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The researcher in this dissertation investigates the influence of sales promotion in selecting the brands by the regular customers and how it affects on the brand loyalty. To offer an additional value to the buyer the significance of sales promotion has become a fundamental component of communication mix. The result of this sales promotion generates an additional value in the growth of business (Fill 2006). The benefits achieved by this sales promotion would not only benefits to manufacturer however it also benefits to the consumers. Marketers are trying to increase their market share through sales promotion, because day by day the manufacturers are designing the products with less differentiated products and as a result the consumers inclined more towards promotion (Kotler1999). The expenditures on sales promotion was not so high as ever before, the expenditures on sales promotion has been raised as compare to ever before while the expenditures on advertising has been decreased Kotler1999). It was just a decade ago the ratio between the sales promotions to advertising was 40:60, however today many of the buyer package goods companies, sales promotion accounts for 60 to 75% of whole financial plan. Sales promotion is a division of communication mix that converse “one way non-personal communication” to their clients (Duncan 2002). The technique of sales promotion is used by the manufacturers to gain the strategic position in the field of retail; however the retailers pull their customers by providing value added products to their customers. With the development of relationship marketing, companies are using sales promotion technically and strategically to attract and retain the attention of customers. There are several of different views regarding the influence of sales promotion on sales and the behaviour of consumers. Some practitioners and academics believe that the function of encouragement is limited to achieve for short term sales increase, on the other end many of the others believe that promotion bring long term constructive growth on sales. (Smith and Sinha,(2000); Banks and Moorthy (1999), Kopella and Mella (1999). Copley and Paul (2004) makes a discussion on promotion, that promotion is a division of strategic and integrated marketing approach that helps in structuring brand image by offering some extra things like some special gifts or some big financial or personal rewards. It has been revealed by the research of Pauwel et al (2008, p.293) that promotion has got very positive and long lasting effect on the brands with growth in equity. Similarly greater benefits can be achieved by the low equity brands from promotion when they were launching new products.
PURPOSE OF RESEARCH:
As the marketers are allocating a considerable amount of budget to promotion based marketing so the researcher has decided to conduct his research in examine the role of sales promotion in influencing brand loyalty and brand selection. The best example was in USA where in 1996, $9.5 billion was spent on finest based marketing. (Astous and Jacob 2002, p1270). The reason for this huge investment was to provide the brand better worth and attraction in the marketplace. These activities were planned to change the buying behaviour of consumers (Alvarez 2006). According to Alvarez and Casielles (2005) companies have used different sales techniques and sales promotion for achieving most of the shares in the market, but they have achieved only short term objectives while on the other end they were expecting or they have planned to change the consumer behaviour on the long term basis. Regarding effectiveness of sales promotion the researcher will conduct his research to discover out the position of sales promotion, in inducing brand switch, brand check, increase in rate of sales and stock piling, above all in the end the researcher will advise some strategies to manufacturers and retailers concerning sales promotion which will help to attain the maximum benefits out of any promotion strategies.
AIM AND OBJECTIVES:
The researcher in the dissertation has planned to discuss the impact of sales promotion in influencing brand choice and brand loyalty.
To achieve his desired task the researcher has set his objectives in a systematic order to meet his desired aim.
1) Firstly in the start the researcher in literature review discuss the sales promotion, its different types and its significance in today's business environment.
2) To examine the function of diverse types of sales promotion and suggest (a) brand switching, (b) purchase acceleration, (c) product trial, and (d) stock piling.
3) To provide ideas to manufacturers and retailers in London as to which sales promotion outfit are more efficient in preferring brand switching, purchase acceleration, stock piling and product trial
RATIONALE FOR THE CHOSEN TOPIC:
The researcher have determined to carry out research to examine the function of sales promotion in influencing brand loyalty and brand choice, since marketers are fixing a significant amount of financial plan to promotion base marketing. For example in 1996, $10.5 billion was used up in USA on finest based publicity. (Astous and Jacob (2002, p.1270). Earlier works argued that constancy behind such enormous investment was to give the brand better attraction and worth. All such performance are meant to change customers buying behaviour activities (Alvarez 2006)
As discuss in the previous paragraph that there is a dispute on the role and efficiency of sales promotion. Academics and practitioners have huge concern about the impact of any advertising function. If any promotion tool fail to attain its objective, it can grow weaker its functionality and reliability (Rust et al 2004, quoted by Pauwels et al 2008).Alvarez and Casielles (2005) argue that companies have been adopting varied sales promotion technique with the aim of influencing consumer's buying activities, but they have been achieving only short term objectives and be unsuccessful to achieve long term results in changing consumers behaviour.
