Impact Of Sales Promotion On Buying Decision (A Case Study Of Globacom Nigeria Limited)

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Impact Of Sales Promotion On Buying Decision (A Case Study Of Globacom Nigeria Limited)


Abstract


The depressed nature of Nigerian economy has weakened the purchase power of consumers of products and services. The research survey has critically examined the effect which sales promotion has on Globacom Nigeria Limited together with the resultant effect on customers buying behaviour and the level at which customers try and adopt their offerings.

The major tools use in collection of primary and secondary data were the use of 100 administered questionnaires which was distributed among executives of Globacom Nigeria Limited, the marketing intermediaries (wholesalers, retailers and distributors) and the consumers of the product. Consultation of previous materials on the related research topic was also employed.

Research question and hypothesis were equally raised which were analyzed using regression analysis. The hypotheses tested were:

  1. Sales promotion has no significant impact on the buying behaviour.
  2. Sales promotion does not lead on repeat purchase and product loyalty.

It was revealed that sales promotion has a great effect on customers buying behaviour and also contributes towards the sales of Globacom Nigeria Limited.


Table of Contents


  • Page
  • Title
  • Certification
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of Contents

Chapter One:

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Research Questions
  • 1.4 Objectives of the Study
  • 1.5 Significance of the Study
  • 1.6 Scope of the Study
  • 1.7 Definition of Terms
  • 1.8 Brief write-up on case study: GLOBACOM Nigeria LTD

Chapter Two:

Literature Review

  • 2.1 Nature of Sales Promotion
  • 2.2 Sales Promotion objectives and uses
  • 2.3 Growth of Sales Promotion
  • 2.3.1 External Factors
  • 2.3.2 Internal Factors
  • 2.4 Sales Promotion Methods and Tools
  • 2.4.1 Sales Promotion tools used by Retailers
  • 2.4.2 Sales Promotion Techniques for New Products
  • 2.4.3 Sales Promotion Tools for Established Products
  • 2.4.4 Sales Promotion Methods for Resellers
  • 2.5 Major Decisions involved in Sales Promotion
  • 2.5.1 Major Decisions involved in Sales Promotion
  • 2.5.2 Selection of a Sales Promotion Tools
  • 2.5.3 Development of Sales Promotion program
  • 2.5.4 Pre-Testing of the Sales Promotion program
  • 2.5.5 Implementation and control of the Sales Promotion Program
  • 2.5.6 Evaluation of the Sales Promotion Results
  • 2.6 Limitations of Sales Promotion Results
  • 2.7 Consumer Buying Behaviour
  • 2.8 Decision Process of a Consumer
  • 2.8.1 Complex Buying Behaviour
  • 2.8.2 Dissonance reducing Buying Behaviour
  • 2.8.3 Habitual Buying Behaviour
  • 2.8.4 Variety-Seeking Buying Behaviour
  • 2.9 Stages of the Buying Decision Process
  • 2.9.1 Problem Recognition
  • 2.9.2 Information Search
  • 2.9.3 Evaluation of Alternatives
  • 2.9.4 Purchase Decision
  • 2.9.5 Post-Purchase Behaviour
  • 2.10 Factors influencing consumer Buying Decision
  • 2.11 Effect of Sales Promotion on Buying Decision

Chapter Three:

Research Methodology

  • 3.1 Introduction
  • 3.2 The Study Population
  • 3.3 Sampling size and Sampling technique
  • 3.4 Method of Data Collection
  • 3.6 Method of Data Analysis
  • 3.7 Regression Analysis
  • 3.8 Research Hypothesis

Chapter Four:

Presentation and Analysis of Data

  • 4.0 Presentation and Analysis of Data
  • 4.1 Frequency Tables for Executives
  • 4.2 Frequency Table for Middlemen
  • 4.3 Frequency Table for Consumers
  • 4.4 Frequency Table for other questions
  • 4.5 Test of Hypothesis
  • 4.6 Discussion of Results

Chapter Five:

Summary of Findings, Conclusion and Recommendation

  • 5.1 Introduction
  • 5.2 Summary of Findings
  • 5.3 Conclusion
  • 5.4 Recommendation
  • References
  • Appendix:
  • Questionnaire

Chapter One


Introduction

1.1 Background of the Study

After the advent of industrial revolution, machines were introduced into the production system to boost the production of goods and services and this brought about large number of goods available for sales. In this regard, consumers were exposed to variety of products and were required to select the product which will give them the optimum satisfaction they desired according to their needs.

