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1 “IMPACT OF SALES PROMOTION ON BRAND LOYALTY OF SELECTED FMCG PRODUCTS ON CONSUMERS IN MAHARASHTRA.”
1
“IMPACT OF SALES PROMOTION ON BRAND LOYALTY OF
SELECTED FMCG PRODUCTS ON CONSUMERS IN
MAHARASHTRA.”
2
EXECUTIVE SUMMARY
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“Impact of Sales Promotion on Brand Loyalty of Selected FMCG
Products on Consumers in Maharashtra.”
Introduction:
The consumer is the one who pays to consume goods and services. They play a vital role
in the economic system of a nation. Whole marketing depends upon consumer and their
buying behavior. Buying behavior can be influenced by some marketing tactics.
Marketers always have been need of quick selling, so they exercise various sales
promotion time to time. The very purpose of sales promotion is to influence consumer for
quick buying. It is considered as marketing techniques that adds value to the product
which is on offer. Sampling, Couponing, Contests and Sweepstakes, Money refunds,
Premiums and Bonus packs, Loyalty schemes, Exhibitions and Packaging are the
example of Consumer sales promotion.
Brand Loyalty is the affection that a customer has to a brand. The advantages of owning
brand loyal customers are the requirements of less significant advertising, gaining of the
greatest level of repeat purchases, and the generation of consumer’s acceptance to pay
premium for the service or product. The basic sign of loyalty is the amount a customer
will pay for the brand in comparison with another brand (or set of comparison brands)
offering similar benefits.
The Indian FMCG market is the 4th largest sector in the Indian economy. It was set to
treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. The urban section is the
largest contributor to the sector, accounting for around 65 percent of total revenue and
had market size around USD 20.74 billion in 2015. In 2016 (Forecasted) FMCG market
size would be USD49 billion and in 2020 (Forecasted) FMCG market size would be
USD103.7 billion. [Source: CII].
House hold and Personal Care is the important segment, accounting for 50 percent of the
overall market. Health care (32percent) and Food Beverages (18percent) comes next in
terms of market share.
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Literature Review
Sales Promotion:-
The main intention of sales promotion is to persuade customer for quick purchase and it
is considered as marketing tools and techniques that adds value to the product which is on
offer. In other hand, advertising influences consumer at mass level and as well as educate
the customers.
Sales promotional approach and techniques are different from personal selling and
advertising. Personal selling is face to face activity and advertising is informative and
educational activity on mass level.
The example of sales promotion is to offer winning of prize or extra purchase on same
price, etc. Sales promotional approach and techniques are different from advertising and
personal selling. Personal selling is face to face activity and advertising is informative
activity on mass level.
Advertising and personal selling is of frequent and routine method, while Sales
promotion is free from recurring and regular method. In advertising advertiser/ marketer
can not control media while sales promotion is controlled and targets small groups.
Consumer Sales Promotion:-
Money refunds, Sampling, Couponing, Loyalty schemes, Exhibitions and Packaging,
Contests and Sweepstakes, Premiums and bonus packs, are the example of Consumer
sales promotion.
To pursue the products in market, sampling is one of the helpful ways of sales promotion.
Sampling promotion is good for low value products which have highly visible properties
of benefits to the target consumers. It is used by delivering sample products door to door
or via mailing.
Coupon is used for encourage the sales instant, it may harm the brand name. It is also
used to attract new customers by offering price drop.
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Sweepstakes and Contests are cost effective and trendy method of sales promotion. It is
an effective way of educating target consumers, so, customers can give attention while
competition and it will be easy to promote products.
Money back offer is security purpose to the customers. It is a good promotional incentive
for customers. It was successful with Cell phone provider and web hosting companies in
past. Premium and Bonus pack sales promotion offer is useful on brand switching
consumers. It offers an extra or same product on reduced rice or on same price. For
several marketers Loyalty scheme is frequent purchasing scheme. In this scheme
consumers get some points on each purchase and they can exchange in some other
purchase or as discount on same product.
