UNIVERSITY OF GHANA

MARKETING DEPARTMENT.

NAME: KODI ELIZABETH TEKI

ID NUMBER: 10409574

THE EFFECTS OF BELOW THE LINE SALES PROMOTION ON THE PURCHASE

OF FAST MOVING CONSUMER GOODS (PROMASIDOR’S EXPERIENCE)

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 CHAPTER ONE

INTRODUCTION

1.0 Background of the Study

When a consumer goes shopping, his/her decision to buy or not to buy is influenced by consumer

characteristics (e.g., income, family size, purchase frequency) and by the marketing environment

(e.g., the prices and promotion activities of the various brands and stores). Marketing mix

variables can affect these decisions to differing degrees Teunter (2002)

The different effects sales promotions can have on household purchase behavior (brand

switching, store switching, purchase acceleration, repeat purchase, and category expansion) are

known as the possible sales promotion reaction mechanisms Blattberg and Neslin (1990). In this

study, purchase, as one of such reactions will be looked into.

1.1 Sales Promotion

Sales promotion is an activity intended to stimulate purchases by adding an incentive to the

inherent features of the product or services offered. Most sales promotions have a specific

duration Majeed, jasmine CK International Research Journal of Interdisciplinary &

Multidisciplinary Studies (IRJIMS) Volume-I, Issue-VII, August (2015). They produce results

quickly but once the promotional period is over that incentive induced sales tend to disappear. A

properly designed sequence of sales promotion can accomplish various objectives like encourage

an initial purchase, foster increased purchases and reward repeated purchase.

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Sales promotion as a pivotal component of marketing mix has been heavily used as a major

incentive tool to pull consumers to stores and increase short-run sales volumes. Since 1980s,

researchers have constantly proposed a variety of concepts to illustrate how sales promotion

might affect consumer purchase behavior via overcoming "consumer entropy" Beem & Shaffer

(1981), inviting consumers to engage in transactions Kotler (1988), heightening the

psychological value associated with the transactions Thaler (1983), or by providing consumers

with a script of purchase behavior Gardner & Strang (1984). No matter what effects of sales

promotion would be, all the convictions alleged by the preceding studies indicate that sales

promotion may activate or facilitate certain consumer psychological mechanism based on the

notion that sales promotion "affects consumer by acting on basic mental processes common to all

decisions" (Schindler & Rothaus 1985). Although sales promotion has become a universal

element of consumer marketing, large portions of ineffective promotional activities indicate a

great need of refining and redirecting the focus of the impact sources. Numerous studies have

focused on consumer attitudinal and behavioral responses to price promotion and its utilitarian

benefits (S Gupta 1988, RC Blattberg and SA Neslin 1997, DC Gilbert and N Jackaria 2002).

Below the Line Sales Promotion

Below the line sales promotions are short-term incentives, largely aimed at consumers. With the

increasing rate of competition, organizations are seeking ways to capture the attention of the

consumer and as such has led to an increasing demand for marketers who can go beyond the

everyday marketing theories and practices to increase their sales volume (Shukla, 2007). With

this pressure on the marketing team to achieve communication objectives more efficiently in a

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limited budget, there has been a need to find out more effective and cost efficient ways to

communicate with the target markets. This has led to a shift from the regular media based

advertising to what Hugh Davidson defined as below the line sales promotion-'An immediate or

delayed incentive to purchase, expressed in cash or in kind, and having only a short term or

temporary duration'. Some examples of below the line sales promotion include:

BOGOF (buy one, get one free) offers, Price discounts (10% off this week), Giveaways,

Competitions to win holidays or cash prizes, Sponsorships and many more.

Companies producing Fast Moving Consumer Goods (FMCG) in Ghana make use of more of

below the line sales promotion because there are many brands involved and because of limited

funds available for promotion of the many brands available Quarshie, (2000).

Fast Moving Consumer Goods (FMCGs)

Fast Moving Consumer Goods (FMCG) are products that have a quick shelf turnover, at

relatively low cost and do not require a lot of thinking time and financial investment to purchase.

