ABSTRACT

Advertising is a prominent feature of modern business operations. One could encounter advertising messages, while watching TV, reading magazines, listening to the radio, surfing the internet or even simply working down the street, as advertising has a stimulating influence on purchasing behavior of the consumers. Empirical evidence has proven that advertising increases sales revenue of firms. Advertising provides a platform for firms to create awareness about their products or services and how consumers could make the best out of such products. This study evaluated the effectiveness of advertising expenses on the sales revenue and profitability of selected food and beverages firms in Nigeria. This study was based on secondary data collected for advertising expenditures, sales and profit of food and beverages companies listed in the Nigerian Stock Exchange over the period of 2004 to 2017 from the annual report and accounts of the firms under study. Among the objectives of the study is to determine the extent to which advertising costs impact on the sales revenue and profitability of the selected food and beverages companies in Nigeria. Correlational and Ordinary Least Square regression analysis study designs were adopted for the study. The first hypothesis test showed that advertising expenses has no positive significant relationship with the sales revenue of the companies. Further, the second hypothesis test showed a positive significant relationship between advertising and the profitability of the firms. This study concluded that advertising is one of the most important medium of communication influencing the companies‟ performance in more than one ways. But its influential strategic importance could be suppressed by other factors which also try to receive equal attention at time of deciding any sales and profitability strategy. It is therefore recommended that not only advertising should be given adequate attention while formulating strategies relating to sales and profitability promotion policy. Other factors which are important to increasing sales revenue and profitability such as sales promotion, personal selling, publicity etc which are crucial should be considered.

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TABLE OF CONTENTS

Cover page i

Title page ii

Declaration page iii

Certification iv

Dedication v

Acknowledgement vi

Table of contents vii

List of tables ix

Abstract x

CHAPTER ONE

INTRODUCTION

1.1 Background to the study 1

1.2 Statement of the Problem 3

1.3 Objectives of the Study 4

1.4 Research Questions 5

1.5 Statement of Hypotheses 5

1.6 Significance of the Study 5

1.7 Scope of the Study 7

1.8 Limitation of the Study 7

1.9 Definition of Terms 8

1.9.1 Advertising 8

1.9.2 Brand equity  8

1.9.3 Brand loyalty  8

1.9.4 Carryover 8

1.9.5 Expenses 9

1.9.6 Strategy 9

1.9.7 Profitability 9

CHAPTER TWO

LITERATURE REVIEW AND THEORETICAL FRAMEWORK 

2.1 Introduction 10

2.2 The Concept of Advertising 10

2.3 Objectives of Advertising 12

2.4 Criteria for Setting Advertising Objectives 13

2.5 Developing Advertising Message 16

2.5.1 Perception 16

2.5.2 Business Publication 17

Factors that Determine the Choice of Media 18

2.6 Functions of Advertising 22

2.7 Types of Advertising 24

2.8 Testing of the Advertisement 27

2.9 Criticisms of Advertising 28

2.10 Measuring Advertising Effectiveness 30

2.11 Developing and Managing an Advertising Program 31

2.12 Deciding on the Advertising Budget 31

2,14 Empirical Review 36

2.15 Theoretical Framework 39

2.15.1 The sales effect model 39

2.15.2 The dynamic theory of profitability 40

2.16 Summary 41

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction 43

3.2 Research Design 43

3.3 Population and Sample of the Study 43

3.4 Sources and Method of Data Collection 44

3.5 Technique of Data Analysis 44

3.6 Model Specification and Development 46

3.7 Justification of the methods 47

3.8 Summary 47

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 Introduction 48

4.2 Data Presentation 48

4.3 Descriptive Statistic 49

4.4.1 Test of Null Hypothesis One (Ho1) 50

4.4.2 Test of Null Hypothesis Two (H02) 52

4.5 Discussion of Findings 53

4.6 Summary 54

CHAPTER FIVE

SUMMARY, COMCLUSION AND RECOMMENDATIONS

5.1 Summary 56

5.2 Conclusion 57

5.3 Recommendations 59

REFERENCES

APPENDIX