IMPACT OF SALES PROMOTION STRATEGIES ON CUSTOMER’S PATRONAGE (A CASE STUDY OF PIZZA HUT, THAILAND)

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

In today’s business world, organizations keep changing strategies in order to survive and be competitive. In several organizations, sales promotion is a tool or a time bound program offered to attract customers and require their response in the form of an immediate purchase. According to Kotler (2014) sales promotion is a vital tool in marketing campaigns which consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by customers.  They represent those activities that fall outside advertising, publicity and direct marketing, although, these could serve as agents of sales promotions the American Marketing Association says its preferred definition is “Those marketing strategies other than advertising, publicity, etc. that stimulate consumer purchasing and dealer effectiveness such as displays, shows and exposition, demonstration and various non- current efforts not in the ordinary routine. For an organization to remain competitive in the competitive market, the marketing strategies adopted are the key. To remain in business as an organization, customers are identified as kings. Customers are faced with varieties of choices and decisions with respect to product size, quality, incentives and price. Thus, it is essential that producers strive to meet the needs of customers in order to stay in business. To achieve this, marketing strategies have been identified as important tools utilized to expand market share, sales and profit level. To retain customers in the face of keen competition, service providers must develop marketing strategies that will not only win customers but help to retain them. Sales promotion is seen as the next available marketing strategy that help to promote sales, increase product life cycle, sales growth and enhance customers’ goodwill Moemeke(2007). Also, the studies of Omotayo (2011), Akanbi et al (2011) argued that that sales promotion plays an important role in retaining old customers and attracting new ones. The existence of a business is not only to produce goods and services that will be required by customers and to make profit from such activity but should be able to enhance repetitive purchases. This has triggered pizza hut in Thailand to undertake different strategies to boost profit and increase their market share. The pizza hut service providers have offered various promotions to customers and dealers as a form of reward and an offer to purchase the product, to increase their market share. The major forms of consumer promotion offered subscribers over the years have been sweepstakes, contests and games2, premiums, point of purchase display and price deals. Sales promotion has been identified as a marketing tools adopted to attract the attention of consumer and build their loyalty about a product. It’s a means used by producers to communicate with intended target audience. Sales promotion is unique in that it offers an extra incentive for action (Palmer, 2010). Sales promotion refers to those promotion activities other than advertising, publicity and personal selling that stimulate interest, trial or purchase by final customers or others in the channel (Pillai, 2007). Sales promotion is seen as an enterprise marketing tools adopted by firms to facilitate sales, usage or trail of a product or services to create awareness. It essentially aims to stimulate demand during the period in which it is set (Peattie & Peatie, 2011; Lehman &Winer, 2015, Walsh 2011). The potential benefits of using sales promotion could range from attracting new consumers from competitors to persuading consumer to switch to brands with higher profit margins or simply inducing existing customers to buy more. It provide extra-incentive for the target audience to make purchases or support one brand over another thereby serving as a competitive weapon. Hence, it increases market share (Luk and Yip, 2008). Sales promotion involves some type of inducement that provides an extra incentive to buy. This incentive is usually the key element in a promotional program; it may be a coupon, price reduction or rebates. Thus, sales promotion is essentially an acceleration tool, designed to speed up the selling process and maximize sales volume. By providing an extra incentive, sales promotion techniques can motivate customers to purchase a larger quantity of a brand. Sales promotions are economic, entertainment or information incentives that are targeted at different parties in the marketing channel. Consumer attitude are dynamic making the things harder for sales or sales growth. Here comes the marketing in picture with different actions such as advertising, promotion, pricing and distribution having positive effect on business performance. For more than decades, sales promotions have grown in importance, chiefly to increase the sales temporarily to increase sales volume or market share. Sales promotion have grown importance and worked as marketing kit for the business world. Wathieu & Murre, 2007,” Many purchase situations are so habitual that customers conduct very little cognitive activity”. For the marketers it is difficult to motivate the behaviour of customers for brand switching or increase the numbers of unit purchase. The promotional activity stimulates the customer for rethink and evaluates the brand and the quantity that they may not have been realized. So, the sales promotion has grown as the important tools for the marketers and retailers used with different promotional tools and strategies in order to understand the customers’ preferences and boost the sales of their business. Against this background, this study examined the impact of sales promotion on customer’s patronage.

STATEMENT OF THE PROBLEM

Pizza hut Thailand has regrettably experienced a disappointing same-store sales growth which declined by 1%, including a 3% decline in markets outside of Thailand; parent company Yum Brands said on Wednesday. Sept. 30, 2014.

Yum CEO Greg Creed said the company was “disappointed” by Pizza Hut’s Thailand results. “We have work to do around same-store sales growth,” he said on the company’s third quarter earnings call Wednesday morning. This has unfortunately continued to be the case in recent times and has negatively affected customer patronage and by extension the organizational growth and development of pizza hut Thailand.

INTENTION AND REASON FOR THE STUDY

The cardinal intention/reason for the study is to assess the impact of sales promotion strategies on customer patronage at pizza hut retailing outlets with the sole aim of improving customer patronage and ensuring organizational growth and development.

RESEARCH OBJECTIVES

The major purpose of this study is to examine the impact of sales promotion strategies on customer’s patronage. Other general objectives of the study are:

1. To examine the practice of the sales promotion that has great impact on consumer’s behavior.
2. To examine whether non-acceptability of sales promotion to the targeted market have any effect on customers’ patronage.
3. To examine the impact of sales promotion strategies on customer’s patronage in Pizza hut, Thailand.
4. To examine whether sales promotion can serve as the major sustenance of short-term sales strategy in Pizza hut, Thailand.
5. To examine the relationship between sales promotion strategies and customer patronage in Pizza hut, Thailand.
6. To assess the contribution and efforts of sales promotion to improve the sales of Pizza hut.

ASSUMPTIONS OF THE RESEARCH

The study was based on the assumption that improvement in the customer patronage and thus organizational growth at pizza hut retail outlets is dependent on the sales promotion strategies put in place which basically is to enable employees to show certain skills and attitude in the use of concepts that describe honesty, discipline, obedience, orderliness, discipline, diligence.

SCOPE OF THE RESEARCH

This research is based on impact of sales promotion strategies on customer’s patronage (a case study of Pizza hut). This study will focus on ways of improving customer patronage through the application of certain sales promotion of certain sales promotion strategies that would be explored in this work.

BENEFITS OF THE STUDY

The findings of this study will have a number of significant implications. Both the young and the old will gain a lot of things from this work. This research would be significant to understand the influence of the promotions on the consumer’s behaviour. The study would determine the relevant short-term marketing strategy that would have greater impact on increase in sales volume and market share. The outcome this study would be relevant to different companies to determine the various factors that influence the consumer’s purchase decisions and adjust their sale promotion strategies accordingly. It would also help the firms to utilize their resources in optimum way and increase profitability and the market share. This study would determine the importance of understanding of consumer’s buying decision and their dynamic attitude before making decision regarding the sales promotion and the implication of the consumer’s behaviour on sales.

LIMITATIONS OF THE RESEARCH

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.