THE EFFECT OF SALES PROMOTION ON CUSTOMER PATRONAGE OF BRANDS OF PROMASIDOR LTD

ABSTRACT

Sales promotion plays an important role everywhere in today’s business environment. Many dwindling business are revived by sales promotional activities. This work investigates the effect of sales promotion on marketing performance. The research specifically measures the effect of gift offer, price packs, contest offer, sweepstakes on customers’ level of patronage and purchase behavior. A structured questionnaire was used in collecting data and was analyzed using descriptive statistics and multiple regression analysis. The result shows that there is a positive and significant relationship between sales promotional tools and consumer purchase behaviour. This research would help managers to understand the impact of sales promotion on sales volume of a company and how sales promotion can help to achieve a promotional objective.

TABLE OF CONTENTS

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

1.2     Statement of the Problem

1.3     Objectives of the Study

1.4     Research Questions

1.5     Research Hypotheses

1.6     Scope of the Study

1.7     Significance of the Study

1.8     Limitations of the Study

1.9     Definition of Terms

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1     The Concept Sales promotion

2.2     Conceptual Framework:

2.2.1 Free samples

2.2.2 Prices Incentives

2.2.3 Gift offer

2.2.4 Consumer Contests

2.3     Theoretical Framework

2.3.1  Diffusion of Innovations Theory

2.3.2  The Hierarchy of Effects Theory.

2.3     Empirical Review

CHAPTER THREE

RESEARCH METHODOLOGY

3.1     Research Design

3.2     Area of the Study

3.3     Population of Study

3.4     Sample Size determination

3.5     Sampling Technique

3.6     Sources of Data

3.6.1  Sources of Primary Data

3.6.2  Sources of Secondary Data

3.7     Instrument for Data Analysis

3.8       Validity of the Instrument

3.9     Method of Data Analysis

3.9     Model Specification

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

4.1     Introduction

4.2     Questionnaire Distribution and Return

4.3     Data Analysis: Presentation of Responses

4.4     Test of the Research Hypotheses

4.5     Discussion of Result

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.1     Summary of Findings

5.2     Conclusion

5.3     Recommendations

REFERENCES

APPENDIX: Questionnaire

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

In this world of keen competition, sellers use various tools and strategies to attract customers and increase their profitability. To compete effectively, companies are increasingly tapping from the several strategic tools offered by the marketing mix elements, which include product, price, place, and promotion. Amongst all the marketing mix elements, promotion seems to standout because it communicates to target market about the other marketing mix elements with a view of influencing consumer purchase decision (Onyeke, 2003).

Promotion (sometimes referred to as marketing communications) refers to those activities that informs, persuade, educated, reminds, and influence the target market towards having favorable disposition for the company and its products (Kotler, 2003). James, Martin, and Thomas (1983) opined that promotion in marketing can be classified into three - consumer promotion, trade promotion, and salesforce promotion. Within the domain of sales promotion, consumer promotion is widely used since it is targeted at the consumer.

Sales promotion is one of the best tools to attract the attention of new customers and retain the old ones. This tool helps in building customers’ loyalty in brand which results in increase in sales. Nowadays different marketing strategies are being implemented by the' marketers to survive in the current situation of tough competition by using different marketing tools such as, advertising, publicity, promotions etc. Marketing mix consists of seven aspects. Sales promotion is one of them. Others include publicity or public relations, advertisement, corporate image and direct marketing, personal selling and exhibitions (Kotler & Keller, 2012).

A collection of short term incentive tools that are referred to as a key ingredient in marketing campaigns to stimulate purchases by the customers is called sales promotion (Kotler, 2003).

Sales promotion marketing strategies involve such communication tools that work for a limited time to increase customer and market demand for a product with improved product availability in market through media and non-media sources. Such offers include prizes, coupons, free samples, rebates, discounts, premiums, point of purchase displays etc. Sales promotion assist consumers to evaluate brands and increase purchase possibilities by offering benefits to them and make think to buy that product about which they might not have thought of (Agbonifoh, Ogwo,Nnolim, and Nkamnebe, 2007).

