Download 4.5: Relationship between promotional activities and brand loyalty.

MAKERERE UNIVERSITY
TOPIC:
PROMOTIONAL ACTIVITIES AND BRAND
LOYALTY
(A CASE STUDY OF COCA-COLA-NAMANVE PLANT)
BY
WUBO GERALD
06/U/9282/EXT
A RESEARCH REPORT SUBMITED TO MAKERERE
UNIVERSITY IN PARTIAL FULFILMENT OF THE
REQUIREMENTS FOR THE AWARD OF A BACHELOR OF
COMMERCE DEGREE.
SEPTEMBER 2011
i
DECLARATION
I WUBO GERALD declare that this research work is my original work and has not been
published or submitted for the award of any discipline to any university or any higher institution
of learning before. Where it is indebted to the work of others due acknowledgement has been
made.
Signature……………………………………..
Date………………………
WUBO GERALD
06/U/9282/EXT
(STUDENT)
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DEDICATION
This piece of work is dedicated to my parents Mr. Mutenyo Solomon (May his soul rest in
eternal peace), Mrs. Jeninah Kalanda Mutenyo, Mrs. Zewuliya Kisakye Mutenyo and my
guardian as well as blood brother Mr. Kennedy Dustan Mutenyo whose imperishable support and
vision i shall stand for ever.
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APPROVAL
I hereby certify that this research report by Wubo Gerald has been prepared and completed under
my supervision and submitted in upon my approval.
MS. Nanyanzi Marion
Signature……………………………………… Date…………………………………………...
(Supervisor)
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ACKNOWLEDGEMENT
First and fore most I thank the almighty God for protecting me all this time, giving me the
wisdom, courage and strength to come through all the obstacles and finally completing this
course. Am so grateful to my Mother, Mrs. Jeninah Kalanda for her Parental love, tireless efforts
to nurture me up while others watched and mocked her, Struggled to pay my school fees and her
Godly guidance in my upbringing. Without her, I would not be who I am today. My beloved
blood brother Mr. Kennedy Dustan Mutenyo who sacrificed hard and pondered day and night
during my darkest moments when I lost my Father Mr. SKM Solomon Mutenyo( RIP) without
whose love and care, I would not have survived the complexities of this world. Special thanks
also go to my Friends and course mates; Mr. Martin Mungashow, Mr. Rogers, Mr. Paul Damba,
Mr. Gule Swadick, Mr. Kiyemba Robert, Mr. Kaggwa Andrew and Mr. Angeta Wilfred.
I extend my sincere vote of thanks to my supervisor Ms Marion Nanyanzi, Lecturer department
of marketing and management at Makerere University, without whose support, guidance,
insights and contributions, this research would not have seen the light of the day.
Am also greatly indebted to Mr. Joseph Kabela and Mr. Anthony Tibaingana who helped me to
identify another supervisor after being rejected by my original supervisor. May the good lord
Jesus Christ reward you king-size. I cannot forget to thank my learning and development
manager at Century bottling company Mr. Rajaabu Ssenkuba for giving me the opportunity to
conduct this study and also family; my wife Mrs. Sharon Nyiraguhirwa and children Ms.
Mutenyo Solomon and Ms Precious Seline Kataha Muyama whose presence and care to them
has been an opportunity cost during the compilation of this research work. And Lastly but not
least, my Sisters and brothers; Mrs. Turyamubona Violet Kituyi, Mrs. Magoola Jackie Mugimba,
Mrs.Wabomba Muyama Chritine, Mulembe Constance and Sisters-in-law; Mrs. Kyamuhangire
Annet, and Mrs. Abigaba Helen. You people have been an inspiration in my life.
God bless you all.
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TABLE OF CONTENTS
Page
DECLARATION ............................................................................................................................. i
DEDICATION ................................................................................................................................ ii
APPROVAL .................................................................................................................................. iii
ACKNOWLEDGEMENT ............................................................................................................. iv
TABLE OF CONTENTS .................................................................................................................v
LIST OF TABLES ........................................................................................................................ vii
LIST OF FIGURES. .................................................................................................................... viii
ABSTRACT ................................................................................................................................... ix
CHAPTER ONE ............................................................................................................................1
INTRODUCTION ...........................................................................................................................1
1.1: Background to the study: ..........................................................................................................2
1.2: Statement of the problem. .........................................................................................................5
1.3: Purpose of the study:.................................................................................................................5
1.4: Objectives of the study: ............................................................................................................5
1.5: Research questions:...................................................................................................................6
1.6: The scope of the study: .............................................................................................................6
1.7: Significance of the study...........................................................................................................7
1.8: Figure 1. Conceptual frame work. ............................................................................................8
CHAPTER TWO: LITERATURE REVIEW ...........................................................................13
2.1: Introduction. ............................................................................................................................13
2.2: Promotional activities: ............................................................................................................13
2.4: Relationship between promotional activities and brand loyalty: ............................................21
2.5: Other factors affecting brand loyalty: .....................................................................................24
CHAPTER THREE: METHODOLOGY .................................................................................30
3.1: Introduction:............................................................................................................................30
3.2: Research designs and strategy ................................................................................................30
3.3 Survey population: ...................................................................................................................30
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3.4 Sample size: .............................................................................................................................30
3.5: Sampling methods and techniques:.........................................................................................31
3.6: Data collection sources: ..........................................................................................................33
3.7: Data collection methods and tools: .........................................................................................33
3.8: Investigative procedure: ..........................................................................................................34
3.9: Data processing and analysis: .................................................................................................35
3.10: Challenges encountered. .......................................................................................................35
CHAPTER FOUR ........................................................................................................................36
PRESENTATION, ANALYSIS AND DISCUSSION OF RESEARCH FINDINGS. .................36
4.1 Introduction ..............................................................................................................................36
4.2 Background information ..........................................................................................................36
4.3: Century bottling company and promotional activities. ...........................................................41
4.4: Management of loyalty programs. ..........................................................................................49
4.5: Relationship between promotional activities and brand loyalty. ............................................51
CHAPTER FIVE .........................................................................................................................62
SUMMARY, CONCLUSION AND RECOMMENDATIONS. ...................................................62
5.1: Introduction. ............................................................................................................................62
5.3: Conclusion. .............................................................................................................................63
APPENDICES ...............................................................................................................................68
MAKERERE UNIVERSITY.........................................................................................................68
INTRODUCTORY LETTER ........................................................................................................76
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LIST OF TABLES
Page
Table 1: Illustration of the sample size ........................................................................................ 31
Table 2: Gender of respondents .................................................................................................... 37
Table 3: Age bracket of respondents. ........................................................................................... 37
Table 4: Level of education of respondents .................................................................................. 38
Table 5: marital status of the respondents..................................................................................... 39
Table 6: Income of the respondents per month. ............................................................................ 40
Table 7: Use of coupons. .............................................................................................................. 41
Table 8: Use of Rebates. ............................................................................................................... 42
Table 9: Use of free product trails. ............................................................................................... 42
Table 10: Use of sales contests: .................................................................................................... 43
Table 11: Use of fliers: ................................................................................................................. 44
Table 12: Use of Street advertising ............................................................................................... 45
Table 13: Use of event sponsorship. ............................................................................................. 46
Table 14: Use of Television advertising ....................................................................................... 47
Table 15: Use of radio advertising ................................................................................................ 48
Table 16: Loyalty programs and consumer rewards. .................................................................... 49
Table 17: Management of loyalty programs. ................................................................................ 50
Table 18: Proportion of Coca-Cola consumption. ........................................................................ 51
Table 19: Preference rate for the coca-cola brand. ....................................................................... 52
Table 20: Choice on consumption of Coca-Cola. ......................................................................... 54
Table 21: Promotions and consumption behavior. ....................................................................... 55
Table 22: Promotions and consumption decision. ........................................................................ 56
Table 23: Themes and consumption behaviors. ............................................................................ 57
Table 24: Themes and level of consumption interests. ................................................................. 58
Table 25: Promotions and brand switching. ................................................................................. 59
Table 26: Promotional activities and brand loyalty: ..................................................................... 60
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LIST OF FIGURES.
1.8: Figure 1. Conceptual frame work. ............................................................................................8
viii
ABSTRACT
The study aimed at establishing the relationship between promotional activities and brand
loyalty. The study objectives included: to find out the extent to which Century bottling company
conducts promotional activities, to establish how Century bottling company manages loyalty
programs and to establish the relationship between promotional activities and brand loyalty.
The study was carried out in Century bottling company-Namanve plant using a correlational
research design. The researcher used purposive sampling technique in sample selection, stratified
random sampling technique in categorizing the sample. And lastly simple random sampling to
choose respondents. A total of 44 respondents comprising of Century bottling company
employees and consumers in Kampala were selected to participate in the survey and a statistical
package for social sciences (SPSS) was used to analyze data. The findings were presented using
frequency tables.
The study revealed that Century bottling company had a number of promotional activities. That
Consumers were aware of the promotions and were highly aroused by the activities. The study
further revealed that Century bottling company has put a number of loyalty programs basically to
give back to society. Sponsoring football in secondary schools, community work, free
refrigeration programs, were mentioned. In order to manage these programs, Century bottling
company has made use of contracts. The study also found out that there is a strong positive
correlation between promotional activities and brand loyalty represented by Pearson correlation
coefficiency of r=0.964**.
Conclusively, the researcher discovered that promotional activities to a greater extent affect
consumers purchase decisions. This implied that brand loyalty can be achieved through
designing well packaged promotions. Century bottling company should therefore continue to put
in more efforts in designing and carrying out promotional activities.
In regard to the above observations, Century bottling company should try as much as possible to
manage its loyalty programs in a way that directly rewards consumers and counter competition.
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CHAPTER ONE
INTRODUCTION
Since 1987, the Ugandan economy has continued to grow on a positive note thereby creating a
delicate and competitive marketing environment.
In this regard, buyers operate under various constraints and occasionally make choices that give
weight to their personal benefits than to the company benefits (Philip kotler 2003).In fact, its so
amazing to see a variety of commodities in the market place that it even becomes quite
challenging for a consumer to choose what type of commodities to purchase.
To day’s consumers’ are becoming harder to please, they are smarter, more price conscious,
more demanding, less forgiving and are usually approached by many competitors with equal or
even better offers (Philip Kotler 2003).These together with the growth of consumerism and the
ever burning flame of competition, have greatly affected the consumers relative attitude towards
brand portfolios (CCS news April 2005).
All over the world, Multinational companies have employed promotional activities such as
advertising, sales promotions, personal selling, publicity and public relations and direct
marketing for survival (Engel et al 1991).
And in Uganda, the situation is not different either. Soft drinks manufacturing companies for
example continuously seek for varying promotional tools basically to gain a competitive
advantage over and above their competitors and as such attain a higher degree of consumer
loyalty. They as such use promotions as away to differentiating their products since they provide
inducements or contributions that give additional value to consumers leading to a strong and
quick response (Shiffman and kanuk 1991).
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1.1: Background to the study:
Promotion comes from a Latin word meaning to move forward. The meaning has narrowed
down so that promotions refer to communication undertaken to persuade others to accept ideas,
concepts or things (F.James Engel et al 1994). Therefore promotions is one of the four elements
of the marketing mix i.e. product, price, promotions, and distribution.
It is the communication link between sellers and buyers for the purpose of influencing,
informing, or persuading a potential buyer’s purchasing decision (Kurtz and Dave 2010). The
specification of five elements creates a promotional mix. These elements are personal selling,
advertising, sales promotions, direct marketing and publicity (Rajapogal 2007). A promotional
mix can have a wide range of objectives including: sales increases, new product acceptance,
creation of the brand equity, positioning, competitive retaliations or creation of a cooperate
image. Fundamentally; however there are three basic objectives of promotion. These are: to
present information to consumers as well as others, to increase demand and also to differentiate a
product. (Kurtz and Dave 2010)
There are different ways to promote a product in different areas of the media. Promoters use
internet advertisement, special events, endorsements and newspapers to advertise their products.
Many times with the purchase of the product there is an incentive like discounts, free items or a
contest. There is therefore an increasing need for brands to build a deep and meaningful connect
with consumers’ so that brands rise above market clutter. Successful brands deliver on these
timeless values, build on them and resonate not just with the immediate needs of the consumer
but also their larger aspirations. In doing so, brands deliver on their immediate promise and also
build a long term relationship with customers. But this relationship must negotiate a
marketawash with growing brands and multiple messages, making it that much more difficult to
differentiate brands and sustain brand loyalty. (Dowling and Uncles).
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Brand loyalty in marketing, consists of consumer’s commitment to re-purchase or otherwise
continue using a brand and can be demonstrated by a repeated buying of a product or service or
other positive behaviors’ such as word of mouth advocacy ( Dick et al 1994).
Brand loyalty is more than simple purchasing. Customers’ may repurchase a brand due to
situational constraints such as vendor lock in (Jones, Micheal.A.et al). Such loyalty is referred to
as spurious loyalty. True loyalty exists when customers have a high relative attitude towards the
brand which is exhibited through re-purchase behavior (Dick et al 1994). This type of loyalty can
be a great asset to the firm: customers’ are willing to pay higher prices, they may cost less to
serve, and can bring new customers’ to the firm (Riechheld et al 1990).
Many multi-national companies in Uganda, for example soft drinks manufacturing companies
continuously seek for varying promotional tools basically to gain a competitive advantage and as
such attain a higher degree of customer loyalty thereby discouraging other firms from competing
directly. They therefore use promotions as a way of differentiating their products since it
provides inducements or contributions that give additional value to customers leading to stronger
and quick responses (Shiffman and Kanuk 1994).
In this regard, the coco-cola brand is not an exception. Coca-cola was invented in 1876 by Dr.
John Pembaton and was availed in only Atlanta-Georgia USA. It was first sold as energy drink in
form of syrup in Jacob’s pharmacy. Its sales gained momentum during the First World War as it
was served whenever there was a monument service unit.
Pembaton had a partner known as Frank Robinson. Frank Robinson sold the plant to Asa Candler
at $250000 who later sold it to Robert Woodruff at $25million. It was Robert woodruff who
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grew the business to this magnitude when he introduced the idea of bottling it as a soft drink.
(CBC sales reports 2003)
In Uganda, the official bottlers, Century bottling company ltd started in 1988 by the Bagaalaliwo
family in partnership with the coca-cola international whose head quarters are based in AtlantaGeorgia. However the first bottle came off the line on 5th may 1989. The plant started with the
production of three core brands namely; coca-cola, Fanta orange and Sprite. Over the years,
Century bottling company expanded its’ product portfolios to include Krest, Stoney, Novida
Dasani water and the newly introduced Minute maid juice.
The performance of Century Bottling Company, has been growing at a double digit over the past
two decades with the highest contribution of 50% coming from the Coca-cola brand.
However, over the last two decades, the contribution of the coca-cola brand to the overall sales
of the company has been fluctuating up to the current 36%. (CBC sales report March 2011).
As a way of revamping the Coca-cola brand performance the company has launched such
promotion themes as life tastes good, Coca-cola real, Enjoy Coca-cola, Open happiness among
others and also conducted such promotional activities as: Brr on the Coke side of life, Bongasna
Coke, Coke with meals combos’, Coca-cola music wave and the frequent Coca-cola free product
samples basically to attract customers and retain them. (CBC sales report Dec. 2010)
Despite of all these innovations, consumer’s degree of pre-depositional commitment towards
Coca-cola brand has remained low. One therefore wonders if these promotional activities really
result into creation of loyal consumers. In this regard, the study focuses on the promotional
activities of which Advertising, direct marketing, personal selling, sales promotions and publicity
and public relations are an integral element basically to explore and establish the relationship
between promotion activities and brand loyalty.
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1.2: Statement of the problem.
The contribution of brand Coca-cola to the total sales of Century bottling company has reduced
over the past two decades.( CBC Sales reports Nov. 2010).In this regard, Century bottling
company has launched such promotional activities as bonganaCoke,BRR on the coke side of
life, Coke and meals combos, and has also initiated such promotional themes as Coke real, Live
on the coke side of life, Life tastes good, Enjoy coca-cola, always coca-cola, Open happiness
among others basically to attract and retain consumers. (CBC Sales reports Dec 2010).Despite of
all these innovations, consumers’ degree of pre-dispositional commitment towards the Coca-cola
brand has remained unsatisfactory to the management of Century bottling company and the
shareholders. One therefore wonders if these promotional activities really result into creation of
loyal consumers. This coupled with the heavy investment in consumer promotions by the
competitors’ leaves a lot to be desired. The study therefore sought to explore and establish the
relationship between promotional activities and brand loyalty.
1.3: Purpose of the study:
The purpose of the study was to establish the relationship between promotional activities and
brand loyalty in Century bottling company ltd.
1.4: Objectives of the study:

