cavendish university zambia school of business and
TRANSCRIPT
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).
13
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.
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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