INFLUENCE OF SALES PROMOTION ON CONSUMER DECISION: A STUDY OF UNILEVER NIGERIA PLC, APAPA, LAGOS

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CHAPTER ONE

INTRODUCTION

 1.1 BACKGROUND TO THE STUDY

Sales promotion has become a vital tool for marketers and its importance has been increasing significantly over the years. It is not enough for a business to have good products sold at attractive prices. To generate sales and profits, the benefits of products have to be communicated to consumers. Sales promotion is defined as a œkey 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 (Kotler, 2002).

Promotion is seen from dimension and different scholars, professional bodies and associates have been given various definitions of promotion. Nevertheless, it is indeed noteworthy that each definition is unique. Promotion is a vital component of marketing and an integral aspect of or complex social economic system. Blackwell, Miniard and Engel (2001) provide a revised definition for sales promotions: a range of marketing techniques designed within a strategic marketing framework to add extra value to a product or service over and above the œnormal offering in order to achieve specific sales and marketing objectives. This extra value may be a short-term tactical nature or it may be part of a longer-term franchise-building program.’

Sales promotions set in motion a complex interaction of management decisions and consumer decision. If managers are ever to assume the œdriver’s seat in this interaction, they must understand not only how but also why consumers respond to promotions (Brown, 2007). The field of consumer decision provides a rich collection of concepts and theories that shed light on this question. Sales promotion is sometimes considered as an activity of less importance but companies increasingly realize the importance of having a well planed and structured program for sales promotion. All businesses need to communicate to the consumer what they have to offer (Bucklin, Gupta and Siddarth, 1998).

According to Schmitt (2011) sales promotions are generally time-bound programs that require participation on the part of the consumer through either immediate purchase or some other action. The fundamental goals of sales promotion are tactical, strategic, and ultimate. The tactical goals are to combat a competitor’s increase in market share, to combat other competitors’ promotional efforts, and to move brands that are either declining, overstocked, damaged, or not selling fast enough.

The majority of past studies on the effectiveness of consumer sales promotion have focused on monetary sales promotions (Jones, Haskett, Loveman, Sasser and Schlesinger, 1994). However, in practice, a range of both monetary and non-monetary sales promotions are used Fishbein and Ajzen (1975) and there are important differences between them. Monetary promotions (e.g., shelf-price discounts, coupons, rebates and price packs) tend to provide fairly immediate rewards to the consumer and they are transactional in character; non-monetary promotions (e.g., sweepstakes, free gifts and loyalty programs) tend to involve delayed rewards and are more relationship-based.

The International Chamber of Commerce (ICC) also defined sales promotion as: Marketing devices and techniques which are used to make goods and services more attractive by providing some additional benefits, whether in cash or in kind, or the expectation of such a benefit.

Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase. Examples of devices used in sales promotion include coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes (Dolak, 2010).

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, œhow they evaluate it after the purchase and the impact of such evaluations on future purchases, and how they dispose it off (Schiffman and Kanuk, 2004). There are various factors such as social and economic factors which influence the consumer behavior but culture is the œfundamental determinant of consumer behavior (Kotler, 2002).

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 (Blanton and Christie, 2003). Promotion is one of the elements of marketing mix  among other elements like Product, Price, and Place of marketing.

Sales promotion is used to reduce dissonance and in turn the risk involved in the purchase process of a consumer. The risk could be financial, functional, social or psychological. Sales promotion can be used both for shaping of new behaviour as well as reinforcing existing behavior. Tougher market conditions and complexity of modern business have led managers to make frequent use of sales promotions. With sales promotion becoming an integral component of brand building strategy, innovative forms of sales promotions have started emerging (Pickton and Broderick, 2005).

Sales Promotion brings an interactive dialogue between an organization and its customers and it takes place during the pre- selling, selling, consuming and post- consuming stage. Such promotional elements include: sales promotion, advertising, sales force, public relation and direct selling.

Most promotional organizations use price as a tool for sales this may apply only if the target population are aware of the existence of these products. Others use quality products and the accessibility of these products will directly reflect in the consumer decision (Bhattacharya and Sen, 2003).

