The Appraisal of Sales Promotion on Marketing of GSM Service (a Comparative Study of Globalcom and MTN)
Chapter One
OBJECTIVES OF THE STUDY
The general objective of this research is to assess the role sales promotion play in influencing the consumer buying behavior of telecom service consumers.
Therefore, this research seeks specifically:
To find out the practice of sales promotion in the telecom industry.
To find out the factors that promotes or impairs the effectiveness of the practice.
To assess the impact of sales promotion on consumer behavior in the telecom industry.
To recommend suggestions on measures for improvement.
CHAPTER TWO
REVIEW OF LITERATURE
INTRODUCTION
Increased competition in the telecom industry has made prices of products and services more transparent and has also increased the use of different promotional mix to inform their loyal consumers and also help entice more consumers to their network.
The situation has made promotion in the telecom industry a normal activity for these companies in the industry if they want to maintain their market share. This was however confirmed with what Peattie & Peattie (1993) claimed about promotions becoming so common that firms are almost obliged to follow or risk losing market share.
Sales promotion is therefore a direct inducement that offers an extra value or incentive for the product to the sales force, distributors or the ultimate consumer with the primary objective of creating an immediate sale (George, 1998). However, despite the various promotional strategies employed by these firms, the consumer is influenced by several factors and also goes through several processes in arriving on the service that can satisfy their need.
THEORETICAL ISSUES IN MODELS OF CONSUMER BEHAVIOUR
Consumer Behaviour is the study of how individuals, groups and organisations select, buy, use and dispose of goods, services, ideas or experiences to satisfy their needs and wants (Kotler and Keller, 2009). According to Schiffman and Kanuk (1997), the study of consumer behaviour focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items. Belch and Belch (1998) also defines consumer behaviour as the process and activities people engage in when searching for, selecting, purchasing, using, evaluating and disposing of products and services so as to satisfy their needs and desires. Behaviour occurs either for the individuals or in the context of a group or an organization.
Schiffman and Kanuk (1997), distinguished between two different types of consumers which are personal and industrial consumers. Personal consumers purchase goods and services for their own use, household use or as a gift to someone else. Organisational consumers on the other hand purchase goods and services to run an organisation including both profitable and non-profitable organisation, government and non- governmental organisations.
BEHAVIOURAL ECONOMICS
Behavioural Economics is how people react, and the economic decisions they make in any given financial framework (Xavier, 2005). Behavioural economics challenges some of the presumptions of conventional economics that consumers make their choices coherently and rationally given their preferences and the constraints upon them. It argues that consumers often act in their own best interests due to behavioural traits such as failure to process information objectively or misevaluations about the costs and benefits of prospective decisions (Xavier, 2005). These biases according to the behavioural economics traits, partly explains the reasons why consumers may be making seemingly irrational decisions in choosing a particular network operators package over the other. Among the behavioural economics trait identified are as follows;
Hyperbolic Discounting is one of the biases that could distort the irrational decision taken by consumers. This is where the consumer only focuses on the immediate need the product or service is satisfying and so makes decisions based on the present need.
Consumers tend to be short sighted when making decisions with immediate costs or benefits to be weighed against future costs or benefits. For instance consumers may enter long term telecommunications contracts because they place more value on the immediate benefit of enjoying lower call rate to a particular number rather than the long term costs such as high price for calls exceeding the usage cap or inability to enjoy lower weekend calls to other numbers.
Choice or Information Overload is where consumers have too many products or features to compare. Consumers who may encounter such a bias may experience increased anxiety about the possibility of making a bad choice. This according to (Xavier, 2005) can lead to random choice or failure to make any choice, resulting in missed opportunities for buyers and sellers.
Endowment is one of the traits that make consumers reluctant to give up what they have. Consumers mostly behave in this manner because of misplaced loyalty, a failure to acknowledge poor choices in the past, or an irrational consideration of sunk cost.
Framing Biases also affect the consumer’s decision. Consumer choice is influenced by the frame in which information is presented. Presentation of the same information in a different frame can lead to a different decision from consumers. This implies that sales can improve based on the way promotional messages are carried out by the various network operators.
CHAPTER THREE
METHODOLOGY
RESEARCH DESIGN
Research design according to Kerlinger (1986) is “the plan and structure of investigation conceived so as to obtain answers to research questions”. The design of a research specifies the methods and procedures for acquiring the information needed. It represents the overall operational framework of the project that stipulates what information is to be collected from which source and by what procedure.
This work lays focus on Globacom Nigeria and MTN. The researcher employed the quantitative approaches to data collection and analysis. According to Ary et al (2002), a study allows for an in-depth analysis of a single unit such as one individual, one group, one organization, one programme etc. This study was done with customers or subscribers of Globacom and MTN at Abuja vicinity for the purpose of obtaining quantitative data.
THE STUDY AREA
The study was conducted in the Abuja Federal capital territory of Nigeria. It comprised all subscribers or customers of Globacom and MTN within the Abuja. The study was comparative so as to enable the researcher assess the various strategies of sales promotion being employed by both networks. All respondents lived or worked in Abuja as at the time the data was collected.
POPULATION AND SAMPLING TECHNIQUE
The study population, as have been noted, comprises all subscribers or customers of Globacom and MTN within the Abuja. The study used consumers from MTN to enable the researcher assess the various strategies of sales promotion being employed.
The sampling design provides detailed explanation of the target population and the sampling method used for this research. The population was heterogeneous. For the purpose of this research, a purposive sampling technique was used to sample hundred (100), made up of customers who were adjudged users of Globacom and MTN. Guba and Lincoln (1981) have stated that purposive sample is almost never random but intended to exploit competing views and fresh perspectives as fully as possible. The sample size for this study was therefore, hundred (100) customers of Globacom and MTN.
