THE RELATIONSHIP BETWEEN ADVERTISEMENT COST, VOLUME OF SALE AND PROFITABILITY OF A COMPANY: A STUDY OF HOPE AND FAITH LIMITED
Virtually all business organizations, private or public enterprises are looking for ways of reducing the cost of producing their products and rendering their services to their customers. These organizations are doing this: in order to increase the profitability and hence the sustainability of their business entities. In spite of the above objective, one keeps on wondering the reason(s) why organizations still involve in incurring a large sum of money on advertisement despite the high quality and utility of their products and services. The objectives of this research work is to find reasons why organizations are still involved in incurring further cost on advertisement despite all efforts put in place to reduce cost of their products and to find out the relationship between advertisement costs and the profitability of these business organizations. This study is designed along the line of an ex-post-facto research design in which there was no treatment and manipulation of subject matter, instead it involved the collection of data from the records of the company consigned. Data collected were analyzed using Pearson product moment correlation coefficient for testing the hypotheses generated. Findings revealed that there is significant relationship between advertisement cost and the volume of sales. It was concluded that Enterprises need to advertise to promote sales and to inform the public of their product. The owners of Enterprises need not be afraid to invest on advertisement because it brings a high return in terms of sales.