 1.2 STATEMENT OF THE PROBLEM

A delay in sales promotion might result in a delay in consumer decision to purchase the product of their choice. Challenges encountered in sales promotion are stated below

Temporary Incentive: sales promotion gives a short-term inducement of value offered to arouse interest in buying a good or service. It is offered to intermediaries as well as consumers inform of coupons, rebates samples and sweepstakes’.

Short-term again: most sales promotions are oriented toward short-term gain 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. Foskett (1999) argues that sales promotions cannot be the sole basis for campaign because gains are often temporary and sales drop off when the deal ends so that advertisement is often used to convert the customer who tried the product because of sales promotion into a long-term buyer.

Psychological effect: Kotler (1994) noted that if sales promotion is conducted continuously, they lose their effect. Customers begin to delay until a coupon is offered or they question the product’s value.

Therefore, when organizing sales promotion firms can direct sales promotion to ultimate consumers, that is, Consumer-oriented sales promotion to support a company’s advertising and personal selling.

1.3 AIMS AND OBECTIVES OF THE STUDY

The main purpose of this research is to examine the influence of sales promotion on consumer decision. Other objectives include:

1. to evaluate the influence of sales promotion on consumers’ decision;
2. to show the effect of sales promotion on organizational sales volume;

3. to examine the effect of promotional factor on the purchasing power of consumers?
4. to find out how promotional factors affect the purchasing power of the consumers; and
5. to determine the effect of sales promotion on the willingness of customers to purchase.

 1.4 RELEVANT RESEARCH QUESTIONS

In assessing the purpose of the study, this research project will answer the following questions:

1. Will sales promotion have any effect on consumer decision?
2. Does sales promotion have effect on organizational sales volume?

3. Does a promotional factor affect the purchasing power of consumers?
4. Can sales promotion affect the attitudes of customers towards the product/company?
5. Can sales promotion affect the willingness of customers to purchase?

 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:

H_o1: Sales promotion does not have any significant influence on consumer decision.

H_o2: Sales promotion does not affect the organization sales volume.

H_o3: Promotional factor does not affect the purchasing power of consumers.

 1.6 SIGNIFICANCE OF THE STUDY

It is hoped that the findings and recommendations of the study will be of great benefit in 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.

The study will also help sales managers 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.

It will enlighten the management of organizations on the positive effect of sales promotion on the productivity of an organization.

1.7 SCOPE OF THE STUDY

This research work aimed to examine the influence of sales promotion on consumer decision with a view to Unilever Nigeria Plc, Apapa, Lagos.

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 OPERATIONAL 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 (cognitive process) resulting in the selection of a course of action among several alternative scenarios. Every decision making process produces a final choice.

 Environment: Environment (systems), the surroundings of a physical system that may interact with the system by exchanging mass, energy, or other properties.

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

Blackwell, R. D. Miniard, P. W., and Engel, J. F. (2001). Consumer Behavior. Forth Worth, TX: Harcourt College Publisher.

Brown, A. (2007). Consumer Buying Behavior. [Online] Available:http://www.udel.edu/alex/chapt6.html (August 27, 2009).

Bucklin, R., Gupta, S., and Siddarth, S. (1998). Determining segmentation in Sales Response Across Consumer Purchase Behaviors. Journal of Marketing Research, 35(2), 189.

Jones, T. O., Haskett, J. L., Loveman, G. W., Sasser, W. E., and Schlesinger, L. A. (1994). Putting the Service-Profit Chain to Work. Harward Business Review , 172 (2), 164-174.

Schmitt, B. (2011). The consumer psychology of brands. Journal of consumer psychology , 11.

Fishbein, M., and Ajzen, I. (1975). Belief, Attitude, Intention and Behaviour. An Introduction to Theory and Research. Reading, Mass: Addison-Wesley

Kotler, P. (2002). Marketing management. 11th ed. London: Pearson International; 2002.

Pickton D, Broderick A. (2005). Integrated marketing communications. 2nd ed. Harlow: Prentice Hall

Bhattacharya, C. B., and Sen, S. (2003). Consumer“company identification: Aframework for understanding consumers’ relationships with companies. Journal of Marketing, 67(2), 76-88.

Blanton, H., and Christie, C. (2003). Deviance regulation: A theory of action and identity. Review of General Psychology, 7(2), 115-149.

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