Research Report on
“Consumer perception towards frequent sales promotions and its impact on brand loyalty”
Course Title: Marketing Research
Course Code: MKT 414
Section: 01
Instructed By
Md. Farhan Faruqui
Assistant Professor
Department of Business Administration
Submitted by
Name
Syeeda Raisa Maliha
Samiul Hassan Tarafder
Suday Saha
Zubaer Islam
ID
2016-3-10-042
2016-1-10-057
2016-1-10-203
2016-3-10-056
Submission Date: December 3, 2019
Letter of Transmittal
December 3, 2019
Md. Farhan Faruqui
Assistant Professor
Department of Business Administration
East West University
Subject: Submission of the report on “Consumer perception towards sales promotion and its
impact on brand loyalty”
Sir,
Here we present our report on “Consumer perception towards sales promotion and its impact on
brand loyalty”. We have communicated with respective authority, selected some journals, and
collected some data survey to prepare this report. During the preparation of this report we have
enforced our best effort. Surely it enriches our knowledge.
We highly appreciate you for authorizing this report. Your positive action regarding this issue
would be very much helpful. It also needs to be mentioned that without your expert advice and
cooperation it would not have been possible to complete this report. If you need any further
clarification of information in interpreting this analysis, we will be glad to answer your queries.
Regards,
Syeeda Raisa Maliha
___________________
Suday Saha
___________________
Samiul Hassan Tarafder
___________________
Zubaer Islam
___________________
Acknowledgement
We would like to express our gratitude and indebtedness to honorable course instructor Md.
Farhan Faruqui, Assistant Professor, Department of Business Administration, East West
University, with his inexhaustible guidance, valuable advice, continuous inspiration, constrictive
criticism and generosity. He helped us to carry out this report with sophistication and precision.
We would like to express our gratitude to the respondents who helped to gather all the essential
information by answering the questionnaire.
Finally, we would like thank all the group members who directly and indirectly helped us to
provide and accumulate all the necessary information for the accomplishment of this term paper.
Abstract
Purpose – This research aims to demonstrate that sales promotion has a negative impact on
consumer perception as well as brand loyalty.
Design/methodology/approach – A survey of 230 respondents has been conducted. Expert
opinions and secondary data analysis has also been used to get insights.
Findings – The correlation analysis shows that only promotion driven customer base has an
influence on consumer perception. The regression analysis shows that promotion driven
customer base, cynical view, restrictive requirements and brand image have enough significance
to explain some portion of the dependent variable, loyalty. Two cross tabulations show two very
interesting patterns of behavior related to age and average monthly income.
Originality/value – Consumers respond negatively to offers of sales promotions because of
issues like promotion driven customer base, cynical view, restrictive requirements and brand
image. Brands should carefully plan their whole operation before jumping into such projects.
Keywords: Sales promotion, Promotion driven customer base, Cynical view, Restrictive
requirements, Brand image, Perception, Satisfaction and Loyalty.
Paper type: Research paper
Contents
1.0 INTRODUCTION .......................................................................................................................................... .1
2.0 BACKGROUND OF THE STUDY ................................................................................................................. 2
3.0 PROBLEM DEFINITION .............................................................................................................................. 5
3.1 SPECIFIC MARKETING RESEARCH PROBLEMS .................................................................................. ..5
3.2 BROAD MARKETING RESEARCH PROBLEM ........................................................................................ 5
3.3 MANAGEMENT DECISION PROBLEM ................................................................................................. 5
4.0 LITERATURE REVIEW………………………………………………………………………………………………………...………6
4.1 PROMOTION-DRIVEN CUSTOMER BASE…………………………………………………………………………………………..6
4.2 CYNICAL VIEW………………………………………………………………………………………………………………………….7
4.3 RESTRICTIVE REQUIREMENTS…………………………………………..………………………………………………………….8
4.4 BRAND IMAGE………………………………………………………………………………………………………………………….9
4.5 RELATIONSHIP BETWEEN CONSUMER PERCEPTION TOWARDS SALES PROMOTION AND PREFERENCE……………...9
4.6 PREFERENCE AND BEHAVIOUR…………………………………………………………………….……………………………..10
4.7 BEHAVIOUR AND CONSUMER SATISFACTION………………………………………………………………………………...…10
4.8 CONSUMER SATISFACTION AND BRAND LOYALTY………………………………………………............................................10
5.0 RESEARCH DESIGN…………………………………………………………………………………………………………………..11
5.1 EXPLORATORY RESEARCH………………………………………………………………………………………………………….11
5.1.1 SECONDARY DATA ANALYSIS…………………………………………………………………...…………………………….…11
5.1.2 INTERVIEW OF INDUSTRY EXPERTS……………………………………………………………….…………………………....12
5.1.3 QUALITATIVE RESEARCH…………………………………………………………………………………………………………13
5.1.4 FOCUS GROUP DISCUSSION……………………………….………………………………………………………………………13
5.1.5 PILOT SURVEY…………………………………………...………………………………………………………………………...14
5.2 DESCRIPTIVE RESEARCH……………………………………………………………..…………………………………………….15
5.2.1 SAMPLE AREA AND SIZE………………………………………………………………………….……………………………....15
5.2.2 DATA ANALYSIS METHOD……………………………………………………..………………………………………………...15
6.0 GRAPHICAL MODEL: “CONSUMER PERCEPTION TOWARDS FREQUENT SALES PROMOTIONS AND ITS IMPACT
ON BRAND LOYALTY”…………………………….………………………………………………………………………………………16
8.0 DATA ANALYSIS AND FINDINGS………………………………………………………………………………………………….18
8.1 DEMOGRAPHIC PROFILE……………………………………………………………………………...............................................18
8.2 PSYCHOGRAPHIC PROFILE…………………………………………………………………………………………………………..19
8.3 IMPACT OF AGE ON PURCHASING PRODUCTS AND SERVICES FROM SALES PROMOTION……………...........................20
8.4 IMPACT OF AVERAGE MONTHLY INCOME ON PURCHASING PRODUCTS AND SERVICES FROM SALES
PROMOTION………………………………………………………………………………………………....................................................21
8.5 STRENGTH AND SIGNIFICANCE OF RELATIONSHIP BETWEEN THE CONSTRUCTS .……………………….……………...22
8.6 EXTENT TO WHICH THE INDEPENDENT VARIABLES CAN EXPLAIN THE DEPENDENT VARIABLE ..............................23
8.7 HYPOTHESES TESTING AND RESULTS………………………………………………………………...........................................25
9.0 RECOMMENDATION…………………………………………………………………………………………………..………….…27
10.0 CONCLUSION……………………………….………………………………………………………......................................28
REFERENCE LIST
APPENDIX
1.0 Introduction
Firms nowadays are giving out BOGO offers, discounts or coupons every now and then. Some
are giving BOGO offers throughout the year, every single day (Café Cherrydrops). Whether it is
to increase traffic, sales or fame, sales promotion has become one of the favorite choices of
marketers as it is easier to plan and consumers find it attractive at first. If you scroll through food
review groups you will find a lot of posts asking for restaurants that are giving discounts or
BOGO offers. You see an increased traffic of customers on stores that have a 30% or 50% off
signs on the door.
