Jan 2, 2019 - IV NOS. 1 e;2 JAN/DEC., 2000. ARTICLES. -Nigerian Military Regimes and .... Some of these media types are: newspapers, television, direct.
DSR VOL. IV NOS. 1
e; 2 JAN/DEC.,
2000
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ARTICLES -Nigerian Military Regimes and Trah'sifitrr -
~gn-iB-,""
- 1 - 21
-Shedrack G. Best Religion and the Pluralistic Society -Cyril 01;110 -
72 -41 -
-42 - 67
Rise and Fall of Nigeria's Diplomacy in Africa
-WOAlli 68 -78
The 1996 State and Local Governments Creation in Nigeria
- Nereus I NWQsu Women Involvement in Rural Industrialization in Nigeria -J Okerhe Macaver; D Maigida, T Aytala & T Kudi Variation in Poverty Among Women of Appalachia, U.S.A. -Theresa Myadze -=Peasant Farming on Aeolian Sands in a Semi Arid Area of'Northem Nigeria - Olowolafe E.4. &-S. Patrick Dynamics of Violence in Nigeria: Plateau State as Case Study -Sam G Godongs Juvenile Institutions in Nigeria
Zanzan A_ Uji ~
BOOK REVIEW~ National Policy on Women -Kachollom C. Best Women Development Issues: A Book of Reading Adegboye Adeyanjll Breaking the Myth: Shehu Musa and tile 1991 Census Andat Dashe Studies in Language and Literature JeffGDoki A Study of the Court Systems of Northern Nigeria with a Proposal for: the Creation of Lower Shariah' court in some Northern Stotes. :4. O. Omotosho The State and Women in Nigeria Victor A. O. Adetula
OF JOS
87 - 98 99 - 115 116 - 131 132 - 151
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Social and Economic Networks in West Africa -Vlctor A O. Adetula _ Optimal Advertising Media Selection and the Multicollinearity Problem -G U Ugwuanyim .. After School Cliildren Activities: An Exploratory Study on Children ofUnijos Staff -Garos D. Choji (Mrs) Children and the Environment: An Overview of the Legal and Sociological Problems of Children Living and Exploited outside the Family Setting - Onyemachi, Thomas Uche and-Tenshak, Juliet An Evaluation of Children's Social Welfare Services, Policies, Programmes and Funding in Plateau State -Ibrahim- Angai Ayu
UNIVERSITY
79 - 86
CDS PUBLICATION
152 - 167 168-180 181 -194 195 - 217
218 - 230
231 - 237 238 - 241 242 - 244 245 -248 249 -25-1
252 - 254
ISSN 0794-5272
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Dr.
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Dr. Ode Ojo Mr. S. A. Akinmnde Dr. Femi Adel Dr. (Mrs.) C. F. Dr. M. Y. 1angv-',vat Mrs. K. C. Best
Published by the Centre for D lopmen: University of J05 Jos, igeria
~'lKA'lC::S
Printed by Jos University Press Ltd., Jos, Nigeria
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EDITORIAL BOARD Editor - ill - Chief VICTOR A. O. ADETULA Director. Centre for Development
Studies.
Uiiivcrsitv o(.los, Mtllltlgillg Editor KACHOLLO!\l C. BEST Centre for Development Studios. Uuiversitv of Jos.
EDITORlf\.L BOARD Cliainnan Secretary Member Member Member Member Member Member
Victor A. O. Adetula Kachollom C. Best Ode Ojowu Comfort F. Asun Gideon Baklit Monday Y. J\1angvwat S. A. Akintunde Ferni Adelakun
EDITORIAL ADVISORY BOARD Prof. Michael '''atts Director. Institute of lntcrnationul
Snulics.
University of California. Bcrklcv CA 947]0 - ~308, USA, Prof. O. F. Onoge, Department u(So('iology Unil0l~'ity ofJos Jos. Nigeria, Prof. Bade Onirnode, Dcpa rtnicnt ofE con 0111 ics University oflluulan lluulan, Nigeria,
Prof. Okwudiha Nnoli, Department ofPolitical Science Univcrsitv ofNigeria ,\'sukka, Nigeria.
