Investigating the effect of sales promotion on customer patronage of household appliances within Lagos metropolis

Investigación del efecto de la promoción de ventas en el patrocinio de los clientes de electrodomésticos en la metrópolis de Lagos

Oyekunle Olubusola Temiloluwa

Lagos State University. Nigeria.

olubusola.oyekunle@lasu.edu.ng

0000-0002-0529-7697

Tijani Usman Moyosore

Lagos State University. Nigeria.

usman.tijani@lasu.edu.ng

0000-0001-7132-3948

Balogun Mustapha Tosin

Lagos State University. Nigeria.

mustapha.balogun@lasu.edu.ng

0000-0003-3939-0192

Oyekunle Olubusola Temiloluwa, Tijani Usman Moyosore & Balogun Mustapha Tosin

Abstract

This study investigated the effect of sales promotion on customer patronage of household appliances in Lagos State. The purpose of the study was to examine the effectiveness of sales promotion (discount, premiums, and demonstration) on customer patronage of household appliances. The methodology used was based on a descriptive research design. Questionnaire was used as an instrument for data collection. The sample size was determined using simple random sampling technique. The sample size was One hundred and twenty-four (124) respondents, which was further analyzed using multiple-regression analysis. The findings revealed that there is a positive significant effect of sales promotion in terms of discounts and demonstration used in marketing and sales of household appliances to drive customer patronage. The study however found that the use of premium as a customer sales promotion to influence customer patronage of household appliances was insignificant. In light of the findings, the study recommended that companies that trade in household appliances should continue investing in trade discounts activities that help the customers to keep patronising their company and products.

Keywords

Promotion; sales; communication; marketing; customer.

Resumen

Este estudio investigó el efecto de la promoción de ventas en el patrocinio de los clientes de electrodomésticos en el estado de Lagos. El objetivo del estudio era examinar la eficacia de la promoción de ventas (descuentos, primas y demostraciones) en el patrocinio de los clientes de electrodomésticos. La metodología utilizada se basó en un diseño de investigación descriptivo. Se utilizó un cuestionario como instrumento de recogida de datos. El tamaño de la muestra se determinó mediante la técnica de muestreo aleatorio simple. El tamaño de la muestra fue de ciento veinticuatro (124) encuestados, que se analizaron posteriormente mediante un análisis de regresión múltiple. Los resultados revelaron que existe un efecto positivo y significativo de la promoción de ventas en términos de descuentos y demostración utilizados en la comercialización y venta de electrodomésticos para impulsar el patrocinio de los clientes. Sin embargo, el estudio reveló que el uso de la prima como promoción de ventas para influir en el patrocinio de los clientes de electrodomésticos era insignificante. A la luz de los resultados, el estudio recomendó que las empresas que comercian con electrodomésticos sigan invirtiendo en actividades de descuentos comerciales que ayuden a los clientes a seguir patrocinando su empresa y sus productos.

Palabras clave

Comunicación; cliente; promoción; rebajas; marketing.

1. Introduction

Every day, the business world becomes more complicated. Every industry is becoming increasingly competitive. In the marketing environment, businesses, in particular, are finding it difficult to sell their products in a timely manner. As a result, entrepreneurs employ a variety of methods and techniques to market their goods. Today’s market is expanding at a breakneck pace. Every day, a new product is introduced into the market. The situation was not like this a few decades ago; the market was confined to a few products. Because the market was expanding, there was a bountiful supply of new customers to recruit, and the industrial corporation could do so without fear of losing existing customers. However, competition has increased, the market has become more sophisticated, and organizations are now confronted with some marketing realities (Okoye-Chine, 2021).

The study of Mbaga (2016) noted that Consumer sales promotions have a significant impact on customer loyalty and can outlast any competition. Furthermore, previous research has shown that distinct market segment customer profiles react inversely to sales promotions. (Emma et al., 2019). Esfahani and Jafarzadeh (2012) found out in their studies that there is a significant relationship between psychological variables and sales promotion.

According to Amusat, Adejumo, and Ajiboye (2013), businesses spend a significant portion of their resources promoting consumer sales. This is done to increase the merchandise’s value and appeal. According to Amusat et al. (2013), just forty percent (40%) of sales promotion activities are effective, although no success or improvement has been observed. Other research suggests that sales promotions do not have a long-term influence on an organization’s sales volume, which tends to decrease or remain at the same level as before the sales promotion was issued (Ashraf, Rizwan and Khan, 2014). To counter this, Malik and Sachdeva (2015) discovered that consumer sales promotions encourage customers to make immediate purchases and also impacts the volume of consumption positively.

