Download CERITIFICATION +THESIS

CERTIFICATION
The undersigned certify that he has read and hereby recommends for acceptance by the
INILAK the thesis entitled “The role of promotion in influencing customer purchasing
decision in telecommunication companies in Rwanda”. A case study of Airtel Rwanda
Ltd (2012-2014) in fulfilment of the requirements for the degree of Master of Business
Administration option of marketing.
Signature………………………………………
Supervisor: Prof. BIDERI ISHUHERI NYAMULINDA
Date………………………………………...…….
i
DECLARATION AND COPYRIGHT
I, UWAYO Noel hereby declare that this thesis is my own original work. To the best of
my knowledge it contains no materials previously published or written by another person,
nor material which to a substantial extent has been accepted for the award of any other
degree or diploma at the INILAK or any other institution, except where due
acknowledgement is made in the thesis. Any contribution made to the research by others,
with whom I have worked at INILAK or elsewhere is explicitly acknowledged in the
thesis.
I also declare that the intellectual content of this thesis is the product of my own work,
except to the extent that assistance from others in the thesis’s design and conceptions or
in style, presentation and linguistic expression is acknowledged.
Signature: …………………………..
Date……………………………………
No part of this thesis may be reproduced, stored in any retrieval system, or transmitted
in any form or by any means without prior written permission of the author or the
INILAK.
ii
DEDICATION
To my father
To my mother
To my brothers and sisters
iii
ACKNOWLEDGEMENT
I would like to express my thanks to my supervisor; Prof. BIDERI ISHUHERI
NYAMULINDA for his assistance to the end of this work. I would also like to thank
INILAK for the efforts and resources committed to my education. Many thanks go to the
management of Airtel Rwanda for their assistance in conducting this research. I thank
also my colleagues at INILAK, for their teamwork spirit displayed for the success of my
studies. Finally, I would like to recognize the contribution of family members for heir
encouragement, material support during my academic struggle.
iv
ABSTRACT
The topic of the research was entitled “The role of promotion in influencing customer
purchasing decision in telecommunication companies in Rwanda. A case study of Airtel
Rwanda Ltd (2012-2014)’’
The purpose of the research is find out the promotion tools which are the source of
purchasing information for customers, which medium that has been more effective as a
source of product information and to examine the relationship between promotion tools used
by Airtel Rwanda Ltd and customer purchasing decision.
Quantitative study was the form of research methodology adopted for the study. Data
collection was done with gathering information via a questionnaire, and the appropriate
responses were evaluated using a statistical package for the social sciences programme,
(SPSS).
Findings about advertising showed that radio is the most source of information and it has
been used by (60%), the majority of the respondents do not appreciated about personal
selling used. More customers have been subscribed in 2013 with (73.5%). Only (12.1%)
of Airtel subscribers mostly use Airtel line, (58.2%) rarely recommend Airtel products.
Findings on brand switching showed that only 105 (30.9%), have replaced other line with
Airtel and (69.1%).
Airtel should increase advertising on radio and Billboards because it is the most source of
information to many customers. Training on customers care is very necessary.
Key words: Mobile telecommunication, Promotion, customer purchasing decision.
v
TABLE OF CONTENTS
CERTIFICATION ............................................................................................................................ i
DECLARATION AND COPYRIGHT ............................................................................................ ii
DEDICATION ................................................................................................................................ iii
ACKNOWLEDGEMENT .............................................................................................................. iv
ABSTRACT..................................................................................................................................... v
LIST OF ABBREVIATIONS, ACRONYMS AND SIGNS .......................................................... ix
LIST OF TABLES ........................................................................................................................... x
LIST OF FIGURES ........................................................................................................................ xi
CHAPTER ONE: GENERAL INTRODUCTION .......................................................................... 1
1.1Introduction ............................................................................................................................. 1
1.2 Back ground of the study ....................................................................................................... 1
1.3 Statement of the problem ....................................................................................................... 4
1.4 Research questions ................................................................................................................. 5
1.5.1 General objective ............................................................................................................ 5
1.5.2 Specific objectives .......................................................................................................... 5
1.6 Hypothesis of the study.......................................................................................................... 6
1.7 Significance of the study ........................................................................................................ 6
1.8 Justification of the Study ....................................................................................................... 7
1.9 Scope of study ........................................................................................................................ 7
1.10 Conceptual framework ......................................................................................................... 7
1.11 Operational definitions......................................................................................................... 8
CHAPTER TWO: LITERATURE REVIEW ................................................................................ 11
2.1 key concepts ......................................................................................................................... 11
2.1.1 Promotion...................................................................................................................... 11
2.1.2 Advertising:................................................................................................................... 12
2.1.3. Sales Promotion: .......................................................................................................... 18
2.1.4 Personal Selling ............................................................................................................ 22
2.1. 5. Public Relations .......................................................................................................... 25
2.1.6 Publicity ........................................................................................................................ 27
2.1.7 Direct Marketing ........................................................................................................... 29
vi
2.2 Consumer Purchasing Decision ........................................................................................... 29
2.2.1 Attraction of customers ............................................................................................... 33
2.2.2 Increase in sales .......................................................................................................... 33
2.2.3 Customer loyalty ........................................................................................................... 35
2.2.4 Brand switching .......................................................................................................... 35
2.3 Relationship between Promotion and customer purchasing decision .................................. 36
CHAPTER THREE: RESEARCH METHODOLOGY ................................................................ 41
3.1 Company profile .................................................................................................................. 41
3.1.1 Vision of Airtel Rwanda ............................................................................................... 41
3.1.2 Core values.................................................................................................................... 41
3.1.3 Mission of Airtel Rwanda ............................................................................................. 42
3.2 Research design ................................................................................................................... 42
3.3 Area of the study .................................................................................................................. 42
3.4 Population, sample size and sampling techniques ............................................................... 42
3.4.1 Population (N) ............................................................................................................... 42
3.4.2 Sample size (n) .............................................................................................................. 43
3.4.3 Sampling procedures ......................................................................................................... 43
3.5 Data collection ..................................................................................................................... 43
3.5.1 Research Instrument.......................................................................................................... 43
3.5.2 Data collection procedures ................................................................................................ 44
3.6 Validity of the Instrument .................................................................................................... 44
3.7 Reliability of the Study ........................................................................................................ 44
3.8 Data analysis ........................................................................................................................ 45
3.9 Ethical Considerations ......................................................................................................... 45
3.10 Limitations of the study ..................................................................................................... 46
CHAPTER FOUR: DISCUSSION AND INTERPRETATION OF FINDINGS .......................... 47
4.1: Demographic characteristics of the Respondents ............................................................... 47
4.1.1Gender ............................................................................................................................ 47
4.1.2 Age ................................................................................................................................ 48
4.1.3 Marital Status ................................................................................................................ 48
4.1.4 Education level.............................................................................................................. 49
vii
4.2 Using promotion tools.......................................................................................................... 49
4.2.1 The use of advertising and publicity ............................................................................. 50
4.2.2 Sales promotion ............................................................................................................ 50
4.2.3 Personal selling ............................................................................................................. 52
4.2.4 Public relations.............................................................................................................. 53
4.2.5 Direct marketing ........................................................................................................... 55
4.3 Customer purchasing decision in Airtel Rwanda Ltd .......................................................... 55
4.3.1 Attraction of new customers ......................................................................................... 56
4.3.2Increase in sales ............................................................................................................. 57
4.3.3 Customer loyalty ........................................................................................................... 57
4.3.4 Brand switching ............................................................................................................ 58
4.4. Relationship between Promotion and customer purchasing decision in Airtel Rwanda Ltd
................................................................................................................................................... 59
4.5 Testing of hypothesis ........................................................................................................... 60
CHAPTER FIVE: CONCLUSION AND RECOMMENDATION ............................................... 61
5.1 Summary of the major findings ........................................................................................... 61
5.2 Conclusion ........................................................................................................................... 63
5.3 Recommendations ................................................................................................................ 63
REFERENCES .............................................................................................................................. 65
APPENDICES ............................................................................................................................... 67
viii
LIST OF ABBREVIATIONS, ACRONYMS AND SIGNS
INILAK
: Independent Institute of Lay Adventists of Kigali
RURA
: Rwanda Utilities Regulatory Authority
TV
: Television
CRM
: Customer Relation Management
C.V.I
: Content validity index
SPSS
: Statistical Package for Social Science research software
ix
LIST OF TABLES
Table 3. 1: The Reliability of the Instrument .................................................................... 45
Table 4. 1: Gender Distribution........................................................................................ 47
Table 4. 2: Age distribution.............................................................................................. 48
Table 4. 3: Distribution of Marital Status ........................................................................ 48
Table 4. 4: Distribution of Education level ...................................................................... 49
Table 4. 5 : Advertising medium most used by Airtel Rwanda ....................................... 50
Table 4. 6: The most types of sales promotion used by Airtel Rwanda Ltd .................... 51
Table 4. 7: Perception of customers towards salesmen .................................................... 52
Table 4. 8: Constructing public relation ........................................................................... 53
Table 4. 9: Tools of Direct marketing which are mostly used by Airtel .......................... 55
Table 4. 10: New customer’s attraction ........................................................................... 56
Table 4. 11: Level of increase in the sales ....................................................................... 57
Table 4. 12: Level of customer loyalty of Airtel .............................................................. 58
Table 4. 13: Brand switching ........................................................................................... 58
Table 4. 14: Spearman's rho correlation between Promotion and customer purchasing
decision ............................................................................................................................. 59
x
LIST OF FIGURES
Figure 1.1: Conceptual framework ..................................................................................... 8
xi
CHAPTER ONE: GENERAL INTRODUCTION
1.1Introduction
The present chapter, presents about, back ground of the study, the statement of the
problem, research questions, objective of the study, hypothesis of the study, significance
of the study, justification of the study, scope of study, conceptual framework and
operational definitions of the studied variables.
1.2 Back ground of the study
You may have the finest product and the most attractive prices, but if potential customers
don’t know about your business, your chances of success are limited. Promotion refers to
activities undertaken to increase sales or enhance the image of a product or business
(Douglas, 2010). Promotion is the process of marketing communication to inform,
persuade, remind and influence consumers or users in favour of product or service
(Satnam, 2014). Promotion has three specific purposes. It communicates marketing
information to consumers, users and resellers. The term promotion- mix is used to refer to
the combination of different kinds of promotional tools used by a firm to advertise and
sell its products.
In this process the promotional mix includes four ingredients: 1)
advertising; 2) publicity; 3) personal selling; 4) sales promotion (Satnam, 2014).
Promotion is used primarily to inform the potential customer of the availability of
product or services, when they are in season, where you are located and anything special
about your product. Promotional activities are important for maintaining customer traffic
throughout the market season used early in the season to draw customers to your business
and during the season to maintain customer traffic levels during slow periods. Research
conducted on direct farm marketing indicates that promotion, with emphasis on product
1
freshness and quality, is more likely to move produce than price cutting. In conceptual
terms, promotion is the element in an organization’s marketing mix that serves to inform,
persuade and remind the market and/or the organization of a product, in the hope of
influencing the recipients’ feelings, beliefs or behaviour. Promotion is aimed at
communicating a message to customers about a product or service that is being offered
by a firm.
Customer purchasing decision mainly sheds light on how consumers decides to spend
their various resources like time, money etc. on various products so as to meet their needs
and requirement. Consumer behaviour encompasses study of what, when, why and where
the consumers will buy their products. It also focuses on how often the consumers use the
products. Furthermore, it also sheds light on how the consumers evaluate the products
after the purchase and the effect of evaluations on their future purchases (Schiffman,
2005).
According to Neha (2013), in India, promotion plays a significant role in consumer
purchase decision; those customers are influenced the most by offer further followed by
premium and contest. Offering discounts on a brand name has bigger impact on
customer’s purchase intention (Kumar & Sharma ,1998).
