Consumer Dynamics Environment on Organizational Performance

Question: 1. To review literature on relationship between advertisement and consumer buying behaviour. 2. To provide overview of the beverage industry in Nigeria. 3. To assess consumer buying behaviour in Nigeria beverage industry - how they sell ? Which beverage companies are the leader. 4. To determine which advertising channels that are most effective for Influencing consumer buying behaviour. Answer: Introduction Advertising is a form of paid mass communication for brand building. It is the persuasive communication, which makes perception on the mind of consumers regarding products or services. Advertisement emotionally motivates consumers to purchase a product. Markets are to customize their message in advertisement for matching it with different consumers needs (Nwagbara and Umor 2012). The study will highlight the effects of advertisement on consumer buying behavior of the beverage industry in Nigeria. In order to analyze the overall matter, firstly, a relationship between advertisement and consumer buying behavior will be drawn in this study. Secondly, the study will give the overview of the beverage Industry in Nigeria. Next, the study will assess the consumer buying behavior of Nigeria Beverage Industry and demonstrate the way organizations sell their products (Akpan, Akpan and Obukoadata 2013). On the other hand, some of the most impactful advertising channels will also be analyzed in this study. Relationship between advertisement and consumer buying behavior Advertising is an attempt of creating an influence on consumers mind to persuade them in buying a product. It creates a change in consumers mind through stimulating an action towards product purchase. It also makes a perception about products on the mind of consumers. According to Oladepo and Abimbola (2013), the appeal of advertisement can act as suppliers, which arouse the psychological motive of consumers to buy products. Advertising involves two kinds of appeals. One is rational appeal and another is emotional appeal. Rational appeal of product is associated with the benefits it provide and the problem that can be solved by it. On the other hand, emotional appeal of product is associated with emotional, psychological and social requirements of consumers. On the other hand, Oke et al. (2016) opined that advertising is a form of paid non-personal communication process, through which organizations become able to convey the rationality of their products. It is designed to create basi c awareness of the products on the mind of consumers and build up knowledge regarding products. According to Gorondutse, Hilman and Nasidi (2014), advertising is the way to communicate with the consumers. Culture is highly influential in shaping consumers buying behavior, as the wants and trends of the customers vary in accordance with their lifestyle. Therefore, every marketer is to understand the buying behavior of the consumers to design advertisements in getting desired impact. Advertisements are created to create an image on the mind of consumers. Therefore, it should be catchy and covey right message to right person. The consumers in Nigeria are more likely seek benefit from the products before its ultimate purchasing in term of cost (Oyeniyi 2014). Therefore, every company conveys a customized message in their advertising, which can meet the consumer needs. Understanding the wants of consumers is extremely important for customizing the advertisement to the right consumers. On the other hand, Okafor and George (2016) opined that understanding the needs of consumers in hig hly essential for demonstrating what they like. Advertising should be designed in such a way that consumer can find out what they expect from the products. In this way, advertising and consumer buying behavior is related. According to Ayuba (2014), advertising is the most important tool to motivate the consumers emotionally towards purchasing products. There is a strong linkage between advertisement and entertainment and the proliferation of media has blurred the distinctive line between these two. The most theory of advertising is attitude-towards-ad, which defines that attitude of consumers towards ads ultimately influence the attitude of consumers towards the products until their purchase intension (Adebiyi, Olateju Oyatoye and Amole 2013). According to Agwu et al. (2014), advertising can be like magic, which can actually change the wants and needs of consumers. It can sometimes create the needs. As, new generation consumers are highly influenced by commercial advertisement, mass media advertising are best for them. Nigerian organizations are more like to convey their advertising through TV advertising, as it is the most effective way to reach mass customers in short time. On the hand, Social media advertising is also a great medium to convey message to new generation consumers in Nigeria. Ayuba (2014) suggested that advertisement creates cognition, which shapes the behavior of consumer in their buying decision. Cognition is the perception of buyers towards the message conveyed through advertisement. Consumers observe cognition through their perception, memory, attention and sense. Advertising offers new function for the consumers. Consumers see the ads and become aware of the product fact without any approval. It crates product awareness among the consumers. It crates curiosity among the consumers regarding the products. Consumers demonstrate rational approach to the advertisement, when it shows all logical listing of offering through the products (Michael and Ogwo 2013). In this case, consumers show an intellection response rather than emotional response. After seeing ads, while consumers weigh the benefits, they become emotionally attached