Despite the fact that there have been quite a number of studies on consumer sales promotion, there is limited focus on how it affects consumer patronage of products of home appliances which is obviously used by a larger population in developing economies. As a result, this current study aims to close the aforesaid gap by evaluating the effects of sales promotions on consumer patronage of household appliances within Lagos Metropolis.

1.2. Objectives of the Study

The aim of this study is to investigate the effect of sales promotion on patronage of household appliances within Lagos Metropolis.

The precise objectives include to:

1. Determine the relationship between discounts and customer patronage of household appliances in Lagos State.
2. Identify the relationship between premium and customer patronage of household appliances in Lagos State
3. Investigate the relationship between demonstrations and customer patronage of household appliances in Lagos State.

1.3. Research Questions

1. What is the relationship between discounts and customer patronage of household appliances in Lagos State?
2. What is the relationship between premium and customer patronage of household appliances in Lagos State?
3. What is the relationship between demonstrations and customer patronage of household appliances in Lagos State?

1.4. Research Hypotheses

• H01: There is no significant relationship between discounts and customer patronage of household appliances in Lagos State.
• H02: There is no significant relationship between premium and customer patronage of household appliances in Lagos State.
• H03: There is no significant relationship between demonstrations and customer patronage of household appliances in Lagos State.

2. LITERATURE REVIEW

2.1. Sales Promotion: An Overview

Over the years, sales promotion has been studied and documented in marketing literature. According to Kotler and Armstrong (2012), sales promotion refers to the various tools and tactics used to encourage the purchase of a company’s numerous items. Furthermore, sales promotion is regarded as a very successful marketing tactic that aids various firms in being more competitive in a global marketplace (Oyedapo et al, 2012). As a result, sales promotions are described as a short-term inducement given to customers to make a purchase ‘right now’ (Amusat et al. 2013).

When sales promotions program are concentrated at the consumer, it is usually referred to as consumer sales promotions, sales promotion directed at sales staff are known as salesforce sales promotion; while sales promotions programs directed at wholesalers and retailers are called trade sales promotions (Kotler & Armstrong, 2012; Abdulmajeed & Haseena, 2015).

There are three (3) main areas of sales promotion, according to Smith (1998), as cited by Santhosh, Raghavendra, and Sambrama (2014). Gifts, prizes, premiums, and competitions are examples of consumer sales promotions. Free pens, diaries, point-of-sale materials, unique terms, and competition prizes are examples of trade sales promotions. Sales promotions for salespeople take the shape of motivational schemes and rewards.

2.2. Customer Sales Promotion

Customer sales promotion is referred to as short-term techniques that is designed to attain a short-term objective, in order to arouse buying and develop anticipation for certain products or brands. Consumer sales promotions consist of the related promotional activities that are necessary to supplement personal selling (Abdulmajeed & Haseena, 2015). Therefore, consumer sales promotions are in form of discounts rebates, premiums and demonstrations as key tools of sales promotions pertaining to influencing consumer patronage (Banabo, & Koroye, 2011; Santhosh et al., 2014; Abdulmajeed & Haseena, 2015).

Sales promotions, according to Dixon-Ogbechi (2015), are marketing methods that businesses utilize to communicate a change in the price/value of goods and/or services perceived by a brand’s target group, resulting in immediate sales and influencing the brand’s long-term worth. The first aspect highlighted in this description is that a sales promotion persuades a buyer to acquire things right away, either by lowering prices or providing value. Second, rather than focusing on a cognitive level, sales promotions aim on a direct behavioral level. As a result, the concept of a target audience is highlighted in this definition. It means that rather than targeting the entire population, sales promotions should always be targeted at a specific group of customers.

There are two types of sales promotion approaches, according to Dixon-Ogbechi (2015), that can be employed as sales promotion strategies: Point of Purchase displays, Point of Purchase demos, Samples, Exhibitions, and Training programs for intermediaries are examples of special communication strategies that are sales promotion activities focused at intermediaries. Second, special offers are sales promotional activities aimed at customers that may arise as a result of a value-price problem. Coupons, refunds and rebates, premiums sweepstakes, and discounts are examples of these (Kotler, 2010; Dixon-Ogbechi, 2015). For the purpose of this study, discounts, premium and demonstration will be considered.

