Validating the advertising expenditure of Nestle Ghana Limited.

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Advertising represents an important means by which companies communicate with their customers, both current and potential. Among the key objectives of advertising is the generally perceived benefit that it persuades customers to purchase the product. Notwithstanding this key role of advertising impacting positively on sales, some school of thought have initiated some debate regarding the justification for companies’ continued emphasis on that aspect of the marketing expenditure. Their contention has been that the returns from advertising expenditure in terms of sales is not significant. They also add that such expenditure rather goes to increase the cost of production thereby pushing up prices of products. The general objective of this study was to validate advertising expenditure of Nestle Ghana Limited. The specific objectives were: to determine the extent to which advertising impact on sales performance and also find out if other intervening marketing variables can be isolated as impacting on sales performance. The scope of the work was limited to the operations of Nestle Ghana Limited and covered the company’s entire operations over a period of five years using the half-yearly data of the period. To realize these objectives, a purposive sampling of sales data and other relevant information covering a period of five years and made up of 10 data points, was used to run a regression to determine the significant or otherwise of each variable. Pre-prepared questions were also used to interview practitioners to provide additional insight for the study. The study revealed that unlike Advertising expenditure, Trade Performance expenditure and Other Promotions expenditure significantly impact on sales performance. The work also established the point that despite the seemingly insignificant role of Advertising expenditure regarding sales performance, it is still very important when all the variables are looked at as a one unified strategy. To better optimize the Trade and Marketing budget, it was recommended that in other to better evaluate the use of the Trade and Marketing expenditure, there is the need for a consistency in any chosen marketing strategy. Among other things, clear-cut objectives of the individual variables need to be stated. The study was organized into five main chapters; with the first chapter dealing with the problem statement, objectives, and methodology. The second chapter dealt with the various concepts and theories which underpin the subject under study. The third chapter provided the profile of the organization which was used for the case study. The chapter four covered the analysis of the data. Recommendations from the data analysis are captured in chapter five
A Dissertation submitted to the Board of Postgraduate Studies, Kwame Nkrumah University Of Science and Technology, in partial fulfillment of the requirements for the award of the Master of Business Administration, 2004