Impact Of Sales Promotion On Consumer Purchase Decisions Of Nestle Products In Lagos

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Impact Of Sales Promotion On Consumer Purchase Decisions Of Nestle Products In Lagos


Abstract


Sales promotion is a marketing strategy which has been studied for years and has become a crucial factor in modern marketing. This research paper investigates the impact of sales promotion on the consumer purchase decisions of nestle products in Lagos, Nigeria. The study was guided by the following specific objectives: to find out the impact of sales promotion on the sales and consumption of Nestle products in Lagos, Nigeria. Structured questionnaire was used to collect data from seventy-three (73) respondents from the company’s sales department and its agents through purposive sampling method. Descriptive statistics, correlation and multiple regression was used to analyze data. Statistical Package for Social Sciences (SPSS 20) software was used to analyze the data. Result shown that sales promotion dimensions such as price discount, buy one get one free and were joint predictors of sales volume. The predictor variables jointly explained 37% of the variance of sales volume, while the remaining 63% could be due to the effect of extraneous variables such as pricing, brand name, product quality etc. All the independent variables are positively and directly related to dependent variable particularly in Nestle products in Lagos, Nigeria the findings have been summarized systematically answer the research questions and objectives. It was concluded that management of the company should increase budget on sales promotion dimensions and also set up more and effective sales promotion activities which could address customers and consumers to meet the stated objectives.


Chapter One


Introduction

1.1. Background of the Study

The business environment has become very competitive in the 21st century due to the growth in technology, infrastructure and access to information around the globe. This has made the environment very complex and consumer preferences keep changing because of the low switching cost in the market. Due to this increasing demand of consumers in the market, management of business organizations have to increase their resources with attention focused more on attracting and retaining its customers (Kotler, 2003).

The main aim of any organization is to maximize profit, have largest market shares and to become leader in a market competitive environment. The ultimate objective of every business is to increase the sale of goods that it deals in. Several methods can be adopted for the achievement of this goal; some direct while others indirect. Sales promotion is one of them. Sales promotion is defined as a “diverse collection of incentive tools, mostly, short term designed to stimulate quicker and/or greater purchase of particular products/services by consumers” (Kotler, 1998).
The ever increasing competition in the global market has prompted organizations to be determined and ensure satisfaction of customer needs and wants more efficiently and effectively than ones competitors (Kotler, 1988). Sales promotion is an initiative undertaken by organizations to promote and increase sales, usage or trial of a product or services (Aderemi, 2003). Sales promotion refers to the provision of incentives to customers or to the distribution channel to stimulate demand for a product. It is an important component of an organizations overall marketing strategy along with advertising, public relations and personal selling. Sales promotion acts as a competitive weapon by providing an extra incentive for the target audience to purchase or support one brand over the other. It is particularly effective in spurring product trials and unplanned purchases (Aderemi, 2003).

A sales promotion strategy is an activity that is designed to help boost the sales of a product or service. This can be done through an advertising campaign, public relation activities, a free sampling campaign, a free gift campaign, a trading stamps campaign, through demonstrations and exhibitions, through prize giving competitions, through temporary price cuts, and through door to-door sales, telemarketing, personal sales letters, and emails. The importance of a sales promotion strategy cannot be underestimated. This is because a sales promotion strategy is important to a business boosting its sales (Aham, 2008).

It is quite evident level that no business organization that desire to survive can afford to neglect the importance of sales promotion in the marketing of its product or services. The role of sales promotion in achieving organizational stated objectives cannot be underestimated. It is on the basis of this invaluable contribution to organizational success that, effort were made to find out the impact of sales promotion on consumer purchase decisions in Nestle products in Lagos, Nigeria.

There are more than 20 brands and 6 breweries in Nigeria. In the last two decades, the industry has evolved into one of the most competitive arena in the food and beverages sector attracting giant foreign companies. Among those foreign companies Nigerian Brewery, the world renowned brewery, with the presence in 84 countries, operating over 165 breweries producing 254 brands.