Our goal is to figure out whether this sort of promotion will do any good in the long run. Or will
it fade away once the hype ends?
1
2.0 Background of the study
Sales promotion has become one of the favorite buzzwords for firms. Any problem they face,
they think there is only one solution which is giving the consumers something extra with the
product. Such reward programs are admired by firms and customers give a positive feedback too
but for a short time (Yang et al, 2010). Executives of an advertising agency have given us some
insights on what is going on in the minds of their clients and the latest trend of giving frequent
sales promotion.
Several giant companies have faced trouble regarding these issues including KFC, Wendy’s and
so on. Even Pepsi faced trouble because of sales promotion. We all know what happened when
Pepsi accidentally printed the winning number 349, eight hundred times!
There are some more specific reasons for selecting this particular topic. Such as:
Firms giving out offers of sales promotion without thinking strategically
We have said in the very beginning, offers of sales promotion like premiums or BOGO offers
have become a trend. As a result, firms are just randomly giving out promotional offers to keep
up with their competitors and increase customer traffic. Later on they figure out that it is actually
decreasing their profit margin and doing no good (Sherriff and Leslie, 2008).
A very real example can be seen in the following picture:
2
Firms competing based on sales promotion instead of based on quality of product or
services
Firms are competing themselves based on sales promotion rather than improving the product
qualities or thinking of well-planned marketing activities. So, instead of trying to improve
quality, they are taking the easier way out and ultimately creating an unhealthy form of
competition (Kendrick, 1998).
3
Offer driven customer base- “the coupon trap”
The “coupon trap” is a situation where consumers only buy products from brands that are offers
of sales promotion. Lately, most of the firms are running on sales promotions. If one
discontinues sales promotion, another firm will be available right away who’s selling products on
sales promotion. As a result, consumers are building up a habit of buying products that are on
promotion rather than the ones on actual price (Kendrick, 1998).
Emergence of a smarter customer base
Thanks to internet and technology, consumers know a lot more now than they ever did before
and that has turned them into a bunch of skeptical consumers (Schindler, 1992). So, when a firm
offers a sales promotion, they start asking questions like maybe the firm if giving such offers
because they are trying to get rid of the products that they are not being able to sell, or maybe
they had manipulated the price before giving out the discount so they can still make a profit out
of it, or maybe they are trying to sell cheap quality products and so on. Consumers know that a
firm or a company will never do anything that hurts their profit. That is why the concept of sales
promotion raises so many questions (Raghubir, 2005).
Decline in customer loyalty-Increasing number of brand switching
If we relate this to the point of the coupon trap, we can see that the loyalty of the consumers is
slowly fading away. We do not find customers who buy from a handful of favorites always
anymore (Kendrick, 1998). They have become smarter and more price sensitive. They always
look for scopes to reduce their cost of purchase. As a result they keep jumping from one brand to
another in search of offers of sales promotion (Mendez et al, 2015).
Consumers not willing to buy products for regular price
As the consumers have become habituated to the concept of getting things free or for a discount,
they are not willing to buy the same products for regular price anymore. As a result, if a
company does not offer sales promotion for a particular period of time, the consumers either
switch to other brands or wait for the brand to offer the promotion again (Raghubir, 2005). For
example, most people skip the rest of the days and visit Pizza Hut only on Sundays as they offer
the “buy one get one pizza” offer on that day. Same goes for other brands as well.
Creation of a Sales Promotion driven market
Based on the facts discussed above, firms are now bound to give offers of sales promotion
otherwise they lose customers. But then again, this is also creating a negative impact on the
brand’s profit and brand image (Kendrick, 1998).
4
3.0 Problem Definition
3.1 Specific Marketing research problems
To identify consumer psychology behind buying products on which offers are given.
To identify consumer perception towards frequently given offers of sales promotions.
To identify the demographic and psychographic profile of the consumers.
To identify whether customers will still buy from the brand even after discontinuing the
offer.
To identify whether frequent sales promotion is creating an increasing number of brand
switchers.
3.2 Broad Marketing Research Problem
To determine the effect of frequent sales promotion on customer loyalty.
3.3 Management Decision Problem
Should the firm use frequent sales promotions in their marketing strategy?
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4.0 Literature Review
The concept of sales promotion may look easy but it comes with a lot of baggages. First of all,
such offers of sales promotion and rewards are only said to be effective if they do not have a
negative impact on the products utility and cost (Simson, Carman and Suzan, 1994). So,
according to them, there is a possibility that the sales promotion will backfire if he customer
finds the related reward to be unattractive. On top of that, there are a lot of negative aspects
related with the concept. For example, many people think that products with discount offers have
a low cost. As a result, they refuse to buy the product for a regular price after the promotion
period ends (Raghubir, 2005). Another problem can be the diversion of focus from the brand to
the rewarded incentives (Dubey, 2014). And there is no certainty that the sales promotion will
end up in a higher sales volume. There are so many uncertainties relates here such as the a high
price level even after providing offer/discount, consumers who have a strong orientation towards
saving, low information provided by the firm, or fragile pre-existing favourite product (Jia et al,
2018).
These are just some examples. We have found out several more by analyzing some international
journals to develop the literature review. All of those aspects have been considered as our
constructs or variables in this report.
4.1 Promotion-driven Customer Base
Several marketers think that sales promotion is such a complex strategy that firms are damned if
they do it, damned if they do not. They fear that running endless sales promotion can end up in a
promotion-driven customer base (Kendrick, 1998). Generally people believe that sales promotion
is just a strategy to get customers for a short run but for retaining those customers that has to be
backed up with a long term marketing plan. Otherwise it can backfire and result in a false
customer base (Nation’s Restaurant News, 1985).
Coupon Trap
The variable coupon trap refers to a situation where consumers only buy from brands that are
offering sales promotion. This is a concern of many marketers because they have realised that
because of this trap, a large portion of the customer traffic is coupon driven and once the
coupon/discount is discontinued, they stop purchasing from the brand and keep waiting for the
next promotion (Kendrick, 1998). Marketers do fear that such behaviour of customers has a long
term negative impact on the price-value relationship of the product and they should look for
other alternatives (Wiggle, 1991).
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Little Real Loyalty
The next variable is little real loyalty. According to Li-xin & Shou-Lian (2010), sales promotion
has an indirect impact on brand loyalty through satisfaction, which has a direct impact on brand
loyalty. Also, from the coupon trap perspective, we’ve seen that customers buying from sales
promotion mostly buy the product only because of the promotion, not for the product or the
brand (Mendez et al, 2015).
Increased Price Sensitivity
This is the third variable under this construct. Overreliance on sales promotion can increase
customer’s price sensitivity by neutralizing the effect of brand trust (Sherriff and Leslie, 2008). It
has been claimed by most researchers that one of the main disadvantages of sales promotion is
the increase in customer’s price sensitivity (Chandon, Wansink, & Laurent, 2000; Neslin, 2002).
