This document discusses a research project on the effects of sales promotion schemes on customers. The research will be conducted in three phases involving manufacturers, retailers, and customers in the FMCG sector across food, stationery, and cosmetics/hygiene product categories. The objectives are to determine the best fitting sales promotion schemes for different product categories and understand the different motives of stakeholders in the sales promotion system, including manufacturers, retailers, and customers. A conceptual model is presented showing the relationships between these stakeholders and how sales promotion schemes flow through the system. Primary research methods will involve surveys of manufacturers, retailers and customers.
This document discusses a research project on the effects of sales promotion schemes on customers. The research will be conducted in three phases involving manufacturers, retailers, and customers in the FMCG sector across food, stationery, and cosmetics/hygiene product categories. The objectives are to determine the best fitting sales promotion schemes for different product categories and understand the different motives of stakeholders in the sales promotion system, including manufacturers, retailers, and customers. A conceptual model is presented showing the relationships between these stakeholders and how sales promotion schemes flow through the system. Primary research methods will involve surveys of manufacturers, retailers and customers.
This document discusses a research project on the effects of sales promotion schemes on customers. The research will be conducted in three phases involving manufacturers, retailers, and customers in the FMCG sector across food, stationery, and cosmetics/hygiene product categories. The objectives are to determine the best fitting sales promotion schemes for different product categories and understand the different motives of stakeholders in the sales promotion system, including manufacturers, retailers, and customers. A conceptual model is presented showing the relationships between these stakeholders and how sales promotion schemes flow through the system. Primary research methods will involve surveys of manufacturers, retailers and customers.
Group 3 Koundinya. N- 93 Arjun A 16 Dileep A 24 Renjith P 49 Vineet A 69 Prashant K 195 Raunak K 199 Gopi D - 178 Contents Introduction .................................................................................................................................................. 2 Literature Review .......................................................................................................................................... 3 Objective ....................................................................................................................................................... 4 THE MODEL ............................................................................................................................................... 5 Research Methodology ................................................................................................................................. 6 Primary Research ...................................................................................................................................... 6 Phase I: Manufacturers ......................................................................................................................... 6 Phase II: Retailers .................................................................................................................................. 7 Phase III: Customers .............................................................................................................................. 7 Conclusion and Key insights .......................................................................................................................... 9
Introduction
Sales Promotion is the set of marketing activities undertaken to boost sales of the product or service. Sales promotion is one of the five aspects of the promotional mix. (The other 4 parts of the promotional mix are advertising, personal selling, direct marketing and publicity/public relations.) Sales promotion includes several communications activities that attempt to provide added value or incentives to : consumers, wholesalers, retailers, or other organizational customers Main Purpose is to stimulate immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase. There are quite a large number of promotional schemes prevalent at the moment. We discuss here only a few that are very much visible to the common man so much so that the consumer response towards the schemes is easily available. Classification :- 1. Consumer Promotion Tools: - Free Samples, Coupons, Discounts, Loss Leader, Loyalty Marketing, etc.
2. Trade Promotion Tools: - Price Off, Allowance, Free Goods, etc. 3. Business Promotion tools: - Trade Shows, Sales Contest, Specialty advertising, etc.
Sales Promotion :- A South Asian Perspective Globalization and Open-market are used in almost all the South-Asian countries. Earlier on, most of the countries in this region used to be traditional in dealing with the customers at the lower levels, in the sense that the wholesalers had their set of retailers and each retailer had a set of loyal customers.
Brand switching was rare and trade flourished on faith and counter-faith. With the opening up of markets to imported goods, coming up of new ideas along with multinational firms and multi-cultural goods became a must.
Hitherto unknown commodities have become the article of faith, now so much so that one wonders as to how we were living without these essentials. All this has not happened in a day nor is the transformation complete. The changes are gradual and on- going. The introduction of providing incentives either to lure the customers or to keep them in the net is a new phenomenon for the countries in this region. The consumer may have utilitarian motives like savings, quality and convenience, or the consumer may have hedonist motives like amusement, exploration, seeking variety, etc. Literature Review Understanding consumer responses to retailers cause related voucher schemes evidence from the UK grocery sector by Matthew Gorton, Robert Angell, Yu-Shan Tseng, John White.