In this present day, the telecommunication industry faces stiff competition as many
telecommunication companies are aggressively promoting their products and services in
an attempt to create customer awareness as well as attract them to purchase as much and
as often as possible. The telecommunication industry delivers voice communications,
data, graphics, and video at ever increasing speeds. (Grönroos, 2004).
2
The success of telecommunication industry depends on prudent efforts and feasible
investments. In a competitive market, service providers are expected to compete on both
price and quality of services and also it is necessary for the service providers to meet the
consumers’ requirements and expectations in price and service quality (Melody, 2001).
The growth rate in the use of telecommunication facilities has increased dramatically,
especially in the rank of increasing number of telephone subscribers.
Mobile phone is used for different purposes: calls and short messages sending/receiving,
money transfer, recording and playing music and movies, picture shooting, listening to
the radio, watching TV, internet connectivity, advert and publicity etc. The increase of
ownership of mobile phones goes together with the increase of economic growth of a
country.
For this reason the Government of Rwanda plans to have a telephony penetration rate of
50% for the whole country and 25% for the rural areas by year 2020 (Government
Rwanda report, 2002). Telephone, for example, provides ubiquitous social interactions
between and among individuals, groups, organizations, and the governments alike and
that subsequently makes and operates a broadly networked international environment
tying nations, cultures, casts, creeds, national identities and businesses. Deutsch (1953)
states this trend as “a web of nations.
In Rwanda there are three telecommunication companies. Among them MTN Rwanda is
an active telecommunication company with about
3.363,976 subscribers, followed by
Millicom International Cellular owned Tigo Rwanda doubling with 2,099, 807 and
Bharti Airtel Rwanda with 1,116,883 subscribers ( RURA,2014).
3
The City of Kigali made a big progress in terms of mobile phone ownership because the
percentage of households with at least one mobile phone in Kigali City was 79.6 per
cent in 2010/2011 from 33.2 per cent in 2005/2006, which is a growth rate of 46.4 per
cent in only five years (Rwanda Statistical yearbook 2012).
From 2012, Airtel Rwanda was committed mainly in providing affordable mobile phone
services to the rural populations by using different promotion launches like igitego
promotion (Gasana, 2015). Despite of this, Airtel is facing fierce competition on the
Rwandan market. So far the battle has stood between MTN and Tigo. The researcher has
chosen to conduct this research in order to examine the role of promotion for consumers
purchasing decision in Airtel mobile telecommunication company.
1.3 Statement of the problem
In early 2012, Airtel Rwanda was committed mainly in providing affordable mobile
phone services by using different promotion activities like igitego promotion, tunga etc
(Gasana,2015).
Despite of the promotion practices, Airtel is facing fierce competition on Rwandan
telecommunication market. According to RURA (2014), Airtel Rwanda had the lowest
market share of 15% in 2014 compared to that of MTN Rwanda with 51.5% of the
market share followed by Tigo with 33.5%.of market share. In its geographic area only
45% of the populations use its services, while MTN Rwanda 98.42% of the population
use its services and Tigo 99% of the population use Tigo services. AIRTEL market share
of internet has reduced from 15%in 2013 to 14% in 2014(RURA, 2014). It is against this
4
backdrop that the researcher examines the extent to which promotion influences
customers purchasing decision in Airtel Rwanda Ltd.
1.4 Research questions
1. What are the promotion tools that are the source of purchasing information for customers?
2. Which medium that has been more effective as a source of product information?
3. What is the situation of customer purchasing decision in Airtel Rwanda Ltd?
4. How promotion tools have impacted on customer’s commitment to the Airtel products?
1.5 Objectives of study
The present research study aims at both general and specific objectives;
1.5.1 General objective
The general objective of the study is to examine the relationship between promotion tools
used by Airtel Rwanda Ltd and customer purchasing decision.
1.5.2 Specific objectives
1. To find out the promotion tools which are the source of purchasing information for
customers
2. To find out which medium that has been more effective as a source of product information
3. To analyze the situation of customer purchasing decision in Airtel Rwanda Ltd?
4. To find out how promotion campaign has impacted on customers’ commitment to the
Airtel products.
5
1.6 Hypothesis of the study
Ho: There is no significant relationship between the use of promotion mix and customer
purchasing decision in Airtel Rwanda Ltd.
H1: There is a significant relationship between the use of promotion mix and customer
purchasing decision in Airtel Rwanda Ltd
1.7 Significance of the study
1.7.1 Personal significance
This study will help the researcher to understand how promotion tools influence on the
purchasing decision of the customers. The research will also serve as partial fulfilment of
the requirement of award of Master Degree of Marketing.
1.7.2 Scientific significance
Findings of this study will serve as source of information for other researchers who will
be interested in research related to this topic
1.7.3 Social significance
The management of Airtel Rwanda Ltd has invested much in promotion as strategy to
increase market share in Telecommunication industry in Rwanda, but still now the
company facing a strong competition of MTN and Tigo Rwanda. Because there is no any
research conducted in relation to promotion and customer purchasing decision, findings
of this research will help Airtel Rwanda to know its level of using promotion and the
level of customer purchasing decision. Findings will help the company to know the
6
relationship between the using promotion and the level of customer purchasing decision.
Then the management will take correction majors if possible.
1.8 Justification of the Study
Many researchers have shown that promotion influence positively customer purchasing
decision on products. But still, there is a gap in telecommunication industry because
Airtel Rwanda Ltd invested much in promoting its services but still now the company is
suffering a shortage of customers, compared to other telecommunication companies in
Rwanda. Even if this gap is there is no empirical research which has been conducted to
address this issue. Therefore
the researcher has seen very important to conduct this
study in order to help the company to address the issue. The study also will open new
doors for new upcoming researcher, in telecommunication industries.
1.9 Scope of study
This study will cover the period between 2012-2014. This period is taken because it is
a period which presents recent information. Regarding the geographic space, this research
takes place in Rwanda; the study will be limited on two variables including Promotion and
customer purchasing decision and on the relationship between them.
1.10 Conceptual framework
The conceptual framework of this study is made of the two variables; Independent and
dependent variable. The independent variable is the use of Promotion and the dependent
variable is the Customers purchasing decision.
7
The figure one represents a schematic representation of the conceptual framework of this
study.
Independent variable
Dependent Variable
Customers purchasing decision
 Attraction of new customers
 Increase in sales
 Customer loyalty
 Brand switching
Promotion
 Advertising and Publicity
 Sales promotion
 Personal selling
 Public relations
 Direct marketing
Figure 1.1: Conceptual framework
Source: Drawn from the compiled data by Researcher
As it is shown in this figure the independent variable is promotion. It will be analyzed by
measuring how the company is using, Advertising, Public relations, Publicity, Personal
selling, direct marketing and Sales promotion in its promotion practices. The dependent
variable which is Customers purchasing decision will be analysed under Attraction of
new customers, Increase in sales, Customer loyalty and Brand switching.
1.11 Operational definitions
Promotion: It refers to raising customer awareness of a product or brand, generating
sales, and creating brand loyalty. Promotion is also defined as one of five pieces in
the promotional mix or promotional plan including personal selling, advertising, sales
promotional, direct marketing and publicity.
Advertising: It refers to the activity of attracting the public attention to a product or
business by a paid announcement in newspapers or magazine, on radio or television. To
8
measure this variable the researcher used descriptive statistics (Frequency and
percentage).
Sales promotion: It refers to short term use of incentives or other promotional activities
that stimulate the customer to buy the product. To measure this variable the researcher
used descriptive statistics (Frequency and percentage).
Personal selling: This involves face to face interaction between seller and buyer for the
purpose of sale. To measure this variable the researcher used descriptive statistics
(Frequency and percentage).
Public relations: It refers to the practice
of creating and maintaining goodwill of
an organization’s various publics (customers, employees, investors, suppliers etc)
through,
charitable
activities
like,
education,
sporting events
and
other
civic engagements. To measure this variable the researcher used descriptive statistics
(Frequency and percentage).
Publicity: It refers to the type of promotion carried usually freely by mass media. To
measure this variable the researcher used descriptive statistics (Frequency and
percentage).
Direct marketing: It refers to a type of advertising campaign that seeks to elicit an
action from a selected group of consumers through postal mail, telemarketing, direct email marketing etc. To measure this variable the researcher used descriptive statistics
(Frequency and percentage).
9
Customers purchasing decision. It refers to a series of choices made by consumer
before making a purchase after they have the willing to buy. The measures of this
variable are:
Attraction of new customers: It refers to the increase of the numbers of customers
during the period of the study. To measure this variable the researcher used descriptive
statistics (Frequency and percentage).
Increase in sales: It refers to the increase of the quantity of services sold during the
period of the study. To measure this variable the researcher used descriptive statistics
(Frequency and percentage).
Customer loyalty: It refers to how customers perceive the services of Airtel Rwanda Ltd
services. To measure this variable the researcher used descriptive statistics (Frequency
and percentage).
Brand switching: It refers to the process of choosing to switch from use of other
telecommunication companies services to steady usage of Airtel services Rwanda Ltd. To
measure this variable the researcher used descriptive statistics (Frequency and
percentage).
10
CHAPTER TWO: LITERATURE REVIEW
This chapter contains the literature review of the study. The researcher constructed the
literature in line with the objectives and the conceptual framework of the research.
2.1 key concepts
2.1.1 Promotion
In today’s era, competitive environment is everywhere. To stay in competitive market,
communication is one of the ways to reach customers. Communication is also one of the
tools to achieve company objective (Fill & Jamieson, 2011). To having customer buy
products, the seller should be able to influence customer-buying decision. For that,
promotional mix is one of the tools to wooing the customer to buy their products .As
many managers believe, promotion has play important role in creating brand awareness
of the product (Blythe, 2005).
According to Swastha and Irawan (2008), promotion is information flows or one way
persuasion which directing someone, people, or organization to make a demand.
Promotion is used to expand and penetrate the market, build the company’s image,
provide information, increase and stabilize sales, add value to product and differentiate
the products (Williamson, 2012).
There are various tools and elements available for promotion. These are adopted by firms
to carry on its promotional activities. The marketer generally chooses a combination of
these promotional tools including, Advertising, Sales promotion, Personal selling, Public
relation and publicity.
11
2.1.2 Advertising:
Advertisement can be defined as the paid form of non-personal presentation and
promotion of idea, goods or services by an identified sponsor. It is an impersonal
presentation where a standard or common message regarding the merits, price and
availability of product or service is given by the producer or marketer. The advertisement
builds pull effect as advertising tries to pull the product by directly appealing to customer
to buy it (Buel, 2004). Three distinct features of advertising are Paid Form, Impersonality
and Identified Sponsor (Buel, 2004).
By Paid Form the sponsor has to pay for advertising. He has to bear a cost to
communicate with customers. By Impersonality there is no face to face contact between
customers and advertiser. It creates a monologue and not a dialogue. By Identified
Sponsor, advertisement is given by an identified company or firm or individual. The
Merits of Advertisement include Reach, Choice, Legitimacy, Expressiveness, Economy,
Enhancing Customer Satisfaction and Confidence (Buel, 2004).
Reach means that advertising can reach a large market. As through various media of
advertising there is benefit of mass reach for example, any message given on Radio or
TV can reach in different corners of the country wherever TV and Radio network is
available (Buel, 2004).
Choice means that there is wide variety of media available for advertising for video,
audio, visual audio, print media etc. Under each category large variety is available for
example, in print media we can select from magazines, newspaper, banner etc. This
12
variety or choice helps the marketer to select the media, keeping in mind the target
customer (Buel, 2004).
Legitimacy means that in advertisement the messages regarding the product or service are
given publicly to customers so there is always a proof for it and customers believe that
publicly the company will not give false information of the product. The customer feels
comfortable to buy a product which is widely advertised (Kotler, 2008).
Expressiveness means that advertising provides enough opportunities to marketers to
dramatize the message with the help of drawings, colours, pictures, music, dance etc.
They can easily express the use of product through various techniques, and can add
multimedia effect also (Kotler, 2008).
Economy means that it is always felt that advertising increases the cost of product or
service but advertising is considered economical as compared to other promotional
techniques because it reaches masses and if we calculate cost per customer it is very low
or nominal ( Osuagwu and Eniola, 1997).
