Advertising Channels and Sales Revenue

This assignment analyzes the relationship between different advertising channels and their effectiveness in influencing customer buying decisions and generating sales revenue. It examines various communication mediums, including television, internet, newspapers, cable TV, radio, magazines, cinema, outdoor, and transit advertising. The research highlights the channels that effectively drive customer purchase intention and sales revenue, such as television, internet, and newspaper spending, while suggesting that other channels like radio, magazines, and outdoor advertising may have limited impact. The assignment emphasizes the importance of strategic marketing decisions in choosing appropriate advertising channels to maximize customer engagement and sales.

The investment of advertising impacts on consumer purchase intention: An
empirical study of consumer goods industry in Thailand.
CHAPTER 1: INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Advertising is a key marketing tool in communication programs that the majority of
companies apply to communicate brands, products, services and companies (Belch and
Belch, 2015). In the real sense, advertising is applied for creating awareness of brand
functional and brand emotional to consumers’ perception. Advertising focuses on
creating brand image in consumers’ mind in such manner that brand could be accepted
by the consumers and buyers (Suttle, 2017). Nowadays, advertising is communicated
through several media channels, such as television, radio, newspaper, magazine,
billboards and online. Generally, marketing managers aware that the cost to advertising
has been rising due to the higher media cost (Louth, 1966). Thereby, the expenditure of
advertising depends on the medium that is applied to communicate.
Additionally, advertising budget should be allocated appropriately in order to
increase effective communication that might impact on sale revenues. The idea to study
the investment of advertising impacts on consumer purchase intention, was developed
through reading the previous studies and informal discussing marketing managers in
Thailand. Low and Mohr (1999) suggested that brand managers should effectively set
and allocate advertising and sales promotion expenditures to achieve long term brand
loyalty leads to long-term profitability to the consumers. There are many factors that
should be considered before allocating the advertising budget. For example: the
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percentage of sale after launching advertising, the effective media channel and
marketing research information. These factors might help companies improve their
marketing communication budget. Hence, this paper will focus on how advertising
could really affect a consumer’s purchase intention and which media channel could
effectively reach the audience.
1.2 STATEMENT OF THE PROBLEM
Currently, the amount of spending by medium in global increased 5.2% from 2009 to
2014 and it was expected to grow continually (McKinsey & Company, 2015). These
figures imply that adverting plays very important role in the economic growth. The
previous study, Grullon et al. (2003) stated that the companies with higher advertising
expenditure and brand visibility have higher sales revenue. While Chemmanur and Yan
(2009) argued that the additional revenue seems to be higher but actually the additional
revenue is just equal to the additional cost of advertising. This could hypothesize that
advertising has a significant impact to sales and the further study will investigate that
could advertising really increase sales revenue.
This paper will study on the consumer goods product industry in Thailand due to
this industry especially in fast-moving consumer goods (FMCG) sector has the biggest
share of advertising expenditure that might be obvious to see and compare the different
figure in each brand. Furthermore, from observing the companies in Thailand, most of
them apply the advertising agency to handle their adverts and spend advertising budget
as same as the last year, this causes firm might be difficult to spend some reasonable
money on advertising. In all actuality, firm should consider the factors in current
situation, such as company’s sale revenues, media channels, competitors and so on.
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Besides, some companies select ineffective media due to their advertising policy
resulted in advertising might not be so effective for communication. As a result,
advertising expenditure on all media in Thailand was revealed by Media Agency
Association that the number dropped about 12 percent due to the weak consumption
(Bangkok Post, 2017). Moreover, the spending is projected to improve just only 4
percent in 2017 (Suchiva, 2017). The variance of advertising expenditure might lead to
the variance of sales revenue that impact to economy in Thailand. All these discussed
issues should address through the research. The intention of the research is to
understanding the effectiveness of advertising and ascertaining how advertising has
impacted on sales volume which could keep the company going in business. A result of
this paper might help managers balance the appropriate budget for effective
communication.
1.3 RESEARCH QUESTIONS
The research aimed to investigate and answer the following questions:
1. Does advertising have an impact on the sales volume?
2. Could the larger amount of advertising expenditures increase more sales volume?
3. What are the effective and ineffective media channels?
4. Is the mass media channels have more effect on sales revenue?
1.4 IMPORTANCE AND BENEFITS OF THE STUDY
The research intends to achieve answer on the above questions so that problem
and benefits associated with the impacts of advertising were investigated, discussed
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and recommended based on the findings of the study. Besides, this study attempted to
analyse and provide the new idea and future opportunities to achieve more effective
communication. It has highlighted both the impacts of advertising and media channels.
1.5 LIMITATIONS OF THE STUDY
The study will clarify to what is the significant association of advertising spending
and sales volume. The data of advertising spending will be collected from the research
company in Thailand (The Nielson Corporation) while the data of sales volume will be
collected from The Stock Exchange of Thailand (SET). Thus, this study will focus on the
companies that have shares admitted to trading on the Stock Exchange only and might
not include the small businesses.
1.6 RESEARCH DESIGN AND METHODOLOGY
The study is a correlation study which is a quantitative research. Crowther and
Lancaster (2008) stated that to investigate the relationship of variables X and Y, hence,
the quantitative is suitable method to answer the research questions. As mentioned, the
secondary data will be applied to examine the impacts of advertising towards sale
revenues. A purposive judgment sample of 50 consumer goods companies will be used
for the purpose of the research. Then the data will be interpreted and presented through
SPSS programme. Additionally, the results of the study will be analysed in form of
descriptive analysis and Principal components analysis.
1.7 CHAPTER OUTLINE
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Chapter 2 Literature Review: Chapter two consists of a discussion of the previous
literature on impacts of advertising. It discusses how advertising associates with
consumers’ purchase intention and sales.
Chapter 3 Research design and methodology: This chapter will examine the
quantitative information and discuss the inspiration of selecting quantitative as a method
for gathering data. Other issues will be explained, including the hypothesis, target
population, data collection methods, sample size and also the limitation of the research
will be discussed on this chapter.
Chapter 4 Analysis and Finding: Chapter four will undertake to present and analyse
result of the research. SPSS statistical programme will be applied to perform data entry
and analysis. The result of research will be presented through pie chart, graph and table
in order to clearly understand the analysis.