CRVS Model - This paper discuss about a model CRVS to understand consumer responses to cause related voucher schemes. CRM initiatives have been implemented in a range of industries in a similar way grocery retailers came up with similar initiative customers receive vouchers linked to their total spend, which can be donated to, for example, schools and sporting clubs. Schools and clubs then redeem these vouchers, at levels set by the retailers, for equipment and other goods.
The conceptual model incorporates six theoretically derived exogenous constructs, i.e. status of the cause, company-cause fit, personal involvement with the cause, attitudes to the company, perceived sincerity of the company and perceived ubiquity. These are hypothesized to influence consumer responses to three primary endogenous variables: interest in the company, favorability of attitudes to the company and use (impact on purchasing intentions). The model is tested using survey data (n = 401) collected in two UK cities Newcastle and Plymouth and for two stores Tesco and Morrisons. Hypothesis H1. Status of cause will positively influence personal involvement. H2. Status of cause will positively influence perceived sincerity. H3. Status of cause will positively influence interest H4. Company cause fit will positively influence perceived sincerity. H5. Company cause fit will positively influence favorability.
H6. Personal involvement will positively influence interest. H7. Personal involvement will positively influence favorability. H8. Perceived sincerity will positively influence interest. H9. Perceived sincerity will positively influence favorability
H10. Perceived ubiquity will negatively influence favorability. H11. Perceived ubiquity will negatively influence use. H12. Attitude to the company will positively influence favorability. H13. Attitude to the company will positively influence use.
H14. Interest will positively influence favorability. H15. Favorability will positively influence use. Indirect effects - H16. Status of cause will positively influence interest through personal involvement. H17. Status of cause will positively influence favorability through perceived sincerity. H18. Company-cause fit will positively influence favorability through perceived sincerity.
Test Used Confirmatory factor analysis (CFA) - The objective was to validate each of the nine constructs in keeping with standard practices of unidimensionality Structural equation modeling (SEM) - Each of the factors specified in the conceptual model was tested via SEM and three indirect paths were hypothesized.
Result The analysis indicates that CRVS can stimulate favorable attitudinal change and behavioral intentions. Consumer responses are thus not limited to CRVS being perceived merely as a good thing and the results are encouraging for the retailers concerned and, more widely, those interested in creating a CRVS. Attitudes to the company, perceived ubiquity and favorability were identified as significant predictors of the construct use.
Physical Implications - Managers have to very careful in the selection of a cause, its status, and how to build personal involvement. There should be consistency in communication for CRVS. If a company suffers from negative consumer attitudes, then CRVS alone is unlikely to turn around their business performance. Objective
The primary objective of research is to measure the effectiveness of various sales promotion schemes on consumers. The study would be conducted across several product categories. The sector chosen is FMCG and the various categories selected are Food, Stationery and Cosmetics & Hygiene. The following model depicts the entire system which incorporates all the stakeholders involved in a sales promotion system thus representing the starting, intermediate and end point of a sales promotion scheme.
THE MODEL
Specific objectives of the research are also: 1. To find the best fit sales scheme corresponding to a particular product category. For instance, if the product is considered to be a soap, the Buy 1 get 1 free offer may create a positive impact on the buying patterns of the consumer. However if the product is bread, then the same offer may come across as a stock clearance offer or a bundling of near to expiry products 2. To understand the different motives of the several stakeholders present in the system. From the above model, it can be observed that sales promotion schemes may be between a manufacturer and a retailer or a manufacturer and a consumer directly or in between a retailer and a consumer. In each of these cases, the motive of the sales promotion scheme may be different. This research project aims at understanding what those motives are, are they been able to achieve and so on. Distributors/Manufacturers Distributors/Manufacturers Distributors/Manufacturers Sales Schemes S a l e s
S c h e m e s
Sales Schemes Sales Schemes Research Methodology
Primary Research As per the objectives of the study, the primary research will be conducted in 3 phases. Each phase will target one of the three main stakeholders in any sales promotion scheme the manufacturer/service provider, the retailer, the customer. All 3 phases can be simultaneously launched. Phase I: Manufacturers Nature of Research: Exploratory Objective: To understand the manufacturers motives behind different sales promotion schemes To understand the customers response to various schemes offered by the retailer To analyze the impact of external factors such as geography, culture etc. on effectiveness of sales promotion schemes
Sampling: Convenience sampling technique may be used. Since only sales/marketing managers in FMCG manufacturing companies will be targeted, a non-probabilistic sampling technique such as convenience sampling will be appropriate. 5 Managers each from 3 different companies in each of the 3 product categories identified for research (cosmetics, food and snacks, stationery) hence 45 respondents. Data Collection Strategy In depth interviews (Since the respondents in this phase of the research are limited in number but highly informed about the topic of the study, it makes sense to spend more time and effort on interacting with each one of them.
