A STUDY ON THE INFLUENCE OF SALES PROMOTION ON CUSTOMER PURCHASE DECISIONS AT MAX

PREPARED BY S.ANITHA

OBJECTIVES
To identify the importance of various attributes on the purchase of apparels. To determine the effect of discount on consumers purchase decisions related to Frequency Value Preference for brands To find the customers preference for various retail apparel stores.

LITERATURE REVIEW
Hanna R.C, Berger P.D, Abendroth L.J, Optimizing time limits in retail promotions: an email application, Published in Journal of the Operational Research Society. Vol .56, Issue 1, Jan 2005. Gendek, Karen, Neslin, Scott A, The role of Retail Promotion on determining future brand loyalty: its effect on purchase event feedback, Published in Journal of Retailing. Vol .75, Issue 4, Jan 1999. Kincade, Doris H, Woodard Ginger A, Buyer-Seller relationships for promotional support in the apparel sector Published in Journal of Consumer Studies. Speer, Jordan K, Converting your best commodity into cash Published in Apparel Magazine. Vol. 49, Issue 3, Nov 2007. Garbato Debby, Setting Back the color for Back To School apparel Published in Retail Merchandiser. Vol. 44,Issue 10, Oct 2004.

LITERATURE REVIEW
Mulhem Francis J, Padgett Daniel T, The relationship between retail price promotions and regular price purchases, Published in Journal of Marketing. Vol .59, Issue 4, Oct 1995. Walter Rockney G, Assessing the impact of retail price promotions on product substitution, complementary purchase and interstore sales displacement, Published in Journal of Marketing. Vol .55, Issue 2, Apr 1991. Kumar V, Leone Robert P, Measuring the effect of retail store promotions on brand and store substitution Published in Journal of Marketing Research. Vol.25, Issue 2, May 1988 Voss Glenn B, Seiders Kathlun, Exploring the effect of retail sector and firm characteristics on retail price promotion strategy Published in Journal of Retailing. Vol. 9, Issue 1 , Spring 2003. Alvarez, Cassielles, Consumer evaluations of sales promotion: the effect on brand choice Published in Journal of Marketing. Vol . 39, Issue 1

RESEARCH DESIGN
Research Type Research approach Universe Sampling Type Sampling Method Sample Size Data Collected Statistical Tools Descriptive Research Questionnaire All the customers of max store Non-Probability sampling Convenience Sampling 296 Primary Data Chi-square, Garret ranking

ANALYSIS
RANKING OF ATTRIBUTES FOR PURCHASE
20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0

Frequency

Attributes

AWARENESS OF BRAND MAX BOUGHT THE BRAND BEFORE BEFORE THEIR VISIT TO STORE
NO 20% NO 20%

YES 80%

YES 80%

ACCEPTANCE LEVEL OF ATTRIBUTES IN MAX BRAND

1. The reputation of max brand is good

3% 6% 17%

74% Disagree Neither agree nor disagree Agree Strongly agree

ACCEPTANCE LEVEL OF ATTRIBUTES IN MAX BRAND

2. Max brand provides more attractive sales promotion offers than competitors

5%

11%

23%

61%

Disagree

Neither agree nor disagree

Agree

Strongly agree

ACCEPTANCE LEVEL OF ATTRIBUTES IN MAX 3. Designs of max brand apparels are fashionable 4.Fabric quality of max brand is good 5.Inner circle card(TIC) is useful 6.Product variety of max brand is good 7.Max brand provides lot of color options 8.Preferred sizes are available in max brand 9.Displays are appealing in max brand 10.Salesmen are courteous 11.Salesmen are helpful in choosing the product 12.Exchange scheme of max brand is useful 13.Location of store is convenient 14.Max brand apparels are better when compared with national brands 15. Price matches with the quality