Chapter 5 Discussion: The chapter five will discuss the results of the research as they
relate to the literature and research questions.
Chapter 6 Conclusions: The main points of finding will be concluded on this chapter.
The results that relate to research questions will be presented and examined. Moreover,
the recommendations, directions and limitations experienced will be provided and
discussed for the further study.
CHAPTER 2: LITERATURE REVIEW
The literature review will explore to the relevant literature which has been applied
to inform and assist the answer of the topic. The previous literature is the foundation of
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finding and developed on this study. The important information and the resulted of the
previous studies as it relates to the research problem will be bracketed and presented.
This review examines the definitions of advertising, theoretical basis of the information
overload discourse and presents the impact of advertising in different perspectives.
Several different definitions of advertisement are recorded in the literature. One
of the world’s large multinational advertising agencies named Leo Burnett defined
advertising as "selling corn flakes to people who are eating Cheerios" (Bendinger,
1993). It signifies that advertising is applied to promote brand loyalty (brand in mind)
among users and persuade those who are not switch brand. This state is agreed by
Professor Jef Richards of the University of Texas’s Department of Advertising, Richards
also claimed that advertising is a paid communication tool which the majority of firms
use to persuade the receiver to take some positive action towards brand. Over the
years, advertising has been defined many ways, Daniel Starch (1923) and Gunther
(1960) suggested that advertising is "salesmanship in print". The reference to "print"
could reflect to the media channel which is applied to reach the audiences at that time.
This implies that advertising is the activity to attract public intention by communicating
and persuading through paid announcements in several media channels, such as
television, print, radio and billboard.
In addition, the advertising communication model contains of four steps.
Essentially, objective will be set in each step, and provides planning and tactical detail
on how each step approach the target audience (Rossiter and Percy, 1985). There are
four decision levels of the advertising communication model from the manager top-down
perspective:
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(I) Target audience action objectives (Buyer): The first step of communication is to
define the characteristics of target audience (Rossiter and Percy, 1985). The target
audiences are those people who might be response to advertising the most. Then
construct the decision making process. Webster and Wind (1974) claimed that there are
four steps of decision making, including consideration, recommend, make the final
decision and buy it.
(II) Communication Objectives (Brand): The communication objectives focus on the
action of target audiences after launching the advertising (Rossiter and Percy, 1985).
There are five basic of communication effects defined. Including category need, brand
awareness, brand attitude, brand purchase intention and purchase facilitation.
(III) Executional Processing (Ad.): In this part, the creative department constructs the
messages which have two types of massage contain of hard-sell messages and soft-
sell messages (Krugman, 1965). The intended outcome of creating the advertisement
message is to produce communication affects in long-term or semi-permanent memory.
(IV) Exposure (Media): Media planners usually select the medium which is the most
useful in reaching the target audiences. It is essential that media plan will be
constructed within the budget (Hello Starling, 2015). Therefore, the media selection and
the amount of audience who will be responsive to advertising depend on the budget of
communication.
In terms of the impacts of advertising, the communication objectives focus on the
action of target audiences after launching the advertising (Rossiter and Percy, 1985).
There are five basic of communication effects defined. Including category need, brand
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awareness, brand attitude, brand purchase intention and purchase facilitation. It could
be said that brand awareness is increased by advertisement that communicates through
media channels. Additionally, the greater number of advertising frequency might
increase more chance of reaching target audience leads to the purchase intention.
Migrom and Robert (1986) claimed that advertising and pricing decision imply
product quality. The research studied on two sample groups, including high-quality firm
and low-quality firm. Two key points from derived result are mainly discussed here.
Firstly, many customers infer product quality from the average number of price
observation or advertising volume. This implies that the high-quality firm could add an
increase in sales revenue by raising price on a product because pricing could signal the
product quality and attract consumers to purchase. Secondly, as mentioned that a high-
quality producer leads to a higher marginal benefit from attracting an initial sale, in the
case of high-quality firm, the high-quality producer could attract the consumers’
purchase that this would increase sales revenues rather than the low-quality firm.
Additionally, revenue or sales growth is the powerful cashflow driver for any business,
and it is indeed a fund (amount of money available) that directly affects advertising
budget of a business. In order to generate consumer demand, it plays a key role in
decision making process and the advertising budget. It also determines whether a
company can spend far more on advertising or not. Meanwhile, by making consumers
aware of the existence and availability of product, the low-quality firm effectively uses
advertising to demonstrate the high quality of product so that it is able to influence the
intention of consumer, and by doing so, it can increase sales and boost marketing. A
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conclusion can be drawn from this study is advertising has been used to present the
existence characteristics and the product’s price leads to sale increasing.
In the meantime, George and Mohr (2000) studied on consumer packaged goods
(CPG) categories, the study showed that although sale promotions can make
consumers more aware of new product and encourage customers to buy now rather
than later, consumers will tend to make better decisions and eventually become less
loyal, meaning customer loyalty is declining, and customers do not emotionally attach
themselves to certain brands, which do more harm than good. Similarly, price sensitivity
does not have only a significant impact on product purchase decision as well as how
they respond to the advertising, but also has a great influence on customer satisfaction.
Therefore, in respect of sale promotions, consumers will depend heavily on price rather
than the brand owing to consumers' different attitude and opinion towards the brand.
There is a relationship between loyalty and profitability, and it is quite challenging to
build a foundation for long-term engagement and loyalty. In fact, we have to look
carefully at the relationship between customer longevity and companies' profits in order
that we can find a positive correlation and gain a better understanding. We can
accurately predict and set prices independently to see which applies to our particular
customer circumstances. Nevertheless, given that customers deem unreasonable for
what they are signing up to, high price sensitivity disrupts customer loyalty, and total
sales revenue also decreases. Accordingly, firm should decrease their allocation to
sales promotion and increase their allocation to advertising in order to achieve positive
effect and consumer attitudes toward advertising, brand equity, market share and profit.
Additionally, Buzzell et al. (1990) pointed out that advertising could build brand loyalty
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and increase effectiveness of a reduced sales promotion budget leads to higher
additional profits.