Prof. Esko To~'o, 0/ Economics University ofCalabar Calahat: Nigeria , Department
Prof. A. T. Gana iI/i'ican Centrefor Democratic Govcrna lice. Jos . Jos Nigeria, Dr. Segun Osoba Deparuucnt ofHistory
Uuiversitv I/e-I(e. I/c-f(c Nigeria. Obafcuii ,
Al1'()IOlI'O
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DEVELOPMENT STUDIES REVIEW DEVELOPMENT STUDIES REVIE"r provides a forum for multi-discipline interaction among academic researchers and professionals in the study and solution of the development pr.olcms of Nigeria, Africa and the Third W(;.Id. This Journals specifically seeks to encourage the evolution of indigenous innovations in development theory and practice. DEVELOPMENT STUDIES REVIEW is published twice in a year by the Centre for Development Studies, University of Jos, Jos - Nigeria.
DSR Vol IV No.1 & 2 Jan/Dec. 2000
Published bv the CENTRE FOR DEVELOPMENT University of Jos Jos, Niceria b
II
STUDIES
Development
Studies Review Vol V Nos. 1 & 2, Jan/June, 2000
Optimal Advertising Media Selection and the Multicollinearity Problem
G. U. Uqwuenyim' Introduction Many micro studies in the past have concentrated on the evaluation of the effect of advertising on the turnover and lor profitability of a going concern, with little or no attention paid to the impact the various media types have 0 such turnover or profit; neglecting perhaps to consider t.ie possible broa benefits of such studies, for instance, to help in the optimal allocation of the advertising budget which this paper is addressing. Some of the existin studies referred to above include Akaigwe(1995), Echere (1995), Ugbakile (1995),Musa (1995), Orji (1996), and Nagogo (1997) among others. The above studies show that for each N1.00 spent on advertising, sales profit increased between N4.75 and N195.89. In a recent macro stud; (Ugwuanyim, 2003), it was discovered that the advertising-sales response function is concave upwards which suggests that incremental advertisi expenditures are increasingly less efficient. This finding supports the eartle: conclusion reached by Simon (in Kotler, 1980: 501) that: If diminishing returns rather than economies of scale are the case, then, advertising expenditures should be dispersed rather than concentrated. That is, it would pay for a firm to: divide its advertising among several equally likely media buys rather than concentrate it in one; spread advertising evenly over weeks and months, rather than concentrating in a few time periods; use two copy approaches, if both are equally strong; disperse the advertising geographically (making allowance for variation in market potentials); use smaller-size ads; and increase the number of brands marketed.
Marketing, as Odia (1979:4) puts it, is a total system of interacti business activities designed to plan, price, promote and distribute wa satisfying products and services to present and potential customers Production and productivity cannot be ascertained without suppo . marketing functions. These functions are: the research function, ~ Mr. G. U. Ugwuanyim is a Lecturer in the Department of Accounting & Managerr Sciences, University of Jos.
t
168
Development Studies Review. Vol V Nos. 1 & 2, JanlJune, 2000
distribution and promotion functions and the selling function. The research function seeks to determine needs and the most economic way of satisfying these needs. The distribution function directs the need-satisfying products to the consuming public as economically as possible, with emphasis on consumer convenience. The promotion function seeks to create awareness and initiate purchase action necessary for continued production. The selling function measures consumers' final approval of the production effort (Nnolim, 1979:8) Advertising is one of the promo tools. Its goal is to communicate information about a product, service or idea and thus to stimulate demand. Onyebuagu (1979:106) argues that the lack of advertising initiative among some of our businessmen seems to suggest a strong reason for the constant product mortality and business failure among indigenous businesses in ITJst developing economies. The Advertiser uses various media to reach his customers. Some of these media types are: newspapers, television, direct mail, radio, magazines, outdoor etc. But which media type can deliver the desired response in the most cost-effective way? Is there any need for the re-evaluation of revenue periodically from different media types in order to facilitate and aid allocation of budget to the media types? These are the questions this study will answer. Multcollinearity is an expression of the fact that many economic series move together over a period of time because they are affected by a common cause such as the trend of the trade cycle or the overall pattern of business activity (Yeomans, 1968:331). Simply put, when two explanatory variables are highly correlated, we say that such variables are collinear and a set of explanatory variables that are correlated with each other is called a mulicollinearity set (Amir,1989:563). Multiple Regression is the tool for the analysis of data in this paper. The idea of multicollinearity permeates every aspect of multiple regression, and has adverse effects on the estimation procedure. Since economic data is used in this paper, we attempt to address this type of problem in this study and other related studies. Moreover, rnulticollinear.ty will enable the discovery of the equally iikely media buys. This article is divided into five parts: introduction; literature review; research methodology; presentation and analysis of data; discussion and conclusion. Literature Review Media selection is the problem of finding the best way to deliver the desired number of exposures to the target audience. By the desired number 169