We therefore hypothesize that:
H1: Promotion-driven customer base influences consumer perception towards sales
promotion.
4.2 Cynical View
Marketers believe that unplanned sales promotions can reinforce a cynical view of the customers.
A brand’s trust refers to customer’s reliability on a brand’s ability to perform (Chaudhuri and
Holbrook, 82). Customers may think that there is something fishy going on behind the sales
promotion and that can have an adverse effect in consumer’s trust (Kendrick, 1998).
Price Manipulation
This variable states that consumers become sceptical about sales promotion and think that the
prices have been manipulated before the discount offer so that the company can still make a
profit out of it (Jayaraman et al, 2013). Many consumers think that price cuts are only hoaxes to
fool them (Kendrick, 1998).
Cheap Quality Products
This variable refers to the unethical practices that can be undertaken by marketers to sell cheap
quality products through sales promotion (Jayaraman et al, 2013). Relating to that view, Corfman
(1999) also showed that customers develop a perception of poor quality because of sales
promotion.
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Low Cost of Production
When products are offered on sales promotion, consumers tend to think that the cost of
production of that product is very low and that is why the firm is selling that on sales promotion.
This sort of thinking has an impact on their purchase decision when the product is offered
without sales promotion. Because they think that the product is not worth that much as the
production cost is low. So they refuse to buy it, resulting in a decrease in sales (Raghubir, 2005).
This view is also consistent with the findings of Simonson et al. (1994) who thinks that people
prefer not to buy from offers of sales promotion as they think the product is of poor quality and
has a very low production cost.
We therefore hypothesize that:
H2: Cynical view influences consumer perception towards sales promotion.
4.3 Restrictive Requirements
It is believed that consumers are more likely to react negatively to sales promotion with
restrictive requirements. Restrictive requirements are basically the terms and conditions like
limited time offers, expiration dates or specific quantity (Trump, 2016). Prior research has
proven this fact that psychological reactance has a negative impact on consumer’s reaction and
perception towards loyalty programs(Kivetz, 2005; Wendlandt and Schrader, 2007).
Psychological Reactance
Psychological reactance is the negative motivational reaction to specific offer, persons or rules
that tend to restrict the way a person behaves. Research has shown that psychological reactance
towards restrictive requirements of the sales promotions offered by a firm can harm consumers’
overall mind-set towards the company (Trump, 2016). Such reactance has a negative impact on
customer loyalty as customers relate sales promotion to loyalty programs and the same
psychological reactance gets triggered (Kivetz, 2005; Wendlandt and Schrader, 2007).
Limited Freedom of Choice
Many consumers think that firms are trying to limit their freedom of choice by giving out sales
promotion that have restrictive requirements attached to them. Customers know when firms offer
sales promotion (E.g. during off-peak hours, for new or unpopular products). So, they think of
such promotional offers as a tool to infringe their freedom of choice because due to the
requirements, customers can only purchase from sales promotion during the time frame or
product range given by the company (Trump, 2016). Consumers also feel that marketing
messages and sales promotional slogans are pushy and address the customers forcefully
(Kronrodetal, 2012).
8
We therefore hypothesize that:
H3: Restrictive requirements influence consumer perception towards sales
promotion.
4.4 Brand Image
Sales promotion can damage a brand’s image by reinforcing distrustful views of many customers
(Kendrick, 1998). Many marketers believe that sales promotion (especially monetary ones) can
have a negative impact on brand image as it diverts customer attention from the brand to
financial incentives (Sherriff and Leslie, 2008).
Price Reduction Image
Sales promotion gives the consumers a financial incentive to buy products or services but studies
have shown that the consumers return to their favourite brands after taking advantage of the sales
promotion. So, the image for the brand providing sales promotion is only related to price
reductions and not the brand itself (Kendrick, 1998). Cheong (1993) showed in his research that
although sales promotion increases customer traffic, the total amount spent by customers stay the
same.
Desperate Measure
A mail order executive commented to Kendrick that once a firm starts giving out free gifts (for
sales promotion), they can never stop. Sales promotions are hardly seen as a strategic marketing
component. Rather, it is seen as a desperate tool for desperate marketers (Kendrick, 1998).
Nation’s Restaurant News, (1985) also share the same views.
We therefore hypothesize that:
H4: Brand Image influences consumer perception towards sales promotion.
4.5 Relationship between consumer perception towards sales promotion and preference
There has always been a debate on whether or not sales promotion has any impact on brand
preference. Many marketers argue that sales promotion (especially monetary ones) have a
negative impact on customer preference and brand trust as they divert the customers’ focus from
the brand to the incentives given by the sales promotion (Kendrick, 1998). Many also believe
that the preference they create is only for the short run and fades away once the promotional
offer is discontinued (Mendez et al, 2015).
9
So, how the customers perceive sales promotion given by a company influences their preference.
It could be an opportunity for them to buy more from their favourite brands but it could also be
an opportunity to try out random brands only for a short time. So, we can hypothesize that:
H5: There is a positive relation between consumer perception towards sales
promotion and preference.
4.6 Preference and Behaviour
According to Kendrick (1998), consumers receiving free gifts preferred a product more than a
product with no gift and eventually ended up buying that product. Simply put, this sums up the
relationship between consumer preference and behavioural intention. Also, Simonson et al.
(1994) found that the occurrence of a promotional offer can backfire and lead to reduced buying
behaviour as compared to the absence of the promotional offer. So, we can hypothesize that:
H6: Preference influences consumers’ behaviour.
4.7 Behaviour and consumer satisfaction
Marketers must make sure that the offers of sales promotion that they are giving out is ending up
in customer satisfaction to ensure their repurchase intentions. So, if every purchase made from
sales promotion does not end up in customer satisfaction, there is a huge possibility that the
promotion will backfire and end up in loss of brand trust and loyalty (Jayaraman et al, 2013).
Also, price is one of the key determinants of customer satisfaction (Andaleeb and Conway,
2006). Sales promotion has a close connection with both of these elements.
So, we can hypothesize that:
H7: Behaviour results in consumer satisfaction.
4.8 Consumer satisfaction and brand loyalty
Kendrick (1998) states that there are two dimensions of brand loyalty - purchase activity and
spending on a brand over time. We have already discussed how customer satisfaction is related
to brand loyalty as it evokes repurchase intention of the customers (Jayaraman et al, 2013).
Although most researchers have argued that in the long run, sales promotion has an adverse
effect on customer loyalty in the form of price sensitivity (Chandon, Wansink, & Laurent, 2000;
Neslin, 2002), brand switching, and lower repeat purchase rates (Gupta, 1998). This is why
ensuring satisfaction is important to create brand loyalty. So, we can hypothesize that:
H8: Consumer satisfaction influences brand loyalty.
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5.0 Research Design
5.1 Exploratory Research
Here are the methods we plan to follow in case of the exploratory research. The methods are
arranged sequentially.
