Investigating the Impact of Sales Promotion on Brand Perception in Soft Drink Industry - Research Paper Example

INVESTIGATING THE IMPACT OF SALES PROMOTION ON BRAND PERCEPTION: STUDY OF SOFT DRINK INDUSTRY Introduction The success and growth of any business mainly depends on which strategy the company employs in advertising its goods and services to the customers. Most companies use various form of promotion a way to market their products and services to their customers. The recent report released by (Economic Times, August 13, 2003) indicates that there has been an increase on the amount of money being used by Soft Drink Companies to promote their products to the customers. Furthermore, the report indicates that the increase on promotion expenditure ranges within 150 to 200 percents in the year 2002 and 2004. For instance in 2004, coca cola company alone developed more than 1500 promotion schemes at a cost of more than $50,000 (Dang et. al, 2005). Coca cola Company mostly recognized as coke is one of the soft drink industry that is vastly know entirely in the globe market because of its stand in manufacturing a wide range of soft drinks. Since its invention in Atlanta Georgia in 1886 by Doctor John Pemberton, pharmacists by profession, the company has made tremendous progress in its operation hence making it to be one of soft drink Company in the global market. Under the invention of Doctor John there were three coca cola brands in market by then but due to advancement of science and technology more brands of soft drinks are now available in the market. The soft drink manufacturers only need to change the formula composition of the drink so that to come up with a new brand. The company is well established with branches in every part of the global. However, such great success can only be attributed to the company’s commitment, innovation and heavy investment in sales promotion which aim at meeting the needs of the consumers. For the company to realize and attain its mission of being the greatest leader in the soft drink industry, it has established value to its constituting constraints which it serves ranging from consumers, bottle manufacturers to the community at large. To achieve this, the company has placed measures which involve executing business strategies in a manner that it is in line with the goals and mission of the company. Through the sales promotion strategies the company has had an access to larger market share compared to its competitors. It organizes sales promotions such as: sponsoring extra curriculum activities in learning institutions with an objective to market its products, organizing trade shows and exhibitions to the public, music extravaganza, concerts, road shows, advertising through the media and display of products, just to mention but a few. Sales promotions along with business strategies are two key factors behind success of Coca Cola Company as well as guarantee for firm’s sustainable development in the future. Sales promotion as a vital tool in marketing mainly involves the process of increasing purchase of goods and services. It is different from advertising and publicity in the sense that whereas the two aim at developing and reinforcing high quality of products and long term reputation of differentiated goods, sales promotion aims at inducing direct incentives to consumers through prizes, gifts and money that increases purchase of goods and services. Examples of sales promotion include organization of trade exhibitions and display fashion shows that increases sales volume of some products. Branding can be defined as the identity or personality that is given to a specific product, service or company. It is established in various facets such as through symbols, signs or slogans. Branding help to differentiate goods and services manufactured by one company from the other hence promoting fair competition in the market. The government through the act of parliament enacts laws and policies that aim at legal protecting the brand of each company. Therefore a brand that is legal protected by the laws is called the trade mark of that company. For example the slogan that bears the name coca cola becomes its trade mark. Brand perception simply means the ability of the consumer to recognize a particular product in the market. It may also mean the way the company wish to exhibit their products or services to the consumer or how it intends to relate with them. By just seeing a particular slogan attached to a product helps the consumer to know that the product belongs to certain company. Soft drink industry is kind of an establishment that mainly deals with manufacturing of non alcoholic drinks, concentrated syrups that are used in production of carbonated beverages such as sodas, juices and mineral water. A good example of soft drink industry is the coca cola company that manufactures all brands of sodas in the world. It is one of the most established soft companies in the entire world. Research Aims and Objectives The main aim of this research study is to determine the impact of sales promotion on brand perception in soft drink industry. The main aims and objective include: 1. To determine the effects of sales promotion on consumer prices. 2. To investigate whether there is any relationship between sales promotion and brand perception. 3. To find out the effect of sales promotion on brand perception. 4. To examine the factors that lead to change in brand perception on consumers. Research Question 1 What effects does sales promotion has on consumer prices? 2. What kind of relationship does exist between sales promotion and brand perception? 3 What effects does sales promotion have on brand perception? 