EFFECT OF SALES PROMOTION ON PURCHASING BEHAVIOUR OF CONSUMERS OF COCA-COLA PRODUCTS IN UMUAHIA METROPOLIS

ABSTRACT

The unfavourable economic environment of Nigeria has brought about devastating effect on consumers of manufactured products with heavy consequences on producers of consumers products. Producers are trapped with reducing purchasing power of consumers and high cost of production. The study explored the “effect of sales promotion on purchasing behaviour of consumers of Coca-Cola products in Umuahia metropolis”. This research work was carried to investigate whether people do actually buy during sales promotion campaign or not. To this end, research questions were formulated and two (2) hypotheses tested, with a view to find whether the strategies meet the expectation of consumers and sellers of their products. Four hundred (400) questionnaires were distributed to two (2) markets in Umuahia metropolis (Ahia Ukwu Olokoro Market and Umuahia modern market, Ubani-Ibeku).The response rate was four hundred (400). The data analysis was done using descriptive statistics such as frequencies and percentages to analyze objective one (i), two (ii), and three (iii). Correlation and multiple regression analysis were used to analyze hypothesis one and two. It was discovered after testing the hypotheses formulated, that awareness of sales promotion has effect on the socio-economic characteristics of the respondents. Findings from this study revealed that 51% of the respondents were single, more than half of them (50.8%) earn between N6,000-N10,000 daily, 89.5% were aware of sales promotion and 37.5% and 27% sourced their information from television and radio, respectively. Majority of the respondents (95.3%) were aware of open and win promo, majority (70%) reported that price of Coca-Cola products remained the same during sales promotion, majority (65.8%) have not won during sales promotion, and advertisement was the best method of sales promotion according to 34.5% of the respondents. Findings also revealed that sales promotion is not the most effective tool that could be used to stimulate consumer’s purchase of Coca-Cola products. It is therefore recommended that during sales promotion, price of Coca-Cola products be reduced as to encourage consumers to buy more.

TABLE OFCONTENTS

Title i

Declaration ii

Certification iii

Dedication   iv

Acknowledgements v

Table of Contents vii

List of Tables    xi

List of Figures xiii

Abstract xiv

CHAPTER ONE: INTRODUCTION

1.1 Background of the Study 1

1.2 Statement of the Problem 4

1.3 Objectives of the Study 5

1.4 Research Questions 6

1.5 Research Hypotheses 6

1.6 Significance of the Study 7

1.7 Limitations of the Study 7

1.8 Definition of Terms   9

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1 History of Modern Sales Promotion 11

