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:
i.
Sales
promotion has no significant impact on the buying behaviour.
ii.
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 i
CERTIFICATION
ii
DEDICATION iii
ACKNOWLEDGEMENT iv
ABSTRACT v
TABLE OF CONTENTS vi
CHAPTER ONE: INTRODUCTION
1.1 Background
of the Study 1
1.2 Statement
of the Problem 4
1.3 Research
Questions 5
1.4 Objectives
of the Study 5
1.5 Significance
of the Study 6
1.6 Scope
of the Study 6
1.7 Definition
of Terms 7
1.8 Brief write-up on case study: GLOBACOM
Nigeria LTD 8
CHAPTER TWO: LITERATURE REVIEW
2.1 Nature of Sales Promotion 13
2.2 Sales Promotion objectives and uses 13
2.3 Growth of Sales Promotion 14
2.3.1 External Factors 15
2.3.2 Internal Factors 15
2.4 Sales Promotion Methods and Tools 15
2.4.1 Sales Promotion tools used by Retailers 17
2.4.2 Sales Promotion Techniques for New Products 18
2.4.3 Sales Promotion Tools for Established
Products 19
2.4.4 Sales Promotion Methods for Resellers 20
2.5 Major Decisions involved in Sales
Promotion 21
2.5.1 Major Decisions involved in Sales Promotion 21
2.5.2 Selection of a Sales Promotion Tools 22
2.5.3 Development of Sales Promotion program 22
2.5.4 Pre-Testing of the Sales Promotion program 23
2.5.5 Implementation and control of the Sales
Promotion
Program 24
2.5.6 Evaluation of the Sales Promotion Results 24
2.6 Limitations of Sales Promotion Results 24
2.7 Consumer Buying Behaviour 26
2.8 Decision Process of a Consumer 26
2.8.1 Complex Buying Behaviour 27
2.8.2 Dissonance reducing Buying Behaviour 28
2.8.3 Habitual Buying Behaviour 28
2.8.4 Variety-Seeking Buying Behaviour 28
2.9 Stages of the Buying Decision Process 28
2.9.1 Problem Recognition 29
2.9.2 Information Search 29
2.9.3 Evaluation of Alternatives 30
2.9.4 Purchase Decision 30
2.9.5 Post-Purchase Behaviour 31
2.10 Factors influencing consumer Buying Decision
31
2.11 Effect of Sales Promotion on Buying Decision
33
CHAPTER THREE:
RESEARCH METHODOLOGY
3.1 Introduction 35
3.2 The Study Population 35
3.3 Sampling size and Sampling technique 35
3.4 Method of Data Collection 36
3.6 Method of Data Analysis 36
3.7 Regression Analysis 37
3.8 Research Hypothesis 37
CHAPTER FOUR:
PRESENTATION AND ANALYSIS OF DATA
4.0
Presentation and Analysis of
Data 39
4.1
Frequency Tables for
Executives 39
4.2
Frequency Table for
Middlemen 42
4.3
Frequency Table for
Consumers 43
4.4
Frequency Table for other
questions 45
4.5
Test of Hypothesis 52
4.6
Discussion of Results 55
CHAPTER
FIVE: SUMMARY OF FINDINGS, CONCLUSION
AND RECOMMENDATION
5.1
Introduction 58
5.2
Summary of Findings 58
5.3
Conclusion 59
5.4
Recommendation 60
References 62
Appendix: 63-68
Questionnaire
69-70
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.
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