ROLE OF SALES PROMOTION IN INCREASING REVENUE: THE
CASE STUDY OF THE TELEPHONY INDUSTRY IN KUMASI
METROPOLIS
By
Eric Quarshie
(Bachelor of Education)
A Thesis Submitted to the Institute Of Distance Learning, Kwame
Nkrumah University of Science and Technology in Partial Fulfillment of
the requirement for the Degree of
COMMONWEALTH EXECUTIVE MASTERS OF BUSINESS
ADMINISTRATION
July, 2010
1
DEDICATION
I dedicate this project work to my sweetest and hardworking wife, Mrs. Alberta
Quarshie for her foresight, encouragement, support and endless advice which has
brought me this far in my educational pursuit. I also dedicate it to my two kids;
Keydellen and Samuel Quarshie who have been able to cope with my absence due to
the involving nature of this programme.
2
ACKNOWLEDGEMENT
I wonder if I can sufficiently acknowledge the enormous debt of gratitude which I
owe in connection with the writing of this research work.
I wish to express my unqualified thanks and to say that for obvious material
constraints, I would have produced a long list covering them all in this
acknowledgement. While believing that they will pardon this general expression of
thanks and I wish to apologise in advance to any of them who would have preferred a
more specific mention.
I cannot fail to mention Asante Boakye Ben, Kwarteng Amaning Andrews (for his
selflessness, financial support and devotion to this piece), Ankoma Oduro Patrick,
Asiedu Augustine Afriyie (who have devoted his energy in assisting me with the
typesetting), Forkuoh Philip, Oduro Charles, Owusu Achiaw Mary (Mrs.) CEMBA
students 2008 – 2010 year group who albeit unknown to them provided a lot of useful
information and materials for the writing of this research work. I am grateful to them
all wherever they may be.
Lastly, but not the least, I thank Mr. Obiri Yeboah, Lecturer, KNUST Business
School, my supervisor for his commitment in going through my piece of work and
offering the necessary salient suggestions.
May the ever shining light of the Lord continuously direct your paths in the name of
the Holy Trinity, Amen.
Eric Quarshie
3
CERTIFICATION
I declare that this long essay is my work towards the award of CEMBA and that to the
best of my knowledge it does not contain any material previously published by
another person or that which has been accepted for the award of my degree of the
University, except where due acknowledgement has bee made in the test.
Name
Index Number
Eric Quarshie
PG2078608
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Signature
Date
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CERTIFY BY SUPERVISOR
Name
Signature
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Date
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CERTIFY BY HEAD OF DEPARTMENT
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Date
ABSTRACT
Most business organisations the world over adopt many effective and efficient
programmes with the aim of maximizing profits, staying in active business and more
importantly reducing piled up stock. For this reason the telephony industry in the
Kumasi Metropolis adopt sales promotion tools and techniques to meet the above
mentioned aims of business organisations.
The research focused on the roles of sales promotions in increasing profits in the
Kumsai Metropolis.
In gathering the needed information for this research work, both primary and
secondary data were effectively used. The primary data included information from the
various management staff and their clients. The secondary data on the other hand
included the use of documents, journals, bulletins, text books and leaflets.
In order to gather enough facts, questionnaire was also administered to both clients
and management staff on the use of sales promotions.
The data collected were thoroughly used in analyzing the use of sales promotions on
profits.
Through the research, it was revealed that the telephony industry in Kumasi
frequently used sales promotion to draw attention of customers to their new products,
it has encouraged sales of slow moving items, reduced piled up stocks, stimulated offpeak sales of selected items and increased profits.
From the study it was realized that most of the customers have stayed glued to their
networks due to their frequent, interesting sales promotional activities. These
promotions have enabled them to save a lot of money and also to be on line for longer
periods.
On the part of management, it was also realized that they were always willing to
provide the needed funds for sales promotions since it has helped them to maximize
profits, stay in active business and to penetrate into the challenging and competitive
market.
The research also came out with the following recommendations: that management
ought to come out with more frequent but interesting promotions and these
promotions ought to be attractive. They should also satisfy their clients or customers
during sales promotions in a bid to make more profits and stay in active business.
5
TABLE OF CONTENT
TITLE
PAGE
FRONT PAGE
DEDICATION
ii
DECLARATION
iii
CERTIFICATION
iv
ABSTRACT
v
TABLE OF CONTENTS
vi
LIST OF TABLES
viii
LIST OF FIGURES
ix
LIST OF APPENDICES
x
CHAPTER ONE: RESEARCH INTRODUCTION AND CONTEXT
1.0
Introduction
1
1.1
Background to the study
2
1.2
Statement of the Problem
3
1.3.
Objectives of the Study
4
1.4.
Research problem
4
1.5.
The Scope of the Research
4
1.6
Limitations of the Study
4
1.7
Significance of the study
5
1.8
Methodology
5
1.8
Organization of the study
5
CHAPTER TWO: REVIEW OF RELEVANT LITERATURE
2.1
Definition of promotional sales
7
2.2
Promotional techniques
9
2.3
Sales promotions
9
2.4
Sales promotion tools
12
2.5
Factors driving use of sales promotions
16
2.6
History of sales promotion and the factors of its increase use
17
2.7
Reasons for the increased use of sales promotions
18
6
2.8
Joint and cross promotions
18
2.9
Some effects and problems of sales promotions
18
CHAPTER THREE: METHODOLOGY AND PROFILE OF THE
TELEPHONY INDUSTRY
3.0
Introduction
20
3.1
Research Philosophy
20
3.2
Research Design
20
3.3
Population
21
3.4
Sampling and Sampling Techniques
21
3.5
Types of Data Collected
22
3.6
Data analysis
23
3.7
Profile of the Telephony Industries in Ghana
23
CHAPTER FOUR: DATA ANALYSIS AND DISCUSSIONS
4.0
Introduction
27
4.1
Questionnaire for Customers
27
4.2
Questionnaire for Management Staff
43
CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDATIONS AND
CONCLUSIONS
5.0
Introduction
66
5.1
Findings
66
5.2
Recommendations
69
REFERENCES
71
APPENDIX
74
7
LIST OF TABLES
TITLE
PAGE
Tables 4.1.1
Network the customer is using
27
Table 4.1.2
Number of years customer has used the network
28
Table 4.1.3
Network organizes frequent sales promotional activities
29
Table 4.1.4
I like sales promotion for it saves me money
31
Table 4.1.5
I joined my network because of sales promotion
32
Table 4.1.6
I participate frequently in sales promotional activities
33
Table 4.1.7
I stay on the line longer during sales promotions
35
Table 4.1.8
I participate in sales promotion raffles
36
Table 4.1.9
I am satisfied with my network due to sales promotion
38
Table 4.1.10 Sales promotion reduces the overall cost of using phones
39
Table 4.1.11 I encourage others to join my network due to their sales promotion 40
Table 4.1.12 Sales promotion will always make me stick to my network
42
Table 4.2.1
Which network do you work with
43
Table 4.2.2
Number of years you have worked with the network
44
Table 4.2.3
How many times in a year do you organize sales promotions
45
Table 4.2.4
My outfit uses sales promotion to introduce new products
46
Table 4.2.5
Sales promotions help my outfit to beat competitors
48
Table 4.2.6
Offloading stock makes us adopt to sales promotion
49
Table 4.2.7
Remaining in business makes my outfit use sales promotion
51
Table 4.2.8
My outfit faces a lot of competition as a result of sales promotion 52
Table 4.2.9
Cost of organizing sales promotion is one of the problems my
outfit faces
53
Table 4.2.10 A lot of people partake seriously in sales promotions
55
Table 4.2.11 Timing of sales promotion is one of the hurdles my outfit
encounters
56
Table 4.2.12 To meet expected goals, staff is committed to sales promotions
58
Table 4.2.13 Management is always willing and able to provide the needed
funds for sales promotions
59
Table 4.2.14 There has been an increase in customers as a result of sales
promotions
61
Table 4.2.15 Profits has shot up due to sales promotion
8
62
Table 4.2.16 Sales promotion should be more frequent
9
64
LIST OF FIGURES
TITLE
PAGE
Figures 4.1.1 Network the customer is using
27
Figure 4.1.2
Number of years customer has used the network
28
Figure 4.1.3
Network organizes frequent sales promotional activities
30
Figure 4.1.4
I like sales promotion for it saves me money
31
Figure 4.1.5
I joined my network because of sales promotion
32
Figure 4.1.6
I participate frequently in sales promotional activities
34
Figure 4.1.7
I stay on the line longer during sales promotions
35
Figure 4.1.8
I participate in sales promotion raffles
37
Figure 4.1.9
I am satisfied with my network due to sales promotion
38
Figure 4.1.10 Sales promotion reduces the overall cost of using phones
40
Figure 4.1.11 I encourage others to join my network due to their sales promotion 41
Figure 4.1.12 Sales promotion will always make me stick to my network
42
Figure 4.2.1
Which network do you work with
43
Figure 4.2.2
Number of years you have worked with the network
44
Figure 4.2.3
How many times in a year do you organize sales promotions
45
Figure 4.2.4
My outfit uses sales promotion to introduce new products
47
Figure 4.2.5
Sales promotions help my outfit to beat competitors
48
Figure 4.2.6
Offloading stock makes us adopt to sales promotion
50
Figure 4.2.7
Remaining in business makes my outfit use sales promotion
51
Figure 4.2.8
My outfit faces a lot of competition as a result of sales promotion 52
Figure 4.2.9
Cost of organizing sales promotion is one of the problems my
outfit faces
54
Figure 4.2.10 A lot of people partake seriously in sales promotions
55
Figure 4.2.11 Timing of sales promotion is one of the hurdles my outfit
encounters
57
Figure 4.2.12 To meet expected goals, staff is committed to sales promotions
58
Figure 4.2.13 Management is always willing and able to provide the needed
funds for sales promotions
60
Figure 4.2.14 There has been an increase in customers as a result of sales
promotions
61
Figure 4.2.15 Profits has shot up due to sales promotion
10
63
Figure 4.2.16 Sales promotion should be more frequent
11
64
LIST OF APPENDICES
APPENDIX A
Submission of thesis
APPENDIX B
Questionnaires
74
12
CHAPTER ONE
INTRODUCTION
1.0 Introduction
Sales promotion activities are a form of direct advertising designed to stimulate sales
mainly by the use of incentives. Sales promotion activities are organized and funded
by the organization‟s own resources. Sales promotion is used most frequently in the
area of consumer products. Sales promotion could either be directed at consumers or
trade customers. To embark on any sales promotion, a sales promotion programme
must first be developed. This is then pre-tested and then implemented. When the
promotion ends the results are evaluated or assessed.
