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International Journal of Business & Law Research 6(3):24-33, July-Sept.

, 2018

© SEAHI PUBLICATIONS, 2018 www.seahipaj.org ISSN: 2360-8986

Sales Promotion Dimensions and Consumer Loyalty: An


Empirical Investigation of Nigerian Manufacturing
Companies in Oyo State

1
Onikola, Yemisi. S. & 2Adedokun, Femi. B
1
Department of Marketing
The Polytechnic, Ibadan, Nigeria
2
Department of Purchasing and Supply
The Polytechnic, Ibadan, Nigeria

ABSTRACT
The objective of this study was to examine the impact of sales promotion dimensions on consumer loyalty
with special reference to the selected manufacturing companies in Ibadan, Oyo State, Nigeria. Data was
collected with aid of a structured questionnaire administered to one hundred and fifty (150) respondents.
Data were analyzed with the aid of Pearson Product Moment Correlation Coefficient and Multiple
Regression Analysis. Result showed that sales promotion dimensions (price promotion, premium, coupon,
bonus and free sample) were jointly and independently predict consumer loyalty (R2 = 0.972; F(5, 69) =
485.552; P<.01) expect premium. Specifically, it was discovered that sales promotion dimensions (price
promotion, premium, coupon, bonus and free sample) were significant joint predictors of consumer
loyalty. It was also discovered that coupon, free sample, bonus and price promotion were significant
independent predictors of consumer loyalty. But the premium has negative influence on consumer loyalty
but not significant. It was recommended that manufacturers and sellers should continue apply price
promotion, coupon, bonus and free sample because of their robustness influence on consumer loyalty.
Keywords: Consumer Loyalty, Price Promotion, Coupon, Bonus, Free Sample, Sales Promotion.

INTRODUCTION
Sales promotion is recognized and acknowledged by scholars, professionals and marketers as one of the
key promotional mix elements that are commonly employed by firms that find themselves in a global
competitive environment. Obi (2002) described sales promotion that consists of the related promotional
activities that are necessary to supplement personal selling. Some of these include distribution of sample
products to customers, exhibitions, or demonstration of products at stores or trade fairs or shows and
preparation of printed materials used by sales people or for point-of sale displays. A combination of the
above variables defines a firm’s promotional programme that hopes to influence consumers to patronize
and become loyal to the organizations offering (Banabo & Koroy, 2011). Prior studies argued that sales
promotion dimensions have become crucial factors in modern marketing (Anuraj, 2018; Egwuonwu,
Adeniran & Egwuonwu, 2017; Pembi, Fudamu & Adamu, 2017). According to Sakara and Alhassan
(2014), the concept of sales promotion has received the attention of both manufacturers and retail
organizations and also from players in services industries from all over the world been it local or multi-
national. The manufacturing industry of Nigeria is not exclusive from the trend.

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Recently, the industry has been bedeviled by cut-throat competition; this has made the sector to operate
below industrial standard. Former Governor of Central Bank of Nigeria, CBN, Malam Sanusi Lamido
Sanusi, confirmed that unfavourable competition arising from the World Trade Organisation Treaty is
responsible for the collapse of industries in the country. This menace has made Nigeria’s manufacturing
sector performed dismally in 2018, where about 272 firms were shut, while more than half of the
surviving firms are classified as ailing (MAN, 2018). Sales promotion has become a vital tool for
marketing, and its importance has been significantly increasing over the years. Therefore, manufacturing
operators must work hard to appeal and win customers through various sales promotion dimensions.

There are many studies on consumer responses to promotion (Oyedapo, Akinlabi & Sufian, 2012; Kotler
& Kelvin, 2006; Robinson & Carmack, 2007). Though these studies provide important insights into the
effect of promotion, the usefulness of most in predicting the effects of promotion on the product trial and
repurchase behavior of consumers is limited as they place too much emphasis on advertising, direct
marketing, public relations and publicity, personal selling, and sponsorship at the expense of sales
promotion, mean while sales promotion is equally important promotion tool. Therefore, more work needs
to be done to investigate the effects of sales promotional tools such as coupon, free sample, bonus pack,
and price discount on consumer royalty, especially among Nigerian consumers, whose behavioral
responses to promotional strategies are ill understood due to lack of research on them.
Research Question
The following research question was the focus of this study: Do coupon, free sample, premium, bonus,
and price promotion jointly and independently predict consumer loyalty?
Research Objective
The main objective of this study was to determine whether coupon, free sample, premium, bonus and
price promotion will jointly and independently predict consumer loyalty.
Research Hypothesis
The following hypothesis was formulated in null form for the study:
Ho: Sales promotion dimensions (coupon, free sample, premium, bonus, and price promotion) do not
jointly and independently predict consumer loyalty.