5.1.1 Secondary data analysis
We have already gone through several journals related to our research topic. Eight of them have
been discussed in this proposal with a detailed discussion on their findings, limitation and future
research scope. Here are the references of the journals:
i.
Alice Kendrick, “Promotional products vs price promotion in fostering customer loyalty:
a report of two controlled field experiments”, the journal of services marketing, 1998,
VOL. 12, Issue:0 4, pp. 312-326
From this journal, we have derived 3 or our constructs- promotion driven customer-base,
cynical view and brand image as well as 4 variables- coupon trap, little real loyalty, price
reduction image and desperate measure.
ii.
Rebecca K. Trump, “Harm in price promotions: when coupons elicit reactance”, Journal
of Consumer Marketing , 2016, Vol.33 Issue 04, pp. 302-310
From this particular journal, we got one of our constructs- restrictive requirements and
two of the variables- psychological reactance and limited freedom of choice.
iii.
Priya Raghubir, “Framing a price bundle: the case of “buy/get” offers”, Journal of
Product & Brand Management , 2005, Vol. 14, Issue 02, pp. 123-128
From this journal, we got one variable which is the low cost of production.
iv.
Itamar Simonson, Ziv Carmon, and Suzzane O’curry, “Experimental evidence on the
negative effect of product features and sales promotion on brand choice”, Journal of
Marketing Science, 1994, Vol. 13, Issue 01, pp. 23-39
From this journal, we did not directly get any variables or constructs but it gave us
supporting information about the variables and constructs that we had already figured
out.
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v.
KrishnaSwamy Jayaraman, Mohammad Iranmanesh, Manjeet Dashini Kaur and Hasnah
Haron, “Consumer Reflections on “Buy One Get One Free” (BOGO) Promotion
Scheme-An Empirical Study in Malaysia “,Research Journal of Applied Sciences,
Engineering and Technology , 2013, Vol. 5, Issue 09, pp. 2740-2747
From this journal, we got two of our variables- cheap quality products and price
manipulation.
vi.
Marife Mendez , Michael Bendixen , Russell Abratt , Yuliya Yurova and Bay O’Leary , ”
Sales Promotion and Brand Loyalty: Some New Insights “,International Journal of
Education and Social Science , 2015, Vol. 2, Issue 01, pp. 103-117
We may not have gotten any direct construct or variables from this journal but it helped
up build up the background of the report as well as providing supporting information
about the variables and constructs that have already been fixed.
vii.
Chung-kue Hsu and Ben S. Liu, “The role of mood in price promotions “,journal of
product & brand management, 1998, Vol. 7, Issue 02, pp. 150-160
From this journal, we did not directly get any variables or constructs but it gave us
supporting information about the variables and constructs that we had already figured
out.
viii.
Sherriff T.K. Luk And Leslie S.C. Yip, “The moderator effect of monetary sales promotion
on the relationship between brand trust and purchase behavior “, Journal of Brand
Management, 2008, Vol. 15, Issue 06, pp. 452-464
From this journal, we got one of our variables which are the increased price sensitivity.
Basically all of these journals provided us with relevant information regarding our topic one way
or another.
5.1.2 Interview of Industry experts
To gain more insights for our research, we have conducted an interview with some industry
experts. We have discussed the issue of our report with the top executives of an advertising
agency, Ikbal Al Mahmud, the managing director and Firoza Begum Tumpa, the Chairperson of
Mindtree BD Ltd. They conduct frequent researches on sales promotion of their clients as well as
their competitors.
The executives of MindTree have given us some insights on what is going on in the minds of
their clients. Although firms do not reveal their budgets or specific plans completely to the
agency, they have seen the emerging trend of spending more money on sales promotion
throughout the last couple of years. There has been a drastic change in the mindset of firms in the
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last 6 years. 6 years ago firms were more focused on TVCs. Digital marketing replaced TVCs for
the last couple of years and now, sales promotion has been getting increasing attention recently.
Many firms are cutting down their costs from TVCs, print advertisements to finance sales
promotion. Unfortunately, the results of these acts are not as positive as we think they are.
Mostly because the customers get habituated to the fact that they will get free gifts or discounts,
the firms have to continue doing that to retain the customer. And to do that, they have to cut their
costs even more from other promotional options. Based on this phenomenon, we have chosen
this particular topic to explore how much benefit can actually be derived from sales promotion.
5.1.3 Qualitative research
For qualitative research, we conducted an open discussion with one of the sales persons of
Freeland (Manzur Hasan Mazumder) to gain insights about the current situation regarding sales
promotion offers and customer behavior. We have chosen a sales person because he can give us
a proper insight about what goes on inside the stores. We have chosen someone we know
because strangers may not be willing to disclose information about their workplace.
The salesperson did not really give us any new insights on the issue. He only mentioned that
whenever discounts are given, the customer traffic becomes almost double. But then it returns to
the original number after the offer is discontinued. Such issues have already been discussed by
researchers like Chandon, Wansink, & Laurent, 2000; Neslin, 2002 and Gupta, 1998.
5.1.4 Focus group discussion
The first specific marketing problem that we had was to figure out the consumer psychology
regarding offers. For that, a focus group discussion is the most appropriate method.
We have conducted a focus group discussion on 3 groups of 10 individuals to gain insights about
their psychology and perception about frequent sales promotions. The individuals have been
chosen among regular shoppers.
The first one was a group of 10 individuals who were mostly middle aged, aging from 35 and
above. These people did not show a lot of interest in offers of sales promotion. One of them
added that at this age, most of the shopping they do is for groceries. Purchasing vegetables, salt
or rice from sales promotion does not make much sense.
The second group consists of 10 individuals who were undergraduate students. This group
showed some interest in purchasing products from sales promotion. Although the survey was
proven to be gender neutral but in this particular group discussion, females showed a greater
interest in purchasing products, especially clothes from sales promotion, while the guys showed
more of a skeptic point of view. They basically said the things that we found from our secondary
data. No new information was added.
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The third group was a group of 10 individuals who have completed their graduation and most of
them were employed. They said that perception towards sales promotion varies from product to
product. They said that they would never buy products on sales promotion from Daraz as they
have already experienced that those products are not of good quality. But they had a positive
reacting for clothing items in physical outlets as they said they can see and judge the quality
before purchasing to check if there’s anything off about the product.
5.1.5 Pilot Survey
We administered a pilot study of 30 individuals to figure out whether our questionnaire has any
flaws or not.
All the independent variables and the overall reliability have been tested using Cronbach’s alpha
to evaluate data reliability. As we know that if the alpha is more than 0.7 than the data can be
accepted as they are reliable. We also conducted a regression analysis on the data from the pilot
survey to see if the variables were significant enough.
While conducting the pilot surveys, we came across several problems regarding the values of the
Cronbach’s alpha and the regression. We figured out the reasons behind the poor results and tried
to fix our questionnaire accordingly.
Problems
Corrections
The questionnaire had a lack of
life into it (colours and pictures)
We put some colourful pictured related
to sales promotion as a watermark in
the questionnaire.