It refers to a wide range of frequently purchased consumer products including toiletries, soaps,

cosmetics, teeth cleaning products, shaving products, detergents, other non-durable such as

glassware, bulbs, batteries, paper products and plastic goods, such as buckets. The food category

in Fast Moving Consumer Goods is gaining popularity fast in Ghana. According to KPMG sector

report on Fast Moving Consumer Goods in Africa (2014 edition), the food sector dominates the

Fast Moving Consumer Goods in Ghana, closely followed by the beverage sector. In line with

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this, Promasidor, which is one of the leading companies in Ghana will be used as a case study in

this project.

Promasidor is involved in a range of products like Cowbell Coffee milk, Choco malt, Malt milk,

Sweet milk Strawberry and Mocha. Miksi, Kremela creamer as well as a range of Onga

seasoning powders. For the purpose of this study, Cowbell, which is the leading product of the

company will be selected as an example of fast moving consumer good to be analyzed

1.1 Statement of the Problem

Given the increasing importance of sales promotions as a percentage of the total

advertising and promotional budget (growth from 58 percent in 1976 to 72 percent in 1992,and

increasing at a rate of 12 percent per year over the last 10 years (Gardener and Trivedi 1998),

studies that strive to understand the impact of sales promotions on consumers are very important.

Most studies however look at the sales promotion as a whole whether pricing promotion or non-

pricing and the impact on consumer purchases. Thus, uncertainty exists about the effects of using

or not using a promotional pricing strategy.

Although, many studies show that as a result of direct impact of sales promotion on the

purchasing habit of consumers, ‘manufacturers are now spending more money on promotions

than on advertising (Blattberg, Briesch and Fox 1995). However, some studies reveal that 80

percent of promotion users are, in fact, loyal customers who presumably would have bought the

brand regardless of the promotion (Levine 1989). In many of these studies that are giving

conflicting conclusions on the effects of sales promotion on purchase of Fast Moving Consumer

Goods, both above-the-line and below-the-line sales promotions are used raising the question of

whether if only one strategy is employed, there might be a consistent conclusion in all the

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studies. Thus, this research is trying to pin-point the effects (if there is any) below the line sales

promotions of Fast Moving Consumer Goods will have on the purchasing pattern of the

consumers in Ghana who otherwise would not have responded to over the line promotions. The

study also wants to know whether statistics such as age, sex and level of education attained can

influence which tool of sales promotion a consumer will readily respond to.

1.2 Objectives of the study

The broad aim of this study is to explore the effects below the line sales promotions have on the

purchase of fast moving consumer goods by consumers in Ghana. This can be in terms of

increasing purchase volume, repeated purchases or outright switching of brand loyalty. The

specific objectives are highlighted below:

• To explore Cowbell milk as a brand and what factors informed its awareness in the

Ghanaian market.

• To explore what informs consumers’ purchase of Cowbell milk.

• To determine if below the line sales promotion is used in marketing Cowbell and its

effect on the buying behavior of consumers in Ghana.

• To identify the most influential type of below the sales promotion on consumers’

buying behavior in Ghana.

• To determine if gender, age and level of education have anything to do with

consumers’ response to below the line sales promotion from Cowbell in Ghana.

1.3 Research Questions

The following research questions when answered will facilitate the realization of the research

objectives:

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 • Under which circumstance does below the line sales promotion influence the

purchase of cowbell milk?

• Is the popularity of Cowbell milk as a result of the below the line sales promotional

activities of Promasidor on the product in Ghana?

• What type of below the line sales promotion does cowbell use for the marketing of

Cowbell milk?

• Do consumers adjust their purchases or switch from a previous brand to Cowbell as a

result of its below the line promotional offers?

• Which of the promotional tools has the greatest effect on consumers’ purchase of

Cowbell?

1.4 Significance of the study

This study expands on available works on how below the line sales promotions affect the

purchase of fast moving consumer goods. Unlike most research works on this topic that focus

generally on sales promotion, this research intends to narrow down to below the line sales

promotion. This study is important because recently, below the line sales promotions have

become very significant in most industries in Ghana and hence, there is need for research to

determine the extent to which below the line sales promotions affect the purchases of consumers

and in turn, the overall profit of the firms. It is hoped that this study will help stakeholders make

informed decisions on which type of below the line sales promotions to concentrate on for

maximum market penetration, acceptance and profitability of industries in Fast Moving

Consumer Goods and other industries in Ghana.

