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ASSESSING THE IMPACT OF SALES PROMOTION ON CONSUMER BEHAVIOUR
(A CASE STUDY OF TRANSCARD GH)
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OPEN UNIVERSITY, MALAYSIA ASSESSING THE IMPACT OF SALES PROMOTION ON CONSUMER BEHAVIOUR (A CASE STUDY OF TRANSCARD GH) BY SADAT ABARI BSCJ13BBA0017Y

A Research Thesis Submitted to Accra Institute of Technology; Open University, Malaysia in Partial fulfillment of the requirements for the award of Bachelor of Science in Business Administration (Management Option)

September, 2014

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SCHOOL: OPEN UNIVERSITY MALAYSIA.

TOPIC: ASSESSING THE IMPACT OF SALES PROMOTION ON CONSUMER BEHAVIOUR

CASE STUDY :(TRANSCARD GH).

STUDENT NAME: SADAT ABARI.

IDNO: BSCJ13BBA0017Y.

SUPERVISOR’S NAME: MR. STEPHEN DOTSE.

A LONG ESSAY TO THE DEPARTMENT OF BUSINESS ADMINITRATION AS PART OF THE FUFILLMENT OF THE REQUIREMENT FOR THE AWARD OF BACHELORS DEGREE IN ADMINISTRATION (MANAGEMENT OPTION).

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ABSTRACT

In order for these telecom firms to succeed in this ever increasing competitive market, they employ a lot of different promotional tools to attract and retain their customers. The study aimed at assessing the impact of sales promotion on consumer behaviour. There is no doubt that sales promotions do influence the decision of a consumer in to stimulate demand for a product / service, hence the need to attach more importance to the activities. The study indicated significant influence of sales promotion on consumer buying behaviour. The research consequently recommended that, telecom service providers need to undertake regularly sales promotion activities to ensure constant influence on their patrons. The results of the study showed that almost all the respondents knows what sales promotion is and bonus talk time and are the two promotional activities preferred by subscribers. Most respondents commented that the quality of the service which is an aspect of operation the companies have to pay attention to improve. The recommendations given are; i) The operators must intensify the use of sales promotion as consumers have shown great interest and are highly influenced by sales promotion activities.

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ii) 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. iii) Telecom service providers should engage in continuous research to correctly approximate consumer expectations and plan to meet them to reduce consumer complaints. iv) The 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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DECLARATION. I do hereby declare that , this work is the result of my own research and has not been presented by any one for any academic award in this or any other university. All references

used

in the

work

have

been

fully

acknowledged. I bear

responsibility for any shortcoming.

Name………………………………………..

Date……………………………

(BSCJ13BBA0017Y).

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sole

CERTIFICATION I hereby certify that this long essay was down by the university.

supervised in accordance with procedures laid

…………………………………..

Date………………………………

(SUPERVISOR).

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DEDICATION I dedicate this work to my family , Mr. Umar Abari, Mrs. Kafayat Abari, Adnan Abari , Samira Abari, and My Supervisor Mr Stephen Dotse for his enormous contribution towards my education at AIT.

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ACKNOWLEDGEMENT.

For the development of this study, my

sincere appreciation goes to :

Mr. Stephen Dotse, my supervisor for his patience and guidance during this study. Mr. David Attivi for guidance given to me during this study.

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TABLE OF CONTENTS ABSTRACT………….…………………………………………………………………..III DECLARATION……………………………………………………………………...…V CERTIFICATION…………………………………………………………………….…VI DEDICATION………………………………………………………………………..…VII ACKNOWLEDGEMENT………………………………………………………………VIII TABLE OF CONTENT LIST OF FIGURES AND ILLUSTRATION LIST OF TABLE CHAPTER ONE 1.0 BACKGROUND OF THE STUDY………………………………………………………1 1.1 STATEMENT OF THE STUDY…………………………………………………………6 1.2 OBJECTIVE OF THE STUDY…………………………………………………………..7 1.3 RESEARCH OF THE STUDY…………………………………………………………...8 1.4 SIGNIFICANCE OF THE STUDY………………………………………………………8 1.5 SCOPE OF THE STUDY………….……………………………………………………..9 1.6 METHODOLOGY……………………………………………………………………....10 1.7 LIMITATION OF THE STUDY………………………………………………………...10 1.8 ORGANIZATION OF THE STUDY……………………………………………………11

CHAPTER TWO: LITERATUTRE REVIEW 2.0 INTRODUCTTION……………………………………………………………………..11 2.1 CONSUMER BEHAVIOUR……………………………………………………………14 ix