By enhancing Customer Satisfaction and Confidence it means that Customer feel more
assured about quality and feel more comfortable if sponsors claim these benefits in
advertising.
Advertising have Disadvantages. The first disadvantage is that Advertising is an
Impersonal
Communication/Less
Forceful.
In
advertising there
is
no
direct
communication between the customer and marketer. The marketer assumes that the
message is communicated but the audience or customers do not pay any attention to
impersonal messages conveyed through advertising. The response of customer cannot be
known in advertising (Osuagwu and Eniola, 1997).
13
The second disadvantage is that Advertising is less effective. In advertising there is only
one way communication i.e., communication from seller only, but two way
communication is always more effective as in two way communication the customer gets
chance to clarify his or her queries. Sometimes customers have many doubts regarding
the use of product, these doubts can be clarified only when there is two way
communications (Osuagwu and Eniola, 1997).
The third is advantage is that it is difficulty in media choice. In advertising various media
are available. Each
media have its own advantages and disadvantages. So the
effectiveness of advertisement depends to a great extent on the right choice of media.
When choice of media is faulty or wrong no matter how good the advertisement is it will
not reach the target customer (Peattie and Peattie, 2009).
The fourth advantage is that advertising is inflexibility. It is very difficult to change
advertisement as companies use standardised messages which cannot be changed
according to the need of customers. The fifth disadvantage is that there is a lack of
Feedback. The evaluation of effectiveness of advertisement is very difficult as there is no
immediate and accurate feedback given by the customers (Peattie and Peattie, 2009).
Advertising has been subject to lot of criticisms. The following are main objections raised
on advertisements by a group of people. Along with objections the answers to these
objections are also mentioned below (Peattie and Peattie, 2009).
The major objection on advertisement is that it promotes materialism. The advertisements
inform people about more and more products, the use of existing products and the new
products are shown dramatically to attract the customers. This knowledge about more and
more products induces the customers to buy more and more products. They start
14
demanding the products which they don’t even require. If there was no advertising the
company would be less aware of material things and it can be more contented (Peattie
and Peattie, 2009).
The advertisement increases the knowledge of customers by informing them about
various products along with their utilities. The advertisement only informs the customers,
the final choice of buying or not, lies with the customers only. The advertisements show
all types of products irrespective of their quality. With the help of advertising anything
can be sold in the market (Peattie and Peattie, 2009).
The objection to sale of inferior goods is not correct because what is inferior and what is
superior depends upon the economic status and preference. Every one cannot afford to
buy superior quality expensive products but it does not mean they should not use the
product. The lower income group people satisfy their needs with low cost inferior goods.
So it is not advertisements which encourage sale of inferior goods; it is one’s pocket or
financial capacity which decides this (Peattie and Peattie, 2009).
Another objection to advertisements is that advertisements use bad language, the way
they are speaking may not appeal everyone, sometimes women are shown in the
advertisements where they are not required for example, a woman in after shave lotion
and in advertisements of suiting etc. The most serious objection to advertisement is that it
increases the price of product because the firms spend a huge amount on advertisement
and these expenses are added to cost and consumer has to pay a higher price for the
product or service (Prentice, 1985).
15
To know the best advertising medium is not simple. Effectiveness depends on how well
the medium fits with the rest of a marketing strategy that is, it depends on (1) your
promotion objectives, (2) what target markets you want to reach, (3) the funds available
for advertising, and (4) the nature of the media, including whom they reach, with what
frequency, with what impact, and at what cost. For example, direct mail may not be a
flexible choice in a country with a weak postal system. Internet advertisements might be
worthless if few target customers have access to the Internet. Similarly, TV audiences are
often less selective and targeted, but a special-interest cable TV show may reach a very
specific audience (Prentice, 1985). The medium should support the promotion objectives.
If the objective requires demonstrating product benefits, TV or Internet with video may
be the best alternative. If the objective is to inform, telling a detailed story and using
precise pictures, then Internet advertising might be right (Prentice, 1985).
Newspapers work well for businesses operating in local markets. Alternatively, with a
broad target market or when there is a need to show colour, magazines may be better. To
guarantee good media selection, the advertiser first must clearly specify its target market.
Then the advertiser can choose media that reach those target customers. Most media
firms use marketing research to develop profiles of their audiences. Generally, this
research focuses on demographic characteristics rather than the segmenting dimensions
specific to the planning needs of each different advertiser. The audience for media that do
reach your target market may also include people who are not in the target group. But
advertisers pay for the whole audience the media delivers, including those who aren’t
potential customers. Because it’s hard to pick the best media, media analysts often focus
on cost per thousand of audience size. This may seem an objective approach, but
16
advertisers preoccupied with keeping these costs down may ignore the relevant
segmenting dimensions and slip into mass marketing (Neha, 2013).
Today, advertisers direct more attention to reaching smaller, more defined target
markets. The most obvious evidence of this is in the growth of spending on direct mail
advertising to consumers in databases. However, even traditional media are becoming
more targeted. TV is a good example (Neha, 2013).
In many countries there are about as many cell phones as adults, and people carry them
everywhere. This has a lot of advertisers wishing their advertisements could give their
customers a call. Now they’re getting help with this wish. In the United Kingdom, for
instance, the leading cellular service provider signs up subscribers to receive once-a-week
text-message offers, such as half-price movie tickets. Some firms are even experimenting
with advertisements that target customers based on the customer’s location at a particular
moment (Neha, 2013).
People continue to increase time spent surfing the Internet, while spending less time
watching TV and reading magazines and newspapers. The Web lets people socialize with
friends, consume news and other information, enjoy entertainment like videos, and shop.
This change in consumer behaviour creates new challenges and opportunities for
marketing managers as they try to target specific customers or segments through Internet
advertising. Advertising on the Internet takes a variety of forms, but the purpose is
usually to attract the interest of people in the advertiser’s target market so they’ll click
through to the firm’s Web site. This is not as easy as it sounds since many people try to
17
ignore any advertising. To get the attention of Web surfers, Internet advertisers have
created many different types of advertisements (Neha, 2013).
Selecting which media to use is still pretty much an art. The media buyer starts with a
budgeted amount and tries to buy the best blend to reach the target audience. Often must
buys, like the Yellow Pages for a retailer in a small town, will use up much of an
advertising budget.
2.1.3. Sales Promotion:
Sales promotion refers to short term use of incentives or other promotional activities that
stimulate the customer to buy the product. Sales promotion techniques are very useful
because they bring short and immediate effect on sale, Stock clearance is possible with
sales promotion, Sales promotion techniques induce customers as well as distribution
channels and Sales promotion techniques help to win over the competitor (Neha, 2013).
Some of the sales promotion activities commonly used by the marketer to increase the
sale are Rebate, Discounts,
Refunds, Premiums or Gifts/or Product Combination,
Quantity Deals, Samples, Contests, Instant Draws and Assigned Gifts, Lucky Draw,
Usable Benefits, Full Finance @ 0%, Packaged Premium and Container Premium(Neha,
2013).
Rebate refers to selling product at a special price which is less than the original price for
a limited period of time. This offer is given to clear off the stock or excessive inventory.
Discounts refers to reduction of certain percentage of price from list price for a limited
period of time. The discounts induce the customers to buy and to buy more. Generally at
18
the end of season big companies offer their products at discounted price to clear off the
stock (Neha, 2013).
Refunds refer to refund or part of price paid by customer on presenting the proof of
purchase. Premiums or Gifts/or Product Combination are most popular and commonly
used promotion tool. It refers to giving a free gift on purchase of the product. Generally
the free gift is related to product but it is not necessary (Palmer, 2004).
Quantity Deals refers to offer of extra quantity in a special package at fewer prices or on
extra purchase some quantity free for example, buy three get one free. Samples refer to
distribution of free samples of product to the customers. These are distributed when the
seller wants the customer must try the product. Generally when a new product is
launched.
Contests refer to participation of consumers in competitive events organised by the firm
and winners are given some reward. Instant Draws and Assigned Gifts includes the offers
like scratch a card’ and win instantly a refrigerator, car, T-shirt, computer etc.
Lucky Draw. In this draws are taken out by including the bill number or names of
customers who have purchased the goods and lucky winner gets free car, computer, T.V.,
etc. Draw can be taken out daily, weekly, monthly, etc.
Usable Benefits. This includes offers like Purchase goods and get a holiday package or
get a discount voucher, etc. Full Finance @ 0%. Many marketers offer 0% interest on
financing of consumer durable goods like washing machine, T.V. etc.
Packaged Premium. In this type of sales promotion the free gift is kept inside the pack.
The gift is kept in limited products but the excitement of getting the gift induces the
customer to buy the product.
19
Container Premium refers to use of special container or boxes to pack the products which
could be reused by the customer. Sales promotion has the advantages. They include
Attention Value: Useful in New Product Launch, Synergy in Total Promotion Efforts,
Aid to other Promotion Tools.
By Attention Value, the incentives offered in sales promotion attract attention of the
people. It is Useful in New Product Launch as the sales promotion techniques are very
helpful in introducing the new product as it induces people to try new products as they
are available at low price or sometimes as free sample.
Sales promotion is Synergy in Total Promotion Efforts because it supplements
advertising and personal selling efforts of the company. Sales promotion adds to the
effectiveness of advertisement efforts.
Sales promotion aid to other Promotion Tools as it makes other promotion techniques
more effective. Salesmen find it easy to sell products on which incentives are available.
Even if sale promotion has advantages, it has also demerits. These demerits are Reflect
Crisis and Spoil Product Image (Palmer, 2004).
About reflect crisis, if firm is offering sales promotion techniques again and again it
indicates that there is no demand of product which can create crisis situation.
About Spoil Product Image, the use of sales promotion tool may affect the image of
product as buyer feel that product is of low quality that is why firm is offering incentives.
According to Jobber (2004) sales promotion boosts sales during the promotion period
because of the incentive effect. This is followed by a small fall in sales to below normal
level because some consumers have stocked up on the product during the promotion. He
stipulated that the long-term sales effect of the promotion could be positive, neutral or
20
negative. If the promotion has attracted new buyers, who find that they like the brand,
repeat purchases from them may give rise to positive long-term effects. Alternatively, if
the promotion has devalued the brand in the eyes of consumers, the effect may be
negative. Where the promotion has caused consumers to buy the brand only because of
its incentive value, with no effect on underlying preferences, the long-term effect may be
neutral. Also, he said certain promotions by their nature encourage repeat purchase of a
brand over a period of time (Jobber ,2004).
Over the last few years there has been a rapid increase in the use of sales promotion, for a
number of reasons. Internally there has been a greater acceptance of the use of sales
promotion by top management and more people are now qualified to use it. In addition,
there is greater pressure today to obtain a quick sales response, something which sales
promotion is good at achieving.
There has been a general proliferation of brands with increased competitive pressure. As
a result of this and the changing economic environment, consumers are more deal orient
and this has led to pressure from intermediaries for better incentives from manufacturers
and service principals. It has been argued by many that advertising efficiency is declining
due to increasing costs and media cluster.
New technology in targeting has resulted in an increase in the efficiency and
effectiveness of sales promotion (Palmer, 2005), According to Jobber (2004) the reasons
for the increasing growth of sales promotion in recent times as follows: Sales promotions
are becoming respectable: through the use of promotions by market leaders and the
increasing professionalism of the sales promotion agencies.
21
2.1.4 Personal Selling
Personal selling means selling personally. This involves face to face interaction between
seller and buyer for the purpose of sale. The personal selling does not mean getting the
prospects to desire what seller wants but the concept of personal selling is also based on
customer satisfaction (Palmer, 2004). The features of Personal Selling include Personal
Interaction, Two ways Communication, Better Response, Relationship and Better
Convincing.
About Personal Interaction, in personal selling the buyers and sellers have face to face
interaction. This closeness allows both the parties to observe each other’s action closely.