Keeping in sight the above mentioned awkward situation regarding efficiency of sales promotion, the researcher has opt to carry out this research to discover out the function of sales promotion in inducing brand switching, brand trial, sales acceleration and stock piling, and then advise some strategies to manufacturers and retailers concerning sales promotion outfit to achieve utmost benefits out of any promotion plan.
Is brand loyalty and brand choice affected by the sales promotion?
In the start of this section the researcher will start his discussion by discussing some of the background theories on sales promtion and brand loyalty, and what are the reasons by which one influence on other. As the chapter begins there will be some of the definitons given by some of the very renowned marketers of their own time. The researcher will also discuSss the views and outcomes of varies research scholars regarding the importance, types and influence of sales promotion on brand loaylty and on brand choice. In the very end of this chapter the researcher will also make some comments with specific conclusion to research objectives.
Definition of Sales Promotion:
There are a lot of definitions of sales promotion. Some of the very renowned marketers believed, the benefits or advantages of sales promotion will not last for a very long period of time among these writers Kotler is one. According to him (1997, p.624) “Various collection of incentive tools, mostly short term, designed to stimulate faster and or a /greater purchase, of a specific product or services by the consumer or the trade” . Institutions of sales promotion also believes that the sales promotion is a tool which gives short term boost on sales, so therefore they defined sales promotion as “….a variety of strategically marketing techniques designed with in a strategic marketing structure to insert value to a manufactured goods or service in order to attain specific sales and marketing objectives.” (Brassington, et al. (1997), p.653). According to Brasington, et al.(1997 p.662) the meaning of tactical in sales promotion is defined as a “short term burst of activity” the purpose of this short term activity is to bring a immediate required result. It not only brings the desired result but also it is a division of communication mix that helps in other marketing tools like advertising to achieve the strategic objectives. Previously as we have discussed in the above paragraph that sales promotion is considered as a tool of marketing which help in achieving good sale for a short time however with the passage of time and with development of relationship marketing, the position of sales promotion has been changed, the marketer are using this tactic of sales promotion for building the loyalty towards customers.
There are many marketing giants who use this tactic of sales promotion for long term benefits for their customers rather than short term period the best example of this is Tesco club card, Shell smart card, Boots membership cards, Sainsbury's nectar card these cards offer benefits to their customers not on the short term basis but on the long term and in this tactic the customer is also remain loyal to the company. There are many scholars who believed that the sales promotion does not benefit the marketers for a short period of time, it benefits the marketers for a long period of time and it also give a good boost to the business. According to Copley and Paul (2004) sales promotion is a part of strategic and integrated marketing is a way building towards brand image and brand equity by offering their customers some thing extra than other marketers like offering the customers vouchers, some gifts or some personal rewards. Like wise Pauwel et al (2008, p.293) have revealed that the sales promotion has got long term positive and lasting effect on the brands with higher equity. In a same way the brands with lower equity can achieve the good capture on market the time when they are launching new products by offering sale promotion on their product. There was research conducted by Gilbert and Jackaria (2002) in the UK supermarket, there research was regarding different promotions like coupons, samples, buy one get one free or discount), after their research the come on the point these sales promotion are very helpful and effective in attracting the customers towards product these promotions also help the customers in brand switching and in product trial, these sales promotion also helps the producers by accelerating the product sales in the market. Fill (2006, p.650) argued that the promotion in sales can be helpful in bringing long-term positive results by designing them for a long time like 3 to 4 year, and they should be coordinated by some other marketing activities like advertising and is incorporated with the business activities. The discussion on the sales promotion and its impact on the brand loyalty it's not in its final stage the researcher will discuss all this in detail in his upcoming dissertation.
In the last chapter researcher make some discussion on the literature review where he discusses the impact of sales promotion on brand loyalty and brand choice. In this chapter the researcher has planned to discuss all the methods and procedure which he will use to finish his research. Means the researcher will discuss the design of his research, method of his data collection, how the researcher will analyse his collected data, strength and dependability are discussed step by step.
For the selection of methodology there are many forms of research available. However it can be divided in to two major categories.
“The research for good marketing always begins with secondary data” [Iacobucci .D. 8th edition]. The available information and data is called secondary data [P .Saunders, J. Wong,]. To make the analysis on the given data is always easy and quick because it is already being done by others [Lancaster et al, 2002]. The internal and external data sources are the main sources of getting secondary data. Examples for the internal source are salesman call report, sales invoice and the cards of warranty are some of the examples on the other end financial records, magazine and newspapers they are consider being as the examples of external sources [Iacobucci D 8th edition]
The problems and basic objectives of the research will be identified by the secondary data.