2.2.1 Discounts: According to Alowi and Kani (2018), discounts are a type of savings, and where they are presented can influence how customers view things and how they make purchasing decisions. Furthermore, Santini, Sampai, Perin, and Vieira (2015) defined discounts as a method of lowering product and service prices in order to improve client purchase decisions.

2.2.2 Premiums: These are consumer sales promotional items such as souvenirs, collectables, toys, and household products (Nochai & Nochai, 2011; Kotler & Armstrong 2012). Premiums are occasionally referred to as prizes. Free premiums are consumer sales promotions programs that allow consumers to receive a free gift with the purchase of a product; in-or out-package premiums are premiums where gifts are already packaged along with the product purchased; and self-liquidating premiums are premiums where consumers are expected to pay a minimum designated amount on a gift item (Nochai & Nochai, 2011).

2.2.3 Product demonstrations: These are promotional techniques that allow potential buyers to see things in action (Kotler, 2010). According to Ezenyilimba, Mbah, and Eze (2019), the purpose of demonstration is to acquaint clients with the product in order to convince them to purchase it. The majority of products supplied as samples during demonstrations are new products, which are either better versions of existing products or ones that are just being introduced to a new market.

2.3. Customer Patronage

A consumer response can be solicited by the company or initiated by a consumer. In this context, we are looking at the positive feedback which is patronage. According to Malik and Sachdeva (2015) consumers’ sales response is a crucial guide to foresee the behavior of consumers as a subjective attachment to the product.

The customer is seen to be old just like the business itself and the primary aim of every enterprise is to create more customers. Drucker, (1973) as cited in Ogwo and Igwe (2012) are of the opinion that achieving customer satisfaction is the only economic and social justification of any business existence.

There is a direct positive relationship between customer satisfaction and their repurchase intention leading to patronage (Shamout, 2016).

Literature has shown that conceptual definition and measures of patronage is complex. However, some scholars have mentioned that actual usage and attitude are measures as dimensions of consumer patronage (Ogwo & Igwe 2012).

2.4. Theoretical Review.

2.4.1. Push Strategy of Sales Promotion

Blattberg and Neslin proposed this theory in the year 1993. According to Shimp (2003), the push theory of sales promotion strategies proposes that you market your products to middlemen such as wholesalers and retailers, who would subsequently sell them to their customers. The utilization of a company’s sales staff and trade promotion operations to stimulate customer demand for a product is known as a “push” promotional approach (Koekemoer, 2004). The product is promoted by the producer to wholesalers, who then promote it to retailers, who then market it to consumers. The push theory, according to Kotler and Armstrong (2010), explains how the link between sales promotions might impact customers’ purchasing intentions. The relevance of this theory to this study is that the sales promotion method adopted has an impact on customer patronage.

2.4.2. Pull strategy of sales promotion

This theory was proposed by Blaikie in the year 2000. According to Kotabe (2000), the pull theory of sales promotion demonstrates that sales promotion can be defined just by focusing on the customer. Aderemi (2003) backs up Kotabe (2000) by characterizing the pull theory as a method that necessitates a large amount of advertising to raise awareness for a sales promotion campaign in order to increase customer demand for a product. Consumer sales promotion, according to Kotler (2003), is a set of activities aimed to generate demand from end users or customers who would draw the product through the distribution chain.

2.4.3. The combination theory of sales promotion

The combination theory of sales promotion was propounded by Kotabe (2000). The intention of the theory is to counter off the pull and push theories. Kotler (2003) agreed that Combination theory is a theory which comprises of both the pull and the push theories of sales promotion. In addition, Kotler (2012) also viewed that the Combination theory shows that the Pull theory or Push theory cannot work alone to enhance the customers purchase intentions. Flaherty & Hunt (2007) in support to the combined theory states that when considering sales promotion, companies should attract both the retailer and consumers so that both the company and the retailers works together to improve the customers purchase intentions of the products. As a result of the earlier stated assertions, combination theory would be useful in considering the relationship between consumer sales promotion and consumer’s patronage.