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It is also hoped that the result of this study, will convince scholars and researchers to pay more

attention to below the line sales promotion as a distinctive concept rather than muddling it up

with or being regarded as same as sales promotion.

1.5 Scope and Limitations of the study

This study aims to look at the effects of below the line sales promotion on purchase of Fast

Moving Consumer Goods in Ghana. The study will draw sample across Accra which will

comprise both male and female, different age groups and people of varying educational levels.

The sample will be used to get inference on the people of Ghana in terms of their purchasing

pattern of fast moving consumer goods.

The study is limited in scope in terms of the areas in Ghana where the samples will be drawn

from as the purchasing pattern of people in an urban area like Accra might be significantly

different from people in rural areas like Akosombo, Dodowa, Ada and even other cities outside

Accra.

Because of time and cost constraint, the size of the sample is not very large. A further study on

this subject can expand the sample size to accommodate more respondents. Also, the list of data

to be measured against purchasing behavior of consumers like age, sex and level of education is

not exhaustive, further studies can include income level of the consumer and also government

policies.

1.6 Research Methodology

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To achieve the research objectives outlined, the research will be in two categories. The

descriptive research which will be used to describe certain characteristics in the study and the

causal research which will be used to determine cause and effect relationships in the study.

1.6.1 Research Approach

In line with the research objectives of this study and working within the scope and the limitations

highlighted, the study will be qualitative and make use of qualitative means of obtaining data.

1.6.2 Research Design

The research will be qualitative in design. The survey will be conducted with the use of

questionnaire in sampling of opinion of different people at a particular point in time. In other

words, a cross sectional sampling analysis will be adopted. The questionnaire will be designed to

feature mostly closed-ended questions apart from questions that will seek to acquire the

respondents’ demographic data.

The study will make use of a sample size of 100 that will be drawn from different age groups,

gender, levels of education and income levels.

1.6.3 Sources of Data

The primary source of data for this study will be elicited directly from the respondents through

questionnaire since the study is about the effects of sales promotion on the purchase of Cowbell

milk by consumers (respondents) in Ghana. The secondary data will be obtained from annual

reports of Promasidor and their other publications.

1.6.4 Data Analysis

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This study being descriptive in nature will make use of tables to analyze the data to be collected.

The use of tables will show clear and easy to see relationship between independent variable and

the dependent variable. It also makes for easy comparison on the demographic details of

respondents in relative to their response to sales promotion from Cowbell in Ghana.

1.7 Organization of the study

This project work is structured into five chapters. Chapter one states the outline of the study, a
background view of the study, the problem statement, the significance of the work, the research
methodology, the scope as well as the limitations of the study.

The review of available literature on the work of study is done in chapter two. Chapter three
highlights the research methodology comprising of the sources of data, the sampling method, the
size and design of the research. Chapter four of the study is where the collected data is compiled
and analyzed. Chapter five concludes the study and discusses recommendations for future
researches along the line of this study.

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 REFRENCES:
Linda H. Teunter (2002). Analysis of Sales Promotion Effects on Household Purchase Behavior.
Erasmus Research Institute of Management (ERIM)
Robert C. Blattberg, Scott A. Neslin (1990). Sales Promotions: Concepts, Methods and
Strategies. Prentice Hall College Division
Dr C Abdul Majeed, Haseena jasmine CK International Research Journal of Interdisciplinary &
Multidisciplinary Studies (IRJIMS) Volume-I, Issue-VII, August (2015)
Beem, E.R. and Shaffer, H.J. 1981. Triggers to Customer Action-Some Elements in a Theory of
Promotional Inducement, Marketing Science Institute: Cambridge,, Massachusetts.

Philip Kotler. Marketing management: analysis, planning, implementation, and control. Prentice-
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Meryl P. Gardner, Roger A. Strang (1984) Consumer Response to Promotions: Some New
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pp.315 – 322
Eric Quarshie (2000). Role of Sales Promotion in Increasing Revenue: The Case Study of the
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