EFFECT OF SALES PROMOTION TOOLS ON CUSTOMER PURCHASE DECISION WITH SPECIAL REFERENCE TO SPECIALTY PRODUCT (CAMERA) AT CHENNAI, TAMILNADU ABSTRACT

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1 EFFECT OF SALES PROMOTION TOOLS ON CUSTOMER PURCHASE DECISION WITH SPECIAL REFERENCE TO SPECIALTY PRODUCT (CAMERA) AT CHENNAI, TAMILNADU 1 C. Suresh, 2 K. Anandanatarajan, 3 R. Sritharan ABSTRACT 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. Through this study, an effort has been made to find out the various sales promotion tools and its impact on purchase decision towards specialty good (camera). For conducting the research, data was collected through convenience sampling of 109 respondents through descriptive research design technique. Later the data was analysed and the hypothesis was tested by using multiple regression technique. The result shows that among the various sales promotion tools: offer, premium and contest are the most influencing variables for consumer purchase decision. Introduction Keywords: Sales promotion, purchase decision, specialty goods. Every business organization reaches to the customers through their goods or services. To sell the products to the customers a number of activities are being performed. This is called marketing and it is an important function. Marketing is the performance of business activities that directs the flow of goods and services from producer to the customer. In marketing a large number of activities are performed. For easy understanding these activities are divided in 4 groups for products and 7 groups for services. These elements are product, price promotion, placement for products and three additional elements for services are process, people and physical evidence. These are called elements of marketing mix. Promotion is one of the elements of marketing mix. Promotion decisions are taken simultaneously with other decisions like finding target group, determining objectives, budgeting for promotion, launching of new products, distribution etc. Promotion is one of the variables through which information regarding products or services is being communicated to customers to change their attitude and behaviour. The purchase 1 Research Scholar, Department of Business Admin., Annamalai University csureshbemba@gmail.com 2 Assistant Professor, Business Administration Wing, Annamalai University 3 Assistant Professor, Business Administration Wing, Annamalai University Page 171

2 decision related to the goods depends on various factors like brand, quality, after sales services, warranty, advertising, rebates, offers, discount, mode of payment, display, sales person behaviour, store location and many more. Efforts have to be made by the marketer to plan the optimum combination of the factors that can increase the sales of their products. Well framed strategies will thus, contribute for the above. The customer should know about products usage and benefits. For these most effective tools is promotion. It includes elements like advertising, sales promotion, personal selling, public relation and direct marketing. It helps in conveying message about the product offering to the customers, creating demand, market positioning, make a decision related to buy a product. Among the various promotional tools it has been found that sales promotion is one which stimulates quick and large purchases in a limited period of time. It can be said that, it s a marketing activity that adds the value proposition related to a product (i.e., getting more for less) for a limited time in order to stimulate consumer purchasing, effective sales and the effort made by the sales force. It includes price offs, free gifts, premium, contest, exchange offer, rebates, sweepstake, buy one get one free, discount, point of purchase, event etc. Review of Literature Consumer promotions are now more pervasive than ever. Witness 215 billion manufacturer coupons distributed in 1986, up 500% in the last decade (Manufacturers Coupon Control Center 1988), and manufacturer expenditures on trade incentives to feature or display brands totalling more than $20 billion in the same year, up 800% in the last decade (Alsop 1986; Kessler 1986). So far, not much work has been done to identify the purchasing strategies that consumers adopt in response to particular promotions, or to study how pervasive these strategies are in a population of interest. Blattberg, Peacock and Sen (1976) define a purchase strategy as a general buying pattern which "incorporates several dimensions of buying behaviour such as brand loyalty, private brand proneness and deal proneness." A greater understanding of the different types of consumer responses to promotions can help managers to develop effective promotional programs as well as provide new insights for consumer behaviour theorists who seek to understand the influence of different types of environmental cues on consumer behaviour. Blattberg, Eppen, and Liebermann (1981), Gupta (1988), Neslin, Henderson, and Quelch (1985), Shoemaker (1979), Ward and Davis (1978), and Wilson, Newman, and Hastak (1979) find evidence that promotions are associated with purchase acceleration in terms of an increase in quantity purchased and, to a lesser extent, decreased inter purchase timing. Researchers studying the brand choice decision-for example, Guadagni and Little (1983) and Gupta (1988)-have found promotions to be associated with brand switching. Montgomery (1971), Schneider and Currim (1990), and Webster (1965) found that promotionprone households were associated with lower levels of brand loyalty. Blattberg, Peacock, and Sen (1976, 1978) describe 16 purchasing strategy segments based on three purchase dimensions: brand loyalty (single brand, single brand shifting, many brands), type of brand preferred (national, both national and private label), and price sensitivity (purchase at regular price, purchase at deal price). There are other variables that may be used to describe purchase strategies, examples are whether the household purchases a major or minor (share) national brand, store brand, or generic, or whether it is store-loyal or not. McAlister (1983) and Neslin and Shoemaker (1983) use certain segments derived from those of Blattberg, Peacock, and Sen but add a purchase acceleration variable to study the profitability of product promotions. Throughout the world, consumer sales promotions are an integral part of the marketing mix for many consumer products. Marketing managers use price-oriented promotions such as coupons, rebates, and price discounts to increase sales and market share, entice trial, and encourage brand switching. Non-price promotions such as sweepstakes, frequent user clubs, and premiums add excitement and value to brands and may encourage brand loyalty (e.g., Aaker 1991; Shea, 1996). In addition, consumers like promotions. They provide utilitarian benefits such as monetary savings, added value, increased quality, and Page 172