Sales promotion programmes are developed taking into consideration the size of the
incentive to be used, condition for participation, how to promote and distribute the
programme itself, the length or duration of promotion and sales promotion budget.
Sales promotions are pre-tested on a limited basis in selected geographical areas. This
is done to find out if the sales promotion tools are appropriate and of the right
incentive size. Implementation of promotion is done by formulating plans to cover
lead-time (time needed to prepare programme before launching it) and self off time
(time from the launch to the end of a promotion).
Evaluation of sales promotion could be done by checking on dealers stock-levels or
interviewing a sample of consumers in the target market. However, the most popular
method of evaluation is to compare sales and or market share before, during and after
a promotion. Sales promotion supports other sales efforts and thus plays an important
role in the total promotion mix; hence it must be used well.
13
1.1 Background to the study
Business organizations promote their products and services by using advertising, sales
promotion, public relations and personal selling.
Advertising, sales promotion and public relation are described as mass promotion
tools. However, Cole (1993) reports that the most widely used are advertising and
personal selling.
Kotler and Armstrong (1994) define sales promotion to consist of short – term
incentives to encourage purchase or sales of a product or service. Whereas advertising
offers reasons to buy a product or service, sales promotion offers reasons to buy now.
Anything that can be offered to a market to satisfy a need or a want is known as a
product. It usually suggests a tangible or physical object such as a car, a fan, video
cassette recorder or a television. A service on the other hand is used to refer to
intangible products such as providing a means of transport or communication. Sales
promotion includes a wide variety of tools: consumer promotion tools, samples,
coupons, rebates, price pack, premiums, contests, patronage awards, advertising
specialties and point-of purchase promotions, trade promotion tools – buying
allowance, free goods, merchandise allowance, push money, dealer sales contest,
sales force promotion tool – bonuses, contest, sales rallies.
Sellers may use consumer promotions to increase short-term market. The objective
may be to entice consumer to try new products, lure consumers form a competitor‟s
product or reward loyal customers. In Ghana, market women, petty traders, hawkers
and other sellers practice sales promotion by inflecting the price of their commodities
or wares.
14
This is then reduced upon bargaining with the buyer. The price reduction becomes an
incentive to the buyer who then makes a purchase. Others also add a little of the item
being sold (known in local parlance as „ntosuo‟) to what over purchase is made. This
also serves as an incentive to customers. During the barter system, sales promotion
was practiced but in a different manner. To entice or win a buyer, a seller of say gold
dust would offer his or her product for another of a lesser value. But at a later date,
items would be collected from the buyer till such time that the gold dust would have
been fully paid for.
Most organizations in Ghana have in the past concentrated on advertising and
personal selling to promote their products. However, the use of sales promotion tools
has experienced rapid growth in recent times. This is indicated by an increase in the
number of sweepstakes and sales contests being organized by business organizations.
This study is thus to identify the forms of sales promotions used in Ghanaian
environment by business organization, assess their impact on organizations and
society at large, identify loopholes and give recommendations. It is hoped that this
work will serve as reference material for other researchers and marketing students.
1.2 Statement of the Problem
Firms or companies the world over aim at maximizing profits or to stay in active
business. They also aim at satisfying their customers. For this reason, organisations
put in measures or programmes that would help them achieve the above mentioned
objectives.
The study thus aimed to assess the types of sales promotion in practice and those used
in the telephony industry and how these promotions enable these firms maximize
profits.
15
1.3 Objectives of the study
The objectives of this study include the following;
 To determine the types of sales promotion in use.
 To evaluate the usage of sales promotion.
 To determine the effects of sales promotion on profits.
 To evaluate the possible effects of sales promotion on customer behavior.
1.4 Research Questions
1. What type of sales promotion does the telephony industry make use of?
2. Has sales promotion been of any benefit to the telephony industry?
3. Has sales promotion led to increase in profit?
4. What has been the behavior of customers towards sales promotion?
1.5 the scope of the research
The research will concentrate on the Telephone Industry. The study will examine the
sales promotional practices of the organizations selected from the late 1999 to date.
The organizations used for the research were Tigo, Vodafone, MTN, Kasapa and
Zain. These organizations were used because they adopt a lot of promotional
strategies to outwit their opponents.
1.6 limitation of the study
The research study cannot cover every issue of the telephony industry and this is a
limiting factor. This is due to cost involved in researching throughout all the agro feed
industries in Ghana. Also is the time factor. The researcher is bound by time since
there is a time lapsed in completing this research therefore he can not research
16
extensively. Collection of questionnaire is also a limiting factor since some of the
respondents will not meet the collection time of the researcher.
1.7 significance of the study
The main significance of the study is to find out the various types of sales promotions
adopted by firms in the telephony industry in the Kumasi metropolis and their effects
on increasing profits. Taxes from the telephony industry will bring revenue to the
state. Sales will lead to efficiency in the country. Profits may woo more companies
into the country to contribute their quota towards the development of the state.
1.8 methodology
The methodology used for this research included primary and secondary data. The
primary data included information from the various telephony industries in the
country which is their promotional sales tools. Secondary data included documents,
journals on sales promotions and marketing procedures.
1.9 organisation of the study
The project will be structured into chapters as described below:
Chapter one deals with the introduction; aims and objectives; research methodology,
the scope of the research, plane of work; general information. Chapter two was
literature review. Definition of Promotion: promotional techniques, sales promotion
definition, objectives of sales promotions; why short termism in sales promotion;
sales promotion tools; factors driving the effective and efficient use of sales
promotions, history of sales promotion and the effect of its increased use; reasons for
17
the increased use of sales promotions; joint promotions and cross promotions; effects
of sales promotion; sales promotion problems. Chapter three is about the methodology
used for the research and this would consider the identification of sales promotions
used in the telephony industry, classification of small promotion according to
industry, assessment of the impact of specific sales promotion activities, assessment
of sales promotion mix as employed by some firms. Chapter four is purely about the
data presentation and analysis. Chapter five is about the summary, conclusion and
recommendations with appendix.
18
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 definition of promotion
For companies to stay alive and to have competitive advantage, then they have to
adopt effective and efficient means of promotion.
Cole (1993), reported that every product needs to be promoted, that is to say it needs
to be drawn to the attention of the market place and its benefits identified.
Kotler and Armstrong (1994), however, asserts that modern marketing calls for more
than just developing a good product pricing at attractive conditions and making it
available to customers. There is the need for companies to also communicate with
their customers. This art of communication is called promotion.
Sales Promotion as defined by the American Marketing Association is “those
marketing activities other than personal selling, advertising and publicity, that
stimulates consumer purchasing and dealer effectiveness such as display, shows,
exhibitions, demonstrations and various non-recurrent selling efforts not in the
ordinary routine.
Advertising, sales promotion and personal selling generally
constitute the promotional mix within the marketing mix of the company. Perfect coordination among these three types of promotional activity can alone secure
maximum effectiveness of the promotional strategy.
The American marketing association, some years ago attempted to bring a semblance
of uniformity and better understanding in the semantics jungle in the field of
19
marketing. It defined advertising as any paid form of non – personal presentation and
promotion of ideas, goods and services by an unidentified sponsor (Alexander, 1960).
It also defined publicity as non – personal stimulation of demand for a product,
service or business unit by planning commercially significant news about it in a
published medium or obtaining favourable presentation of it upon radio, television or
stage that is not paid for by the sponsor (Alexander, 1960).
Sale promotion as defined by the American marketing association is those marketing
activities other than personal selling, advertising and publicity, that stimulates
consumer purchasing and dealer effectiveness such as display shows, exhibitions,
demonstrations and various non – recurrent selling efforts not in the ordinary routine.