We gave examples in brackets beside
difficult terms like sales promotion and
restrictive requirements so that it
becomes easier for people to
understand.
Some of the terms like sales
promotion
and
restrictive
requirements may have been a
little difficult for people from a
non-marketing background.
Table 5-1: Problems and corrections in the questionnaire
After making the correction we went for several more pilot surveys and after conducting 5 pilot
surveys and fixing the questionnaire 5 times, we finally got some acceptable figures of reliability
and regression.
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5.2 Descriptive Research
Primary data has been collected via a survey questionnaire where have collected information
from 230 respondents and we have used that data to draw a conclusion about our research
problem after analyzing it. Our goal is to quantify the perception of customers about frequent
sales promotions and their brand switching behavior. We have also examined the demographic
and psychographic profiles of the target audience.
We have collected the data on a one to one basis which means that while the respondents fill up
the questionnaire, at least one of our group members were there with the respondent so that he
could clear any sort of confusion regarding the questionnaire and get proper answers.
5.2.1 Sample area and size
We have selected simple random sampling (SRS) as our sampling process. Although the
selection was random, we tried to make it as representative as possible by selecting people from
all age groups, income class, educational background and things those sorts. And as it was
random, it was free from all sorts of biasness. We only excluded the age group 0-15 years as we
thought children would not be able to think strategically and realistically enough to understand
and answer the questions.
The sample size was of 230 respondents, the extent was one geographical area only, the Dhaka
city and the time was the month of November, 2019.
5.2.2 Data Analysis Method
We have conducted a conclusive research which means that the data collected from the
questionnaires have been analyzed by statistical tools to reach a final conclusion.
After collecting the data, ran it through SPSS to analyze the data and test the reliability of the
data as well as calculate the regression between the dependent variable and for all the
independent variable separately. We tested our hypotheses to reach a conclusion for the research
problem. The reason for doing regression analysis, correlation analysis, and cross is because we
have both dependent variable and independent variable from the constructs of the graphical
model and our target was to find out the link between these variables. That sort of relationship
can be best understood by these analyses.
15
6.0 Graphical Model: “Consumer perception towards frequent sales promotions and its
impact on brand loyalty”
Figure 6-1: Graphical overview of consumer perception towards sales promotion
16
We will be using PDC, CV, RR and BI as short forms of Promotion Driven Customer base,
Cynical View, Restrictive Requirements, and Brand Image respectively for the rest of the report
to reduce complexity.
17
7.0 Data Analysis and Findings
We have conducted our main survey on 230 respondents. The analysis of the collected data has
been divided into seven major segments.
7.1 Demographic profile
Gender
Age group
Occupation
Education
Average Monthly Income
Marital Status
Category
Male
Female
Total
16-25
26-35
36-45
46 and above
Total
Student
Business Owner
Government Employee
Private Employee
Housewife
Others
Total
Masters/MBA/Graduate
Undergraduate
HSC/A levels
SSC/ O levels
Total
10,000 or below
10,001-20,000
20,001- 30,000
30,001-40,000
40,000 or above
Total
Married
Unmarried
Total
Table 7-1: Demographic profile
18
Frequency Percentage
136
59.1
94
40.9
230
100.0
176
76.5
31
13.5
12
5.2
11
4.8
230
100.0
170
73.9
9
3.9
16
7.0
29
12.6
4
1.7
2
0.9
230
100.0
42
18.3
181
78.7
7
3.0
0
0.0
230
100.0
145
63.0
29
12.6
22
9.6
25
10.9
9
3.9
230
100.0
40
17.4
190
82.6
230
100.0
From the demographic profile, we can see that in the sample, there were more male members
compared to female. In terms of age group, most of the respondents belong to the age group of
16-25. In the occupation category, majority of them were students and in the education category,
most of the respondents are undergraduate students. In the case of average monthly income,
majority had an income of BDT 10,000 or below, which makes sense as most of them are
students. And the major portion of the respondents is unmarried.
7.2 Psychographic profile
A summary of the psychographic characteristics have been presented in the following table:
What matters to you most while
buying a product?
Why do you buy products/services
from sales promotion?
What sort of product or service do you
buy from sales promotion?
How often do you buy products from
offers of sales promotion?
Category
Price
Quality
Features
Availability
Total
Lower price
Increased quantity
To try out new brands
To save money
Total
Daily groceries
Clothing
Electronic Goods
Fast Foods
Others
Total
2/3 times a year
Once a month
Once a week
2/3 times a week
Never
Total
Frequency
61
142
23
4
230
75
9
78
68
230
39
96
47
41
7
230
139
78
6
4
3
230
Percentage
26.5
61.7
10.0
1.7
100.0
32.6
3.9
33.9
29.6
100.0
17.0
41.7
20.4
17.8
3.0
100.0
60.4
33.9
2.6
1.7
1.3
100.0
Table 7-2: Psychographic Profile
In the psychographic profile, majority said that the most important aspect to them when they buy
a product is quality. 78 out of 230 said that they purchase from sales promotion to try out new
brands, narrowly beating lower price (75/230). The product category gives us an interesting
insight as we see that most of the respondents like to buy clothes from sales promotion. This
result is consistent with our findings from the group discussion. And finally, for the majority, the
frequency of purchasing products from sales promotion is 2/3 times a year.
19
7.3 Impact of Age on Purchasing products and Services from Sales Promotion
We have conducted Cross tabulation analysis to figure out if age has any impact on behaviour.
Age
Group
16-25
Age Group * Behavior Cross tabulation
Behavior (You purchase products with
offers of Sales Promotion)
Strongly
Strongly
Disagree Disagree Agree
agree
Count
28
28
17
103
% within
15.9%
15.9% 58.5%
9.7%
Age Group
Total
176
100.0%
26-35
Count
% within
Age Group
5
16.1%
7
22.6%
17
54.8%
2
6.5%
31
100.0%
36-45
Count
% within
Age Group
3
25.0%
0
0.0%
7
58.3%
2
16.7%
12
100.0%
46
and
above
Count
% within
Age Group
1
9.1%
6
54.5%
4
36.4%
0
0.0%
11
100.0%
Table 7-3: Cross tabulation of age group and behaviour
We can see a pattern here if we look at it from a distance. The percentage (within age group) of
agreeing to purchase products from offers of sales promotion is more of less the same for ages 16
to 45. It is highest for the age group 16-25. On the other hand, the percentage (within age group)
of purchase is the lowest for the age group 46 and above.
So, from a broader point of view, we can say that, the more people age, the less they are attracted
to offers of sales promotion. And this pattern is consistent with the views of Dubey (2014), who
also indicated that youngsters are more sensitive to incentives offered by sales promotion
compared to older people. They are also more likely to switch brands because of this behaviour.
Saleh, Alothman & Alhosan’s research (2013) prove the same theory.
20
7.4 Impact of Average Monthly Income on Purchasing products and Services from Sales
Promotion
We have conducted Cross tabulation analysis to figure out if average monthly income has any
impact on behaviour.