The reason of exhibition is to educate customers about product or services and to gain
interaction between customers and offered product. It is very competent way to reach out
among customers.
Customers do like promotions; they prefer utilitarian profits like monetary savings, added
value, increased quality, and convenience, with hedonic profits like entertainment,
exploration, and self expression [Chandon, Laurent, and Wansink, 1997].
Classification of Sales promotion:-
Price based Promotion-
Price-off-> Offers a discount on the regular price of the purchase.
Coupon-> Provides a certificate entitling the bearer to a saving on the purchase
Rebates-> Offers cash back from the manufacturer on a purchase
Non-Price based Promotion-
Extra product-> Offers more quantity of the product/service without an increase in
normal price.
Premium-> Offers a free gift in addition to the main purchase
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Contest-> Provide a chance to win a large prize through skill (ex. demonstrated by
answering a question or writing a brand slogan)
Sweepstake-> Provides a chance to win a large prize based on chance (through a lucky
draw or a scratch card).
Source: Blattberg, R., and Scott, A., Neslin. (1990).
Brand Loyalty:-
Brands comprise the logo, the pictorial representation of the firm or organisation, the
signature of the company. As per AMA [1960], a brand is a name, term, sign, symbol or
design or a combination of them intended to identify the goods and services of one seller
or group of sellers and to differentiate them from those of competitors.
Aaker [1991] defines brand loyalty as the measure of affection or association that a
customer has towards a brand. Further, according to him Brand loyalty reflects how
possible a consumer will switch the brands if that brand makes a product change either in
product or price features. Again he states that the centre of a brand’s equity is based on
customer loyalty. So when customers purchase with respect to price, features and
convenience with little concern to the brand name, then there is perhaps little equity.
Aaker [1991] expressed loyalty as a core dimension of Brand Equity and proposed Brand
Loyalty as the affection/ attachment that a buyer has to a brand. A loyal buyer/customer
base represents a barrier to entry, time to respond to competitor innovations, a basis for
price premium and a fortification against adverse price competition.
Oliver (1997, 1999) expressed Brand Loyalty as a deeply held commitment to buy (or re
patronise) a favoured product or service consistently in the future, in spite of marketing
efforts and situational influences having potential to generate switching behaviour.
Yoo and Donthu [2001] defined Brand Loyalty, from the attitudinal viewpoint, as the
tendency to be loyal to a focal brand and which is demonstrated by the intention to buy
the brand as a primary choice.
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Non price promotions like premiums, sweepstakes and frequent user clubs include
enthusiasm and worth to brands and that may promote brand loyalty [Aaker 1991, Shea,
1996].
FMCG Market:-
FMCG industry also called as Consumer packaged goods (CPG) industry mainly deals
with the production, distribution, marketing and sales of consumer packaged goods.
The Fast Moving Consumer Goods (FMCG) is those consumables which are generally
consumed by the customers at a regular interval or frequently. Some of the major
activities of FMCG industry are selling, marketing, financing, purchasing, etc. The
industry too engaged in production, operations, supply chain, and general management.
The Indian FMCG sector is the 4th largest sector in the Indian economy. The FMCG
market was set to treble from US$ 11.6 bn (billion) in 2003 to US$ 33.4 bn (billion) in
2015.
The urban section is the major contributor to the sector, accounting for around 65 percent
of total revenue and had market size around USD 20.74 bn (billion) in 2015.
In 2016 FMCG market size was US$49 billion and in 2020 (Forecasted) FMCG market
size would be USD103.7 billion. [Source: CII].
House hold and Personal Care is the important segment, accounting for 50 percent of the
overall market. Health care (32percent) and Food Beverages (18percent) come next in
terms of market share [www.ibef.org]
Revenues of FMCG sector reached US$ 52.8 billion (Rs 3.4 lakh crore) in FY18 and are
estimated to reach US$ 103.7 billion in 2020F.
FMCG sector to gain support for growth from IWAI multi modal transportation project
of freight village at Varanasi which will bring together retailers, warehouse operators and
logistics service providers, investment worth US$ 25.35 million.