To find out the extent to which Century bottling company conducts promotional
activities.

To establish how Century bottling company manages loyalty programs.

To determine the relationship between promotional activities and brand loyalty.
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1.5: Research questions:

To what extent does Century bottling company conduct promotions?

How are loyalty programs handled in Century bottling company?

What is the relationship between promotions and brand loyalty?
1.6: The scope of the study:
1.6.1: Geographical scope:
The study targeted consumers in and around Kampala District and the commercial team in
Century bottling company ltd located 28 km from Kampala city on plot 964,kyagwe block 111
Namanve industrial area.
The Researcher used Century bottling company ltd because it’s the plant that manufactures,
distributes and sales Coca-Cola, a brand which is experiencing a fluctuating performance.
1.6.2: Subject content:
The study focused on establishing the relationship between promotional activities as an
independent variable and brand loyalty as a dependent variable. It therefore covered promotional
tools such as sales promotions, advertising, public relations, personal selling, and direct
marketing.
1.6.3: Time period:
The study covered a period ranging from 1990 to 2011.This was because it’s the period over
which the performance of Coca-Cola brand started fluctuating.
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1.7: Significance of the study.
The study intends to benefit the following people:

Business community.
The research study will go a long way in enabling the business community in similar business
environment to make rational and informed business decisions in strategy implementation.

Researcher.
The research study will also help in equipping the researcher with the knowledge and the skills
of collecting, coding, editing, analyzing and interpreting data and presenting information. This
will enhance the researchers’ competency and therefore the researchers ‘career development in
marketing and sales management.

Future research and academicians:
The findings of the research study will also go along way in producing empirically grounded
data from which students may form a foundation for further research on promotional activities
and brand loyalty.

Management of Century bottling company.
The research study will help management of century bottling company to identify the relevant
marketing mix elements that add value to the core business and therefore improve on its
operational excellence through reducing costs.
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1.8: Figure 1. Conceptual frame work.
Independent variable
Dependent variable.
Promotional activities
Brand loyalty

Advertising

commitment

sales promotions

perceived value

Publicity and public

brand trust
relations

satisfaction

personal selling

direct marketing
Extraneous variables

price

peer influence
Source: Adopted from Philip Kotler (2003) “Marketing Management “,7th edition.
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
Advertising:
Is a form of communication intended to persuade an audience (viewers, readers of listeners) to
purchase or take some action upon products, ideas or services. It includes the name of the
product or service and how that product or service could benefit the consumer, to persuade a
target market to purchase or consume that particular brand. These messages are usually paid for
by sponsors and viewed via various Media.

Sales promotions:
Sales promotions is a set of paid marketing activity (other than advertising, and personal selling)
undertaken to stimulate buyer action. It includes such inducements as point of sale, displays, and
coupons. It assumes a much greater role with low priced mass products than specialty products
such as sports, watches.
Sales promotions therefore consist of short term incentives to encourage purchase or sale of a
product or service. Whereas advertising and personal selling offers reasons to buy a product or
service, sales promotions offers reasons to buy now.

Publicity and public relations:
From the Wikipedia, a free encyclopedia, publicity is a deliberate attempt to manage the public’s
perceptions of a subject. According to Philip Kotler 2003, a public is any group that has an actual
of potential interest in or impact on a company’s ability to achieve its objective. Public relations
involve a variety of programs designed to promote or protect company image or its individual’s
products.
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
Personal selling:
Personal selling is the most effective tool at the later stages of the buying process particularly in
building up buyer preference, conviction and action. It’s believed to be effective because: it
involves an immediate and interactive relationship between two or more persons. Here each
party is able to observe the others reactions, it also permits all kinds of relationships to spring up
ranging from a matter –of-fact selling relationship to a deep personal friendship and it makes the
buyer feel under some obligation for having listened to the sales person talk.

Direct marketing:
Direct marketing is a form of advertising that reaches its audience without using traditional
formal channels of advertising, such as TV, newspapers or radio. Businesses communicate
straight to the consumer with advertising techniques such as fliers, catalogue distribution,
promotional letters, and street advertising. A well-executed direct advertising campaign can offer
a positive return on investment as the message is not hidden with over complicated branding.
Instead, direct advertising is straight to the point; offers a product, service, or event; and explains
how to get the offered product, service, or event.

Commitment:
According to the psychological theories, commitment is the set of acts and cognitions that link a
person to his behavior. The organizational literature considers it as an affective attachment to an
organization values and purposes, or a relative intensity of the identification and the involvement
in a particular organization. The latter is characterized at least by three factors: a strong
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conviction and acceptance of the organization‟goals and values, a will to produce great efforts
for the benefit of the organization and lastly, a strong desire to remain member in it.

Brand trust :
Brand trust is defined as the willingness of the average consumer to rely on the ability of the
brand to perform its stated function, as the confident expectations of the brand‟s reliability and
intentions and as the confidence a consumer develops in the brand’s reliability and integrity
(Chatterjee and Chaudhuri, 2005).

Perceived value :
Perceived value is regarded as a strategic weapon in attracting and retaining customers and has
become one of the most significant factors in the success of both manufacturing businesses and
service providers.
The construct of perceived value has been identified as one of the most important ingredients for
gaining competitive edge and repurchase intentions.

Price:
It is postulated that buyers, generally, have a range of acceptable prices for considering
purchases. Thus, buyers may not purchase a product when price is perceived to be too high, nor
when price is perceived to be too low.
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
Peer influence:
Peer pressure is ‘a social instance of social influence, which typically produces conformity to a
specific way of acting or thinking.’ Under peer pressure, adolescents may emerge desires for
conformity, which has been associated with the needs for acceptance, approval and harmonious
relationships with others. Adolescents usually seek the feelings of “fitting in” and sense of
belonging in peer groups, as well as avoid negative emotions, such as feelings of isolation and
inadequacy by participating in behaviors with peers. Hence, it is logical that many brand name
marketers attempt to directly attract adolescent consumers or indirectly affect adolescent
consumption behaviors through peer pressure

Satisfaction:
It is viewed as an emotion or a consequence of both cognitive and affective process. Total or
cumulative satisfaction is an overall evaluation that is based on the purchase and the
consumption experience with a product or service through the time. Customer satisfaction that is
inherent to a specific transaction represents an immediate post-purchase evaluation. It can either
indicate the affective reaction toward the recent experience with the product or service.