3 convenience, as well as hedonic benefits such as entertainment, exploration, and self expression (Chandon, Laurent, and Wansink, 1997). Statement of Problem: This paper aims to find out the impact of independent variables (sales promotion tools like price pack, rebate, offer, premium, contest) on dependent variable (consumer purchase decision) towards purchase of specialty good (camera). As per previous studies it has been found that among the various promotional mix elements sales promotion is the most stimulating variable for quick selling. There are various types of sale promotion tools used by the marketer but how to decide that which of them can stimulate the purchase. An effort is made to know what can be best way to use the various tools of sales promotion. Objectives: i. To identify various sales promotion tools influencing consumer purchase decision. ii. iii. To find the impact of sales promotion tools on purchase decision towards specialty product (camera). To find most influencing sales promotion tools on purchase decision. Research Hypothesis: H1: Price packs have significant impact on consumer purchase decision towards Camera. H2: Rebate has significant impact on consumer purchase decision towards Camera. H3: Offer has significant impact on consumer purchase decision towards Camera. H4: Premium has significant impact on consumer purchase decision towards Camera. H5: Contest has significant impact on consumer purchase decision towards Camera. Research Methodology Figure 1: Proposed Research Model The research has been framed to be organized through Multiple Regression Analysis for which a sample of 109 respondents was collected through convenience sampling from consumers of specialty good (camera). 5-points Likert s rating used for measurement. The data has gone through Factor Analysis using Principal Component method in order to test the reliability of the instrument. As dependent variable Y and Page 173

4 independent variable X2 were loaded on the same component thus the variable X2 has been deleted and rests were taken for further analysis. Data Interpretation and Analysis Table-1: Factor Analysis Rotated Component Matrix Component Y Y Y X X X X X X X X X X X X X X X a. Extraction Method: Principal Component Analysis. b. Rotation Method: Varimax with Kaiser Normalization Rotation converged in 6 iterations The result analyzed in SPSS with the use of Multiple Regression method. With the use of Factor analysis it was found that independent variable X2 has been eliminated and is not considered for further analysis. Thus, the remaining independent variables X1, X3, X4 and X5 are included in multiple regression analysis. With the interpretation of multiple regression it was found that except variable X1 the remaining variables are found to be significant. The analysis thus shows that among the various tools of Page 174