2.5. Empirical Review

The impact of consumer sales promotion on the patronage of pharmaceutical products in Nigeria was researched by Awoniyi, Olufayo, Oyekunle, and Osanyintolu (2021). The study’s goal was to see how effective consumer sales promotions (discounts, rebates, premiums, and demonstrations) are at increasing over-the-counter (OTC) drug usage. A descriptive study design with multistage sampling procedures was employed as the methodology. A total of 400 people were included in the sample, which was then examined using regression analysis. The findings demonstrated that consumer sales promotion, such as premiums, discounts, and rebates, utilized in the marketing and sales of pharmaceutical items, had a substantial effect on driving customer patronage as a consumer sales reaction. Consumers’ sales responses to demonstrations as a consumer sales promotion, on the other hand, were shown to be inconsequential in the study. In light of the findings, the study suggests that pharmaceutical companies engage in more sales promotional techniques such as customer loyalty programs and web-based forms of consumer sales promotion, which are more innovative to today’s technology-driven consumers.

Shodiya, Olumoko, Adeyemo, Tijani & Alli (2021) investigated the effect of sales promotion on customers patronage in Rites Foods Plc in Ijebu-Ode, Ogun State. The study employed descriptive survey research design. The population of the study covers the entire customers of Rites Foods Plc in Ijebu Ode, Ogun State which is estimated at 18000. Yaro Yamane sample size determination was used to select 392 respondents from the total population at 95% confidence level. The study utilized primary and source of data collection. The retrieved data was analyzed with the aid of descriptive statistics and Multiple Regression with the aid of Statistical Package for the Social Sciences (SPSS, V.23.0). The study utilized 5-point Linkert scale measurement and structured self-administered questionnaire. The finding of the study revealed that significant positive relationship exists between monetary sales promotion techniques (MSPT) and customers patronage of Rite Foods Plc in Ijebu Ode, Ogun State. The study further concluded monetary sales promotion technique enhance customers patronage in Rite Foods Plc.

Orji, Oyenuga, and Ahungwa (2020) use Nestle Nigeria Plc Maggi NAIJA POT brand as a case study to investigate the impact of sales promotion on consumer buying behavior of food seasoning among Nigerian households. The population of the study included Nestle product (Maggi seasoning) users in Bwari Area Council, Abuja, and the study used a cross-sectional research design. Topman’s formula yielded a sample size of 246 people. Primary data was collected using questionnaires, and regression analysis was utilized to examine the relationship between the study variables. The findings revealed that most consumers enjoy rebates, which influence their decision before, during, and after the purchase; there is a positive effect of free trial and free gift on consumer buying behavior of Maggi NAIJAPOT in Bwari Area Council, Abuja; and there is a positive effect of free trial and free gift on consumer buying behavior of Maggi NAIJAPOT in Bwari Area Council, Abuja. The study concluded that sales promotion through rebates, free trials, and free gifts is one important tool which marketing companies should pay attention to in order to influence their consumers’ buying behavior, and suggested, among other things, that providing free samples for food seasoning is a good technique to use in introducing new products to the Nigerian marketplace, and that a free gift should be included in the outer part of the product packaging to serve as a visual cue.

The influence of sales promotion on customer patronage of alcoholic beverages was investigated by Ezenyilimba et al (2019). The study’s major goal was to investigate the impact of sales promotions on customer loyalty. The study was conducted using a survey research design. A total of 115 people took part in the study. The data was analyzed using Multiple Regression Analysis. Both dependent and independent variables (pricing, pack, contest, and coupons) had a considerable impact on customer patronage, according to the data. According to the findings, sales promotions have a considerable impact on client consumption of alcoholic beverages.

3. Methodology

This study adopted a descriptive survey design and was carried out in Lagos State. With respect to this research work, the researcher made use of primary sources. Questionnaire was used as an instrument for data collection. The population of the study comprises all household appliances customers in Lagos State. The sample size was determined using simple random sampling technique. After meticulous selection processes were conducted across the study area, 124 respondents were sampled for the study which was calculated using Yamane formula. The questionnaire was tested for content validity and Cronbach’s Alpha Coefficient after it was designed. The collected data were analyzed using quantitative data analysis methods. Data from questionnaire were coded and using Statistical Package for Social Science (SPSS Version 21) for analysis. The study employed Multiple Regression Analysis and ANOVA.

4. Data Presentation and Analysis

4.1. Data Presentation

The instrument used for the study is questionnaire. A total of 124 questionnaire was analyzed.