Relationship:
Promotions are being used with increasing frequency by manufacturers facing highly
competitive markets, which are causing concern among some marketers who feel that frequent
promotions can hurt a brand. Allan Baldinger and Joel Rubiuson noted that if all brands in a
product market have high brand loyalty then, Price promotion will not be useful to any of the
brands. Nevertheless, there is little evidence to either confirm or dispel these fears.
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CHAPTER TWO
LITERATURE REVIEW
2.1: Introduction.
This chapter reviews the existing literature on the variables under study. I n this regard, it focuses
on the relationship between promotional activities and brand loyalty.
This chapter is as such divided into five sections. The first section (2.1) is an introduction to
chapter two, the second section (2.2) deals with promotional activities, the third section (2.3)
deals with brand loyalty, the fourth section (2.4) discuses the relationship between promotional
activities and brand loyalty and the fifth section (2.5) discuses the other factors that influence
brand loyalty.
2.2: Promotional activities:
2.2.1 Sales promotions:
Sales promotions is a set of paid marketing activity (other than advertising, and personal selling)
undertaken to stimulate buyer action. It includes such inducements as point of sale, displays, and
coupons. It assumes a much greater role with low priced mass products than specialty products
such as sports, watches etc. (James .f. Engel et al 1991).
Sales promotions therefore consist of short term incentives to encourage purchase or sale of a
product or service. Whereas advertising and personal selling offers reasons to buy a product or
service, sales promotions offers reasons to buy now.(P.Kotler and G. Armstrong 2001).
According to Phillip Kotler (2003), consumer promotional tools include; Samples:These are
offers of a free amount of a product or service delivered from door to door or sent in mail, picked
up in a store, attached to another product that featured in an advertising offer, Cash refund offers
(Rebates): These provide a price reduction after purchase rather than at the retail shops. Here
consumers send a specified proof of purchase to the manufacturer, who refunds part of the
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purchase price by mail, Coupons: These are certificates entitling the bearer to a stated saving on
the purchase of a specific product either mailed, enclosed in other products or attached to or
inserted in magazine and newspapers adverts, Price packs (Cents off deals):These are offers to
consumers of savings off the regular price of the product, flagged on the label or package .A
reduced price pack is a single package sold at a reduced price (such as two for the price of one),
a bonded pack is two related products bonded together (such as a tooth brush and
toothpaste),Premium (gift):This is merchandise offered at a relatively low cost or free as an
incentive to purchase a particular product. A pack premium accompanies the product inside the
package. A free in the mail premium is mailed to consumers who send in a proof of purchase
such as a box top is sold below its normal retail price to consumers who request it. Frequency
programs: These are programs providing rewards related to the consumers frequency and
intensity in purchasing the company products or services, Prizes (contests sweep stakes, games):
Prizes are offers of the chance to win cash, trips or merchandise as a result of purchasing
something. A contest calls for consumers to submit an entry to be examined by a panel of Judges
who will select the best entries. A sweep stake, asks consumers to submit their names in a
drawing. A game presents consumers with something every time they buy bingo numbers,
missing letter which might help them win a prizes, Patronage awards: These are values in cash or
in other forms that are proportional to patronage of a certain vendor or group of vendors, free
trials: These invite prospective purchases to try the product without a cost with the hope that they
will buy, Product warranties: These are explicit or implicit promises by sellers that the product
will perform as specified or that the seller will fix it or refund the customer’s money during a
specified period. Point ofpurchase (pop): These are displays and demonstrations that take place
at the point of purchase or sale, Price offs (off-invoice off list): Is a straight discount off the list
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price on each case purchased during a stated time period. Allowance: Is on amount offered in
return for the retailers agreeing to feature the manufacturer’s products in some way. An
advertising allowance compensates retailers for advertising the manufacturer’s products. A
display allowance compensates them for carrying a special product display, free goods: These
are offers of extra cases of merchandise to intermediaries who buy a certain quality who feature a
certain flavor or size, and lastly sales contests: These aims at inducing the sales force or dealers
to increase their sales results over a stated period with prizes (money, trips, gift or points) going
to those who succeed.
2.2.2 Advertising:
Is a form of communication intended to persuade an audience (viewers, readers of listeners) to
purchase or take some action upon products, ideas or services. It includes the name of the
product or service and how that product or service could benefit the consumer, to persuade a
target market to purchase or consume that particular brand. These messages are usually paid for
by sponsors and viewed via various Media Bhatia (2000).Advertising permits the seller to repeat
a message many times. It also allows a buyer to receive and compare the messages of various
competitors. Large scale advertising says something positive about the seller’s size, power and
success (Phillip kotler 2003).
The purpose of advertising is to get consumers to think about or react to the product or company
in a certain way (Phillip Kotler and Garry Armstrong 2001).
There are many forms of advertising and these include; Digital advertising: This is further
classified into the following sub categories i.e. Television advertising/Music in advertising: The
TV commercials is generally considered the most effective mass market advertising format as is
15
reflected by high price. TV network charge for commercial airtime during popular T.V events.
The majorities of television commercials feature a song or jingle that listeners soon relate to the
product. Virtual advertisements may be inserted into regular television programming through
computer graphic (Mscarthy, Micheal 2002) or used to replace local bill board that are not
relevant to remote broad cast audience (Keith Mcarther 2009).Others include: RadioAdvertising,
On line advertising, Product placements, Press advertising, Bill board advertising, Mobile
billboard advertising, In -store advertising, street advertising, Celebrity branding to mention but
a few
2.2.3 Publicity and public relations:
From the Wikipedia, the free encyclopedia, publicity is a deliberate attempt to manage the
public’s perceptions of a subject. According to Philip Kotler 2003, a public is any group that has
an actual of potential interest in or impact on a company’s ability to achieve its objective. Public
relations involve a variety of programs designed to promote or protect company image or its
individual’s products. He furthers notes that, clearly, creative public relations can affect public
awareness at a fraction of the cost of advertising. That the company does not pay for the space if
time obtained in the media. It only circulates the messages stories and manages on certain events.
Public relation and publicity can be managed via art exhibitions event sponsorship, arrange a
speech of talk, make an analysis or prediction conduct a poll or survey, issue a report, take a
stand on a controversial subject, arrange for a testimonial announce an appointment, invent then
present an award, stage a debate, organize a tour of your business or projects, issue a
commendation.
16
2.2.4 Direct marketing:
Direct marketing is a form of advertising that reaches its audience without using traditional
formal channels of advertising, such as TV, newspapers or radio. Businesses communicate
straight to the consumer with advertising techniques such as fliers, catalogue distribution,
promotional letters, and street advertising. Direct marketing is predominantly used by small to
medium-size enterprises with limited advertising budgets that do not have a well-recognized
brandmessage. A well-executed direct advertising campaign can offer a positive return on
investment as the message is not hidden with over complicated branding. Instead, direct
advertising is straight to the point; offers a product, service, or event; and explains how to get the
offered product, service, or event. Direct marketing can be conducted through the following
forms; Direct mail: Direct mail includes advertising circulars, catalogs, free trial CDs, preapproved credit card applications, and other unsolicited merchandising invitations delivered by
mail or to homes and businesses, or delivered to consumers' mailboxes by delivery services other
than the Post Office. Bulk mailings are a particularly popular method of promotion for
businesses operating in the financial services, home computer, and travel and tourism industries,
Telemarketing: This is another common form of direct marketing in which marketers contact
consumers on phone, Door-to-Door Leaflet Marketing: Here leaflet distribution services are used
extensively by the fast food industries, and much other business focusing on a local catchment.
Business to consumer business model, similar to direct mail marketing, this method is targeted
purely by area, and costs a fraction of the amount of a mail shot due to not having to purchase
stamps, envelopes or having to buy address lists and the names of home occupants, Voicemail
Marketing: This is another type of direct marketing which emerged out of the market prevalence
of personal voice mailboxes, and business voicemail systems. Due to the ubiquity of email
17
marketing, and the expense of direct mail and telemarketing, voicemail marketing presented a
cost effective means by which to reach people directly, Direct-response television marketing:
Direct marketing on TV (commonly referred to as DRTV) has two basic forms: long form
(usually half-hour or hour-long segments that explain a product in detail and are commonly
referred to as infomercials) and short form, which refers to typical 30-second or 60-second
commercials that ask viewers for an immediate response (typically to call a phone number on
screen or go to a Web site),Direct selling: This refers to selling products by face-to-face contact
with the customer, either by having salespeople approach potential customers in person, or
through indirect means such as Tupperware parties.
2.2.5: Personal selling:
Personal selling is the most effective tool at the later stages of the buying process particularly in
building up buyer preference, conviction and action. It’s believed to be effective because: it
involves an immediate and interactive relationship between two or more persons. Here each
party is able to observe the others reactions, it also permits all kinds of relationships to spring up
ranging from a matter –of-fact selling relationship to a deep personal friendship and it makes the
buyer feel under some obligation for having listened to the sales person talk.
2.3: Brand loyalty:
The History of loyalty marketing dates way back in 1929 when Betty Crocker issued coupons
that could be used to redeem for items like flatware. (Reichheld ,1996 ).Therefore the discipline
of customer loyalty marketing has been around for many years, but expansions from it merely
being a model for conducting business to becoming a vehicle for marketing and advertising have
made it Omni present in consumer marketing organizations since the mid to late 1990s (Fred
Reichheld,1996).
18
There are several definitions and measures of brand loyalty; some focus on the attitudinal
dimension and others focus on the behavioral aspect of brand loyalty (Gee et al., 2008; Oliver,
1997).In this approach, brand loyalty “is a deeply held commitment to rebuy or repatronize a
preferred brand consistently in the future, despite situational influences and marketing efforts
having the potential to cause switching behavior (Oliver, 1997).
In a related development, Brand loyalty in marketing consists of a consumer’s commitment to
repurchase or otherwise continue using the brand and can be demonstrated by repeated buying of
the product or service or other possible behavior such as word of mouth advocacy (Dick et al,
1994 ). Therefore Brand loyalty is an important consideration when estimating the value of a
brand as loyalty can translate into profit (Aaker, 1991).Besides, Brand loyalty is a barrier for new
competitors and forms the basis for a price premium (Aaker, 1996b). Brand loyalty also
encourages repeated purchase behavior from consumers, and discourages them froms witching to
competitor brands (Yoo, Donthu and Lee, 2000). Brand loyalty is as such a valuable asset for
