Essay, 11 pages (2500 words)

Effect of sales promotions on consumer buying behavior in branded apparels in india

Basically, promotion is first introduced in the 4Ps of marketing. The four Ps represents the marketing mix (Product, Price, Place & Promotion) and the promotional mix is the important term used to explain the set of tools of the business. This is applied to achieve benefit of its products and services from its consumer and the followings are (Advertising, Public relation, Direct marketing, Personal selling and Sales promotion). Basically sales promotions strategies used as a short-term technique tool which principal objective is to influence the ultimate buyers to try a brand or change their mind to another brand.

Does consumption respond to promotion? Many studies have focused on the effects of promotion on brand switching, purchase quantity, and stockpiling and have documented that promotion makes consumers switch brands and purchase earlier or more. The consumers‘ consumption decision has long been ignored, and it remains unclear how promotion affects consumption (Blattberg et al. 1995) Wansink and Deshpande (1994) show that when the product is perceived as widely substitutable, consumers will consume more of it in place of its close substitutes. They also show that higher perishability increases consumption rates.

Throughout the world, consumer sales promotions are an integral part of the marketing mix for many consumer products. Marketing managers use price-oriented promotions such as coupons, rebates, and price discounts to increase sales and market share, entice trial, and encourage brand switching. Non-price promotions such as sweepstakes, frequent user clubs, and premiums add excitement and value to brands and may encourage brand loyalty (e. g. , Aaker 1991; Shea, 1996). A large body of literature has examined consumer response to sales promotions, most notably coupons (e. g.. Sawyer and Dickson, 1984; Bawa and Shoemaker, 1987 and 1989; Gupta, 1988; Blattberg and Neslin, 1990; Kirshnan and Rao, 1995; Leone and 92 | P a g e Srinivasan, 1996).

Despite this, important gaps remain to be studied. It is generally agreed that sales promotions are difficult to standardize because of legal, economic, and cultural differences (e. g. , Foxman, Tansuhaj, and Wong, 1988; Kashani and Quelch, 1990; Huff and Alden, 1998). Multinational firms should therefore understand how consumer response to sales promotions differs between countries or states or province.

This study seeks to demonstrate the impact of sales promotion and advertising simultaneously on consumer’s purchasing behavior. Now-a-days people are conscious to look for the best one and that’s why their fluctuating mind may switch on to new brands with a simple stimulus. In this case an extra incentive can be added to a product by different promotional activities.

Difference in customer’s habits, their cognitive structures and their motives cause them to behave differently when buying. Although an individual doesn’t act the same way in all situations, people tend to act consistently, we may identify six groups of consumers by their buying behavior. A habit – determined group of brand loyal consumers who tend to be satisfied with the Product or brand last purchased. A price – cognitive group of consumers who decide principally upon the basis of price or economy comparison. A cognitive group of consumers who are sensitive to rational claims An impulse group of consumers who buy on the basis of physical appeal and arerelatively insensitive to brand name.

A group of emotional reactors who respond to product symbols and are heavily swayed by images. A group of new consumers who haven’t yet stabilized the psychological dimensions of their behavior. Indian Apparel Industry India’s apparel market is in the throes of change. Rapid growth and rising urbanization have spawned a new class of consumers with more money to spend, and a growing passion for fashion. In India’s high-growth, fast-changing retail clothing market, we see significant new growth opportunities for foreign and domestic players.

The main aim and objective of this research is – How do sales promotion strategies impact on consumer buying behavior? Indian fashion retail industry is transforming rapidly, thanks to growing organized retail, increasing purchasing power and the new-found “ look good-feel good” concept in the youth. This article explores the scope of branded apparels beyond metros by analyzing consumer behavior in the suitable target segment and developing market insights. It maps consumer expectations with key success factors for the industry and recommends suitable entry strategies for leading players considering their individual strengths and weaknesses.

Literature Review In recent decades different researchers and practitioners emphasizes on manufacturer’s advertising and promotion activities which increases market share. According to Anselmi (2000) the relative market share may be influenced by manufacturer’s advertising and promotion allocation decision. He also added that advertising develops the manufacturer’s relationship with the distributors and allocation to promotion can be increased in terms of discrete relationship among them.

Brand with low relative market share may experience greater opportunity for advertising in relational exchange and pressure for promotion in discrete exchange. Teng (2009) aims to show the considerable effects of the price discounts. He explained that price discounts may change consumers’ attitudes and purchase intentions regarding a particular brand by moving it from consumers’ hold set to consideration set. Here it can be added that the consumer are not only sensitive to price but also to the firms’ advertising efforts (Huang et al. , 2012).

Jones (2003) argued here as, in general, increased advertising expenditure generates only a small average volume of additional sales that can often be profitable. He classified the advertising effects in short, medium, and long term. The initial effect can be positive and a prior condition for the longer effects. The medium-term has a positive influence of the brand’s own advertising as well as negative influence for competitive brands. A continuous improvement of an advertised brand may generate long-term effect in consumers’ minds that can lead to a further sales outcome which can be very beneficial.

