Influence of sales promotion on impulse purchase buying behaviour

Purpose – The purpose of this dissertation is to find out the influence of sales promotion on impulse purchase buying behaviour. This research is focused on the grocery retailer Tesco.

Design/Methodology/Approach – The subject areas covered in this dissertation are consumer buying behaviour, sales promotions and impulse buying behaviour. Two hypotheses are developed for this research and they are interrelated. Three objectives are developed and they are used to prove these hypotheses. The secondary data is collected first to know what is said about this phenomenon. Primary data is collected in the form of qualitative and quantitative data. Two mini focus group interviews are conducted for qualitative data. Surveys are used to collect the quantitative data. The population of the survey consisted of 78 samples from the consumers of Tesco, Parnell Street. Information like demographics and shopping frequency are collected to know about the details of the consumers. The data collection also verifies sales promotional activities, impulse buying behaviour and the relation between them. Data is analysed using an online survey tool called Surveymonkey

Findings- From this study, it has been understood that sales promotions have a major influence on the impulse purchasing behaviour of consumers. It has also been verified that price promotion is the most influencing factor of sales promotion, which drives consumers towards impulse purchase. Conclusions and recommendations at the end of this research will be useful for students who study consumer buying behaviour and for retailers to implement a strategy for sales promotion.

Originality/Value: Previous researches that has been carried out about impulse purchase has been influence of culture, mood etc. The function of this research is to find the influence of sales promotion on impulse purchase, which is important especially during the current economic recession.

Introduction:

This section of the dissertation outlines the research topic the researcher chose to study as part of his Masters in Business Administration (International) in Dublin Business School. This section is divided into the following parts.

Background of the research

Suitability of the researcher and interest in subject

Research Objectives and Hypotheses

Approach to the dissertation

Recipients of the research

Organisation of the research

Scope and limitations of the study

Background of the research:

One’s own personal shopping experiences verify that occasionally we go into a store with no planned purchases in mind. Usually, however we go into a store planning to buy one or more specific items. Sometimes we know that those planned items are offered at a sale price, sometimes they are at regular price, and sometimes a mixture of both. We usually have an idea how much it will cost and how many of them we plan to buy. However, once we are in the store, we sometimes buy all we planned to buy; sometimes we buy more than we planned to buy. This would have happened because of something that stimulated us inside the store. It could be because of various reasons like sales promotions or store atmospherics or uniqueness of the product. This study is based on the influence of sales promotions on unplanned purchases like this called impulse purchase.

Consumers’ buying behaviour is based on the needs of the consumer. This goes down to the basic level of consumer needs developed by Maslow(1971). He suggested a hierarchy of needs from the most basic to the most civilised one. Physiological needs, safety needs, belongingness needs, esteem needs and self-actualisation needs. To satisfy the needs, consumer buys things and this study is on the consumer buying behaviour. The consumer buying behaviour goes through a five sequential steps that is explained in the literature review of this article.

Practically, when a consumer feels the need for buying things, he/she goes for shopping. There are many types of shops available, but the retail shop is where consumers can buy the things that they need for daily life. The concept of retail shops are now changing with the evolution of large supermarkets. Retail shops are now becoming one-stop-shops called super markets, offering vast number of product categories and services ranging from fruits and vegetables, off-licence, bakery, butcher facilities and even pharmaceuticals. It is a common fact that the large grocery stores and super markets have an unfair advantage over small players, by using a low cost selling, which the small convenience stores struggle to match. The Irish grocery retail market has evolved with many changes over the last few years. Tesco is one of the main players that exist in Irish grocery retail market.

Organisations have started changing the methods of their grocery business over the last decade. There are innovations coming in the market everyday to attract new consumers and to retain them for a long period. Sales promotion is a quick way to strengthen the sales of an organisation. According to Kotler(2003), sales promotion is a key ingredient in marketing campaign which consists of diverse collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of a particular products or services by consumers or trade. It is one of the effective methods in creating savings to the regular grocery shoppers. For retailers, the sales promotion is an excellent opportunity to promote their products in bulk thereby increase profit margins and consumer loyalty. There are various sales promotion tools used by the retailers, price promotion being one of them. Price promotions help the consumers to buy their goods for a reduced price. There are various types of promotions which are described in the literature.