The researcher used the non-probability sampling technique to determine subscribers from whom data was obtained. The researcher found this technique appropriate to use because the sample was taken out of a diverse population of mobile telephony subscribers in their natural environment and a questionnaire was administered to seek customer’s answers to questions. Furthermore, this research, like any marketing research, involves a large population which is almost inaccessible if each member of the population should have a known chance of being included in the sample. This would cost too much or take too much time.
CHAPTER FOUR
DATA ANALYSIS AND DISCUSSION OF RESULTS
INTRODUCTION
This chapter presents the analysis of data collected for the study. For the purpose of responding to the objectives of this study, a sample of 100 telecom consumers was used. The study mainly assesses the role of sales promotion in consumer buying behaviour in the use of telecom services. Data have been analysed in the form of reliability analysis, descriptive statistics, and multiple regression analysis. The results of data analysed have been presented in the form of tables and charts below.
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
SUMMARY OF FINDINGS
Below are the findings of the research as gleaned from the analyses;
Sales promotion practice is a very prominent feature in the Nigerian telecom industry and consumers are very much aware of the various sales promotional strategies practiced by these telecom service providers. The various strategies identified in the Nigerian telecom industry by consumers’ supports the most frequently used sales promotions in the world as identified by Berkowitz and Hartley (1994). The notable sales promotional strategies practiced in Nigeria included bonus for talk time, premiums, frees samples, price offs, branded souvenirs, contests and sweepstakes, and free talk time to family and friends.
The sales promotion strategy that consumers were mostly aware was the contest and sweepstakes. The consumers’ awareness of the sales promotional strategies in the telecom industry gives them access to enough information that guides their decision making.
The sales promotion practice in the industry draw these consumers to the product and make them do impulse purchase. This confirms the assertion by Ngolanya, et al, (2006) that sales promotion engenders impulse buying.
Factors such as appearance of sales persons, displays of products, free gifts accompanied with the purchase of airtime, free samples offered for customer trial and short term reduction of prices on certain occasion could enhance or impair the effectiveness of sales promotion. The findings confirmed that, amidst the factors that could enhance the effectiveness of sales promotion practice, the factor that has the greatest effect was the attachment services such as double bonus for all day. This supports the study done by Adcock (2001), who asserts that when a purchase decision is made, the actual purchase can be affected by unanticipated situational factors. Some of these situational factors according to them could be directly associated with the purchase, for example the outlet where the purchase is to be made, the quality to be bought, and payment procedure among others. The consumers also had similar views that these attachment services enhance the effectiveness of sales promotion.
There was a significant influence of sales promotion on consumer behaviour. Implying an improvement in the sales promotion strategies will lead to a corresponding improvement in consumer buying behaviour towards purchasing telecom services at least in the short term. This supports the study by Sam and Buabeng (2011), which states that, the essence of sales promotion is to provide a direct inducement to act by providing extra worth over and above what is built into the product at its normal price. Sales promotion plays a significant role in influencing the consumer decision process by shortening the decision process during purchase.
In the case of post-purchase actions of consumers, the findings showed that, consumers to a larger extent grumble and complain about their dissatisfaction of the service to their friends and persuade them not to purchase that particular service or product. It was realised that, the consumer compare the actual experience with their expectations to determine their satisfaction. If it meets their expectations, the likelihood of purchasing the same brand becomes very high and the vice versa. This confirms the study by Gabboth and Hogg (1994) who affirmed that, consumers have a predetermined standard against which they compare the outcome.
CONCLUSION
Telecom service providers have a lot of services and products that they make available to consumers through their various communication tools. One of the key promotional tools used in marketing these services and products is sales promotion.
The study revealed that sales promotion has an influence in the purchase decision of consumers. It was realised that the consumer may not go through the entire decision making process anytime they want to purchase a telecom service or product. This may be so because the evoked sets which present the consumer with established alternatives may inform the consumer’s judgements in deciding which service or product to buy. This may eventually prevent the consumer from going through all the stages of decision making because of experience and available information to him. It was also observed that the consumer would mostly consider which telecom service operator is offering the best discount and the kind of service that satisfies their need. Sales promotion therefore is an inevitable promotional tool for telecom firms if they really want to maintain or increase their market share.
Some of the challenges this study encountered was accessibility of information from Globacom Nigeria. This actually hampered the research because the researcher couldn’t get information from the Management of Globacom to confirm the influence sales promotion has on their sales, customer attraction and customer retention. The study also failed to assess the impact sales promotion has on customer retention after the sales promotion is over.
In conclusion, this study has demonstrated that, the consumer is aware of the information around him and are always looking forward to take advantage of the sales promotions being run by these telecom service providers. Hence, in order to attract and influence the purchase decisions of the telecom consumers in today’s competitive market, sales promotion should be a prominent feature in telecom service providers’ budget, year in, year out.
RECOMMENDATIONS
Recommendations have been made about measures that could be taken to improve the practice of sales promotion in the telecom industry in order to influence the consumer buying behaviour effectively. The following may be noted:
The operators must intensify the use of sales promotion as consumers have shown great interest and are highly influenced by sales promotion activities.
Double bonus-all-day should be carefully applied as it can reduce profitability. Therefore it may be used in conjunction with other promotional tools such as coupons and free talk time. Greater emphasis may be placed on attachment services to gain maximum advantage.
Sales promotion has short term effect, as a result services providers need to do a continuous follow up to establish long term relationship with new customers acquired during sales promotion period.
Telecom service providers should engage in continuous research to correctly approximate consumer expectations and plan to meet them to reduce consumer complaints.
Globacom and other telecom operators should enhance the situational factors such as display of items, appearance of sales persons, location of showrooms as well as payment processes. These factors and other situational factors will enhance the effectiveness of their sales promotions to influence their consumers.
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