CHAPTER ONE

INTRODUCTION

1.1      Background of the study

“Advertising can be traced back to the very beginnings of recorded history. Archaeologists working in the countries around the Mediterranean Sea dug up signs announcing various events and offers. The Romans painted walls to announce gladiator fights […] during the Golden Age in Greece, town criers announced the sale of cattle, crafted items and even cosmetics […]” (Kotler et al. 2002, p. 661). Today, advertising is a multi-billion industry, employing hundreds of thousands of people and affecting billions of people’s lives worldwide (http://encarta.msn.com). In 2000, international advertisement spending exceeded $414 billion (Kotler et al. 2002), and according to Zenith Optimedia (www.marketwatch.com), it is believed that spending will maintain a 6 per cent growth rate for the next couple of years, increasing to an estimated $427 billion this year and to $451 billion next year. However, as a consequence of long-term changes, such as the increase of a larger and more diverse range of media, as well as the arrival of new technologies, particularly the Internet, consumers have become better informed than ever, and as a result, some of the traditional advertising methods are no longer as effective as they used to be (www.economist.com). Instead, firms have increasingly employed other marketing tools, such as corporate sponsorship of sports, arts and cultural events to name a few (Ruth et al. 2003). Sponsorship is claimed to be the world’s fastest growing form of marketing, and in 2001, worldwide spending was estimated to be as much as $24.6 billion. Moreover, sponsorship activities are applied with the belief that companies can enter international markets and appeal to local consumer preferences (Dolphin 2003). This promotional tool has proved to be successful in reaching a large global audience, and seeing as consumer behaviors differ greatly in preferences and product choices, it is apparent why sponsorship has outperformed other marketing methods (http://geoff.cox.free.fr)

Yet, as a result of globalization, the use of advertisement across cultural borders has grown immensely, and while one expert claims that the average person is daily exposed to 1,600 advertisements, another expert estimates the total number to be as much as 5,000 a day (Armstrong et al. 2005), “from billboards to bumper stickers to logos on caps and T-shirts” (www.thegredecompany.com). Seeing as advertising clutter has increased tremendously and is more intense than ever, it is vital that companies differentiate themselves from competitors by creating even more powerful, entertaining, and innovative advertisement messages. However, this has proven to be very costly, especially within highly competitive product markets, such as the soft-drink industry, which requires higher advertising budgets just to stay even with competitors. Examples of such companies that spend billion of dollars on advertising in order to stay key players in their industry are The Coca-Cola Company and PepsiCo (http://business.enotes.com) (see Appendix 1 and 2). Not only are Coca-Cola and Pepsi dominant market leaders on the worldwide beverage market, but they are also two of the most notable and widely sold commercial brands in the world (http://en.wikipedia.org), and annually spend billions of dollars on advertising campaigns. In 2004, Coca-Cola’s worldwide advertising budget exceeded $1.5 billion, while Pepsi’s advertising expenditure totalled $1.3 billion (www.mind-advertising.com). Coca-Cola’s advertising has always been celebrated globally, and introduced its first advertising theme in the early 1900's and has since seen plenty of popular themes that have become recognized worldwide (www.coke.com). Today, Coca-Cola depends heavily on “images of happiness and togetherness, tradition and nationalism”, whereas Pepsi relies more on the appeal of celebrities, popular music, and young people in their television commercials (www.geocities.com).

1.2      STATEMENT OF THE PROBLEM

The concept of advertizing has Grounded in eight selected image advertisements from the 1980’s-’1990s, four to represent Coca-Cola and Pepsi respectively, this study tends to enumerate Coca-Cola’s marketing during “The Golden Age of Advertising” more effective than Pepsi’s and how was Coca-Cola able to sustain its market position despite loosing the taste tests to Pepsi during the early 2000’s. it is in view of these that the researcher intends to compare the advertizing campaign strategies adopted by coca cola and pepsi

1.3      Objective Of The Study

The main objective of this study is to compare advertizing campaign strategies of coca cola and pepsi; but for the purpose of the study the researcher intends to achieve the following objectives;

i)             To ascertain the effect of advertizing campaign strategies of coca cola.

ii)           To investigate the impact of advertizing on sales volume of pepsi

iii)          To investigate if there is any significant relationship between advertizing and sales volume of coca cola

iv)         To ascertain the role of advertizing in the profitability of coca cola pepsi

1.4      Research Hypotheses

For the successful completion of the study; the following research questions are formulated by the researcher

H0: advertizing campaign strategy does not have any significant effect on coca cola pepesi

H1: advertizing campaign strategy has a significant effect on coca cola pepsi

H02: there is no significant relationship between advertizing and sales volume of coca cola pepsi

H2: there is a significant relationship between advertizing and sales volume of coca cola pepsi

1.5      SIGNIFICANCE OF THE STUDY

It is believed that at the completion of the study the study will be useful to the marketing department of coca cola pepsi as the findings in the literature seek to address various advertizing technique which will produce equitable return on the investment that is committed to advertizing, the study will also be of great important to the management of all bottling company as the findings tends to enumerate the benefit of advertizing on the sales volume and profitability of the company. The study will also be beneficial to researchers who intend to embark on study in similar topic as the study will serve as a guide to their study. Finally the study will be beneficial to academia’s students and the general public.

1.6      SCOPE AND LIMITATION OF THE STUDY

The scope of this study covers a comparative study of advertizing campaign strategies of coca cola pepsi. However in the cause of the study, the researcher encounters some constraint which limited the scope of of the study;

(a)Availability of research material: The research material available to the researcher is insufficient, thereby limiting the study.      

(b)Time: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.      

(c)Finance: The finance available for the research work does not allow for wider coverage as resources are very limited as the researcher has other academic bills to cover.

1.7 DEFINITION OF TERMS

Advertizing

the act or practice of calling public attention to one's product, service,need, etc., especially by paid announcements in newspapers andmagazines, over radio or television, on billboards, etc.to get more customers by advertising

Marketing

Marketing is a form of communication between you and your customers with the goal of selling your product or service to them. Communicating the value of your product or service is a key aspect of marketing.

Advertizing Campaign

An advertising campaign is a series of advertisement messages that share a single idea and theme which make up an integrated marketing communication (IMC). Advertising campaigns utilize diverse media channels over a particular time frame and are often mandated to be rationally defined. The campaign theme is the central message that will be conveyed in the promotional activities and is the prime focus of advertising campaign as it sets the motif for the series of multifarious individual advertisements and other marketing communications that will be used

Strategies

Strategy "art of troop leader; office of general, command, generalship “is a high level plan to achieve one or more goals under conditions of uncertainty. In the sense of the "art of the general", which included several subsets of skills including “tactics”, siege craft, logistics etc

1.8 Organization of the study

This research work is organized in five chapters, for easy understanding, as follows Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study. Chapter two highlight the theoretical framework on which the study its based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion and also recommendations made of the study.

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