Little (1979) presented aggregate advertising response models which explained
the correlation between advertising expenditures and the number of sales. There are
two models consist of The Concave-Downward Response Curve and S-Shaped
Response Function.
Figure 1: The Concave-Downward Response Curve (Source: MBA Skool, 2017)
Figure 1 presents the Concave-Downward Response Curve model which is
based on the Microeconomic Law of Diminishing Returns. In other words, increase in
advertising spending lead to decrease in its value (Little, 1979).
This model in accordance with the concept of Marginal Analysis which pointed
out that increasing advertising expenditures, sales margin also increase to a point and
then level off (Basu and Batra, 1988). The firm would increase continually in the
advertising budget as long as the marginal revenues created by these expenditures
exceeded the incremental costs as is shown in Figure 2.
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Figure 2: Marginal Analysis (Source: ShillongSultans, 2012)
The principles of Marginal Analysis are as follows,
- The additional cost of advertising might be increased if the increases lower than
the additional profit.
- The additional cost of advertising might be decreased if the increases higher
than the additional profit.
- Maintain the same budget of advertising if the additional cost of advertising
equals the additional profit.
From these two models shows that there is a correlation between advertising
spending and sales revenue. In addition, there is a similar point that advertising could
decrease the sale revenues if its cost is higher than the additional profit.
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Figure 3: The S-Shaped Response Function (Source: MBA Skool, 2017)
In Figure 3, the S-Shaped Response Function interprets the impacts of
advertising expenditures towards incremental sales which divide into three sections.
Initial advertising outlay has the low number of sales as is shown in zone A of the S-
Shaped Response Function graph in Figure 3. Then the next amount of advertising
expenditure in range B could increase the number of sales continually. However, this
increase in sales continues only to a point and after that in the last section presents the
additional expenditures results in stop growing of sales (Little, 1979).
From these models, it could be concluded that the budget allocation of
advertising impacts to sales. There are two points from the result. First, increasing
advertising spending resulted in reducing the additional value because the product
might reach its market saturation while the firm has high spending on advertising.
Second, if firm gradually increase advertising spending until the sale stops growing.
This might be more effectiveness and achieve the higher values. This study implies that
effectiveness of allocation to advertising impacts to sales revenue.
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There are several perspectives about the impacts of advertising on sales.
Generally, advertising has a profound effect on the marketing given that marketing and
advertising play a huge role in shaping our society. Leone and Schultz (1980) and
Wood and Poltrack (2015) determined that nearly half of TV advertising campaign has a
considerable and immediate impact on sales, thereby using single-source data to
measure advertising effectiveness. It could assume that television is the most effective
channel to motivate consumer purchase intention.
Givon and Horsky (1990) claimed that reinforcement is one of the aim of
advertising to ensure that customers have done the right thing in buying the particular
product as well as taking the best advantage of the product, meaning advertising is
intended to reassure customers have made the right choice so that advertising is able to
increase customer experience and satisfaction – has a significant effect on sales. The
purpose of reinforcement advertising is to maintain market share, and most importantly
it aims at reminding the consumers of its continued existence and unique benefits in
order to get those consumers who have tried a particular brand to become repeat
purchasers along with attracting new customers. In the same way, Horsky and Simon
(1983) speculate that advertising affects innovation, quality, and customer choice, and
incentive also affects innovation. No doubt, advertising encourages innovation and so
encourages choice. To grow customer base and increase future sales value of
business, advertising gives innovators financial rewards if they can successfully launch
a new product or service given that incentive attracts attention and drives large-scale
participation.
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Competitive reaction has a significant influence on and considerably alters
effectiveness of marketing program (Weitz, 1985). Due to the fact that different
competitors formulate and implement different strategies to response to their chief
competitors using efficient manners such as raising advertising expenditure, cutting
price to make room for the newcomer, or even fighting back. The result of previous
study showed that three of the four brands used advertising as instrument to compete
with their competitors. In light of these responses, it could be hypothesized that
advertising could expand market share, thereby, there is a significant impact on sales.
Bass (1969) cautions that current and past sales affect advertising expenditure,
and we should take care of it. When budget allocation rules with regard to the
percentage of marketing budgets for sale applied, it is definitely that this case should be
taken into consideration. Using a simultaneous-equations model to analyze of the
American Cigarette Industry, Bass and Parsons (1971) applied this concept to check
how advertising budget can be determined as percentage of past sales. As a result, the
conceptual model presents contemporaneous and purchase reinforcement effects, and
it also produces autoregressive statistical pattern in accordance with advertising
spending on firm value. It is clearly that current and past sales play an essential role in
advertising spending when budget allocation applied.
Summary
From the previous studies, there are three ways of advertising lead to sale
increasing, including advertising volume, communication channels and content of
advertising. As mentioned, there are three models consist of the Concave-Downward
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Response Curve model, Marginal Analysis and The S-Shaped Response Function,
which presented the correlation between advertising and sales. These three models
imply that the allocation of advertising volume impacts to sales. There are both positive
impact and negative impact, the advertising spending might be the wasted investment
and decrease total additional value if firm spend continually in advertising after the sale
has reached saturation point and then level off. The positive impact is increasing brand
loyalty. The high frequency of advertising might remind the brand in consumers’ mind.
However, these three models considered the sales and advertising relationships rather
than how much the advertising expenditure impacts to sales. In terms of communication
channels, the previous research studied on the television channel, this study pointed out
that advertising on television channel could immediately attract consumers to purchase.
As the assumption from the result of this study, television might be the most effective
channel to increase sales, the future research could study on the investment in other
media channels that might effect to sale increasing in order to determine what the most
effective channel to increase sales is. While the content of advertising also impacts to
the consumer intention to purchase and stimulate the high demand of product because
the content advertising could present the product characteristics and benefits resulted in
sale increasing.
Additionally, the previous studies were discussed which suggest that advertising
has a positive impact on sales volume. This suggestion could guide the further study in
the next process which would study on the investment of advertising, how much it
impacts to sale revenues and which is the most effective media channel. The research
would consider the total advertising expenditure and sales. Then consider the
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investment in each media channel and sales. The relevant of literature reviews
suggests that research is needed on variables. Therefore, there are five variables that
would be considered consist of average growth, media spending, sales revenue, media
channels and frequency of advertising per year. Quantitative research will be used for
collection and analysis of data in numeric form which will present or perceive as being
about the gathering of facts. The reasons of method selecting will be demonstrated in
the chapter three.