Companies on the other hand were interested in boosting their image, achieving high sales, maximizing profit and at the same time gaining competitive advantage over others. In the light of the foregoing for a company to excel above its competitors, it has to employ certain marketing strategies to attract the attention and triggered the interest of its consumers.

When a consumer goes shopping, he or she implicitly, or explicitly, has to make four key decisions for each product category. Whether to buy in the category and, if so, where (which store), which brand, and what quantity. All four decisions may be influenced by consumer characteristics (e.g., income, family size, purchase frequency) and by the marketing environment (e.g., the prices and promotion activities of the various brands and stores). Marketing mix variables can affect these four decisions to differing degrees.

In recent years, consensus have it that spending on sales promotion by firms in most developed and some developing countries of the world has significantly overwhelmed those on advertising. This is not surprising when its inevitable role in complementing other methods of product promotion in order to achieve short-term gains is considered. Sales promotion involves gaining consumer loyalty, increase repeat purchase and facilitate profit maximization. Promotion campaigns are probably the most important of four marketing mix element: product, price, place and promotion that can help to solve company’s problem and gain competitive advantage if well implemented.

The greatest disadvantage of sales promotion lies on its long-term ineffectiveness, even though it accounts for over 65 percent of a typical marketing budget. This is the result of the research work by Abraham and Lodish in (1990). However, further efforts by Perreault and Mccarthy in (2002) submits that sales promotion can instigate a continuous increase in sales in the long-term if it has successfully resulted in brand loyalty, repeat purchase and customer satisfaction in short term.

Furthermore, the issue of getting the most out of each promotional naira has become an increasingly important one. However, some managers’ studies reveal that 80 percent of promotion users are, in fact, loyal customers who presumably would have bought the brand regardless of the promotion (Levine 1989).

Basically, promotion is an exercise that performs the role of information, persuasion and influence to purchase certain products. Promotion also affects the demand elasticity of a product, making the demand inelastic when the price increases and elastic when the price decreases.

The main purpose of promotion is for effective and efficient communication. Basically, the promotion exercise is usually aimed at achieving the following:

  1. Achieving high sales volume, which in turns affects the contribution of profit ratio.
  2. Directing and ensuring that product flow through the appropriate channels till the products get to the final consumers so that wants may be satisfied.
  3. Identification of markets and buyers motives that enables want to be satisfied.

The objectives of promotion are as follows:

  1. To inform that is making the market aware of a new product or service. Promotion informs the market of a price charge, the product or service usage and the available services.
  2. To increase the demand for products and services.
  3. To persuade consumers by building brand name and encouraging consumers to switch to a firm’s brand.
  4. To reduce customer’s fears and anxiety and also to build good company image.
  5. It supports personal selling program.
  6. Reminding customers of where to buy products that are needed immediately and those needed in future, most especially when they are off-season products.
  7. Announcement of special sale.
  8. To introduce new business to the community.

This study will be used to highlight or evaluate the effectiveness of sales promotion on the buying decision of consumers. This is very important as it would bring about rapid growth if the promotional strategies are well planned and implemented.

Finally, marketers should constantly evaluate promotional effectiveness in terms of its ability to make clients or consumers to respond more favourably towards the firm’s product than they would respond towards firms’ competitors. This is because it would provide information about the effectiveness of promotional activities on the management, employees, the sales of the company’s product and competitive advantage relevant to most firms or companies producing and marketing consumer products.


1.2 Statement of the Problem

Major external factors such as socio-economic, regulatory and technological issues have shaped the structure of communication service and also the nature of competition within it. The Nigerian telecommunication industry cannot be isolated from the list of industries where product promotion and incentives are wholly adopted. The reason for this can be associated with oligopolistic nature of the industry. In other words, the major challenge of the telecommunication companies in Nigeria is how to be the choice of majority of the over 140 million interconnected Nigerians.

