IMPACT OF SALES PROMOTION ON CONSUMER DECISION-MAKING- A STUDY OF DANGOTE FLOUR MILL IN APAPA, LAGOS, NIGERIA
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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Promotional elements are used by various organizations to influence consumer decision. Marketers use numerous tools to elicit responses from target markets. These tools are known as the marketing mix that is defined as the set of tools that a firm uses to pursue its marketing objectives in the target market. Promotion is one of the elements of marketing among other elements like Product, Price, and Place of marketing (Kotler, 2000).
According to Kotler (2003), 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 particular products or services by consumers. Sales promotions programmes are those activities other than stimulate consumer purchase.
Achumba (2002) defined sales promotion as those marketing activities, other than personal selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness, such as displays, shows and expositions, demonstration etc. 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 ultimate consumer with the primary objective of creating an immediate sale (George, 1998).
Consumer decision focuses on how consumers choose what to buy, why to buy, when to buy, where to buy and how often they buy, how frequently they use it, how they evaluate it after the purchase and the impact of such evaluations on future purchases, and how they dispose it off (Schiffman & Kanuk, 2004). There are various factors such as social and economic factors which influence the consumer decision but culture is the fundamental determinant of consumer decision (Kotler, 2003).
Massy and Frank (1965) investigated the short term effects of temporary price discounts and found that both brand-loyal and non-loyal buyers responded to a discount promotion. Hinkle (1965) argued that a brand’s age may influence the extent to which a price discount can increase its share. He found that price discounts were most effective with new brands, which tended to achieve higher gains with smaller price reductions than more established brands.
More than a decade later, most marketers believe that a given product or service has an established perceived price or value, and they use sales promotion to change this price value relationship by increasing the value and/or lowering the price compared with other components of the marketing mix (advertising, publicity, personal selling).
More so, sales promotion tends to work best when it is applied to impulse items whose features can be judged at the point of purchase, rather than more complex, expensive items that might require hands on demonstration. Sales promotion includes communication activities that provide extra value or incentives to ultimate consumers, wholesalers, retailers or other organizational customers. It also stimulate sales, product trial (Kotler & Kelvin, 2006).
1.2 STATEMENT OF THE PROBLEM
Most promotional organizations are bedeviled with the cost involved in carrying out a promotional programme. The challenges encountered in sales promotion are buttressed below:
Bonus packs give a short-term inducement of value offered to arouse interest in buying a good or service and which may in turn affect the running cost of an item. Improper evaluation of the cost of bonus packs during sales promotion can have negative effect on organizational sales volume.
Manufacturers who promote their brands by way of temporary price discounts may, in the short term, induce buyers of competing brands to purchase their product, but observation from experts shows that price discounts do not usually have a permanent effect on consumers’ brand preferences.
Jingles in sales promotions are oriented toward momentary stimulation of consumer decision rather than long-term reputation, which is a problem in and of itself as most standard organizations are geared toward the long-term health of a product. Experts argue that jingles cannot be the sole basis for campaign because stimulations are often temporary and sales drop off when jingles come to an end.
Reducing the price of items during sales promotion may increase patronage and sales of items, but may in turn have an adverse effect on the cost of production and overhead cost of the organization.
The research intends to investigate the frequent recur of low sales after sales promotion activities which in turn affect the organization’s sales volume and financial portfolio.
1.3 AIM AND OBJECTIVES OF THE STUDY
The main purpose of this research is to examine the effect of sales promotion on consumer decision-making. Other objectives include the following to:
- Evaluate the influence of price discount on organizational profitability;
- Examine the effect of bonus on organizational sales volume;
- Examine the effect of jingles on consumer purchase decision; and
- Examine the perceived effect of low price on organizational performance.
1.4 RELEVANT RESEARCH QUESTIONS
In assessing the purpose of the study, this research project will answer the following questions:
- Does price discount has any effect on organizational profitability?
- Does sales bonus affect the organizational sales volume?
- Do jingle influence consumer purchase decision?
- Does perceived low price has any effect on organizational performance?
1.5 RELEVANT RESEARCH HYPOTHESES
In carrying out this research work the following theoretical statements are buttressed to serve as a direction on which the work will be premised:
- Ho: There is no significant relationship between price discount and organizational profitability.
H1: There is significant relationship between price discount and organizational profitability.
- Ho: There is no significant relationship between sales bonus and organizational sales volume.
H1: There is significant relationship between sales bonus and organizational sales volume.
- Ho: There is no significant relationship between jingle and organizational performance.
H1: There is significant relationship between jingle and organizational performance.
- Ho: There is no significant relationship between low price and organizational performance.
H1: There is significant relationship between low price and organizational performance.
1.6 SIGNIFICANCE OF THE STUDY
It is hoped that the findings and recommendations of the study will be of great benefit through the following ways:
The study will broaden students understanding about the importance of sales promotion in any business environment and it effects on sales volume.
The study will be of great benefit to the public by bringing to their awareness about the existence of a product and its value in the society plus it effect on organizational performance.
The study will also help sales manager to monitor the trend of the market and the consumption pattern in order to establish an interactive dialogue between an organization and its customers. It will also help the sales personnel to reposition their branding and marketing strategy in the society in order to attract and retain their target market.
1.7 SCOPE OF THE STUDY
This research work examines sales promotion and consumer decision-making with a view to understudy Dangote Flour Mill in Apapa, Lagos, Nigeria. The study as perceived might face some logistic challenges in term of the time and the costs involved in carrying out the research, but nevertheless, it would endeavor to accomplish its aims and objectives.
1.8 DEFINITION OF TERMS
Consumer: A consumer is a person or group of people that are the final users of products and or services generated within a social system. A consumer may be a person or group, such as a household.
Decision: Decision can be regarded as the mental processes (cognitve process) resulting in the selection of a course of action among several alternative scenarios. Every decision making process produces a final choice.
Influence: Influence is the action or process of producing effects on the actions, behavior, opinions, etc., of another or others.
Purchase: This refers to a business or organization attempting for acquiring goods or services to accomplish the goals of the enterprise.
Promotion: something devised to publicize or advertise a product, cause, institution, etc., as a brochure, free sample, poster, television or radio commercials, or personal appearance.
Organization: An organization is a social group which distributes tasks for a collective goal.
Sales: The exchange of goods or services for an amount of money or its equivalent; the act of selling.
REFERENCES
Achumba, I. (2002). Sales Management Concepts, Strategies and Cases. AI-Mark Education Research.
Frank (1965). Innovative Sales Promotion Techniques among Hong Kong Advertisers- A Content Analysis Innovative Marketing, 4 (1), 8- 15.
George, J. (1998). Contemporary Management. 3rd Edition Mc Graw Hill.
Hinkle, L. (1965) Impact of Promotional Schemes on Buying Decisions of a Consumer International Journal of Sales and Marketing Management Research and Development, 2 (2), 40- 48.
Kotler, A. (2000). Goal setting and goal striving in consumer behavior, Journal of Marketing, pp. 19-32
Kotler, P. (2003). Marketing Insights from A to Z, Published by John Wiley & Sons, Inc., Hoboken, New Jersey. PP. 1-8
Kotler, P. and Kelvin, L. (2006). Top Management’s Concerns About Marketing: Issues for the 1980’s, Journal of Marketing, pp. 83-93
Schiffman, K. and Kanuk, J. (2004). (2007). Modern Marketing. Revised Edition. New Delhi: S. C hand and company Ltd.
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