every brand. Research has indicated that the cost of recruiting new customers is very high due to
advertising, personal selling, establishing new accounts, and customer training (Mittal and
Lassar, 1998). More importantly, profits generated increase significantly over time (Reichheld
and Sasser, 1990).
From the point of view of many marketers, loyalty to the brand in terms of consumer usage is a
key factor. Most important of all, in this contest , is usually the rate of usage to which the
par-to 80-20 rule applies. Philip Kotler also contends that heavy users are likely to be
disproportionately important to the brand. As a result, suppliers often segment their customers
into heavy, medium and light users.
19
Past research on segmentation has also proposed various approaches to classify consumers into
different segments. Typically, most of them rely on the assumption that there exist two groups of
consumers—loyal and non-loyal in the market (Jacoby and Chestnut 1978; Lattin 1987; Bawa
1990) or inertia land variety-seeking (Jeuland 1979; Givon 1984; Seetharaman and Chintagunta
1998).
Specifically, past research in this stream, assumes that consumers who have shown high loyalty
level in the past will repeat purchase the same brand (i.e., repurchase exclusivity; Banasiewicz
2005); as a result, the impact of past purchases on current purchase decision and loyalty is not
accounted for.
In practice, consumers ‘preferences are changing over time. For instance, Heilman, Bowman,
and Wright (2000) demonstrate that consumers’ preferences may either strengthen or weaken.
That when loyal consumers repeat purchase the same brand, their decision is driven by their
brand preference – as a result of the unique value of this brand (Ailawadi, Neslin, and Gedenk
2001).
In contrast, when switching to a different brand, they may be motivated by the attractiveness of
new brand’s promotional incentives (such as price-cut).
Analogously, non-loyal consumers may repeat purchase the same brand in response to the
aggressive economic incentives provided by that specific brand (Brown 1974; Schneider and
Currim 1990; Currim and Schneider 1991) or switch to another brand due to their desire for
variety (McAlister and Pessemier 1982; Givon 1984; Seetharaman and Chintagunta 1998). This
suggests that both loyal and non-loyal consumers may exhibit different levels of sensitivity to
various marketing variables – especially to prices – when making repeat purchases and switching
20
Brands. Recently, Yoon (2008) and Yoon and Kwak (2009) demonstrate that consumers are
morelikely to use the habit tactics when making repeat purchases.
2.4: Relationship between promotional activities and brand loyalty:
In the long term, brand loyalty is perceived to be the key to sustainable competitive advantage.
Just as people are more likely now than ever to change jobs, homes, even spouses brand
choice is also in question. (Aaker David .A 1996.).New products, more media communication
choices, wider variety of distribution channels and greater choice in financing lead to
difficulty in maintaining loyalty.
Shari Caldron attributes this decline in brand loyalty to rising consumer price sensitivity, a
decrease in advertising effectiveness, and an increase in new brands..
In an analysis of price – related promotions, across 13 different product categories, Andrew
S.C, Ehrenberg, Kathy Hammond and G.J Goodhardt found at that price promotion often
reward the
brand
existing
customers. That those consumers’ rarely responds to a price
promotion if the brand has not previously been tried. They assert that when these one offpurchase do occur, it is the result of a selective consumer reaction which is not likely to
result in additional brand loyal customers. According to them, at best there are temporary brand
switchers. Brand loyalty may seem strong, yet still be short lived leaving brands venerable.
Therefore, brand loyalty of moderate loyals who may or may not buy the brand on any given
occasion, can be enhanced through promotional programs.
Price promotion such as rebates , cash discounts, other promotional offer can serve as a
mechanism to say thank you making the promotion a reward rather than an enticement at
least for the long term conserve as a positive reinforcement for loyal purchasers of the brand.
21
They further explain that price promotion strategies have been linked directly to customer brand
loyalty and that another potential goal for sales promotion is to address the moderate loyal or
systems beaters who are not
yet loyal users of the brand but have the greatest potential for
becoming long term brand loyal consumers. Sales promotions therefore reinforce the brand
for this group and some people may even be convert into highly loyal product purchases.
In a related development, Huff et al ( 1999) , asserts that sales promotions comprises of a wide
variety of promotional tools designed to achieve short term objectives. For instance monetary
promotions, such as price discounts and coupons, are the most common form of sales promotions
used by organizations. However, non-monetary promotions, such as free gifts, free samples,
sweepstakes and contests, are gaining popularity given the negative effects of frequent discounts.
Recent studies to date have shown that non-monetary promotions may help to reinforce brand
equity (Palazo´n and Delgado, 2005; Montaner and Pina, 2008). Unlike monetary promotions,
with non-monetary promotions the incentive is not directly experienced through a lower
purchase price making it more difficult that these types of promotion influence consumers’
internal reference prices (Campbell and Diamond, 1990).
Consequently, when consumers are exposed to non-monetary promotions, it is less likely that
those promotions will negatively influence perceived quality and brand associations. Similarly,
non-monetary promotions can differentiate brand and help communicate distinctive brand
attributes, contributing to the improved brand equity (Papatla and Krishnamurthi, 1996; Mela et
al., 1998; Chu and Keh, 2006).
Of the non-monetary promotional tools, gifts or premiums are becoming increasingly important
in promotional strategies (Raghubir, 2005; Banerjee, 2009; Palazo´n and Delgado, 2009a).
22
A gift or premium is a product or service offered free, or at a relatively low price, in return for
the purchase of one or many products or services (d’Astous and Landreville, 2003).Surprisingly,
while gift promotions are widely used in marketing, academic research into this subject is limited
(D’Astous and Landreville, 2003; Bodur and Grohmann, 2005; Prendergast et al., 2008).
As such, manufacturers tend to make decisions about gift promotions on the basis of experience
and intuition (Hiam, 2000; d’Astous and Landreville, 2003).
Consequently, gift promotions do not always achieve their objectives, such as significantly
increasing sales (Gedenk et al., 2004). Gifts are used to influence attitudes and purchase
intentions of potential consumers, maintain or increase purchases by existing consumers, along
with other short term objectives (Bodur and Grohmann, 2005).
However, as the findings of previous studies suggest, the effects from a free gift offer may be
limited by different factors (Drake and Chung, 2005; Chang, 2009). For instance, Simonson et al.
(1994) found that sales promotions, such as premiums, can reduce purchase intentions when
consumers perceive the gift as providing little or no value.
d’Astous and Jacob’s (2002) study was one of the first to delve into the impact of several factors
on consumer reactions to gift promotions. Specifically, these authors studied the impact of three
categories of variables on gift promotions success: objective characteristics of the offer (whether
the value of the gift was mentioned), attitudinal variables (the interest in the product, interest in
the gift or the attitude toward the brand), and consumer characteristics (deal proneness or
compulsive buying tendencies). Extending this work, d’Astous and Landreville (2003) showed
that complex dynamics appear to underpin the relationships between the characteristics of gift
promotions (e.g. gift attractiveness, the fit with the product category, etc.) and consumer
reactions. Bodur and Grohmann (2005) found that a stronger relationship between the consumer
23
and the business and an implicit request for reciprocation positively affect consumer responses to
gifts. In another development, Chandon also contends that sales promotions can be used across
various product types. Two general categories of products have been studied in sales promotions
research: utilitarian and hedonic products. Utilitarian products are viewed as more functional and
instrumental. Consequently they are judged in terms of how well they function. On the other
hand, hedonic products are typically linked to more experiential consumption. Therefore, they
are judged in terms of how much pleasure they provide.
The benefit congruence framework proposed by Chandon et al. (2000) points that sales
promotions should be more effective if there is congruence between the benefits the promoted
product provides and the benefits the promotion generates. These authors showed that monetary
promotions provide stronger utilitarian benefits (i.e. monetary savings, product quality and
shopping convenience) while non-monetary promotions provide stronger hedonic benefits (i.e.
value expression, entertainment and exploration). Therefore, the use of monetary promotions
should be more successful forutilitarian products, whereas non-monetary promotions should be
more effective for hedonic products. According to these authors, non-monetary promotions can
also be useful with utilitarian products because they provide consumers with experiential benefits
that are not generate from the product itself. In this sense, gift promotions could offer consumers
experiences such as fun, amusement and diversion, and provide a symbolic meaning that
supplements the characteristics of the utilitarian products thereby encouraging them to make a
repeat purchase (Palazo´n and Delgado, 2005).
2.5: Other factors affecting brand loyalty:
Brand loyalty is perceived as multidimensional construct. It is determined by several distinct
psychological processes:
24
2.5.1: Peer influence:
Previous literature has indicated that the presence of peer pressure also facilitates the generation
of wider-ranging, synergistic alternatives (Peel and Dansereau, 1998). For example, wearing a
certain brand name of apparel or a pair of branded athlete shoes is an effective way of “fitting in”
in peers for adolescents (Forney & Forney, 1995). Elliott and Leonard’s (2004) study supported
this argument and contended that peer pressure fulfills a critical role in determining adolescent
attitudes and behaviors.
As literature demonstrated, peer pressure is a critical determinant in confirming adolescent
perceptions and consumption behaviors (Evans, 2004). That is, adolescents tend to learn about
their peers' product favorites and take them into account while evaluating products on their own
(Gunter and Furnham, 1998). Furthermore, adolescents are much more likely than adults to have
positive attitudes toward brand name products under peer pressure (Miller, 2002).
Pilgrim and Lawrence (2001) also asserted that peer pressure is probably the strongest influence
on adolescent brand choices, and this influence is even evident on such symbolic goods as
clothes and fashion items (Brittain, 1963).
2.5.2: Perceived value:
It has been long acknowledged that creating and delivering superior customers‟ perceived value
is regarded as a strategic weapon in attracting and retaining customers and has become one of the
most significant factors in the success of both manufacturing businesses and service providers
(Wang et al., 2004).
The construct of perceived value has been identified as one of the most important ingredients for
gaining competitive edge (Spiteri and Dion, 2004; Mizik and Jacobson, 2003; Baker,
25
Parasuraman, Grewal and Voss, 2002) and repurchase intentions (Parasuraman and Grewal,
2000). In general, perceived value is the result or benefits customers receive in relation to total
costs (Woodruff, 1997). Consistently, Sirdeshmukh et al. (2002) and Hellier et al. (2003) defined
value in the service context as the consumer’s perception of the benefits minus the costs of
maintaining an ongoing relationship with a service provider. Thus, customers are more likely to
stay in a relationship when they perceive the sum of benefits (e.g. satisfaction with core service
attributes, supplementary services and relationship benefits) exceeds the cost. Traditionally,
perceived value is most commonly conceptualized as a unidimensional measure (Gale, 1994).
However, research scholars argued that this unidimensional measure lacks validity (Woodruff
and Gardial. 1996) and fails to give specific direction on how to improve value with a view to
retain customers (Petrick, 2002).
Earlier empirical evidence indicated that perceived value on repurchase intention was completely
mediated via customer satisfaction (Patterson and Spreng, 1997). Based on equity theory (Oliver
and DeSarbo, 1988), customers are inclined to feel equitably treated if they perceive that the