However, many promotion and sales incentives adopted by companies these days are so ineffective, dull and dreary that they bore the prospective consumer.

However, considering the level of economic resources committed to these promotional mix and program, a good business manager must weigh the cost of a promotion against the expected increase in sales that will result from the promotion rather than “buying sales” at the cost of reduced profit i.e. carry out a cost benefit of the promotion program. A sales promotion is only effective and appropriate if it can prompt its target and it possess a high degree of creativity and flexibility. Obviously since the aforementioned applies to the Nigerian telecommunication sector, there is therefore a void to fill by carrying out this study.


1.3 Research Questions

The following research questions relevant to the study are raised:

  1. How does sales promotion affect increase in sales and to what extent?
  2. What are the factors that influence consumer loyalty of a particular package?
  3. Does sales promotion have a short-term impact rather than long-term impact on buyers’ decision?
  4. What are the impacts sales promotions have on buyers’ buying decision?

1.4 Objectives of the Study

The major objective of the study is to examine the effective sales promotion plans in the Nigerian telecommunication industry and evaluate its impact on buying decision using GLOBACOM Nigeria Limited as a case study.

The specific objectives of the study include:

  1. To examine the impact of sales promotion on customer awareness of the company’s product.
  2. To determine whether sales promotion makes the customers to maintain repeat purchase and have product loyalty.
  3. To identify the problems associated with sales promotion by the company.
  4. To examine the impact of sales promotion or buying decision and levels of satisfaction.

1.5 Significance of the Study

The significance of the study cannot be over-emphasized as the result; it would serve as an aid to different parties, especially the firm of concern (GLOBACOM NIG. LTD). Drawing from the objectives of the study, it should determine the efficacy of sales promotion by the company in order to foster competitiveness and enhance profit.

Moreover, the study will be useful for students, practitioners, marketers, consultants and academicians who value research and have interest in the business and marketing discipline.


1.6 Scope of the Study

Every research work is only effective and useful at drawing reliable conclusions if it concentrates on its objectives. This study is only limited to the sales promotion activities of GLOBACOM NIG. LTD and the respondents for the study are restricted to the Lagos State University and her immediate environment.

Hence, the researcher has chosen to undertake this research work to cover the period of 2009 and 2010.


1.7 Definition of Terms

The following terms are defined as they are used in this study:

Promotion:

Promotion keeps the products in the minds of the customers and help stimulate demand for the product. Promotion involves on-going advertising, sales promotion and publicity.

Marketing:

This is the wide range of activities involved in making sure that the company is continuing to meet the needs of their customers and getting value in return. Marketing also includes analyzing the competitive positioning of new packages or products or services (finding market niche), pricing products or services and promoting them through continued advertising, promotion, customer service and sales.

Sales:

Sales includes various forms of activities. They include marketing prospective buyers (or leads) in a market segment, conveying the features, advantages and benefits of a product or service to the lead and closing the sales (or coming to an agreement on payment and service).

Advertising:

This is bringing a product or service to the attention of potential and current customers. It is typically done with signs, brochures, commercials, direct mailing or email messages, personal contacts e.t.c.

Sales Promotion:

These are other activities other than advertising, personal selling and publicity that stimulate the interest, trial and purchase by final consumers or others in the chain of distribution.

Buying Behaviour:

This is the decision process and acts of final household consumers associated with evaluating buying, consuming and discarding products for personal consumption.


1.8 Brief Write-Up on Case Study: Globacom Nigeria Limited

GLOBACOM Nigeria started operation on August 29, 2003 by Dr. Mike Adenuga, who is the present chairman of the company. GLOBACOM was made known to the people through marketing activities such as sales promotion and advertising.

The company has a reputation of one of the fastest growing mobile service providers in the world and their aim is to be recognized as the best mobile network in Africa.

The company has its headquarters in Lagos, Nigeria. The company consolidated its position by setting up new branches in almost all the states in the country. GLOBACOM also extends outside Nigeria to some West African countries like Benin Republic, Ghana and Ivory Coast.