with the promotional advertisement. Consumers realize whether the product or service would make them happy or not. They understand the level of pleasure coming out of the product or service. This is an irrational consumer response. It lead the consumers to make a decision regarding buying the product and competitive to obtain it. Repeated advertising have a strong connection with consumer buying behavior. Repetitive advert ising act as reminder to the consumers while shopping. It stems out from suddenly thinking of the products during shopping and taking purchasing decision (Owolabi 2015). Buying behavior of consumers also splits between the loyalty and alienation depending on the effectiveness of the product as per its advertising. Overview of Beverage industry in Nigeria It has been forecasted that Nigerian Beverage industry will be on upward trend throughout 2017 by being backed up with healthy economy and high disposable income (Duru, Ekwe and Okpe 2014). Growing population and urbanization present the opportunity for this industry as a whole. These opportunities are matched with technological innovation of organizations and heightened marketing activities towards target audience. Improvement of purchasing power from the year of 1999 has affected a lot to the industry. Humid and hot weather of Nigeria has boosted up the business of soft drinks organizations. Support from Government has also boosted up operation of beverage industry. In order to nurture countrys export, Nigerian Government has reimbursed 40% of export value for beverage products upon its proof and application of exports (Kareem, Oke and Lawal 2013). It has encouraged the various local producers to improve their product and packaging quality for matching with international standard. For strengthening the beverage industry further, Nigeria hosted 1st international trade show on Beverage Packaging Technology in the year 2015 (Akintelu, Irefin and Akarakiri 2016). Food and beverage is the largest sector within the industries by representing 22.5% of manufacturing industry and 66% of total consumer expenditure (Adeoye and Elegunde 2012). The aggregate output from beverage industry to the countrys economy is estimated as $ 20.55 billion. It is equivalent of 4.6% of total gross domestic product (GDP) of the country (Akintelu, Irefin and Akarakiri 2016). Figure 1: Consumer Expenditure on Beverage Products (Source: Akinbola, Ogunnaike and Ojo 2013) The above chart demonstrates that the consumer expenditure of beverage products has been increased from 2012 to 2015. It has been found that in 2012, beverage sector has generated of $89.8 billion total consumer expenditure. However, in 2015, this sector has generated $100.49 billion, which is quite higher than in 2012. This statistic clearly demonstrates that beverage industries are customizing their product line and increasing their total sales. It demonstrates 16.4% growth after Nigerian GDP rebasing (Akinbola, Ogunnaike and Ojo 2013). According to Akinbola, Ogunnaike and Ojo (2013), bulk of companies in this sector, which is 85%, are small and medium scale organization. These small and medium scale beverage companies absorb only 10% of total sales. On the other hand, Dauda and Ismaila (2013) opined that FB market players has sales of up to 90% and makes 15% of total suppliers (Michael and Ogwo 2013). Among different manufacturing industries, beverage industry has have generated 1.5 million jobs in Nigeria. It has employed 5% total workforce within Nigeria (Ayuba 2014). The largest sector within Beverage industry is carbonate sector in terms of volume. In 2005, it led beverage market in volume terms and accounted of 49% of total soft drink sales (Gorondutse, Hilman and Nasidi 2014). Carbonates are the most popular among all Nigerians, especially within young generation. Many Nigerian even buy 2 to 8 bottles of each day and they are completely unaware of its effects on health. It is most dynamic sector within the industry in regards to sales volume, which is at a rate of 46% (Oyeniyi 2014). Lack of running tap water in most of the cities has benefited bottled water company a lot. In 2006, bottled water had chosen to be the largest sector after carbonates in term of volume. There is a increasing tough competition among Nigerian soft drink market. Many new players in beverage industry like CWAY Food Beverages Co Nig Ltd and Classic Beverages Nigeria Ltd has secured the market share and changed the market dynamic through changing products (Michael and Ogwo 2013). Product diversification is one of the most notable trends within bottled water sectors. For instance, Coca-Cola has already the Fanta brand with three different flavors and the coke having two different flavors. Bottling sectors has 86% of total market share with production of 1.1 billion liters bottles. It make a total revenue of over N128 billions representing 1% of nominal GDP (Akpan, Akpan and Obukoadata 2013). Dairy, baked and chilled foods are also some prime category of food sector. There is a fast growing trend of food purchase among Nigerian middle class people. Therefore, this sector is continued to be uptick. Fast food sector of Nigeria is highly benefited from industry regulation. The National Agency for Food and Drug Administration and Control ensures that all the food and beverages production, exports and sold in Nigeria are as per the food standard (Dauda and Ismaila 2013). Consumer buying behavior in Nigeria Beverage Industry and selling strategy Consumer buying behavior is the sum of consumers attitudes, intentions, preferences, and decision towards purchasing a product. Consumers search for, select, utilize and dispose products towards satisfying their needs through this process. Consumer behavior among Nigerians in beverage industry has been