Theoretical Framework, empirical review, sample size of sales Promotion

Theoretical Framework of sales Promotion Sales promotion tools and objectives were analyzed. In general, sales promotion is used to encourage immediate action among consumers. Value adding and value increasing promotions are targeted with unique objectives to potential users, competitor loyals, brand switchers and loyal customers. (Peattie & Peattie 1993) Also the possible problems of value increasing sales promotion in the context of financial services were identified and additional use of value adding promotion is suggested. Intense competition in the credit card markets has made price reductions almost imperative but surviving the competition requires more. One promotional method to be used to stand out from competition could be the increased use of value adding promotion. In the promotion of the company´s credit card, value adding deals such as the increased bonuses and sweepstakes are used in addition to the value increasing price reductions. Sales promotion debate was also discussed in the previous Chapter. The boosting effect of sales promotion to short-term sales is widely accepted in the literature. Research on long-term effects has however, offered some inconsistent results. According to Ailawadi (2001) sales promotion has a positive long-term effect on sales. Also Cotton & Babb (1978; in Peattie & Peattie 1993) state that consumers who are satisfied with the promoted brand will more likely repurchase. In contrary, many researches have revealed results indicating that sales promotion does not affect on long-term sales or even that promotion might decrease long-term sales. (Frank & Massey 1971, Monroe 1973, Bawa & Shoemaker 1977, Dodson et al. 1978, Winer 1986, Neslin & Shoemaker1989, Kalwani et al. 1990; in Peattie & Peattie 1993) The theoretical framework of the study is constructed on the basis of the content of the work. Promotion is just like the spark plug in the marketing mix. It is the process of marketing communication involving information, persuasion, and influence. Promotion has been defined as “co-ordinate self-initiated efforts to establish channels of information and persuasion to facilitate or foster the sale of goods or points of view.” Thus, promotion is persuasive (Communication to inform potential customers of the existence of products, to persuade them that those products have want satisfying capabilities).The marketing mix (or promotion mix) consist of five major modes of communication vix. Advertising, sales promotion, Public relations and personal selling. Allelements of promotion mix have a defined ~ole in all stages of the selling process. Theobjective of promotional strategies is to influence the customer in such a way that he can purchase the product of his own will and then patronizes the same brand in future too. Thusthere are two important activities.1.To give information about the product.2.To influence (increase) the demand of the product.Within the five forms of promotion, each as distinct features that determine in whatsituation it will be most effective. EMPIRICAL REVIEW A sales promotion is a marketing event focusing in which a corporate entity attempts to influence customers directly (Blattberg & Neslin, 1990). A sales promotion stimulates customer purchases and the efficiency of distributors through marketing activities excluding advertising, public relations and so on. In other words, a sales promotion provides the incentive for consumers to purchase some specific products, and this incentive is different from the incentive provided by advertising with respect to the reasons to purchase those specific products. The purpose of a sales promotion is to attract new customers, maintain existing customers who are contemplating switching brands and give incentives to customers who are about to use competing products. Sales promotions vary depending on the situation and need, and they have an immediate effect on product purchases. Airport duty-free shops aim to sell products during a short period of time and help potential duty-free consumers make decisions easily as they consider numerous alternatives before purchasing products. A sales promotion can be categorized as either a price-discounting sales promotion or a value adding sales promotion, depending on the nature of its incentive (Sawyer & Dickson, 1984). A price-discounting sales promotion, presented as a unit price, discounts the price temporarily; methods of doing this include the use of coupons, price discounts and cash refunds. A value adding sales promotion, which is highly likely to be structured as a separate benefit because its differentiating unit is not price, includes the use of premium gifts and free gifts through a bonus pack draw. On the basis of the theory provided by (Sawyer & Dickson, 1984), this study has categorized sales promotions into four different categories: price discounts, coupons, freebies and points. A price discount is the deduction of a certain amount of money from the tag prices during a certain period of time at an airport duty-free shop. A coupon refers to a certificate that provides a price discount or special benefit to only the holder of that coupon. A freebie refers to a free gift for purchasers, and a points system converts a certain amount of money into millage that can later be used as cash. Customer reaction typically varies depending on the type of sales promotion being used; a special sale item might increase an existing consumer’s inclination to make a purchase, while other types of sales promotions might be more effective in attracting new consumers (Cotton & Babb, 1978). Thus, this study investigates the effects that airport duty-free sales promotions have on customer satisfaction and which of the four types of sales promotions has the greatest effect on customer satisfaction. Customer satisfaction is the overall satisfaction that an airport duty-free user has after experiencing a sales promotion, and customer value is the valuation of the time, effort and amount of money invested in the sales promotion by the airport. Corporate image can be defined as the overall image of the airport in the minds of airport users. Customer satisfaction and customer value interact with one another, and these two variables are the factors that are crucial in affecting the behavioral intention of customers (Gross, 1997). Furthermore, customer satisfaction is the antecedent of corporate image. Therefore, customer satisfaction improves corporate image, which will, in turn, generate repurchases and the word-of-mouth effect, and it will also generate customer loyalty for the corresponding company. Airport duty-free users build the image of the airport in their minds, and those images will eventually have a direct effect on their behavioral intention. Therefore, it is very crucial to analyze the role and the effect of images. Behavioral intention suggests that the key elements used to predict the directivity and future behavior of consumers are the results of all the variables used in this study. Behavioral intention is considered to be the outcome of the overall satisfaction that includes the intention to return and the intention to recommend (Bendall-Lyon & Powers, 2004). Behavioral intention can be defined as individual will and faith that airport duty-free users want to express through future behavior after having formed an attitude toward the sales promotion they experienced in the airport duty-free shop. In other words, it is the amount of the satisfaction of the airport duty-free users transmitted to others and the strength of the intention to purchase duty-free items. Validity of the instrument All the instruments used by the researcher in collecting data relevant for this work, both the primary and secondary instrument were adequate enough to cover the required areas of the work. Hence, by using all the above mentioned instrument, the researcher was able to gather the needed information for this study which in other words help to update this study for both professional and unprofessional use in academic work and field work. However, the use of questionnaires by the researcher in collecting data relevant for this work proves abortive due to the fact that most of the employees were unable to comply effectively because of some personal reservations which they think it is unworthy to disclose factually. Consequently, with the sole exception of questionnaires, all other instruments were valid for this research work. Reliability of the instruments The instruments used in collecting data both primary and secondary proved worthy of being relied upon by the research because they were able to bring to light an undisputed accuracy of the result obtained in their use. In the same vein, based on the above, all the information acquired from the use of these instruments are reliable, except for questionnaires in which most of the employees refused to comply transparently and some of its results/information was discarded by the researcher. SAMPLE SIZE Sales promotion as an agent of motivation helps in improving the efficiency of workers in the organization, is a specialized area and demand only those knowledgeable in the field to fill the questionnaire. As a result, only 80 person out of 100 person were considered representative enough to enable a reliable generalised state to be realised. The above sample size was obtained using Yaro Yamen formula. n = N 1 + N (e)2 Where n = Sample size N = Population e = Error of estimate = 5% I = Constant Where N = 100 e = 0.05 n = 100 1 + 100 (0.05)2 n = 100 1 + 0.25 100 1.25 = 80 ans