In the first year of operation, GLO MOBILE boasted of about one million subscribers in over 87 towns. This company provides mobile networks, telecommunication services e.t.c. The Cellular News reports that GLO MOBILE which was sixth at the start of last year has apparently now overtaken MTN NIGERIA as the market leader occupying the forth place on the lost of the largest mobile network operators in the region. GLO MOBILE now has over 25 million subscribers in the last seven years. This company also has the largest roaming coverage for voice and data in the whole of Africa.

In addition, the company has been a dominant player in the Nigerian Telecommunication Industry and has continued to improve her product and services to attract consumer. The company has also embarked on a lot of promotional strategies to boost the sale of their products. The most recent sales promotional strategies embarked upon by GLOBACOM NIGERIA include GLO talk points, GLO 100 crash rate, GLO free night calls among other.


Chapter Five


Summary of Findings, Recommendation and Conclusion

5.1 Introduction

This chapter is intended to present a brief summary of the major findings of this study, draw conclusions and provide some recommendations for the improvement of efficiency and effectiveness of any sales promotion program.


5.2 Summary of Findings

This research is summarized as follows:

  1. The basic objectives of sales promotion is to influence consumer buying decision positively so as to result in overall increase in volume of sales of the company, if the company exercise maximum credibility in its activities.
  2. Sales promotion are not always employed in isolation, more often than not, organization tend to use sales promotional activities in concert with the other promotional mix such as advertising and personal selling to achieve optimum results.
  3. Based on the data collected and analysis in chapter four (4) all the hypothesis were accepted that is sales promotion is very effective in influencing consumer buying behaviour.
  4. It can also be drawn from the data collected that there are some problems associated with sales promotion which include:
    • Frequent sales promotion often gives customers a low impression on the standard of the package because when there is too much sales promotion, it shows the inferiority of the packages.
    • Sales promotion has a short term impact on customers and cannot be run for the purpose of long term.

In selecting sales promotion tools, careful consideration should be given to the product characteristics, market characteristics, sales promotion objectives and cost effectiveness of each tools. If these could be given priority consideration, sales promotion would surely achieve its objectives of increasing buying behaviour of customers for a particular product or package and consequently increase its profitability.


5.3 Conclusion

Based on the findings of this study, it was concluded that sales promotion is very important in any organization that aids in the sales of goods and services.

Consequently, it becomes very necessary for organization to know how to carry out and evaluate sales promotion activities at any given time, so that at the end of such activities, the organization will be able to say precisely whether the promotion activities are successful or not.

Sales promotion is a powerful distribution tool. It as been a vital promotional tools which organization uses to create effective awareness, improve buying behaviour of customers and also help in disposing off the company’s product or packages. As such GLOBACOM Nigeria Limited adopts sales promotion to create awareness of their product in the midst of preventing competition.

From all indications, it can be brought to conclude that sales promotion is very effective in influencing customer buying behaviour.


5.4 Recommendations

Based on the findings of this study, the following are strongly recommended.

  1. The management of GLOBACOM Nigeria Limited should try and improve the quality of sales promotional activities, through incentives.
  2. Promotional exercise should be more of rewards in order to guarantee customer loyalty since anyone who wins in a promotional exercise would feel that he has gained from his or her continuous of GLO packages thereby making him to enjoy continuous patronage.
  3. The company should introduce other incentives which serve as below the line promotion such as keyholders, caps, pens, books, bags, e.t.c. that carry the company’s name. This will always remind the customers of the company’s packages.
  4. Creation of awareness and mass promotional activities should always be embarked upon in order to maintain and win more market for all GLOBACOM packages.
  5. Relationship between management and distributors should be enhanced. They should be ever ready to receive and deal with complaints intelligently.
  6. The sales promotion activities should be monitored. In order to carry out this activity effectively, GLOBACOM Nigeria Limited should lay more emphasis on the sales promotion in a competitive situation.
  7. The management should also accept suggestions from dealers or distributors and sales force on the best period to use sales promotion to increase sales turnover and profit contribution.
  8. Consideration should not only be accorded to sales promotion but that proper organization of the sales promotion program is the main requirement for the success.
  9. Lastly, management of GLOBACOM Nigeria Limited should see the customers as the king because they ensure the existence of the company.

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