4.2. Interpretation of Multiple Regression Analysis

Multiple regression analysis was carried out to test the hypotheses and the results were presented in the table below:

Table 1.Model Summaries

Model	R	R Square	Adjusted R Square	Std. Error of the Estimate
	.656a	.431	.417	.63377
a. Predictors: (Constant), Discounts, Premium, Demonstration. b. Dependent Variables; Customer patronage.				Source: own elaboration

Table 2. ANOVAa

Model		Sum of Squares	df	Mean Square	F	Sig.
1	Regression	36.786	3	12.262	30.528	.000b
	Residual	48.601	121	.402
	Total	85.388	124
a.Dependent Variables; Customer patronage Predictors: (Constant), Discounts, Premium, Demonstration				Source: own elaboration

The analysis of variance (ANOVA) table above shows F value of 30.528 at 0.000 significant level (p<0.05) which indicates that the regression is statistically different from 1 and further shows that the model is a good fit.

Table 3. Coefficientsa

Model		Unstandardized Coefficients		Standardized Coefficients		t	Sig.
		B	Std. Error	Beta
1	(Constant)	.869	.291			2.991	.003
	Discount	.506	.072	.536		7.019	.000
	Premium	.102	.075	.107		1.355	.178
	Demonstration	.159	.080	.150		1.975	.051
a. Dependent Variable: Customer Patronage The smaller the value of significance (p-value), and the larger the t-value, the greater the contribution of that predictor: In this model, Discount (t=7.019 p=.000<0.05), Premium (t=1.355, p=.178 < 0.05), Demonstration (t = 1.975, p =.051 <0.05).					Source: own elaboration

4.3. Hypothesis Testing

Hypothesis H01: The first null hypothesis which states that there is no significant relationship between discounts and customer patronage of household appliances in Lagos State. From the regression analysis (t=7.019, p=0.000 < 0.05). We reject the null hypothesis and accept the alternative hypothesis as the study revealed that there is a positive and significant relationship between discount and customer patronage of household appliances in Lagos State.

Hypothesis H02: The second null hypothesis states that there is no significant relationship between premium and customer patronage of household appliances in Lagos State. From the regression analysis (t=1.355, p=0.178 < 0.05). We accept the null hypothesis because the study showed that there is a positive but insignificant relationship between premium and customer patronage of household appliances in Lagos State.

Hypothesis H3: The third null hypothesis also states that there is no significant relationship between demonstration and customer patronage of household appliances in Lagos State. From the regression analysis (t=1.975, p=0.051 < 0.05). We reject the null hypothesis and accept the alternative hypothesis that there is a positive significant relationship between demonstration and customer patronage of household appliances in Lagos State.

4.4. Discussion of Findings

The study findings show that there is a significant positive relationship between discounts and customer patronage of household appliances. The study findings are in line with previous studies of Awoniyi, Olufayo, Oyekunle, and Osanyintolu (2021) on the result that there is a significant positive relationship between discounts and consumer patronage of pharmaceutical products. Also, the study findings agreed with Santini et al. (2015) asserting that discounts have a way of working on consumer perception to buy more products.

Furthermore, the study findings revealed that there is a positive insignificant relationship between premiums and customer patronage of household appliances. The findings agreed with Parker and Pettijohn (2016) based on the idea that pharmaceutical products are unsought and that consumers don’t go for them naturally only when in need therefore do not seek consumer sales promotions. The study findings however disagree with Santhosh et al (2014) saying that premiums are the most effective kind of sales promotional tools.

Finally, the study findings indicated that there is also a positive significant relationship between demonstrations and customer patronage of household appliances. The findings however did not agree with Awoniyi, Olufayo, Oyekunle, and Osanyintolu (2021) that indicated that there is no relationship between demonstrations and consumers patronage of pharmaceutical products.

5. Conclusion

The study examined the concept of customer sales promotion as a strategic short-term tool of enhancing sales in critical times and to boost the performance of household appliances in the competitive market like Nigeria and concludes that consumer sales promotion in terms of discounts and demonstrations are used in marketing and sales of household appliances significantly drive customer patronage. The study however found that the use of premium as a way of increasing customer patronage of household appliances was insignificant.

5.1. Recommendation

Based on the findings of this study and the conclusion, the following have been recommended that:

1. Household appliance companies should continue to invest in trade discounts activities that encourage customers to continue patronizing their company and products;
2. Companies must develop strategies and make decisions that will allow them to offer discounts and demonstrate their products in order to survive in changing business settings;
3. The budget for customer’s sales promotions should always be sufficient to achieve the intended results.

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