FORMS OF ADVERTISING USED IN EXCEL INSURANCE COMPANY
5. Does this company advertise?
a) Yes b) No
6. If yes, to what extent do you agree that the company uses the following forms of advertising
Forms of Advertising SA SLA UC SLD SD
Television
Posters
Newspapers
Magazines
Radio
Billboards
Newsletters
Business cards
Stickers
Giving prizes with company product brand
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7. List down any other form of advertising used by the company other than the ones mentioned
in 5 above.
…………………………………………………………………………………………………
…………………………………………………………………………………………………
…………………………………………………………………………………………………
………………………………………………………………………………………………….
8. How effective are these methods?
…………………………………………………………………………………………………
…………………………………………………………………………………………………
…………………………………………………………………………………………………
…………………………………………………………………………………………………
PART III: SALES PERFORMANCE
9. How has been the company’s sales performance in the last five years?
a) Increasing
b). Uncertain
c). Declining
d). Constant
d). Otherwise state here under
…………………………………………………………………………………………………
…………………………………………………………………………………………………
………………………………………………………………………………………………….
PART IV: RELATIONSHIP BETWEEN ADVERTISING AND SALES PERFORMANCE
a) SA b). SLA c).UC
e). SD d). SLD
10. Do you agree that there is any relationship between advertising and sales performance?
…………………………………………………………………………………………………
…………………………………………………………………………………………………
…………………………………………………………………………………………………
………………………………………………………………………………………………….
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11. If you agree, somehow explain the relationship
…………………………………………………………………………………………………
…………………………………………………………………………………………………
…………………………………………………………………………………………………
………………………………………………………………………………………………….
12. What has been the company’s sales performance for the last five years (for the Accounting
and finance department)?
Year 2006 2007 2008 2009 2010
Sales level
13. What do you think management should do to improve on the sales trend?
…………………………………………………………………………………………………
…………………………………………………………………………………………………
…………………………………………………………………………………………………
………………………………………………………………………………………………….
END
Thank you very much for your co-operation
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REFERENCES
Bovee, H (1997). Consumer behavior and marketing action. Boston, Kent publishing.
Cambridge International college training manual, (2000). Advertising and public relations, services
to management (International) limited.
David, S Dunbar, (1968). The politics of the economics of advertising; Journal of advertising
research, 3rd edition, advertising research foundation.
Frank Jefkins (1990). Introduction to marketing, advertising and public relations, 3rd
edition,
Macmillan education Limited.
Internal Audit Reports Excel Insurance Company for the years 2006 – 2010
Joseph M Ntayi, (1997). Practice and marketing management; Problem solving advertisement and
decision-making approach, 2nd
edition, JMPN.
Kinsey. J. (1988): Marketing in developing countries. London.
Kotler, P (1984). Management Management. Pentice hall International Inc.
Mc Cathy, J. (1960). Basic marketing. Home wood: Irwin
Philip, K & Garry Armstrong, (1996). Principle of marketing, 7th
edition, Prentice-hall International,
Inc.
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Pride. F et al, (1989). Marketing concept and strategies, 6th
edition, Boston Houghton Miffin
Company.
Welbacher,R (1984). Advertising concept and strategies. Macmillan Publishing Co.
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