5 sales promotion: offer, premium and contest are having significant impact on consumer purchase decision.rebate is found to be insignificant. Thus, it can be interpreted that H3, H4 and H5 hypothesis are accepted and H1 and H2 are rejected. Table 2: Multiple Regressions Coefficients Model Unstandardized Coefficients B Std. Error Beta Standardized Coefficients t Sig. Constant X X X X a. Dependent Variable: Y Table 3: Hypothesis Testing Hypothesis Statement Status H1 H2 H3 H4 H5 Price pack has significant impact on consumer Rebate has significant impact on consumer Offer has significant impact on consumer Premium has significant impact on consumer Contest has significant impact on consumer Rejected Rejected Accepted Accepted Accepted Conclusion On the basis of above findings it can be concluded that sales promotion tools plays significant role in consumer purchase decision. The respondents are most influenced by offer further followed by premium and contest while price pack and rebate have been found to be insignificant. The marketers should focus on reframing of the above tools for stimulating purchase decision. Page 175

6 Managerial Implications: This paper tries to throw light on effect of some specific variables of sales promotion on consumer purchase decision. The research can help the business precisions, entrepreneur and other related marketing personnel in framing strategies related to decision for selling products. Further, remaining of the variables of sales promotion can be considered together for further research to have wider scope in marketing. The research is restricted to white good (refrigerator) which can be expanded to other white goods and brown goods also. Future study can be performed at other regions of the country with different demographic and at various other segments. Sales promotion variables can be clubbed with variables of other promotional tools also. References 1. Aggarwal, P. & Vaidyanathan, R. (2003) Use it or lose it: purchase acceleration effects of time limited promotions. Journal of Consumer Behaviour, 2(4), pp Ailawadi, K.L., Neslin, S.A. & Gedenk, K. (2001) Pursuing the value-conscious consumer: store brands versus national brand promotion. Journal of Marketing, 65(1), pp Bawa, K. & Shoemaker, R.W. (1987a) The coupons-prone consumer: some findings based on purchase behavior across product classes. Journal of Marketing, 51(4), pp Bawa, K. & Shoemaker, R.W. (1987b) The effects of direct mail coupons on brand choice behavior. Journal of Marketing Research, 24(4), pp Bawa, K. & Shoemaker, R.W. (1989) Analyzing incremental sales from a direct mail coupon promotion. Journal of Marketing, 53(3), pp Beerli, A. & Martin Santana, J. (1999) Design and validation of an instrument for measuring advertising effectiveness in the printed media. Journal of Current Issues and Research in Advertising, 21(2), pp Belch, G.E. & Belch, M.A. (2003) Advertising and Promotion: An Integrated Marketing Communications Perspective, 6th edn. Boston, MA: McGraw-Hill. 8. Blattberg, R.C. & Neslin, S.A. (1990) Sales promotion: Concepts, Methods, and Strategies. Englewood Cliffs, NJ: Prentice-Hall. 9. Blattberg, R.C., Eppen, G.D. & Lieberman, J. (1981) A theoretical and empirical evaluation of price deals for consumer nondurables. Journal of Marketing, 45(1), pp Gilbert, D.C. & Jackaria, N. (2002) The efficacy of sales promotions in UK supermarkets: a consumer view. International Journal of Retail & Distribution Management, 30(6), pp Gupta, S. (1993) Reflections on the impact of sales promotions on when, what and how much to buy. Journal of Marketing Research, 30(4), pp Haugh, L.J. (1983) Defining and redefining. Advertising Age, 14 February, p. 44. Helsen, K. & Schmittlein, D.C. (1992) Some characterizations of stockpiling behavior under uncertainty. Marketing Letters, 3(1), pp Ho, S.C. (1994) Report on the supermarket industry in Hong Kong. Working Paper, Hong Kong Consumer Council. Page 176