About two ways Communication, in personal selling the sellers give information about
the product; at the same time the buyer get a chance to clarify his doubts. It is suitable for
sale of complex products where buyer wants to interact with the manufacturer.
For Better Response, when seller is personally explaining the utilities of product to the
customers then customer do pay some attention and listen to the information.
Concerning Relationship, when the seller and buyer come together this may improve
relation between the customer and seller. Salespersons normally make friendly relations
with the customers (Palmer, 2004).
Furthermore, about better convincing, Personal selling is most effective form of
promotion because with this the sales person can convince the buyer by demonstrating
the use of product and making changes in the product according to the need of customer.
For a better Personal selling the flowing qualities of a good Salesman should fulfilled:
Physical Qualities: a salesman must have good health and pleasing personality. He must
be well built and free from physical defects. A pleasing and charming personality boosts
22
self-confidence. Good grooming, appropriate dress, clean and tidy appearance and a good
posture will go a long way in creating a first impression. More importantly, a salesman
must always have a cheerful smile on his face (Palmer, 2004).
Social Qualities: A salesman must have good manners, courtesy in dealing with
customers. The practice of greeting and thanking customers, using polite expression are
necessary for success in personal selling. He should not be shy or reserved but an
extrovert and a good listener. He must have the ability to say the proper things and do the
right thing without offending others (Achumba, 2000).
Mental Qualities: A good salesman must have a high degree of intelligence, initiative
and foresight. He must be intelligent and imaginative enough to understand the customer
quickly and read his mind accurately. Salesman must have two basic qualities i.e.,
empathy and ego drive. Empathy means he must have ability to understand the problem
from customer’s point of view. Ego drive means salesman must pursue sale not just for
money but for recognition and personal success. A good salesman must have presence of
mind and good common sense.
Technical Quality: The salesman must have full technical knowledge about the product.
Other qualities, a salesman must possess, are:
A salesman must have a good power of memory and observation. A salesman must be
honest and should not try to win the customer through false and misleading
representation. A salesman must be a man of sound character, loyal and dependable. He
must perform his duties sincerely. The salesman must have wide knowledge about the
product he is selling and company he is representing. He must have capacity to inspire
trust.
23
Personal selling plays a very important role in marketing of goods and services. It is
important tool for businessmen, customers and society. It is important for businessman
because it is an effective tool to increase the sale of product. Salesmen explain the merits
of products to customers. It is a flexible Tool because its efforts can be changed
according to the type of customer salesmen are attending. They may change the offer in
varying purchase situations. As compared to other methods of promotion in personal
selling the wastage of efforts is minimum. Through personal selling it is easy to get the
attention of customer as there is face to face interaction between salesman and customers.
Personal selling helps to create lasting relationship between customers and sales-persons
which help in increasing sale. Through personal selling salesmen can create personal
support with the customers. This can improve competitive strength of organisation.
Personal selling is very effective to introduce a new product as salesman can explain the
merits, show the demonstration and clarify the doubts of customers. Personal selling is
very important from customer’s point of view, as customers can get required information
about the product from customers.
Salesmen help the customers to discover their needs and wants and they also help
customers to know how these needs and wants can be satisfied. In personal selling
salesmen provide information regarding the new products available in market, uses of
those products etc. Customers can get expert advice and guidance in purchasing various
goods and services. Personal selling induces customers to buy products for satisfying
their needs.
24
Personal selling brings positive effects for society. Personal selling creates effective
demand which results in increasing sale and more income. With more income there will
be more products and services which in turn bring economic growth. Unemployed youth
can work as salesman and earn their livelihood. Personal selling offers attractive career
with job satisfaction and security. Sales people move from one place to other, this
promotes travel and tourism industry. With the help of personal selling there can be
uniformity of consumption by supplying standardized products.
2.1. 5. Public Relations
An important tool of promotion is maintaining Public Relations. In simple words, public
relations mean maintaining public relations with public. By maintaining public relations,
companies create goodwill. Public relations evaluate public attitudes; identify the policies
and procedures of an organisation with the public interest to earn public understanding
and acceptance.
Public does not mean only customers, but it includes shareholders, suppliers,
intermediaries, customers etc. The firm’s success and achievement depends upon the
support of these parties for example, firm needs active support of middle men to survive
in market, it must have good relations with existing shareholders who provide capital.
The consumers’ group is the most important part of public as success of business depends
upon the support and demand of customers only.
25
There are Role, Significance, advantages of public relations: Public relations help to
convey the policies and programmes of the organisation It helps to collect information
about public opinion about the organisation, management activities etc. It helps to
overcome the complaints and dislikes of public. It helps to mould people’s attitude in
favour of organisation. It helps to maintain goodwill and understanding between
organisation and public. It helps to build an image of the organisation.
The companies can use the tools to improve their relations with public including News
Speeches, Events, Written Materials and Public Service Activities:
About News, sometimes companies get involved in such kind of activities or make such
policies so that they get some positive coverage in news. For example, a company’s name
may be covered in news for reservation of jobs for women or for introducing new
technology etc.
For Speeches, the speeches given by the leaders of corporate sectors influence various
members of public specially banks, shareholders etc. Public relations department creates
occasion when the speeches are delivered by the leader of company.
Events refer to organizing press conferences, multimedia presentation, matches, stage
Written materials such as Balance Sheet, Annual Reports, Special documents, Brochures
etc. are circulated to various parties to improve and maintain public image of the
company.
About Public Service Activities, big business houses often associate themselves with
various social service projects such as women welfare programmes, charity shows, up-
26
keeping of parks, planting trees on road side, training schools, running schools, colleges,
hospitals etc.
2.1.6 Publicity
Publicity is the promotion and management of the public’s impression towards a
subject. It is the process of creating news through sponsorship, exhibitions, staging a
debate, organizing a tour of the business, and inventing and presenting an award.
Through involvement in these activities, the individual or company’s name will be
extensively mentioned in the media and attract the attention of people to the individual or
for consumers to a company’s products and services. Publicity is any unpaid form of non
personal presentation of ideas, goods, or services.
Publicity is usually an unpaid promotion, although a minimal cost is incurred for
the materials used in the publicity. When you are trying to generate publicity for your
business through public relations efforts, the only cost is the manpower that it takes to
create the documents that you send out to the news media and the costs of delivering or
shipping. However, since it is unpaid, the individual or company has no control over
how the material is presented if it is released at all. With publicity, you don’t dictate
when, where, or if your promotional messages ever see the light of day. You can send a
news release to a print publication, and the editor or journalist who receives it might see
value in it and print it in the next issue.
Since it is featured in a magazine or newspaper, the company’s name and
products being mentioned by a writer or editor, consumers will see them as a positive
27
feedback about the product and the company. People will believe in the product if
somebody else talks about it. In recent years as consumers try harder and harder to avoid
advertising, publicity has emerged as a more prominent promotion tool. Many consumers
view advertising as an interruption to what they would rather be doing watching their
favourite TV program and not a commercial, seeing a pleasant vista when driving crosscounty and not a billboard, listening to a popular song and not an ad jingle on the radio.
Also, many consumers don’t trust advertising as a source of product information. So
they’ve gotten better at avoiding advertising. As advertising becomes more costly and
less effective, publicity is gaining. As we discussed Promotion can influence buying
decisions when customers trust the source and find the information credible. Importantly,
the most trusted sources are forms of publicity, not advertising. In fact, advertising is
generally the least trusted source, while cell phones and the Internet are the least trusted
communication.
There are a wide variety of publicity tools. Given their potential as a trusted
communication source. Many of these tools are the result of advances in technology and
changes in consumer behaviour. Marketing managers must be on the lookout for new
tools and try to understand how they can be used to support promotion objectives.
Publicity can be used to help a firm sell more products, generate leads for the sales force,
get contributions to a charitable cause, or encourage people to join an organization.
Often publicity works in combination with other promotion tools as part of an
integrated marketing communications program with specific objectives. In addition, most
28
laws covering advertising apply to most of the publicity approaches. Common sense,
honesty, and fairness are important.
2.1.7 Direct Marketing
Direct marketing is a type of advertising campaign that seeks to elicit an action
from a selected group of consumers in response to a communication from the marketer.
The communication itself may be in any of a variety of formats including postal mail,
telemarketing, direct e-mail marketing, etc (Mihaela, 2012).
It is a form of advertising in which physical marketing materials are provided to
consumers in order to communicate information about a product or service. Direct
marketing does not involve advertisements placed on the internet, on television or over
the radio. Direct marketing reaches the consumer without the influence of any outside
party (Mihaela, 2012).
Direct marketing removes the middle man from the promotion process, as a
company's message is provided directly to a potential customer. This type of marketing is
typically used by companies with smaller advertising budgets, since they cannot afford to
pay for advertisements on television and often do not have the brand recognition of larger
firms (Mihaela, 2012).
2.2 Consumer Purchasing Decision
Customer purchasing decision is a series of choices made by consumer before
making a purchase after they have the willing to buy. Consumers can purchase different
products and this difference because that different buying decisions buying process
29
consists of several steps. Some purchases are so important that the consumer is forced to
do all these steps carefully and meticulously (GilaniNia, 2010). These steps include
Identify the problem .It is the first stage of the decision-making process. It is that people
can feel the difference between current and desired situation, so trying to resolve these
differences. The second stage is Data collection for solving this problem. This
information can be internal (experiences) and external (family, exhibits, etc.) The third
stage is assessment options. After gathering information, the consumer is ready to make a
decision. At this point, he should be able to evaluate different options and choose
products that meet the demands of him. The last stage is Purchase. This stage is the stage
that all marketing activities are the result. Consumer at this stage, according to the
information already obtained, Select a product that feels satisfy his need and buys it.
Pride and Ferrell (2012) stated that to understand consumer buying decision, the
marketer should understand the consumption process and the utility of products in
consumers’ perceptions. They also
declared that when purchasing products
unconsciously, consumer gets through several steps in the making of purchase decision,
purchase, and post-purchase evaluation. The first step decision is problem recognition
where the consumers are able to differentiate between their needs and wants. Marketers
usually use advertising, sales person, and packaging to stimulate recognition of the needs
or wants. Furthermore, situational factor that can influence on consumer buying process
consists of five categories; the first one is physical surrounding like location, store
ambience, or weather. Second is social surrounding like characteristics and interactions
with others. Third is the time dimension. Time playing an important role as the buyer
considers the durability of the product or the frequency of product use. Forth is the reason
30
why consumer buy certain products. The last is consumer’s condition or feeling might
affected to consumer buying decision process.
The consumer is faced with various stimuli to respond to in the market; the
stimuli include the marketing mix (4Ps) alongside other forces within the environment.
However, the stimuli pass through decision making process of the consumer which led to
the aspect of observable buyer response in form of brand choice, dealer choice, product
choice, time of purchase and amount to be expended on the products amongst others. It is
expedient for the marketers to know what happens between the stimuli and consumer’s
response behaviour (Odugbesan and Gbolahan, 1996). The consumers’ characteristics
and their influences serve as a major ingredient in the buyer’s perception about stimuli
and their purchase decision making process, hence Hawkins et.al, (1989), stated that the
marketing manager needs to view the consumer as a problem solver due to the fact that
consumer is a decision making unit that takes in information, processes it in light of
existing situation, take actions to accomplish satisfaction that enhances lifestyle. It is
obvious that consumer behaviour is the soul of marketing concept. One should not lose
sight of certain factors which influence consumer behaviour such as cultural, social,
personal, psychological and situational factors are all comprehensive approach to buying
behaviour acknowledgement that makes man a complex creature.
Interestingly, some researchers have also shown that promotion is likely to 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 (Peattie and Peattie 2009).
However, it was concluded that sales promotions should be handled with care the
outcomes vary from products or services to consumer groups is the situational factors
31
play a major role in the outcome analysis bearing in mind that most promotions research
are based on the context of USA markets.