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The Union Budget 2018-19 initiatives are expected to increase the disposable income of
the common people, especially in the rural area, which will be beneficial for the sector.
FMCG sector witnessed growth of 16.5 percent in value terms between July-September
2018; supported by moderate inflation, increase in private consumption and rural income.
It is forecasted to develop at 12-13 per cent between September-December 2018.
In the last few years, this market has grown at a faster speed in rural India compared with
urban India. In 2018-19, revenues from the rural segment are expected to grow 15-16
percent outpacing.
FMCG urban segment is expected to have a steady revenue growth at 8% in FY19.
Accounting for a revenue share of around 55%, urban segment is the largest contributor
to the overall revenue generated by the FMCG sector of India.
Rural section is growing at a rapid pace and accounted for a revenue share of 45 per cent
in the overall revenues recorded by FMCG sector in India. This sector products account
for 50 per cent of total rural spending
Top 10 FMCG Companies in India:-
ITC, HUL, Nestle India, Parle Agro, Britannia Industries, Marico Limited, Godrej
Industries, Colgate- Palmolive, P&G and Amul. [Naukrihub.com]
Statement of Problem:-
The proposed study envisages finding out the Impact of sales promotion on Consumer
and on their brand loyalty. Hence this enquiry seeks to find out whether there exist any
differential and significant effects of Sales Promotion on Consumer Based Brand
Loyalty.
Therefore the statement of the problem under the study that has been selected is “Impact
of Sales Promotion On Brand Loyalty Of Selected FMCG Products On Consumers
in Maharashtra”.
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Objectives, Hypothesis & Research Methodology
Objectives of the Study:-
• To study the Consumers’ attitude toward Price based Sales Promotion Schemes.
• To study the Consumers’ attitude toward Non price based Sales Promotion
Schemes.
• To analyse the Deal Proneness of Consumers considering demographic variables.
• To investigate the most influential Media for Sales Promotion Schemes.
• To examine the influence of Sales Promotion on Brand Loyalty.
Hypotheses:-
• H01: There is no significant difference in the attitude of Consumers toward Price
Based Sales Promotion Schemes.
• H02: There is no significant difference in attitude of Consumers toward Non Price
Based Sales Promotion Schemes.
• H03: Demographic parameters do not affect Consumer Deal Proneness
considering sales promotion schemes.
• H04: Brand Loyalty is consistent irrespective of media used for sales promotion
schemes.
• H05: Brand Loyalty is consistent irrespective to prevailed sales promotion
schemes.
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Research Methodology:-
Research Methodology chapter presents the methods and procedures used to explore and
investigate the effects of sales promotion on Consumer and Brand Loyalty with respect to
FMCG products.
The study is based on both Primary & Secondary Data. The possible insight into study
was investigated with the help of Primary data and Secondary data.
The research methodology which is presented below specifies the method & procedures
for the collection of data, sample selection, measurement and analysis of data.
Sampling Design:-
The study is based on both Primary & Secondary Data.
Six cities of Maharashtra; Amravati, Aurangabad, Mumbai, Nagpur, Nashik and Pune
have been selected as a geographical area, which represents all the regions of
Maharashtra respectively ( all are the Divisional Head Quarters) and only urban
population is taken for this study.
Quota sampling is used. The close ended Questionnaires have been implemented for data
collection.
Population: -
This study is confined to the residents of the Maharashtra. For the purpose of the research
all the age group of individuals have been considered from above said six major cities of
Maharashtra.
Sample size
Since, the results of Study depend upon the response of individuals, hence, large sample
size is needed, and so, to get large sample size Cochran’s (1977) sample size formula has
been used.
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(Z-score) ² * std.dev*(1-std.dev)
Sample size =
(Margin of error) ²
To get sample size, Confidence level of 95% and margin of error 3% and 0.5 Standard
deviation has been used.
