THE ROLE OF SALES PROMOTION ON THE PROFITABILITY OF TELECOMMUNICATION COMPANIES IN CAMEROON. CASE STUDY MTN CAMEROON

Abstract

This study was on the role of sales promotion on the profitability of telecommunication companies in Cameroon. Three objectives were raised which included: To find out the factors which promotes or impairs the effectiveness of sales promotion, to find out the role of sale promotion on profitability of MTN in Cameroon and to find out the effect of sale promotion on sale volume in MTN, Cameroon. The total population for the study is 75 staffs of MTN in Yaounde, Cameroon. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. The data collected were presented in tables and analyzed using simple percentages and frequencies

 Chapter one

Introduction

1.1Background of the study

Sales promotion has become an effective marketing tool that assists organizations to wax stronger in a global competitive environment. Oyedapo etal,( 2012) identified sales promotion as a key ingredient in marketing campaigns which assist organization to achieve its objectives. The main aim of any organization is to maximize profit, have largest market shares and to become leader in a market competitive environment. Okoli (2011) confirmed that the essence of setting up a business organization is to make profit. Sales promotion simply exists to have a direct impact on the behavior of the firm’s customers (Blattberg and Neslin 1990). Aworemi (2008) in his research finding said that sales promotion plays a significant effect on sales volume which help in achieving the organizational objectives. The role of sales promotion in achieving organizational stated objectives cannot be underestimated. The purpose of sales promotion is to motivate the customers to immediately purchase a particular product thus enhancing its sales volume (Sadia andSyeda, 2012; Odunlami and Ogunsiji; 2011; and Aderemi, 2003). According to Shimp (2003), sales promotion refers to any incentive used by a manufacturer to induce the trade (wholesalers, retailers, or other channel members) and/or consumers to buy a brand and to encourage the sales force to aggressively sell it. Kotler (2003) sees Sales Promotion a key ingredient in marketing campaigns and consists of a diverse collection of incentive tools, mostly short term designed to stimulate quicker or greater purchase particular products or services

In any organization whether profit or nonprofit oriented the main purpose of the organization is to achieve its objective. The objectives cannot be achieved in a vacuum there must be a clearly set strategy that management should use in order to meet these objectives.  Sales promotion became an essential motivating factor in the area of marketing in any organization whether in the Telecommunication firms or any other company.

Sales promotion is an initiative undertaken by organizations to promote and increase sales, usage or trial of a product or services (Aderemi, 2003). Sales promotion refers to the provision of incentives to customers or to the distribution channel to stimulate demand for a product. It is an important component of an organizations overall marketing strategy along with advertising, public relations and personal selling. Sales promotion acts as a competitive weapon by providing an extra incentive for the target audience to purchase or support one brand over the other. It is particularly effective in spurring product trials and unplanned purchases (Aderemi, 2003). Many businesses fail to realize that they cannot stay in business without any marketing strategies. This is because they were operating in a market that was monopolistic in nature. This means that there was no intense competition from other organization. But these days due to dynamic nature of the market, and consumer taste changes every day it has become imperative on the part of the business to look into their strategies and review them if at all they want to remain in business.

The marketing communication mix consists of the sub sets of marketing tools that are primarily communicational in nature. They are tools normally classified under promotion which is one of the controllable variables of the 4ps of marketing promotional mix, is made up of advertising, personal selling, sales promotion and publicity. The element in the promotional mix that is rapidly gaining additional recognition in most industries especially in the telecommunication industry in Cameroon is the sales promotion.

