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Impact of Advertising on Sales Performance of a Brewery Company

 

CHAPTER TWO

LITERATURE REVIEW

This chapter provides an insight to readers about the theoretical view of the topic under study. In Line with the objective of the study the chapter covers topic related to Informative, Persuasive Reminder, advertising and sales performance. In addition, this chapter includes different issues Regarding advertising and the conceptual framework, the study is presented at the end of this chapter.

2.1  Conceptual review

2.1.1 The Concept of Advertising

The meaning of advertising cannot be definite as it means different things to different people depending on their perceptions of what it is. According to Kotler (2019), advertising is any non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. Advertiser includes not only business firms but also museums, charitable organizations and government agencies that direct messages to target public. Advertising can also be defined as any paid non-personal communication about an organization, products, services or ideas by an identified sponsor (Bennet, 2016). Advertising is any paid message presented through various media, such as television, radio, magazine, newspapers or billboards by an identified source.

Scholars such as Sandage and Rotzoll (2002) have argued that advertising is a cost- effective way to disseminate messages, for instance to build brand preference for a product or to educate people about government policies or to avoid consumption of hard drugs. Companies embark upon advertising not only to sell their products, promote their goods, but also to create efficient defense to curtail competitors‟ moves. Frank (2015) saw advertising with the aim to persuade people to buy. Modern advertising is a product of the twentieth century; however, communication has been a part of the selling process ever since the exchange of goods between people started (Kazimi, 2015). Modern commercial advertising is the persuasive force that aims at changing customer’s behaviors. This is important because consumer wants and needs change as their economic positions improve and as they pass through different stages. It is therefore desirable for advertisers to assess the impact of advertisement on their products‟ performance from time to time (Kotler, 2019).

Shimp (2017) in corroborating Richards and Curran (2002) defined advertising as a paid, mediated form of communication from an identifiable source, designed to persuade the receiver to take some action, now or in the future. A broad variety of rational motives can be used as the source for advertising appeals such as convenience, economy, health, sensory benefits, quality, performance, comfort, reliability, durability, efficiency, efficacy etc; all of these are to stimulate the consumer to patronize a product (Duncan,2002).

According to Giles (1974) as cited in Adewale (2014) advertising is a non-personal communication directed at target audience through various media in order to present and promote products, services and ideas. Hancock and Holloway (2002) stated that advertising are those marketing activities other than personal selling, publicity and public relations that stimulate consumer purchasing and dealers’ effectiveness, such as displays, shows and exhibitions, demonstrations and various non-recurrent selling efforts not in ordinary routine. Wright (2019) defined advertising as a short-term incentive to the traders or consumers to induce the purchase of a product. Engel (2019) stated that advertising informs customers about a product and also sells the product.

All the aforementioned definitions made modest efforts to define advertising. However, one or two deficiencies can be observed from some of the definitions. The study finds the definition by Bennet (2016) 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 by it. The definition appears to be adequate for the purpose of the study, and encompasses all the important dimensions to advertising such as the product, awareness and sales among others.

2.1.2 Objectives of Advertising

In the past, many people thought that advertising could be carried out without any objectives. Studies have shown this to be a wrong notion. For advertising to be regarded as having aims and objectives, it needs to possess some of the followings:

Tellis (2019) Opined that advertising is to encourage purchase by temporarily improving the value of a brand. The main objective of advertising is to translate favourable attitudes into actual purchase, improve attitude towards a brand and nurture brand loyalty at all times.

Donald (2019) stated that regardless of the exact technique employed, advertising should attempt to accomplish four fundamental tasks:

  1. Advertising objectives should relate to overall marketing and should be clearly measurable. This requires that the promotional strategies should adequately define what the promotion wishes to accomplish;
  2. Advertising technique should be used to supplement sales and advertising efforts;
  3. Advertising like other promotional forms should attract attention among those people they are intended to influence; and
  4. Advertising should generally persuade the target audience to place an order i.e. to really close the sale and perhaps assume it has been done. There must be readily recognizable link between the promotion and desirability of buying the particular product.

 

According to Adeleye (2018) advertising has three objectives:

  1. Sales: Some firms, especially those involved in direct response can define and measure their advertising objectives in terms of unit or Naira sales or specific sales. Leads and Shultz (2020) contented that setting sales as the advertising objective is the most acceptable way of measuring advertising
  2. Behavioural effect: When advertising cannot be defined directly in terms of final sales, some types of behavioural activity by consumers may be used as a measure of the impact of the advertising campaign. For example, some advertisers try to get their target audience to take a specific action short of making a purchase such as requesting for more information, or visiting a retail
  3. Communication effect: Firms do set and measure their advertising objectives in terms of awareness, knowledge, preferance, or some other mental effect on the consumer. The observation made by Adeleye (2018) shared the same opinion with Kotler (2019) in which he postulated that most advertisers try to measure the communication effects of an advertisement i.e. its potential effects on awareness, knowledge or preference apart from sales

 

2.1.3 Advertising Effectiveness

Advertising effectiveness can be defined as the extent to which advertising generates a certain desired effect. 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:

  1. Advertising interacts with other business variables (behavior, marketing policies, financial decisions etc.) and environmental variables (competition, economic conjuncture etc.), hardly isolable;
  2. The effects of advertising are varied and not always translatable into quantitative terms;

iii) Advertising causes long-term effects, not always, therefore, the results occur in the same period in which are the costs. In literature and practice, the evaluation of advertising effectiveness has used two basic models: the dichotomous model; the three-dimensional model.

