Effect of Sales Promotion Activities on Consumer Buying Behaviour. A Case Study of Watanmal Group

Abaidoo, Anthony

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Effect of Sales Promotion Activities on Consumer Buying Behaviour. A Case Study of Watanmal Group

Wissenschaftliche Studie, 2015
50 Seiten

BWL - Offline-Marketing und Online-Marketing

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ABSTRACT

The study sought to assess the effect of sales promotion activities on consumer buying behaviour

by using Watanmal Group as a case study. The study used both quantitative and qualitative

research techniques. In achieving the research objectives both primary and secondary data was

used. The primary data was collected through questionnaires. Using a simple random technique

20 employees and 80 customers of Watanmal Group were interviewed. The findings of the study

showed that all respondents (100%) are aware of the sales promotion strategy of Watanmal Group.

Majority of respondents (48%) are more aware of Buy-one-get-one free promotional strategy and

24% are also aware of free sample promotional strategy.

Results from the study showed that, the most effective promotional strategy is the use of Buy-one-

get-one free strategy (58%), followed by free sample (22%) and price discounts (15%). Using a 5

point likert scale technique anchored on 1 Strongly Disagree, 2- Disagree, 3- Uncertain, 4- Agree,

and 5- Strongly Agree, the study found that, sales promotion strategy influence consumer

behaviour. The study recommend strongly that Watanmal Group should increase their sales

promotion strategies in order to increase their sales and market share since it was found that sales

promotion influence the purchase pattern of consumers.

CHAPTER ONE

INTRODUCTION

1.0BackgroundoftheStudy

The intense competition among companies in the 21

century has prompted them to adopt different

marketing strategies in order to survive and enjoy a higher market share within the industry. In

such an intense industry, competitors entice consumers with a number of sales promotion

activities. This is because of all the promotional tools advertising, public relations, personal

selling, direct marketing, it is sales promotion that normally presents additional benefit to the

consumer (Kotler, 2002).

Since 1980s, researchers have constantly proposed a variety of concepts to illustrate how sales

promotion might affect consumer purchase behavior via overcoming "consumer entropy" (Beem

& Shaffer, 1981), inviting consumers to engage in transactions (Kotler 1988), heightening the

psychological value associated with the transactions (Thaler, 1983), or by providing consumers

with a script of purchase behavior (Gardner & Strang, 1984). No matter what effects of sales

promotion would be, all the convictions alleged by the preceding studies indicate that sales

promotion may activate or facilitate certain consumer psychological mechanism based on the

notion that sales promotion "affects consumer by acting on basic mental processes common to all

decisions" (Schindler & Rothaus, 1985). Although sales promotion has become a ubiquitous

element of consumer marketing, large portions of ineffective promotional activities indicate a great

need of refining and redirecting the focus of the impact sources.

In recent times the concept of sales promotion has received the attention of both manufacturers

and retail organisations and also from players in services industries from all over the world been

it local or multi-national. Numerous studies have focused on consumer attitudinal and behavioral

responses to price promotion and its utilitarian benefits (see Dobson et al. 1978, Gupta 1988).

Haugh (1983) defines Sales promotion as `a direct inducement that offers an extra value or

incentive for the product to the sales force, distributors, or the final consumer with the primary

objective of creating an immediate sale' (Haugh, 1983). Belch and Belch (2003) have proposed a

similar definition. The many definitions of sales promotion have a common viewpoint: they all

involve a temporary and tangible modification of supply, for the ultimate goal of direct impact on

the behaviour of the consumer, retailer or sales force. Within the marketing mix, sales promotion

has one of the strongest impacts on short-term consumption behaviour (Laroche Et al., 2003). It is

an `action-focused' marketing event (Blattberg & Neslin, 1990). Kotler and Gary (2010) indicated

that Sales promotion consist of short term incentives to encourage purchase or sales of a product

or service.

The immense role sales promotion plays in the selling of products could be one of the most

important reasons why businesses continue to use this tool to promote their products. The use of

sales promotion techniques has been on the increase by most Ghanaian businesses in recent years.

Following the economic recovery programme, structural adjustment programme and the

subsequent trade liberalization, many companies in Ghana have had to face competition from

overseas companies that are aggressive in promoting their products. This situation has led to the

need for adoption of sales promotion by local companies. Watanmal Group is one of the companies

in Ghana that uses sales promotion. Watanmal, is a leading Fast Moving Consumer Goods

(FMCG) group in West and Central Africa. The company that is over 100 years old, first started

as a general merchandise trading company at the turn of the 20th century and is today one of the

pre-eminent branded packaged foods businesses in these markets. Watanmal Group has reputed

brands like Gino, Pomo, Jago, Palmo and Forte.

Generally, companies adopt sales promotions in order to increase the level of sales but whether

Watanmal Group's sales promotion really induces consumers and increases the level of the

company's sales still remain unanswered. The sales promotion situation of Watanmal Group (e.g.

discounts) especially, its reputed brands like Gino and Pomo are still on the increase. However,

the question is does these aggressive sales promotion influence buyer behaviour? This research

therefore seeks to assess the effect of sales promotion activities on consumer behaviour.

