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Int. J. Value Chain Management, Vol. 7, No. 2, 2014

Value-based promotion a consumer retention tool in


electronics goods market
Gemini V. Joy*
Anna University,
Chennai 600 025, Tamilnadu, India
E-mail: geminivjoy@gmail.com
*Corresponding author

P.S. James
T.A Pai Management Institute (TAPMI),
P.O. Box 9, 80 Badagubettu,
Manipal-576 104, Karnataka, India
E-mail: james@tapmi.edu.in

N. Senthil Kumar
Department of Management Studies,
Anna University,
Chennai, 600-025, India
E-mail: sen.nsk76@gmail.com
Abstract: The marketing world is spinning around different types of value for
money strategies. All the sales promotion tools are assuring the customer about
an incomparable deal. What more the customers are getting is always pacifying
the consumer during his purchasing efforts. Value for money-based sales
promotion is one of the most significant strategies that can be adopted by the
mobile handset marketer. The present study had taken four value-based sales
promotion tools such as product bundling offer, exchange offer, free after sales
service for limited period and Take one get one free offer. The study also
analysed the impact of the said factors in consumer electronics segment among
consumers of different demographic profiles. It also tested the influence of the
four factors in value perception of customers.
Keywords: customer value; customer perceptions; customer evaluations; sales
promotion.
Reference to this paper should be made as follows: Joy, G.V., James, P.S. and
Senthil Kumar, N. (2014) Value-based promotion a consumer retention tool
in electronics goods market, Int. J. Value Chain Management, Vol. 7, No. 2,
pp.124133.
Biographical notes: Gemini V. Joy is a doctoral student of Anna University,
Chennai. Her research interest is in the area of brand equity and is zealous in
studying about customer-based brand equity of mobile phone users. After her
graduation in psychology and post-graduation in MBA she has been fervent in
studying about marketing. She takes classes for enthusiastic students about
marketing matrices and brand management. A prolific researcher, she has also
Copyright 2014 Inderscience Enterprises Ltd.

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multidisciplinary ideas and has published papers in HR and KM as well and has
many international conference presentations to her credit.
P.S. James is a Professor of T.A Pai Management Studies, Manipal.
After serving Indian Army and getting a graduate degree from Defense
Services Staff College, he completed his MBA programme from UBS,
Chandigarh and Israel Asper School of Management of University of
Manitoba, Canada. He also took a Masters degree in Psychology from Madras
University and completed his PhD from Devi Ahiliya University, Indore.
After a noble career as the Founder Dean of Saintgits Institute of Management
he is now serving T.A. Pai Management Institute as a Faculty. An ardent
researcher, he has published in leading journals and has more than 40 papers to
his credit. His interests are in application of motivational language theory
propounded by Sullivan, exploring multiple intelligence and kinesthetic
intelligence in India.
N. Senthil Kumar is currently serving the Department of Management Studies,
Anna University, Chennai as an Associate Professor. He has a total academic
experience of 14 years. After his Bachelors in Mechanical Engineering and post
graduate degree in MBA (Operations and Marketing Management) he has also
secured a PhD in the area of Management. Being a PhD guide he has guided
many students towards academic excellence. His research papers (nearly 20 of
them) and case studies have been published in leading management journals
across the world. His expertise includes service quality, supply chain
optimisation, and application of sophisticated operations research techniques in
the services sector.

Introduction

Electronics goods market is witnessing changes, modifications and cut throat


competitions. All the segments from mobile handsets to the most complicated or
advanced computer systems are competing for a reasonable market share. Markets are
fragmented on the basis of heterogeneous hair thin customer cluster groups to
homogenous unanimous demands from all. Marketers are confused about how they can
create a place in the mind of consumers. The recession phase of 2013 also had its
devastating effect electronic goods market due to cost cutting plans on life style products
by the customers. To breathe life into this inactive market, the marketer can try out some
of the value for money promotional strategies.
Value can be generated through the interaction of some individuals/institutions
which can give a mutual support. Marketing functions (packaging, selling promotion
etc.) are continuously working towards value creation process. Decisions on pricing
by the marketers are ruled by value oriented strategies such as the product assortments,
free of cost services, discounts, take one get one free etc. The gap between inactive
customer and active marketer is fixed by value-based marketing strategies. It made
two unrelated lines to intersect on a common point (Alderson and Martin, 1965;
Burt, 1992). The top ranked item in exchange of goods and services between buyer
and seller is evaluated on the basis of value received by buyer from seller. Value in
exchange is only one type of value. According to Mittal and Sheth (2001), the value

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G.V. Joy et al.

definition given by the firms is expanded through performance and personalisation value
and value for money. Lusch and Vargo (2006) describe the alteration from value in
exchange to value in use. After understanding the importance of focusing on value offers,
marketers around the globe started tailoring strategies accordingly. Value-based sales
promotion is trigger the consumer to receive an incentive for the purchases they are doing
in the market.