(1.96²) * 0.5*0.5
So, sample size (ss) = = 1067
(0.03)²
In this research sample size 1070 (Approx 1067) used and Quota has been fixed for all
the six cities in their respective population ratios.
Statistical tools Used for Data Analysis:-
Firstly data fed in Excel then data analyses has been done through SPSS 20. In this study
Non Parametric tests performed widely. Non Parametric tests are distribution free. It does
not depend on any assumption about the Population distribution.
Statistical tests Used:-
Cronbach Alpha, Chi- Square test, K-W test, M-U test, Wilcoxon Signed Ranks Test,
ANOVA and Logistic regression.
Major Findings and Conclusions
The major Findings and Conclusions of the Study:
1. Averagely no significant differences have been found in attitude as per area of
residence, towards Sales Promotion among all respondents from six cities.
2. Price Based Schemes are most preferred over Non Price Based Schemes
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3. Price off Scheme is most preferred among Price based promotional schemes.
4. Free Gift Scheme is most proffered as non priced promotional schemes.
5. Demographic parameters as Income, Gender & Educational Qualification do
affect Consumer Deal Proneness considering sales promotion schemes.
6. 3-5 lakhs Income groups are very Deal Prone and 5-7 lakhs Income groups are
least Deal Prone.
7. Post Graduate people are very Deal Prone and below 10th people are least Deal
Prone.
8. Female are very Deal Prone than Male.
9. Television is leading media used for sales promotion.
10. Other media like Social sites/ media and news paper are also used for sales
promotion followed by Television.
11. Brand Loyalty is respective to / depends on media used for sales promotion
schemes
12. Brand Loyalty is respective to / depends on prevailed sales promotion schemes.
Recommendations
Price based promotions are preferred most, hence, marketer may offer attractive
price based discounts.
High Income group of Consumers strongly rated Deal proneness, so marketer
should emphasis more on Price Off / Free Gift as Sales promotion schemes.
Immediate benefits consider better than delayed benefits, so, marketers may offer
sales promotions considering this as well.
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Price Off if most preferred, so, company may think more on cash discount than
gift or value added.
Television is most preferred knowledge source and it reaches mass level, so, this
medium should be considered as very effective medium to reach the customers.
Females are Deal Prone than Males, so, this category should cater promptly.
Female are now more over 50% of the India’s population so marketers should
make effective sales promotion strategy to cater this group.
Male are Quality conscious, therefore this section shows very rational attitude
towards purchasing, so marketer should be also careful about this category.
Sales Promotional schemes preferences do vary with Family income, Gender and
Educational Qualification. So demographic variable become important in
formulation of Sales promotion schemes.
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ANNEXURE-Ι:
QUESTIONNAIRE
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Annexure- Ι: Questionnaire
A. Demographic Profile:-
1. Name:-……………………………………
2. Age group :- [Below 20] [21-30] [31-40] [41-50] [Above 50]
3. Gender:- [M] [ F]
4. Marital Status:- [Single] [Live in] [Married] [Separated]
5. Employment Status: -
[Not employed] [Self employed] [Employed (Private org.)]
[Employed(Govt. org.)]
6. Educational Qualification:-
[Below 10th] [10th Pass] [12th Pass] [Graduate] [Post graduate]
[Above P.G]
7. Annual Income:-
[Below 1 lakhs] [1-3 lakhs] [3-5 lakhs] [5-7 lakhs] [Above 7 lakhs]
8. Family Size:-
[Single] [2 members] [3 members] [4 members] [5 members]
[Above 5 members]
9. Family Type:- [Joint] [Individual]
10. a. Name of the city: - [Mumbai] [Pune][Nagpur] [Amravati][Aurangabad] [ Nashik ]
b. Area of Residence:-……………
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B. Sales promotion schemes practiced in FMCG industry
The extent to which you are aware and wish to avail the following sales promotion
schemes
Schemes No extant-
1
Small extent-
2
Some extant-
3
Large extent-
4
Very large
extent- 5
1. Price off
2. Coupon
3. Rebates
4. Extra
Product
5. Premium
6. Contest
7. Sweepstake
C. Choice of Price & Non price based schemes
S.Disagree-1 Disagree-2 Neutral-3 Agree-4 S.Agree-5
Price based schemes: - [Example: - Price off, Coupon, Rebates etc.]