1.1BriefReviewofLiterature

Several literatures reviewed indicate that, there is no common or single definition of sales

promotion. Sales promotion has been defined by the Advertising Standard Authority's (ASA) as

those marketing techniques which are used, usually on a temporary basis to make goods and

services more attractive to the consumers by providing some additional benefit whether in cash or

in kind, Mercer (2002). Kotler (2001) describes sales promotion as adverse collection of incentive

tools, mostly short-term, designed to stimulate quicker and/or greater purchase of particular brand,

products, or service by consumers or the traders. He added that sales promotion had more impact

at mature stage of a product and that product managers might try to stimulate sales by modifying

one or more marketing mix elements.

Blackwell et al. (2001) on the other hand defines consumer behaviour as those acts of individuals

directly involved in obtaining, using, and disposing of economic goods and services, including the

decision processes that precede and determine these acts.

A number of studies on the effect of sales promotion on consumer buying behaviour have been

conducted throughout the world.

Yin and Sok (2011) conducted a study in Malaysia to examine the influence of sales promotion on

buying behaviour among university students. They used University Putra Malaysia as their case

study. A systematic random sampling technique was used to sample 150 respondents for the study.

The data for their study was collected through questionnaires. In their study, they found that there

was no significant difference between gender and buying behaviour. On the other hand, a there is

a significant differences family monthly income and buying. There was significant relationship

between attitude towards price discounts, coupons, free samples and "buy-one-get-one-free" with

buying behaviour. Results of Hierarchical Multiple Regression found that free samples and buy-

one-get-one-free explained 28.7% variance in buying behaviour of the respondents.

1.2StatementofProblem

Intense competition among Fast Moving Consumer Goods (FMCG) companies such as Watanmal

Group has led to the application of various marketing strategies in order to win a good market

share. Sales promotion has been widely used by these companies in attempt to outsmart their

competitors. The effect of sales promotion on consumer buying behaviour has long been argued

by researchers. The widely held view is that sales promotion influence consumers to behave

positively towards the company's product and services. Critics argue that sales promotions are

ineffective as they make consumers more promotion prone, resulting in market share losses in the

long run (Ehrenberg et al., 1994). However, researchers such as (Dodson et al. (2001), Bawa&

Shoemaker 1987; in Peattie&Peattie, 1993) found that promotion is considered to be an external

stimulus and when it is gone consumers are less likely to re-purchase. Customers might also

become comfortable with the lower price and demotivated to buy with the normal price anymore.

Sales promotions might also encourage low-probability purchasers to try. However they are

customers who are not likely to make repeat purchases and thus the promotions have a negative

impact on long-term sales. Price is used as a measure of quality for many service consumers. In

that sense, decrease in the price devalues the brand in the eyes of the customers. Some studies have

also shown that sales promotions increase the likelihood for repeat purchases. If consumers are

satisfied with the brand that is being promoted, it is more likely that they will also buy it later after

the promotion is over (Peattie&Peattie, 1993). The uncertainty surrounding the exact influence

sales promotion has on the behaviour of consumers has necessitated the study into the area.

1.3ObjectivesoftheStudy

The primary objective of the study was to assess the effect of sales promotion activities on

consumer buying behaviour. The following specific objectives were formulated to help achieve

the main objective;

1. Identify the promotional strategies used by Watanmal Group.

2. Examine the effectiveness of sales promotion strategy at Watanmal Group.

3. Examine customer's perception towards sales promotion.

1.4ResearchQuestions

To be able to achieve the objectives stated above, the research questions below were formulated

to serve as a guide.

1. What are the promotional strategies used by Watanmal Group?

2. How effective is sales promotion strategy at Watanmal Group?

3. What is the perception of customer's towards sales promotion?

1.5 Significance of the Study

According to Kotler (2002), Sales Promotion is a key ingredient in marketing campaigns and

consists of a diverse collection of incentive tools, mostly short term designed to stimulate quicker

or greater purchase of particular products or services by consumers. Sales promotion and its

importance to businesses have never been in doubt. It has also been well researched into by various

researchers and on different dimensions (Bawa& Shoemaker 1987; in Peattie&Peattie 1993). The

researchers' conviction for undertaking this study is the dimension it brings to bear on the topic.

That is: how consumer buying behaviour is affected by sales promotion. This research is

significant in the following sense:

This study would be relevant to companies in the FGCG sector to determine the various

factors that influence the consumer's purchase decisions to enable them adjust their

strategies.

The research work will also provide valuable data on dynamics of consumer buying

behaviour for various managerial decisions in the FMCG sector.

This study would be significant in the promotion of products and services by the FMCG

operators in Ghana.

It will also help the firms to properly utilize their resources, increase their profitability and

growth.

Again, this study would inform researchers and firms why consumers do not follow

through the whole consumer decision process before making a purchase decision and the

implications of consumer behaviour on sales.