2.2 Theoretical Issues in Models of Consumer Behaviour 12

2.2.1 Howard – Sheth Model 13

2.2.2 Nicosia Model 17

2.2.3 The Engel-Kollat-Blackwell (EKB) Model 20

2.2.4 Consumer Decision Making Process 22

2.3 Emperical Review of Sales Promotion 23

2.4 Rationale for Sales Promotions 27

2.5 Sales Promotion’s Objectives 29

2.6 Categories of Sales Promotion   30

2.7 Various Sales Promotions Linked to Coca-Cola Products in the

 Study   Area 31

2.8 Influence of Sales Promotion on Consumer Purchase Decision 33

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Research Design 36

3.2 A Brief History of Nigeria Bottling Company Plc (NBC) 37

3.3 Area of Study        39

3.4 Population of the Study 39

3.5 Sample and Sampling Techniques     40

3.5.1 Determination of Sample Size Using Taro Yamane Formula 41

3.6 Instrument of Data Collection 42

3.7 Validity of the instrument(s) 42

3.8 Reliability of the instrument(s) 43

3.9 Method of Data Collection 43

3.9.1 Primary Sources 43

3.9.2 Secondary Sources 44

3.10 Method of Data Analysis 44

3.10.1 Model Specification 45

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION

4.1 Socio-economic Characteristics of the Respondents 47

4.1.1 Gender of the Respondents 47

4.1.2 Age of the Respondents 48

4.1.3 Educational Status of the Respondents 49

4.1.4 Marital Status of the Respondents 50

4.1.5 Occupation of the Respondents 51

4.1.6 Daily Income of the Respondents 52

4.2 Various Sales Promotions Linked to Coca-Cola Products in the

Study Area 53

 4.2.1Aware of Coca-Cola Sales Promotion 53

4.2.2 Sources of Information on Coca-Cola Sales Promotion 54

4.2.3 Types of Sales Promotions of Coca-Cola Products 55

4.2.4 Changes in the Price of Coca-Cola Product during Sales Promotion 56

4.2.5 Types of Changes Noticed During Sales Promotion 57

4.2.6 Winning during Sales Promotion of Coca-Cola Products 58

4.3 Effect of Various Sales Promotions on Purchasing Behaviour for

Coca-Cola Products 59

 4.3.1 Promotional Tools That Make People Buy Coca-Cola Products 59

 4.3.2 Frequency of Exposure to Sales Promotion 60

4.3.3 Extent to Which Sales Promotion Campaigns Had Persuaded Them 61

4.3.4 Reasons Why Sales Promotion Campaigns Had Not Persuaded Them 62

4.3.5 How Sales Promotion Campaigns Had Persuaded Their Frequency of  Purchase 63

4.3.6 Increase in the Purchase and Consumption of Promoted Purchase of

Coca-Cola Products 64

4.3.7 Continued purchase of promoted products even after campaign 65

4.4  Hypothesis Testing 66

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of Findings 71

5.2 Conclusion 73

5.3 Recommendations 73

References

Appendix 1

Appendix 2

LIST OF TABLES

Table 3.1 Coca-Cola products and their years of production and

discontinuation 38

Table 4.1 Distribution of the respondents according to gender 47

Table 4.2 Distribution of the respondents according to age 48

Table 4.3 Distribution of the respondents according to educational status 49

Table 4.4 Distribution of the respondents according to marital status 50

Table 4.5 Distribution of the respondents according to occupation 51

Table 4.6 Distribution of the respondents according to their daily income 52

Table 4.7 Distribution of the respondents according to their awareness of

Coca-Cola sales promotion 53

Table 4.8 Distribution of the respondents according to their sources of

information on Coca-Cola sales promotion 54

Table 4.9 Distribution of the respondents according to their knowledge of

various types of sales promotions of Coca-Cola products 55

Table 4.10 Distribution of the respondents according to changes in the price

of Coca-Cola product during sales promotion 56

Table 4.11 Distribution of the respondents according to types of changes

 that took place during sales promotion 57

Table 4.12 Distribution of the respondents according to whether they

 have won during sales promotion of Coca-Cola products 58

Table 4.13 Distribution of the respondents according to promotional

tools that make people buy Coca-Cola products 59

Table 4.14 Distribution of the respondents according to their frequency of

exposure to sales promotion 60

Table 4.15 Extent to which sales promotion campaigns had persuaded them 61

Table 4.16 Reasons why sales promotion campaigns had not persuaded

them 62

Table 4.17 Distribution of the respondents according to how sales promotion

campaigns had persuaded their frequency of purchase of Coca-Cola

products 63

 Table 4.18 Distribution of the respondents according to their increase in the

purchase and consumption of promoted purchase of Coca-Cola

products 64

Table 4.19 Distribution of the respondents according to their continuation in

the purchase and consumption of promoted Coca-Cola products

even after campaign 65

Table 4.20 Sales promotion of Coca-Cola products and socio-economic

characteristics of the respondents 66

Table 4.21 Relationship between various sales promotions of Coca-Cola

 products and the purchasing behaviour of the respondents 69

LIST OF FIGURES

Figure 2.1 A Simplified version of the Howard-Sheth Model of

Buyer Behaviour                      16

Figure 2.2 Nicosia Models of Consumer Decision Processes 19

Figure 2.3 Stages in the Purchase Decision 22

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Many purchase situations are so habitual that consumers conduct very little cognitive activity (Wathieu & Murre, 2007). In such cases, it is hard to motivate behaviours such as brand switching or increases in the number of units purchased. One of the advantages of promotions is that they can stimulate consumers to think and evaluate brands and purchase possibilities when they otherwise may not have. Therefore, many marketers and retailers utilize different kinds of promotion tools and strategies in order to understand the preference of consumers and boost their sales.

In terms of coupon promotions, those consumers obtained coupon are entitled to get discount of the products at its original price (Ndubuisi & Chew, 2006). Previous study found that coupon promotions do not have significant effect on volume of product purchase by consumer (Gilbert & Jackaria’s, 2002).

Kardes (1999) opined that marketing managers are aware of product trial related to behavioural experience of consumers towards a product. Thus, sending free sample take place in promotional tools. Free samples refers to consumers are giving a chance to try and use the product. Shimp (2003) reported that a free sample had influence on consumer’s buying behavior while Gilbert & Jackaria (2002) have shown otherwise. Free sample was positively related to immediate sales of that particular (Lammers, 1991).

Promotion technique of “buy-one-get-one-free” is one of the types of bonus packs in which the consumers are offered the additional product at the ordinary price but are in an enhanced package. Consumer would be easily persuaded to buy products as there is no extra cost need and more valuable perceived by consumers (Sinha & Smith, 2000).

Sales promotion is media or non-media marketing pressure applied for a predetermined, limited period at the level of consumer, retailer or wholesalers in order to stimulate trials, increase consumer demand or improved product availability (Kotler, 2003).

Sales promotion is that something extra that can arouse interest, create a buying desire, spark an immediate reaction from customers, middlemen or company’s sales force. It is the name that is applied to special kinds sales accelerating activities not necessarily classed as personal selling effort. It consists of short term incentives designed to stimulate buying action. Sales promotional activities are directed towards consumers, middlemen or the firm’s sales force. Sales promotion being a short term incentives is to encourage purchases (Kotler, 2008) and is combined with advertising.

Consumer behaviour focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items (Schiffman & Kanuk, 1997). Consumer only focuses on the immediate need the product or service is satisfying and so makes decisions based on the present need. Despite the incentives used by marketers to persuade the consumers in order to increase market share in the products and services they offer, consumers are still becoming more and sophisticated.

