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AN EXAMINATION OF THE IMPACT OF SALES PROMOTION ON THE MARKETING OF TELECOMMUNICATION SERVICES IN NIGERIA

CASE STUDY OF GLOBACOM, ENUGU

Product Description

CHAPTER ONE

INTRODUCTION

1.1    Background of the Study

Over the past few decades in Nigeria, there has been an increase in the use of sales promotion tools by marketers in attempt to achieve, and maximize their marketing objectives. Whatever the product, sales promotion has found its usefulness in one direction or the other. This is especially so with the continuous development of marketing practices such that marketing managers have taken to the use of every available strategy aimed at achieving set objectives.

 

As Jones (1991: 61) notes, the use of sales promotions have grown in importance to becoming the most popular tool in the marketer’s kit in America and world over. Also, Lancaster and Massingham (1993: 219) observe that the total amount spent on sales promotions in consumer markets in the UK outstrips the spending on media advertising. This point is further magnified by Czinkota et al (1997: 455) as they explain that due to the cost and clutter of media advertising, better targeting capabilities and easier tracking of its effectiveness, sales promotions budget has over taken advertising budget in both the US and Europe.

 

The adoption of sales promotion strategies in marketing practice dates back to the origin of marketing itself. Notwithstanding the evolutionary process bringing about a shift from selling concept to the emphasis on marketing concept philosophy, sale promotion continues to take a prominent position in the overall promotion mix of many marketing organizations. It is however important to observe that, the growth of sales promotion was initially fast tracked by the selling concept which emphasised selling, selling, and selling!

 

In Nigeria, the growth of sales promotion activities has been steady over the recent past. This may not be unconnected with the increased competition in advertising and other elements of promotional mix bringing about some form of resistance of the market. As at present, the noticeable upsurge in the use of sales promotion tools cuts across virtually all sectors of the economy whether products or services, telecommunications, beverages, travels/aviation, hospitality, manufacturing, etc. This buttresses the potency of sales promotion as a viable element of the overall marketing communication mix, and hence the need for this study.

 

1.2    Statement of the Problem

As noted in the background of this study, there has been an increase in the use of sales promotion by many marketing organisations in Nigeria. Whatever the product or service of the industry, various sales promotion activities are constantly being developed with the aim of achieving set marketing objectives. Of specific interest to the researcher is the deluge of sales promotion activities which are apparently lined up and continuously used by telecommunication marketers.

 

By design,  the traditional rationale  of sales promotion as a Pavlovian strategy to enlist customers’ patronage seems to have changed as the frequency of sales promotion activities does not suggest  its use mainly as a bait to induce trial purchases or patronage (Spillard, 1975:8).

 

Since the commencement of the global system of mobile telecommunication (GSM) services in Nigeria, operators have taken to the use of one form of sales promotion or the other with a view to either attract new subscribers or retain existing ones. However, as good as this seems, the problem observable is the turn over. The implication of this is that subscribers’ loyalty may now hang on the bait of sales promotion rather than benefit/value derivable from the use of the product.

 

In addition, frequency of sales promotion leaves much to be desired as the consumers (subscribers) most times doubt the efficacy and credibility of some sales promotion. This could make sales promotion counterproductive. Simonson et al (1994: 23) observe that marketers employ various means to enhance the attractiveness of their offerings and increase sales as the case with telecommunication operators in Nigeria. However, the short and long term effect of these tactics on brand evaluation and overall marketing objective needs to be examined as it is often assumed generally that sales promotions activities only help short term sales. In other words, subscribers who find the offerings of a promoted product appealing are more likely to patronize it while the purchase probability of others not attracted by the offering does not change. However, in particular cases where there is an avalanche of promotions and offerings there may be exceptions to the generalization that sales promotion leads to increase in sales. This is due largely to the fact that such development leads to complexities and can further boomerang and bring about an insignificant change in expected sales

 

In most cases it is quite observable that when subscribers are uncertain about their preferences among highly competing alternatives as in the telecommunication market, they may avoid products whose promotions are perceived as providing little or no value or unneeded features.

 

In view of the above, it has become necessary to carry out an examination of the impact of sales promotion on marketing of telecommunication services using Globacom Nig. Ltd. in Enugu as a case study.

 

1.3    Objectives of the Study

To make this research relevant and purposeful, a clearly defined and unique set of objectives which it seeks to achieve is outlined as follows:

(a)     To assess the impact of sales promotion on the marketing of telecommunication services.

(b)     To examine if sales promotion actually provides an edge in a highly competitive telecommunication market.

(c)     To analyze the effect of sales promotion on consumers (subscribers) loyalty.

(d)     To determine whether sales promotion activities enhance telecommunication services acceptability

(e) To find out if sales promotion enhances the value of telecommunication services.

(f)      To find out the limitations of sales promotion as a telecommunication services marketing tool.

 

1.4    Research Questions

This study is set out to address the following basic questions:

(1)     What is the impact of sales promotion on the marketing of telecommunication services?

(2)     Do sales promotion activities create an edge in a highly competitive telecommunication market?