Development Studies Review Vol V Nos. 1 & ~, Jon/June, 2000
of exposures, one means that the advertiser is seeking a certain response from the target audience. Who sees ad depends as much on where it runs as on what it says (Reichert, 1972:75). Kotler (1980:514) said that an increasing number of agencies are using a computer program to develop their initial advertising media plans. He went further to say that at least three different basic types of mathematical model are in use. They are: Linear Programming, Heuristic Programming and Simulation. Linear Programming method can be used to discover the media mix that will maximize the number of effective exposures subject to a set of constraints - in this case, the advertising budget, minimum and maximum media availabilities, and minimum desired exposure rates. This approach has some limitations which are: assumptions that repeat exposures have a constant marginal effect; assumption of constant media costs (no discounts); inability to handle the problem of audience duplication, and failure to advise on when to schedule advertisement. An alternative approach proceeds with a sequential rather than a simultaneous selection of media. This is the Heuristic Programming. It has four advantages: it develops a schedule simultaneously with the selection of media; handles the audience-duplication problem; handles the media discount problem; and it incorporates theoretically important variables such as brand-switching rates and multiple exposure coefficients". Another approach is the simulation model, which does not profess to find the "best" media plan but rather to estimate the exposure value of any given media plan. Simulation complements rather than competes with the other models. Non-inclusion of an overall effectiveness function and lack of a procedure for finding better schedules are its major limitations. Also, the representativeness of the hypothetical population is always suspect. Kotler warns that these computerized media-selection models should be thought of as an aid to, rather than a substitute for, executive judgment. In this paper Multiple Regression Analysis technique is used in order to explain why some media types should be used in place of others and to control and foster ::,udgeting to these media types. In what follows, various media types - newspapers, television, direct mail, radio, magazines, outdoor, etc ..- are discussed. Onyebuagu (1979:99) said that the tremendous advertising creativity everywhere amazes and fascinates us all. Blinking lights in different commercial centres at night, skywriting during the day; magazine and newspapers full of colourful advertisements; television commercials; giant outdoor posters - all these massive proof of creative activity, frivolous at times, sometimes loud and 170
Development Studies Review Vol V Nos. 1 & 2, Jan/June, 2000
unpleasant, but always full of zest and optimism that signifies that spirit of creative advertising age. Kotler (1980, 512) opines that the experienced media planner knows the special characteristics of each media type. The basic objective is to place the advertising sales message before prospective buyers. If this can be done by a given medium at a cost commensurate with prospective-buyer reception advertisers are inclined to use that medium (Reichert, 1972:75). Newspapers have the advantage of flexibility, timeliness, good market coverage, broad acceptance and high believability. Their disadvantages are a short life, poor reproduction quality, and a small "pass-along" audience. Magazines have the advantages of high geographic and demographic selectivity, credibility and prestige, high quality reproduction, long life, and good pass-along readership. They have the disadvantages of long ad purchase lead time, some waste circulation, and no guarantee of position. Radio has the advantages of mass use, high geographic and demographic selectivity and low cost. As Adenaike (in Musa, 1995:22) puts it, it does not require literacy to use and it is therefore accessible generally. It is adaptable to programming in local language and it is cheap. It has the disadvantages of audio presentation only, lower audience attention than television, nonstandardized rate structures, and fleeting exposure. The television has the advantages of combining sight, sound and motion, appealing to the senses, high attention and high reach. It has the disadvantage of absolute cost, high clutter, fleeting exposure, and less audience selectivity. Direct mail has the advantages of audience selectivity, flexibility, no ad competition within the same medium and personalization. It has the disadvantage of relatively high cost. Finally, outdoor has the advantages of no flexibility, high repeat exposure, low cost and low competition. It has the disadvantages of no audience selectivity and creative limitations. In general, when selecting r~dia types, Evans (in Musa, 1995:22) advised that the following factors should be considered: cost, waste, reach, frequency, rness.iqe, performance, persuasive impact, clutter and lead-time. Data and Method Secondary data was collected from eleven manufacturing -orqanizations on their advertising expenditures through various media and sales from 1985 to 1995. Only one company was able to provide the required data on the expenditure using various media types. This may lead to the inference that several companies do not make good advertising budgets, however the !7!