2.2 TYPES OF SALES PROMOTION……………………………………………………...15 2.2.1 CONSUMER SALES PROMOTION…………………………………………….……16 2.2.2 TRADE PROMOTION………………………………………………………………...16 2.2.3 SALES FORCE PROMOTION………………………………………………….……..17 2.3 THE STIMULI-RESPONSE MODEL OF CONSUMER BEHAVIOUR……………….18 2.4 CHARACTERISTICS AFFECTING CONSUMER BEHAVIOUR…………………….19 2.5 HOWARD-SHETH MODEL…………………………………………………………… 19 2.6 CONSUMER DECISION MAKING PROCESS…………………………………….…. 21 2.7 BEHAVIOURAL ANALYSIS……………………………………………………….…..25 2.8 NATURE OF SALES PROMOTION IN THE TELECOM INDUSTRY……………….26 2.9 SALES PROMOTION TOOLS IN THE TELECOM INDUSTRY………………………27 2.10 NATURE OF SALES PROMOTION IN THE TELECOM INDUSTRY………………28 2.11 ABOUT TRANSCARD GH .……………………………………………………………32

CHAPTER THREE: METHODOLOGY 3.1 INTRODUCTION…………………………………………………………………….…….33 3.2 TARGET POPULATION…………………………………………………………………. 33 3.3 DATA COLLECTION PROCEDURE………………………………………………..…….33 3.4 RESEARCH INSTRUMENT …………………………………………………………….. 33 3.5 RESEARCH DESIGN…………………………………………………………………….. 34 3.6 DATA ANALYSIS……………………………………………………………………….. 34

CHAPTER FOUR: DATA ANALYSIS 4.0 INTRODUCTION…………………………………………………………………………35 x

4.1 AGE DISTRIBUTION OF RESPONDENTS……………………………………………..35 4.2 GENDER DISTRIBUTION OF RESPONDENTS………………………………………..37 4.3 EDUCATIONAL STATUS………………………………………………………………..38 4.4 NETWORK SUBSCRIPTION OF RESPODENTS……………………………………… 40 4.5 USAGE OF MOBILE NETWORK………………………………………………………..41 4.6 KNOWN PROMOTIONAL ACTIVITIES………………………………………………..43 4.7 SALES PROMOTION ENHANCEMENT………………………………………………...44 4.8 FACTORS THAT INFLUENCE ACTUAL BUYING………………………………….... 46 POST PURCHASE DECISIONS: 4.9 TESTIFY TO FAMILY AND FRIENDS…………………………………………………..48 5.0 REPEAT PURCHASE……………………………………………………………………,,,49 5.1 INFLUENCE YOU TO PORT……………………………………………………………...51 5.2CONSUMER COMMENTS……………………………………...…………………………52

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION 5.1 SUMMARY OF FINDINGS………………………………………………………………53 5.2 CONCLUSION…………………………………………………………………………….54 5.3 RECOMMENDATION………………………………………………………………… ...55

LIST OF TABLES TABLE 4.1 AGE DISTRIBUTION…………………………………………………………......36 TABLE 4.2 GENDER…………………………………………………………………………...38 TABLE 4.3 EDUCATIONAL STATUS………………….….………,,………………………...39 TABLE 4.4 SERVICE PROVIDER…….………………...………………………………….….41 TABLE 4.5 MAIN USAGE OF MOBILE NETWORK…………………………………….…..42 xi

TABLE 4.6 PROMOTIONAL ACTIVITY……………………….………………………….….44 TABLE 4.7 SALES PROMOTION ENHANCEMENT…………………….…………………..45 TABLE 4.8 FACTORS THAT ENHANCE ACTUAL BUYING………………………………47 POST PURCHASE DECISIONS: TABLE 4.9 TESTIFY TO FAMILY AND FRIENDS….………………………………………49 TABLE 5.0 REPEAT PURCHASE……………………………………………………………..50 TABLE 5.1 INFLUENCE YOU TO PORT……………………………………………………..52

LIST OF FIGURES FIG 4.1 AGE DISTRIBITUON………………………………………………………..…….....37 FIG 4.2 GENDER……………………….……………………………………….…….………..38 FIG 4.3 EDUCATIONAL STATUS……………….…………….…….……………….………40 FIG 4.4 SERVICE PROVIDER………………….………….……….…………….…….….…..42 FIG 4.5 MAIN USAGE OF MOBILE NETWORK………….………….……………..…….…43 FIG 4.6 PROMOTIONAL ACTIVITY……………………………...…….…………….……...45 FIG 4.7 SALES PROMOTION ENHANCEMENT………….…………..….………….……....46 FIG 4.8 FACTORS THAT ENHANCE ACTUAL BUYING….……….…..……………….….48 POST PURCHASE DECISIONS: FIG 4.9 TESTIFY TO FAMILY AND FRIENDS…………………………………….………...50 FIG 5.0 REPEAT PURCHASE……………………………………………………….……,..….51 FIG 5.1 INFLUENCE YOU TO PORT…………………………………………………..…..….53