revealed as their interest in unique products. According to (Akinbola, Ogunnaike and Ojo 2013), 60% of total new generation people in Nigeria have huge access to internet. Therefore, they have great tendency to search about new product features. Thus, these kinds of consumers are more inclined to shift towards new brand than their familiar brand. For this reason, many of the local beverage companies like Mr Bigg's and Tantalizers are lagging behind in their sales growth, whereas the new products of KFC are getting priority over them (Oyeniyi 2014). Most of the typical Nigerian consumers like to stand out and keep their trends towards buying products at fair and affordable price. Therefore, beverage companies are to set their price at most affordable price. On the other hand, in case of new market entrants in beverage industry, companies are to use price penetration strategy to grab the market. In this strategy, new beverage organizations keep their price low to reach out mass customers in Nigerian market. Most of the Nigerians are attracted to the products, which look good at their appearance. Therefore, the companies like Seven-Up Bottling Company Plc and Promasidor Nigeria Limited has more inclined to make attractive packaging for their products (Oladepo and Abimbola 2013). Nigerians are becoming more health conscious and more likely to have foods, which are hygienic and having low fat. Therefore, the dairy firms are very conscious about this thing when offering products to consumers. They are aware of the fact that consumers will buy their products only when it will meet their needs. Therefore, it has been found that the company like Coca-Cola has launched new diet cola (Hassan, Amos and Abubakar 2014). On the other hand, Shagalinku Yoghurt has reduced the fat level in their dairy products (Michael and Ogwo 2013). It has increased their customer volume. Apart from that, dairy products in Nigeria are mostly bought buy mother groups for their children. Therefore, the dairy firms of this country are more like to target mother groups as their customers and customized products as per their needs. On the other hand, consumers in Nigeria are showing more interest in health drinks. It has been found that 50% of total adult consumers buy 35-40 bottles of health drink each in a month (Gorondutse, Hilman and Nasidi 2014). Keeping this thing in mind, many soft drink companies like 7-Up Bottling Co. Plc and Acreage Integrated Food Co. Ltd has launched their new fruit drinks apart from their other soft drinks (Ayuba 2014). It has been found that the consumers of Nigeria are mostly affected by word of mouth message. Whenever, they go to buy beverage product, they always asked to their relatives, who have used this product previously. Therefore, word-of-mouth is a great way of advertising for the Nigerian Beverage Companies. The companies always try to increase referrals through their repeated customers, as it enhances their business growth and reputation (Agwu et al. 2014). In order to increase referrals, beverage companies encourage their existing consumers to suggest their friend reg arding the products. While encouraging customers in suggesting their friends, the companies offers discount to the existing customers. Leader Companies in Beverage industry in Nigeria Some of the leading Beverage Companies are explained in the below: adbury Nigeria Plc Cadbury Nigeria is involved in manufacturing and marketing of cocoa-based products, confectionaries and beverages. It is the member company of Cadbury Schweppes Plc, which is a popular global confectionery and beverage organization. Cadbury Nigeria has become able to be a household name with all loved brands. It has revenue of N35.7b in 2013 (ng.mondelezinternational.com 2016). The company has fist launched Cadbury Bournvita in 1965, which is the first food manufactured in Nigeria. From 2013, the company has remained the market leader in Beverage Industry. The company has expanded its product portfolio in 2012 and launched new product Tang. It is the global leader in powdered beverage. The company had been listed in Nigerian Stock exchange in 1976 (Hassan, Amos and Abubakar 2014). It became the top 10 among 258 quoted equities by market capitalization. Coca-Cola Nigeria A refreshing wave of The Coca-Cola Company has been arrived at Nigeria from US in 1951 and it has remained the most popular soft drink band among the consumers. It was named as Coca Cola Nigeria. The company operates 13 bottling plants and channel products through 59 distribution centers and warehouses. The company has employed more than 4800 people in their operation. The company actually produces, sells and distributes products, which are trademark products of The Coca Cola Company. The leading brands of this company are Coca Cola, Fanta, Coca Cola Light and sprite. However, they also produce some local brands like Five Alive, Eva, Limca and Schweppes. The company has bought 40% stake from a juice company Nigeria namely Chi (Nigerianbottlingcompanyltd.com 2016). The intension behind this stake purchase was to be in the frontier of market. This drink giant has almost 145 bottling and huge manufacturing opportunity in Africa. In order to bring a high economic growth and expanded cons umer class, the company has announced an investment of $17bnin the continent within the year of 2010 to 2020 (Akinbola, Ogunnaike and Ojo 2013). Chicken Republic Being Established at 2004, Chicken republic has become the most ambitious and world class modern fast food brand in Nigeria. The company has opened up over 65 stores in Ghana and Nigeria. It is the second largest quick service restaurant in Nigeria. The simple taste more philosophy of this company has make them different from other fast food organization through increasing their food quality. The