1.2. Statement of the Problem

The purpose of sales promotion is to motivate the customers to immediately purchase a particular product thus enhancing its sales volume (Sadia and Syeda, 2012). The beverage industry is influenced by seasoned fluctuations and climatic changes coupled with depression in the economy. The sensitivity of the beverage industry often lead to sales decline, erosion of market share, low capacity utilization, reduction in overall industrial output and colossal loss of profit. Thus the success of any beverage firm that wishes to sustain the acceptability of its product hands on its intensive sale promotional activities. Nestle is also intensively undertaking sales promotion with different brands to stimulate the sales, for example; price discount, sampling, bonus, buy one get one free, different gift packages, point of sales materials and the like. So, the question is “could sales promotion if adopted as one of the problem solving behavior to help the sales”. It is in the light of this question that the researcher is motivated to conduct a study on sales promotion with reference on the Nestle products in Lagos, Nigeria. However, one unbearable difficulty of sales promotion is the difficulty in measuring its direct contributions to sales. This study therefore, sought to determine the impact of sales promotion on purchase decision of Nestle products in Lagos, Nigeria.


1.3. Research Question

Main Research Question

What is the Impact of sales promotion on consumer purchase decisions?

Sub – research questions
  1. How does product price discount contribute to the increase in sales volume?
  2. What is the effect of buy one get one promotions on customers buying decision?
  3. What is the effect of bonus on the company’s sales?

1.4. Objective of the Study

1.4.1. General Objective of the Study

The general objective of this study is to determine the Impact of sales promotion on consumer purchase decisions and consumption of Nestle products at Lagos, Nigeria.

1.4.2. Specific Objectives

This research is designed

  1. To establish effect of product price discount to the increase of sales volume.
  2. To determine the effect of buy one get one promotion to customers buying decision.
  3. To determine the effect of bonus on company’s sales.

1.5. Significance of the Study

Academically, the study will inform the researcher more on the impact of sales promotion on consumer purchase decisions, thus being a good marketer. The study is also relevant in that it seeks to identify the roles sales promotion plays in the marketing strategies and achievement of organizational goals and objectives.

The contribution of this study to the economy though arguable can be seen in the adoption of promotional tools that create value for customers. This study will add to the literature on sales promotion in the Nigerian beer industry context taking one of the breweries as a case study.

The outcome of this study would be relevant to different companies to determine the various factors that influence the sales and adjust their sale promotion strategies accordingly.


1.6. Scope Of The Study

The study examines the Impact of sales promotion on consumer purchase decisions of Nestle products in Lagos, Nigeria. From the various sales promotion tools the researcher took only three of them which, the company is current using widely. Buy one get one free, bonus and product- price discount. The study for reasons of limited resources and time constraints, the data collection will be carried out based in Lagos State. And also the study will not go into the administrative and financial aspect of the company but only limited to finding out the impact of sales promotion in the marketing of their products.


1.7. Limitation of the Study

The Study will focus on the Impact of sales promotion on consumer purchase decisions on Nestle, which is based on only Lagos State’s market taking as a sample. Hence, the geographical and demographic differences of customers and consumers, it is difficult to generalize the impact each sales promotion has on these different market structures. And the study may have a limitation of finding secondary data.


1.8. Organization of the Study

This paper is organized with five chapters. The first chapter provides an overview and introduction to the study stating statement of the problem, research questions, objective of the study, scope, limitation and significance of the study. The second chapter gives related literature review with specific emphasis on the theoretical and empirical features. Chapter three covered the research design and methodology of the study. It describes the type and design of the research; the subject and participants of the study; as well as the data collection tools applied and methods of data analysis. The purpose of this chapter is to make the reader understand the nature of methodological choices made on this study. The fourth chapter includes analysis and results of the collected data. The fifth chapter summarizes the findings from chapter four and draws conclusions. Finally, the recommendation part will be presented.