Concept of Sales Promotion


Sales promotion consists of a diverse collection of incentive tools, mostly short-term, designed to
stimulate quicker and/or greater purchase of a particular product by consumers or the trade (Kotler, 2003).
According to Adrian (2004), sales promotion is the direct inducement or incentive to the sales force, the
distributor, or the consumer, with the primary objective of creating an immediate sale. Sales promotion is
unique in that it offers an extra incentive for action. 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 (BagavathiPillai, 2007). The American Marketing Association (AMA)
defined sales promotion as those marketing activities other than personal selling, advertising, publicity
that stimulate consumer purchasing and dealer effectiveness such as display, shows and exhibitions,
demonstrations and various non-recurrent selling efforts not in the ordinary routine. Sales promotion
represents those marketing efforts that are supplementary in nature, are conducted for a limited period of
time, and seek to induce buying (Davis et al, 2004). Blattberg and Neslin (2000) defined sales promotion
as an action-focused marketing event whose purpose is to have a direct impact on the behavior of the
firm's customers. Ailawadi and Neslin (2008) posited that sales promotion is to induce the present
customers to visit the store more often. And Blattberg and Neslin (2000) also agreed that sales promotion
is to increase brand awareness, attract new customers, and increase sales to present customers.
Oyedapo et al, (2012) posited that sales promotion is a direct inducement that offers an extra value or
incentive for the product to the sales force, distributors or the ultimate consumer with the primary
objective of creating an immediate sale. Aham (2008) is of the opinion that sales promotion emerged as a
reaction by manufacturers marketers, and marketing strategies alike to find a short term solution to the
problems of excess stock of goods which are available in variables manufacturer’s warehouses but are not

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demanded by consumers and organization. Also, Oyedapo et al, (2012) viewed sales promotion as any
activity intended to generate a temporary boost in sales. Shimp (2003) said sales promotion refers to any
incentive used by a manufacturer to buy a brand and to encourage the sales force to aggressively sell it.
Totten and Block (2004) stated that the term sales promotion refers to many kinds of selling incentives
and techniques intended to produce immediate or short-term sales effects. Sales promotion refers to those
promotional activities other than advertising, publicity and personal selling that stimulate interest, trial or
purchase by final customers or others in the channel (BagavathiPillai, 2007).

Concept of Consumer Loyalty


Various scholars have attempted to define customer loyalty with emphasis on how it impacts an
organization’s product, promotion, and performance. For instance, Kotler (2004) described loyalty as a
situation, in which customer consistently uses and recommends the product and prefers the same brand
over the time. Ibok (2015) asserted that customer loyalty is an unwavering commitment to repurchase a
brand continuously regardless of available substitute of the brand. Customer loyalty implies the intrinsic
decision made by the customer to consistently purchase a particular product from their preferred brands
regardless of the availability of substitute (Ogwo & Igwe, 2012). According to Yusuf (2014), one of the
determinants of sustainability of a business entity is the long run repurchase intentions of its customers
which hinges on the level of brand loyalty of the customer. Customer loyalty leads to increase in the
profitability through recommendation of the product to their kin and kindred (Abiodun, 2014).
According to Jones and Sasser (2005), customer loyalty can be grouped into three parts. First one of them
is the re-buy intention, the second is primary level behavior and the third is the secondary level behavior.
Re-buy intention relates to the future purchase intention of the customer to re-purchase the desired
product or the service. Secondary level means the customer himself physically visits the place to purchase
the product. While in the third level customer deliberately recommends the product or the service to the
people around him and thus exhibits the loyalty by human interaction. Kotler (2004) argued that customer
loyalty through attitudes and behavior. The attitude includes the intention to repurchase the product, the
intention to recommend and the immunity to competitors. The behavior consists of behavior of
repurchase, purchasing other products from the company, and recommending it to others.
Empirical Review
Egwuonwu, Adeniran and Egwuonwu (2017) examined the effect of integrated marketing
communications on customer loyalty in the telecommunications industry in Nigeria. Lagos State, Nigeria.
Survey design was adopted for the study. Cross-sectional data were collected across the twenty local
government areas in Lagos State with the aid of a structured questionnaire. The questionnaire
administered on 600 telecommunications subscribers yielded 82.3% response rate. Descriptive statistics,
Kaiser-Meyer-Olkin measure of sampling adequacy and Bartlett’s test of sphericity were employed to
analyze the data The findings revealed that integrated marketing communications (IMC) has a
significant positive effect on customer loyalty. The result further showed that each of the proxies of IMC
studied influenced customer loyalty at varying degrees, ranging from high to weak extent.
Ibok (2015) also examined the nexus between brand identity and customer loyalty in Nigeria with specific
reference to four Nigeria telecommunication companies (MTN, Etisalat, Airtel, and Globacom). Sample
size was made of Two hundred and forty respondents and data was analyzed with the aid of simple
regression method. Results revealed that there was strong and positive relationship between customer
loyalty and brand identity in the context of telecommunication industry in Nigeria. In another study,
Kwabena (2014) investigated the impact of service quality on customer satisfaction, customer loyalty, and
choice of network provider in the Nigeria telecommunication industry. Sample size was drowning from
two hundred and fifty undergraduate students, the study employed one sample T-test to confirm or refute
the hypotheses. Result indicated that service quality has a significant and positive relationship with
customer satisfaction, customer loyalty, and choice of network provider among the four network
providers in Nigeria.
Abubakar (2014) also examined the effect of value equity, brand equity, and relationship equity on
customers’ repurchase intention in fast food subsector in Iran. Results indicated that that value equity,

