ABSTRACT
This research work dealt on “The Impact of Sales
Promotion on Product Competitiveness of Fast Moving Consumer Goods (FMCG).
The purpose is to examine the effects that Sales
Promotional activities have on a product’s competitiveness in the market. Two
hypotheses were set up in chapter one as variables for measurement and guide.
Chapter one also discusses the problems to be addressed, scope and purpose of
the study and operational definition of terms used.
Chapter Two reviewed existing work related to the
subject matter. In this chapter, the two broad types of Sales Promotion were
examined alongside the very long list of different sales promotional
activities. Other topics discussed include market offering, competition, fast
moving consumer goods and insight into Dansa Foods Ltd was also supplied been
the case study for this research work.
The research method used for this project will be
introduced in chapter three alongside the technique used for data analysis.
Size of the population for this research work and the type of sampling used
will also be discussed.
In chapter four, the data contained in the
questionnaire(s) were analysed and subsequently explained. The questions
containing the hypotheses were tested and the responses were then subjected to
chi-square (X²) test at a significance level of 0.05.
Chapter five concludes this research work and also
contains a summary of the findings and recommendations. The major findings
include:
-
Sales
Promotion encourages consumers to buy more of the product on offer
-
It
also encourages brand switching; it is enough reasons for a large percentage of
consumers to change to another brand.
Proposed recommendations are also contained in chapter five with
suggestions for others planning on embarking on a similar project.
TABLE OF
CONTENT
Title Page
Certification
Dedication
Acknowledgement
Abstract
CHAPTER
1
Introduction
1.1 Statement of the
Problem
1.2 Relevant Research Questions
1.3 Statement of Hypotheses
1.4 Purpose and Objectives of the Study
1.5 Scope of the Study
1.6 Limitation of the Study
1.7 Operational definition of Terms
·
References:
Chapter 1
CHAPTER 2
Literature
Review
2.1
Introduction/Background to the study
2.2
Understanding Sales Promotion
2.2.1 Why Sales Promotion?
2.2.2 Types of Sales Promotion
2.3
Market Offering
2.4
Competition
2.5
Fast Moving Consumer Goods (FMCG)
2.6
The Fruit Juice Industry
2.7
Dansa Foods Ltd.
2.7.1 Dansa Foods and Sales Promotion
-
References: Chapter 2
CHAPTER 3
Research
Method
3.1
Introduction
3.2
Restatement of Research Questions and Hypotheses
3.3
Research Design
3.4
Characteristics of the Research Population
3.5
Sampling Design and Procedures
3.6
Data Collection Instrument
3.7
Procedures for Processing and Analysing Collected Data
-
References: Chapter 3
CHAPTER 4
DATA
PRESENTATION, ANALYSIS AND DISCUSSION
4.1
Questionnaire Analysis
4.2
Validation of Hypotheses
4.3
Introduction of Findings
CHAPTER 5
SUMMARY
OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1
Summary of Findings
5.2
Conclusion
5.3
Recommendation
5.4
Suggestions for Further Studies
Bibliography
Appendices
CHAPTER ONE
1.0 INTRODUCTION
Sales
Promotion, a key ingredient in marketing campaigns, consists of a
collection of incentive tools, mostly short term, designed to stimulate quicker
or greater purchase of particular products or services by consumers or the
trade. It is a common tool used to push sales in the Fast Moving Consumer Goods
(FMCG) Industry.
Sales
Promotion according to Belch & Belch (2001) consists of a diverse
collection of incentive tools, mostly short-term designed to stimulate quicker
or greater purchase of a particular product by the consumers. It can also be
seen as all promotional activities apart from personal selling, advertising and
publicity which offers short term incentives designed to bend the demand curve
in favour of a product through changing the habit of customers.
Whereas
advertising offers reason to buy, sales promotion offers incentives to buy. It
is one of the promotional tools used by manufacturers to reach target market. Sales
Promotion is a necessary activity especially in a competitive market. It is not
surprising therefore that sales promotion is recognised as a vital promotional
tool in the marketing industry.
Sales promotion
is often undertaken by an organisation to promote an increase in sales, usage
or trial of a product or service (i.e. initiatives that are not covered by the
other elements of the marketing communications or promotions mix). Sales
promotions are varied. Often they are original and creative, and hence a
comprehensive list of all available techniques is virtually impossible (since
original sales promotions are launched daily!)