The collected information at hand for some basic research is said to be as primary data. [P .Saunders, J. Wong,] Primary data helps the researcher to get a good result for its research, to lead the researcher towards goal the primary data is consider to be as very valuable however it is consider to be as a difficult, expensive and time consuming method. [P .Saunders, J. Wong,]. However the primary data is further classified in to two major categories.
To meet the requirements the dissertation is carried out on the basis of secondary and primary data. Appropriate, correct and impartial data collection can lead to valuable solution to the research problem. (Kotler et al 199 p.326). For qualitative research the researchers used different techniques like group interviewing, depth interviewing, projective techniques and electronic interviewing.
Due to the following reasons in this research the researcher has planned to make a qualitative research.
1) Reaction of huge sample size can be achieved which could provide better insight of customer buying characteristics.
2) As the research is concerned with testing of theories not creation (Bryman, Bell 2003). The objective of researcher is testing of theories of sales promotion.
3) It involves low risk of any delay; the researcher is positive of the return of questionnaires well in time that will ensure completion of research well in time.
HOW TO DESIGN A QUESTIONNAIRE:
Following are the parameters to structure the questionnaire.
1) Before going on to the next topic the questions on one topic should be completed and all the questions in the questionnaire will be discussed in a systematic manner.
2) To achieve the task questionnaire will start with simple, attractive and specific questions.
3) The question like income of respondent is consider to be as the sensitive matter so these questions will be set in the end of questionnaire.
4) The questionnaire will be approved by the supervisor.
5) The questionnaire is the combination of structured and unstructured questions.
While designing questionnaire for this dissertation the researcher will take following customers characteristics in to account.
According to Gilbert and Jackaria (2002), during shopping at shopping mall consumers make choice concerning the type of product and class they buy, this in turn guide to the choice about the quantity to buy. The researcher has selected five type of multiple choice survey statements among them four were from the study work of Gilbert and Jackaria (2002) and the last one will be planned by the researcher. As the main reason of this investigation is to find out the impact of sales promotion on brand loyalty and choice so for this cause the researcher has selected the five types of promotional tools.
2) Price reduction
3) Free sample
4) Buy one get one free
5) Price reduction on customer buying behaviours
For this data compilation researcher has selected Westfield Shopping Mall. The selected area is famous for its mixed culture, representing most of the ethnic group existing in London. To get the improved understanding of client buying behaviour the researcher has determined to collect data at shopping mall because generally most of the people trip to mall for the cause of shopping. The research is base on the compilation of data through survey; the suitable sample will be used to end this research. As it is the easiest sampling method and can be conducted with in short distance of time (Malhotra, 2004); in addition interviewer can select respondents on his own convenience. Examples of convenience sampling comprises of students, mall intercepts, members of social groups, people on the street, departmental stores using charge account lists, people on the street, and questionnaires incorporated in the magazines (Malhotra2004, p.321)
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2) Kotler, P. (1997) Marketing Management; managing advertising, sales promotion, and public relation. 9th ed. London: Prentice Hall International.
3) Astous A , Jacob I (2002) “ Understanding Consumer Reactions to premium based promotional offer”. Europeon Journal of Marketing, 36(11/12), pp1270-1286. Emerald [0nline]. Available from: http//www.emeraldinsight.com/0309-0566.htm (Accessed on 12 August 2008).
4) Alverez B, Casielles.V (2005) “Consumer Evaluations of sales promotion: The effect on brand choice”, Europeon Journal of Marketing 39 (1/2), p54-70. Emerald [0nline]. Available from: http//www.emeraldinsight.com/0309-0566.htm (Accessed on 12 August 2008.
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6) Fill C. (2006) Marketing Communications; Sales Promotion; method and techniques. 4th ed. London: Prentice Hall.
7) Gilbert.D, Jackaria N. (2002) “The efficacy of sales promotion in UK supermarkets: a consumer view”. International Journal of Retail and Distribution Management, 30(6), pp.315-322, emerald [0nline]. Available from: http//www.emeraldinsight.com/0959-0552.htm (Accessed on 15 August 2008)
8) Armstrong, G. Kotler, P .Saunders, J. Wong, V (1999)Principal of Marketing; mass communication; advertising, sales promotion and public relations 2nd ed. Italy: Prentice Hall Europe.
9) Bell, E,& Bryman,A (2003) Business Research Methods: Business Research Strategies, books 24×7 Online [online]. Available at: http//library.books24×7.com/book/id_12878/viewer.asp?bookid=12878&chunkid=625715391( Accessed 30 July 2008).
10) Churchill,G. Iacobucci D (2002) Marketing Research: Methodological Foundations. 8th ed. USA: South Western.