CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

One of the primary objectives of every business is to increase the sale of its products in order to maximize profit. Several methods are adopted by businesses to increase sales and one of such methods is sale promotion. Sales promotion is one of the 4 P’s (price, product, place and promotion) of marketing used by business firms to stimulate buyers in order to increase buyers’ purchases. It is used by retailers, wholesalers and/or manufacturers to provide incentives to buyers or distribution channel thereby inviting them to purchase more of a firm’s products. Sales promotion is an important component of a business firm’s overall marketing strategy along with advertising, public relations and personal selling. It acts as a competitive weapon by providing an extra incentive for the target audience to purchase or prefer one brand of a product over the other. As Aderemi (2003) observes, sales promotion is particularly effective in spurring product trials and unplanned purchases.

The rising interest in the use of sales promotion as a marketing strategy by business firms is against the backdrop that many purchasing situations by customers are so habitual that it is hard for customers, on their own will, to switch from brand of a product to another. For example, users of computer system with window 7 operating system may be so accustom to the product that even when new computers with new windows are launched, they are tacit in switching over to the new product. In other word, the switch to a new product may not be aggressive until consumers are motivated. It then means that when new products or brand of products are introduced, such product may not appeal to the taste of customer who are already accustom to existing products in the market. Thus, one of the ways to influence customers’ buying habit is to embark on sales promotion as this strategy enables consumers to think and evaluate brands and different purchased possibilities.

The relationship between sales promotion and consumers’ buying behaviuor has continued to generate increasing number of studies in the literature. Among such recent studies, include Syed, Waqas, Syed & Malka (2015), Darko (2012) and Syuhaily, Benjamin & Yeoh (2011). Most of these studies were inspired by common believe that the ways customers behave toward purchases have direct effect on the success of a firm and as such, firms must ensure that they create a marketing mix that not only satisfies customers’ wants but also enlighten them on how to optimized their purchases. However, as unanimous as these studies are in terms of direct effect of customers’ behaviour on firms’ success, so also they lack consensus on what is the nature of customers/consumers behavior and how it is measured.

On the nature of customers/consumer behavior, Darko (2012) posits that it is the process by which the individual search for, selects, purchase, use and dispose of goods and services, in satisfaction of their needs and wants. The author adds that consumers always go through about five steps in taking one purchase decision. These include problem recognition, information search, evaluating of alternatives, purchase decisions, purchase and Post Purchase evaluation. Actual purchasing is only one stage of the process and not all decision processes lead to a purchase. Also not all consumer decisions will include all the stages but will depend on the degree of complexity and risk involved.

Syuhaily, Benjamin & Yeoh (2011) however, posit that there are about four types of buying behaviours that consumers exhibit. These include a routine response which needs very little search and used when purchasing frequently purchased item, limited decisions which is used when purchasing low priced brands in a familiar product category, extensive decision which has a high degree of economic, performance and psychological risk which demands lot of time in seeking information and deciding and impulse buying which is spontaneous and needs no conscious planning.

The privatization of telecommunication industry in Nigeria attracted many mobile network service providers (MTN, Airtel, Globacom and Etisalat) into the industry. This set in competition among the firms, making the industry to become customer-oriented with main focus on sales promotion as a strategy. Accordingly, the various mobile network companies in the industry such as MTN, Airtel, Globacom and Etisalat have used different consumer sales promotion strategies to differentiate their services. The essence has been to attract potential customers, retain their existing customers or boost sales. In this study however, in order to properly examine the impact of sales promotion on customers’ buying behaviour, the MTN office in Kaduna State, Nigeria, was selected as case study. The choice of MTN was on the basis that it has the widest network coverage in the country compared to other mobile network service providers. This will provide a good representative sample for the study.

Arguably, a number of studies on impact of sales promotion on consumers’ bahaviour exist in the literature however, findings of these studies are not all inclusive as they still debatable. Beside, none of these studies examine the impact of sales promotion on customers’ buying behavior with reference to MTN office in Kaduna State. This study makes little contribution to the debate on the impact of sales promotion on consumers’ bahaviour with evidence from MTN office Kaduna State.