Survey of literature

Pricing decisions must start with customer value. In any purchase situation, the customer
is buying some benefits in exchange of a price for the received benefit to the seller (Gale,
1994). Value-based pricing is depended upon customers perception of value rather than
the sellers cost-based pricing. Hence the marketers who believe in value-based
marketing sets price before their marketing programme to satisfy and retain their market.
Analysis of consumer needs and value perceptions followed by setting of price to match
the value perceptions of customers are value-based pricing.
Right mix of product/service and quality at a reasonable price is good value pricing
strategy. This might call the attention of marketers to less expensive models of
established brand name products. Wal-Mart introduced EDLP every day low pricing, a
good value pricing strategy to the marketing world. This involves charging low price
every day in a constant manner. Along with the above said strategy, electronic markets
also witnessed the justification strategies adopted by the high prices companies. For their
high priced commodities, the said companies introduced value-added features to
differentiate their product models. The biggest question need to be answered by the firms
is how to offer customers products and services with perceived value. Creating a different
customer experience in addition to value pricing and value added features may be the
proper response for this but the competitive advantage of modern enterprises lies in their
ability to create desirable customer experiences continuously. Many corporates are taking
innovative approaches to create customer experiences.
Value can be defined as the consumers general evaluation of the usability of a
product based on cognitive processing of what benefil received and how much the
customer invested for that (Zeithaml, 1988; Monroe, 1990). It includes social benefits
received by a customer firm in B-to-B context in exchange for the price paid (Anderson
et al., 1993). We can also explain customer value as a cognitive bonding between a
customer and a producer (Butz and Goodstein, 1996).
Customer - value and customer satisfaction goes shoulder to shoulder because of the
involvement of processes such as assessment and judgment about products, and both give
a special importance for usage situation (e.g., Clemons and Woodruff, 1992; Spreng
et al., 1996; Westbrook and Reilly, 1983). Overall satisfaction is the customers feelings
in response to evaluations of one or more use experiences with a product but what
exactly, do customers evaluate about use experiences? The customer value hierarchy
helps to answer this question. When the customer received a stimulus for evaluation, he
connects himself to some notions, learned from past and present experiences, about
what value he desires for. The customer value hierarchy suggests that desired
value is composed of preference for specific and measurable dimensions the
dimensions/features, its performances, and consequences connect to goals for use

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situations. Expected value, in turn, routes customers when they form evaluation-based
perceptions of how good or poor a product has performed in the required situation. In
other word, the buyers assess their experiences on the features offered, product
performance, consistency and reliability in performances and consequences constructed
in their desired value hierarchies. Assessed value will be stored and formed as the overall
satisfaction / feelings towards the brand (Churchill and Surprenant, 1982), or they
may compare perceived value to experienced value and (Clemons and Woodruff,
1992; Woodruff et al., 1991). As per the version given by value hierarchy, different
kinds of overall satisfaction feelings may arise (Clemons and Woodruff, 1992). The
purchasers expected value hierarchy contributed to satisfaction feelings at each level in
the hierarchy. Thus customers may experience more or less satisfied with product
features and performances, use consequences, and even goals and purpose they want to
achieve.
In brief customers may view and experience value in different manners at the time of
purchase than pre-purchase or post purchase situations (Gardial et al., 1994). Gale (1994)
described customer value as the adjustment of price in relation to the perceived quality of
the market. Customers have expectations which usually act as a frame of reference for
them to measure the performance of a firm (Robledo, 2001).
Linking perceived benefits and perceived sacrifice is perceived customer value
(Ravald and Grnroos, 1996). Failure in keeping the promises expected from sellers by
the buyers will create gaps. These gaps between the expected and perceived value will
give adverse effects on retention of customers (Wikner, 2007). Price, quality, brand
Image, company image and service quality are having a major role in customers
perceptions of value (Naumann, 1995).
Figure 1

Research hypothesis

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G.V. Joy et al.