In addition to using advertising, public relation and personal selling, marketing
managers can use sales promotion to increase the effectiveness of their promotion
efforts. Sales promotion is a marketing communication activity on which a short term
incentive motivates consumers to purchase a good or service immediately, either by
lowering the price or by adding value.
Advertising offers the consumer a reason to buy; sales promotion offer an incentive to
buy. Both are important, but sales promotion is usually cheaper than advertising and
easier to measure. In contrast, a news paper coupon campaign or promotional contest
may cost only about half as much. It is hard to figure exactly how many people buy a
product as a result of seeing a television advert. However, with sales promotion
marketers know the precise number of coupons redeemed or the number of contest
entries. Sales promotion is usually targeted toward either of two distinctively different
markets.
20
Consumer sales promotion is targeted to the ultimate consumer market. Trade
promotion is directed to members of the marketing channels such as wholesalers and
retailers. Manufactures of consumer products spend about a quarter of their
promotional budget on consumer sales promotion, half on trade sales promotion and
the remaining quarter on media advertisement.
2.2 promotional techniques
Companies would have to adopt proper or best promotional techniques to stay in
business. According to S.C. Jain (1987), personal selling, sales promotion and public
relations are all devices of a company‟s total promotional scheme but each has certain
characteristics that assign it a unique role. However, R, Kohler (1983) reported that
the promotional techniques used by organizations are advertising, personal selling,
sales promotion and publicity. He argued that packaging could be included in the
promotional mix because it attracts attention through colour, lettering and illustrations
and presents a message to create interest and convince prospective consumers at the
point of purchase to buy the product. James Engel et al (1994) reported that the
promotional strategy of a manufacturer is a blend of the elements of advertising,
personal selling and sales promotion aimed at attaining specific marketing objectives.
2.3 sales promotion
2.3.1 Definition of Sales Promotions
Kotler and Armstrong (1994) define sales promotion to consist of short-term
incentives to encourage purchase or sales of products or services. Cole (1993) also
defines sales promotion to be a form of indirect advertising designed to stimulate
sales mainly by the use of incentives.
21
2.3.2 Objectives of Sales Promotion
P.R. Smith (1993) listed the following as sales promotion objectives;
1. Increase sales by rewarding loyal customers; lock customers into loyalty
programmes; increase repurchase rates of occasional user, generate trial among
new customers; demonstrate features; develop new users; image development.
2. Develop new sales leads.
3. Satisfy retailers with a complete package.
4. Move excess stock.
5. Block a competitor and
6. Match a competition in the market.
According to T. H. Wilson (1995), a sales promotion activity usually has one main
objective – to achieve a sales increase in the short run and several secondary ones
such as building brand loyalty to counter competitive initiative and bring new
customers. He observed that the real purpose behind most promotions is not so much
to offer the customer something interesting or even to change the value for money
perception, it is to break through the „noise level‟ in the market place. It may also be
to ensure that one‟s product is displayed properly in a supermarket or departmental
store.
Cole (1993) also reported the following as sales promotion objectives;
1. The objectives of a promotion directed at consumers are to;
 Draw attention to a new product or line.
 Encourage sales of slow-moving items.
 Stimulate off-peak sales of selected items.
22
 Achieve higher levels of customer acceptance or usage of a product or
product line.
2. Objectives of a trade oriented promotion are to;
 Encourage dealer retailer co-operation in pushing particular lines.
 Persuade retailers or dealers to devote increased shelf space to
organization products.
 Develop goodwill of dealers or retailers.
Sales promotion usually works best in affecting behavior, not attitudes. Immediate
purchase is the goal of sales promotion, regardless of the form it takes. Therefore, it
seems to make more sense when planning a sales promotion campaign to target
customers according to general behavior. Marketers who are targeting loyal users of
their products don‟t want to change behavior. Instead they need to reinforce existing
behavior or increase product usage. An effective tool for strengthening broad loyalty
is the frequent – buyer programme that rewards consumers for repeat purchases.
Other types of promotion are more effective with customers prone to brand switching
or with those who are loyal to a competitor‟s product. The cent-off coupon, free
sample or eye catching display in a store will often entice shoppers to try it through
the distribution of free samples. Once marketers understand the dynamics occurring
within their product category and have determined the particular consumers and
behaviors they want to influence, they can then go about selecting promotional tools
to achieve these goods (Daver, 1999).
23
2.3.3
Why Short Termism in Sales Promotion
P. R. Smith (1993) asserts that sales promotion is short-term because of the
following;
1) Management pressure to boost quarterly sales.
2) Shortening product life cycle – which demand quick sales results.
3) Increased competition and increased new product introductions.
4) Speedy response to handle business problems when they arise.
5) Full service agencies may try to sell client additional services.
2.4 sales promotion tools
According to Kotler and Armstrong (1994), sales promotion includes a wide variety
of promotion tools designed to stimulate earlier or strong market response. It includes
consumer promotion – samples, coupons, rebates, price – offs, premiums, contests,
advertising specialties, patronage rewards, point of purchase (POP) promotions,
sweep stakes and games, trade promotions – buying allowances, free goods,
merchandise money, dealer sales contests, sales rallies.
Cole (1993) also reported that sales promotion activities are organized and funded by
the organization‟s own resources and the tools used are;
a) Promotion directed at consumers –
Free samples
Twin – pack bargains (two for the price of one).
Temporary price reductions.
Point – of – sale demonstrations.
b) Promotion directed at trade customers –
Special discounts
24
Co-operative advertising
Bonus or price for sales representatives
Provision of display material.
Marketing managers must decide which consumer sales promotion devices to use in a
specific campaign.
The methods chosen must suit the objectives to ensure success of the overall
promotion plan. Popular tools for consumer sales promotion are coupons, premiums,
frequent – buyer programmes, contests and sweepstakes, samples and point – of –
purchase displays (Daver, 1999).
2.4.1 coupon
According to Englel (1994), coupon is a certificate that entitles consumers to an
immediate price reduction when they buy the product. Consumers receive coupon by
direct mails, through the media, on the product‟s package; through cooperative
advertising, which presents a manufacturer‟s coupon that can be redeemed only at the
retailer‟s store; and through coupon – dispensing machines at retail stores, coupons
are particularly good way to encourage product trial and repurchase. They are also
likely to increase the amount of a product budget. The problem with the use of the
coupon is that they are often wasted on consumers who have no interest in the product
– for example dog food coupons that reach the petless. Additionally, coupons are
more likely to encourage repeat purchases by regular users of a product than to
encourage nonusers to try the brand. Many consumers in Japan feel that using coupon
may make them look as though they do not have much money or are being “cheap”.
(International Coupons Trends, “Direct Marketing”, August 1993)
25
2.4.2 premiums
Englel (1994) stated that premium is an extra item offered to the consumer usually in
exchange for some proof that the promoted trade has been bought. Premiums
reinforce the consumer‟s purchase decision, increase consumption and persuade
nonusers to switch brands. Premium like telephones, tote bags and umbrellas are
available when consumer‟s buy cosmetics, magazines, bank services, rental cars and
so on. The appropriateness of the premium is crucial to its success.
2.4.3 frequent-buyer programmes
This is one of the promotions. In a frequent – buyer programme, loyal consumers are
rewarded for making multiple purchases of a particular good or service. Those
programmes are basically designed to create and reward brand loyalty among
consumers who might otherwise switch from brand to brand within a category. One
study concluded that improving consumer or customer loyalty by two percent can
boost profits as much as cutting costs by ten percent (Schultz et al, 1993).
2.4.4 Contests and sweetstakes
These are generally designed to create interest in the good or service, often to
encourage brand switching. Contests are promotions in which participants use some
skills or ability to compete for prices. A consumer contests usually requires entrants to
answer questions, complete sentences or write a paragraph about the product and
submit proof of purchase. Winning a sweepstakes on the other hand depends on
chance or luck and participation in free sweepstakes usually draws about ten times
more entries than contests do. When setting up contests and sweepstakes, the manager
must make certain that the award will appeal to the target market (Schultz et al, 1993).
26
2.4.5 Samples
Consumers generally perceive some amount of risk in trying new products. Many are
afraid of trying something they will not like (such as a new food item) or spending too
much money and getting little reward. Sampling allows the consumer to try a product
risk - free. However, sampling can be very expensive. As a general rule, then free
samples of a product should be offered only when two conditions exist. First, the
benefits of the new product must be clearly superior to those existing products.
Second, the item must expensive and believe in. sampling can be accomplished by
directly mailing the sample to the customer, delivering the sample door to door,
demonstrating or sampling the product at a retail store or packaging the sample with
another product by the same manufacturer (Schultz et al, 1993).
2.4.6 Point of purchase-display
This is a promotional display set up at the retailer‟s location to build traffic, advertise
the product or induce impulse buying. One big advantage of point – of – purchase
displays is that they offer the manufacturers a captive audience in retail stores. Point –
of – purchase displays work better for impulse products, those products bought
without prior decision by the consumer, than for planned purchases. Research shows
that sales of coffee in point – of – purchase displays for instance were over six times
higher than sales of coffee displayed in its normal sale position (Schultz et al, 1993).