CHAPTER 3: METHODOLOGY
3.1 INTRODUCTION
This chapter presents the explanation of research design and methodology. This
chapter divided into three parts to present the reasons of undertaking the research
method which was chosen for this study. For the part one, the explanation of research
philosophy will be presented. Part 2 explains the plan of action and demonstrates the
reasons for applying the selected method. The final part illustrates the statistical
procedures which are used for analyzing data.
3.2 RESEARCH QUESTION
Kowalczyk (2015) stated that research question is the question that is set to
answer. It is the initial step after creating an idea. Additionally, research question will
relate to a specific concern or issue which will be studied in the research project.
The research aimed to investigate and answer the following questions:
1. Does advertising have an impact on the sales volume?
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2. Could the larger amount of advertising expenditures increase more sales volume?
3. What are the effective and ineffective media channels?
4. Is the mass media channels have more effect on sales revenue?
3.3 OBJECTIVE
The main objective of this research is to investigate the impact of advertising
investment towards the companies’ sales in Thailand. Other operational objectives
include the following:
1. To examine the effect of advertising on growth and profitability of consumer goods
companies
2. To identify the advertising media that could obtain the attention of consumers.
3. To find out if there are the media channels have more significant impact.
4. To make some recommendations based on the findings of the study.
3.4 RESEARCH PHILOSOPHY
The study is a correlation study, descriptive investigation which applied the
quantitative research (Deductive approach), within the framework of an empirical study
of consumer goods industry in Thailand. Crowther and Lancaster (2008) stated that
quantitative research is typically associated with the principle of positivism which is an
epistemological position that base on empirical observation, measurement and analysis
through using the instrument and mathematical. This implies that positivism associates
with facts that researcher needs to focus. In addition, there are four main paradigms of
positivism philosophy consist of reliability, validity, testability and objectivity. Thus, the
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research will be conducted base on the essential reason of social facts by measurement
and quantitative analysis.
Specifically, positivism relies on the aspects of the science which will be
summarized as following:
1. Science is deterministic: Scientific approach is found on assumption that X causes Y
under certain circumstances. The research will investigate the relationship between
advertising spending and sale revenues, with advertising spending = X and sale
revenues = Y.
2. Science is mechanistic: Craver (2007) defined a principle of mechanical nature that
the hypothesis will be set relates to the research problem and it will be proved and
analysed through the specific research methods. The research will applied the
quantitative method for generating data in order to evaluate a correlation between
advertising spending and sale revenues.
3. Science uses method: Application of methodology involves selection of sample,
measurements, analysis and reaching conclusions about hypotheses. This study will
collect the existing data which relates to the amount of advertising spending and sale
revenue.
4. Science deals with empiricism: Science could be seen or measured. This implies that
science can be evaluated as objective. As mentioned, this research will apply
secondary data which is gathering from the research company (Nielsen Corporation).
Therefore, the number can be determined resulted in a consequence is much more
precise.
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3.5 RESEARCH DESIGN
This study will employ a correlation study strategy in answering the research
question. According to Merriam (2009) stated that correlation study is a quantitative
method which is applied to examine the relationship between one thing and another. It
usually uses to study a specific phenomenon. Thus, quantitative research might be an
effective method for the research to investigate the impact of advertising towards sale
revenues. Additionally, the research concentrates on one industry (Consumer goods
industry) so that it will be clearly compared, identified and investigated (Welman et al.,
2008).
Additionally, Hopskins (2008) pointed out that quantitative research aims to
determine the relationship between an independent variable and a dependent variable.
As mentioned, the research will study on the relationship between advertising spending
which is an independent variable and sale revenues which is a dependent variable.
In term of the data sets that will be applied for the quantitative research. The data
will be arranged as a group and coded in variables that have a range of possible value.
Hox and Boeije (2005) claimed that there are two choices of data collecting consist of
collecting the one’s own data and searching for existing data relevant to the research
problem. There are advantages and disadvantages for both types of data collecting. For
collecting the one’s own data, researcher can create the research design and research
strategy associate with research questions to ensure that the data which will be
collected could resolve the research problem. But it is costly and time-consuming.
Meanwhile, searching for existing data has a wider sample base which could help
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researcher for testing interpretations at far less cost and with greater speed. Moreover,
the secondary data can serve to answer the newly formulated research question.
However, for all of its advantages, collecting the existing data is something of a double-
edged sword. The data were originally collected for a different purpose and it might not
associate with the research problem.
For the research the existing data that will be collected, it has been examined
that the data is relevant to the research problem. Accordingly, secondary data is a far
lower cost and faster access to relevant information; hence, it will be applied to answer
the research question.
3.5 VARIABLES
This study will employ correlation study that is a quantitative method of research
in which there are two or more quantitative variables. For this research, advertising
spending, media channels and frequency of advertising per year are independent
variables that could affect the dependent variable which is sale revenue.
3.6 HYPOTHESIS
Hypothesis 1
H0: There is no correlation between advertising expenditure and sales revenue.
H1: There is a correlation between advertising expenditure and sales revenue.
Hypothesis 2
H0: There is no correlation between media channel and sales revenue.
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H1: There is a correlation between media channel and sales revenue.
Hypothesis 3
H0: There is no correlation between frequency of advertising and sales revenue.
H1: There is a correlation between frequency of advertising and sales revenue.
3.7 POPULATION AND SAMPLING
3.7.1 TARGET POPULATION
Graziano and Raulin (2013) defined a target population is the group of people
whom researcher hopes to study and take a broad view of the findings. Meanwhile,
Welman et al. (2008) described a target population as a collection of components such
as individuals, organizations, administrations, events or situations and individual
offerings. All the consumer goods companies in Thailand made up the target population.
A letter of permission was written to the advertising company, named Prakit
Holdings Public Company Limited in order to ask for the information of advertising
spending. Additionally, the General Manager of the Prakit Holdings Company informed
via electronic mail that the information of advertising spending would be elicited from the
AQX software, the database in AQX software is collected by Nielsen Corporation.