Idris
(2008) explained that Sales promotion is one of the eight aspects of the
promotional mix. The other seven promotools are:
·
Advertising
·
Personal selling
·
Public Relations
·
Direct Marketing
·
Packaging
·
Sponsorships
·
Point of Sales Display
Robin
(2000) states that Sales Promotion tools offer three distinctive benefits:
a.
Communication: They gain attention and may lead the consumer to the
product.
b.
Incentive: They incorporate some concession, inducement, or
contribution that gives value to the consumer.
c.
Invitation: They include a distinct invitation to engage in the
transaction now.
Sales
promotion tools vary in their specific objectives. A free sample stimulates
consumer trial, whereas a free management-advisory service aims at cementing a
long term relationship with a retailer. Sellers use incentive-type promotions
to attract new triers, to reward loyal customers, and to increase the purchase
rates of occasional users. Sales promotion often attracts brand switchers, who
are primarily looking for low price, good value, or premiums. Sales promotions
generally are unlikely to turn them into loyal users, although they may be
induced to make some subsequent purchases. In markets of high brand
dissimilarity, sales promotion may be able to alter market shares permanently
but in market of high brand similarity sales promotions can produce a high
sales response in the short run but little permanent gain in the market share.
In
addition to brand switching, consumers may engage in stockpiling -
purchasing
earlier than usual (purchase acceleration) or purchasing extra quantities.
Sales promotions can be directed
at, the customer, sales staff, or distribution channel members (such as
retailers). Sales promotions targeted at the consumers are called consumer sales promotions. Sales
promotions targeted at retailers and wholesalers are called trade sales promotions.
A number of sales promotion
benefits flow to manufacturers and consumers. Sales promotions enable
manufacturers to adjust to short – term variations in supply and demand. They
enable manufacturers to test how high a list price they can charge, because
they always discount it. They induce consumers to try new products instead of
never straying from current ones. For retailers, promotions may increase sales
of complementary categories (cake mix promotion may help to drive frosting
sales) as well as induce some store-switching by consumers. They promote
greater consumer awareness of prices. They permit manufacturers to sell more
than they would normally sell at the list price. Consumers themselves enjoy
some satisfaction from being smart shoppers when they take advantage of price
specials.
1.1 STATEMENT OF THE
RESEARCH PROBLEM
In this era of keen competition among
producers, William (1999) observed that sales promotion has to be called upon,
not only to highlight each company’s advantage but also to increase the number
of sales and customers. He also observed that manufacturers have argued over
the years that there is no real or tangible benefit derived from sales promo.
They complained that it is a waste of time and resources and that “sales don’t
get actually promoted”
It is on this premise that this
research work wants to investigate the fact that sales promotion is considered
as a mere waste of money and not a tool that increases product competitiveness.
1.2 RELEVANT RESEARCH QUESTIONS
In
order to achieve the purpose of this study, key research questions that were
formulated include the following:
1. What
is the impact of sales promotion on consumers’ brand preference?
2. How
does sales promotion impact on a product’s competitiveness?
3. Do
consumers buy more of a product during sales promotion?
4.
What are the common types
of sales promotion known to the consumers?
1.3 STATEMENT OF HYPOTHESES
1. Sales
promotion impacts on a consumer’s brand preference and at such increase a
product’s competitiveness.
2. People
buy more of a product during sales promotions.
1.4 PURPOSE AND OBJECTIVES OF
THE STUDY
Following from discussion under
the background to this project work, it is clear that this research work aims
at analysing the strength of sales promotion and its impact on product
competitiveness.
We shall analyse and examine the
impact of sales promotion on the sales of fast moving consumer goods (FMCG) with
particular interest on Dansa Foods Limited.
The FMCG Industry is getting more
competitive by the day; new companies are making grand entrance by the day and
cutting into each other’s target market. Different companies have had to come
up with “better products”, better offers, better pricing all in the bid to sway
customers and increase their bottom line.