ratio of their outcome to inputs is comparable to the ratio of outcome of inputs experience by the
company. As a consequence, they are more likely to develop affect and satisfaction with the
service (Bolton and Drew, 1991).
2.5.3: Brand trust
Brand trust is defined as the willingness of the average consumer to rely on the ability of the
brand to perform its stated function (Chaudhuri and Holbrook, 2002), as the confident
expectations of the brands reliability and intentions (Delgado, Munuera et al., 2003) and as the
confidence a consumer develops in the brands reliability and integrity (Chatterjee and
Chaudhuri, 2005). In consonance with previous studies, brand trust was further conceptualized to
26
feature two dimensions: brand reliability and brand intentions (Delgado-Ballester , 2004;
Delgado-Ballester and Munuera-Alemán , 2005). Brand reliability has a competence or technical
nature and is based on the consumer’s belief that the brand accomplishes its value promise. This
reflects a sense of predictability that the brand satisfies the individual’s needs in consistently
positive ways. Brand intentions are based on the consumer’s belief that the brand would hold the
consumer’s interest when unexpected problems with the consumption of the product arise.
Recent studies have suggested a positive association between loyalty and trust, defined as
containing elements such as honesty, competence, benevolence, reliability, and customer
orientation (Chow and Holden 1997; Doney and Cannon 1997; Morgan and Hunt 1994;
Moorman, Zaltman and Deshpande 1992). In general, trust is viewed as the determinant of
relationship commitment and future purchase intentions in the context of buyer-seller
relationships and business-to-business relationships (Morgan and Hunt 1994; Moorman et al.
1992; Crosby et al. 1990). In addition, trust has been found to be predictive of both purchase and
attitudinal loyalty in the consumer market context (Chaudhuri and Holbrook 2001). Consistently,
Urban, Sultan et al. (2000) proposed customer trust as an essential element in building strong
customer relationships and sustainable market share. Reichheld and Scheffer (2000) also inform
that “to gain the loyalty of customers, you must first gain their trust”. With regard to developing
brand loyalty, it has been suggested that brand trust is necessary to create brand loyalty, apart
from brand affect (Ringberg and Gupta, 2003; Urban and Sultan. 2000).
2.5.4 : Customer satisfaction.
Customer satisfaction is the expression of a judgment that a product or service has provided or is
providing a pleasurable level of consumption-related fulfillment (Oliver 1997). An extensive
literature has verified the role of satisfaction in determining post purchase attitudes and
27
intentions and has demonstrated that satisfied customers engage in repurchase behavior (e.g.,
Anderson and Sullivan 1993; Fornell et al. 1996). Moreover, several authors have shown that
satisfaction affects the customer attitude toward the brand or firm (e.g., Bloemer and Kasper
1995; LaBarbera and Mazursky 1983). Therefore, we expect to find positive effects of
satisfaction on attitudinal and behavioral loyalty.
2.5.5: Commitment:
According to the psychological theories, the commitment is the set of acts and cognitions that
link a person to his behavior (Crosby &Tylor 1983)
In the marketing context, Cunningham (1956) considers that commitment results from the
confrontation of the consumer to changes. In marketing services, commitment is viewed as a
consumer’s will to continue in a relationship with an operator (Morgan & Hunt 1994). It makes
possible to differentiate the loyal from the inert consumers. The commitment could be associated
to a brand, a brand retailing or a person (Terrasse 2003).
The commitment refers to an implicit or an explicit promise of relational continuity between the
exchanges‟ actors (Dwyer et al. 1987). It is the most advanced phase of interdependence
between the seller and the purchaser. The latter can reach a level of satisfaction that might
dissuade him to seek another partner providing a similar advantage (Dwyer et al. 1987). The
durability of the relationship can be guided by the habit or the constraints of the market.
Customer’s commitment corresponds to a strong desire to preserve the relationship with the
seller with agreeing to provide the efforts that might be essential (Morgan & Hunt 1994).
28
2.5.6: Price:
It is postulated that buyers, generally, have a range of acceptable prices for considering
purchases. Thus, buyers may not purchase a product when price is perceived to be too high, or
when price is perceived to be too low (Monroe, 1984).
Some evidence that endpoints of the evoked range of prices may impact price judgments. Biswas
and Blair (1991) in Janiszewski and Lichtenstein (1999) have shown that consumer purchase
intention are sensitive to their perception of the lowest and highest prices in the market place.
The consumer reactions are irrational in the sense that consumers are maximizing something
other than a utility function that depends only on their own material payoffs. Rather, they also
wish to harm (or at least not to help) firms that they see as having given them a bad deal.
Understandably, this leads firms to be careful not to induce these emotional reactions
(Rotemberg,2003).
. When considering buying a store-branded garment, price may be a key element in the decision
process. Baltas (1997) has shown that price is an informational cue that increases consumer
sensitivity to private brands.
29
CHAPTER THREE
METHODOLOGY
3.1: Introduction:
This chapter defines the methodological aspects which the researcher used to collect, analyze and
interpret data. This chapter includes the research design and strategy, the survey population,
sample size, sampling methods and techniques, data collection sources and methods and tools,
data processing and analysis and the associated problems and their solutions.
3.2: Research designs and strategy
A correlation research design was used. This was because the researcher wanted to establish the
degree and direction of the relationship between promotion activities and brand loyalty. This
study specifically focused on a casual form of correlation research.
3.3 Survey population:
The survey population comprised of a total of 50 respondents randomly selected from the
commercial team from Century bottling company ltd, located 28km from Kampala city on plot
964, block 111 kyagwe road Namanve industrial area and consumers mainly the young adults in
and around Kampala district.
3.4 Sample size:
The research comprised of 44 respondents. That’s to say: Five Top officials from Century
bottling company ltd. This was because they design, implement, and evaluate the performance of
promotions, five middle- line- managers from Century bottling company ltd. This was because
they frequently interface with the consumers and are often involved in decision making, nine
30
randomly selected sales representatives. This was because they are always in close contact with
the consumers and are also directly involved in customer service delivery and twenty five
randomly selected consumers especially the young adults in and around Kampala. This was
because they are the people who consume these soft drinks and have got the desire to explore
based on logic.
Table 1: Illustration of the sample size
Area of Selection
Description of
Number of
respondents
respondents
Century bottling company commercial team
Top officials
5
Century bottling company commercial team
Middle line mangers
5
Century bottling company commercial team
Sales representatives
9
Kampala District
Consumers
25
Totals
44
Source: primary data
3.5: Sampling methods and techniques:
Purposive, simple random and stratified random sampling research designs were used basically
to ensure that the sample is a true representative of the survey population.
3.5.1 Purposive sampling technique:
This is a sampling technique where the elements in the sample are selected from the population
because they conform to a certain characteristic that the researcher is looking for. This is based
on the researcher’s judgment in as far as the purpose for which the information is sought. The
researcher used purposive research design because it’s a more representative sampling technique
31
of typical conditions in the survey. The researcher employed purposive sampling technique when
selecting the participants from a variety of participants.
3.5.2 Stratified random sampling:
This is a sampling method where the population is classified into homogenous groups called
strata. The researcher used stratified random sampling when identifying and defining a sample of
study from which the participants were selected .The researcher therefore identified and defined
the population ,determined the sample size of the participants, identified the participants for
which the researcher guaranteed appropriate representation, classified them as members
belonging to any of the identified stratum, used a table of random numbers to randomly select an
appropriate number of participants from each of the stratum and a total from these strata was
assembled to form a sample of study. The researcher used stratified random sampling because: it
improves on the generalizability of the different categories of the respondents.
The respondents were then categorized into homogenous groups comprising of; Top commercial
team, Middle line managers and Sales representatives from century bottling company and the
Consumers especially the young adults in and around Kampala.
3.5.3 Simple random sampling:
This is a sampling technique where each member of the population has a known and an equal
chance of being selected. The researcher used simple random sampling technique when choosing
the representatives to participate in the survey. The researcher therefore identified and defined a
sample of study obtained purposively and classified into a strata, determined the number of
participants in each and every stratum, made a list of all the participants in each and every
stratum, assigned consecutive numbers ranging from zero onwards to the last participants in each
32
and every stratum and then selected an arbitrary number in the table of the random numbers from
each and every stratum.
3.6: Data collection sources:
The researcher visited Century bottling company ltd and used both primary and secondary
sources of data.
3.6.1 Primary sources of data:
These refer to sources of data where raw facts are collected for the first time. There as such
original in nature. The researcher used primary sources of data because they are accurate.
3.6.2 Secondary sources of data:
These refer to sources of data that has been prepared and developed for some other purpose but
not to solve the problem at hand. Such sources can either be internal or external to the
organization under study. In this source of data the researcher looked at various documents such
as sales reports, marketing research sources, and also looked at the literature from published
books, journals, company internal reports, in house magazines, information on consumer
research and the internet. The researcher used secondary research sources of data because they
are cheap, time saving, always available and dependable.
3.7: Data collection methods and tools:
Both qualitative and quantitative data collection methods were used to collect and gather data
through the questionnaires.
33
3.7.1 Quantitative research methods:
These are research methods that are used to gather data which are numerical in nature and form
such as age, length and years.
3.7.2. Qualitative research methods:
These are data research methods that are used to gather data that is descriptive in nature and
form. They are often used to collect abstract variables where opinions, feelings, perceptions and
attitudes are studied. Data collection instruments such as the structured questionnaires were
employed.
3.7.3 Questionnaire:
Is a set of formalized questions used in a survey to collect information which is later analyzed to
provide results necessary for solving a given research problem. Like any good test,
questionnaires ask for information that respondents have.
The researcher used the questionnaire as a data collection instrument because it’s cheap, time
saving, easy to administer, effective and it’s the best form of obtaining information from the top
executives. In this instrument, the researcher used both closed and open questions.
3.8: Investigative procedure:
The researcher presented a letter of introduction from Makerere university-Kampala. This was
intended to introduce the researcher to the concerned authorities at the area of study basically to
seek for permission to conduct the survey and reduce on the non-response rate.
34
3.9: Data processing and analysis:
Data was electronically captured and coded. To obtain descriptive and inferential statistics, a
regression analysis was employed basically to establish the relationship between promotional
activities and brand loyalty. Pearson’s correlation coefficiency was used to determine the degree
and the direction of the relationship between promotional activities and brand loyalty.
3.10: Challenges encountered.
While conducting research, the researcher faced the following challenges as;