Hence, the information is used in the study will be referred to the Nielsen Corporation.
The information of sale revenues will be collected from The Stock Exchange of Thailand
(SET).
3.7.2 SAMPLING SIZE
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Secondary data collection has been undertaken for the quantitative method.
Delice (2002) suggested that for quantitative method, the study should include at least
50 samples in order to obtain accurate result. Hence, the information of 50 companies
will be collected, including advertising spending and sale revenues. The check list will
be applied as a guideline to acquire sufficient information relating to the research
questions.
3.8 DATA CAPTURING AND DATA EDITING
SPSS (Statistical Programme) and Microsoft Excel software will be employed to
organize and perform data analysis. The data would be downloaded from the AQX
software and organized into Excel spreadsheet. The data will be grouped base on its
characteristic and then it will be transformed into a numerical format. Cleansing, coding
and labeling of all the revised data will be undertaken after transferring from Excel into
SPSS software.
3.9 STATISTICAL ANALYSIS
3.9.1 DESCRIPTIVE ANALYSIS
Zikmund (2003) stated that descriptive analysis is the transformation of raw data
into a form that might be easy to understand and interpret in order to generate
descriptive information. Similarly Coakes (2013) claimed that descriptive statistics aims
to examine and demonstrate the data gathered. Within the current study will employ the
descriptive analysis to interpret data in SPSS programme. The data analysis will be
generated as graphs and tables to make data easier to understand. It will be analysed
and discussed in the next chapter.
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3.9.2 PRINCIPAL COMPONENTS ANALYSIS
Principal components analysis is one method of condensing a greater numbers
of variables into a lesser number of variables. The aim of principal components analysis
is to be able to examine the key variables associated with the research questions.
SPSS programme will be applied to undertake the principal components analysis which
will be presented in chapter four.
3.10 CONCLUSION
The study is a correlation study which is a quantitative method, to examine the
relationship of advertising spending and sale revenues. However, there is the limitation
to apply the quantitative research, the data might be more precise but it is not able to
obtain the insight. Addtionally, the research applies the secondary data from the reliable
source, including advertising spending by media channels and frequency of advertising
are collected through using the AQX programme which is gathered by the Nielsen
Corporation. Whereas, the sales revenue of each selected companies is collected from
The Stock Exchange of Thailand (SET). After collecting all the data, it will be interpreted
by employing the SPSS programme. Furthermore, the research applies the descriptive
analysis and principal components analysis to analyse the data which will be presented
in Chapter four. Then the finding of data will be discussed in Chapter five.
CHAPTER 4: ANALYSIS AND FINDING
4.1 INTRODUCTION
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This chapter presents the data analysis and finding in the current study, within
the framework of research problem. This chapter contains of two parts, begin with the
explanation of the results of ANOVA analyses. Additionally, three hypothesizes will be
investigated. Part 2 examines and discusses the finding.
4.2 ANALYSIS
In order to analyze data set ANOVA statistical tool is used. ANOVA refers to
analysis of variance. The tool reflect rate at which variables are deviating from each
other. Based on degree of deviation of variables from each other it is identified whether
variables are related to each other or there is low or no relationship among them. It can
be said that there is due importance of the ANOVA method for analysts because by
using it same can identify variables that have huge impact on sales revenue. There are
number of areas where ANOVA is used for measuring statistical significance of the
variables. There are varied components of ANOVA table, which are sum of square,
degree of freedom, mean square, F and value of level of significance. Value of level of
significance is the tool that is used to identify whether there is relationship between
dependent and independent variable. In case it is identified that value of level of
significance is less than 0.05 then it means that there is statistical significant difference
between dependent and independent variable. On other hand, if it is identified that value
of level of significance is greater than 0.05 then it means that there is no statistically
significant relationship among variables.
First, the null hypothesis and alternative hypothesis have been established as
follows,
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Hypothesis 1
H0: There is no correlation between advertising expenditure and sales revenue.
H1: There is a correlation between advertising expenditure and sales revenue.
ANOVA
Sale Revenues 2016 (MB)
Sum of Squares df Mean Square F Sig.
Between Groups 16761196.248 34 492976.360 108.927 .000
Within Groups 67886.084 15 4525.739
Total 16829082.332 49
Table 1: ANOVA Analysis (Sale Revenues and Advertising expenditure)
The one-way analysis of variance (ANOVA) is used to determine whether there
are any statistically significant differences between variables. Hence, the ANOVA is
presented in Table 1 to investigate the association between advertising expenditure and
sales revenue, reports a significant value is 0.000, the null hypothesis is rejected
because its value less than 0.05 that means there is a correlation between advertising
expenditure and sales revenue. There are number of reasons due to which such kind of
results are obtained and one of them is that when advertisement is done marketing of
firm happened and more and more people comes to know about its product. Word of
mouth is promoted among customers or people and due to this reason, positive image
of firm is created. All these things lead to creation of new customers in the business and
retention of old one. Thus, it can be said that advertisement expenditure and sales
revenue are closely related to each other. There are number of firms that every year
make huge expenditure on advertisement of products and consistent increase in sales
25

is the one of the main reason due to which firms are making more and more expenses
in advertisement.
Hypothesis 2
The null hypothesis and alternative hypothesis have been set as follows,
H0: There is no correlation between media channel and sales revenue.
H1: There is a correlation between media channel and sales revenue.
ANOVA
Sale Revenues 2016 (MB)
Sum of Squares df Mean Square F Sig.
Between Groups 15867849.907 25 634713.996 15.848 .000
Within Groups 961232.425 24 40051.351
Total 16829082.332 49
Table 2: ANOVA Analysis (Sale Revenues and TV Spending)
Interpretation
ANOVA stands for analysis of variance and it can be observed that value of level of
significance is 0.00<0.05 and on this basis it can be said that there is significant mean difference
between dependent and independent variables which are sales revenue and media channel. It can
be said that with change in TV spending good amount of deviation is observed in sales revenue.
Thus, in case spending on TV will increase then in that case good amount of revenue can be
earned in business. Further, it depend on the firm that to what extent and at what frequency rate it
advertise its products on TV channels. More will be frequency of advertisement of the product
on TV channel greater will be chance that people will be informed about the product and
purchase intention will be developed among them. It can be said that TV channels are the one of
the important source from where new customers can be created in business and sales revenue can
be enhanced.