He also concludes that price reductions have only a temporary effect and generally there is no further effect to generate more revenue to balance the increased cost. Though it encourages the competitive retaliation but often have a negative influence on consumers’ image of the brand. But Builet al. (2011) shows that the individuals’ attitudes toward the advertisements play key role influencing brand equity dimensions. It has been established in literature that only consumers with repeat purchases are profitable (Nagar, 2009).

It is not every repeat purchase that is connected to consumer’s commitment of a brand. However, consumer’s commitment is important for a repeat purchase. Therefore, business operators need to develop marketing programmes that will not only reinforce customer’s commitment but also encourage repeat purchases. A part of the functions of sales promotion is not only to reinforce commitment of consumers but to encourage repeat purchases. Effects of sales promotion on consumer behavior have been widely studied in literature (Nagar, 2009).

Sales promotion has effects on various aspects of consumer’s purchase decisions such as brand choice, purchase time, quantity and brand switching (Nijs, Dekimpe, Steenkamps and Hanssens, 2001); consumers ’ sensitivity to price (Bridges, Briesch and Yim, 2006). Monetary sales promotions could lead to negative impact on brand preference and trust. This is because monetary promotion can divert attention to financial incentives which may encourage brand switching behaviour, increase price sensitivity and make quality criterion less important (Aaker, 1996; Manaled et al, 2007).

Gedenk and Neslin (1999) argued further that sales promotion can lead to a significant decrease in brand loyalty. From the above discussions sales promotion seem to have double-edge impact on consumer behavior depending on the consumer level of commitment. A committed consumer is less receptive of sales promotional efforts. However, a less committed consumer is highly influenced by sales promotional efforts (Mariole and Elina, 2005). These contradictory findings suggest a need for more research on the effect of sales promotion on consumer loyalty. Sales promotion represent to discount a brand, it can be directly or indirectly, directly price reduction or indirectly through coupons & premiums.

But when the industry withdraws the sales promotion, then the normal price should have had a inferior value and the result of this should have had a negative impact on consumer buying behaviour. On the other hand, if there are many negative views, the sales promotions have a strategic role to play in the promotion mix. It has been viewed as short-term tactical tools that can be used offensively to induce the trial of new products or defensively for established products to retain the shelf space for holding the loyal consumers.

Sales promotions are used in the UK super market to drive the customers into loyal customer or the prospect buyer. There are many sales promotion objectives which are geared to stimulating the consumer buying behaviour either to use a product for first time or to encourage use on a routine basis. There is no doubt about the implication of sales promotional to build up loyalty and retention. It had a remarkable promotional development in the recent year. The Indian textile and apparel industry is valued to be worth Rs. 2, 700 billion in fiscal year 2010. t has been estimated on the basis of industry interactions.

Approximately 65% of the total textile and apparel production (wholesale price level) is consumed domestically. India? s domestic textiles and apparel consumption is estimated at Rs. 1, 750 billion (wholesale price level), of which apparels account for approximately 71%. India exported US$20 billion worth of textiles and apparel of which 45% are apparel exports. The textile and apparel industry is one of the largest and the most important sectors in the Indian economy in terms of output, foreign exchange earnings and employment.

It contributes approximately 14% to India’s industrial production, 4% to the country’s GDP and 17% to the country’s export earnings. It provides direct employment to over 35 million people and is the second largest provider of employment after the agricultural sector. Thus the development of this sector has an overall impact on the economy Moorthy (2005) stated differently that advertising expenditure works as a signal of product quality for experience goods because consumers guess that high-quality products would advertise more than low-quality products. He provides substantial support for ad repetition that influences perceived quality.

Thomas et al. (1998) also agreed earlier that advertising is related with quality signaling and manufacturers use both price and advertising to signal the quality of their products. Consumer’s choice behavior is also a vital thing here. Foxall (1994) also labeled four classes of consumer behavior including maintenance (activities necessary for the consumer’s physical survival and welfare such as food), accumulations (behaviors involved in certain kinds of saving, collecting, and installment buying), pleasure (consumption of popular entertainment), and accomplishment (behavior showing social and economic achievement).

These four types of behavior can be applied to the communications of innovations of new products. Among other, accomplishment will be the initiators exposed to the product. As the life of the product continues the other three behaviors will come into effect in order of early imitators (pleasure), later imitators (accumulation), and last adopters (maintenance). Here marketer can use a lot of promotional tools. As a consumer promotional tool coupon can affect on consumers’ brand categorization, choice processes and impacts on consumers’ attitudes and intentions toward that brand (Laroche et al. 2005).

Chen et al. (1998) also state that when offering the same savings in coupon or discount promotion then the coupon promotion would more favorable and effective in changing consumer’s purchase intention. Children’s purchase decisions are also influenced by the sales promotion (Boland, 2011). Even at a young age, children have acquired the concept of sale price reduction. Prior purchases can also influence the consumer response to promotional activity in brand choice decisions. According to Bridges et al. (2006) prior promotional purchases influence the consumer choice more than prior brand usage.