1.2 Statement of the Problem

Previous studies on the relationship between sale promotion and buyers’ behaviour do not have meetings of mind on the impact of the former on the later. On the one hand, there are views that sales promotion influences customers to behave positively towards the company’s product and services. This view was shared by Syed, Waqas, Syed & Malka (2015) and Darko (2012), among others.

On the other hand however, studies such as Dodson (2001), Bawa & Shoemaker (1987) cited in Peattie & Peattie (1993) found that promotion is considered to be an external stimulus and when it is gone consumers are less likely to re-purchase. Customers might also become comfortable with the lower price and de-motivated to buy with the normal price anymore. Sales promotions might also encourage low-probability purchasers to try.

Furthermore, there are customers who are not likely to make repeat purchases and thus the promotions have a negative impact on long-term sales. Price is used as a measure of quality for many service consumers. In that sense, decrease in the price devalues the brand in the eyes of the customers. Some studies have also shown that sales promotions increase the likelihood for repeat purchases. If consumers are satisfied with the brand that is being promoted, it is more likely that they will also buy it later after the promotion is over. The uncertainty surrounding the exact impact of sales promotion has on the customers’ behaviour is the reason for this study. Thus this study makes contribution to the body of literature on the impact of sales promotion on customers’ buying behaviour with evidence from MTN office, Kaduna, Nigeria.

1.3 Research Questions

Based on the statement of the problem, the following research questions were formulated foe the study:

i.                    Does sale promotion strategies used by Kaduna MTN office influence customers buying behaviour in the study area?

ii.                  What is the relationship between sales promotion and customers’ patronage of MTN mobile network services in the study area?

iii.                What is the sales promotions’ strategies use by Kaduna MTN office to create awareness about MTN mobile network in the study area?

1.4 Objectives of the Study

The broad objective of this study is to examine the impact of sales promotion on the buying behaviour of customers in Kaduna State with a case study of Kaduna MTN office. The specific objectives are as follows:

i.                    Does sale promotion strategies used by Kaduna MTN office influence customers buying behaviour in the study area?

ii.                  What is the relationship between sales promotion and customers’ patronage of MTN mobile network services in the study area?

iii.                What is the sales promotions’ strategies use by Kaduna MTN office to create awareness about MTN mobile network in the study area?

1.5  Research Hypotheses

The following null hypotheses were formulated for the study:

H01: Sale promotion strategies used by Kaduna MTN office do not significantly influence customers buying behaviour in the study area.

H02: There is no significant relationship between sales promotion and customers’ patronage of MTN mobile network services in the study area.

H03: Sales promotions’ strategies use by Kaduna MTN office does not helps create awareness about MTN mobile network in the study area

1.6 Scope of the Study

The study will be conducted in Kaduna State. The study will be designed to sample the views of users of all MTN mobile services operators within the study area. The sample size will be limited to students, traders, artisans and business people in the study area.

1.7  Significance of the Study

A study of the impact of sales promotion on customers’ buying behaviour is significant for a number of reasons. It is important that the role of sales promotion is assessed to ascertain its effectiveness in a competitive environment especially in the mobile telecommunication industry in Nigeria. The study of customer behavior in response to sale promotion strategy is also important for policy makers to know how customers behave towards strategic activities of marketers in a competitive industry using sales promotion. The study is also important to the companies in the mobile industry to realize how their sales promotional activities influence consumers in their favour.

1.8 Organization of the Study

The study is organized into five chapters. Chapter one introduces the study and consist of statement of the problem, research questions, objective of the study,  scope of the study and the significance of the study. Chapter two presents review of relevant literature on a related topic while chapter three focuses on the methodology used to achieve the objectives of the study. Chapter four presents the data and the discussions of results. The conclusions and recommendations are presented in chapter five.

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