The dichotomous model is applied mainly in product and brand advertising, tending to isolate and evaluate separately the following: i. sales effect; ii. Communication effect.

The sales effect refers to the assessment of the capability of advertising to affect the sales volume and/or the market share, regardless of the possible influence of other variables. For (Batraet al.2015), the effectiveness of advertising should be considered for its effect on sales in the short term. This advertising performance measurement is based on the marginal theory (Chamberlin, 1948). The advertising is therefore regarded as an independent variable that can be combined with other marketing variables to have a certain effect on the dependent variable, i.e. sales. The aim is to seek the best combination of the determinants of the sales increase.

The effect of communication refers to the ability to reach, with appropriate messages, a more significant share of public. Such effect is examined in literature with different approaches:

  1. sociological;
  2. semiotic; C. psychological;
  3. Socio-psychological.

Sociological analysis focuses on the community, considered, as a system governed by rules and social norms, and on the social behavior according to (Moingeon 2012) and the role of advertising and consumption in the society change is a very fertile topic. Sociology has examined how advertising influences opinions, attitudes and behaviors of individuals and social groups.

There are two opposite sociological perspectives to the advertising function in contemporary society. The first maintains a positive approach to advertising. It is believed that the role Advertising is to better organize economic and social relations, to harmonize social behaviors, to make people adhere to common values and to help them to better live together without problems. The second approach is, by contrast, rather critic, because advertising tends to generate a mass consumption. In order to adapt messages to a wider audience, introduces new, poorly differentiated, symbolic values (Friedman, 1979).

The semiotic analysis focuses in the first instance, on symbols. These are identified as anything that conveys meaning, e.g., words, gestures, images, and dance. Semiotics studies the problem of encoding, and more generally of the code used. The object of investigation is the message itself containing different signs that can be interpreted according to a pre-established intention, without reference to the consumer and the influence on the consumer behavior. This approach is useful especially in the context of advertising creation. Authors assess the effectiveness of advertising in reference either to the language of the message (Barthes, 1964; Durand, 1964) or the graphic image of the message (Eco, 1979; Mick, 1986; Scott, 2012). However, they analyze the quality of message from the viewpoint of its construction, its presentation and the place of the communication process. The impact of the message on the recipient is a minor problem in the process of the message evaluation. This is an important limitation to the semiotic approach in terms of marketing. Communication in general and advertising in particular, were treated by psychologists starting from the motivations of recipients, which occupy a central position in the analysis. This is because of their influence on the perception of the recipient (Mittelstaedt, 2020). They believe that the motivations drive consumer behavior. Therefore, the purpose for the advertising creator is to identify the reasons of consumer behavior, in order to identify the most effective advertisement message or to remove the communication barriers. With the psychological approach, other types of research and investigation have emerged, thanks to the contribution of neuroscience. The evidence (obtained through scientific experimentation) has become a necessary support to verify the assumptions. The psychological approach has the advantage to measure the effectiveness of advertising with reference to the recipient of the message, particularly to the consumers’ characteristics. On the other hand, the approach does not provide exhaustive answers, not delving into the exact causes that lead the recipient of the message publicity to expose themselves voluntarily to the message, decode it, to store and, eventually, to make the purchase. Therefore, it is not taken into account the entire communication process, and, in particular, the external factors, especially those related to the environment, which may play a crucial role in determining the behavior of the recipient.

The socio-psychological approach takes simultaneously into account the message and the recipient of the message. This approach aims to study the effectiveness of advertising in terms of persuasiveness (Ray, 1982), observing the effects on the formation process of attention, memory, attitude and behavior (Kapferer, 2020).

The major criticisms to the dichotomous model concern the partial evaluation and the inability to provide reliable breakdowns of the effects achieved by advertising and by other company politics (marketing and communication). For these reasons, sometimes, the three-dimensional models (i.e. AIDA model and model Dagmar) are preferred. These models are used both in planning advertising campaigns and in evaluating their effectiveness. They propose a hierarchy of communication effects, cognitive affective and behavioral (Brasini et al. 2012; Marbach and Fabi 2019).

Namely the analysis of cognitive dimension concerns the messages understanding and storing and must take account of different types of memory: spontaneous recall, without any added indication; stimulated recall, facilitated by the presentation of certain evidence; related memory, when respondents are able to describe at least one specific element of the communication; recognition, or identification of the advertising; brand allocation, the memory not only of the advertising but also of the advertised brand).

The affective dimension is linked to the attitude toward and perceptions of communication. Affective reactions and emotional acceptance of that type of campaign are investigated. The affective attitude towards the images proposed and the spread opinion of consumers is detected. The behavioral dimension describes changes in buying behavior, detectable by intentions and actions measured by sales and market share.

All the models mentioned so far are mainly focused on three elements of the communication process: the recipients (in terms of audience, memory, and storage), the media used (in terms of impact, coverage, frequency, etc.) and the feedback (in terms of attitudes, behaviors, opinions, etc…). They totally omit other elements (source, code, context) assuming essentially that the communication process was conducted in optimal conditions or at least without distortion. Moreover, a fundamental element for an effective communication process is the use of the same code by the source and recipient. Otherwise, the recipient will not understand the message or give a different meaning and this will lead to the phenomenon Eco (1979), called “aberrant decoding”. However, since the message is what we understand, not what it was intended to Understand, it becomes important to examine not so much and not only what the firms wanted to communicate, but what was actually communicated.

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