customers can get all unique taste of chicken and sides, especially in case of fried chicken. Most of the foods of this company look like KFC brand. The company has signed up $ 20 million investment for dealing with International Food Corporation (Chicken-republic.com 2016). This investment is to improve the safety and corporate standard of the company and expand in Ghana. Seven-Up bottling company Plc The Seven-Up bottling company Plcis the largest and self-regulating manufacturing and distributing company of well-known soft drink brands. It has 9 manufacturing brand and the brands include 7 UP, Pepsi, Mountain Dew and Teem. The market its products through 200 distribution centers. The customers get the feeling of goodwill and freshness through the soft drinks it produces. Financial performance of the company has remained impressive. The turnover of the company has been increased to N 27.309 billion in 2007 from N 22.072 billion in 2006 (Sevenup.org 2016). The company is quite able to grow its sales by 24% and profit by 15% in each year (Sevenup.org 2016). Effective channels to influence consumers buying behavior Mass Media Channels Digital Advertising Anyasor (2016) pointed out that in Nigeria the usage of internet has increased 48% in the last four years. 51% of the population has the access to internet, as recorded in 2015. This indicates that consumer-buying behavior can be largely influenced by digital advertisement. On the other hand, Rasheed, Olanipekun, and Sydney (2015) added that in entire Africa, Nigeria is the only country that is growing rapidly with three-digit rate of growth in terms of mobile consumption. Therefore, it can be said that digital advertising through social networking sites, Google and through mobile platforms will be highly effective. Traditional Advertising At present, 41% of the Nigerian population depends on entertainment through television and radio (Kehinde et al. 2016). However, newspaper also serves as the medium for enriching ideas among citizen. Thus, as the target market of the beverage companies will be all middle class consumers, hence advertisement has to engulf television, radio and newspapers. Michael, Binta, and Oladayo (2014) pointed out that latest reality shows and television programs in Nigerian local and national channels are imposing a huge demand on the sponsors. Thus, it is the opportunity for Nigerian beverage companies to enhance buying behavior of consumers through traditional advertisement. Personal Advertisement Personal Selling Rasheed, Olanipekun and Sydney (2015) pointed out that personal selling channel is the best medium for understanding the consumer buying behavior. This helps in directly communicating with the target audience and influence sales. On the other hand, Nwankwo et al. (2013) pointed out through personal selling huge amount of audience cannot be reached as personal communication is extremely time consuming. Therefore, it can be said that email-advertisement channel would be better in Nigeria. Thus, finally, it can be said that beverage companies will be able to taste their samples through personal selling and reach out selective target audience through email-advertisement. Advertisement Campaign Small group of consumers can be reached out through advertisement campaigns (Michael, Binta and Oladayo, 2014). Beverage companies have to select certain locations that have huge concentration of consumers. Small events have to be set up so that attraction of consumers can be enhanced. Such activities will lead to effective advertisement strategies and allocate consumers from several parts of Nigeria. From the above discussion, it can be said that advertisement channels consisting both mass media and personal selling will be necessary. In either of the channels, the main motive will be to engage middle class consumers. Digital advertisement will be less cost effective than traditional advertisement. Sponsorships and advertisements in televisions will be much cost effective, but organizations will have to establish their position in the market by understanding the consumer buying behavior. Figure 2: Effective Advertisement Channels for Nigerian Beverage Companies (Source: Created by Author) Conclusion While concluding the study, it can be said that advertisement is an attempt to create perception of consumers mind regarding the product or service. The intention behind every advertisement is to persuade the consumers in towards purchasing a product or service. Advertisement is the paid form of communication process through which marketers convey their product rationality. Wants and needs of consumers vary from one culture to other. Therefore, the marketers are to customize their advertisement and ensure that right message has been conveyed to right person. It can be found that Nigerians are mostly price oriented and they seek benefits of the products before its purchase. The beverage organizations have understood such consumer buying behaviour of Nigerians. Thus, they have customized their advertisement message as per the consumers needs. On the other hand, it has also been seen that Nigerian consumers are mostly affected through commercial ads on TV. Therefore, companies, in this country mostly use TV advertisement for reaching out mass customers in lowest possible time. The companies within beverage industry are encouraged to expand their market by getting 40% reimbursement on exporting value. The industry contributes an estimated $ 20.55 Billion to the economy of Nigeria. Soft drink sector is the largest among this industry. Some of the market leaders of this industry are Coca Cola Nigeria, Cadbury Nigeria and Chicken Republic. Reference List Adebiyi, S.O., Olateju Oyatoye, E. and Amole, B.B., 2013. 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