Most organisations now concentrate their efforts on promotion strategies and techniques
to reach the dwindling profit problem. Promotion being a short-term incentive is to
encourage purchases (Kotler,2008) and is combined with advertising. It is not all sales
promotion techniques that are directed to consumers, some are directed to the middle men
and some to the organisation’s own sales force (Govon, 2006). One gets involved in
making decisions of the product to buy which is now a problem solving process that is
dependent on the consumer’s level of involvement which is the degree of interest on a
product or service. The high involvement products are those that are not expensive with
less society risk attached to them (Witton, 2006) Choosing between 2 brands put one in a
position to make decisions but if there is no alternative, one is literally forced to buy
because there is no choice to choose from and this does not constitute a decision, such a
no-choice decision is commonly referred to s a Hobson’s Choice (Achumba, 2000). Due
to its present economic recession in the world at large, this brought about increased
economic pressure on the consumer and a corresponding increase pressure on the
consumers’ disposal income which lead to consumers becoming more conscious and
rational in their purchasing decisions (Buel, 2004). Promotion becomes increasingly
important in marketing as it serves as a way of increasing the demand for products, as a
substitute for price competition and as a way of differentiating similar products
(Osuagwu and Eniola, 1998).
32
2.2.1 Attraction of customers
A well managed company is aware of the need to develop close coordination with
key customers with the objective of jointly increasing value and decreasing cost.
Customer relation management is the core of an organizational strategy playing an
important role in four aspects of customer identification, customer attraction, customer
retaining, and customer satisfaction.
Customer attraction is highly important today. In competitive business
environments, the ability to identify profitable costumers and consistent development of
existing relationships are the key competitive factors of an organization. Customer
Relation Management helps organizations recognize customers' value, identify the most
profitable ones and develop high quality relations with them. Careful examination of
profitability of each customer and identification of the most profitable ones are key
factors of CRM success (Cheng et al. 2009). Customer Relation Management is a key
commercial strategy in which an organization focuses on its customer’s needs and should
develop a customer-oriented approach in the entire organization (Cheng et al. 2009). A
perfect commercial process includes customer attraction, customer increase, and
customer retention (Yong et al. 2008).
2.2.2 Increase in sales
Gaining customers and/or market share is inevitably a goal of every marketing campaign
and communications effort. For that forgetting about the existing customers, lead always
to detriment of a company. There for the marketing manager should make sure that he is
paying a lot of attention to the customers the company already has (Achumba, 2000).
33
There are three key reasons. The reason one is that if you gain a customer
through your marketing efforts but lose one you already had because you weren’t paying
enough attention to her, you end up with the same number of customers but lower
margins because it costs far more to gain a new customer than to keep an existing one.
So, staying even by adding one customer to offset everyone who goes away is actually
causing you to lose ground (in the form of decreased profits that come about through
increased marketing costs). That is no way to run a business (Achumba, 2000).
The second reason is that there are times when, by remaining in place, you
actually gain ground. Let’s use a straightforward example: Let’s say you have 14% of a
$100 million market. Your sales are $14 million. Now assume two additional competitors
enter the field, increasing the size of the total market to $110 million.If you can just keep
your market share at 14 percent, your sales will climb to $15.4 million. Even better, since
your share has remained the same, it means some of your competitors will have lost
ground to the new entrants, i.e. their market share will have declined while yours
increased (Achumba, 2000).
The third reason is that it is far easier to sell products and services to existing
customers than to someone you don’t have a relationship with. If you have done a good
job taking care of your customer in the past, and your products have performed well for
them, they are usually willing to give any addition to your product line a try. Because the
relationship is in place, far less (expensive) selling is required. A key part of creating a
growing business is making sure you don’t lose the customers/clients/members you
already have (Achumba, 2000).
34
And once you have them, make them your first option when you have an
additional product or service to sell. Your costs of sales will be less and you will find it
easier to gain momentum. Once you have sold all you can to your existing
customers, you can start reaching out to gain more (Achumba, 2000).
2.2.3 Customer loyalty
Loyalty is what customers think about the company and how they perceive its
services. This usually plays a critical role in the development of your business and
services that you provide. For most businesses, customer retention directly affects the
profitability.
One of the most effective measures of loyalty is to measure the degree to which
your customers will vouch for you. If your customers go out of their way to recommend
your product or service to others, it’s an effective measure of their perception (Achumba,
2000).
2.2.4 Brand switching
Sometimes known as brand jumping, brand switching is the process of choosing
to switch from routine use of one product or brand to steady usage of a different but
similar product. Much of the advertising process is aimed at encouraging brand switching
among consumers, thus helping to grow market share for a given brand or set of brands.
Convincing consumers to switch brands is sometimes a difficult task. It is not
unusual for customers to build up a great deal of brand loyalty due to such factors as
35
quality, price, and availability. To encourage switching brands, advertisers will often
target these three areas as part of the strategy of encouraging brand switching.
Price is often an important factor to consumers who are tight budgets. For this reason,
advertisers will often use a price comparison model to entice long time users of one brand
to try a new one. The idea is to convince the end user that it is possible to purchase the
same amount of product while spending less money.
However, price is not always enough to encourage brand switching. There are
consumers who are less concerned with cost. For these users, the approach is to present
the new brand as being of superior quality to the established brand. Essentially, this
means demonstrating that the new brand can do everything the older brand can do, plus a
little more. For example, a product that can be used to dust wood, glass, and plastic
surfaces may be more attractive than a product that is formulated for glass only. The
implication is that the one product can take the place of three products, and may motivate
brand switching.
2.3 Relationship between Promotion and customer purchasing decision
Sales promotions are comparatively easy to apply, and are likely to have abrupt
and considerable effect on the volume of sales (Hanssens, Parsons and Schultz 2001).
Resultantly, according to Currim and Scheinder (1991) the finances of companies
regarding the marketing increase constantly. Research conducted by Ailawadi and Neslin
(1998) had revealed that consumer promotions affect the consumers to purchase larger
amount and consume it faster; causing an increase in sales and ultimately profitability.
Oyeniy (2011) mentioned that to retain consumers in the face of keen competition,
service providers must develop marketing strategies that will not only win customer but
36
help to retain them. Sales promotion plays an important role in retaining old consumers
and attracting new ones. Parts of the essence of a business existence are to produce goods
and services that will be required by customers and to make profit from such activity.
Enough sales must be generated for profit to be made. Sales estimate is the foundation in
budgeting or profit planning process (Ayanwale et al, 2005).
Coupons, discount, and free samples used strategically in various industries not
only increase brand awareness, but also encourage consumers to try new products. For
example, a manufacturer might utilize coupon incentives to encourage consumers to try a
new product, enabling the trial at a discounted price, instead of buying the same flavour
they normally do at full price. Therefore, this incentive may reduce consumers’ perceived
risk associated with trying a new, less-familiar product for the first time (Blackwell et al.
2001).
Blackwell and colleagues argued that new products are more apt to succeed when
consumers can experiment with or try the idea on a limited basis, with limited financial
risk. Therefore, sales promotion such as sampling, couponing, and trial-sized products are
useful to induce the trial of products. Dama (2010) clearly identified that every
organisation has specific group of customers it is serving, each of them has different
needs and expectations. Still on the importance and effectiveness of promotion, Palmer
(2005) stipulates that although it can be used to create awareness, sales promotion is
usually used for the later stages of the buying process, that is, to create interest , desire
and in particular to bring about action. He added that sales promotion can successfully
complement other tools within the promotion mix, for instance by reinforcing a particular
image or identity developed through advertising.
37
According to Sameen A. (2014), promotion is a key factor of influencing
customer purchasing decision. For instance Sales promotion offer and provide benefits to
the customers to seek their attention and to motivate them to purchase, therefore it is
considered an important tool in building customer loyalty. It has been determined that the
cost of gaining new customers is considerably higher than that of retaining the old ones.
Sales promotion provides sellers to attract profitable customers which may assist in
building brand loyalty (Shira 2003). Therefore, retailers are trying harder to cope with the
changing competitive environment by using different promotional tools and
understanding the preferences of customers. Customers’ preferences and commitment for
a brand or a product play a vital role in building customer loyalty as it has been proved
earlier by Nagar (2009), that only repeat purchasers are profitable. Customer’s
commitment adds to the profitability of the businesses but it is not every purchase that
leads towards customer loyalty and profitability. Sales promotions enable customers to
get motivated towards unplanned purchases by considering it a valuable exchange
(Sameen 2014).
Research focusing on the factors that can influence the customer buying decision
on fast food industry showed that advertising, publicity, sales promotion, personal
selling, and price are factors which strongly affect the customer buying decision on fast
food. 37.2% of customer buying decision influenced by the company’s promotional mix
and price set while, the rest 62.8% is influenced by other factors. Overall, this percentage
proves that promotional mix and price set decently influence customer buying decision
on fast food (Tarinee, 2007).
Results on the research Portable PCs in Thailand the study indicates that the sales
promotion factors Offer member card for discount Extend warranty period, Bundled with
scanner, Billboard, radio, leaflet, and magazine, and Able to pay by instalments are the
38
important factors that impact on consumers’ purchasing decision. The researcher
recommended that Portable PC in the study should focus on these sales promotion factors
in order to increase the customer base and make more market share in this segmentation
as follow (Rangsan & Titida, 2011).
The researcher continues showing that Acer should maintain a strategy about.
Offer member card for discount and Extend warranty period. This means that Acer
should update/develop member card for discount and warranty period conditions
continuously in order to increase the customer base over the competitors. Compaq & HP
should maintain a strategy about Bundled with scanner, Billboard, radio, leaflet, and
magazine, and Able to pay by instalments. This means that Compaq & HP should
increase the number of billboards, radio, leaflet, and magazine. Moreover, Compaq & HP
should use the special sale promotion tools such as premiums, how to pay by instalments
in order to attract theirs customers which it make increasing in the sale volume and the
customer base (Rangsan & Titida, 2011).
2.4 Gap in literature
Numerous studies have examined the effectiveness of promotion tools in the past
decade. The common measures of promotional mix include advertisement recall,
advertisement recognition, and brand awareness, attitude towards the advertisement and
the brand, and purchase consideration, publicity, sales promotion, personal selling, and
price are factor. The effectiveness of these measures was assessed by their ability to
predict purchase decision. Advertising, sales promotion and public relations are masscommunication tools available to marketers (Prasanna & Venkateswara, 2013). Today,
we might define promotion as communication process, a marketing process, an economic
and social process, a public relations process or information and persuasion process
viewed as communication through various media by business firms. Promotional
39
strategies provide a major tool in creating product awareness and condition the mind of a
potential consumer to take final purchase decision. Promotion primary mission is to reach
potential customers and influence their awareness, attitudes and buying behaviour.
Ayanwale et al (2005) conducted research on promotion of Bournvita. He found that it
has a major influence on consumers’ likeness for Bournvita food drink.
The finding are opposing what is happening in Airtel Rwanda Ltd. from 2012, Airtel
Rwanda Ltd has invested much in promoting its product and services like providing
affordable mobile phone services to the rural populations, by using different promotion
launches like igitego promotion (Gasana,2015). This should increase the customer
purchasing decision but the company is sill the last in telecommunication industries in
Rwanda. It market share has decreased from 15% in 2013 to 14% in 2014 (RURA, 2014).
Even if these problems are there is no empirical research to link the use of promotion
tools and customer purchasing decision. The study will fill this gap.
40
CHAPTER THREE: RESEARCH METHODOLOGY
This chapter presents the methods that have been used to carry out this research. It talks
about the research design, population of the study, sample size and sampling procedures,
area of the study, research instruments, data collection, data analysis procedures and
ethical considerations.
3.1 Company profile
Airtel is a subsidiary of Indian Telecommunication Company, Airtel’s African operations
are owned by Bharti Airtel Limited, a leading global telecommunications company with
operations in 20 countries across Asia and Africa. The company offers mobile voice and
data services, fixed line, high speed broadband, IPTV, DTH, turnkey telecom solutions
for enterprises and national and international long distance services to carriers. Bharti
Airtel has over 200 million customers (November 2010) across its operations, including
50 million in Africa.