Research questions

Based on the literature survey, the following questions focused on value perceptions of
consumers regarding value-based sales promotion strategies had formulated and tested
for the study:
1

Is there a significant perceptual difference exist between male and female consumers
of electronic goods market regarding product bundling offers, exchange offers, free
after sales service and take one get one free offers?

Is there a significant perceptual disparity exist among consumers of different marital


status regarding product bundling offers, exchange offers, free after sales service and
Take one get one free offers of electronic goods market?

Do product bundling offer, exchange offer, free after sales service for limited period
and take one get one free offer have an influence on customer perception of value?

Methodology of the study

The study is conducted among the consumers of different demographic profiles in Kerala,
which is having one of the highest densities of electronic goods users in India. The
sample for the survey is drawn from different gender groups and marital status.
Table 1

Consumer profile

Gender

Marital status
Married

Unmarried

Male

105

34

Female

86

32

The statistical tools such as regression, ANOVA and t-test are used for testing the
hypothesised relationships regarding the influence of Product bundling offer, exchange
offer, Free after sales service for limited period and Take one get one free offer on
positive customer perception of value on consumer electronics purchase decision
and perceptual variation among different respondents of different demographical
backgrounds.

Relevance of the study

Durable goods market is demanding high investment for majority of its product
categories. In addition to the above said factor, it also has a wide number of players, who
offer great varieties of products through innovative marketing techniques. Among all the
strategies, the consumers are giving importance to value-based sales promotions. The
large investment product markets make the consumers to think wisely and direct their
investments on commodities which give an additional value for normal payments. The
area of the conducted study is comparatively new in its connection with value addition in
promotional offers. Also the study is providing attitudinal and behavioural evidences on

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how the consumers are reacting to value-based promotions by the consumer electronics
marketers.

6
Ha1

Empirical results and discussion


There is a significant difference exists between consumers of different
demographic profiles regarding their perception on product bundling offer.

Table 2

Perception of Consumers from different demographic background to product bundling


offers in consumer electronic market

Parameter

Group variable

Product bundling
offer

Gender
Marital status

Individual variables

Mean

Sig.

1.387

.652

2.124

*.021

Male

3.26

Female

3.02

Married

3.62

Unmarried

3.11

Notes: Table value: 1.96


*p<.05

Testing on how product bundling offer of electronic goods is perceived by different


gender categories and marital status has given a mixed result. Since the p-value
(.652) > .05 and t-value (1.387) < 1.96 in the case of gender categories and t-value
(2.124) > 1.96 and p-values (.021) < .05 in the case of marital status, Ha1 is partially
accepted. The result shown no perceptual disparity among consumers from different
gender categories and regarding the perception of respondents from different marital
status there exist a mean about product bundling offer. Married consumers given more
positive perception towards the offer than unmarried.
Table 3

Perception on exchange offers in electronics market

Parameter

Group variable

Individual variables

Mean

Sig.

Gender

Male

4.38

.978

.325

Female

4.03

Marital status

Married

4.57

2.546

*.004

Unmarried

3.11

Exchange offer

Notes: Table value: 1.96


*p<.05

Ha2

There is a significant difference exists between consumers of different


demographic profiles regarding their opinion on exchange offer.

As exhibited in Table 3, testing on exchange offer of electronic goods among gender


categories and marital status has yielded a partial acceptance to Ha2. Since the p-value
(.325) > .05 and t-value (.978) < 1.96 in the case of gender categories and t-value
(2.546) > 1.96 and p-values (.004) < .05 in the case of marital status, testing on
hypothesis given a mixed result. Unmarried consumers slightly neutral in their opinion
about exchange offers than the married consumers.

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G.V. Joy et al.

Table 4

Perception on limited period free after-sales service offer in electronics market

Parameter

Group variable

Individual variables

Mean

Sig.

Gender

Male

4.01

2.721

*.000

Female

3.98

Married

4.29

2.344

*.018

Unmarried

4.06

Free after-sales
service offer for
limited period

Marital status

Notes: Table value: 1.96


*p<.05

Ha3

There is a significant difference exists between consumers of different


demographic profiles regarding their opinion on free after-sales service offer for
limited period.