High costs in terms of transport, purchasing stationary, typing and photocopying. This was
solved by working within the budget sparingly.

Uncooperative respondents to help in providing the necessary information. This was solved
by availing them with a letter of introduction from Makerere University and also assured
them that the information provided was confidential.

Time constraint in data collection, capturing, coding, editing analyzing and the final
presentation of the report. This was solved by ensuring that the time element was put into
consideration and honoring each and every appointment as agreed upon with the
respondents in the survey population.
35
CHAPTER FOUR
PRESENTATION, ANALYSIS AND DISCUSSION OF RESEARCH FINDINGS.
4.1 Introduction
This chapter deals with the presentation and interpretation of the findings of the study which
were done in relation to the reviewed literature and in regard to specific objectives of the study
outlined below:

To find out the extent to which Century bottling company conducts promotional
activities.

To establish how Century bottling company manages loyalty programs.

To determine the relationship between promotional activities and brand loyalty.
The findings are presented with the help of tables for purposes of easier understanding, clarity
and interpretation.
4.2 Background information
Findings on background characteristics of respondents were considered in order to establish the
bio data of the respondents and findings were as in the tables below;
4.2.1 Gender of the respondents
Respondents were asked to state their gender and the following data was obtained;
36
Table 2: Gender of respondents
Gender
Frequency
Percent
Valid Percent
Cumulative percent
Male
28
63.6
64
64
Female
16
36.4
36
100
Total
44
100.
100
Source: primary data
From table 2 above, majority of the respondents at 64 percent were males and 36 percent were
females. This finding indicates that the researcher took gender balance into consideration though
there was a difference of 28 percent. This implies that the purchase decisions are generally
dominated by Males.
4.2.2 Age bracket of the respondents.
Respondents were asked to indicate their age bracket and below were the findings;
Table 3: Age bracket of respondents.
Age bracket
Frequency
Percent
Valid percent
Cumulative percent
16-20 years
2
4.5
5
5
21-25 years
22
50.0
50
55
26-30 years
11
25.0
25
80
31-35 years
4
9.1
9
89
36-above years
5
11.4
11
100
Total
44
100.0
100
37
Source: primary data
From table 3 above, it is clearly seen that the majority of respondents, 55% were aged between
21- 25 years. Followed by those in the age group ranging from 26-30 years at 25%, then 36+
years at 11%, then 31-35 years at 9%, and lastly those below the age of 20 years at 5%. This
finding implied that the young adults in the age bracket ranging from 21-25 years are the ones
who are impressed by promotions and thus are attracted and taken up by the promotional
activities. This explains why most promotions by century bottling company are geared towards
the youth. This is also the age at which people are yearning for adventure.
4.2.3 Level of education of the respondents.
Respondents were asked to identify their educational levels and below are the responses. The
educational level of the respondents was considered in the study so as to establish the skills and
knowledge of the respondents in relation to answering the questionnaires. The table below
presents the findings;
Table 4: Level of education of respondents.
Education level
Frequency
Percent
Valid percent
Cumulative percent
secondary level
2
4.5
5
5
tertiary level
7
15.9
16
21
University
35
79.5
79
100
Total
44
100.0
100
Source: primary data.
According to table 4 above, it is seen that 79 percent of the respondents were educated up to the
level of university, followed by those from tertiary level at 16 percent and lastly from the
38
secondary level at 5 percent. This means that the researcher considered the level of education
when selecting respondents to participate in the survey. This was a key factor given the fact that
the survey was to be administered through the questionnaires besides obtaining quality data. This
finding was a representative of the sample size from which 43 percent were employees of
century bottling company and 56 percent were the consumers selected from within and around
Kampala District. In relation to the study, this finding indicated that respondents were
knowledgeable and therefore had the capacity to provide reliable and meaningful information.
4.2.4 Marital status of the respondents.
The respondents were asked to state their marital status and below are the responses;
Table 5: marital status.
Marital status
Frequency
Percent
Valid percent
Cumulative percent
Single
27
61.4
61
61
Married
17
38.6
39
100
Widowed
0
0
0
100
Divorced
0
0
0
100
Totals
44
100
100
Source: primary data
Table 5 above clearly indicates that majority of the consumers of the coca-cola brand at 61
percent are single, followed by the married at 39 percent, the widows and divorced contributing
zero percent each. This implies that single people are most attracted to the promotional activities
and are thus loyal to the brand coca-cola. Therefore management should design promotional
39
activities geared towards attracting many singles since such a category’s consumption decisions
are greatly influenced by promotional activities.
4.2.5: Income of the respondents per month.
The respondents were asked to state their levels of income and below were the responses;
Table 6: Income of the respondents.
Level of incomes
Frequency
Percent
Valid percent
Cumulative percent
0-140000
0
0%
0%
0%
150000-350000
4
9.09%
9%
9%
360000-560000
23
52.27%
52%
61%
570000-770000
10
22.7%
23%
84%
780000 +
7
15.9%
16%
100
Totals
44
100%
100
Source: primary data
Table 6 above clearly indicates that majority of the consumers of the Coca-Cola brand at 52
percent have monthly earnings ranging between 360000 shillings and 560000 shillings, followed
by those earning between 570000 and 770000 at 23 percent, then those earning between from
780000 and above at 16 percent, then those earning between 150000 and 350000 at 9 percent and
lastly those earning between zero and 140000 shillings at zero percent. This implies that the
research study focused on the target population who have the need, will and authority to make a
purchase.
40
4.3: Century bottling company and promotional activities.
Respondents were asked to state the extent to which century bottling company conducts
promotional activities. The findings were as in the tables below;
4.3.1: Use of coupons:
Respondents were asked to state the extent to which century bottling company uses coupons as
sales promotion activity and the responses were as in the table below;
Table 7: Use of coupons.
Response
Frequency
Percent
Valid percent
Cumulative percent
Greater extent
3
6.81
7
7
Average
7
15.9
16
23
Lesser extent
34
77.27
77
100
Total
44
100
100
Source: primary data
From table 7 above, the study shows that century bottling company uses coupons as a sales
promotion activity to a lesser extent .This is indicated by a majority response rate of 77 percent,
while 16 percent registered a moderate use and only 7 percent reported a greater use of coupons
as a sales promotion activity. It was therefore concluded that century bottling company does not
use coupons in its promotion techniques.
4.3.2: Use of Rebates.
Respondents were asked to state the extent to which century bottling company uses Rebates in
sales promotion and below were the responses;
41
Table 8: Use of Rebates.
Response
Frequency
Percent
Valid percent
Cumulative percent
Greater extent
26
59.09
59
59
Average
15
34.09
34
93
Lesser extent
3
6.81
7
100
Total
44
100
100
Source: primary data
From table 8 above, the study shows that century bottling company uses Rebates as a sales
promotion activity to a greater extent .This is indicated by a majority response rate of 59 percent,
while 34 percent registered a moderate use and only 7 percent reported a lesser use of coupons as
a sales promotion activity. It was therefore concluded that century bottling company uses
Rebates in its promotion techniques to drive loyalty.
4.3.3: Use of free product trails.
Respondents were asked to state the extent to which century bottling company uses free product
trails as sales promotion activity and the responses were as in the table below;
Table 9: Free product trails.
Response
Frequency
Percent
Valid percent
Cumulative percent
Greater extent
36
81.81
82
82
Average
8
18.18
18
100
Lesser extent
0
0
0
0
Total
44
100
100
42
Source: primary data
From table 9 above, the study shows that century bottling company uses free product trails as a
sales promotion activity to a greater extent .This is revealed by a majority response rate of 82
percent, while 18 percent registered a moderate use. It was therefore concluded that Century
bottling company to a greater extent uses free product trails in its promotion techniques.
Management should therefore design a promotion program with the intention of giving free
product trails to consumers and customers most especially on slow moving brands. These
activities should be carried out preferably from a Manual distribution center level on a quarterly
basis. Preference should be given to manual distribution level because at this level product trails
can reach each and every corner of the intended market segment. This will attract many
consumers to taste and may in the long run remain loyal to the promoted brand.
4.3.4: Use of sales contests.
Respondents were asked to state the extent to which century bottling company uses sales contest
as promotion activity and the responses were as in the table below;
Table 10: Use of sales contests.
Response
Frequency
Percent
Valid percent
Cumulative percent
Greater extent
3
6.81
7
7
Average
14
31.81
32
39
Lesser extent
27
61.36
61
100
Total
44
100
100
Source: primary data
43
From table 10 above, the study shows that century bottling company uses sales contests as a
personal sales activity to a lesser extent .This is revealed by a majority response rate of 61
percent, while 32 percent registered a moderate use and 7 percent recorded a greater use of sales
contents. This means that Century bottling company uses sales contests to a lesser extent.
Management should take note that Human resource is part and parcel of the finished product; in
fact it’s the heart of the organization and is as such the most valued asset of any business
organization since they act as a mirror in the face of the customer. No amount of clever work or
modern technology and application of theories or principles can achieve anything unless people
decide willingly to work. In this regard,management should come up with performance
recognition and rewarding scheme either on a monthly or quarterly basis in order to ensure that
its sales force is motivated enough to think for the organization they work for instead of acting.
4.3.5: Use of flayers’.
Respondents were asked to state the extent to which century bottling company uses flyers as
publicity activity and the responses were as in the table below;
Table 11: Use of flayers.
Response
Frequency
Percent
Valid percent
Cumulative percent
Greater extent
26
59.09
59
59
Average
12
27.27
27
86
Lesser extent
6
13.63
14
100
Total
44
100
100
Source: primary data
44
From table 11 above, the study shows that century bottling company to greater extent uses
flayers as a publicity activity. This is revealed by a majority response rate of 59 percent, while 27
percent registered a moderate use and 14 percent reported that Century bottling company uses
flayers to a lesser extent. This shows that Century bottling company uses flayers to greater
extent. Management should therefore continue to use flayers as a means of reaching out to its
customers since it’s cheap and can be consulted in case of misunderstanding for clarification
unlike Television and radio advertising.
4.3.6: Use of Street advertising:
Respondents were asked to state the extent to which century bottling company uses street
advertising as a promotion activity and the responses were as in the table below;
Table 12: Street advertising.
Response
Frequency
Percent
Valid percent
Cumulative percent
Greater extent
41
93.18
93
93
Average
3
6.81
7
100
Lesser extent
0
0
0
100
Total
44
100
100
Source: primary data
From table 12 above, the study indicated that Century bottling company to greater extent uses
street advertising. This is revealed by a majority response rate of 93 percent, while 7 percent
registered a moderate use. This means that Century bottling company uses street advertising to
greater extent in its publicity campaigns. Management at Century bottling company should
therefore work towards continuous improvement of street advertising in urban markets and also
45
extend the same efforts in rural markets so as to create awareness of its products for market share
reasons.
4.3.7: Use of event sponsorship:
Respondents were asked to state the extent to which Century bottling company uses event
sponsorship as a promotion activity and the responses were as in the table below;
Table 13: Event sponsorship.
Response
Frequency
Percent
Valid percent
Cumulative percent
Greater extent
12
27.27
27
27
Average
25
56.8
57
84
Lesser extent
7
15.9
16
100
Total
44
100
100
Source: primary data
From table 13 above, respondents showed use of event sponsorship on average at majority score
of 57 percent, followed by those who said that Century bottling company uses event
sponsorships to a greater extent at 27 percent and lastly by those who said that Century bottling
company uses event sponsorship as a promotional activity to a lesser extent at 16 percent. This
implies that Century bottling company on average uses event sponsorship in its promotional
campaigns. Amidist the financial constraints facing global businesses, management at Century
bottling company should allow a flexible budget and strategically invest in community based
programs which directly supports its business strategy. This, if well implemented will
46
significantly give the brand the necessary competitive impetus it so requires toenhance
competitive advantage and consolidate it’s hard earned reputation.
4.3.8: Use of Television advertising:
Respondents were asked to state the extent to which century bottling company uses T.V
advertising and the responses were as in the table below;
Table 14: Television advertising.
Response
Frequency
Percent
Valid percent
Cumulative percent
Greater extent
8
18.18
18
18
Average
28
63.63
64
82
Lesser extent
8
18.18
18
100
Total
44
100
100
Source: primary data
From table 14 above, the majority of the respondents showed use of T.V advertising on average
with majority score of 64 percent, followed by those who said that century bottling company
uses T.V advertising to a greater extent and to a lesser extent at 18 percent respectively. This
implies that Century bottling company on average uses TV. Advertising in its promotional
campaigns. Advertising is good especially when it comes to creating awareness. Management
should however note that these television slots are too expensive and a choice to whether or not
to invest intelevision advertising must be critically analyzed because the greater percentage of
the audience watching these television adverts, including the sales force its self ,do not
47
understand them besides getting the time to watch television. Therefore management should only
invest in advertising if it’s contented that the message communicated will enhance brand
awareness and stimulate curiosity. The messages should be eye catching enough to attract the
viewer and entice them to long for more commercial airtime.
4.3.9: Use of radio advertising
Respondents were asked to state the extent to which Century bottling company uses Radio
advertising and the responses were as in the table below;
Table 15: Radio advertising.
Response
Frequency
Percent
Valid percent
Cumulative percent
Greater extent
16
36.36
36
36
Average
21
47.72
48
84
Lesser extent
7
15.9
16
100
Total
44
100
100
Source: primary data
From table 15 above majority of the respondents at 48 percent showed use of radio advertising
on average, followed by those who said that Century bottling company uses radio advertising to
a greater extent at 36 percent and lastly those who said century bottling company uses Radio
advertising to a lesser extent at 16 percent. This implies that Century bottling company on
average uses radio advertising in its promotional campaigns. Century bottling company should
therefore increase on its radio campaigns so as to connect its brands with the consumer. Radio is
a widely used media whether in urban or rural setting and can as such be used to associate the
48
brand with the consumer since its cheaper compared to T.V adertising.The only evil around it, is
that so often organizations formulate fancy ideas and push the media to hastily develop the
already done communications and at the end, they fail to deliver on their promise. In order to
avert this risk, management at Century bottling company should from the word go involve its
advertising agency, distributors, sales force and the media because they know the market and
will guide the communication to cater for various audiences.
4.4: Management of loyalty programs.
Objective number two of the study was to establish how century bottling company manages
loyalty programs the findings were as below;
4.4.1 Loyalty programs and consumer rewards.
Respondents were asked to state whether century bottling company has devised loyalty programs
that reward consumers. This section intended to establish whether century bottling company had
loyalty programs that reward customer. The responses were as in the table below;