ANOVA
Sale Revenues 2016 (MB)
Sum of Squares df Mean Square F Sig.
26

Between Groups 14932600.864 20 746630.043 11.417 .000
Within Groups 1896481.468 29 65395.913
Total 16829082.332 49
Table 3: ANOVA Analysis (Sale Revenues and Newspaper Spending)
Interpretation
It can be seen from the table given above that value of level of significance is
0.00<0.05 which means that there is significant mean difference between independent
and dependent variable. This means that newspaper spending have significant impact
on sales revenue of the business firm. In case newspaper spending will, deviate sales
revenue will change at fast rate. It can be said that firms must increase spending on
newspaper so that more and more people can be made aware about the firm products
and services.
ANOVA
Sale Revenues 2016 (MB)
Sum of Squares df Mean Square F Sig.
Between Groups 15803128.366 22 718324.017 18.904 .000
Within Groups 1025953.966 27 37998.295
Total 16829082.332 49
Table 4: ANOVA Analysis (Sale Revenues and Internet Spending)
Interpretation
Facts state that there is clear mean difference between internet spending and
sales revenue as value of level of significance is 0.00<0.05. Means that with slight up
and down in internet spending good amount of variation can be seen in sales revenue.
It is commonly observed in the current period that more people are making use of
internet to make purchase related decisions. On internet, many details related to
product are available and due to this reason internet spending, have heavy influence on
sales revenue of the firm. People evaluate these varied details in respect to product and
on that, basis take product purchase related decisions. Hence, due to this reason sales
revenue is heavily affected by internet spending of the firm.
Summary overview of above facts
Table 2 presents the relationship between spending sale revenues, TV spending,
newspaper spending and internet spending by considering the significant value in
column Sig., the value is less than 0.05 which means the spending of television,
newspaper and internet has the positive impact to sales revenue.
ANOVA
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Sale Revenues 2016 (MB)
Sum of Squares df Mean Square F Sig.
Between Groups 4230271.555 16 264391.972 .693 .781
Within Groups 12598810.776 33 381782.145
Total 16829082.332 49
Table 5: ANOVA Analysis (Sale Revenues and Cable TV Spending)
Interpretation
Value of level of significance is 0.781 which is greater than 0.05 and on the basis
it can be said that there is significant mean difference between both variables which are
sales revenue and cable TV spending. It can be assumed that with change in cable TV
spending sales revenue does not change at fast rate. This is because on cable TV,
channels when advertisement comes people change channel and due to this reason,
they does not view advertisements. It can be said that this is the reason due to which
spending on cable TV does not lead to increase in sales revenue.
ANOVA
Sale Revenues 2016 (MB)
Sum of Squares df Mean Square F Sig.
Between Groups 3721116.974 19 195848.262 .400 .978
Within Groups 12726731.979 26 489489.692
Total 16447848.954 45
Table 6: ANOVA Analysis (Sale Revenues and Radio Spending)
Interpretation
In order to identify relationship between sales revenue and radio spending
ANOVA tool is applied on data set. Value of level of significance is 0.978>0.05 and on
this basis it can be said that there is no significant mean difference between dependent
and independent variable. Means that with change in radio spending any big deviation
does not comes in sales revenue. This is because less number of people make use of
radio to get informed about any news. People listen less radio and due to this reason,
they does not have any knowledge about advertisement that broadcasted on radio.
Hence, due to this reason with change in radio spending sales revenue does not
change sharply.
ANOVA
Sale Revenues 2016 (MB)
Sum of Squares df Mean Square F Sig.
Between Groups 3698216.778 21 176105.561 .376 .988
Within Groups 13130865.553 28 468959.484
Total 16829082.332 49
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Table 7: ANOVA Analysis (Sale Revenues and Magazines Spending)
Interpretation
From the table that is given above it can be seen that value of level of significance is
0.988>0.05 and this again reflect that there is no significant mean difference between dependent
and independent variables. Means that firm even increase spending on magazines big variation
cannot be observed in sales revenue of the business firm. This is because most of firms give their
advertisement on premium magazines. There are less number of people that prefer to make
purchase of premium magazines. Thus, it can be said that with change in expenditure on
magazine any big variation cannot be observed in sales revenue.
ANOVA
Sale Revenues 2016 (MB)
Sum of Squares df Mean Square F Sig.
Between Groups 1639454.088 8 204931.761 .553 .809
Within Groups 15189628.244 41 370478.738
Total 16829082.332 49
Table 8: ANOVA Analysis (Sale Revenues and Cinema Spending)
Interpretation
Value of level of significance is 0.809>0.05 and this is clearly reflecting that there
is no significant mean difference among variables in terms of rate of change. This is
because while watching movie people are more concerned about content that is shown
in movie. They does not want to see an advertisement that is given in the movie and
due to this reason with change in cinema spending big deviation does not comes in
sales revenue of the business firms.
ANOVA
Sale Revenues 2016 (MB)
Sum of Squares df Mean Square F Sig.
Between Groups 578693.650 9 64299.294 .158 .997
Within Groups 16250388.681 40 406259.717
Total 16829082.332 49
Table 9: ANOVA Analysis (Sale Revenues and Outdoor Spending)
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Interpretation
In above table it can be seen that value of level of significance is 0.997>0.05 and
this is again indicating that outdoor spending does not have significant impact on the
sales revenue of the company. Sales promotion approaches can be taken in to account
as part of outdoor spending. The firms use these methods when there is low demand of
product in the market. Facts are stating that these approaches failed to attract attention
of customers towards firm and due to this reason sales revenue does not affected
heavily by outdoor spending.
ANOVA
Sale Revenues 2016 (MB)
Sum of Squares df Mean Square F Sig.
Between Groups 3579277.720 14 255662.694 .675 .782
Within Groups 13249804.612 35 378565.846
Total 16829082.332 49
Table 10: ANOVA Analysis (Sale Revenues and Transit Spending)
Interpretation
There is no significant mean difference between sales revenue and transit
spending. This is proved from the fact that value of level of significance is 0.782>0.05.