CLUSTER ANALYSIS
CLUSTER 1: Emotional Buyers (Customers who appreciate the aspirational value of max brand) 1. The reputation of max brand is good 2. The display of max apparels is appealing 3. The fabric quality of max brand is good 4. The designs of max brand apparels are fashionable CLUSTER 2: Rational Buyers (Customers who appreciate functional value of max brand) 1. The product variety of max brand is good 2. Salesmen of max brand are courteous 3. Max brand apparels provide a lot of options in colors. 4. Max brand apparels prices match its quality. CLUSTER 3: Deal-loving Buyers (Customers who appreciate the customer focus of max brand) 1. The exchange scheme of max brand is useful. 2.Max brand provides more attractive sales promotion offers than competitors. 3.The max brand apparels are available in various preferred sizes. CLUSTER 4: Loyal Buyers (Customers who are loyal to max brand) 1.The location of the max brand store is convenient. 2.The salesmen of max brand are helpful in choosing the right product. 3.The loyalty card of max brand, Inner Circle Card(TIC) is very useful. 4.Apparels of max brand are better than that of national brands.

CUSTOMERS PREFERENCE FOR PRODUCT TYPE

Men Apparels 25% Ladies Apparels 51%

Kids Apparels 24%

RANKING OF STORES FOR PURCHASING MENS APPARELS

5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Max Lifestyle Reliance Trends Upbeat RMKV

RANKING OF STORES FOR PURCHASING LADIES APPARELS

9639

9622 8309 7062 6449

Max

Lifestyle

Brocade

Reliance Trends

RMKV

RANKING OF STORES FOR PURCHASING KIDS APPARELS

6000 5000 4000 3000 2000 1000 0 Max Lifestyle Lilliput Mom & Me RMKV

To determine the effect of discount on consumers purchase decisions related to frequency of purchase

Without discount
49.3

With discount
54.1

31.4 20.3 19.9 5.7

15.5 3.7

Every Every Quaterly Festival weekend month seasons

Every weekend

Every month

Quaterly Festival seasons

FREQUENCY OF PURCHASE vs. GENDER Null Hypothesis: Gender does not influence the frequency of purchase

Without discount
Frequency Male Oi Every Weekend Every Month Quarterly Festival seasons 4 Ei 4.3 7 Gender Female Oi Ei 6.1

Chi-Square Tests Value .882a Asymp. Sig. (2df sided) 3 .830

Pearson ChiSquare

60 33 19

57.2 36.4 18

86 60 27

88.8 56.6 28

Since the significance is greater than 0.05(level of significance), Null hypothesis is accepted i.e., gender does not influence frequency of purchase (without promotions).

FREQUENCY OF PURCHASE vs. GENDER Null Hypothesis: Gender does not influence the frequency of purchase

With discount
Frequency Male Oi Every Weekend Every Month Quarterly Festival seasons 34 Ei 23.5 26 Gender Female Oi Ei 36.5

\ Chi-Square Tests Asymp. Sig. (2sided) .000

Value Pearson Chi-Square 22.095a

df 3

46 24 12

62.7 23.1 6.7

114 35 5

97.3 35.9 10.3

Since the significance is less than 0.05(level of significance), Null hypothesis is rejected i.e., gender influence the frequency of purchase (with promotions).

From the above table we understand that Male prefer to purchase every weekend Female prefer to purchase every month

To determine the effect of discount on consumers purchase decisions related to brand preference

Without discount

With discount

Other Brands 35% Max Brand 65%

Other Brands 29%

Max Brand 71%

To determine the effect of discount on consumers purchase decisions related to value

Without discount
3001-4000 >4000 3% 2% 500-1000 24%

With discount

500-1000 2% >4000 11% 3001-4000 21%

2001-3000 26%

1000-2000 30%

1001-2000 45%

2001-3000 36%

IMPORTANCE OF DISCOUNT IN PURCHASE

unimportant 6% Neither Important nor unimportant 10% Extremely important 18%

Important 66%

TYPE OF OFFER PREFERENCE FROM MAX

Combo offers 26%

Percentage discount 40%

Buy 1 get 1 34%

TYPE OF OFFER vs. INCOME Null Hypothesis: Income does not influence the offer preference
Type of Offer 600010000 Oi Ei Percentage Discount Buy 1 get 1 Combo Offers 8 0 1 3.6 3.1 2.3 Income Level(amt in Rs) 1000015000 Oi 20 15 11 Ei 1500025000 Oi Ei >25000 Oi Ei Percentage Discount: 1.6000-10000 2.10000-15000 3.>25000 Combo Offers: 1.15000-25000