A phenomenon called impulse purchase is considered as different form of consumer buying action. Impulse purchasing is a phenomenon by which a consumer experiences a sudden and often persistent urge to buy something immediately (Rook, 1987). It is an enigma in the marketing world, which accounts for substantial volume of goods sold every year. It is said that 80 percent of all purchases in some particular goods categories is made through impulse purchase. Virvialite(2009) based on Kacen and Lee(2002).This is a widely used by the retailers as they attract the consumers to buy things impulsively. At the present market conditions, when market competition is high and all types of companies apply promotion in their activities, stimulation of impulse purchasing in the market of consumer goods may become a strong competitive advantage. We go through this phenomenon in our daily life, knowingly or unknowingly. It is the feeling that one cannot resist at that moment, which are affected many factors. An example of this would be when we see an advertisement in the store where it says “Half Price sale, Was €3.99, Now €1.99”.

The aim of this study is to study the influence of sales promotion on impulse purchase. This research determines if the consumers go for an impulse purchase, if there are sales promotions. There is also a second part to this research which determines if the price promotion is the most important factor in sales promotion that leads the consumer to impulse purchase. This study is an important one considering the current economic climate. In this recessionary period, consumers who are doing grocery shopping actually care for the ‘price’ factor and look for goods that are ‘value for money’. This study establishes the relation between sales promotion and impulse purchase.

2. Suitability of the researcher and the interest in the subject:

The researcher is an engineering graduate in Information Technology. The researcher has four years of work experience in I.T and business fields. Researcher has a family business back India, which deals with retail and wholesale trading of steel products. The researcher was taking care of business for one year before coming to Ireland and has an idea of what is happening in the real business world. The ultimate career goal is to take over the family business and expand it with more concentration on retail sector. This study on consumer buying behaviour will certainly help the researcher in achieving this goal.

The researcher is currently working in the retail sector and has observed many consumers going for impulse purchase because of the sales promotions. The researcher himself has fallen into the trap of impulse purchase when doing the grocery shopping on many occasions. This has specifically happened after the researcher came to Ireland where there are more sales promotions than seen elsewhere. This curiosity of the researcher encouraged to do a research on the influence of sales promotion on impulse purchase.

Organisation chosen for the research:

This research is conducted in Tesco, one of the biggest grocery retailers in Ireland. Tesco was founded by Jack Cohenand in 1919 and developed its first super market in 1956. They have come a long way through and now is the fourth largest retailer in the world, measured by revenues and second largest measured by profits. Tesco has its base at The United Kingdom and is spread across 14 countries all over the world. The company started its operations in Ireland as Tesco Ireland in 1997. The theme ‘Every Little Helps’ is very popular in Ireland. Tesco has almost all the services that is needed in our daily life, including groceries, bakery, clothing, and mobile network. The researcher chose Tesco for the research because of he considers it as the best place where the study of sales promotion and impulse purchasing can be done in the context of a grocery-shopping environment. The research takes place in Tesco, Parnell Street in Dublin, Ireland.

3. Research Topic:

Influence of sales promotion on impulse purchasing behaviour in the context of a grocery store.

The aim of this research is to find out the influence of sales promotional activities on impulse buying behaviour in the context of a grocery retail store. With this purpose, the research will be conducted in Tesco, Parnell Street, Dublin, Ireland.

This research focuses on answering the following questions:

1. Do sales promotional activities in store have a major influence on consumers’ impulse buying behaviour?

2. Is price promotion the major factor in sales promotion, which drives the consumers towards impulse purchase?

Objectives:

In order to answer each of these questions, the researcher came out with the following objectives.