Average
monthly
income
(BDT)
Average monthly income (BDT) * Behavior Cross tabulation
Behavior (You purchase products with
offers of Sales Promotion)
Strongly
Strongly
Disagree Disagree Agree
agree
10,000 Count
24
20
14
87
or
% within Average
16.6%
13.8% 60.0%
9.7%
below
monthly income
(BDT)
10,001- Count
4
6
3
16
20,000 % within Average
13.8%
20.7% 55.2%
10.3%
monthly income
(BDT)
20,001- Count
4
5
1
12
30,000 % within Average
18.2%
22.7% 54.5%
4.5%
monthly income
(BDT)
30,001- Count
3
6
2
14
40,000 % within Average
12.0%
24.0% 56.0%
8.0%
monthly income
(BDT)
40,000 Count
2
4
1
2
or
% within Average
22.2%
44.4% 22.2%
11.1%
above
monthly income
(BDT)
Total
145
100.0%
29
100.0%
22
100.0%
25
100.0%
9
100.0%
Table 7-4: Cross tabulation of average monthly income and behaviour
This cross tabulation analysis also has an interesting pattern. If we look at the percentage of
people agreeing to purchase products from offers of sales promotion, the income group of BDT
10,000 or less has the highest percentage (within group). The next three groups have a more or
less same percentage. But the percentage gets a huge drop from 60% to 22% in the income group
of BDT 40,000 or more. So, from a broader point of view, we can say that the more people earn,
the less likely they are to purchase products from sales promotion. The problem is that this result
differs with the findings of Saleh, Alothman & Alhosan’s research (2013), who determined that
income level has no significant impact on purchase from sales promotion.
21
8.5 Strength and Significance of Relationship between the Constructs
Correlations
Mean
CV
Mean PDC
Mean
PDC
1
Mean CV
.489**
1
Mean
RR
Mean
BI
Perception
Preference
Behavior
Satisfaction Loyalty
0.000
Mean RR
1
.354**
Mean BI
1
0.000
Perception
.137*
1
0.038
.639**
Preference
1
0.000
Behavior
*
.712**
.686**
0.047
0.000
0.000
.651**
.673**
.779**
0.000
0.000
0.000
**
**
.706**
.802**
0.000
0.000
0.000
.131
Satisfaction
Loyalty
.171
**
0.009
-.202
**
.700
0.002
0.000
.534
1
1
Table 7-5: Correlation Analysis
From the results of the correlation analysis, we can understand two aspects of the constructs.
The strength of the correlations varies from construct to construct. From the table above, we can
see that behavior is strongly correlated with perception, satisfaction and loyalty. Apart from
behavior, loyalty is also strongly correlated with perception and satisfaction. The strength of the
correlations among constructs has been color coded in table 8-5.
All of the constructs have a positive relationship with each other except the correlation between
loyalty and mean BI. And this does make enough sense to have a negative relationship because
consumers think that if the brand is of good quality, why would it have to use sales promotion to
22
1
increase consumer traffic? This sort of thinking creates a negative impact on a firm’s brand
image and that ultimately shows in consumer loyalty.
8.6 Extent to Which the Independent Variables Can Explain the Dependent Variable
To identify the extent to which the dependent variable, loyalty can be explained by the
independent variables selected in the graphical model, we conducted the regression analysis.
Model Summary
Adjusted R
Std. Error of
Model
R
R Square
Square
the Estimate
a
1
.869
.746
.417
.755
a. Predictors: (Constant), Mean BI, Perception, Mean CV, Mean
RR, Mean PDC, Preference, Satisfaction, Behavior
Table 7-6: Regression Analysis: Model Summary
As we can see from the model summary, the R square here is 0.755 which means that 75.5% the
dependent variable (loyalty) can be explained by the variation in the independent variables. And
the adjusted R square’s value is very close to the one of R square. That indicates that there were
very few errors in the data. So, we can say that the regression model is a good fit.
ANOVAa
Sum of
Mean
Model
Squares
df
Square
F
Sig.
1
Regression
118.217
8
14.777 84.977
.000b
Residual
38.431 221
.174
Total
156.648 229
a. Dependent Variable: Loyalty
b. Predictors: (Constant), Mean BI, Perception, Mean CV, Mean RR,
Mean PDC, Preference, Satisfaction, Behavior
Table 7-7: Regression Analysis: ANOVA
Also, the significance (.000) in the ANOVA shows that the independent variables are good
predictors of the dependent variable (loyalty).
Now that the model has proved its significance and fit, we need to look at the coefficients and
their significance level to see whether all of the constructs are significant or not and, to develop a
regression equation.
23
Coefficientsa
Unstandardized Standardized
Coefficients
Coefficients
Std.
Model
B
Error
Beta
1 (Constant)
.604
.196
Perception
.346
.051
.342
Preference -.117
.044
-.134
Behavior
.128
.058
.134
Satisfaction .565
.059
.554
PDC
-.179
.055
-.126
CV
.197
.047
.160
RR
-.076
.032
-.087
BI
-.100
.038
-.096
a. Dependent Variable: Loyalty
t
Sig.
3.088 .002
6.776 .000
-2.679 .008
2.201 .029
9.547 .000
-3.244 .001
4.152 .000
-2.396 .017
-2.617 .009
Collinearity
Statistics
Toleran
ce
VIF
.436
.443
.299
.330
.732
.751
.850
.820
2.292
2.255
3.344
3.032
1.365
1.331
1.177
1.220
Table 7-8: Regression Analysis: Coefficients
First of all, we can see that all of the constructs have significance level below 0.05. So, all of
them are proper predictors of the dependent variable. Also, the VIF under Collinearity statistics
in under 10 for all of the constructs. This means that the constructs do not influence each other.
So, from the beta coefficients, we can develop a regression equation that looks like this:
Loyalty = 0.604 + 0.342 Perception – 0.134 Preference + 0.134 Behaviour + 0.554 Satisfaction
– 0.126 PDC + 0.160 CV – 0.087 RR – 0.096 BI
This equation shows that satisfaction is the major predictor of loyalty, which makes perfect
sense. Also, it shows the direction of relationship as well. Perception, behaviour and satisfaction
have a positive relationship with loyalty and PDC, RR and BI have a negative relationship with
loyalty (justification behind BI having a negative relationship with loyalty has already been
discussed in the correlations section), all of which is logical enough.
The problem is with the positive relationship between CV and loyalty and the negative
relationship between preference and loyalty. CV represents the sceptical views of customers. It
does not make sense why and how having sceptical views about a brand would lead to loyalty.
How more preference will lead to a decrease in brand loyalty also does not make any sense so
far. Both of these issues require further research.
24
8.7 Hypotheses Testing and Results
The first hypothesis (H1) observes whether promotion driven customer base influences consumer
perception towards sales promotion. This hypothesis has been proven to be true from the results
of our data collection (significance level .001). The value of the beta coefficient indicates that
12.6% of the dependent variable, loyalty can be explained by promotion driven customer base.
