: MS Word : 1-5 : 244 : Abstract
 Price: Just #2000
Get the complete project »

MKT00377 - THE IMPACT OF SALES PROMOTION ON CUSTOMERS’ PATRONAGE IN NESTLE NIGERIA PLC


CHAPTER ONE

Introduction

1.0 Background to the study

In the emerging business scenario, various promotional techniques are used by the marketer for influencing the purchase decision of their consumers. Sales promotion, a key element of promotional mix has been widely used to sustain competitive advantage, increase sales and stimulate consumer purchase decision, is becoming a valuable tool for marketers to influence purchase decision. World of today’s world is a benefit-cost. Firms have to rethink the relationship between attitude and behaviour of their consumers. All businesses need to communicate to the consumer what they have to offer (Jobber& Lancaster, 2006). Sales promotion, a key ingredient in marketing campaigns; the need to promote a product, service or an idea cannot be over emphasized. Obi (2002) described sales promotion consists of the related promotional activities that are necessary to supplement personal selling. Some of these include distribution of sample products to customers, exhibitions, or demonstration of products at stores or trade fairs or shows and preparation of printed materials used by sales people or for point-of-sale displays. A combination of the above variables defines a firm’s promotional programme that hopes to influence consumers to patronize and become loyal to the organizations offering (Banabo & Koroy, 2011). Hence, promotion in marketing represents those tools that companies used to persuade their prospective consumers to buy their product or service.

According to Bruncl (2000), sales promotion excludes all paid media advertising, but includes techniques like coupons, self-liquidating offers, bargain packages, gifts, sampling and points of purchase promotions and displays. Sales promotion works as short-term incentives to encourage purchase of a product or service (Kotler, Brown, Adam, & Armstrong, 2006), therefore is value to the customers in a short – term orientation. It essentially aims to stimulate demand during the period in which it is set (Peattie & Peatie, 1995; Lehman & Winer, 2002, Walsh 2000). The potential benefits of using sales promotion could range from attracting new consumers from competitors to persuading consumer to switch to brands with higher profit margins or simply inducing existing customers to buy more. Sales promotion can promote organization effectiveness through increase in profitability from higher sales. Okoli (2011) explains that the “essence of setting up a business organization is to make profit. Without profit, a business is bound to fail”. Loudon and Bitta (2002) said that sales promotion plays a significant effect on decisions which help in achieving the organizational objectives. It has been established in literature that only consumers with repeat purchases are profitable (Nagar, 2009). It is not every repeat purchase that is connected to consumer’s commitment of a brand. However, consumer’s commitment is important for a repeat purchase. Therefore, business operators need to develop marketing program that will not only reinforce customer’s commitment but also encourage repeat purchases.

A part of the functions of sales promotion is not only to reinforce commitment of consumers but to encourage repeat purchase. Sales promotion has effects on various aspects of consumer’s purchase decisions such as brand choice, purchase time, quantity, and brand switching (Nijs, Erasmus A & Rousseau G, 2001). Thus, sales promotion becomes an integral part of the marketing strategy for reaching the target market and it is the responsibility of marketing managers to combine elements of promotional strategies, which is promotional mix into coordinated plans. The importance of the excessive promotion in a competitive market environment has generated a lot of interest in marketers and firms to develop numerous and comprehensive promotional approaches (Adaramola, 2010).

The major function of Sales Promotion is to communicate with consumers and touch their hearts. Chang and Tsai (2011) proposed the communication tools for marketing including advertising, public relations, personal selling, sales promotions, and direct marketing to enhance consumer Purchase Intention for purchase behaviours. Sales Promotion is also a critical factor in consumer purchase behaviours (Dehkordi, Dotson  & Eva, 2012). Huang & Gartner (2012) regarded Sales Promotion as a direct stimulus to extra value of a product or an incentive to final consumers, salespeople, or distributors. Khajvand and Tarokh (2011) mentioned that Sales Promotion was composed of various temporary incentives, mainly to induce consumers or dealers purchasing certain products in advance or purchasing more quantity. The consumer market would change with changeable life styles and constantly present distinct promotion tactics, such as gift for a pair of sports shoes, cash refund, discount and coupon, prize, and cash or gift for returned certificate. It is what a marketer desires to know about which kind of promotion being able to enhance consumer evaluation on the brand of sports shoes and to appear preference and Purchase Intention on specific promotions (Mesforoush & Tarokh 2013).