To identify the sales promotional activities in the store

To find out if consumers actually go for an impulse purchase and the most influencing factor that affects it

To determine if price promotion is the most influencing factor of sales promotion and if consumer purchase low priced items during impulse buying

To justify this research, and to obtain the answer for the research questions, certain assumptions were made initially. Two hypotheses were developed which needs to be proved or disapproved.

Hypothesis:

H1: Sales promotional activities in the store have a major influence on customer’s impulse buying behaviour

H2: Price promotion is the most influencing factor of sales promotion, which drives consumers towards impulse purchase.

Approach to the Dissertation:

The objectives derived will be obtained systematically in the research. Firstly, the secondary research is conducted using relevant sources to understand the research problem area in depth. Various sources like journals, textbooks, magazines and websites will be used in accordance with academic regulations. Primary research is carried out next with the help of self-administered questionnaires and focus group interviews. The quantitative data obtained through questionnaires are then analysed with the help of appropriate statistical tool and the result will be drawn. The hypotheses will then be tested with the results obtained and will proved or disapproved. Conclusions will be made and recommendations will be proposed based on the results.

Recipients of the research:

There are five recipients of the research that is conducted as part of Masters in Business Administration (International) in Dublin Business School. They are as follows:

Dublin Business School where this researcher is a full time student studying for his qualification

Liverpool John Moore’s university, who provides the qualification which the student is studying for

Mrs. Linda Moran, who is dissertation supervisor, who guided the author through research process to date

Staff and management of Tesco Ireland Ltd, who gave the permission for the research to be conducted on them

Anybody who has interest in marketing specifically consumer buying behaviour, sales promotion and impulse purchase

Organisation of the Research:

Chapter 1: Introduction

This section of the dissertation introduces the background of the research, the suitability of the researcher and the interest in the topic.  This section also states the research objectives and hypotheses. Further, it gives a brief description about how the research is carried out. This section also mentions the recipients of the research and also about the scope and limitations of the research. 

Chapter 2: Literature Review

This section the researcher critically reviews the literature which provides the theoretical background to the study. In the first section, the consumer buying behaviour is described in general. Further, the researcher introduces the concept of impulse purchase. The next section explains the sales promotions and its different types. The final section describes the relation between sales promotion and impulse purchase.

Chapter 3: Research Methodology

This section describes the research methodology adopted for undertaking the research. This chapter begins with the ‘research onion’ proposed by Saunders et al.(2007) and proceeds layer by layer beginning from research philosophy towards data analysis. The justification of population and sampling method used are also discussed later.

Chapter 4: Data analysis and Findings.

This section describes the findings from the data analysis with the help of focus groups and questionnaire.

Chapter 5: Conclusion and Recommendations.

The section integrates the concepts of theories discussed in the literature review earlier and incorporates them with the data analysis and findings. The section concludes the research by providing justifications for proving or disapproving hypotheses. Recommendations are made and can be utilised by retailers and consumers for further studies.

Chapter 6: Self Reflection on Own Learning and Performance.

The section describes the researcher’s learning process and performance over the course of the International MBA programme. This section also describes the researcher’s development of various skills during the course.

Chapter 7: Bibliography

The section provides the list of various books, academic journals and websites that have been used in the dissertation. Harvard referencing system is used to reference the sources used.

Chapter 8: Appendices

Appendix includes the final questionnaire and project management Gantt chart.

Major contributions of the study:

Scope and Limitations of the research:

The main limitation of this study is faced during the primary research. The sample size taken for this study is a small population and of consumers of Tesco, Parnell Street. The results and conclusions are based on a single store and cannot be used for generalisation. Another issue that the researcher faced while conducting the primary research is the biasing problem. The researcher has remained neutral to his best of the ability while conducting the focus group interviews and questionnaires. The study being cross sectional is only relevant for a particular period of the present research. Any future changes in consumers’ attitudes can alter the results of present research.