Development
Studies Review Vol V Nos. 1 & 2, Jon/June, 2000
company that provided the. required data is a renowned bottling company that takes advertising very seriously. Much information was gained from the given data. Multiple regression analysis technique was used to measure the impact of each advertising medium on the sales volume of the organization. This means that more attention will be paid to the media that has significant impact on this turnover when making advertising budgets. This technique helps in the discovery of likely media buys mentioned above, by looking at the multicollinearity set. When many independent variables are highly correlated, there is a problem of multicollinearity. Wonnacott and Wonnacott (1979: 82-83) are of the view that multicollinearity does not raise problems in predicting Y provided values of Yare predicted only within the range of X variables where the multicollinearity is the same as in the region of estimation. However, structural questions cannot be answered i.e. questions on the influence of each of the explanatory variables, Xi, i=1 ,2, ... , k alone on Y cannot be easily investigated. It is also for this reason, that the problem of multicollinearity shall be looked into here. We are more interested not in predicting sales (Y) but on the impact each of the advertising medium (Xi) has on sales volume. Among various means of solving the multicollinearity problem, the method of stepwise selection of repressors (Amir, 1989,577-580), the 'Rule of the Thumb' (Reichert, 1972:500), and Principal Component Analysis (Amir,1989:569) shall be used. The stepwise regression analysis technique enters variables into the regression equation one at a time until all has been analyzed. Some stepwise programs allow an independent variable entered into the equation at an early stage to be eliminated subsequently because of multicollinearity between it and another variable added later. When analysts exami. ',e correlations for multicollinearity, the j use the following 'rule -of- thumb': the correlation between the two predictor variables should be well below the lower of the two correlations between the predictor variables and the dependent variable. Principal Component Analysis forms new combinations of the independent variables that are uncorrelated with each other. It is noted that the computed t-values says Reichert (1972:511) are of particular importance in a multiple regression because they constitute the primary way to detect 172
Development
Studies Review Vol V Nos. 1 & 2. Jon/June, 2000
the presence of multicollinearity. If the computed t-values of the suspected collinear variables are large (a t-value greater than 2 in absolute terms, is suggested) the correlation between them is not a problem. If one or both of the t-values fall below the table t-value, multicollinearity is present, rendering the regression coefficients unreliable. Multiple Regression Model: Yi = 00 +01X1i + P2X2i+ ... + P6X6i i = 1,2, ... , 11 i.e1985-1995 Where
Y
= X1 = X2 = = X3 X4 = = X5 = X6 Pi, i =0,1,2, ... , 6 =
... (i)
Sales volume Billboards Point of Sales Press Advert Radio Sponsorship Television Regression Coefficients.
The computer software based on the Systat Program was used for the analysis. The correlation matrix, R, was first presented in order to check for multicollinearity. Principal Component Analysis was then used to cluster the variables into independent sets. Later, the stepwise regression, based on the forward selection technique combined with the 'rule-of-the thumb' method was used to find the best regressors that would explain Y.
173
~ /
./
Table 1: Advertisinrnoenditurc , C) C) C) C'\I
ADVERT
%
MEDIUM
OUTLAY
Qi
BILL
~ c -,co
BOARDS(XI)
c:: :::!
POINT OF
C'\I-
oc:s
---"....f
»-:
19')~ 198~
2932
19SG
5m
1987
1988
1989
6439
13201
19833
45884
94076
141342
1990
1991
1992
1993
199:1
27144
56550
71079·
84912
95952
193440
403000
605120
683789
_. 66.4
20829
37150
506540
SALES (X2)
.•.... oj 0
~
3035
4559
6240
13000
16340
19520
22058
2.0->,
674
1198
1480
RADIO~)
6.9
3100
5513
6809
13960
15104
20973
28704
59850
8979:
101467
>-
SPONSOR-
8,0
2527
4494
5550
11380
17098
23400
4R750
61275
7320(
82118
m c
«
SlllP (Xl)
"0
TELEVISION
7.2
2999
5333
6587
13504
20289
27768
57850
72713
86964
98158
298965
607854
787797
PRESS