The Pearson's Correlation Coefficient here is .489 with indicates a moderate relationship
between the constructs. So, the hypothesis is accepted. This result is consistent with the views of
Ehrenberg et al. (1994). They determined that there were short term peaks in sales due to
promotional offers, although those did not last long. Bawa and Shoemaker (1987) quote the same
incident.
Hypothesis two (H2) indicates that cynical view influences consumer perception towards sales
promotion. The results from the data analysis support this fact as the significance level is below
0.5. Also, the value of the coefficient indicates that 16% of loyalty can be explained by cynical
view, but the relationship is negative, which does not make sense. The hypothesis can be
accepted. However, the correlation between the constructs was proven to be insignificant. This
view has been supported by Advertising Age (1988), where it has been determined that
customers believe that sales promotional tools cause a higher price. Campbell (1999) argued that
customers are always sceptical about promotional offers and they always think about the seller’s
cost and profit margin to see if the prices are justified.
Next, we have hypothesis three (H3) where we determine whether or not restrictive requirements
influence consumer perception towards sales promotion. The significance level is below 0.5 for
this construct, with a beta coefficient that says that 8.7% of the dependent variable can be
explained by this construct. The relationship is negative, which makes enough sense as an
increase in restrictive requirements would create a negative perception which will ultimately
influence brand loyalty in a negative way. So, the hypothesis is accepted. However, the
correlation between the constructs was insignificant. Several other research papers are out there
where the researchers found out that consumers react negatively if they figure out the marketer’s
target of persuading them. (Brown and Krishna, 2004; Campbell and Kirmani, 2000; Friestad
and Wright, 1994; Morales, 2005; Wei et al., 2008).
Then comes hypothesis four (H4) where our goal was to determine the influence of brand image
on consumer perception. The significance level (.009) indicated that this construct is an
appropriate predictor of loyalty where the beta coefficient indicated that 9.6% of the dependent
variable can be explained by brand image. The relationship is negative and the explanation has
already been given in the correlation analysis. So, the hypothesis is accepted. Although the
correlation between the constructs were proven insignificant, this hypothesis can be supported by
the findings of Nation’s Restaurant News (1985) where they found out that coupons and other
25
forms of sales promotion create an undesirable impact on the company’s brand image, for
example, the price reduction image.
In hypothesis five (H5), the target is to determine the influence of consumer perception towards
sales promotion on consumer preference. The significance level of the data analysis (.000) and
the correlation as well as beta coefficient give us a strong result. This time, the significance level
of the correlation analysis is favourable too as the significance level is 0.000 with a Pearson’s
coefficient that indicates a moderate relationship (0.686) between the constructs. So, the
hypothesis can be accepted. Kendrick’s (1998) report supports this notion as it figures out that
customers do create a perception about the price and brand image of the product which
ultimately influences their preference.
The sixth hypothesis (H6) determines the relationship between preference and behaviour. The
significance level from the regression analysis was 0.29 and 13.4% of the dependent variable
(loyalty) could be explained by preference. But it also showed a negative relationship between
preference and loyalty which does not make a lot of sense. There is a moderate correlation
between the constructs and the significance level is 0.000. This means that the hypothesis can be
accepted. This result can be supported by another research too where they have proven that there
is a significant, yet negative relationship between sales promotion and purchase intention and
preference (Santini et al, 2016).
Then, hypothesis seven (H7) indicates that behaviour influences satisfaction. The significance
level from the regression analysis was 0.000 and 13.4% of the dependent variable (loyalty) could
be explained by behaviour. The data shows a strong correlation between the constructs (.779)
and the significance level here is also is 0.000. So, the hypothesis is accepted. This makes sense
as satisfaction can only result after actions have been taken. Such statements can be found
proven on the studies of Jayaraman (2012), where he determined that if the purchases from sales
promotion do not end up in customer satisfaction, it will ultimately end up in a decrease in
customer’s brand loyalty. So, it is important for the purchase made from sales promotion to end
in customer satisfaction (Gupta, 1998).
Finally, the last hypothesis (H8) emphasizes on the influence of satisfaction on brand loyalty. Not
only has this hypothesis been accepted on the basis that these two have a strong correlation
(.802) with a significance level of .000, but also, even from the regression model, we can see that
satisfaction has the biggest influence on loyalty as 55.4% of loyalty can be explained by
satisfaction. So, the hypothesis is accepted. Also, based on Yee and Sidek’s report (2008), this
result makes perfect sense as their report proves that brand loyalty and switching both are
heavily influenced by the perceived value and satisfaction gained by the consumers.
26
9.0 Recommendation
This report obviously has several flaws and limitations. We will be discussing those limitations
as well as how those can be used in future research.
The first limitation here is the positive relationship between cynical view and brand loyalty. Not
in any logical intellect does it make sense that having sceptical views about a brand would make
you more loyal to it. So, such relationship between these constructs can be investigated in future
research.
The second one is the negative relationship between preference and brand loyalty. Again, it
makes very little to almost no sense that a person who prefers a brand will not be loyal to it. This
aspect can be analysed more for further research.
After that, our third limitation was that we could not look into the issue of how perception and
behaviour differs from product to product even though such patterns have been seen in both
focus group discussion and the survey. This issue can be the focus of another future research.
The fourth limitation of our research is that we found out an interesting pattern of relationship
between average monthly income and purchase behaviour. But, that was proven insignificant by
a study of Alothman & Alhosan’s research (2013). Thus, the issue demands further investigation
and research.
And finally, we could not meet the need of our last specific marketing research problem which
was to figure out the rate of brand switching due to sales promotion. Although we did get a lot of
indirect and qualitative information on that issue, it needs to be quantified to be concrete. So,
future researchers can pick up on that and conduct a research.
27
10.0 Conclusion
From the analysis of all of the collected data, we can see that a sales promotion driven customer
base, restrictive requirements and sales promotion’s impact on brand image decrease consumer
loyalty and create a larger number of brand switching. But we also know that these things are
connected to sales promotion one way or the other. So, it is possible that unplanned sales
promotion can actually do more harm than good (Simonson et al, 1994). Then again sales
promotion is an effective strategy for boosting customer traffic Caliri, 1993; Haire, 1993;
Rundles, 1986). So, marketers must be cautious while going for such promotional offers because
it has a high possibility of backfiring.
28
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APPENDIX
Summary of the Journals
Journal-1:
Alice Kendrick, “Promotional products vs price promotion in fostering customer loyalty: a
report of two controlled field experiments”, the journal of services marketing, 1998, VOL.
12, Issue 04, pp. 312-326
Findings:
Frequent sales promotion offers create a “coupon trap”.
Running endless promotions results in a promotion-driven customer base and little
real loyalty.
Couponing can lead to the creation of a false customer base and a price reduction
image
Price cutting damages brand image and reinforces the distrustful view of many
consumers that price cutting isn’t as real as it’s made out to be.
Coupons boost customer traffic but reduces profit at the same time
Coupons affect consumers’ price perceptions, decrease repeat purchases and damage
brand image.