Purchase decision is defined as the stage at which the buyer or the consumers actually buys the products (Kotler, 1999). He argued that, the consumer will buy the most preferred brand.  Thus, sales promotion on a product can fail or will have no effect on consumer behaviour when the product is not the consumer most preferred brand.

Finally, the additional benefits whether in cash or in kind offered to consumer through sales promotion is highly likely to influence their purchase behaviour or decision (Ngolanya, et al, 2006).

1.2 Statement of the Problem

Sales promotion is an initiative undertaken by organisations to promote and increase sales, usage or trial of a product or service (Aderemi, 2003). An organisation may have good innovations, well equipped plant and office facilities strategically located and promotion activities but if it has no place for effective sales promotion on consumer behaviour which will bring about customers satisfaction, then the whole effort used in putting the other factors in places has been wasted.

In determining the relative importance to place sales promotion in the overall marketing mix, an organisation should consider its marketing budget, the stage of the product life cycle, the nature of competition in the market, target of the promotion and the nature of the product (Odunlami & Ogunsiji, 2011).

The major problem of this study is therefore, is to analyze the extent sales promotion can be effective to consumers’ behaviour of Coca-Cola products.

In this regards, these are some of the sub-problems;

i. Socio-economic characteristics of consumers limit the effectiveness of sales promotion.

ii. Various research works pertaining to the aforementioned topic that was carried out in the study area have not convinced organisations about the relevance of sales promotion.

iii. Adoption of continuous sales promotion reduced the number of times consumer repurchase Coca-Cola products.

iv. Too much sales promotion detracts consumers from the long term value of the brand.

1.3 Objectives of the Study

The broad objective of the study is to determine the effect of sales promotion on purchasing behaviour of consumers of Coca-Cola products in Umuahia metropolis.

The specific objectives are to:

i. ascertain the socio-economic characteristics of the respondents.

ii. identify the various sales promotions linked to Coca-Cola products in the study area.

iii. analyze the effects of various sales promotions on purchasing behaviour for Coca-Cola products.

1.4 Research Questions

To guide this research work, three research questions were formulated to ensure clarity.

i. How can sales promotion of Coca-Cola products affect socio-economic characteristics of the respondents?

ii. Do the various sales promotions linked to Coca-Cola products have effect on the purchasing behaviour of the respondents?

iii. What are the effects of various sales promotions on purchasing behaviour for Coca-Cola products?

1.5 Research Hypotheses

In the course of this research work, the following hypotheses were formulated by the researcher which will be tested later for the purpose of this work.

H₀₁: Sales promotion of Coca-Cola products does not have effect on the socio-economic characteristics of the respondents.

H₀₂: There is no significant relationship between the various sales promotions of Coca-Cola products and the purchasing behaviour of the respondents.

1.6 Significance of the Study

This research work when successfully carried out and supervised will go a long way to offer practitioners, experts, and scholars in marketing communication a lot of information on promotion mix decision as well as operation of sales promotion. Also apart from the aforementioned, the benefits of this research work are spread to everybody including the company, competitors, readers, customers, and myself.

This research work is expected to provide information to Nigerian Bottling Company Plc (NBC) to achieve their target goal. It will help them to know consumer behaviour towards their products.

This study will help the management of the Nigerian Bottling Company Plc (NBC) to know the effect of sales promotion on their products and its application in marketing.

Lastly, this research work is carried out as partial fulfillment of the award of B.Sc degree in marketing.

1.7 Limitations of the Study

In the course of this research work, it was observed that in the Nigerian society to get factual information for any research has always met a lot of problems and limitations. The following are the constraints that limit the researcher in the course of this study.

· Time: This research work is only limited to a semester, hence the problem of time is even more amplified when considered that the researcher had to attend to other aspect of his study order than the research work since both academic studies and research work run simultaneously.

· Finance: This was a major constraint that hampered this research work. This was due to the fact that the researcher has no source of financial support besides his parents and siblings. To this end the researcher had difficulty in coping with the financial demands of this research work.

· Literacy Level: The literacy level of some of the respondents was very low. As a result, problems were faced in the completion of the questionnaire as some were wrongly filled.

· Attitude of Respondents: Some respondents find it difficult to give information about them while others gave wrong information about themselves.

1.8 Definition of Terms

· Sales Promotion: This is designed to produce quick result that will not only boost sales in the immediate future, but will translate to loyal customers in the long run (Churchill & Peter, 1995).

· Consumer Behaviour: This is the study of how individuals, groups, and organisations select, buy, use, and dispose of goods, services, ideas or experiences to satisfy their needs and wants (Kotler & Keller, 2009).

· Purchase Decision: This is the stage at which the buyer or the consumer actually buys the products (Kotler, 1999).

· Trade Show: This is a forum where manufacturers can display their products to current as well as prospect buyers to achieve sales (Etzel, et al, 1998).

· Samples: This is an offer of a free amount of a product or service delivered door-to-door, sent in mail, picked up in a store, attached to another product, or featured in an advertising offer (Kotler, 2000).

· Coupons: These are certificates entitling the bearers to a stated saving on the purchase of a specific product mailed or enclosed in another product or attached to them or inserted in magazines and newspaper ads (Kotler, 2000).

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