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brand equity, and relationship equity have positive effect on customers’ repurchase intention in fast food
subsector in Iran. In a similar study, Ibojo (2014) examined the impact of customer’s satisfaction on the
direction of customer loyalty in Nigerian banks. Simple regression analysis was employed to analyze the
data. Results revealed that that there is a significant relationship between customer satisfaction, retention,
and loyalty at 1% level of significance.
Adepoju (2012) also examined the influence of quality of service and image of the brand on customer
loyalty in Nigerian telecommunication industry. The hypothesis was tested using Pearson Product
Moment of correlation and findings showed that quality of service and image of the brand are strong
determinants of customer loyalty in the telecommunication market. Oyeniyi (2011) also analyzed the
nexus between sales promotion and customer retention with particular reference to MTN and GLO in
Nigeria. Data were analyzed with the aid of Pearson Product Moment of correlation. Results showed that
there is positive relationship between sale promotion and customer retention in the two
telecommunication companies in Nigeria. Specifically, the study asserted a direct and positive
relationship between sales promotion expenditure and customer loyalty in telecommunication industry in
Nigeria.
Empirical Gap
Many studies have been conducted on sales promotional tools in developed countries, but only few were
conducted in developing countries. Specifically, in Nigeria such as Egwuonwu, Adeniran and Egwuonwu
(2017), Ibok (2015), Kwabena (2014), Abubakar (2014), Kwabena (2014), Ibojo (2014), Adepoju (2012)
and Oyeniyi (2011), but none of their studies focused on sales dimensions in manufacturing industry. This
implies there is need to examine the impact of sales promotion dimensions on consumer loyalty in
Nigerian manufacturing industry.
In the light of this, this current study intends to fill the gap in knowledge by examining the impact sales
promotional dimensions on consumer loyalty in Nigerian manufacturing industry. The findings of the
study will also serve as input that will greatly enhance the ability of management of manufacturing
companies to understand the importance of sales promotion dimensions and make appropriate
promotional policies that will improve profitability.
Definition of Sales Promotion Dimensions
Coupon:- this is paper offers that are available in magazines and newspapers, may be downloaded from
the internet, or are available at the point-of-purchase and entitle the recipient to a reduction in price for a
product or service.
Premium:-this is item offered free or at a reduced price with the purchase of another item.
Bonus pack:-this is offers by the manufacturer that provide additional product at the regular price in an
enhanced package.
Free sample:-this is refers to free product rewards for repeat purchase or patronage of the same product
or company.
Price promotion:- this is refers to a consumer cents or even naira off merchandise at the point-of-
purchase through specially marked packages.

METHODOLOGY
Research Design: The survey research design method was adopted for this study.
Sampling Method and Sample Size: For the purpose of this research work, the researchers adopted
multi-stage sampling procedure for the selection of the participants. The first stage was seven
manufacturing companies (Nigerian Breweries Plc, Nigerian Bottling Company, 7UP Nigeria Limited,
Yale Nigeria Limited, and Procter and Gamble) through purposive sampling technique, while judgmental
sampling technique was used to select 30 distributors of each manufacturing company, totaling 150 as
sample for the study.
Data Collection Instruments: A structured questionnaire was used to collect information from the
study’s participants which are Sales Promotion Questionnaire (SPQ) and Consumer Loyalty
Questionnaire (CLQ).