The purpose of the study is to
investigate the impact or otherwise of Sales Promotion on product
competitiveness in the fast moving consumer goods (FMCG) sub sector. In doing
this, the following are the specific objectives to be achieved by the study:
1)
To distinguish between Sales
Promotional activities and other promotional activities (or promotools)
2)
To briefly examine the different Sales
Promotional techniques
3)
To examine the need for sales
promotion as an effective promotool
4)
To examine the impact of sales
promotion on the competitiveness of fast moving consumer goods.
1.5 SCOPE OF THE STUDY
Every organisation has its own
unique ways of combating in this keen competition era. Of course there are
various methods of getting the attention and retaining the loyalty of the
target audience, this study will however limit itself to the option tenable in
sales promotional activities.
This study will extensively look
at the impact of well planned, customer inspired, well researched, corporate
goals motivated activities all tailored to satisfy the needs of the
heterogeneous consumers.
The scope of this research work
will be strictly concerned with the sales promotional activities of Dansa Foods
Limited particularly those directed at the Juice category.
1.6 LIMITATION OF THE STUDY
Obtaining all relevant data in
most research work is usually met with a number of limitations; this exercise
is no exception owing to its scope and nature.
The first limiting factor is
time; there wasn’t enough time to carry out a long elaborate research, hence
this research focused on promotional activities during a particular period of
time. It considered a six months period from 1st of December, 2008
to 30th of May, 2009.
As earlier stated, there are
various expressions of consumer sales promotion, it will be tedious to consider
all these types, this research therefore focused on two popular types; namely
1. Free gift
2. Buy-One-Get-One-Free
(BOGOF )
It will also be cumbersome to
sample the opinions of all customers of Dansa Fruit Juices; we therefore
restricted the research to consumers in the city of Lagos.
1.7 OPERATIONAL DEFINITION OF TERMS
In the course of this study, various terms were used as appropriately as
possible. Following are a glossary of some of such terms:
·
Marketing: The group of
actual or potential buyers for a product.
·
Promotion/Promotools: It involves all set of organizational activities involved in the
process of making a product or service available for use. Fred (2003) explains
it as everything that is done to help sell a product or service in every step
of the sales chain, from the presentation materials a sales person uses during
a sales call to the television commercial that tries to get the customer to
think favourably about what is being offered.
·
Sales Promotion: Duncan (2002) describes
Sales Promotion as the marketing communication function that encourages action
by adding tangible value to a brand offering, it is usually short term aimed at
encouraging and accelerating response.
·
Impact: The powerful
effect that something has on somebody or something
·
Fast Moving Consumer Goods (FMCG): These are products that have a quick shelve
turnover, at relatively low cost and don’t require a lot of thought, time and
financial investment to purchase. It refers to a wide range of frequently
purchased consumer products including toiletries, soaps, packaged food/edibles,
drinks etc.
·
Product Competitiveness: This is the edge or preference that a particular product enjoys above
other products in its category.
·
Consumer Perception: Kotler & Keller (2008) describes this as the process by which
consumers select, organize and interpret information to suit individual
behaviour. It depends not only on the physical stimuli but also on the
stimuli’s relationship to its surrounding field and on conditions within each
of us.
·
Consumer Loyalty: This is a consumer’s preference for a particular product which always
ensures repeat purchases. It is the assurance that no matter what happens, a
consumer is “faithful” to a chosen brand.
·
Brand: Kotler &
Keller (2008) defines brand as a name, term, sign, symbol or design, or a
combination of them, intended to identify the goods or services of one seller
or group of sellers and to differentiate them from those of competitors.
·
Advertising: “any paid form
of non-personal presentation and promotion of ideas, goods or services by an
identifiable sponsor”.
·
Personal Selling: This is
the oral presentation usually in a conversation or discussion format of goods,
services or ideas to a prospective buyer by an agent usually called the “Sales
Representative”
·
Publicity: This is the
non-personal stimulation of demand for products, services or businesses by
planning commercially significant news about such in a published medium like
Newspaper, Magazine, Television, Radio etc. This usually gives the product or
service a favourable coverage to the entire public. It doesn’t necessarily need
to have an identifiable sponsor.
·
Public Relations:
According to Jeffkins (1996), Public Relations can be referred to as “all form
of planned communication, outward and inward between an organization and its
public (internal and external) for the purpose of mutual understanding”.
Another author defined it as the planned effort to influence opinion through
social performance based on mutually satisfactory 2-way communication.
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