This result like above one is indicating that with increase in transit spending sales
revenue does not increase at fast pace. Hence, even transit spending change big
deviation cannot be observed in sales revenue.
ANOVA
Sale Revenues 2016 (MB)
Sum of Squares df Mean Square F Sig.
Between Groups 1804459.512 12 150371.626 .370 .966
Within Groups 15024622.820 37 406070.887
Total 16829082.332 49
Table 11: ANOVA Analysis (Sale Revenues and In-store Spending)
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Interpretation
On analysis of results it is clearly observed that value of level of significance is
0.966>0.05 which means that there is not big difference between both variables in
terms of rate of change. Means that in case within store firms increase their spending
then also sales revenue will not increase at fast rate. Hence, if in store, expenses will be
reduced and same will be invested elsewhere good amount of return can be gained in
the business.
Summary of tables
In Table 5, 6, 7, 8, 9, 10 and 11, in this case the null hypothesis is accepted since
significance value is greater than 0.05 or 5% of significant level. It means that there is
no correlation between sales revenue and cable TV spending, sale revenues and radio
spending, sale revenues and magazine spending, sale revenues and cinema spending,
sale revenues and outdoor spending, sale revenues and transit spending and sale
revenues and in-store spending.
Hypothesis 3
H0: There is no correlation between frequency of advertising by TV and sales revenue.
H1: There is a correlation between frequency of advertising by TV and sales revenue.
ANOVA
Sale Revenues 2016 (MB)
Sum of Squares df Mean Square F Sig.
Between Groups 15867849.907 25 634713.996 15.848 .000
Within Groups 961232.425 24 40051.351
Total 16829082.332 49
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Table 12: ANOVA Analysis (Sale Revenues and Frequency of advertising by TV)
In Table 12, significant value of two variables namely, sale revenues and
frequency of advertising by TV is 0.00, which is less than significant level at 0.05. This
means the hypothesis is rejected. It implies that there is a correlation between sale
revenues and frequency of advertising by TV. Correlation is identified among variables
because when frequency of advertisement of product increased on TV channels. Even
people ignore advertisement their attention on product goes. Due to this reason when
people went to market for buying products product name that they mostly viewed in
advertisement comes in their mind. Thus, more product is advertised people purchase
them and all these things lead to earning of good amount of profit in the business.
Means that memory retention power of product increase and this play an important role
in increasing customer intention to buy firm products. There are number of firms that are
consistently advertising their products over the years and due to this reason name of
relevant items are in brain of customers. Whenever, people goes to market to buy
product name of that specific item click on their brain. In case of FMCG products often
these things occur. In case of electronic goods, also same thing happened. For example
in many nations of the world Samsung have strong grip on the market. This happened
because in past years in these specific nations firm regularly advertise its products by
revealing people that its mobile phones are best and can fulfill their needs. It can be
said that frequency and customer intention to make purchase of the firm product are
interrelated to each other.
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Discussion section
There are number of factors that are taken in to account to understand the
purchase intentions of people. It can be observed that when an individual make
purchase related decisions it consider multiple things to make accurate decisions. Some
of the factors like expenditure on advertisement have significant impact on individuals.
This is because more heavy expenses are made on advertisement more number of
customers are approached. Apart from this, product is presented in better manner in
front of customers. It can be said that in this way by doing advertisement of product firm
easily do marketing of it in effective manner and add customers in its services portfolio.
In the statistical tool that is applied on data set, it is identified that advertisement
expenditure and sales revenue are closely related to each other. In past couple of
years, it is observed that firms are focusing more on advertisement of their products
through different channels of distribution like social media, new channels and other
popular ways that are usually followed for doing advertisement of the product. It can be
said that advertisement through these channels of communication must be done wisely
because by doing so sales revenue can be increased at fast rate in the business.
Results are also reflecting that sales revenue and TV spending are closely
associated with each other as there are number of firms that are making expenditure on
advertising their products on varied TV channels. In current time period single firm is
advertising its product on multiple channels. This is because there are many people that
have specific preference towards specific channel. It is necessary to approach all sort of
customers in the business. Due to this reason, firms are advertising their products on
multiple channels that are on TV. Thus, it can be said that sales revenue and TV
33

spending are closely associated with each other. There are number of firms that are
focusing on making their advertisement more creative in nature. More advertisement is
creative it attract attention of customers or people and probability of increase in demand
of product increase at rapid rate. All these things ultimately lead to increase in sale of
the firm. This is the reason due to which most of business make heavy expenses on
advertisement that is done through TV channels. It can be said that sales revenue and
expenditure on TV channels are closely associated with each other.
Apart from TV channel there are number of channels through which firms are
doing marketing of their products like newspapers. Most of the people whether they are
high income or low income earning individuals buy newspapers and pay attention on the
products that are advertised on it. Thus, it can be said that there is high attention power
of advertisement on newspaper. This is the reason due to which demand of products
increased at rapid pace, which are advertised on newspapers. Those firms that
advertised their products on newspapers especially on cover page earn good amount of
sales revenue in their business. Thus, it can be said that sales revenue and channels
are closely associated with each other. However, firms need to take due care while
advertising their products on newspaper. This is because is because if advertisement is
given on newspapers in small size then less people pay attention on same. Contrary to
this, if image is printed on front page then every individual attention goes on image.
Hence, it can be said that firms needs to be very cautious while advertising their
products on newspapers.
Over the past few years usage of internet increase across the globe. In today era
in order to perform any task internet is needed. For doing marketing of product internet
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is used by the firms. There are number of attractive platforms from where advertisement
of products is done by the firms and one of them is social media. Social media and
customer purchase intention seems to be closely related to each other. In order to
understand this fact there is need to understand broad picture. In current period, firms
are performing CRM or customer relationship management function through social
media channels like Facebook. Under this customers if face any problem in their
products directly establish contact with the firm through social media channels and
address queries and problems of customers within short period of time. By doing so
firms attempts to retain customers in their business. When query and problem of
customer is solved in short period, it get satisfied and do positive word of mouth
marketing of the firm. All these things create positive image of the firm among
customers and they intend to make purchase of products of that specific firm because it
is taking care of the needs of its customers. People feel that if they will make purchase
of products of such kind of firms then in that case they will get better services and this
factor lead to development of purchase intention among people about firm product. It
can be said that purchase intention and advertisement through social media by making
available information on internet and making available CRM services new customers
are added and old one are retained which lead to increase in sales revenue. Results are
clearly reflecting that there is significant mean difference between sales revenue and
internet expenditure. This means that will small change that is done on internet
expenditure good variation is observed in earned revenue. This means that internet
spending is the powerful predictor of sales revenue. Thus, on yearly basis firms must
35

focus on increasing their internet spending or even kept at stable amount every year. By
following this strategy company can improve its performance.