Consumers see coupons as a cause of higher prices rather than the reverse – they know
that the discount has to be paid for and believe that prices are raised so discounts can be
applied profitably.
Sales promotions are often seen as desperate measures from desperate marketers rather
than a key component of a marketing strategy for a brand.
Limitations:
The two studies reported here were for three and eight months in duration, a more
longitudinal approach should be taken to conduct more experiments.
Future research:
Future studies should attempt to compare the effectiveness of other common forms of
discounting with the use of promotional products.
Journal-2:
Rebecca K. Trump, “Harm in price promotions: when coupons elicit reactance”, Journal
of Consumer Marketing, 2016, Vol.33 Issue 04, pp. 302-310
Findings:
Consumers respond adversely to coupons with restrictive requirements for redemption
– especially, a short duration. Psychological reactance is behind this backfire effect.
Consumers perceive coupons as a company’s attempt to limit their freedom of choice.
Limitations:
The studies here focus on consumer responses to short-duration coupons, in particular,
but marketing promotions with restrictive requirements are abundant.
Future research:
Further research should examine the relationship between consumers’ psychological
reactance and responses to promotions with other restrictive requirements.
Further research could explore how consumers respond to the ever-decreasing duration of
coupons for consumer package goods.
Determining whether these tactics do turn away a significant potential market of
consumers.
Journal-3:
Priya Raghubir, “Framing a price bundle: the case of “buy/get” offers”, Journal of
Product & Brand Management, 2005, Vol. 14, Issue 02, pp. 123-128
Findings:
Consumers think that the costs of production of a product that is offered free are low,
and that reduces the price they are willing to pay for the product when it is offered alone.
Limitations:
Some economists propose that for some low-quality products have no other way to subsidize
trials except buy/get offers. This aspect should have been explored more.
Future research:
Future research could also examine the role that free gifts could play in alleviating the
guilt associated with a hedonic purchase for oneself.
Journal-4:
Itamar Simonson, Ziv Carmon, and Suzzane O’curry, “Experimental evidence on the
negative effect of product features and sales promotion on brand choice”, Journal of
Marketing Science, 1994, Vol. 13, Issue 01, pp. 23-39
Findings:
Unnecessary premiums are difficult to justify and more vulnerable to criticism than the
same brand without premium.
Limitations:
The pricing and bundling implications discussed here are incomplete.
Future research:
Conduct a controlled experiment to test the effect of an unattractive premium on sales.
Future research can be to conduct an experiment to test whether a useless or unnecessary
premium can decrease the attractiveness of the product.
Journal-5:
KrishnaSwamy Jayaraman, Mohammad Iranmanesh, Manjeet Dashini Kaur and Hasnah
Haron, “Consumer Reflections on “Buy One Get One Free” (BOGO) Promotion SchemeAn Empirical Study in Malaysia “,Research Journal of Applied Sciences, Engineering and
Technology , 2013, Vol. 5, Issue 09, pp. 2740-2747
Findings:
Consumers think that marketers may conduct unethical practices by selling cheap
quality through BOGO offers
They also think that the price is manipulated to make more profit.
BOGO schemes have been going on for decades in Malaysia and that has reduced its
attractiveness. This gives us an indication that offering sales promotions for a long time
will eventually make it unattractive to consumers.
Limitations:
The study has only explored “the buy one get one” scheme.
Future research:
There are many more promotional schemes left for exploration for further research.
Journal-6:
Marife Mendez , Michael Bendixen , Russell Abratt , Yuliya Yurova and Bay O’Leary , ”
Sales Promotion and Brand Loyalty: Some New Insights “,International Journal of
Education and Social Science , 2015, Vol. 2, Issue 01, pp. 103-117
Findings:
Promotion enhancements reduce brand loyalty because of the increased sensitivity to
marketing mix activities for all brands in the category. So, customers may stop
purchasing from the brands after sales promotion offers end and switch to another brand
that is doing so.
After consumers purchased from a brand on promotion, they asked them whether they
bought it because they liked it or because of the promotion. Majority of the people
answered that they had bought it for the promotion. This implies that their only purchase
reason is the sales promotion.
Limitations:
The study was conducted based on two products only. This could have been done on
several products to ensure that the outcome was universal for all product categories.
Future research:
For further research, a better understanding of the impact of monetary and nonmonetary
promotions on brand loyalty could be developed to figure out the influence of sales
promotion on brand loyalty.
Future research could conduct the study on more product categories to gain better
insights and outcome.
Journal-7:
Chung-kue Hsu and Ben S. Liu, “The role of mood in price promotions “,journal of
product & brand management, 1998, Vol. 7, Issue 02, pp. 150-160
Findings:
Sales promotion materials are perceived in a positive manner mostly when people are in
a positive mood. If they are in a negative mood, the promotion hardly works.
Limitations:
A life event survey was used to induce a positive or negative mood in this study.
However, such a mood induction method appears to be impractical in the real world.
Future research:
Future research may consider inducing consumers’ mood through manipulations of
retailer controllable, store-based atmospherics
Journal-8:
Sherriff T.K. Luk And Leslie S.C. Yip, “The moderator effect of monetary sales promotion
on the relationship between brand trust and purchase behavior “, Journal of Brand
Management, 2008, Vol. 15, Issue 06, pp. 452-464
Findings:
Many retailers think that the primary objective of a sales promotion is to increase traffic,
and forget their crucial impact on the brand’s image.
Poorly designed sales promotion can decrease profit even if they are increasing the sales.
Over-reliance on monetary sales promotion can backfire and decrease consumer trust,
brand equity and increase price sensitivity.
Limitations:
The study has been conducted on a single market. It needs to be tested in several product
markets for a better understanding of the relationship between consumer trust and sales
promotion.
Future research:
Future research should include different measures of monetary sales promotions.
Investigate whether monetary or non-monetary sales promotion will have a higher impact
on consumer trust and buying behavior.
Research Questions and Hypotheses
RQ1: Does promotion-driven customer base influence consumer perception towards sales
promotion?
H1: Promotion-driven customer base influences consumer perception towards sales
promotion.
RQ2: Does cynical view influence consumer perception towards sales promotion?
H2: Cynical view influences consumer perception towards sales promotion.
RQ3: Do restrictive requirements influence consumer perception towards sales promotion?
H3: Restrictive requirements influence consumer perception towards sales promotion.
RQ4: Does brand Image influence consumer perception towards sales promotion?
H4: Brand Image influences consumer perception towards sales promotion.
RQ5: Is there a positive relation between consumer perception towards sales promotion and
preference?
H5: There is a positive relation between consumer perception towards sales promotion and
preference.
RQ6: Does preference influence consumers’ behavioural intentions?
H6: Preference influences consumers’ Behaviour.
RQ7: Does behaviour results in consumer satisfaction?
H7: Behavioural intention results in consumer satisfaction.
RQ8: Does consumer satisfaction influence brand loyalty?
H8: Consumer satisfaction influences brand loyalty.