4 What factor may influence change in brand perception? Literature Review The issue of sales promotion has been in the market for some time now where many companies have been designing new methods of promoting their goods and services to the consumer. Following a large number of companies producing almost similar kind of goods and services in the market, companies invest heavily on promotion as it differentiates between the products being offered and helps the consumer to try or prefer one product in relation to the other (Pettis, 2001). With the growing importance accruing from sales promotion more companies engaging in the manufacturing of soft drinks have of late been greatly involved in designing more schemes of promotion so that to enhance their position in the market arena. In 2009 there were more than 3000 schemes of promotion designed in the Coca Cola company which had impacted a good sum of money in terms of cost incurred ( Dooley, M. 1997). Based on this growing trend in promotions of goods and services by soft drink companies, the attention of research took another different course all together that aimed at examining the change in consumer’s price, brand perception; brand switching behaviour, analysis of brand equity and so many more. However, according to (Blattberg & Neslin, 1990), the main aim of sales promotion is to induce direct impact to the consumer to increase purchase of goods and services. Research also indicate that having more trade promotion in contrast to advertising and publicity promote positive short term goals on the existing market share as well as impacting negatively on brand attitude together with long market share (Priya, 2004). Research reports that have been done on the price promotion have positively depicted both increase in sales effect and brands of goods under promotion (Briesch & Fox, 1995). Statistics portrays that price promotion mostly relay on substitution of brands placed under product rank (Dodson et al, 1978) and more importantly affects the rate of stock turn over and follow of purchase (Neslin, & Quelch, 1985). Contrary to most of these researches, it has been established that by using sales promotion strategy in marketing of goods and services can also lead to a negative impact on the perception of brand by the consumer. Other stakeholders in the market sector have proposed the fact that some of the promotion more so price promotion lead to negative response on brand equity (Mela et al., 1997). By relying more on sales promotion can influence the kind of balance that does exist between value and price Schultz (2004). In respect to the work of (Jedidi et al., 1999) mentions that long term effect of advertising would lead positively affect brand equity while on the other hand; it will impact negatively on the same. Relating to the work of (Yoo et Al., 2000) and by using his model it is worth noting that quite often use of price promotion implicate less brand equity in the market whereas on the contrarily high advertising spending, high distribution and good store image are associated with increases in brand equity. However, this phenomenon does not hold true all the time since subsequent research had done have proved the theory otherwise. By using both non-monetary and monetary sales promotion methods have both shown a positive outcome to brand equity as well as increases in purchase because all are knowledge schemes. It is in reference to this controversy that the researcher proposes to carry out a research study to examine on the impacts of sales promotion on brand perception as well as develop a critical analysis of the situation from the collected data. Research Methodology It is evident enough that research plays an integral part in inculcating knowledge and skill to the intellectuals that in turn is useful in solving most of the problems facing the community. Research methodology can be termed as the use of appropriate methods of data collection that is employed by a researcher in his or her study. It can also mean the way the researcher intends to gather information for analysis and interpretation from the field. It is in respect to vast approaches available in research studies that I would narrow down from a more general point of view to one that is precise in the discussion. The research would be based on primary data that would be collected from the field using various instruments of data collection. This means that the study would adopt a positivism kind of approach instead of interpretive. Under the use of positivism approach it would be possible for a researcher to observe the social reality in the environment because my study involves investigating the effects of sales promotion on brand perception as well as the response from consumers. This kind of approach is more appropriate in my study in the sense that general laws or theories would be generated after analysis and interpreting data. The positivist paradigm will also make it possible for my results to be applied externally and more broadly outside the study context because it will be reliable and unbiased. I will be detached from my research and have little or no influence on the data collected. The aspect of being an independent variable will in turn enhance the credibility and accuracy on the data collected from the field. Furthermore, as a matter of fact the venture that it encompasses formation of law like propositions will mean that there is more room for further investigation since research may be done to determine whether such laws still hold any substantial contextual meaning. To be in a position to collect primary data I would design questionnaire that would be used to collect information in the field. The questionnaire would be containing close ended questions to enhance effective feedback as well as serve on time factor. However, before embarking on the field I would pre-test the proposed questionnaire items using a sample population of ten countries in the world. The questionnaire would be presented to students in higher learning institutions such as universities and colleges, businessmen who sell coca cola products and working people in various production sectors. The instrument questions would be formulated in such a way that subjects can be in a position to understand them as well as respond to them effectively. Within the proposed questionnaire I would have developed some schemes where the subject is supposed to fill