It can be observed that now day’s firms are focusing on multiple channels to
advertise their products. Under this, products are advertised on cable TV channels. Few
firms get advantage by advertising their products on cable TV channels. Most of
business firms are not receiving good return for the investment that they made on the
project. This is because when on cable TV channels products advertised people
frequently change their channels and view program on other TV channel. Hence,
advertisement become ineffective and firms failed to generate any good amount of
return on invested amount. It can be said that advertisement must be cautiously done
on cable TV channels. This is because if it will not be done then entire amount will gone
waste. Firms must focus on preparing their advertisement in attractive manner. By doing
so people attention can be attracted towards advertisement and memory retention
power in respect to it among people can be improved. In case memory retention power
will be improved while making purchase related decisions one will first remember
relevant company product name and on that basis will make purchase related
decisions. Thus, it can be said that in current time period spending on cable TV are not
generating fruitful results for the firms but if work will be done on preparing creative
advertisement then in that case best use of spending that is done on cable TV channels
can be made. It can be said that it is very risky to make investment in mentioned
channel of communication.
Radio was earlier one of the most important channel of communication when
there were no TV and mobiles. At that time, all product advertisements were done
36

through radio. Today radio channels are not much popular and people are using FM
radio channels for listening music. On these FM radio channels, the firms advertise
products but the firms on their products do not receive good amount of customer
attention. Thus, customer intention to buy products are not created which are advertised
on radio. This is because in case of these radio channels people are interested on
listening news and music. When any advertisement comes, people usually change their
radio channels. Another common thing that is observed across radio channels is that
few products are advertised and their advertisement frequency is very high. Thus,
people get bored by listening same advertisement number of times and they does not
pay much attention to it. Thus, it can be said that radio is the ineffective channel of
communication for the firms and by advertising products on it they cannot generate
good amount of return. Thus, companies must abstain from advertising their products
on radio channels.
There are many other channels of distribution through which products are
advertised but it proved ineffective for company. These channels are outdoor spending,
transit spending and in store spending. These channels are not quite popular and
people does not pay much attention to these channels of advertisement. Due to this
reason, the firms do not receive fruitful benefits. Within store when people come they
focus on products instead of advertisements that are displayed on floor. However, from
product to product advertisement within store prove effective or ineffective. In case of
electronic products, customer intention to purchase is affected by in store advertisement
but in case of garments vice versa happened. Thus, in store and other channel through
37

advertisement is done, as transit spending, outdoor spending and cinema spending may
prove effective or ineffective in developing customer intention to buy product.
Research results also reflect that there is correlation between sales revenue and
advertisement that is given on TV. This means that more firm will advertise its products
on TV its sales will increase at rapid pace. Advertisement on TV channels will be
beneficial for the firm and due to this reason out of all channels of communication main
focus must be on buying slots on TV channels. Every year firms make huge amount of
expenses on the TV channels that are widely popular among people. These channels
may be news channels or any other one. Managers can determine months in which they
will increase frequency of advertisement of their products. Some of the products have
seasonal demand and due to this reason, it become necessary for firms to advertise
their products on season basis. By preparing strategy in suitable manner managers can
make best use of resources.
38

CONCLUSION
On the basis of above discussion it is concluded that there is close relationship between
different channels of distribution through which product is advertised and customer intention to
buy products as well as earning of sales revenue. This is because multiple channel of distribution
have their merits and demerits. These merits may change across products means that one channel
of communication may prove effective for single product but for other product, it may become
ineffective. Thus, while making advertisement related decisions it is necessary to ensure that
through right channel the business firm advertises product. In research, it is observed there are
few mediums through which customers can be addressed in better manner by the business firm.
The channels, which proved very effective for companies are internet, spending, TV spending
and newspaper spending. This is because in leisure hours people widely use these channels for
entertainment purpose or to increase knowledge. Due to this reason attention and memory,
retention value of advertisement that are presented on these channels of communication is very
high. Due to this reason, firms are successfully developing intention to purchase products among
customers. It can be said that these channels prove effective for the firms and companies on
relevant media must make more and more expenditure. By following this strategy, new
customers cannot only be created in business but old one can be retained and all these things will
lead to increase in sales revenue in the business.
Apart from this, there are some other channels of communication through which
advertisement is done but it does not prove effective to the firm. Within these channels
of communication, some are cable TV spending, radio spending, magazine, cinema,
outdoor and transit spending. Most of these comes in advertisement methods that
comes in class of sales promotion. It must be noted that sales promotion methods are
used when firm products are not at high demand in the market and company cannot
make big expenditure on advertising its products. It can be said that sales promotion
methods are beneficial for the firms in terms of cost control when product is not in
demand. However, many times these methods failed to deliver desired results for the
39

firm. Results are clearly reflecting that through these mediums sales revenue are not
much affected. This means that any amount of expenditure firm made on these
channels of communication or advertisement sales revenue same. Thus, it can be said
that cable TV spending, radio spending, magazine, cinema, outdoor and transit
spending are not best predictor of sales revenue. It can be said that these channels are
not playing any effective role in forming customer intention to make purchase of the firm
products. Thus, investment on cable TV spending, radio spending, magazine, cinema,
outdoor and transit spending is not worthwhile for the firm.
It can be said that managers needs to formulate appropriate marketing strategy
for their business. This is because through newspapers, TV channels and other
effective channel of communication purchase intention can be created among
customers but it is very important to ensure that advertisement of product is given in
more unique way. If it will be done customers, attention can be attracted towards
product and purchase intention can be created among them. Thus, it is very important
to make prudent use of channels of communication for developing buying intention
among customers.
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