Testing on free after-sales service offer for limited period among gender categories
and marital status of electronics goods market has given a favourable response to
Ha3. Since the p-values (.000) and (.018) of gender categories and marital status
respectively < .05 and t-values (2.721) and (2.344) of gender categories and marital status
respectively < 1.96 Ha3 is accepted. i.e., there is a significant difference exists between
consumers of different demographic profiles regarding their opinion on free after-sales
service offer for limited period. As per the table output, married consumers and male
respondents are holding positive perceptions than female respondents and unmarried
consumers.
Table 5

Perception on take one get one offer in electronics market

Parameter

Group variable

Individual variables

Mean

Sig.

Gender

Male

4.13

1.854

.532

Female

4.03

Married

4.10

2.732

*.017

Unmarried

3.98

Take one get


one free offer

Marital Status

Notes: Table value: 1.96


*p<.05

Ha4

There is a significant difference exists between consumers of different


demographic profiles regarding their opinion take one get one free offer.

Testing on Take one get one free offer of electronics market among gender categories
and marital status has given a mixed result. Since the p-value (.532) > .05 and t-value
(1.854) < 1.96 in the case of gender categories and t-value (2.732) > 1.96 and p-values
(.017) < .05 in the case of marital status, Ha4 is partially accepted. Eventhough the
consumers of different gender category shown similar evaluation, consumers of different
marital status exhibited a perceptual disparity regarding their opinion about Take one get
one free offer. Married consumers shown more favourable tendency towards the offer
than unmarried.

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Standardised estimates of the hypothesised relationships using


regression analysis

Multiple regression analysis is applied for testing the influence of certain variables on
positive customer perception of value in electronics goods market. The linear regression
model thus developed is:

7.1 Model 1
Ha5

Product bundling offer, exchange offer, free after sales service for limited period
and take one get one free offer have an influence on positive customer perception
of value in electronics goods market.
Y = + b + c + d + f +

where
Y

positive customer perception of value to money

constant

product bundling offer

coefficient of product bundling offer

exchange offer

coefficient exchange offer

free after sales service for limited period

coefficient of free after sales service for limited period

take one get one free offer

coefficient of take one get one free offer

sampling error.

Table 6

Regression model output for positive customer perception of value

Predictors

Standardised beta coefficients

Sig.

Product bundling offer

.626

7.013

*.000

Exchange offer

.548

5.432

*.012

Free after sales service for limited period

.430

4.876

*.002

Take one get one free

.383

4.321

*.024

Dependent Variable : positive customer perception of value R square = .728* < .05

Since R square value is .728, 72% variability in positive customer perception of value is
explained by the independent variables taken for the study.
As per the output displayed by Table 6, the variable, Product bundling offer
( = .626; t = 7.013) and exchange offer ( = .548; t = 5.432) influence positive customer
perception of value to money in electronics goods market and with high significance
where the other variables, free after sales service for limited period ( = .430; t = 4.876)

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G.V. Joy et al.

and take one get one free ( = .383; t = 4.321) influence it with a less significance.
Hence the overall model is significant with the selected variables and Ha6 is supported.
Henceforth we can say that the selected variables: product bundling offer, exchange offer,
free after sales service for limited period offer and take one get one free have a
remarkable place in value creation of electronics goods purchases.

Major results and implications of the study

The selected area of the study is comparatively less explored one in regard to segment,
i.e., electronics goods and combination of selected variables (demographic variables and
value-based sales promotion strategies). Electronics goods manufacturers undoubtedly
view sales promotion tools as a measure to shore up sales, the study is adding knowledge
to the specialised segments of marketing such as consumer behaviour and promotion
management. It is also assisting marketers to gain knowledge about the impact of offers
as value to customer perception and its intensity across various consumer demographic
profiles.
The study related to preference for a promotional offer during purchase decision
making of electronics goods among different gender categories of Kerala market shown a
favourable perception. When applied it in different offers categories such as Product
bundling offer, Exchange offer, Free after sales service for limited period and Take one
get one free offer. But regarding respondents from different marital status given mixed
results, i.e., the married shown more favourable responses towards the offers than
unmarried customers. Hence we can conclude that experts, who are focusing on
electronics goods purchasers, have to tailor different programmes for consumers of
different demographic profiles.

Areas for future research

The conducted study has taken only very few variables of sales promotion tools for value
addition to the customers. The general category of product segment did not given the
impact of any specific categories such as TV, refrigerator, oven etc. Hence the future
studies can consider the selected sales promotion strategies on selected durable goods
categories and expand it with additional strategies and other product categories such as
high involvement and low involvement goods.

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