A critical analysis of advertising costs on dairy products sales volumes: a case of Parmalat Zambia limited.

Abstract

The purpose of the study was to establish a relational analysis between advertising costs and dairy products sales volumes at Parmalat Zambia limited for the period 2012-2016. Descriptive research design was employed with a sample population of 105 participants. Data were collected using questionnaires and in-depth interviews. Quantitative data were analyzed using a statistical application called SPSS, version 16.0 while thematic analysis was used to analyze qualitative data. The study had three specific objectives which were to ascertain the extent to which advertising affects consumer behavior, to establish the cost of advertising Parmalat Milk and Milk products and finally to establish the cost of advertising Parmalat milk and milk products .The findings on the first objective were that advertising had minimal statistical significant effect on consumer behavior. Based on the research findings, there were other strenuous variables that impacted on consumer behavior such as age, income and location of the consumers. The finding on the second objective was that despite advertising being a costly undertaking, it played pivotal role in growing the sales of Parmalat daily products hence the need for Parmalat Zambia Limited to have a budgetary allocation for this critical component of the entity. The study further indicated that there was no sufficient evidence statistically that an increase in advertising cost spontaneously increases sales of Parmalat dairy products (Testing Ho at 5% level of significance, Pv < α (0.016110754 < 0.05); Reject Ho).Therefore, an inverse proportion between the cost of advertising and sales emerged from the study findings. That is an increase in the cost of advertising did not translate into a direct increase in the sales of dairy products. Based on the findings of the study the following were the recommendations: 1.Parmalat management should adopt other cost effective advertising strategies as the current advertising costs do not directly trigger high sales of dairy products. These may include but not limited to web based and online advertising.2.Parmalat management should appraise PESTEL factors that act as hidden causative costs outweighing revenues from sales of dairy products.3.Parmalat management should constantly scan the Dairy sector (SWOT) in order to adopt the best practices of advertising i.e. they should periodically review and renew their advertising policy and strategies of advertising dairy products.