Finally, the study will add knowledge to academia and also form basis for further research

endeavours into the topic or other related topics.

1.6 Overview of Research Methodology

The researcher employed both quantitative and qualitative research technique. The main sources

of material for this study were primary and secondary data. Primary data was gathered from

Watanmal Group employees and customers through a well structured questionnaire. The

questionnaires were structured into four sections; the first section captured respondent's

demographic characteristics and the other three sections will help achieve the research objectives.

The secondary data on the other hand was extracted from relevant articles/reports, journals,

textbooks, newspapers, documents and reports presented by scholars, policy makers and

government agencies. The targeted population for this study was employees and customers of

Watanmal Group. A simple random technique was used to select respondents for this study. The

data collected from the field was first be screened to detect any errors and then later coded and

analyzed with the help of SPSS and Microsoft Office Excel. The findings of the research was

presented in Tables, hectograph and pie chart.

1.7ScopeofResearch

The study is mainly conducted to assess the effect of sales promotion activities on consumer

buying behavior. This study will be limited to the employees and customers Watanmal Group. A

limited number of 100 respondents will be selected for the study.

1.8LimitationoftheResearch

As a final year student the main constraints to this study was time. This is because I had to combine

regular academic work to this research work. The other limitations of the study was finance and

getting all respondents to respond to the questionnaires.

1.9OrganizationoftheResearch

The research so far has defined the problem and set the objectives of the study. The project work

was organized into five chapters as follows;

Chapter One

Chapter one looks at the general introduction of the study. It covers the studies background,

problem statement, the research objectives and questions, justification of the study, its scope,

limitation and how the entire project work was organized.

Chapter Two

Chapter two reveals relevant literature on effect of sales promotion activities on consumer

behaviour. Several concepts used in the study was also defined and explained in this chapter.

Empirical studies on sales promotion and consumer behaviour is also captured in this chapter.

Chapter Three

This chapter discusses in detail the methodology that was employed for data collection in the study.

The chapter also gives a brief overview of the study area; Watanmal Group.

Chapter Four

Chapter four discusses and analyzes research data collection against the backdrop of the research

objectives and also seeks to provide interpretations of the findings that would emanate from the

data analysis.

Chapter Five

This chapter concludes the study and presents summaries of recommendations and conclusions

and its implications for further research work.

CHAPTER TWO

LITERATUREREVIEW

2.0Introduction

This chapter explains the concepts of the study. Related literature concerning the research topic is

also reviewed in this chapter. It focuses primarily on concepts of sales promotion, concepts of

consumer behaviour and the effects of sales promotion on consumer buying behaviour.

2.1ConceptofSalesPromotion

Several literatures reviewed indicate that, there is no common or single definition of sales

promotion. Various definitions of sales promotion have been given by many researchers and

authorities in marketing communications. Sales promotion has been used to represent at least three

different concepts: i) Marketing Communication (Anderson, 1982), ii) The entire marketing mix,

iii) a catch-all for all communication instrument that do not fit in the advertising; personal selling

or public relation subcategories (Van Waterschoot and Van den Bulte, 1992).

2.1.1DefinitionofSalesPromotion

According to Zallocco & Kincaid (2008), promotion is the deliberate attempt on the part of the

individual business or other institution to communicate the appropriate information in a manner

persuasive enough to include the kind of acceptable response desired.

Sales promotion has been defined by the Advertising Standard Authority's (ASA) as those

marketing techniques which are used, usually on a temporary basis to make goods and services

more attractive to the consumers by providing some additional benefit whether in cash or in kind,

Mercer (2002).

Brussel (1991) defined sales promotion in relevance to the other forms of marketing

communication. He indicated that sale promotion consists of those marketing activities other than

advertising publicity and personal selling that stimulate customer purchasing.

William & Ferrell (1987) also defines sales promotion as an activity that act as a direct inducement,

offering added value or incentive for a product to resellers, salesperson or customers.

In addition to the above, Sales promotion has been defined as `a direct inducement that offers an

extra value or incentive for the product to the sales force, distributors, or the final consumer with

the primary objective of creating an immediate sale' (Haugh 1983). Belch and Belch (2003) and

George (1998) have proposed a similar definition.

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Details

Titel: Effect of Sales Promotion Activities on Consumer Buying Behaviour. A Case Study of Watanmal Group
Autor: Anthony Abaidoo (Autor:in)
Jahr: 2015
Seiten: 50
Katalognummer: V373127
ISBN (eBook): 9783668532915
ISBN (Buch): 9783668532922
Dateigröße: 749 KB
Sprache: Deutsch
Schlagworte: Sales Promotion Buying Behaviour Watanmal
Preis (Ebook): US$ 19,99
Preis (Book): US$ 28,99

Arbeit zitieren: Anthony Abaidoo (Autor:in), 2015, Effect of Sales Promotion Activities on Consumer Buying Behaviour. A Case Study of Watanmal Group, München, Page::Imprint:: GRINVerlagOHG, https://www.diplomarbeiten24.de/document/373127