Table 16: Loyalty programs and consumer rewards.
Responses
Frequency
Percent
Valid percent
Cumulative percent
Strongly agree
20
45.45
45
45
Agree
10
22.7
23
68
not sure
12
27.27
27
95
Disagree
2
4.5
5
100
Total
44
100.0
100
Source: primary data
49
Table 16 above , clearly shows that majority of respondents at 45 percent strongly agreed that
Century bottling company has devised loyalty programs that directly rewards customers,
followed by those who were not sure at 27 percent, then followed by those who agreed with the
preposition at 23 percent and lastly those who disagreed with the preposition at 5 percent. This
implies that much as Century bottling company has devised loyalty programs, consumers’ are
not informedbesides, they are sophisticated and concentrated in urban settings. This could be a
waste of funds. Management at Century bottling company should therefore design ways to
sensitize the consumers about the loyalty rewards in place so that at least every consumer can
participate. Management as such needs to design better communication systems and try as much
as possible to involve its sales force in passing on the communication even as low as retail outlet
level. This will help in boasting sales and therefore the financial goal of the organization.
4.4.2 Management of loyalty programs.
Here respondents were asked to state if Century bottling company has devised mechanisms to
manage loyalty programs and the responses were as in the table below;
Table 17: Management of loyalty programs.
Responses
Frequency
Percent
Valid percent
Cumulative percent
Yes
24
54.5
55
55
not sure
19
43.2
43
98
No
1
2.3
2
100
Total
44
100.0
100
Source: primary data
50
Table 17 above, clearly indicates that majority of the respondents 55 percent agreed that Century
bottling company has put in place mechanism to manage loyalty programs, this was followed by
those who were not sure at 43 percent and lastly those who disagreed that Century bottling
company has devised mechanisms to manage loyalty programs. When asked to mention the
mechanisms in place, the following were listed: Third party distribution program, free
refrigeration to its customers, corporate nights, exclusive programs, credit programs to key
accounts and sponsorship of football in secondary schools.
This means that Century bottling
company has set up mechanisms to manage its loyalty programs. However, there is need
innovation and also more flexible controls need to be designed for purposes of simplicity and
effective management of these loyalty programs without compromising on the internal controls
and procedures.
4.5: Relationship between promotional activities and brand loyalty.
4.5.1: Proportion of Coca-Cola consumption.
Respondents were asked to state whether they consume Coca-Cola or not and the responses were
as in the table below;
Table 18: Proportion of Coca-Cola consumption.
Responses
Frequency
Percent
Valid percent
Cumulative percent
Yes
39
88.6
89
89
No
5
11.4
11
100
Total
44
100.0
100
Source: primary data.
51
From table 18 above, 89 percent of the respondents consume Coca-Cola brand. This implies that
majority of respondents were loyal to Coca-Cola as a brand of Century bottling company. This
finding is in agreement with (Dick et al 1994) who asserted that brand loyalty consist of a
customer’s commitment to repurchase or otherwise continue using the brand and can be
demonstrated by repeated buying of the product or service. Management at Century bottling
company should therefore devise specific brand promotional activities tocontinuously remind
and give support to its core brands. It can also look at expanding on the brand portfolios’ through
introducing new different flavors like it’s the case with fanta.In fact what is happening is that
consumers for the coca-cola brand are simply switching to the frequent new fantaflovours.Some
change permanently and stay loyal to fanta thereby affecting the coca-cola market share.
4.5.2: Preference rate for the coca-cola brand.
Here Respondents were asked to rate their preference for the coca-cola brand and the findings
were as illustrated in the table below;
Table 19: Preference rate for the coca-cola brand.
Response
Frequency
Percent
Valid percent
Cumulative percent
High
32
72.7
73
73
Medium
7
15.9
16
89
Low
5
11.4
11
100
Total
44
100.0
100
Source: primary data
52
From table 19,above, most respondents at 73 percent had high preference for coca-cola brand,
while 16 percent had a moderate preference and lastly 11 percent had a low preference for the
brand coca-cola. This concurs with Philip Kotler who contends that suppliers segment their
customers into heavy, medium and light users. In practice consumers preferences are changing
over time. For instance Heilman, Bowman and Wright (2000) demonstrate that consumers’
preferences may either strengthen or weaken. That when loyal consumers repeat purchase the
same brand, their decision is driven by their brand preference as a result of this unique value of
the brand( Ailawadi, Neslin and Gedenk 2001).This findings also measures the level of trust
respondents have on coca-cola brand. This conforms to Reichheld and Scheffer 2000,who argues
out that to gain the loyalty of customers, you must first gain their trust with regard to developing
brand loyalty and so is Ring berg and Gupta 2003,who suggested that brand trust is necessary to
create brand loyalty apart from brand affect. There is therefore a need to revise promotion
strategy so as to convert the 27 percent into loyal consumers. Promotions should be designed in
such a way that drives a strong conviction so as to encourage acceptance for brand coca-cola.
4.5.3: Choice on consumption of Coca-Cola.
Respondents were asked to state why they consume Coca-Cola and the responses were as in the
table below;
53
Table 20: Consumption of Coca-Cola.
Responses
Frequency
Percent
Valid percent
Cumulative percent
Taste
24
54.54
54
54
Satisfying
13
29.5
30
84
others
7
15.9
16
100
Total
44
100.0
100
Source: primary data
From table 20 above, 54 percent of the respondents consume Coca-Cola brand due to the taste,
followed by those who consume Coca-Cola because it satisfies their desires at 30 percent and
lastly by those who stated other reasons like price,availability,image convenience and other
reasons at 16 percent. This implies that creating and delivering superior consumer perceived
value is a strategic weapon in attracting and retaining consumers. Management at Century
bottling company shouldnote that future business environment requires mass production but
tailor made to consumer specifications and tastes focusing on size, packaging and delivering
consumer needs, when they need it. Therefore Century bottling company through its quality
assurance competency must continuously review the quality of its core brands specifically Cocacola as this will help the company to deliver a brand that can fulfill the needs and wants of the
consumers besides creation of a continuous demand.
54
4.5.4: Promotions and consumption behavior.
Respondents were asked to state whether promotional activities influence their decision to
consume Coca-Cola and the responses were as in the table below;
Table 21: Promotions and consumption behavior.
Responses
Frequency
Percent
Valid percent
Cumulative percent
Yes
37
84.1
84
84
No
7
15.9
16
100
Total
44
100.0
100
Source: primary data
Table 21 ,above, clearly shows that 84 percent of the respondents acknowledged the fact that
their loyalty to brand Coca-Cola was driven by promotional activities while 16 percent of the
respondents said that their loyalty to brand Coca-Cola was as a result of other factors other than
promotional activities.
Therefore it was concluded that the different promotional activities by Century bottling
company helped to build Coca-Cola brand loyalty. This is in agreement with Andrew S.C.,
Ehrenberg et al who asserted that there exists temporal brand switchers and that in such
situations, brand loyalty may seem strong yet still be short lived leaving brands vulnerable. And
that brand loyalty of moderate loyals who may or may not buy a brand on any given occasion
can be enhanced through promotional activities. These promotional activities shouldfocus
onperiodical free product sampling, basically to re-energize product repeat purchases.
55
4.5.5: Promotions and consumption decision:
Here respondents were asked to state the promotion that influenced their decision to consume
Coca-Cola and the responses were illustrated as in the table below;
Table 22: Promotions and consumption.
Promotion activities
Frequency
Percent
Valid percent
Cumulative percent
Bongana coke
22
50.0
50
50
Win school fees
16
36.36
36
86
Brr on the coke side of life 4
9.09
9
95
Bongana billions
2
4.5
5
100
Total
44
100.0
100
Source: primary data
From table 22 above, 50 percent of the respondents pointed out that bongana coke influenced
their decision to consume coca-cola, this was followed by win school fees at 36 percent, then Brr
on the coke side of coke and lastly bongana billions at 5 percent. Given the finding on the age
bracket, most respondents could have consumed coca-cola with the hope of winning school fees
which was offered. Sales promotion comprises of a wide range of promotional tools designed to
achieve short term objectives, for instance monetary promotions are the most common form of
sales promotion used by organizations (Huff et at 1999), therefore such monetary and non
monetary offer of school fees could have played a major role in luring respondents to consume
Coca-Cola. Therefore management at Century bottling company should design a fresh annual
monetary and non monetary country wide promotion program that instantly rewards consumers
especially in periods were the consumption of soft drinks ranks low or holds no ranking on the
56
budget pie.Management should also carefully think about promotional activities in terms of their
execution, mechanism and how to associate the consumer with the promotional activity taking
into consideration the target market.
4.5.6: Themes and consumption behaviors.
Respondents were asked to state the theme that aroused their interests to consume Coca-Cola and
the responses were illustrated in the table below;
Table 23: Themes and consumption behaviors.
Theme
Frequency Percent
Valid percent
Cumulative percent
Enjoy coca-cola
23
52.3
52
52
Llife tastes good
14
31.8
32
84
Coca-cola music wave
1
2.3
2
86
Open happiness with coke
6
13.6
14
100
Total
44
100.0
100
Source: primary data
From table 23 above, majority respondents 52 percent mentioned Enjoy Coca-Cola as the major
theme that aroused them. While those who mentioned life tastes good were at 32 percent, then
those who mentioned open happiness with coke were at 14 percent and lastly those who
mentioned Coca-Cola music wave were at 2 percent. This means that the design of a promotional
theme can greatly affect brand loyalty. This is because today’s consumers are becoming harder
to please, they are smarter, more price conscious, more demanding, less forgiving and are usually
approached by many competitors with equal or even better offers.Therefore in order to win them,
57
Management at Century bottling company should design well and convincing promotional
themes and must note that advertising communicates not only attributes and the functional
benefits but also provides emotional and self-expressive benefits that have got a personality and
provides a platform for differentiation.
4.5.7: Themes and level of consumption interests.
Here Respondents were asked to state the extent to which promotional themes aroused their
consumption interests and the responses were as in the table below;
Table 24: Themes and consumption interests.
Response
Frequency
Percent
Valid percent
Cumulative percent
Greater extent
30
68.2
68
68
Average
11
25.0
25
93
Lesser extent
3
6.8
7
100
Total
44
100.0
100
Source: primary data
From table 24 above, the promotional themes, to a greater extent aroused the majority of the
respondents at 68 percent, while 25 percent were moderately influenced by the promotional
themes and only 7 percent of the respondents reported that their interest were to a lesser extent
affected by the promotional themes. This implies that promotional themes play a big role in
positively arousing consumer interests and intentions to consume a brand. In this regard,
management at Century bottling company should carefully think through the message content,
58
structure and format such that the theme formulated can predict brand performance in the
consumer’s mind and therefore elicit effective responses from the consumer.
4.4.8: Promotions and brand switching.
Respondents were asked to give reasons as to why they would not change to a particular
substitute as they were being promoted and the responses were as in the table below;
Table 25: Promotions and brand switching.
Reasons
Frequency Percent
Valid percent
Cumulative percent
Used to the brand
5
11.4
11
11
Prefers the brand
26
59.1
59
70
No new brand can meet the desire 13
29.6
30
100
Total
100
100
44
Source: primary data
In table 25 above, most respondents at 59 percent said that they prefer the brand, followed by
those who said that there are no new brands that can satisfy their desire and lastly those who said
they are used to the brand at 11 percent. This is in agreement with past research in this stream
which assumes that consumers who have shown high prefernce levels in the past will repeat
purchase the same brand (Banaseiwiez 2005).This is also in total agreement with Yoo,Donthu
and lee 2000,who argue that brand loyalty encourages repeated purchase behavior from
consumers and discourages them from switching to competitor brands. Brand loyalty is such a
valuable asset for every brand and therefore management at Century bottling company should
59
design promotional activities that reward consumers so as to remind them about their preferred
brands.
4.5.9: Promotional activities and brand loyalty:
Respondents were asked whether promotional activities influence brand loyalty and the
responses were illustrated as shown in the table below;
Table 26: Promotional activities and brand loyalty:
Promotional
Pearson
activities
Correlation
Sig.
PROMOTIONAL ACTIVITIES
BRAND LOYALTY
1
.964(**)
.
.000
44
44
.964(**)
1
.000
.
44
44
(2-
tailed)
N
Brand loyalty
Pearson
Correlation
Sig.
(2-
tailed)
N
** Correlation is significant at the 0.01 level (2-tailed).
The Pearson correlation coefficient above reveals that there is a strong positive relationship
between promotional activities and brand loyalty. This is represented by Pearson correlation
coefficient of r=0.964** tested at 0.01 level of significance. Also the correlation shows a gap of
60
0.036 that need to be closed by the management of Century bottling company. This means that
promotional activities affect brand loyalty by 96.4% and 3.6% by other factors. Given the fact
that the correlation is significant, it was concluded that promotional activities affect brand
loyalty. The positive sign of this correlation implied that if century bottling company increased
its promotional activities, brand loyalty to a particular brand would increase.
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CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS.
5.1: Introduction.
This chapter presents a summary of the findings of the study and then goes ahead to present the
conclusion and recommendations from both the respondents and researchers perspective in
relation to the existing literature.
5.2: Summary of findings;
5.2.1: Promotional activities.
Findings revealed that Century bottling company had a number of promotional activities put in
place to promote particularly Coca-Cola brand. It was further realized that most customers were
aware of these promotional activities through various mechanism put in place such as
advertisements, sales promotions and direct selling. Customers were highly aroused by the
promotional activities hence it was concluded that Century bottling company’s promotional
activities have been successful in linking the brand Coca-Cola to customers which is the major
aim of promotion as noted by (Kurtz and Dave 2010).
5.2.2: Brand loyalty.
Findings revealed that there is a strong loyalty for brand Coca-Cola. This conclusion was
reached because majority of respondents agreed that;they consume the brand, had high
preference for the brand and that they would continue to consume the brand even if a promotion
was run on a competitive brand.
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5.2.3 Relationship between promotional activities and brand loyalty.
Findings showed that there was a strong positive relationship between promotional activities and
brand loyalty at Pearson’s correlation coefficiency r = 0.964**. This implied that promotional
activities affect brand loyalty and therefore management should pay attention to the design of
promotional activities so as to close a gap of r = 0.036**.
5.3: Conclusion.
The strong positive relationship between promotional activities and brand loyalty at Pearson’s
correlation coefficiency of r= 0.964** is attributed to well-designed promotional activities that
helped to build brand loyalty for its products. These promotional activities designed to promote
Coca-Cola to a greater extent achieved the intended promise of building the brand’s loyalty
among the consumers and this has been achieved through well-managed loyalty programs.
5.4: Recommendations.
The study is not only intended to servethe academic purpose of the researcher because of the
analytical nature and the depth of the issues raised herein but also to help in guiding
organizations in formulating and implementing their business strategy. It’s therefore
recommended that:

