CHAPTER ONE

INTRODUCTION

1.0 BACKGROUND OF THE STUDY

The economic situation of the country in both the past and present year has affected the financial and commercial activities of business organization as a whole, which has resulted in decline level of sales and profitability. In view of this facts, many business organization are therefore involved in different type of measure such as sales promotion in order to increase their sales and also to remain in business since there is doubt that without adequate sales promotion, most of the business objective will not be reached.

During the past decades or thereafter, business organizations know their environment customers and market first hand. Reason being that the environment and the business organization were small with the increasing complexity of the business environment, and systematic approach to studying the increase problems of management, it becomes all the more important that the environment need be studied.

It is obvious that the principal function of management is to make decision and without doubt marketing decision seems to be the most difficult and therefore, its effect is felt throughout the business.

With growing needs supply, individuals and organization needs and inevitably bridge the gap between the producers and the customers or users of the product, organizations equally need to research into the growing needs of these groups. Also, since there is the greatest need for the organization to maintain market share, there is the need to create awareness so as to increase their level of sales and productivity. Due to this reason, there is the greatest need to understand the impact of sales promotion in business organizations.

Due to the increase acceptance of sales promotion by firms as a very important element of the promotional mix and its expenditure also being on the rise, it has become very import to examine whether sales promotion is actually making any impact on the volume of sales. This paper specifically evaluates the effect of sales promotion on the volume of sales of products with special reference to Chi Group Limited.

1.2      STATEMENT OF THE PROBLEM

Inspite of the tight definition of sales promotion as an essential means of creating awareness of the product existence and characteristics and also the positive, psychological associations that can enhance the buyer satisfaction which add to the real value of the company's offering, little attention is being given to it by many business organisations in the country and they rarely promote their sales to the fullest.

Many firm pay little attention to sales promotion since they feel they can sell their product with little or no promotional activities. Likewise, many firm which could not afford the huge cost of the promotional programmes, would entail and despite the effects of sales promotion, there had been insufficient research and decision modeling devoted to it. In addition, there is an established negative perception of many firms as regards the cost of business promotion especially those whose benefits are not early and immediately reached.

Also, adequate records of sales and promotional cost are always neglected and some sales promotion programmes are introduced at the wrong time, which will therefore hinder the level of sales and profitability of the firm and thereby render sales promotions less important in the community and the country as a whole.

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