(3)     Do sales promotion activities create subscribers’ loyalty to telecommunications brands?

(4)     Does sales promotion enhance telecommunication services acceptability?

(5)     What are the limitations of sales promotion as a marketing tool?

 

1.5    Hypotheses Formulation

In order to give direction to this research project, the following set of hypotheses has been formulated;

(i)      Sales promotion does not positively impact on telecommunication services marketing.

(ii)     Sales promotion activities do not create an edge in a highly competitive telecommunication market.

(iii)    Sales promotion activities do not create subscribers’ loyalty to telecommunications brands.

(iv)    Sales promotion activities do not enhance telecommunication services acceptability.

 

1.6    Limitations of the Study

Some challenges were encountered by the researcher in the course of this study. These limitations were mainly on resources and availability of relevant materials strategic to the topic under consideration. Getting the numerous sales promotion profile of Globacom was quite daunting and time consuming beyond what was expected. Apart from the foregoing, it took some more time than expected for the researcher to gather first hand information from the respondents making up the sample.

 

In spite of these challenges, the study was carried out and its findings were presented objectively as much as possible.

 

1.7    Significance of the Study

In view of the high level of competition among players within the telecommunication sector, operators have taken to the use of every available strategy in marketing practice in order to remain relevant and occupy strategy position within the industry. In this direction, telecommunication marketers have had cause to put on their thinking caps and develop different types of sales promotions aimed at earning subscribers patronage and loyalty.

 

The significance of this study therefore is to ascertain if sales promotion strategy as adopted by telecommunication operators play a significant role in marketing of their services. In other words, this study will help to verify if the various sales promotions run by the operators contribute significantly to the level of success achieved regarding set marketing objectives.

 

By and large, the outcome of this research will help marketers of telecommunication services know the extent to which sales promotion is necessary in marketing activities.

 

In addition, the study will provide information to telecommunication marketers regarding subscribers’ perception of the various sales promotion tools. The study will give an insight on the credibility perception of the promos by target audiences made up of existing and prospective subscribers. This information would be necessary in designing sales promotion strategies in the future.

 

Last but not the least the study will serve as a reference guide to other researchers who may want to do some work in this area in the future.

 

1.8    Definition of Terms

It is necessary to define some terms used in the course of this research study so as to adequately capture their meaning within the context of the study. Terms to be defined are as follows;

  1. Sales Promotion: Promotion activities that stimulate interest, trial or purchase by final consumers or others in the channel by offering added value, usually on a temporary basis. (Perreault et al, 2000: 316). This could also mean the use of incentive techniques to generate a specific response within a customer, trade or business market (Semenik and Bamossy, 1993: 354).
  2. Marketing: The management process that is responsible for identification, anticipation and satisfaction of consumer needs at a satisfactory profit.
  3. Market Development: A strategy for company growth by identifying and developing new market segments for current products (Kotler and Armstrong, 2004: 48).
  4. Product Acceptability: This term is used to explain consumers’ or buyers’ acceptance or embrace of a product by acknowledge or appreciating its value or need satisfying capability. This invariably could lead to purchase decision or referral to a third party.
  5. Brand Loyalty: This refers to the emotional and rational attachment exhibited by a consumer/customer towards a brand which is probably borne out of satisfaction from the use of the brand over a period of time. It is the expression of a continuous insistence and patronage of a particular brand over others.  
  6. Product Life Cycle: This is simply the course of a product’s sales and profits over its life-time (Kotler and Armstrong, 2004: 300). It involves the idea that any product undergoes five stages before disappearance from the market. These stages include – Introduction, Growth, Maturity, Saturation, and Decline.
  7. Telecommunication Services: Simply put, telecommunication services as used in this project refers to the various offerings packaged to meet the communications needs of people as it relates to telephony. In other words, the term could be seen as the bundle of possibilities that offer solution as per telephone communication. In the broader sense, every kind of intangible services offered by a telecommunication company targeted at meeting the communication needs of the people via telephone refer to telecommunication services. This includes the GSM and fixed wireless offerings like voice call, short message service (SMS), multi-media message service (MMS), data services, high Speed Internet services, vehicle tracking solution, caller tunes, etc.
  8. Strategy: Strategy of any organisation is the perceived pattern over a long time period, in the sequence of actions undertaken by people in that organisation (Ogunbameru, 2004: 304). It could also be seen as the articulated means of achieving an objective. Strategy as used in this study refers to the unique ways through which an organization chooses or seeks to execute its marketing or promotion plan in order to achieve its stated objectives.
  9. Competitive Market: As used in this study, competitive market refers to a situation in which several manufacturers or marketers are aggressively contending for the attention and patronage of consumers/customers through the offering of dynamic and creative products/services. The telecommunication industry in Nigeria describes this situation in view of the heavy competition among several highly innovative operators like MTN, Globacom, Zain, Etisalat, etc.

Edge: This simply means the ability to gain advantage over other operators or players in the same industry or market. In marketing, a firm or a marketer is said to have a competitive edge if it has something additional to offer which could glaringly place it above his rivals. In the case of the telecommunication market, Globacom

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