1. I do think price based discount is good choice as scheme.
2. I do get satisfaction after finding price discount on purchase.
3. I do think price based promotions are not good choice as a scheme.
4. I worth most price based schemes.
Non price based schemes:-[Example: - Extra Product, Free Gift, Premium etc.]
5. I wish to receive non price based schemes.
6. Non price based schemes doesn’t have good quality of products.
7. There is no worth of having non price based schemes.
8. I worth most non price based schemes.
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D. Deal Proneness:-
S.Disagree-1 Disagree-2 Neutral-3 Agree-4 S.Agree-5
1. I give priority to stay for a time to take benefits of Schemes.
2. I usually purchase a product with deal.
3. I not at all consider promotional schemes.
E. Media and Sales Promotion
Please rank the media for informing sales promotion schemes ( i.e in 1 to 10)
Television, News Paper, Magazine, Radio, SMS, Pamphlet, Banner, Point of Purchase,
Website, Social Media
Please response as per the following
S.Disagree-1 Disagree-2 Neutral-3 Agree-4 S.Agree-5
1. I do prefer media to know about sales promotion schemes.
2. I do prefer certain media to purchase products.
3. Media having impact on frequency of purchase of same products.
4. There is repletion in mine purchase due to media which I am using.
F. Brand Loyalty:-
The extent to which you would undertake the following post purchase actions due to
sales promotions
S.Disagree-1 Disagree-2 Neutral-3 Agree-4 S.Agree-5
1. I do rationalize to friends and relatives about the incentives.
2. I made a repeat purchase of the products.
3. I have become more loyal to the products.
4. I acted as referee to others consumers who needed product and induce them to buy.
5. Any time I am dissatisfied and I complain to friends not to purchase products.
6. I would switch from that product to other, if I am disappointed.
7. I register complain to the customer care anytime, am disappointed with a product.
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ANNEXURE-ΙΙ:
REGIONAL PROFILE
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Annexure- ΙΙ: Regional Profile
This research is conducted in Mumbai, Pune, Nagpur, Amravati, Nashik and in
Aurangabad .All six are major cities of Maharashtra and Divisional Headquarters as well.
Mumbai:-
Mumbai is surrounded by the Arabian Sea to the west. Several parts of the city lie just
above sea level, with elevations ranging from 33 ft (10 m) to 49 ft ( 15 m); the city has an
average elevation of 46 ft (14 m). Coordinates: 18°58′ N 72°49′ E .
The total area of Mumbai is 603.4 km2, the island city spans 67.79 km2, while the
suburban district spans 370 km2, together accounting for 437.71 km2 under the
administration of BMC (Brihanmumbai Municipal Corporation).
As per population census 2011, Mumbai (Municipal Corporation) population is
12,478,447.
Fig.01. Source: www.mapsofindia.com
201
Pune:-
Total area of Pune is 710 km2 under the Pune Municipal Corporation. Pune is located
1,840 ft (560 m) above sea level on the western margin of the Deccan plateau. It is
situated on the leeward side of the Sahyadri mountain range, which forms a barrier from
the Arabian Sea. It is a hilly city, with its tallest hill, Vetal Hill, rising to 2,600 ft
(800 m) above sea level. The Coordinates of Pune 18°31′ N 73°51′ E.
As per population census 2011, Pune (Municipal Corporation) population is 3,115,431.
Fig.02. Source: www.mapsofworld.com
202
Nagpur:-
The total area of Nagpur is 228 km2, under the management of Nagpur Municipal
Corporation. Many parts of the city lie just above sea level of (an average elevation)
1,020 ft (310 m). Density 11,000/km2 (27,000/sq mi).It lies between 21.15°North latitude
and 79.09° East longitude.