Topics to be covered in Interview To find motive of the sales promotion scheme (eg. To induce trial, to clear stock, to prolong PLC stage etc); To understand the response received for different sales schemes in different product categories; To understand how the same scheme performed across geographies or at different points of the year or in the presence of competitors schemes etc. Phase II: Retailers Nature of Research: Exploratory Objective: To understand the retailers motives behind different sales promotion schemes; To understand the customers response to various schemes offered by the retailer;
Sampling: Convenience sampling technique may be used. Since only retailers dealing in FMCGs will be targeted, a non-probabilistic sampling technique such as convenience sampling will be appropriate. Two types of retail outlets are to be covered modern trade and traditional trade. To check for geographical factors, the research may be carried out across different regions. Data Collection Strategy: In depth interviews (Since the respondents in this phase of the research are limited in number but highly informed about the topic of the study, it makes sense to spend more time and effort on interacting with each one of them.)
Questionnaire structure To find motive of the sales promotion scheme (If it is a scheme by the retailer) To understand the response received for different sales schemes in different product categories; Phase III: Customers Nature of Research: Exploratory Objective: To understand the customers perception and preferences of various schemes; To understand the impact of schemes on customers of different behavioral profiles loyals, switchers, etc; To understand the effect of demographical factors of customers on their reaction to sales promotion schemes. Sampling: Probabilistic sampling technique may be used. In the probabilistic technique, stratified sampling method has been used. In the stratified sampling, the customers will be grouped into clusters on the basis of profession. Our target group will be students, housewives and business people. We will ensure that each segment will have equal contribution in the responses. Since almost everybody shops for FMCGs, it seems justifiable to undertake a probabilistic sampling technique for research purpose.
Data Collection Strategy: Structured questionnaire (Since the number of respondents is significantly high, capturing data is most convenient through a questionnaire. The questionnaire shall be administered online.)
Questionnaire structure: 1. Demographic profiling: age, income, location, number of members in the household, profession etc. 2. Shopping behavior: (Frequency, place of shopping modern or traditional etc) 3. Behavioural Profiling: (To differentiate loyals and switchers) one product from each of the three chosen product categories will be used for this purpose. for eg. Which is your favourite brand of soap? How often do you purchase other brands? Etc. 4. Receptiveness to different sales promotion schemes in that product category measured on a Likert scale. The different schemes to be rated can be same product free, price off, price off on higher quantum purchase, free assured gift, lucky draw lots, higher quantity at same price etc. Part 3 and 4 of the questionnaire will be repeated for each of the three product categories chosen for research.
Data Analysis: The survey data can be analyzed using MS Excel and any statistical analysis software such as SPSS. The Likert scale ratings of different types of sales promotions can be used to measure the likelihood of success of the particular sales promotion schemes to different demographic or behavioral segments of customers. Exploratory factor analysis can be performed to identify the major distinguishable consumer behavior patterns towards sales promotion schemes. Conclusion and Key insights
From this study we intend to derive key customer insights regarding the impacts of sales promotion schemes. The first conclusion we shall be able to derive is how successful a sales promotion scheme can be across the FMCG product categories - Stationery, Food and Cosmetics/Hygiene. This study shall help to understand customer response and perception towards various sales promotion schemes across the above mentioned product categories. The second key conclusion that we shall be able to derive will be based on the first insight. That is, we shall be able to point out the best fit of sales promotion scheme for a particular product category. As marketers this has important implication while designing a sales promotion schemes. The third result that we shall be able to derive from the primary research on the manufacturers and the retailers as in what the actual motive was behind the sales promotion employed and whether they were able to fulfill that motive. Their motives could range from- inducing trial for a new product, prolonging the PLC stage of a product, clearing out stock etc. Along with these we shall also be able to identify different external factors that affect the sales promotion scheme like- Geography and time, competition, type of trade where the customer shops etc.