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CHAPTER ONE 1.0 BACKGROUND OF THE STUDY Ghana’s mobile voice penetration has now hit 115.64 per cent as at the end of March this year. This is far above the projections many years ago which predicted penetration to be about 70% by the close of2015. According to latest figures released by the industry regulator, national communications authority (NCA), mobile subscriber base increased from 31,028,253 in February this year to end march 2015 at 31,154,420. This represents a marginal growth of 0.41 per cent during the period.

i) Gainers During the period under review, the country’s biggest telecom company by subscriber base and finance, MTN Ghana, increased marginally from 14,113,432 at the end of February to end March with 14,207,778. This represents a positive variance of 0.67 per cent and puts the company’s total market share at 45.60 per cent. For the first time in the years, Glo Ghana joined the gainers as its subscriber base went up from 1,422,113in February 2015 to end March with a figure of 1,481,903. This represents an increase of 4.20 per cent. It’s also translate into a market share of 4.76 per cent for March, up from the previous month’s market share 4.58 per cent. Airtel Ghana again maintained its marginal growth momentum as its subscriber base increase to 3,863,252 at the end of the month under review from the February 2015 figure of 3,808,747, representing an increase of 1.43 per cent. As a results, Airtel’s market share of 12.28 per cent in February, increase to 12.40 per cent at the end of March 2015. Tigo’s subscriber base also registered an increase from 4,264,078 at the end of February to end March with 4,315,719, representing a 1.21 per cent growth. The company’s market share also increased from 13.74 per cent to 13.85bper cent. On another hand, Expresso ended the month of March with a subscriber base of 126,202 from the 119, 386 subscribers it’s registered in February. Subsequently, the company’s market share now stands at 0.41 per cent in the period under review.

ii) Loser Vodafone Ghana, after seeing a rise in its subscriber base for months, saw a drop for the first time in the year. Its subscriber base decreased to 7,159,566 at the end of March from the February figure of 7,300, 497.

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As a result, the company suffered a dip in its total market share from 23.53 per cent at the end of March, 2015.

iii) Customer’s Wish Some customers of the various Telco’s continued their agitations for better services, saying they had been denied quality services for long. Against this background, they urged the new Director General of the NCA, Mr William Tevie, to work at enable them to get value for money. Mr. Joojo Simaman, an accountant, said “the NCA must continue to crack the whip to get the telcos on track to meet customer expectations. A widower, Mrs Joyce Tagoe, also called for measures that would prevent the tecols from “stealing our credit”. Source; Daily Graphic, Tuesday, June 23, 2015. “Ghana’s mobile penetration now at 116%”

by charles benoni okine.

Each year the companies spend billions of dollars on trade promotion to induce retailers for stronger merchandizing support (e.g price, reduction, feature, special display) for brands. Though recent research has documented the success of pricing and promotion in stimulating immediate sales response, some industry experts contend that frequent price discounting blurs the distinction between the deal price and the baseline price of a product to consumers come to expect deals as the rule rather than the exception, discount prices lose their ability to boost sales. To use price discounting effectively, managers must understand the unit between pricing activity and consumer expectation. One stream of research investigating the link in based on the nation that the consumer establishes a reference price for a brand or product. The reference price reflects the expectations of the consumer which are shaped by the past activity of the brand. The consumer then evaluate the future price of the brand in the relation is thin reference point and her or her response in related to the disparity between the two. Hence, consumer response to an unexpected price decrease a pleasant surprise in greater than the response to an expected price decrease. However, product pricing is not the only activity influencing the expectations of consumers. In recent years, retail promotion (by which we mean non price merchandizing activity such as special displays and store features has had an increasingly important effect in consumer choice behaviour. Source: James M. Latin and Randolph E. Bucklin(Aug 1959). 2