As per population census 2011, Nagpur (Municipal Corporation) population is 2,405,421.
Fig.03. Source: www.mapsofindia.com
203
Amravati:-
Amravati is the second largest and most populous city of Vidarbha after Nagpur. It is also
branded as Cultural Capital of Vidarbha because of its education facilities and cultural
heritage. It is the administrative headquarters of the Amravati district and It is also the
headquarters of the Amravati Division which is one of the six divisions of the state.
Amravati is located at 20.93°N 77.75°E.It has an average elevation of 1125 feet
(343 metres). It lies 97 mile (156 km) west of Nagpur and serves as the administrative
centre of Amravati District and of Amravati Division.
Population of Amravati in 2011 was 6, 47,057 of which male and female are 3, 29,992
and 3, 17,065 respectively. The sex ratio of Amravati city is 957 per 1000 males.
Fig.04. Source: www.mapsofindia.com
204
Nashik:-
Nashik is the 5th largest city in Maharashtra in terms of population after Mumbai, Pune,
Nagpur and Thane. According to the Census of India, 2011, Nashik had a population of
1,486,053. Females 703,536 and Male constitute 782,517 of the population.
Nashik city had an average literacy rate of 89.85%: male literacy was 93.40%, and
female literacy was 85.92%.
It was the 4th largest urban area of Maharashtra State after Mumbai, Pune and Nagpur.
The projected population of Nashik urban area in 2012 is 15, 62,769.
Fig.05. Source: www.mapsofindia.com
205
Aurangabad:-
Aurangabad is a city of Maharashtra state in India. The city is surrounded by many
historical monuments, including the Ajanta Caves and Ellora Caves, which are
UNESCO World Heritage Sites.
Hinduism is the mainstream religion in Aurangabad city at 51.07% with 600,183
followers. Islam is the second most popular religion in the city with 30.79% people
following it. Buddhism is followed by 15.17% people, Christianity is followed by
0.86%, Jainism by 1.62%, Sikhism by 0.29%.
Fig.06. Source: www.mapsofindia.com
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ANNEXURE-ΙΙΙ:
SELECTED FMCG PRODUCTS
207
Annexure- ΙΙΙ: Selected FMCG (Personal Care) Products
1. Emami:- Boroplus cream, Navratna Talk, Navratna Tail, Fair & Handsome,
Diamond shine hair color.
2. Dabur India:- Dabur Vatika, Fem Fairness Naturals, Dabur Red paste , Dabur
Amla Tail, Odonil,
3. HUL: - Lifebuoy, Lux, Ponds’ Powder & Cream, Fair & Lovely, Clinic Plus
4. Amway India:- Santinique Shampoo,Dynamite Cream, Dynamite Deodorant,
Persona Kids Soap,Persona Coconut Oil
5. Colgate Palmolive (India) Ltd:- Colgate Maxfresh, Colgate Total, Colgate
Sensitive Clove, Colgate Zig Zag Toothbrus, Colgate Plus, Colgate Fresh Energy
Gel
6. Himalaya Herbals:- Himalaya Herbals Under Eye Cream, Himalaya Herbals
Protein Hair Cream, Himalaya Purifying Neem Face Wash, Himalaya neem &
turmeric soap, Himalaya anti hair fall oil.
7. Patanjali:- Patanjali Aloe Vera Gel, Patanjali Saundarya Face Wash, Patanjali
Apricot Face Scrub, Patanjali Crack Heal Cream, Patanjali Tejus Anti Wrinkle
Cream, Patanjali Rose Body Cleanser.
8. P& G:- Oral B paste, Olay total effect skin cream, and Pantene shampoo
9. Godrej Industries:- Cinthol, Godrej No.1, Godrej Fair Glow, Godrej Shikakai
Godrej Powder Hair Dye.
10. Marico:- Livon, Set Wet gels ,Hair & Care , Nihar Naturals Shanti Amla Badam
Hair Oil, Parachute Advansed Jasmine Hair Oil, Nihar Naturals Coconut Hair Oil