1.9. Definition of Terms

The key terms that will be used here are defined thus

Price Discount

Manufacturers offer consumers products at reduced price from regular price of a product. Price-offs mean that the manufacturer marks the merchandise that the customer could accurately see that the price is lowered (Fill, 2002).

Bonus

Is a manufacturer’s sales promotion technique of giving the buyer an extra quantity of a product at the usual price.

Buy One Get Free

In a common sense that if you buy a product, you get another product for no cost, by means of this method the consumer can be easily attracted to buy the product for the reason that there is no additional cost and it should be more valued by the consumer perspective, (Sinha & Smith, 2000)

Sales Promotion

Short term incentives to encourage purchases or sales of a product or services.

Sales

Is the measurement of sales activity against the goals outlined in your sales plan.

Agents

A person or company that buys products from a manufacturer and sells them for a profit to other businesses, stores, or customers, often by transporting the goods to different places.


Chapter Five


Summary, Conclusions and Recommendations

This chapter presents summary of findings, conclusion and recommendations for the study. Specifically, the study sought to examine sales promotional activities used by Nestle products in Lagos, Nigeria, the relationship between sales promotion and sales of Nestle products in Lagos, Nigeria, examine the Impact of sales promotion on consumer purchase decisions of the company and identify challenges affecting sales promotion activities undertaken by Nestle products in Lagos, Nigeria.


5.1. Summary of Findings

In order to accomplish the set objectives the researcher distributed 73 questionnaires to sample respondents (employees of Nestle in Lagos, Nigeria of sales department for Lagos State territory, and Company’s agents) and collected 70 completely filled questionnaires for data analysis.

The computed mean score of the price discount as shown on the above analysis table are 3.8229 and the standard deviation of .5814, Bonus mean score is 3.2829 and standard deviation is .84476, Buy one get one free mean score is 3.6371 and standard deviation is .51897 and Sales mean score is 3.8500 and standard deviation is .51792. So starting from the above mean and standard deviation values most of the response portrayed is towards agrees. This implies that Nestle products in Lagos, Nigeria price discount, bonus and buy one get one have strong attachment with the sales of the company.

The regression result obtained also indicated that all the coefficients of the independent variables are statistically significant. Meaning that price discount, bonus and buy one get one have an effect on sales of NestleLagos, Nigeria. R² =.37 is moderate indicating that the model is fitting well to the data which means 37% of the variation in the dependent variable (Sales) was explained by the independent variables (price discount, bonus and buy one get one free).

In addition to this, the correlation analysis and its result show a positive and significant association between the independent and dependent variable. All the independent variables (price discount, bonus and buy one get one free) are found to be positively related with the dependent variable (sales). It is the Buy one get one free that is the most highly related with the sales (r = 0.557 with p-value = 0.000). Whereas the correlation between bonus and price discount, are r = 0.349 with p = 0.000, r = 0.486 with p = 0.000, respectively.


5.2. Conclusion

The result shows that all sales promotion dimensions are independently and jointly predict sales. This implies that the sales promotion activities conducted currently by the Nestle Lagos, Nigeria, (Sales promotion is any initiative undertaken by an organization to promote an increase in sales, usage or trial of a product) which are; price discount, bonus, and buy one get one free have significant effect on sales. From the findings, sales promotion is said to have significant effect on organizational performance. On the basis of the findings of this study, it can be concluded that sales promotion have significant influence on sales.


5.3. Recommendation

To deal with the question of whether sales promotion affects sales, the study supported the position that sales promotion has a positive and significant effect on sales. However, it is recommended that management periodically evaluates the contribution of sales promotion relative to other promotional tools. Nestle products in Lagos, Nigeria should endeavor at all time to have a planned and systematic sales promotion activities in place as this would help to make such promotional implementation effective.

The study found that sales promotion tools has strong influence on sales which means if the company wants to achieve its stated objectives, they should take into consideration of price discount, buy one get one and bonus.

Furthermore, management of Nestle products in Lagos, Nigeria should increase budget on sales promotion dimensions and also the company should set up more and effective sales promotion activities that can address customers and consumers in line with the company’s objectives.


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