Impact assessment of promotional effectiveness of the automobile industry in Ghana

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Communicating with the market to stimulate demand for a company‘s goods and services is the role of promotion in the overall marketing strategy. The stiff competition among the automobile companies in Ghana and its associated rising costs underscores the need for a critical investigation into increased promotional expenditure vis a viz returns on investment and related efficiency. This humble piece of work investigated the effectiveness of promotional strategies in the automobile distribution industry in Ghana, identified the basis of setting up promotional budgets, and which of the promotional mix elements have greater impact on the overall promotional objectives. The study employed descriptive analysis, non- parametric statistical tools and econometric techniques to measure the overall promotional effectiveness. The results of the study show that reasonable number of females (38.2%) own automobiles in Ghana. Secondly, the study showed that spouses are the most influential agents in automobile purchase decisions. A cyclical trend of promotional spending is revealed by the study. It also establishes the fact that automobile firms increase their promotional budget in election years. For instance, personal selling constituted over 50 percent of the promotional expenditure in the last election year. The Kendall Concordance tool was used to test the relative importance of factors influencing the choice of brands among the different consumer segments in the automobile industry. The findings revealed that there was 38% agreement amongst the various consumer segments on factors influencing brand choice with price as the dominant factor in brand purchase decision. The test accepted at 95 percent level of confidence that automobile firms in Ghana can adopt similar promotion strategy to effectively target their different market segments. In addition, the study used the Wilcoxon Rank Sum non-parametric method to test the hypothesis that effective promotion media selection strategy may be dependent on the media habits of target markets. The test revealed there is not any significant difference between the impact of particularly selected media mix on both corporate and individual consumers, and that any chosen medium can be used to reach the different market segments and make maximum impact. Finally, the study shows that the effectiveness of marketing mix variables is influenced by interaction mechanisms which are measured by the relationship between product sales and promotional efforts. The study introduces a class of market response model estimated by linear least squares. The number of brand new automobiles purchased is modeled as a function of the four main promotion mix variables, competitor’s price, price of brand new automobiles and lagged effects of price, promotional activities and the number of automobiles purchased. Results show that personal selling is the single most important variable in predicting the number of brand new automobiles to be purchased. Again interactions among the marketing mix variables are statistically significant in influencing the number of automobiles to be purchased. Consequently, various recommendations have been put forward and includes automobile distribution firms undertake market research to enhance their market development and opportunities; develop other appropriate acquisition methods for their clients to enhance their sales volumes and development of a national policy on Information, Communication and Technology [ICT] which the distribution firms will exploit it for effective use, access and mode of payment by clients to realize maximum marketing impact via Internet. It also recommends that automobile firms should embark on an effective market segmentation to overcome unhealthy competition from the second hand auto market.
A thesis submitted to the School of Graduate Studies, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the award of Master of Arts degree in Industrial Management, 2002