Consumers patronize organizations products/services at one time or the other. We may use customer patronage and loyalty interchangeably because customer patronage precedes loyalty. There is a strong relationship between patronage and loyalty. Patronage is burn out of a desire to be committed to an organization either based on its product quality or perceived product qualities. Hence, the extent to which a customer will patronize the products of a company depends on how the customer perceives the company’s sales promotion and how the customer also thinks and feels that the condition of the promotion is consistent with his / her personality (Asiegbu, Akpotu & Ogbonna, 2011). Companies in the 21st century often compete for customers in order to increase their market share (Arens, Schaefer & Weigold, 2009). The possibility of any of these companies to achieve their stated aims is hinged on their ability to evolve products (services) that will satisfy the needs and wants of their chosen target customers better than their competitors. Also, their product quality and sales promotion strategies should be improved while looking for new avenues to regularly attract and retain their customers. The importance or essence of repeat customer patronage is that an increase in sales volume will ultimately and significantly impact on the company’s profitability level (Bandy, Gupta, & Dube, 2005). A long standing marketing principle is that understanding and satisfying customers leads to superior business results. An organization relates to its customers to achieve the understanding and increase patronage through the design of its promotion. In other words, if the promotion (i.e. sales promotion) and the sales promotional tools are consistent with customer expectations, satisfaction will increase which will significantly increase the level of customer patronage.

 

1.1 Statement of the problem

Selling concepts made it clear that customers will not patronize a product or service if promotional activities are not in place (Kotler, 2000). Organizations such as Nestle Nigeria may be faced with challenges of inadequate sales of the varieties of products its offers due to poor promotional strategies which lead to customer non- patronage and disloyalty. One of the major ways of ensuring that they stand out and achieve their aims is through intensive and strategic implementation of promotional mix which include advertising, sales promotion, personal selling, public relations, publicity and all elements of promotional mix leading to customer’s patronage and  loyalty, increase profit, attraction of both old and new customers and sales increase. Despite the benefits of sales promotion, most organizations still neglect sales promotion in promoting their products/services.

            This is as a result of their inability to recognize and exploit the strategic competitive advantage associated with the application of the sales promotion (Zeithamil & Mark, 2000). This little or non-attention to these promotional activities especially sales promotion which is the key to attracting customers who eventually become loyal to the organization may affect the organizational profitability. This study seeks to evaluate the impact of sales promotion on customer patronage in Nestle Nigeria Plc.

1.2 Research Questions

        The study tries to answer the following research questions:

i). How does sales promotional tools affect consumer purchase decision?

  1. ii) What is the effect of sales promotion on customers’ patronage?

iii) How does sales promotion influence customers' loyalty?

  1. iv) What effect does sales promotion activities have on consumer brand switching behaviour?

1.3 Objectives of the Study

       The overall objective of this study is to examine the impact of sales promotion on customers’ patronage in Nestle   Nigeria Plc, while specific objectives are to;

  1. i) determine the effect of sales promotional tools on consumer’s purchase decision in Nestles Nigeria Plc
  2. ii) determine the effect sales promotion on customer’s patronage in Nestles Nigeria Plc

(iii) investigate the influence of sales promotion on customers loyalty in Nestles Nigeria Plc

  1. iv) Assess the relationship between sales promotion and consumer brand switching behaviour

1.4 Statement of hypotheses

      The study formulates the following hypothesis: 

 Ho1: sales promotional tools have no significant effect on consumer buying decision in Nestle Nigeria Plc

 Ho2: there is no relationship between sales promotion and consumer patronage

 Ho3: there is no relationship between sales promotion and consumer loyalty

 Ho4: there is no relationship between sales promotion activities and consumer brand switching behavior in Nestles Nigeria Plc

1.Significance of the study

 The result of this research will be of benefit to Nestle management as it will help the sales manager and marketing manager of the company to understand how to carry out their sales promotional activities because the purchasing decisions of the consumers will be known at the end of this study, it will Influence the direction of how marketing communications such as, advertising, sales promotion etc must go. Not only that, the application of the study has the potential of creating and sustaining competitive advantage of businesses in Nigeria. In this era of competition every organization in Nigeria wants to increase or at least maintain their products sale in the market. Every organization wants to know how the purchase decision of customers can be evaluated.

This study will be helpful to academics seeking to pursue further studies on the subject matter. This may trigger an impetus to further improve the knowledge of the manufacturing industries in Nigeria on how to properly use sales promotion in achieving increase in customers' patronage. To this end, the study will be beneficial to a number of sectors in society. The researcher believes this study will serve as a basis to further develop the existing literature in this area.

1.7 Scope of the study

             The study focuses on the impact of sales promotion on the customers’ patronage as it applied to the manufacturing industry, how sales promotion can help build customers’ patronage, good customer satisfaction, strong relationship and customer retention with particular focus on Nestle Nigeria Plc in Ilorin metropolis while the respondents are the customers of Nestle. The choice of Nestle as the case study is because it is a multi-product company that makes use of sales promotional strategy to reach out to their customers. The study will cover from year 2017 to 2019. The choice of Kwara State capital “Ilorin” is as a result the large population as compared to other towns in the state that used Nestle product and it is a place where the researcher can easily conduct his/her research work properly.