In Cameroon, the growth of sales promotion activities has been steady over the recent past. This may not be unconnected with the increased competition in advertising and other elements of promotional mix bringing about some form of resistance of the market. As at present, the noticeable upsurge in the use of sales promotion tools cuts across virtually all sectors of the economy whether products or services, telecommunications, beverages, travels/aviation, hospitality, manufacturing, etc. This buttresses the potency of sales promotion as a viable element of the overall marketing communication mix, and hence the need for this study. Based on this background the researcher wants to investigate the role of sales promotion on the profitability of telecommunication companies in Cameroon. Using MTN as a case study

Statement of the problem 

Sales promotion is one of the backbones of any successful organization effort in the contest of marketing. Therefore, companies spend a lot of money on sales promotion. Some companies with little budget for sales promotion have recorded drastic fall in profit which has resulted in retrenchment of workers Some organizations are not aware of the impact of sales promotion on telecommunication industry in Cameroon and the economy at large organizations to assist consumer’s attitude towards sales promotion can be seen as a catastrophic, since the organization cannot forecast the demand for product.

Other organization has not been able to discover the sales promotion strategy that can be utilized to increase profitability and sales volume growth in organizations

There is also a minor strategy syndrome by organization who concentrates solely on type of advertising method while failing to realize the potentiality of sales promotion on turnover relative to other forms of advertisement.

There is also the problem of decoding which choice of sales promotion activity is cost effective for a specific situation.

Objective of the study

The objective of the study is to investigate the role of sales promotion on the profitability of telecommunication companies in Cameroon. The specific objectives are;

1. To find out the factors which promotes or impairs the effectiveness of sales promotion
2. To find out the role of sale promotion on profitability of MTN in Cameroon
3. To find out the effect of sale promotion on sale volume in MTN, Cameroon

Research question

The study formulated the following research questions;

1. What are the factors that promotes or impairs the effectiveness of sales promotion in MTN?
2. What is the role of sale promotion on profitability of MTN in Cameroon?
3. What is the effect of sale promotion on sale volume in MTN, Cameroon?

Research hypotheses

The following research hypotheses were formulated;

H0: there are no factors which promotes or impairs the effectiveness of sales promotion

H1: there are factors which promotes or impairs the effectiveness of sales promotion

H0: there is no role of sale promotion on profitability of MTN in Cameroon

H2: there is role of sale promotion on profitability of MTN in Cameroon

H0: there is no effect of sale promotion on sale volume in MTN, Cameroon

H3: there is effect of sale promotion on sale volume in MTN, Cameroon

Significance of the study

This study has shown that marketing techniques have great influence on the profitability of any company, thus this study seek to examine the role of sales promotion on the profitability of MTN. The finding and recommendation of this study produces greater awareness on the part of the organization particularly in the area of sales promotion. Management, students and academics can utilize the conclusions and recommendations based on this research work as a vendible tool in varying specialized field of study of some of information a reference point and a guide from further researcher in this field of study.

Scope of the study

The scope of the study covers the role of sales promotion on the profitability of telecommunication companies in Cameroon. The study will be limited to MTN in Cameroon

Limitation of the study

The researcher encounters some constraints which limit the scope of the study namely:

The research material available to the researcher is insufficient, thereby limiting the study

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Definition of term

MARKETING

American Marketing Association (AMA) 2011), defined marketing as the activity, set of institutions, and processes for creating, communication, delivering and exchanging offerings that have value for customers, clients, partners, and society at large.

Kotler (2011), defines marketing as the science and art of exploring, creating and delivering value to satisfying the needs of a target market at a profit.

Marketing is the process by which a firm profitably translates customers need into revenue (Burgess, 2011).

MARKETING MIX

Kotler (2013) opines that marketing mix are terms used to describe the contribution of the four elements, strategies that are constant for they are of a company’s marketing system.

Kotler (2006), define marketing mix as the set of marketing tools the firm uses to pursue its element of the marketing mix must blend and fit together in harmony with the other elements.

Marketing mix according to Stanton is the term used to describe the combination of the four inputs which constitute the core of a company’s marketing system. The product, the price structure and the promotional activities, and the distribution system.

Sales Promotion: Promotion activities that stimulate interest, trial or purchase by final consumers or others in the channel by offering added value, usually on a temporary basis. (Perreault et al, 2000: 316). This could also mean the use of incentive techniques to generate a specific response within a customer, trade or business market (Semenik and Bamossy, 1993: 354).

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