2.4.7 Personal selling
Personal selling is direct communication between a sales representative and one or
more prospective buyers, for the purpose of making a sale. Sales people can
27
accomplish this purpose by communicating face to face during a personal sales call or
by selling over the telephone (telemarketing).
2.5 Factors driving the use of sales promotion
Factors driving the use of sales promotions as given by P.R. Smith (1993) are as
follows;
i. Recession – has fuelled the emergence of price consciousness and the
customer search for value for money offers or promotions.
ii. Retail power – sales promotions provide another tool with which the
manufacturer can negotiate with this retail power.
iii. Spiraling TV advertising costs – combined with the constant search for cost
effectiveness force marketing managers to look for more cost effective
below the line too such as sales promotion.
James Engel et al (1994) assert that the intense competition for retail shelf space and
the desire on the part of brand managers to show quick gain in market share have had
a snowball effect on promotion campaign. They observed that one of the reasons why
potential excessive use of consumer promotion exists is that brand managers who are
looking to have quick success are aware that promotions can produce quick jumps in
the market share. Sales promotions are usually cheaper than advertising and their
results are more easily identified.
28
2.6 History of sales promotion and the facts of its increase
S.C. Jain (1987) reported that historically sales promotion is a uniquely American
phenomenon. Beirelen et al (1981) observed that the use of sales promotion
campaigns has grown into popularity in recent years and if done with sane thought
and planning and used as part of the firms marketing mix, sales promotion will lead to
greater sales and profits. According to P. R. Smith (1991) sales promotion is a big
business and even bigger than advertising in the United Kingdom. He asserts that the
United Kingdom sales promotion industry has enjoyed and average ten (10) percent
growth per anum during the period 1981 – 1990. James Fayol et al (1994) reported
that the use of coupons has increased dramatically over the last few decades and
shows all signs of continuing to do so, despite ongoing forecasts of coupon saturation.
David Merceler (1992) observed that in recent years, spending on sales promotions in
both the U.S.A. and Europe has overtaken that on advertising. He reported that sales
promotions have become so popular that they now account for more than 65% of
typical marketing budgets. T. H. Nilson (1995) asserts that sales promotion have over
the last 10 – 15 years taken an increasingly larger share of the marketing budget,
mainly at the expense in relative terms of media advertising. This trend has been
particularly pronounced in the U.S.A. when in 1977 the relationship between
advertising and promotion was 60 to 40 and just 10 years later it was 40 to 60. Kotler
and Armstrong (1994) also observed similar trends and reported that annual sales
promotion spending has increased rapidly in recent years. They assert that a few years
ago the ratio of advertising to sales promotion spending was about 60 to 40. They
stressed that today in many consumer packaged goods companies; the picture is
reversed with sales promotion accounting for 75% or more of all marketing
expenditures.
29
2.6 Reasons for the increase use of sales promotion
According to Kotler and Armstrong (1994) several factors have contributed to the
rapid growth of sales promotion particularly in consumer markets. First, inside the
company, promotion is now accepted more by top management as an effective sales
promotion tool and more product managers are qualified to use sales promotion tools.
Furthermore, product managers face greater pressures to increase their current sales.
Second, externally, the company faces more competition and competing brands are
less differentiated. Competitors are using more and more promotions and consumers
have become more ideal oriented. Third, advertising efficiency has declined because
of rising costs, media clutter and legal restraints. Finally, retailers are demanding
more deals from manufacturers.
2.7 Joint and cross promotion
According to P. R. Smith (1993), Joint Promotion and Cross promotions offer
economic routes to target the same customers with relevant offers. He further noted
that for every one joint promotion that gets off the ground, ten never make it.
2.8 Some effects and problems of sales promotion
T. H. Nilson (1995) reported that in sales promotions, discount levels once introduced
to a customer will be very difficult to decrease. It also takes a lot of experience to get
the discount levels so that the company gets the maximum effects from a promotion,
he added. He further noted that from time to time, companies declare that they will do
away with short term price promotions and work on an every day low price formulae
instead. The reasons for this are usually very logical and rational; price promotion
30
cost money to administer, they impose a purchasing pattern on the customer and they
cause logistical problems with the suppliers.
P. R. Smith (1993), however, listed the following as some sales promotion problems;
1. Premiums are pilfered.
2. Malredemption (large scale fraudulent coupon redemption)
3. Over redemption
According to James Engel et al (1994), companies offering more coupons, bigger
rebates and more valuable sweepstakes prices in an effort to draw customers from the
competition. This marketing approach neglects the brand images that some
manufacturers have spent decades developing through advertising. They assert that
companies are worried that consumers are starting to take promotion for granted.
Also, companies fear that heavy couponing which represents a significant proportion
of all sales promotion is evaporating brand loyalty and turning retail brands into
competition. Beierlein and Woolerton (1991) reported that since sales promotion are
generally employed along with other promotional activities; their effects are hard to
single out.
Kotler and Armstrong (1994) observed that the growing use of sales promotion has
resulted in promotion increasingly turning out promotions, weakening their ability to
trigger immediate purchase.
31
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
This chapter discusses the methodology employed to achieve the objectives of the
research. The methodology includes the research philosophy, population, sampling,
research instruments, procedures for collecting data and analysis of data. The research
also seeks to find the effect of sales promotion on profit in the telephony industry. The
profile of the telephony industry in Ghana, the organizations being studied are also
included in the chapter.
3.1 Research Philosophy
In a bid to come out with a good research, the philosophy of the research is of the
hybrid type. It falls under pragmatism, which is a mix of positivism, interprets and
subjectivism. This approach was chosen based on the research questions and also
based on the researchers believe in these philosophies in helping to get the best results
or data for the research so as to come out with credible findings and conclusions (Bell,
2000).
3.2 Research Design
The methodology adopted involved the conduct of interviews, preparation of
questionnaires and their administration. The research used mix methods,
incorporating both qualitative and quantitative data gathering methods. Qualitative
research because it is based on holistic approach to science and is explained in terms
of variables and units of analysis. Both explanatory research and descriptive research
32
were used in accomplishing the objectives of the study. The explanatory research was
again used to gain insight into the impact of sales promotion on profit.
3.3 Population
There were over hundred members of staff each in the various offices visited but only
fifty were used in this research. Also for easy achievement of results, one hundred
customers from each of the offices visited were chosen through purposive sampling
method. The population of the study was made up of various telephony networks
namely Kasapa, Tigo, MTN, Vodafone and Zain; in their various head offices and
branches in the Kumasi metropolis. They form the management staff and customers
of these networks. Three offices within the Kumasi metropolis each of the networks
were selected. This included the regional headquarters and two branch offices.
For Kasapa, the headquarters is situated at Adum with two branches namely Bantama
and Oforikrom. Tigo regional headquarters is at Ahodwo with the two branches
namely Adum and Ashtown. MTN has its regional office at Ahodwo with branches at
Bantama and Adum. Vodafone‟s regional office is at Adum with the two branches
situated at Tanoso and Kwame Nkrumah Universtiy of Science and Technology
junction. Zain has its regional office at Amakom with it branches at Atinga junction
and Atonsu. These offices were chosen for the research study.
3.4 Sampling and Sampling Techniques
There were a total of seventy managers from the branches visited for the research and
over one hundred and twenty staff members. Convenience sampling method was used
in picking fifty of the management staff for the research. Five hundred customers of
33
the various networks who fall within the population were selected through
convenience sampling. Time, money and energy were saved by selecting a sample to
be studied rather than attempting to study the entire population. The customers were
chosen for this research because of their fluency in the English language.
Out of the total population which the researcher used, ten management staff of the
various networks aforementioned was chosen from the organizations with the
customer population chosen from the metropolis. One hundred questionnaires were
given to the customers for each network making a total of five hundred in number
whiles ten questionnaires were given to management of the various network being
studied making a total of fifty in number.
3.5 Types of Data Collected
The researcher did administer the questionnaire by hand. The questionnaire were self
administered, copies were given to and collected from the respondents by staff of the
institutions on behalf of the researcher. This was done with the view to ensuring
among other things that copies of the questionnaire reach all the respondents, that
adequate and effective report could be established to encourage the respondents to
accept and answer the questionnaire faithfully and that all copies of the questionnaire
are appropriately answered and retrieved from all the respondents. The researcher did
the administration of the questionnaires to customers himself.
34
3.6 Data Analysis
The completed questionnaire was first edited for consistency. The data obtained
through the questionnaire was then coded and translated into percentages and pie
chart with the help of Microsoft excel.
3.7 Profile of the Telephony Industries in Ghana
Vodafone Ghana
Onetouch GSM Mobitel Network Service from Ghana Telecom is now Vodafone
Ghana. It replaces the national company of Ghana. As one of the industry leaders, the
company provides the backbone for the country‟s telecommunication infrastructure.
Vodafone is one of the largest employers in the country close to 4000 Ghanaians. The
company‟s operation is a source of employment for communication center operators
and agents who retail the Vodafone payphone, recharge and top – up cards.