3.1.1 Vision of Airtel Rwanda
By 2015 Airtel will be the most loved brand in the daily lives of African people.
Preferred by more customers. Targeted by top talent. Benchmarked by more businesses.
3.1.2 Core values
Empowering People to do their best
Being Flexible - to adapt to the changing environment and evolving customer needs
Making it Happen - by striving to change the status quo, innovate and energize new ideas
with a strong passion and entrepreneurial spirit, openness and transparency with an innate
41
desire to do well Creating Positive Impact with a desire to create a meaningful difference
in society.
3.1.3 Mission of Airtel Rwanda
As one of the world’s top mobile communications companies, Airtel Rwanda aims to
connect communities across Africa by providing affordable, relevant and innovative
mobile solutions to all, and to produce an overall positive impact on stakeholders and
Rwanda society.
3.2 Research design
This study was descriptive quantitative and descriptive qualitative because the research
was describe the promotion tools used by Airtel Rwanda Ltd .He was also describe the
level of customer purchasing decision in Airtel Rwanda Ltd (Amin, 2005). The study
was a survey because the researcher collected data from the sample of the population
using the questionnaire. The study was a correlational research because the researcher
tested the relationship between promotion and customer purchasing decision (Amin,
2005).
3.3 Area of the study
This study was conducted at Airtel Rwanda Ltd in Rwanda.
3.4 Population, sample size and sampling techniques
3.4.1 Population (N)
The population of this study was made of the 1,116,883 subscribers of Airtel Rwanda
Ltd in a whole country ( Rura, 2014).
42
3.4.2 Sample size (n)
𝑁
To determine the sample size the following formula was used 𝑛 = 1+𝑁∗𝑒 2
Where n= sample size
N: population
e: Significance level which is 0.05
As the population of this is 1,116,883 subscribers the sample size was:
1,116,883
n= 1+1,116,883 ∗0.052=340 respondents.
3.4.3 Sampling procedures
Convenient sampling method was used in selecting the respondents of the study.
Convenience sampling is a non-probability sampling technique where subjects are
selected because of their convenient accessibility and proximity to the researcher. The
subjects are selected just because they are easiest to recruit for the study (Mugenda,
2003).
3.5 Data collection
3.5.1 Research Instrument
The instrument of the research was self administered questionnaire. The questionnaire
contained three sections A, B and C. Section A contained questions related to personal
characteristic of the respondents. The section B contained questions related to promotion
tools used in Airtel Rwanda Ltd. The section C contained the questions related to
Customers purchasing decision.
43
3.5.2 Data collection procedures
The researcher got a letter of data collection from the INILAK. This letter helped
him to introduce himself to the Airtel Rwanda Ltd. The researcher distributed the
questionnaire to the selected respondents.
3.6 Validity of the Instrument
Validity is the extent to which the instrument measures what it supposed to measure.
Before administering the questionnaires, four experts in research including the
supervisor, was selected to assess the relevant questions. Relevant questions are the
questions which can help the researcher to test the objectives of the study. Validity was
tested using Content Validity Index (CVI).In this researcher relevant questions were 15
out of 18 questions.
CVI=
𝑅𝑒𝑙𝑒𝑣𝑎𝑛𝑡 𝑞𝑢𝑒𝑠𝑡𝑖𝑜𝑛𝑠
𝑇𝑜𝑡𝑎𝑙 𝑞𝑢𝑒𝑠𝑡𝑖𝑜𝑛𝑠
The calculated CVI was CVI=
15 𝑟𝑒𝑙𝑒𝑣𝑒𝑛𝑡 𝑞𝑢𝑒𝑠𝑡𝑖𝑜𝑛𝑠
18 𝑡𝑜𝑡𝑎𝑙 𝑞𝑢𝑒𝑠𝑡𝑖𝑜𝑛𝑠
=0.83
Because the calculated C.V.I is greater than 0.60 the instrument was valid
(Sounders, 2000).
3.7 Reliability of the Study
Reliability ensures the degree of consistency/stability; hence the researcher
checked the reliability of the questions in the instrument. To reach this, a pilot study was
conducted to detect any major challenge likely to result from the research instrument to
be applied. A total number of 10 respondents were used for the pretesting. The researcher
used Cronbach’s alpha (α) using SPSS software.
44
Table 3. 1: The Reliability of the Instrument
Reliability Statistics
Cronbach's Alpha
0.891
Source: Primary data
Number of Items
18
The instrument was reliable if the value of Cronbach’s alpha is greater than 0.70
(Amin, 2005).
3.8 Data analysis
After a successful collection, data was edited, coded, transcribed and analyzed
using SPSS. Objective one and two and there was analyzed using descriptive statistics
(frequency and percentage).The objective four was analysed using inferential statistics
especially correlation analysis in providing affordable mobile phone services to the
rural
populations by using different promotion launches like igitego promotion
(Gasana,2015).. The results were presented and discussed according to the research
objectives (Mugenda, 2003).
3.9 Ethical Considerations
The researcher ensured voluntary participation of respondents in the research. For
this he motivated the respondents by clearly informing them about the objectives and
benefits of the study. The researcher also promised to keep the information given by
respondents as for academic purposes only and promise to offer a copy of the completed
dissertation.
Information from the respondents was kept top secret. Plagiarism was
avoided in this research.
45
3.10 Limitations of the study
The researcher may face the challenges of some respondents who were not willing
to fill the questionnaire because of different causes like lack of interest of the research,
pretext of being busy, and fear of giving information which are sensitive to their work.
To overcome these limitations the researcher convinced the respondents showing the
importance of this research and assuring them that all information they provide should be
confidential and treated for academic purpose only.
46
CHAPTER FOUR: DISCUSSION AND INTERPRETATION OF FINDINGS
This chapter presents the results of the study and their discussion in line with
research objectives. The discussion of the study results is done while comparing present
research findings with those of previous and recent-related research studies. Still in
discussing the study results, the findings were used to answer the research questions.
4.1: Demographic characteristics of the Respondents
The actual research participants included 340 respondents. Descriptive statistics, mainly
frequency and percentages, were used to analyze data on the demographic profile of the
respondents in terms gender, age, level of education, marital status. The frequency and
percentage were meant to establish the most frequently occurring responses and the least
frequently occurring responses.
4.1.1Gender
Table 4. 1: Gender Distribution
Description
Male
Female
Total
Frequency
218
122
340
Percentage
64.1
35.9
100
Primary data (2015)
Referring to the table 4.1, the findings on the demographic characteristic revealed that
male represent 218 (64.1%) and female are 122 (35.9%. This can be explained that a big
number of customers of Airtel are male even if female do not have a negligible number.
47
4.1.2 Age
Table 4. 2: Age distribution
Group Age ( years)
Less than 18
18-35
36 -55
56-65,
Above 65
Total
Primary data (2015)
Frequency
34
196
68
27
15
340
Percentage
10.0
57.6
20.0
7.9
4.4
100
With reference to the table 4.2, finding on age found that those in the age bracket of 1835 years were dominant in this study representing 196 (57.6%), followed by those in the
age bracket of 36-55 years who were 68(200%), followed by those in the age bracket of
less than 18 years who were 34(10%), followed by those in the age bracket of 56-65
years who were 27(7.9%), and lastly those who were above 65 years and above, who
were 15 (4.4%). This shows that a big number of customers of Airtel are youth. This is an
opportunity of the company because a big number of Rwandan populations are youth.
But Airtel should look a method of approaching old people because they are the ones
who have enough money.
4.1.3 Marital Status
Table 4. 3: Distribution of Marital Status
Marital Status
Single
Married
Divorced
Total
Primary data (2015)
Frequency
184
148
8
340
Percentage
54.1
43.5
2.4
100
Referring to the table 4.3, findings on marital status showed that the majority were 184
(54.10%) were single, followed by those who were married 148 (43.50%) followed by
48
those who were divorced 8(2.4%). This indicates that the majority of Airtel customers are
single. This implies that the customers of Airtel do not have many responsibilities and
they can used more services of telecommunication once they realise that it is affordable
4.1.4 Education level
Table 4. 4: Distribution of Education level
Level of education
Frequency
No formal education
15
Percentage
4.4
Primary education
Secondary
University level
Total
Primary data (2015)
199
83
43
340
58.5
24.4
12.6
100
Referring to the table 4.4, findings on education showed that a big number of respondents
had attained primary level 199 (58.5%), thus dominating the study, followed by those
who had secondary education 83(24.40%), followed by those who university level 43
(12.60%) and lastly those with no formal education 15 (4.40%). This indicates that most
of the Airtel customers have low education (primary level). This is in line with the at
least the customers of Airtel can read and write. For this they can understand many
services provided by the company
4.2 Using promotion tools
The first objective of the study was to find out the promotion tools which are the source
of purchasing information for customers. For this objective the researcher analyzed the
use of advertising and publicity, Sales promotion, Personal selling, Public relations and
direct marketing as promotion tools. This objective was analyzed using the frequency and
percentage.
49
4.2.1 The use of advertising and publicity
To test the use of advertisement and publicity usage in Airtel the researcher tested the
usage of the most used medium of advertisement and publicity for many companies,
including Radio, Television, Newspapers, Bill board and Internet. Findings are
summarised in the table 4.5.
Table 4. 5 : Advertising medium most used by Airtel Rwanda
Medium source of information
Frequency
Radio
204
Television
53
Newspapers
10
Bill board
59
Internet
14
Total
340
Source: Primary data (2015)
Percentage
60.0
15.6
2.9
17.4
4.1
100.0
Referring to the table 4.5, findings on adverting and publicity, radio is the most source of
information and it has been used by 204 (60%). It is followed by Billboards with 59
(17.4%) followed Television with 53(15.6%), followed by internet with 14(4.1%), and
the last was Newspapers with 10(2.9%). Direct mail has not been used as a source of
information. These findings showed that Airtel should concentrate investing in
advertisement using radio and Billboard because they are the most source of information
in advertisement and publicity.
4.2.2 Sales promotion
About sales promotion, the researcher tested the types of sales promotion mostly used by
Airtel. He tested also the most factors which influenced the customers of Airtel to use its
products and services. Findings are summarized in the table 4.6
50
Table 4. 6: The most types of sales promotion used by Airtel Rwanda Ltd
Items
Scale
Frequency
The most types of sales Rebate,
88
promotion used by Airtel Discounts,
107
Rwanda Ltd
Refunds
36
Instant Draws and Assigned 45
Gifts
Lucky Draw
64
Factors
which
has
influenced customers to
purchase Airtel products
and services
Percentage
25.9
31.5
10.6
13.2
18.8
Total
Affordable price
Availability
340
187
21
100.0
55.0
6.2
Superior customer care
Reliable connectivity
Total
32
100
340
9.4
29.4
100.0
Source: Primary data (2015)
Referring to the table 4.6 findings about the type of sales promotion discount showed that
the most appreciated by 107 (31%) followed by rebate, with 88 (25.9%) followed by
lucky Draw with 64(18.8%), followed by Instant draws and Assigned Gifts with
45(13.2%) and the last was refunds with 36(10.6%). Considering these findings, Airtel
should continue using discount and rebate because they are the types of sales promotion
that are more appreciated by customers.
About factors which has influenced customers to purchase Airtel products and services
Findings showed that affordable price was the most factor which influenced customers to
purchase Airtel products and services with187 (55%) followed by Reliable connectivity
with 100(29.4%) followed by superior customer care with 32(9.4%) and the last was
availability with 21(6.2%).From these findings Airtel should continue selling its product
at affordable price because this factor is the most influenced customers to buy. It should
increase also availability of its products and services because findings showed that this
variable is the least among others.
51
4.2.3 Personal selling
To test personal selling as a promotion tool, the researcher used four questions that the
respondents should answer by yes or no. Findings are summarized in the table 4.7
Table 4. 7: Perception of customers towards salesmen
Items
Scale
The salesmen of Airtel have good health Yes
and pleasing personality
No
Total
The salesmen of Airtel always have a Yes
cheerful smile on their face.