his or her feeling towards the effect of sales promotion on brand perception. Gorgeous In some instance rather than using questionnaires, interviews would be suitable to use especially to the general public. This will in turn compliment the data collected using questionnaires to enhance its reliability and accuracy in this study. In interview the kind of approach that would be employed is quite different from the one used in questionnaires in that in interviews questions would be open ended. Since the main objective of the study is to investigate the effects of sales promotion on brand perception, I would use fast moving soft drink products manufactured by Coca Cola Company especially the new brands in the market. From such an analysis it would give me a clear picture pertaining to what we should expect from the field. On the other the formulated hypothesis would be tested using chi-square with a significance level of 5%. The use of such a lower value in significance level allows the researcher to minimize his or her chances of committing error 1 and 2 which can in turn interfere with the results. At this point it is worth noting that in this study both qualitative and quantitative methods of data analysis would be used. Qualitative method mainly involves the process of analysis of data by the use of non numerical figures whereas on the other quantitative method involves the use of numbers that can be quantified. Quantitative and qualitative data collection techniques and analysis procedures each have their own strengths and weaknesses (Smith, 1975). In order to seek convergence of results this research will be triangulated because I will use both qualitative and quantitative research in analysis, interpreting and inferring conclusion. The methods of data analysis would of great importance in the sense that findings from both sides tend to complement each other hence making the research to be more reliable as well as credible. In respect to the work by Mela et al. (1997), multiple methods are useful because they provide better opportunities to answer research questions and better evaluate the extent to which research findings can be trusted and inferences made from them. After the analysis of the data research findings would be represented using various methods such as graphs, pie charts and histograms for easy interpretation as well as understanding. Research Method With regard to this research study I would invest more on the use of secondary data is analysis and interpreting research findings. This being not a new field in research means that there is more than enough material on the same topic that can of great importance in my study. According to Mela et al. (1997), secondary data is a kind of information collected for other purpose, processed and finally stored for future reference. The researcher does not necessary need to collect new information but to use the already gathered information by other researchers and integrate his or her formulated hypothesis to be in line with the secondary data. Secondary data may be grouped on basis of sources whether internal or external from the organization. Example of internal secondary data may include; sale and marketing reports, accounting and financial records just to mention but a few. Similarly, external secondary include things such as library sources, news paper and magazines, articles and so on. It can also be ranked both as qualitative and quantitative. Qualitative data may include personal letters, biographies, diaries, personal records, published material such as books, policy statements among many more. On the other quantitative data mainly includes things such as census, planning documents, and economic documents. These kind of data can be easily be quantified using numbers so that to help in data analysis, interpretation as well as conclusion. There are three main types of secondary data namely documentary, survey and those from multiple sources. Documentary contains information that has been published and stored for future references. On the other hand surveys involves the kind of data that to was collected with the aim of revealing how the situation under investigation is on the real ground. For example census surveys conducted by the government provide useful information pertaining to population. The Anticipated Method of Data Analysis and Findings Data analysis and findings forms the final stage in conducting a research. It is one of the most crucial stages in the sense that collected information would bear meaning to the researcher. There are many methods employed in analysis data but it mainly depends on the topic under discussion as well as the researcher’s preference (Mertens, 2005). The two main methods in data analysis include: descriptive and inferential. In descriptive it involves the process of summarizing the parameters of a population from a sample. It involves the use of appropriate mathematical concepts in calculating statistics such as mean, median, mode, regression and variance, just to mention but a few. In this case my study would integrate all these components so that to provide suitable results concerning the study. By the use of measures of central tendency I would be in a position to indicate the relationship that exists between sales promotion and brand perception as well as learn the direction of the relationship. With such knowledge from such a correlation I can be in a position to anticipate the outcome of other variable in the study without having to carry out another research. On the other hand my study would use the normal curve distribution concepts in interpreting the information. Under inferential method of data analysis involves the use of descriptive data to predicate the outcome in the future. In other words it mainly infers the anticipated trend of variables in the future. It is also used in formulating theories and general concepts about an issue. In order for a researcher to be in a position to make comprehensive conclusion, it depends on how well he or she can effectively evaluate