In a bid to make enough profit the company adopted the following sales promotions:
they now have the 30-30 promotion which basically is that if one registers for this, the
customer is charged thirty pesewas for calls up to thirty minutes to any Vodafone
mobile or landline calls.
They also have the family and friends promotion in which four Vodafone numbers
when one registered will be charged only forty-two percent of the normal call charges.
Again, there is the bonus recharge from two cedis and above when one gets a bonus
of fifty to seventy-five percent.
There is internet café pay less where one pays GH¢1.80 per hour and GH¢O.90 for
thirty minutes. Finally, to the landline (post paid) customers who uses the electronic
35
billing systems in settling their bills are given five percent discount of the amount
paid.
Kasapa Telecom Limited
Kasapa Telecom Limited – a subsidiary of Hutchison Whampoa Group – offers
mobile, home and business voice and data service in its 800 MHz CDMA2000 1X
network, expanding throughout Ghana.
Their promotional sales include; Kasapa dash promo. This simply means that when
one uses a credit within a month, it is given back to the customer the following month.
They also have the Kasapa voice mail which simply means if a customer is busy and
the phone rings, the person leaves a message for the recipient. They also change faulty
customized phones for new ones at a discount. They also have buy one phone and get
one phone in addition in a bid to win more customers. They also give souvenirs in the
form of „T‟ Shirts, base ball caps to customers who buy their phones and finally, they
have a valentine day „promo‟ in where one buy a phone on Valentines Day for a free
chocolate.
Mobile Telecommunication Network (MTN) Ghana
MTN, the leading telecommunication company in the emerging markets of Africa and
the Middle East, entered the Ghanaian market following the acquisition of Investcom
in 2006. MTN is the market leader in the increasingly competitive mobile
telecommunications industry in Ghana. It offers subscribers a maze of exciting
options under Pay Monthly and Pay As You Go Services.
36
MTN‟s network coverage is extensive, covering all ten regional capitals and many
rural and remote areas. MTN continues to invest heavily in infrastructure to expand its
coverage across the country.
MTN‟s promotional sales include the MTN Zone which allows a discount of up to
ninety-nine percent of every call make. It also has the seamless roaming – a service
that allow free roaming into Benin, Nigeria and Cameroon for MTN Ghana
subscribers. It also has the rolling-out a money transfer service known as MTN
MobileMoney, which was launched on 22nd July, 2009.
Zain
Celltel International, a subsidiary of Zain (formerly named the MTC Group) signed an
agreement to acquire 75% of Western Telesystems Limited (Westel) from the
Government of Ghana though the Government of Ghana remains a shareholder in
Westel with a 25% holding through the Ghana National Petroleum Corporation.
Westel is the second national operator in Ghana and is licensed to provide fixed and
mobile (GSM) telecommunications services. The latest stunt is their „Live Your
Dream‟ promo that is offering various cash rewards to subscribers. The aim is to get
subscribers to use more and more airtime thereby driving Zain‟s revenue upwards.
The biggest of the cash rewards is a whopping GH¢75,000 (about US$50,000).
Tigo Ghana
Tigo grew out of Mobitel Ghana. Mobitel is the first cellular network in Ghana. It
launched way back in 1992. They have a promo that encourage old subscribers to get
back on board and another that offer 10% to 20% discounts on all call rates to faithful
37
subscribers. Tigo‟s promotional sales also include the Tigo extreme value which
allows a customer to pay seventy pesewas for calls made from 6:00 am to 6:00 pm.
It also has the Tigo call me back where a customer without a credit can ask another to
call him or her. They also have a Tigo day or week which a customer‟s credit is
tripled after credit recharge. Tigo number one is also a promotional sale which allows
a customer to register a tigo number and pays GH¢3.99 for a month.
Talk for free charges GH¢0.30 for the three minutes and tigo bears the rest.
Evolution of Mobile Telephony in Ghana
The use of mobile phone was started by Ghana Telecom in the early nineties with
about 900 subscribers. It was during 1992 that the first cellular phone service in
Ghana was initiated by Mobitel now Tigo with about 19,000 mobile phone
subscribers. This number increased to 68,000 in 1998 when three other mobile phone
networks joined Mobitel. The network companies were Ghana Telecom, Areeba now
MTN and Kasapa (www.vodafonegh.com) With the influx of these networks,
advertisement has played and still continues to play a vital role in the industry. With
the evolution of these networks, competition has become very keen leading to some
amount of efficiency which has led to increase in consumers.
3.8 Chapter Summary
This chapter has looked at the method that the researcher used in collecting and
analyzing the data collected. Also the profile of the telephony industry and their
promotional techniques were also enumerated. Chapter four, the next chapter looks at
the analysis of the data collected.
38
CHAPTER FOUR
DATA ANALYSIS AND DISCUSSIONS
4.0 Introduction
This chapter looks at the analysis of the findings and discusses in details what the
findings talks about. It is here that the responses from the questionnaires administered
are assessed.
4.1 Questionnaire for Customers
Table 4.1.1: Network the customer is using
Network
Respondents
Percentages (%)
VODAFONE
100
20
MTN
100
20
TIGO
100
20
KASAPA
100
20
ZAIN
100
20
Total
500
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.1.1: network the customer is using
39
Source of data: researcher’s field work, 12th July, 2010
From table 4.1.1 above, 100 respondents each representing 20% were using
Vodafone, MTN, Tigo, Kasapa and Zain respectively
Table 4.1.2: Number of year’s customer has used the network
Number of years
Respondents
Percentages (%)
Less than one year
120
24
1 – 3 years
130
26
4 – 6 years
100
20
7 years and above
150
30
Total
500
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.1.2: number of year’s customer has used the network
Source of data: researcher’s field work, 12th July, 2010
From table 4.1.2, the question was about the number of years respondents have used
the network and 150 respondents representing 30% said they have used it for over
40
seven years, 130 respondents representing 26% said between and a year and three,
120 respondents representing 24% said they have used it for less than a year whiles
100 respondents representing 20% said they have used it between four and six years.
From the analysis those who have been using the network for long were those who
have served seven years and above. This means that because of the benefit customers
derived from sales promotion they have been using the network for longer period of
time. This shows also that the efficient and effective use of sales promotion has been
of benefit to the telephony industry in terms of revenue.
Table 4.1.3: Network organizes frequent sales promotion activities
Responses
Respondents
Percentages (%)
Strongly Agree
100
20
Agree
50
10
OK
100
20
Somehow
90
18
Disagree
130
26
Strongly disagree
30
6
Total
500
100
Source of data: researcher’s field work, 12th July, 2010
41
Figure 4.1.3: network organizes frequent sales promotion activities
Source of data: researcher’s field work, 12th July, 2010
Table 4.1.3 indicates that 130 respondents representing 26% said they disagree to the
statement that their network frequently organizes sales promotion activities, 100
respondents representing 20% each said they strongly agree and OK to the statement,
90 respondents representing 18% said somehow, 50 respondents representing 10%
said they agree whiles 30 respondents representing 6% said they strongly disagree to
the statement. From the analysis it came to light that more customers agreed to the
frequent use of sales promotions. This means that frequent organization of sales
promotions help to increase revenue of these firms.
42
Table 4.1.4: I like sales promotion for it saves me money
Responses
Respondents
Percentages (%)
Strongly Agree
150
30
Agree
100
20
OK
50
10
Somehow
100
20
Disagree
50
10
Strongly disagree
50
10
Total
500
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.1.4: I like sales promotion for it saves me money
Source of data: researcher’s field work, 12th July, 2010
Table 4.1.4 above indicates that 150 respondents representing 30% said they strongly
agree to the statement, 100 respondents each representing 20% said they agree and
somehow to the statement respectively whiles 50 respondents representing 10% each
said they are OK, they disagree and strongly disagree to the statement respectively.
43
The table indicates that a lot of customers like sales promotion since it save them
money. This also means that people use their phones more leading to increase in
revenue.
Table 4.1.5: I joined my network because of sales promotion
Responses
Respondents
Percentages (%)
Strongly agree
100
20
Agree
50
10
OK
100
20
Somehow
150
30
Disagree
50
10
Strongly disagree
50
10
Total
500
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.1.5: I joined my network because of sales promotion
44
Source of data: researcher’s field work, 12th July, 2010
From table 4.1.5, 150 respondents representing 30% said somehow to the statement,
100 respondents representing 20% each said they strongly agree and OK respectively
whiles 50 respondents each representing 10% said they agree, they disagree and
strongly disagree to the question respectively. The table goes to support the fact that
more people joined some networks due to their sales promotions. More people joining
these networks mean more revenue to these firms in the telephony industry as a result
of sales promotions.
Table 4.1.6: I participate frequently in sales promotion activities
Responses
Respondents
Percentages (%)
Strongly agree
80
16
Agree
100
20
OK
100
20
Somehow
120
24
Disagree
50
10
Strongly disagree
50
10
Total
500
100
Source of data: researcher’s field work, 12th July, 2010
45
Figure 4.1.6: I participate frequently in sales promotional activities
Source of data: researcher’s field work, 12th July, 2010
From table 4.1.6, 120 respondents representing 24% said somehow to the question,
100 respondents each representing 20% said they agree and are OK to the question,
80 respondents representing 32% said they strongly agree whiles 50 respondents each
representing 10% said they disagree and strongly disagree respectively to the
question. The indication was that about half of the respondents participate in sales
promotions. From the above, most of these clients participated actively in these sales
promotions thereby increasing the revenue of the firms in the telephony industry.