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Sales Promotion Questionnaire (SPQ): The SPQ developed and validated by Rashid et al (2013) was
used to measure sales promotion among the respondents. The questionnaire is a self-administered
instrument; it is a 5-point Likert type scale anchored on 5-point rating scale. The response format ranges
from strongly agree (5) to strongly disagree (1).The SPQ consists of three items of coupon scale with
reliability alpha coefficient of .82, a four-item free sample scale with alpha reliability coefficient of .79; a
three-item premium scale with alpha of .85 a two-item bonus scale with alpha reliability coefficient of
0.84 and three-item price promotion with alpha of .85.
Consumer Loyalty Questionnaire (CLQ): This scale was used to measure consumer loyalty levels of
distributors and consumers. The scale was developed and validated and validated by Rashid et al (2013).
It is a Likert type scale anchored on 5-point rating scale. Its response format ranges from “strongly
agreed” (5) to “strongly disagreed” (1).
Method of Data Analysis: Product Moment Correlation Coefficient and Multiple Regression were used
to determine the relationship and extent to which the predictor variables independently and jointly predict
the dependent variable.
Model Specification and Analytical Technique
To evaluate the impact of sales promotion dimensions on consumer loyalty; mathematically, the model is
expressed as follows:
Model. CL = F(X1, X2,X3,X4, X5)
CL = β0 + β1XI + β2 X2 + β3X3 + β4X4 + β5X5 +Є. .(i)
Where:
CL = Consumer Loyalty
X1 = Coupon
X2= Free sample
X3 = Premium
X4= Bonus
X5 = Price promotion
β0 = Intercept
β1- β5 = Regression Coefficient
Є= Stochastic error term

The model was enabling the researcher to get a more complete picture of the variables and determine the
significance of independent variables individually and jointly on the dependent variable.

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RESULTS AND DISCUSSION OF FINDINGS


Analysis of Data Presentation
Table 1: Pearson Product Moment Correlation Coefficient Showing the Relations of Sales
Promotion Dimensions and Consumer Loyalty.
Loyalty Coupon Free Premium Bonus Price
sample promotion
Pearson
1 .931** .974** .930** .961** .950**
Correlation
Loyalty
Sig. (2-tailed) .000 .000 .000 .000 .000
N 75 75 75 75 75 75
Pearson
.931** 1 .906** .905** .888** .927**
Correlation
Coupon
Sig. (2-tailed) .000 .000 .000 .000 .000
N 75 75 75 75 75 75
Pearson
.974** .906** 1 .933** .956** .919**
Free Correlation
sample Sig. (2-tailed) .000 .000 .000 .000 .000
N 75 75 75 75 75 75
Pearson
.930** .905** .933** 1 .921** .900**
Correlation
Premium
Sig. (2-tailed) .000 .000 .000 .000 .000
N 75 75 75 75 75 75
Pearson
.961** .888** .956** .921** 1 .931**
Correlation
Bonus
Sig. (2-tailed) .000 .000 .000 .000 .000
N 75 75 75 75 75 75
Pearson
.950** .927** .919** .900** .931** 1
Price Correlation
promotion Sig. (2-tailed) .000 .000 .000 .000 .000
N 75 75 75 75 75 75
**. Correlation is significant at the 0.01 level (2-tailed).

Table 1 shows that coupon, free sample, premium, bonus and price promotion have significant
relationship with consumer loyalty (r = 0.931, 0.974, 0.93, 0.961 and 0.950) at 1% level respectively.
Furthermore, the results indicate that coupon contributes 93.1% to consumer loyalty. This implies that
coupon is a strong promotional tool. This result is in line with Peter and Olson, (2006), Fill (2002), Cook
(2003) and Darks (2000) who affirmed that coupon is strong sales tool which can be easily understood by
the consumer and can be highly useful for trial purchase.
Free sample, according to the result, contributes 97.4% to consumer loyalty. This indicates that free
sample the more the free sample offered by the organizations the higher the consumer loyalty. This result
is not support to the founding of Gilbert and Jackaria (2002) who asserted that free sample as a
promotional offer had no significance on consumers’ reported buying behavior, but in line with Shimp
(2003) and Fill (2002) that free sample is a promotional tool that stimulate repurchase.
The result also indicates that premium contributes 93% to consumer loyalty. This implies that packs with
“buy – one – get – one - free” enhances consumer loyalty. This result is not in line with Gilbert and
Jacker (2002) who opined that premium may not increase brand awareness before trial purchase.
Bonus and price promotion also contribute 96.1% and 95% to consumer loyalty respectively. This implies
that bonus and price promotion have significant influence on consumer repurchase. This result is
conforms to Schindler (2008) and Wayne (2002).