When the effects of usage dominance are greater than promotion enhancement, promotions can be used as an effective tool for building market share. Darke (2005) also examined that different promotional frames increases the perceptions of deal value. But it needs to concern about that negative price-quality inferences are most likely to occur when the brand name or seller is not well-known (Rao & Monroe, 1989) and free gift frames were effective in increasing deal value under such conditions. Kopetz et al. (2011) says that like most behavior, consumer behavior is goal driven too.

A choice made after a difficult search may increase consumers’ satisfaction as a result of an effort justification process (Labroo & Kim 2009; Liberman & Forster, 2006). Multiple unit price promotions may provide a means for increasing purchase quantities of promoted products (Manning, 2007). Polo et al. (2011) shows that mass advertising exert a significant influence on the probability of terminating an existing incumbent relationship. Nowlis (2000) also proposes that sales promotions and the choice set composition have compensatory effects on brand switching.

Selecting the effective instruments and identifying the target customer is also very important part of any promotional activity. Palazon (2011) observes that the effectiveness of different promotional tools, price discounts and premiums depends on the level of deal proneness. An effective and well planning promotion can stimulate consumers’ buying intentions but the success of the promotion would be contingent on deal proneness. So is vital to identify the target customer and more effective instruments to attract them in designing a promotional campaign. society and the individual influencing their behavior.

It also provides huge amount of information to consumer to make a choice and draw a conclusion. Hyun et al. (2011) also stated that advertising-induced emotional responses positively influence patrons’ perceived value. He indicates four dimensions of advertising (relevant news, stimulation, empathy, and familiarity) that have a significant impact on inducing patron’s emotional responses. Beside of these positive effects, the marketers also have to be careful about their efficient uses. Moreover Dens (2010) compares two types of advertising strategies like informational vs. positive emotional.

He finds that informational appeals in comparison to emotional appeals reduce the effects of parent brand quality and fit. It should also consider the geographical location of the consumer which can plays a vital role regarding the response of advertising and sales promotion. Relating this issue, Green (1995) examines the responses of African-American and Anglo-American consumers to four types of retail sales promotion-coupons, product displays, feature advertisements, and price discounts. Results found significant differences between these two types of consumer only in their use of cents-off coupons.

After observing such relevant articles, it can be concluded that many researchers examined and studied different aspects of sales promotion and advertising on consumer’s behavior. There are some considerable contradiction among the previous works and theories of science. This paper is a combined study or examination of all these agreements and contradictions. It is known to all that the consumer’s behavior largely depends on their geographical location. Many researchers have studied their work in their own geographical locations.

This work emphasizes on the consumer’s behavior of a sub continental country like Bangladesh. There are a lot of works based on different developed countries and different classes of consumer as well. Here this is an attempt to test the behavioral theories on economically higher and middle class customer regarding to a developing countries like Bangladesh. The behavioral theories are already examined on different famous or international brand. The findings of this work can be applied not only on the local product but also on the national or well known products.

Most of the previous works are done individually on sales promotion or advertising. Here this work will integrate both of these important marketing strategies simultaneously. This work attempts to examine the impacts of knowing the product’s primary information along with its promotional messages through advertising on consumer’s behavior. By observing the importance of knowing the new promotional activities through advertising, the final goal of this paper is to find out the combined effects of sales promotion and advertising on consumer’s purchase behavior that can influence the sales volume.

Branded Apparels in India. The Indian economy has been witnessing a massive change for the last one decade because of the various dynamics of the business. Particularly the business sectors like share market, retailing, BPO, real estate etc. are growing rapidly. The Indian retailing industry is moving towards the phase of organized retailing from the phase of unorganized retailing. Over the past few years, the retail sales in India are hovering around 33-35 per cent of GDP as compared to around 20 per cent in the US.

According to a survey conducted by business consultancy Technopak Advisors, the country’s retail market is expected to touch 620 billion Euros by 2020 at a compounded annual growth rate (CAGR) of more than 25 per cent. Strong underlying economic growth, population expansion, the increasing wealth of individuals and the rapid construction of organized retail infrastructure are key factors behind the forecast. Estimates say (based on industry interactions) that the Indian apparel market grew at a CAGR of . 5% from Rs. 1, 225 billion in fiscal year 2005 to Rs. 1, 675 billion in fiscal year 2010 (wholesale level).

The Indian apparel market comprises domestic apparel consumption and exports. The domestic market is estimated to be worth Rs. 1, 250 billion in fiscal year 2010 (at wholesale level). Spending on domestic retail apparel has grown at a high rate of approximately 13–14%. The apparel market size at the retail level is estimated at Rs. 2, 000 billion in fiscal year 2010. The retail purchases on apparels is expected to double to approximately Rs. 4, 000 billion by fiscal year 2015, a CAGR of approximately 15%.

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