46
Table 4.1.7: I stay on the line longer during sales promotion
Responses
Respondents
Percentages (%)
Strongly agree
130
26
Agree
100
20
OK
50
10
Somehow
100
20
Disagree
50
10
Strongly disagree
70
14
Total
500
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.1.7: I stay on the line longer during sales promotion
Source of data: researcher’s field work, 12th July, 2010
From table 4.1.7, 130 respondents representing 26% said they strongly agree to the
statement, 100 respondents each representing 20% said they agree and somehow
respectively, 70 respondents representing 14% said they strongly disagree whiles 50
47
respondents representing 10% said OK and disagreed respectively to the statement.
The indication was that people make calls for long period of time because of sales
promotions. From the analysis above, most clients now stay on the line for longer
period of time leading to an increase in revenue as a result of sales promotions to the
firms within the industry.
Table 4.1.8: I participate in the sales promotion raffles
Responses
Respondents
Percentages (%)
Strongly agree
150
30
Agree
100
20
OK
50
10
Somehow
70
14
Disagree
50
10
Strongly disagree
80
16
Total
500
100
Source of data: researcher’s field work, 12th July, 2010
48
Figure 4.1.8: I participate in the sales promotion raffles
Source of data: researcher’s field work, 12th July, 2010
From table 4.1.8, 150 respondents representing 30% strongly agreed to the assertion
above, 100 respondents representing 20% agreed to the statement, 80 respondents
representing 16% strongly disagreed, 50 respondents representing 10% said OK, 70
respondents representing 14% said somehow whiles 10 respondents representing 10%
disagreed to the statement. This indicates that those who participate in sales
promotions overshadow the rest. This means that sales promotions have encouraged
more clients to partake in raffles organized by these networks leading to increase in
revenue.
49
Table 4.1.9: I am satisfied with my network due to sales promotion
Responses
Respondent
Percentages (%)
Strongly agree
50
10
Agree
50
10
OK
180
36
Somehow
100
20
Disagree
70
14
Strongly disagree
50
10
Total
500
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.1.9: I am satisfied with my network due to sales promotion
Source of data: researcher’s field work, 12th July, 2010
Table 4.1.9 indicates that 180 respondents representing 36% said OK, 100
respondents representing 20% said somehow, 70 respondents representing 14% said
they disagreed whiles 50 respondents each representing 10% strongly agreed, agreed
50
and strongly disagreed to the statement respectively. The reason for this was that a
few of the respondents were happy with their networks because of sales promotion.
The behavior of clients has been very positive due to sales promotions because of the
satisfaction they derive from it and this has led to more revenue on the part of firms in
the telephone industry.
Table 4.1.10: Sales promotion reduces the overall cost of using phones
Responses
Respondents
Percentages (%)
Strongly agree
100
20
Agree
80
16
OK
70
14
Somehow
100
20
Disagree
70
14
Strongly disagree
80
16
Total
500
100
Source of data: researcher’s field work, 12th July, 2010
51
Figure 4.1.10: sales promotion reduces the overall cost of using phones
Source of data: researcher’s field work, 12th July, 2010
From table 4.1.10, 100 respondents representing 20% each strongly agreed and
somehow to the question, 80 respondents each representing 16% said they agree and
strongly disagreed to the statement respectively whiles 70 respondents representing
14% each disagreed and OK respectively to the statement. The reason for this is that
a lot of the people were of the opinion that sales promotion reduces the overall cost of
using phones. This has also made these firms to make revenue due to these attractive
sales promotions.
Table 4.1.11: I have recommended my network to others.
Responses
Respondents
Percentages (%)
Strongly agree
50
10
Agree
100
20
OK
90
18
Somehow
80
16
52
Disagree
100
20
Strongly disagree
80
16
Total
500
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.1.11: I encourage others to join my network due to their sales
promotion
Source of data: researcher’s field work, 12th July, 2010
Table 4.1.11 indicates that 100 respondents each representing 20% agreed and
disagreed to the statement to the question, 80 respondents representing 16% said
somehow and strongly disagreed to the statement respectively, 90 respondents
representing 18% said OK, whiles 50 respondents representing 10% said they strongly
agreed to the statement. This analysis support the fact that a lot more people would be
encouraged to join new networks due to their sales promotions. From the above, sales
promotions have enabled users to encourage others to join their networks leading to
increase in number of clients and an increase in customer satisfaction.
53
Table 4.1.12: Sales promotion will always make me to stick to my network
Responses
Respondents
Percentages (%)
Strongly agree
80
16
Agree
100
20
OK
80
16
Somehow
70
14
Disagree
50
10
Strongly disagree
120
24
Total
500
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.1.12: sales promotion will always make me to stick to my network
s
Source of data: researcher’s field work, 12th July, 2010
Table 4.1.12 indicates that 120 respondents representing 24% strongly disagreed to
the statement, 100 respondents representing 20% said they agree, 80 respondents
representing 16% each said they strongly agreed and were OK to the statement
respectively, 70 respondents representing 14% answered somehow whiles 50
54
respondents representing 10% disagreed to the statement. More respondents from the
analysis would stick to their networks rather than changing to other networks. Sales
promotion from the above analysis has made it possible for clients to stick to their
networks leading to maximization of revenue on the part of these networks.
1.2 Questionnaire for management staff
Table 4.2.1: Which network do you work with?
Network
Respondents
Percentages (%)
VODAFONE
10
20
MTN
10
20
TIGO
10
20
KASAPA
10
20
ZAIN
10
20
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
4.2.1: which network do you work with?
Source of data: researcher’s field work, 12th July, 2010
55
From table 4.2.1, 10 respondents representing 20% each were working with
Vodafone, MTN, Tigo, Kasapa and Zain respectively.
Table 4.2.2: Number of years you have worked with the network
Number of years
Respondents
Percentages (%)
Less than one year
4
8
1 – 3 years
8
16
4 – 6 years
20
40
7 years and above
18
36
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.2.2: number of years you have worked with the network
Source of data: researcher’s field work, 12th July, 2010
Table 4.2.2 indicates that 20 respondents representing 40% have worked with their
network between four to six years, 18 respondents representing 36% have worked
56
with their network for over seven years, 8 respondents representing 16% have worked
for one to three years whiles 4 respondents representing 8% have worked less than
one year with the network. This is an indication that majority of the respondents have
worked with the network for a longer period of time. This shows that their number of
years with the company has enabled the firm to effectively make use of sales
promotions and these have enhanced revenue.
Table 4.2.3: How many times in a year do you organize sales promotions?
Responses
Respondents
Percentages (%)
Seldom
30
60
A lot
8
16
Frequently
12
24
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.2.3: how many times in a year do you organize sales promotions?
Source of data: researcher’s field work, 12th July, 2010
57
From table 4.2.3 above, 30 respondents representing 60% of the total sample said
their outfit seldom organizes sales promotion in a year, 12 respondents representing
24% said frequently whiles 8 respondents representing 16% said a lot to the question.
From the analysis, it was evidently clear that the company organizes sales promotions
but not frequently in a year. From the above, the seldom organization of sales
promotions has won the heart of many clients and has led to an increase in revenue to
these firms.
Table 4.2.4: My outfit uses sales promotion to introduce new products
Responses
Respondents
Percentages (%)
Strongly agree
16
32
Agree
12
24
OK
8
16
Somehow
8
16
Disagree
4
8
Strongly disagree
2
4
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
58
Figure 4.2.4: my outfit uses sales promotion to introduce new products
Source of data: researcher’s field work, 12th July, 2010
From table 4.2.4, 16 respondents representing 32% strongly agreed to the statement
that their outfit uses sales promotion to introduce new products, 12 respondents
representing 24% said they agree, 8 respondents representing 16% each said they are
OK and somehow to the statement, 4 respondents representing 8% said they disagreed
whiles 2 respondent representing 4% said he strongly disagreed to the statement.
From the analysis, most networks organize sales promotions to introduce new
products onto the market. The use of sales promotions to introduce new products onto
the market has increased the revenue of these firms.
59
Table 4.2.5: Sales promotion helps my outfit to beat competitors
Responses
Respondents
Percentages (%)
Strongly agree
16
32
Agree
14
28
OK
10
20
Somehow
4
8
Disagree
2
4
Strongly disagree
4
8
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.2.5: Sales promotions help my outfit to beat competitors
Source of data: researcher’s field work, 12th July, 2010
Table 4.2.5 indicates that 16 respondents representing 32% strongly agreed to the
statement, 14 respondents representing 28% said they agreed 10 respondents
60
representing 20% were OK, 4 respondents each representing 8% said somehow and
strongly disagreed to the statement whiles 2 respondent representing 4% disagreed
with the statement. The reason here was that outwitting competitors was a major
reason why sales promotions are organized. The organization of sales promotions has
enabled firms to overtake their competitors in the industry leading to revenue
increases. MTN has been able to outwit the other firms with its increased sales
promotion and thus has become the market leaders in the telephone industry (NCA,
2009).