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Testing of Hypothesis

Table 2 (a) Model Summaryb of Multiple Regression Analysis

Model R R Square Adjusted R Std. Error of the Durbin-Watson


Square Estimate
1 .986a .972 .970 .22993 1.212
a. Predictors: (Constant), Price promotion, Premium, Coupon, Bonus, Free sample
b. Dependent Variable: Loyalty

Table 2 (b) ANOVAa

Model Sum of Squares Df Mean Square F Sig.


Regression 128.352 5 25.670 485.552 .000b
1 Residual 3.648 69 .053
Total 132.000 74
a. Dependent Variable: Loyalty
b. Predictors: (Constant), Price promotion, Premium, Coupon, Bonus, Free sample.

Table 2 (a) and (b) show that sales promotion dimensions (price promotion, premium, coupon, bonus
and free sample) were significant joint predictors of consumer loyalty with R2 = 0.972; F(5, 69) =
485.552; P<.01. The predictor variables jointly explained 97.2% variance of consumer royalty, while the
remaining 2.8% could be due to the effect of extraneous variables.
This implies that sales promotion dimensions have positive significant impact on consumer loyalty. This
result is in line with Ailawadi (2001), Shoemaker (2009); Blattberg et al (2001), Raju and Hastak (2003)
who affirmed that sales promotion dimensions have significant effect on purchase behaviour. However,
this result is contrary to Davis et al (2002) assertion, that sales promotion dimensions have only a minor
effect on brand switching and customers who do switch might be those who are always looking for the
best deal and thus cannot be kept as loyal customers.

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Table 2(c) Coefficientsa


Model Unstandardized Standardized T Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) -.181 .083 -2.194 .032
Coupon .159 .068 .142 2.343 .022
Free sample .520 .085 .486 6.087 .000
1
Premium -.017 .068 -.015 -.249 .804
Bonus .195 .081 .190 2.407 .019
Price Promotion .209 .068 .209 3.062 .003
a. Dependent Variable: Loyalty

Table 2 shows that coupon (β = 0.159, t = 2.343, P <.05); free sample (β = 0.520, t = 6.087, P <.01);
bonus (β = 0.195, t = 2.407, P <.05), and price promotion (β = 0.209, t = 3.062, P <.05) were significant
independent predictors of consumer loyalty. The study is consistent with the findings of previous studies
(Olson, 2006; Fill, 2002; Cook, 2003 and Darks, 2000) that sales promotion is very crucial to consumer
behavior. While the premium (β = -0.017, t = -0.249, P ns) has negative influence on consumer loyalty
but not significant and this result is in line with Gilbert and Jackaria (2002) who asserted that premium
may not increase brand awareness before trial purchase.

CONCLUSION
On the basis of the findings of this study, it can be concluded that Sales promotion dimensions (price
promotion, premium, coupon, bonus and free sample) jointly and independently predict consumer loyalty
expect premium which has negative influence but not significant. This is largely due to consumer
unfamiliarity with the tool. Thus, it is suggested that manufacturers and sellers should use more of
premium in their promotional efforts. This will help ignorant customers to be better informed about
premium and their uses. The study is consistent with the findings of previous studies (Olson, 2006; Fill,
2002; Cook, 2003 and Darks, 2000) that sales promotion is very crucial to consumer behavior.

RECOMMENDATIONS
Based on the research findings and conclusion, the following recommendations were made:
1. That manufacturers and sellers should continue apply price promotion, coupon, bonus and free sample
because of their robustness influence on consumer loyalty.
2. Manufacturers also need to pay more attention to their customers in order to understand their needs
and expectations as well and to keep in touch with them.
4. Customer's satisfaction surveys should be conducted in a systematic and continues way.
5. Finally, there should be enhanced and computerized distribution system, this strategy create
performance and proficiency on field managers and supervisors monitoring sales on consumers and
complaint.

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