No
Total
The salesmen of Airtel have good Yes
manners, courtesy in dealing with No
customers.
Total
The Salesmen of Airtel Rwanda Ltd have Yes
the basic qualities like empathy and ego No
drive
Total
Source: Primary data (2015)
Frequency
46
294
340
56
284
340
130
Percentage
13.5
86.5
100
16.5
83.5
100
38.2
210
61.8
100
22.4
77.6
100
340
76
264
340
Referring to the table 4.7 findings showed that 294 (86.5%) of the respondents said no to
the statement saying that the salesmen of Airtel have good health and pleasing
personality and only 46 (13.5%) accepted the statement. 284 (83.5%) of the respondents
said no to the statement saying that the salesmen of Airtel always have a cheerful smile
on their face. only 56 (16.5%) accepted the statement. 210 (61.8%) of the respondents
said no to the statement saying that the salesmen of Airtel have good manners, courtesy
in dealing with customers and 130 (38.2%) accepted the statement. 264 (77.6%) of the
respondents said no to the statement saying that the Salesmen of Airtel Rwanda Ltd have
the basic qualities like empathy and ego drive and 76 (22.4%) said yes to the statement.
52
These findings showed personal selling are not very well practiced because all indicators
of personal selling have been refuted by the majority of the respondents. This implies that
Airtel should come back on this practice by making training to its agents and employees
on how they should behave in front of the customers.
4.2.4 Public relations
To analyze public relation at Airtel Rwanda the researcher used three statements
containing the most practices of many companies for constructing a good relation to with
the public. Findings are summarised in the table 4.8.
Table 4. 8: Constructing public relation
Items
Scale
The activities involved in Population
welfare
Public relations use by programmes
Airtel
Charity shows
Training
schools
and
helping schools to perform
Hospitals
None
Total
Leaders of Airtel Rwanda Never
Ltd use Speeches which Seldom
influence
positively Often
various stakeholders.
All the time
Airtel
Rwanda
Ltd
organize
press
conferences, multimedia
presentation,
matches,
stage shows etc about is
product and services
Frequency
177
Percentage
52.1
7
29
2.1
8.5
10
117
340
153
165
13
2.9
34.4
100
45.0
48.5
3.8
9
2.6
Total
Never
340
150
100
44.1
Seldom
163
47.9
Often
11
3.2
All the time
Total
16
340
4.7
100
Source: Primary data (2015)
53
Referring to the table 4.8, findings in constructing Public relations showed that the most
known activity is Population welfare programmes, known by 177 (52.1%) followed by
Training and helping schools to perform, with 29 (8.5%), followed by hospital with
10(2.9%) and the last was Charity shows with 7(2.1%). 117(34.4%) said that they don’t
know any activity in relation to construct public relation. Considering these findings,
Airtel should increase and extend the activities of public relation. 117(34.4%) of the
respondents who do not know any activity of the Airtel in constructing public relation is
not negligible. They have to be also approached.
About using speeches which influence positively various stakeholders, findings showed
that 153(45%) did not hear any speech, 165(48.5%) rarely heard the speech, 13(3.8%)
often heard the speech and 9 (2.6%), all the time heard the speech. From these findings it
is shown that a big number of customers do not know the speech of Airtel staff in
building public relationship. For this the management of Airtel should prepare speeches
explaining the potentiality of using Airtel product services.
About organizing press conferences, multimedia presentation, matches, stage shows,
finding showed that 150(44.1%) never know any press conferences multimedia
presentation, matches, stage shows about Airtel ,
163(47.9%) rarely know
conferences multimedia presentation, matches, stage shows about Airtel
press
,11(3.2%)
confirmed that often Airtel use press conferences multimedia presentation, matches,
stage shows about Airtel and 16 (4.7%), confirmed that all the time there are press
conferences multimedia presentation, matches, stage shows about Airtel.
This is a very big problem because according to the finding, customers of Airtel do not
know press conferences multimedia presentation, matches, stage shows used by Airtel for
54
constructing Public relation. The management should take correction major in order to
increase a good reputation of the company.
4.2.5 Direct marketing
To analyse the use of direct marketing as a promotion tool, the researcher assessed the
usage of Postal mail, Telemarketing, Direct e-mail marketing and others. Findings are
summarised in the table 4.9.
Table 4. 9: Tools of Direct marketing which are mostly used by Airtel
Frequency
Telemarketing
92
None is used
248
Total
340
Source: Primary data (2015)
Percentage
27.1
72.9
100.0
Referring to the table 4.9, findings on Direct marketing showed that only 92(27.1%) of
the respondents know Telemarketing and other 248 (72.9%) do not know any. others like
Postal mail and Direct e-mail marketing are not known at Airtel. The company should try
to use other techniques of direct marketing and extends the existing one in order to
approach many customers.
4.3 Customer purchasing decision in Airtel Rwanda Ltd
To analyse customer purchasing decision at Airtel Rwanda Ltd, the researcher used the
indicators like attraction of new customers, Increase in sales, Customer loyalty and Brand
switching.
55
4.3.1 Attraction of new customers
To analyze attraction of new customers, the researcher analyzed the increase of
subscription per year, and the number of lines the subscriber of Airtel the subscriber has.
Findings are summarised in the table 4.10.
Table 4. 10: New customer’s attraction
Items
Scale
Year of subscription to Airtel
2012
2013
2014
2015
Total
The number of
subscription to Airtel only
mobile telecommunication (line) do Airtel and MTN
you have
Airtel and Tigo
Airtel Tigo and
MTN
Total
Frequency
44
250
26
20
340
40
198
67
Percentage
12.9
73.5
7.6
5.9
100
11.8
58.2
19.7
35
10.3
340
100
Source: Primary data (2015)
With reference to the table 4.10, findings from the respondents showed that a big number
of Airtel customers has been subscribed in 2013 with 250 (73.5%), followed by 2012
with 44 (12.9%), followed by 2014 with 26 (7.6%) and 2015 with 20 (5.9%) customers.
This shows that from 2012 which is the year of starting the number of subscription was
increasing but from 2013 to 2015 the subscription was reducing. This shows that Airtel
could have a problem of losing customers. Strong majors are necessary to increase the
numbers of subscribers. Otherwise the company will face big problems. There is not any
company that can perform if it doesn’t have customers.
56
4.3.2Increase in sales
To test this variable, the researcher tested the most line used by the customers and the
level of increase of the money spends in using Airtel services. Findings are summarized
in the table 4.11.
Table 4. 11: Level of increase in the sales
Items
Scale
Which
mobile
telecommunication Airtel only
subscription (line) do you often use during MTN
your communication?
Tigo
Total
Does money you spend by using Airtel Yes
services increases with the time?
No
Total
Frequency
41
229
70
340
114
226
Percentage
12.1
67.4
20.6
100
33.5
66.5
340
100
Source: Primary data (2015)
With reference to the table 4.11, findings showed that a big number of Airtel customers
use mostly MTN 229 (67.4%), followed by those who mostly use Tigo 70(20.6%), only
241 (12.1%) mostly use Airtel. This showed that even if Airtel has many subscribers a
big number of them use other lines in their communication. Findings also showed that
only 114(33.5%) have increased the money they spend in using Airtel services and 226
(66.5%) did not. These findings show how big Airtel is facing a big problem of
competition.
4.3.3 Customer loyalty
To test this variable, the researcher used two statements to the reputation of the company
and the behaviour of the customer in the recommending the company. Findings are
summarized in the table 4.12.
57
Table 4. 12: Level of customer loyalty of Airtel
Items
Scale
Airtel has a good reputation among its
customers
customer recommend Airtel product and
services their friends and relatives
Yes
No
Total
Frequency
91
249
340
Percentage
26.8
73.2
100
Never
Seldom
Often
All the time
Total
106
198
26
10
340
31.2
58.2
7.6
2.9
100
Source: Primary data (2015)
With reference to the table 4.12, finding showed that only 91 (26.8%), confirmed that
Airtel has a good reputation among its customers and 249(73.2%), showed Airtel doesn’t,
106 (31.2%) never recommend Airtel to their friends and relatives, 106 (58.2%) rarely
recommend Airtel products, 26 (7.6%) often recommend Airtel products and services and
10 (2.9%) recommend Airtel products all the time. This showed that a big number of
subscribers of Airtel are not loyal to the company.
4.3.4 Brand switching
To test brand switching, the researcher used a statement in order to know a proportion of
the customers who have replaced other lines services with Airtel services. Findings are
summarized in the table 4.13.
Table 4. 13: Brand switching
Items
Scale
Have you ever stopped using other lines
and replace them by Airtel line
Source: Primary data (2015)
58
Yes
No
Total
Frequency
105
235
340
Percentage
30.9
69.1
100.0
As it is found in the table 4.13, only 105 (30.9%), have replaced other line with Airtel
and 235(69.1%), have never replaced Airtel .This show many customer of Airtel continue
using other lines despite promotion tools used the Airtel. It shows big problems of
competition
4.4. Relationship between Promotion and customer purchasing decision in Airtel
Rwanda Ltd
The objective three was to find out how promotion campaign has impacted on customers’
purchasing decision to the Airtel products and services. To test this relationship the
researcher used correlation analysis especially spearman's rho correlation. Findings are
summarized in the table 4.14.
Table 4. 14: Spearman's rho correlation between Promotion and customer purchasing
decision
Customer
purchasing decision
Values
Indicators
Promotion
Spearman's rho
Correlation Coefficient
P- Value
N
*. Correlation is significant at the 0.05 level (2-tailed).
-0.137*
0.011
340
Source: Primary data (2015)
With reference to the table 4.14, Spearman's rho coefficient (rho) was -0.137 with the pvalue (0.011). According to Sounders (2000), when rho is more than 0 there is a positive
relationship between independent and dependent variables. This means as the value of
independent variable increases, also the value of dependent variable increases and vice
versa. When the (rho) is less than 0, there is a negative relationship between the variables
which means that if the value of independent variable increases the value of dependent
variable decreases and vice versa. Buglear (2005) has given interval showing the level of
relationship. He said when rho is 0.9 to 1.00 the relationship is strong. When rho ranges
59
from 0.6 to 0.89, the relationship is fair / moderate. When rho ranges from 0.3 to 0.59 the
relationship is weak. When (rho) ranges from 0 to 0.29 the relationship is negligible.
The author continues saying that the relationship is significant when the P-value is less
than the level of significance of the study.
Basing on the above theories there is a negative negligible relationship between the two
variables. Relationship between promotion and customer purchasing decision at Airtel
was negligible because the (rho) was -0.137 the value which is between 0 to -.0.29.
Because p-value (0.011) is less than 0.05 level of significance, the relationship is
significant. The negative relationship between promotion and purchasing decision
explains that the methods of promotion that Airtel is using are affecting negatively
purchasing decision of customers. This is a big challenge because generally promotion
affects positively purchasing decision. Therefore the management of the company should
try to modify the ways they are promoting its products and services, because if they do
not change they are going to continue investing in promotion while the results are
negative.
4.5 Testing of hypothesis
From findings in the table 14 the null hypothesis was rejected and the alternative
hypothesis was accepted. Therefore there is a significant relationship between the use of
promotion and customer purchasing decision in Airtel Rwanda Ltd. This relationship was
negative.
60
CHAPTER FIVE: CONCLUSION AND RECOMMENDATION
5.1 Summary of the major findings
Findings showed revealed that the highest percentage of the respondents were male
(64.1%), the highest percentage of the respondents were in the age range of 18-35 years
(57.6%), the majority of the respondents were single (54.10%), the big number of
respondents had attained primary level (58.5%).
Findings about advertising and publicity showed that radio is the most source of
information and it has been used by 204 (60%). It is followed by Billboards with 59
(17.4%) and Television with 53(15.6%). Finding on sales promotion showed that
discount is the most appreciated by 107 (31%) followed by rebate, with 88 (25.9%)
followed by lucky Draw with 64(18.8%). Affordable price was the most factor which
influenced customers to purchase Airtel products and services with187 (55%) followed
by Reliable connectivity with 100(29.4%).
