CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Every firm aims to make profit. It is generally agreed that one of the keys to making profit is boosting sales. To boost sales, a substantial number of customers must choose one’s product over and above that of its competitors on a substantial number of occasions. One of the surest way of ensuring this happens is to cultivate brand loyalty to one’s product or service.

Brand loyal consumers are more likely to choose their preferred products and /or service over its competitors on a consistent basis. Considering the fact that consumers tend to be finicky with their choices, producers of rival brands tend to be uncompromising with product or service quality while being relentless with their marketing, wiggle room for product in a highly competitive environment is little or nonexistent and the margin of error is narrow. Brand loyal consumers tend to serve as a crucial even if sometimes unconscious support base for product and/or service is the fierce battle for patronage.

For any organization therefore broadening and deepening the base of brand loyal consumers is a key objective in fashioning out any marketing strategy for the brand. Indeed, brand loyalty has been proclaimed by some as the ultimate goal of marketing (Reicheld and Sasser, 1990).

Hence, this concern led to the study of sales promotion as it relates to customer loyalty. Sales promotion is inevitable for any type of organization that wants to stimulate sales.
According to the American Marketing Association (AMA) defines sales promotion as “media and non media marketing pressure applied for a predetermined, limited period of time in order to stimulate trial, increase consumer demand, or improve product quality”. But this definition does not capture all the elements of modern sales promotion.

Schoell and Guiltinan (1996) sees Sales promotion as any activity that offers an incentive for a limited period to induce a desired response for target customers, company sales people, or intermediaries.

Jobber (2004) simply captures sales promotion as a package of incentives to consumers or the trade that are designed to stimulate purchase. Sales promotion, a key ingredient in marketing campaigns, consists of a collection on incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers of the trade (Kotler and Keller, 2009). Sales promotion plays an important role in retaining old consumers and attracting new ones.

It has being established in literature that only consumers with repeat purchases are profitable (Nagar, 2009). This shows that sales promotion is vital and research must be done to explore it full potential fully. Against the background, this research work strives to broaden our understanding as it appears that sales promotion has to be integrated in order to gain customers’ loyalty in the Nigeria telecommunication industry. In Nigeria, the telecommunication sector is highly competitive and telecommunication operators attempt to appeal and win customers through various sales promotion strategies.

The Nigerian telecommunication industry is entering its maturity phase, with reducing average profit. With fierce competitive, telecommunication operators must work hard to reduce cost, win new customers and retain existing ones and increase profit to ensure sustainable development of their businesses.

1.2 STATEMENT OF THE PROBLEM.

Every supplier wants to create and retain a loyal customer who engages in continued profitable business with him. Customer loyalty is the measure of success of the supplier in retaining a long term relationship with the customer.

Marketers across the globe have to use sales promotional resources available to them efficiently and not to waste them under any circumstances.

Worldwide survey indicates that consumers globally are changing their behavior towards product and services. Hence competitors seem to develop any available sales promotional strategy to retain existing customers.

The challenges of sales promotion is that its activities are required to generate awareness about not only their presence but also accentuate the importance of the brand, constantly emphasizing on the brand, the purchase of which would bring a host of other benefits for customers who buy the brand.

The brand should be strong enough and should have enough qualities to motivate the consumers to buy it again once the sales promotional activities has succeeded in enabling the customer to buy the brand.

There is also a challenge of maintaining the market pressure of the brand. This happens through the constant emergence of new sales promotional activities for short time periods that main the freshness of the brand.

A sales promotion makes up one of the seven part of promotional mix. One of the benefits organization would derive from good sales promotion is that it can create up sell or cross sell opportunities for a business. Up sell or cross sell opportunities can result in word-of-mouth business from satisfies customer. This will generate more profit which can also be considered another benefit.

The sales promotion can also cause the company to focus on marketing and create creative tasks for the marketing team at the company.

1.3 OBJECTIVE OF THE STUDY

The General objective of the study is to determine the impact of sales promotion on customers’ loyalty in the Nigerian Telecommunication Industry. Other specific objectives are:-

To Determine the Impact of Premium Sales Promotion on Customer Patronage.

To Examine the Role of Sales Promotion through Consumer Contest on Brand Switching.

To Evaluate the Effectiveness of Sales Promotion on Customer Loyalty.

1.4 RESEARCH QUESTIONS

Given the objective of the study above, the following research questions are thus formulated to guide the study:

What impact does Premium Sales Promotion has on Consumer Patronage in the Telecommunication Industry.

How can Sales Promotion through Consumer Contest Impact on

Brand Switching in the Telecommunication Industry.

How does Sales Promotion Impact on Customer Loyalty in the Telecommunication Industry.