Table 4.2.6: Offloading stock makes us adopt to sales promotion
Responses
Respondents
Percentages (%)
Strongly agree
16
32
Agree
14
28
OK
10
20
Somehow
4
8
Disagree
2
4
Strongly disagree
4
8
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
61
Figure 4.2.6: offloading stock makes us adopt to sales promotion
Source of data: researcher’s field work, 12th July, 2010
Table 4.2.6 indicates that 16 respondents representing 32% agreed with the statement,
14 respondents representing 28% strongly agreed, 10 respondents representing 20%
said somehow, 4 respondents representing 8% each said OK and disagreed whiles 2
respondent representing 4% strongly disagreed to the statement. From the above,
offloading stock greatly compels the organizations to organize sales promotions. The
organization of sales promotions has enabled firms in the telephony industry to
offload piled up stocks leading to more sales and more revenue.
62
Table 4.2.7: Remaining in business makes my outfit use sales promotion
Responses
Respondents
Percentages (%)
Strongly agree
16
32
Agree
12
24
OK
12
24
Somehow
4
8
Disagree
4
8
Strongly disagree
2
4
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.2.7: remaining in business makes my outfit uses sales promotion
Source of data: researcher’s field work, 12th July, 2010
From table 4.2.7 above, 16 respondents representing 32% strongly agreed, 12
respondents representing 24% each agreed and were OK, 4 respondents each
representing 8% each said somehow and disagreed whiles 2 respondents representing
63
4% strongly disagreed to the statement that they want to remain in business that is
why they organize sales promotions. This indicates that most firms in the telephony
industry organize sales promotions just to remain in business. The organization of
sales promotions has enabled firms in the telephony industry to remain in business.
Table 4.2.8: My outfit faces a lot of competitors as a result of sales promotion
Responses
Respondents
Percentages (%)
Strongly agree
14
28
Agree
16
32
OK
12
24
Somehow
2
4
Disagree
4
8
Strongly disagree
2
4
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.2.8: my outfit faces a lot of competitors as a result of sales promotion
Source of data: researcher’s field work, 12th July, 2010
64
Table 4.2.8 indicates that 16 respondents representing 32% agreed to the statement,
14 respondents representing 28% strongly agreed, 12 respondents representing 24%
were OK, 4 respondents representing 8% said somehow and strongly disagreed whiles
2 respondent representing 4% each said somehow and strongly disagreed to the
statement. From the analysis of the statement above, competitors happen to be one of
the reason why sales promotions. The frequent and efficient organization of sales
promotions has led to more competitors and this has also enabled the efficient ones to
make more revenue.
Table 4.2.9: Cost of organizing sales promo is one of the problems my outfit faces
Responses
Respondents
Percentages
Strongly agree
12
24
Agree
10
20
OK
14
28
Somehow
8
16
Disagree
4
8
Strongly disagree
2
4
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
65
Figure 4.2.9: cost of organizing sales promo is one of the problems my outfit
faces
Source of data: researcher’s field work, 12th July, 2010
From table 4.2.9, 14 respondents representing 28% were OK, 12 respondents
representing 24% strongly agreed, 10 respondents representing 20% agreed, 8
respondents representing 16% said somehow, 4 respondents representing 8%
disagreed whiles 2 respondent representing 4% strongly disagreed to the statement put
forward by the researcher to them. From the above analysis, it was clear that cost is
one of the major reasons facing firms organizing sales promotion. Even though
organization of sales promotions involves cost, it effective and efficient use has made
most firms in the telephony industry to win more clients leading to increase in
revenue.
66
Table 4.2.10: A lot of people partake seriously in sales promotion
Responses
Respondents
Percentages (%)
Strongly agree
12
24
Agree
8
16
OK
10
20
Somehow
4
8
Disagree
10
20
Strongly disagree
6
12
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.2.10: a lot of people partake seriously in sales promotion
Source of data: researcher’s field work, 12th July, 2010
Table 4.2.10 above indicates that 12 respondents representing 24% strongly agreed to
the statement, 10 respondents representing 20% each were OK and disagreed
respectively, 8 respondents representing 16% agreed, 6 respondents representing 12%
67
strongly disagreed whiles 4 respondents representing 8% said somehow to the
statement. From the analysis above, a lot of people partake seriously in sales
promotions. From the above, the attractive nature of these sales promotions compels
clients to partake in them leading to an increase in revenue on the part of these firms.
4.2.11: Timing of sales promotion is one of the hurdles my outfit encounters
Responses
Respondents
Percentages (%)
Strongly agree
14
28
Agree
10
20
OK
6
12
Somehow
14
28
Disagree
4
8
Strongly disagree
2
4
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
68
Figure 4.2.11: timing of sales promotion is one of the hurdles my outfit
encounters
Source of data: researcher’s field work, 12th July, 2010
Table 4.2.11 indicates that 14 respondents each representing 28% strongly agree and
somehow respectively, 10 respondents representing 20% agreed, 6 respondents
representing 12% were OK, 4 respondents representing 8% disagreed whiles 2
respondent representing 4% strongly disagreed to the statement. The analysis above
proves that timing of sales promotion is one of the hurdles in the organization of sales
promotions. Proper timing of sales promotions has led to more clients and this has
also resulted in increase in revenue. Timing is an essential part of sales promotions.
69
Table 4.2.12: To meet expected goals, staff is committed to sales promotions
Responses
Respondents
Percentages (%)
Strongly agree
14
28
Agree
12
24
OK
10
20
Somehow
10
20
Disagree
2
4
Strongly disagree
2
4
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.2.12: to meet expected goals, staff is committed to sales promotions
Source of data: researcher’s field work, 12th July, 2010
Table 4.2.12 above indicates that 14 respondents representing 28% strongly agreed,
12 respondents representing 24% agreed, 10 respondents representing 20% each were
OK and somehow, 2 respondent representing 4% each disagreed and strongly
disagreed respectively to the statement. The analysis above shows that staff is
70
committed to the organization of sales promotion in meeting expected goals. From the
analysis, sales promotions are organized to increase revenue and this can only be
achieved with the involvement of committed staff.
Table 4.2.13: Management is always willing and able to provide the needed
funds for sales promotions
Responses
Respondents
Percentages (%)
Strongly agree
16
32
Agree
4
8
OK
10
20
Somehow
6
12
Disagree
4
8
Strongly disagree
10
20
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
71
Figure 4.2.13: management is always willing and able to provide the needed
funds for sales promotions
Source of data: researcher’s field work, 12th July, 2010
From table 4.2.13 above, 16 respondents representing 32% strongly agreed 10
respondents representing 20% each were OK and strongly disagreed, 6 respondents
representing 12% said somehow whiles 4 respondents representing 8% agreed and
disagree to the assertion. The above analysis indicates that management is always
willing and able to provide the needed funds for the organization of sales promotions.
From the above, management is always willing to make normal revenue hence their
commitment to sales promotions.
72
Table 4.2.14: There has been an increase in customers as a result of sales
promotion
Responses
Respondents
Percentages (%)
Strongly agree
20
40
Agree
6
12
OK
4
8
Somehow
10
20
Disagree
6
12
Strongly disagree
4
8
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.2.14: there has been an increase in customers as a result of sales
promotion
Source of data: researcher’s field work, 12th July, 2010
73
Table 4.2.14 above indicates that 20 respondents representing 40% strongly agreed to
the statement, 10 respondents representing 20% said somehow, 6 respondents
representing 12% each agreed and disagreed respectively whiles 4 respondents
representing 8% each were OK and strongly disagreed respectively to the statement.
The above table brings to light that there has been an increase in customers as a result
of sales promotions. From the above, the attractive promotions have increased the
number of clients and this has had a positive effect on their revenue as the number
clients keep increasing by the day.
Table 4.2.15: Profits has shot up due to sales promotions
Responses
Respondents
Percentages (%)
Strongly agree
16
32
Agree
14
28
OK
10
20
Somehow
4
8
Disagree
2
4
Strongly disagree
4
8
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
74
Figure 4.2.15: profits has shot up due to sales promotions
Source of data: researcher’s field work, 12th July, 2010
From table 4.2.15 above, 16 respondents representing 32% strongly agreed, 14
respondents representing 28% agreed, 10 respondents representing 20% were OK, 4
respondents representing 8% each said somehow and strongly disagreed respectively
whiles 2 respondents representing 4% disagreed to the statement that profit has shot
up due sales promotion. Revenue has shot up due to sales promotion as indicated by
the table above. From the above, the appealing nature of sales promotions has led to
increasing revenue and this means that effective, efficient and periodic organization of
sales promotions has led to increase in revenue.