Century bottling company should continue putting more efforts in designing and carrying
out promotional activities aiming at building brand loyalty particularly for Coca-Cola, a
brand whose performance is fluctuatingand also carefully think about promotional
activities in terms of their execution, mechanism and how to associate the consumer with
the promotional activity taking into consideration the target market.
63

The future business environment requires mass production but tailor made to consumer
specifications and tastes focusing on size, packaging and delivering consumer needs,
when they need it. Therefore Century bottling company through its quality assurance
competency must continuously review the quality of its core brands and most especially
coca-cola as this will help the company to deliver a brand that can fulfill the needs and
wants of the consumers besides creation of a continuous demand. This calls for flexibility
on the internal controls so that they do not override the effectiveness of customer service
delivery. This however should be achieved without compromising company processes
and procedures.

Century bottling company should manage its loyalty programs in such a way that
customers are directly rewarded by the promotional activity in order to counter
competitors’ undertakings.
5.5 Areas for further research.
Having conducted a research on the influence of promotional activities on brand loyalty, future
researchers should carry out further research on the following areas such as; the effect of price on
brand loyalty and the influence of peer pressure on brand loyalty.
64
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67
APPENDICES
MAKERERE UNIVERSITY
QUESTIONAIRE
Topic: Promotional Activities and Brand Loyalty
(To be filled by Employees of Century Bottling company and consumers of the Coca-Cola)
Dear sir/madam.
Am Wubo Gerald, a student of Makerere University with registration number 06/U/9282/Ext and
student number 206009683 carrying out research on promotional activities and brand loyalty in
partial fulfillment of the requirement for the award of a Bechelors’degree in commerce. Your
response herein is highly treasured, important and it’s required strictly for academic purposes
and therefore be assured of utmost confidentiality. Please spare some time and answer the
following questions. Thank you for your time and co-operation.
SECTION A: GENERAL INFORMATION.(Please tick the most suitable option).
Qn 1. What is your Gender?
( a) Male.
( b) Female
Qn 2. What is your Age bracket?
(a) 16 to 20 years
(b) 21 to 25 years
( c) 26 to 30 years
(d) 31 to 35 years
(e) 36 and above
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Qn 3. What is your Level of Education?
(a) Secondary level
(b) Tertiary level
( c) University level
Qn 4: What is your marital status?
(a) Single
(b) Married
(c ) widowed
(d) divorced
Qn 5: What is your level of income?
(a) 0 – 140000
(b) 150000 – 350000
(c) 360000 – 560000
(d) 570000 – 770000
(e) 780000 and above
SECTION B: Century bottling company and promotional activities.
(Pleases tick the most appropriate option and explain where necessary)
Qn 5: Do you consume coca-cola brand?
(a) Yes.
(b) No
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Qn 6: If your answer in question (5) above is yes, what could be the main reason you consider to
consume coca-cola?
………………………………………………………………………………………………………
Qn 7: Do promotional activities influence you to consume coca-cola brand?
(a) Yes
(b) No
Qn 8: which of the following promotions influenced your decision to consume a coca-cola?
(a) Bongana coke
(b) BRR on the coke side of life
( c) Coca-cola music wave
(d) Win school fees
(e) Juzzae’kikapu
Qn 9: From the following list, please tick the themes that you have ever heard about?
(a) Enjoy coca-cola.
(b) Life tastes good
(c) Coca-Cola music wave
(d) Open happiness with coke.
Qn 10: Which of the above themes aroused you most to consume coca-cola………….……?
Qn 11: To what extent were you aroused?
(a) Greater extent
(b) Average
(c)Lesser extent
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Qn 12: To what extent does century bottling company use coupons as a promotional activity?
(a) Greater extent
(b) Average
(c) Lesser extent
Qn 13: To what extent does century bottling company use rebates as a promotional activity?
(a) Greater extent
(b) Average
(c) Lesser extent
Qn 14: To what extent does century bottling company use free product trails as a promotional
activity?
(a) Greater extent
(b) Average
(c) Lesser extent
Qn 15: To what extent does century bottling company use sales contests as a promotional
activity?
(a) Greater extent
(b) Average
(c) Lesser extent
Qn 17: To what extent does century bottling company use fliers as a promotional activity?
(a) Greater extent
(b) Average
(c) Lesser extent
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Qn 18: To what extent does century bottling company use street advertising as a promotional
activity?
(a) Greater extent
(b) Average
(c) Lesser extent
Qn 19: To what extent does century bottling company use event sponsorship as a promotional
activity?
(a) Greater extent
(b) Average
(c) Lesser extent
Qn 20: To what extent does century bottling company use T.V advertising as a promotional
activity?
(a) Greater extent
(b) Average
(c) Lesser extent
Qn 21: To what extent does century bottling company use radio advertising as a promotional
activity?
(a) Greater extent
(b) Average
(c) Lesser extent
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SECTION C: Management of Loyalty Programs (Please tick, outline or explain where
necessary).
Qn 26: Century bottling company has devised loyalty programs that directly reward customers?
(a)Strongly agree
(b) Agree
(c) Not sure
(d) Disagree
(e) Strongly disagree.
Qn 27: In reference to your option in question 12 above, outline the loyalty programs carried out
by century bottling company that you are aware of in the space provided below.
……………………………………………………………………………………………………
Qn 28: Is there any mechanism that century bottling company has put in place to manage the
loyalty programs listed above?
(a) Yes
(b) Not sure
(c) No
Qn 29: If your answer in question 14 above is yes, how does Century bottling company ensure
that the above loyalty programs are perfectly implemented?...........................................................
………………………………………………………………………………………………………
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SECTION D: Relationship between promotional activities and brand loyalty
(Please tick, outline or explain where necessary)
Qn 30: What is your preference rate on the coca-cola brand?
(a) High
(b) Medium
(c) Low
Qn 31: What is the main reason behind your rate of preference for the coca-cola brand?
............................................................................................................................................................
Qn 32: Assuming a promotion is run on different brands, say by the same company or the
competitor company, can you continue consuming the coca-cola brand?
(a) Yes
(b) No
Qn 33: If your answer in question (18) above is “Yes”, please tick the statement that best
describes your opinion why you would not change your preference of the coca-cola brand.
(a) Used to the brand
(b) Prefers the brand
(c) No new brand can meet the desire
Qn 34: If the answer in question (19) is “No”, please tick the most likely reason why you / one
may change his/her choice against the coca-cola brand.
(a) Convinced by the promotion
(b) New brand can meet the desire
© All brands are alike
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Qn 35: Promotional activities conducted by coca-cola have got an influence on consumer’s brand
loyalty?
(a)Strongly agree
(b) Agree
(c) Not sure
(d) Disagree
( e) strongly disagree.
Qn 36: There is a relationship between promotional activities and brand loyalty?
(a)Strongly agree
(b) Agree
(c) Not sure
(d) Disagree
(e) Strongly disagree.
Thank you for your time
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INTRODUCTORY LETTER
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