18.2 21 15.9 29 12.0 32

32.4 68 62.8 28.3 58 54.8 21.3 33 41.4

Chi-Square Tests Asymp. Sig. (2sided) .002

Value Pearson Chi-Square 21.398a

df 6

Since the significance is less than 0.05 (level of significance), Null hypothesis is rejected i.e., income influence the type of offer.

TYPE OF OFFER vs. AGE Null Hypothesis: Age does not influence the offer preference
Type of Offer 18-25 Oi Ei Percentage Discount Buy 1 get 1 Combo Offers 25-30 Oi Ei Age 30-35 Oi Ei >35 Oi Ei Percentage Discount: 1. 18-25 2. >35 Buy 1 get 1 1. 30-35 Combo Offers: 1.25-30

59 53.8 29 31.2 8 45 46.9 26 27.2 23 32 35.4 24 20.6 17

19.0 21 13 16.5 8 12.5 4 11.4 8.6

Chi-Square Tests Value 20.502a Asymp. Sig. (2- Since the significance is less than 0.05 df sided) 6 .002 (level of significance), Null hypothesis is rejected i.e.,

Pearson ChiSquare

age influence the type of offer.

FREQUENT COMMUNICATION ABOUT THE OFFERS FROM MAX

No 22%

Yes 78%

MEDIA PREFERENCE FOR GETTING INFORMATION FROM MAX

Leaflets by post 7% Information at the point of purchase 1%

Newspaper 14% Phonecalls 12% Sms 66%

PROFILE OF CUSTOMERS: GENDER:

Male Female

AGE:
11% 16% 46% 18-25 25-30 30-35 >35

39% 61%

27% MARITAL STATUS: Student Employee Business Housewife Single Married 60%

OCCUPATION:
14% 38% 17%

40%

MONTHLY INCOME:
31% 3% 15% 6000-10000 10000-15000 15000-25000 >25000

54%

28%

FINDINGS
The majority of max customers prefer Fabric Quality as the major attribute for their purchase. 80% of customers are aware of brand max before coming to store. 80% of customers have bought the brand max(among the customers who are aware of brand max before coming to store). 33% of customers neither agree nor disagree that the max brand is better than other national brand. The majority of max customers prefer Ladies Apparels as the major category for purchase from max. The majority of max customers prefer Max for purchasing Mens apparels when compared with other stores like Lifestyle, Rmkv, Reliance Trends, Upbeat The majority of max customers prefer Max for purchasing Kids apparels when compared with other stores like Lilliput, Rmkv, Mom & Me, Lifestyle.

FINDINGS
The majority of max customers prefer Max for purchasing Ladies apparels when compared with other stores like Brocade, Reliance Trends, Rmkv, Lifestyle, Max. The majority of max customers prefer to buy apparels every month with and without discounts The majority of male customers prefer to purchase apparels every weekend and female customers prefer to purchase apparels every month(with discount) 71% of max customers prefer max brand when there is discount. The majority of max customers increase their value of purchase when there is discount. The majority of max customers prefer percentage discount from max. The majority of max customers prefer to get information about offers through SMS.

CONCLUSION & SUGGESTIONS

Discounts affect consumers purchase decisions related to Frequency Value Preference for brands

Customers will be loyal to max brand when they get a best deal in discount offers. Female customers traffic can be increased by giving monthly discount. Customers of max can be communicated through SMS about the discount offers. Percentage discount can be offered to attract the customers.

LEARNINGS
COMPETITOR ANALYSIS: Fixtures and wall allotment for brands. Sq. feet allocation for brands. Volume of purchase in mens category is more when compared to ladies category. The majority of customers are satisfied with the Discount offers from max Product variety of max brand Location of max store Customer service in max store