In Nigeria, the use of sale promotion is a commonplace in the fast-moving-consumer-goods (FMCG) categories. This study explores the effect of sales promotion at influencing consumer patronage of FMCG, with a view of providing empirical evidence to the extent to which sales promotion can trigger increased customer visits and customers’ preferences. This study uses the products of Promasidor Ltd Plc in Calabar as point of reference.

1.2       Statement of the Problem

In Nigeria, the fast-moving-consumer-goods sector is highly competitive and companies (such as Promasidor Ltd, Cadbury, Nestles, Liver Brothers etc) in the sector attempt to appeal and win customers through various sales promotion strategies. The Nigerian FMCG industry has reached maturity phase, with reducing average profit. With fierce competition, companies in this sector must work hard new customers and retain existing ones and increase profit to ensure sustainable development of their businesses. Ultimately, they must explore sales promotion option to compete effectively. Anything short of this will mean to move from existence to none- existence.

The problem that have stimulated this study is that it is not fully known if certain selected consumer sales promotion tools are more effective at influencing customer patronage of Cadbury products in Nigeria in this era of highly matured competitive FMCG sector. Hence it is not fully documented in literature as to which sales promotion tool is more effective in FMCG category in recent times, since the consumers taste is ever dynamic. Has customer preference for a type of sales promo tool changed?

1.3       Objectives of the Study

The general objective of this study is to determine the effect of sales promotion on customer patronage of brands of Promasidor LTD., while the specific objectives of this study were to;

      i.         Investigate the effect of premium gift offer on customer patronage.

     ii.         Determine the relationship between contest offer and customer patronage.

   iii.         Investigate the significant effect of sweepstakes offer on customer patronage.

   iv.         Investigate the significant effect of different price packs on customer patronage.

1.4       Research Questions

      i.         What is the effect of premium gift offer on customer patronage?

     ii.         What is the relationship of contest offer and customer patronage?

   iii.         Does sweepstakes offer have significant effect on customer patronage?

   iv.         Does different price packs have significant effect on customer patronage?

1.5       Research Hypotheses

The following hypotheses will guild this study:

Ho₁:    Gift premium offer do not significantly influence customer patronage,

Ho₂:    Consumer contest offer do not significantly influence customer patronage.

Ho₃:    Sweepstakes offer do not significantly influence customer patronage.

Ho₄:    Different price packs do not significantly influence customer patronage.

1.6       Scope of the Study

The scope of this study is twofold, that is, geographical scope and literature scope. In the case of geographical scope or area of study, this research focuses on Umuahia metropolis. With respect to literature, the study is guided and restricted within the boundaries of consumer sales promotion literature. With respect to population scope or unit of analysis, the study will be limited to consumers and customers of brands manufactured by Promasidor Ltd.

1.7       Significance of the Study

This research work would be of benefits to manufacturers in the FCMG sector, particularly Promasidor Ltd. The findings of this study will provide strategic insight to the marketing management of Cadbury Plc on best to compete within the Umuahia metropolis. Other similar companies can also tap from the insight provided by this study.

This study recommend: the most effective tools to use before embarking on sales exercise within Umuahia metropolis, since respondents are drawn from this area. In addition, the findings of this study will provide insight to them on how well to be able to set a clear -cut objective and budgets for their consumer sales promotion activities. This study is also aimed at contributing to the frontier of the existing literature on the topic to provide a sound basis for future research on the topic.

1.8       Limitations of the Study

The sample size, and population of the study are major limitation to this study. They are one of the factors that could make this work not to be generally accepted.

1.9       Definition of Terms

Marketing: the process of identifying, planning and implementing product pricing promotion and distribution to satisfy the needs or want of individual or organizations.

Advertising: the non- personal communication of information usually paid for and usually persuasive in nature, about product (goods and service or ideas by identified sponsors through various media.

Brand: the name, logo, and symbols that uniquely identify affirm product and distinguish it from other firm’s product.

Promotion: any activity of an organization that intend to inform, remind, and persuade its target public about the organization or its products when and where they are or will be available.

Sales promotion: any short term incentives that is intended to result in target markets buying more, buying now, or buying one organization product, instead of another organizations product.