Promotion is the management process through which an organization enters into dialogue with its various audiences in order to generate attitudinal and behavioural responses (fill 2002). The promotional blend should fit logically into the strategy developed to satisfy a particular target market. Marketing communications is to emphasize the promotional aspect of marketer in an attempt to reach out to the target market. For an organization to stay solvent and profitable, there is no need for management to inform its prospective customers who are either unaware or have little knowledge about the existence of the organization and its offer to the market and the kind of product or service that they provide. As a consequence, companies are always reaching for ways to gain efficiency by substituting one promotional for another. Some of the promotional tools companies use to gain customers attention are sales promotion, advertising, publicity, sponsorship, direct marketing, exhibition among others. Among the several promotional tools companies use, sales promotion is the promotional tool that increase sales within a shortest possible time frame. Sales promotion is a term covering a whole variety of sales inducing techniques including cut price offers, premium offers (gifts given with the product or in exchange for tokens included in the packaging, loyalty points such as air miles or other entitlement to discount, cash or other rewards accumulated through purchases. Advertising to sales promotion ratio was 60:40 respectively. This is because advertising was found to be an efficient way to reach geographically dispersed buyers. But today, the trend of advertising to sales promotion has changed. Organizations supplying consumer markets spend about 70% of their promotional budget on sales promotion which is a clear indication of a sudden change from other form of promotional tools to sales to promotion. All these activities are designed to encourage prospect at point-of-sales in order to increase dealer’s effectiveness and reward customer loyalty. Sales promotion such as coupons, sweepstakes, contests, discount among others trigger quicker sales for the duration of the campaign. (Kotler 1997). Sales promotion is a supplemental ingredient of the promotional mix and is not as visible as advertising, but more than $100 billion is spent annually on it. During the 1980s, there was a major shift of dollars from media advertising to trade and consumer promotion. By 1997 about

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75% of these expenditures were for trade and consumer promotion. (Berkowitz, kevin, Hartley, Rudelius: 2000). Consumer packaged - goods firms spend approximately $70 billion annually in trade promotion. Moreover, many of these forms have been increasing the proportion of their marketing budget spend on trade promotions; more than 70% of manufacturers increase promotional expenditures between 1990 and 1995.Consumer and trade promotion now account for 50% of many expenditures marketing budgets. The increase comes inspite of efforts by some major consumer packaged - goods companies to reduce their promotional expenditures (Forbes 1991) and /or cut their couponing efforts. The reason for increasing promotional spending is clear promotions have a large, measureable, immediate effort on a brand's sales. Inspite of the substantial temporary increase in house-hold purchases attributable to the use of promotion, there are concerns that such promotions might have a differing long term effect. For example, in categories in which promotion have become frequent, consumers might learn to anticipate future deals. This particular scenario suggests that; 1) A particular promotional event induces a household to stock-pile on a given purchase occasion (short term effect). 2) The promotions long-term, negative effect which is manifested as an increase probability that the household waits for another promotion before bringing on subsequent purchase occasions. Consistent with the spirit of the foregoing example, We define a short term promotional on a particular shopping visit (simple point in time).In contrast, a long term effect refers to cummulative effect of previous promotional exposures(over quarters or years) on a consumers current, or short-term decision on whether and how much to buy. The effect of the past exposures on current purchases also suggest a carryover effect, a promotion in the current period will affect behaviour on subsequent periods.

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Source :(Carl F. Mela, Kamel Jedidi and Douglas Bowman, Journal of marketing research, volume 37(may 1998), page 250.) “Consumer behaviour describes how consumers make purchase decisions and how they use and dispose of the purchase goods or services” (Lamb, 2009). As a consumer we are all unique and this uniqueness is reflected in the consumption pattern and process of purchase. The study of consumer buying behaviour provides us with reasons why consumers differ from one another in buying products and services. Consumer Sales promotional tools are; •

Sampling

•

Price reduction

•

Coupons, Premium

•

Fairs and Exhibition

•

Scratch and Win offer

Since launching the first cellular mobile network in sub-Saharan Africa in 1992, Ghana has become one of the continent’s most vibrant mobile markets with now six competing operators, including regional heavyweights such as MTN, Vodafone, Bharti Airtel (formerly Zain) and Millicom (Tigo). The entry of Nigeria’s Globacom as the sixth player in 2012 has delivered another boost to the sector. Subscriber growth, however, has come at the expense of the average revenue per user (ARPU) which has fallen below US$5 per month for some of the operators. While the voice market is approaching saturation at more than 100% penetration in mid-2013, enormous potential in both subscriber and ARPU terms exists for 3G mobile broadband services which already represent the vast majority of internet connections in the country. Vodafone Ghana, formerly Ghana Telecom, is the national telecommunications company of Ghana. In 5

2006, it had around 400,000 customers for fixed and mobile telephony and Internet services. According to the National Communications Authority’s Mobile Voice subscriber base figures, Vodafone recorded a figure of 6,644,825 in April 2014 which increased to 6,732,555 as at the end of May 2014. Source: nca.org.gh. 1.1 STATEMENT OF THE PROBLEM. According to the National Communications Authority, the mobile networks are not giving subscribers the best value for money when it comes to the quality of service they render such as call clarity; internet speed among others which is evident in the number of portability that has been activated since last year. There is always a post purchase evaluation by the consumers after purchasing and consumption of the service. There are many promotional activities in the country by various telecom operator which has differe...