Finding about Personal selling, 294 (86.5%) of the respondents said that the salesmen of
Airtel do not have good health and pleasing personality.284 (83.5%) of the respondents
said that the the salesmen of Airtel do not always have a cheerful smile on their face. 210
(61.8%) of the respondents said that the salesmen of Airtel do not have good manners,
courtesy in dealing with customers . 264 (77.6%) of the respondents said that the
Salesmen of Airtel Rwanda Ltd do not have the basic qualities like empathy and ego
drive .
Finding on Public relations showed that the most known activity is Population welfare
programmes, known by 177 (52.1%) followed by Training schools and helping schools to
61
perform , with 29 (8.5%). findings showed that 13(3.8%) often heard the speech from the
management influencing positively various stakeholders, and 9 (2.6%), all the time
heard the speech. About direct marketing, findings showed Airtel use only Telemarketing
and it known by 92(27.1%) of the respondents know and other 248 (72.9%) do not know
any method of direct marketing.
To analyse customer purchasing decision the researcher used the indicators like attraction
of new customers, increase in sales, Customer loyalty and Brand switching. Findings on
attraction of new customers, Airtel attracted more customers in 2013 with 250 (73.5%).
About the increase in sales, findings showed that only 41 (12.1%) of Airtel subscribers
mostly use Airtel line. Others use other lines like MTN and TIGO. Findings on the
customer loyalty, showed that only 91 (26.8%), confirmed that Airtel has a good
reputation among them. 106 (31.2%) never recommend Airtel to their friends and
relatives and 106 (58.2%) rarely recommend Airtel products. Findings on brand
switching showed that only 105 (30.9%), have replaced other line with Airtel and 235
(69.1%).
The Spearman's rho correlation (-0.137) showed that there is a negative negligible
relationship between Promotion used by Airtel and customer purchasing decision. This
relationship was significant because the p-value (0.011) was less than the level of
significance (0.05).From these finding the researcher can conclude that all objectives
have been verified.
62
5.2 Conclusion
The study was about the role of promotion in influencing customer purchasing decision
in telecommunication companies in Rwanda. The research addressed the problems that
Airtel is suffering including the lowest market share of 15% compared to other
competitors in 2014, a low population coverage 45%.
The study analyzed four objectives. The first objective was to find out the promotion
tools which are the source of purchasing information for customers. The second was to
find out which medium that has been more effective as a source of product information.
The third was to analyze the situation of customer purchasing decision in Airtel Rwanda
Ltd. The fourth was to find out how promotion campaign has impacted on customers’
purchasing decision to the Airtel products and services.
Findings showed that radio is the most source of information; discount is the most
appreciated, affordable price was the most factors which influenced customers to
purchase Airtel products salesmen of Airtel do not have good health and pleasing
personality. Airtel does not have good reputation among its customers. Many customers
rarely recommend Airtel products. Only 105 (30.9%), have replaced other line with
Airtel and there was a negative negligible relationship between Promotion used by Airtel
and customer purchasing decision. In general the objective of the study has been reached.
5.3 Recommendations
From these findings the researcher has formulated the following recommendation:
63
To the customers of Airtel
The customers should try to use the telecommunication company product and services
because they are useful and easily reached
To Airtel management
The management of Airtel should increase advertising on radio and Billoards because
findings showed that they are the most source of information to many customers. They
should train their employees of customers care because customers do not appreciate their
behaviours. They should increase the activities which help the company to increase it
good public image like diversified social activities and speech explaining its activities.
They should make all possible strategies of increasing the customers because findings
showed that the number of subscription has been reducing and this is a big problem
because no business can survive without customers. They should try to construct good
relations to existing customers so that they can be royal to the company. The company
should try to modify the mode of using promotion tools because findings showed there is
negative relationship while normally the relationship should be positive.
To the future researchers
This research should be replicated to the other companies which are suffering from the
performance problems. There is a need to conduct other research like the contribution of
other marketing strategies like 4ps to the purchasing power of the customers.
64
REFERENCES
Achumba IC (2000), Strategic Marketing Management. Mac-Williams and Capital
Publishers Inc. Charlotte USA January 2000 Achumba.
Buel V (2004), Marketing Management, New York, McGraw Hill
Douglas D. (2010). Advertising and Promotion. Arizona Cooperative Extension
(Willcox)
Gasana C.(2015). Airtel Rwanda extends customer services to rural. Kigali Rwanda.
Govon DF (2006), Promotional Management, Englewood Cliffs New Jersey Prentice
Hall, Inc.
Hawkins DL, Best RH and Conney KA (1989), Consumer Behaviuor: Implications for
Marketing Strategy, Donnely and sons Company USA.
Jobber, D. (2004) Principles and Practice of Marketing, 4th Edition.
Kotler P (2008), Marketing Management an Asian Perspectives, 5th edition
PearsonEducation.
Kumar A, & Sharma R (1998).Marketing Management. Atlantic publishers and
distributors.
Mihaela S.D .(2012). Direct Marketing. An Efficient Communication Tool. Tibiscus
University from Timişoara, Faculty of Economic Sciences, Daliei STR.
Nagar, K. (2009). Evaluating the effects of consumer sales on brand loyal and brand
switching segments.VISSION-Journal of Business Perspective, 13 (4), 35-48.
Neha S, (2013). Impact of Sales Promotion Tools on Consumer’s Purchase Decision
towards White Good (Refrigerator) at Durg and Bhilai Region of CG, India.
Research Journal of Management Sciences.
Odugbesan O and Gbolahan S (1996), Distribution Channel Management: Mukugamu,
Nigeria Co, Lagos.
Osuagwu L and Eniola V (1997), Marketing Management: Principles, Strategies and
Cases: Malthouse Press Ltd.,Nigeria.
Palmer, A. (2004), Introduction to Marketing Theory and Practice; 2nd Edition, United
State: Oxford University Press Inc.
Peattie K and Peattie S (2009). Social Marketing: A Pathway to Consumption Reduction,
Journal
of
Business
Research,
vol.
62,
Issue
2
http:/www.sciencedirect.com/science/article/B6V75...cb01bc5aa097590713c
Prasanna K & Venkateswara R. ( 2013).The Role of Advertising in Consumer Decision
Making. IOSR Journal of Business and Management (IOSR-JBM.)
Prentice H. (1985). Marketing: Concept, Strategies, And Decisions.
65
Rangsan N & Titida N (2011). The Influence of Sale Promotion Factors on Purchase
Decisions: A Case Study of Portable PCs in Thailand.
Rura (2013). Statistics and Tariff Information in Telecom Sector . Kigali Rwanda.
RURA (2013). Statistics and Tariff Information in Telecom Sector.Kigal, Rwanda.
Sameen A. (2014).The impact of retail shoes sales promotional activities on ladies’
purchase intentions .Journal of Public Administration and Governance 21617104, Vol. 4, No. 2
Saritha P.(2015). Most Important Elements of Promotion Mix.Business Marketing
internet
article
retrived
on
15/4/2015.
From
http://www.yourarticlelibrary.com/marketing/4-most-important-elements-ofpromotion-mix-business-marketing/8796/
Satnam U. (2014). A Study of Sales Promotion Mix on Customer Satisfaction With
Reference to Shopping Malls in Indore. Research India Publications Global
Journal of Finance and Management. Volume 6, Number pp. 245-252.
Schiffman K. (2005), Consumer Behaviour, Eight Edition Prentice Hall of India, New
Delhi.
Shira S, Ramu (2003), Marketing. 1st Edition, Delhi: A. H Wheeler and C, Lid.
Stone, B., Jacobs, R.( 2004).Successful direct marketing methods, 7th edition, ARC
Publishing house, Chişinău.
Tarinee Chaipradermsak (2007).The Influential Factors on Consumers’ Purchasing
Decision in Bangkok Pet Retailing Business. Shinawatra University.
Witton CT (2006), Concept of trade Promotion Spending and Merchandising Industry
Study, (Cannodals Association, May 2006) Pp 14.
66
APPENDICES
Appendix 1: Questionnaire
Dear respondent,
I am UWAYO Noel a student at Independent Institute of Lay Adventists of Kigali
(INILAK), faculty of Economic Sciences and Management, Master of Business
Administration (MBA), Option of Marketing. I am conducting my research called THE
ROLE OF PROMOTION IN INFLUENCING CUSTOMER PURCHASING DECISION
IN TELECOMMUNICATION COMPANIES IN RWANDA. A case study of Airtel
Rwanda Ltd (2012-2014). Please, kindly assist the researcher in filling the questionnaire
knowing that your information will be confidential and used only for academic purpose.
Think you for your cooperation.
Section A: Identification of Respondents
Tick the correspondent point
1. Age: Less than 18
18-35,
36 -55
56-65
above 65
2. Sex: Male
Female
3. Marital Status: Single
, Married
, Divorced
4. Education Level: No formal education
Secondary
, University level
67
, Primary education
Section B: Promotion
Please, tick your appropriate answer.
Advertising and publicity
Q1. Which of the following medium has been the most source of information about Airtel
products to you?
a. Radio
b. Television
c. Newspapers
d. Bill board
e. Direct mail
f. Internet
Sales promotion
Q2.Among the list below shows the types of sales promotion Airtel Rwanda Ltd mostly
uses:
1.Rebate, 2.Discounts,
3.Refunds, 4.Premiums or Gifts/or Product Combination,5.
Quantity Deals, 6.Samples, 7.Contests 8.Instant Draws and Assigned Gifts,9.Lucky Draw
10.Usable 11.Benefits 12.Full Finance @ 0%, 13.Packaged Premium 14. Container
Premium.
Q3.Please rank the following factors which has influenced you to purchase Airtel
products and services with 1 indicating the most influential factor.
a) Affordable price of Airtel product and service
b) Availability
c) Superior customer care
d) Reliable connectivity
68
Personal selling
Q4.The salesmen of Airtel have good health and pleasing personality.
1.Yes
2.No
Q5. The salesmen of Airtel always have a cheerful smile on their face.
1.Yes
2.No
Q6. The salesmen of Airtel have good manners, courtesy in dealing with customers.
1.Yes
2.No
Q7. The Salesmen of Airtel Rwanda Ltd have the basic qualities like empathy and ego
drive.
1.Yes
2.No
Public relations
Q8. What are the activities involved in Public relations
1. Population welfare programmes
helping schools to perform
2. Charity shows
4. Hospitals
5. Others
3. Training schools and
6. None
Q9. Leaders of Airtel Rwanda Ltd use Speeches which influence positively various
stakeholders.
1.Never
2. Seldom
3. Often
4. All the time
Q10. Leaders of Airtel Rwanda Ltd organize press conferences, multimedia presentation,
matches, stage shows etc about is product and services
1.Never
2. Seldom
3. Often
69
4. All the time
Direct marketing
Q11.Which tools of Direct marketing does Airtel mostly used to give you the information
1.Postal mail
4.Others
2.Telemarketing
3.Direct e-mail marketing
5. None is used
Section C: Customers purchasing decision
Please, tick the appropriate answer.
Attraction of new customers
Q12.When have you been subscribed to Airtel?
1. In 2012
2.In 2013
3.In 2014
4.In 2015
Q13.How many subscription of mobile telecommunication (line) do you have ?
a)I have subscribed to Airtel only
b.I have Airtel and MTN
c) I have Airtel and Tigo
d. I have Airtel and Tigo and MTN
Increase in sales
Q14. Which mobile telecommunication subscription ( line) do you often use during your
communication?
a. I often use Airtel only
b. I often use MTN
c) I often use Tigo
70
Q15. Does money you spend by using Airtel increases with the time?
1.Yes
2.No
Customer loyalty
Q16.Do you attest that Airtel has a good reputation among its customers.
1.Yes
2.No
Q17. As a customer of Airtel, do you recommend its products or services to your friends
and relatives?
1.Never
2. Seldom
3. Often
4. All the time
Brand switching
Q18. Have you ever been stopped using other lines to replace them by Airtel line?
1.Yes
2.No
71