75
Table 4.2.16: Sales promotion should be more frequent
Responses
Respondents
Percentages (%)
Strongly agree
16
32
Agree
12
24
OK
12
24
Somehow
4
8
Disagree
4
8
Strongly disagree
2
4
Total
50
100
Source of data: researcher’s field work, 12th July, 2010
Figure 4.2.16: sales promotion should be more frequent
Source of data: researcher’s field work, 12th July, 2010
From table 4.2.16 above, 16 respondents representing 32% strongly agreed, 12
respondents each representing 24% agreed and OK respectively, 4 respondents
representing 8% said somehow and disagreed, whiles 2 respondents representing 4%
strongly disagreed to the statement that sales promotion should be more frequent.
Greater number of the respondents called for frequent organization of sales promotion
76
by their networks. From the above analysis, the satisfaction derived from sales
promotions means it should be frequently organized as this has led to increased
revenue.
77
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.0 Introduction
This chapter provides a brief summary of the research methods used in the study
analysis of the data and main findings. It also provides the conclusions and
recommendations. The main objective of the study was to evaluate the role of sales
promotion on profits in the telephony industry in Kumasi metropolis.
5.1 Summary of Findings
Since the telephony industry in Ghana and for that matter Kumasi metropolis keeps
offering bigger and more valuable sweepstakes price which in the end could increase
profits, it is of paramount importance that marketing officers take a good look at
blending advertising, public relations, personal selling and sales promotion properly
in a bid to make profits and also to capture the market.
From the findings, it was observed that a lot of sales promotions were in use in the
telephony industry. These included coupons which were certificates that entitles
consumers to an immediate price reduction when they buy any of their products.
Premiums, frequent buyer programmes, contests and sweepstakes, samples point of
purchase display and personal selling were most of the promotional tools used by the
telephony industry within the Kumasi metropolis.
It was also found out that there were a lot of sales promotions by the various
telephony firms. For Kasapa, they had “Kasapa dash promo”. By this, any amount of
credit or top up made within the month is given back to the user (customer) the
following month. Kasapa also has the “Kasapa voice mail” where if a customer was
78
busy or engaged in an activity and the phone rings the caller could leave a message
for the recipient. With Kasapa, they have the “buy one get one free” where two
phones are given to the customer. Souvenirs in the form of „T‟ Shirts, base ball caps
are given out to customers who patronize their products or services. Finally, they have
the “valentine day promo” where a phone bought on a valentine day, free chocolates
are given to customers.
Mobile Telecommunication Network (MTN) also adopt sales promotions to their
advantage. The Company create room for subscribers who only pay for the bills at the
end of the month. They also have the “pay as you go services”. MTN also allows a
discount gap of ninety-nine percent (99%) every call made. In addition to this, the
network also operates the MTN roaming service which allows a customer in Ghana to
use his or her phone in Benin, Nigeria and Cameroun. Finally, MTN now operates
MTN Mobile Money which allows a customer to send money to his relative via
mobile phone.
Zain on the other hand uses sales promotion tools and some of these were the “live
your dream promo” and “brilliant but needy” students are sponsored by Zain.
Tigo also had a promo that encourages old subscribers to go on board with a ten
percent to twenty percent discount to faithful subscribers. Tigo also had the “Tigo
Extreme Value” which allows a customer to pay seventy pesewas for calls made from
6:00 am to 6:00 pm the same day. It was found out that Tigo also had the “Tigo Call
Me Back” where a customer without credit can ask another subscriber with enough
credit to call him back. The “Tigo day promo” is also used where a credit bought is
tripled. Finally, is the “Tigo number one” where a subscriber pay GH¢3.99 a month to
call a registered number.
79
In a bid to make enough profit the company adopted the following sales promotions:
they now have the 30-30 promotion which basically is that if one registers for this, the
customer is charged thirty pesewas for calls up to thirty minutes to any Vodafone
mobile or landline calls.
They also have the family and friends promotion in which four Vodafone numbers
when one registered will be charged only forty-two percent of the normal call charges.
Again, there is the bonus recharge from two cedis and above when one gets a bonus
of fifty to seventy-five percent.
There is internet café pay less where one pays GH¢1.80 per hour and GH¢O.90 for
thirty minutes. Finally, to the landline (post paid) customers who uses the electronic
billing systems in settling their bills are given five percent discount of the amount
paid.
Most of the clients were happy because they stayed on their lines for longer period of
time due to sales promotion which in a way made to save money. It also came to light
from the research that most clients were in fact very happy with their networks due to
their sales promotions. Many of the clients were also of the opinion that sales
promotions help them to reduce the overall cost of using phones. From the research it
was evidently clear that most clients wanted to encourage their friends to join their
networks due to their attractive sales promotions.
From the research most of the clients were not ready to switch to any new network but
to stick to their old network due to the sales promotions. Also from the management it
came to light that a lot of them have been with the outlets fro many years due to the
profits they make and the attractive nature of their sales promotions. It also came to
80
light that most of these firms organize sales promotions frequently in a bid to make
profits and to also capture the market. In a bid to introduce new products onto the
market, it was realized from the research that the entire network use sales promotions
and also to beat their competitors. The telephony industry adopts sales promotions to
offload piled up stocks to make profit. Sales promotions help firms in the telephony
industry to remain in active business. From the point of view of management a lot of
problems are faced in the organization of sales promotions and one of these problems
is cost. Timing of when to organize sales promotions was also a major problem faced
by the telephony industry.
From the research, it was clear that almost all the firms in the telephony industry
efficiently, effectively and periodically make use of sales promotions. The use of sales
promotion has enabled the firms to increase profits due to the nature and benefits
customers derive from such promotions.
Such profits have enabled the telephony industries to expand and also play vital role
as far as social responsibilities are concerned.
5.2 Recommendations
The recommendations outlined below are worth considering by both management and
clients. In a bid to make maximum revenue, firms in the telephony industry should
organize more attractive sales promotions and also to stay in active business.
For firms in the telephony industry to make more revenue and to make their clients to
stick to their networks, there is the need for more organizations of sales promotions.
In a bid to win more clients for them to partake in sales promotions, attractive sales
promotions ought to be organized.
81
There is also the need for these firms to satisfy their clients if they want to win more
customers and also to make more revenue. If sales promotions are attractive, a lot of
staff members would be willing to contribute their quota towards the realization of the
dreams of these outfits (revenue maximization).
For firms to reduce piled up stocks, they have to rely on frequent sales promotions to
achieve these goals. Management in a bid to increase revenue ought to release the
needed funds at the right time for the organization of sales promotions.
Firms in the telephony industry ought to organize frequent and attractive sales
promotions to outwit their competitors in the industry and also to capture the market.
For firms to make a lot of revenue from sales promotions, they ought to time the
organization of these sales promotions since timing plays a major role in revenue
mobilization. For sales promotions to lead to revenue, staff ought to be well
motivated.
Suggestion for further research
The researcher studied the role of sales promotions in profit making of the telephony
industry. It was limited to only the promotion aspect of profit making. Further
research should be taken up by other researchers on effect of sales promotion on the
customer.
82
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86
APPENDIX B
Questionnaire for customers
Please this is for academic exercise. Kindly answer the following questions.
1. Which of the following Network(s) do you use currently?
MTN
(
)
VODAFONE (
)
KASAPA
(
TIGO
(
)
ZAIN
(
)
)
2. For how long have you been using this network?
Less than one year
(
)
1 – 3 years
(
)
4 – 6 years
(
)
7 years and above
(
)
Rank each statement as follows
Strongly agree
Agree
OK
Somehow
Disagree
Strongly Disagree
1
2
3
4
5
6
Statement
score
3. My network has frequent sales promotion activities going on
4. I like sales promotion because it saves me money
5. I joined my network because of a sales promotion
6. I participate frequently in sales promotion activities
7. I stay on the line longer during sales promotion
8. I participate in the sales promotional raffles
87
9. I am satisfied with my network due to sales promotion
10. Sales promotion reduces the overall cost of using phones
11. I have recommended my network to others.
12. Sales promotion will always make me stick to my network
Questionnaire for Management Staff
Please this is for academic exercise. Kindly answer the following questions
1. Which of the following networks do you work with?
Vodafone
(
)
Tigo
(
)
Kasapa
(
)
MTN
(
)
Zain
(
)
2. For how long have you been working with this outfit?
Less than a year
(
)
1 – 3 years
(
)
4 – 6 years
(
)
7 years and above
(
)
3. How many times in a year do you organize sales promotion?
Seldom
(
)
A lot
(
)
Frequently
(
)
You should rank each statement as follows
Strongly agree
Agree OK
Somehow
Disagree
Strongly disagree
1
2
4
5
6
3
88
Statement
score
4. My outfit uses sales promotion to introduce new products into the
Market
5. Sales promotion helps my outfit to beat competitors
6. Offloading stock makes us adapt to sales promotion
7. Remaining in business makes my outfit use sales promotion
8. My outfit faces a lot of competitors as a result of sales promotion
9. Cost of organizing sales promotion is one of the problems my
Outfit faces
10. A lot of people partake seriously in sales promotion
11. Timing of sales promotion is one of the hurdles your outfit encounters
12. To meet expected goals, staff are committed to sales promotion
13. Management is always willing and able to provide the needed funds for sales
promotion
14. There has been an increase in customers as a result of sales promotion
15. Profits has shot up due to sales promotion
16. Sales promotion should be more frequent
89