hypothesis. This is done through hypothesis testing and in this particular case I would employ both the use of chi-square and t-test methods in hypothesis testing. There are other methods used in data analysis and findings as discussed below such as content analysis, theoretical sampling, thematic analysis and grounded theory among many more. According to Mertens (2005), content analysis is research technique for the objective, systematic, and quantitative description of manifest content of communications. Thematic analysis is an approach of dealing with data that involves the creation and application of measurement to data. It has been found out that there is close association between this kind of method and grounded theory in the sense that they complement each other. With respect to the work of Mertens (2005), grounded theory can be termed as a method of analyzing data which is systematic in manner and aims at establishing a higher understanding as well as generation of theories pertaining to the social phenomena under investigation. However, analysis of quantitative data quite often depends on the use of inductive reasoning in constructing meaning of the collected data. Irrespective of which perspective a researcher inclines on the fundamental concept is that they all lead to either inferential or descriptive method of data analysis. Ethical Consideration In respect to the work of (Saunders et al., 2007) ethical consideration can be defined as questions about how we formulate, clarify research topic, data collection, processing method and how we report our research findings in a moral and responsible way. It aims at upholding the appropriateness of researcher’s behaviour in relation to the rights of the subjects who would be taking part in the research. The research will take into consideration all the ethical protocols that should be adhered to while conducting the research in the field. Since this kind of research involves the use of quantitative data it simply means that the researcher will be interacting with his subjects while conducting the study. It also depicts that the collected information will not be confidential in the sense that it would be presented to the public. All the participants would voluntary decide to take part in this crucial exercise without being forced to do so. They will as well be informed on what is expected from them and the risk involved in this research thus giving them informed consent. Researcher under the ethical standards should not expose his or her subjects to harm or any risk while participating in the exercise. The researcher would uphold confidentiality of the information provided by the respondent unless otherwise accorded permission to do so by the subjects. The issue of holding the subject identity should also be taken into account to develop mutual relationship between the two parties. Malpractices which may interfere with research findings such as plagiarism would not be allowed in this kind of research at whatever cost. By observing these ethical considerations, the researcher would not be convicted for violating laws by the court hence safeguarding the welfare of the researcher. Conclusion The conducted research study provides ample evidence that is a considerable relationship between sales promotion and change of brand perception on the consumer’s side. On the other hand research findings indicate that introduction of sales promotion influence brand perception but not the price of goods and services. References Berelson, B (1952) Content Analysis in Communication Research. New York: Free Press Blattberg R. C and Scott A .Neslin (1990), Sales promotion: Concepts, methods, and marketing, 10, 4, pp. 381-386. Blattberg R.C, Briesch R. and Fox E.J (1995), How Promotions Work, journal of Marketing Science, Vol. 14(3), G 122- 132 Creswell, W, 2003, Research design: Qualitative, quantitative, and mixed methods approaches, (2nd ed.), Thousand Oaks: Sage Dodson, J.A., Tybout, A.M. and Sternthal B. (1978), “Impact of Deals and Deal retraction on Brand switching, “Journal of marketing research”, 15(1). 72-81. Dooley, M. (1997) “A Model of Crisis in Emerging Markets”, NBER Working Paper. Number 6300, Cambridge MA Glaser, B. and Strauss, A. (1967) The Discovery of Grounded Theory, Chicago, IL, Aldine Gupta, S. and Cooper L.G. (1992) “The discounting of discounts and promotion Thresholds,” Journal of consumer research, 19 (3), 401-411. Hussey, J. and Hussey, R. (1997) Business Research, Macmillan Press Ltd, Basingstoke Kotler, P, 2002, Marketing Management, New York, Prentice-Hall publication Mela, C.F, Gupta, S. & Lehman, D.R. (1997) The long term impact of promotion and advertising on consumer brand choice. Journal of Marketing research, 34(May), pp. 248- Mertens, M. (2005). Research methods in education and psychology: Integrating diversity with quantitative and qualitative approaches. (2nd ed.) Thousand Oaks: Sage Neslin, s. Henderson C., and Quelch J., (1985) “Consumers promotions and the Acceleration of product purchases,” Marketing Science,4(2), 147-165. Pettis M (2001) The Volatility Machine: Emerging Economies and the Threat of Financial Collapse, Economic Times, Sunday, June 13, 2003, Priya Raghubir (2004), “Free Gifts with Purchase: Promoting or Discounting Brands?” The Journal of Consumer Psychology; 14 (1 & 2) pp. 181 – 186 Remeniyi, D., Williams, B., Money, A. and Swartz, E. (1998) Doing Research in Business and management: An Introduction to Process and Methods, London, Sage Saunders, M., Lewis, P. and Thornhill, A. (2007) Research Methods for Business Students (4th edn), Harlow, Pearson Education Schultz, Don. E, (2004) “A Clean Brand Slate”; Marketing Management; Spetmebre/ October, Vol. 13, Issue 5, pp. 10-11 Tashakkori, A. and Teddlie, C. (eds) (2003) Handbook of Mixed Methods in Social and Behavioural Research, Thousand Oaks, CA, Sage Yoo, Boonghee; Dondhu, Naveen; Lee, Sungho; (2000);“An examination of selected marketing mix elements and brand equity”; Journal of the Academy of Marketing Scieence; Vol. 28, No: 2, pp, 100-105 Read More