CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
A key ingredient in marketing campaign is sales promotion. In every business, the need to promote product, service or idea can not be over emphasized. The America 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 quality. From the above definition, the modern elements of sales promotion are not visible.
Effective sales promotion increases the basic value of a product for a limited time and directly stimulates consumers purchasing, selling effectiveness in time with the efforts of sales team. The level of brand competition today requires a very high use of sales promotion activities in the society. Activities of sales promotion is best described as a specific usually short term promotion that is over and above what one would normally provide to the customers. When used effectively it can help to move old stock, counter act competitor activity, merchandise new products encourage repeat buying and motivate your staff some common types of sales promotion are Discounts, samples, instant draws and assigned gifts premium gifts or product combinations, container premium amongst others.
The high patronage and usage in the telecommunication industry in Nigeria today cannot be over emphasized. As individuals, companies and group depend on these networks available for fast and easy communication and day to day transactions. The privatization policy has erupted a number of investors in the telecommunication industry. “The banking and finance sector is reaping the benefits of deregulation as the telecom sector is creating more opportunities for investment”. Nnama( 1999, p.1) The deregulation of mobile phone market led to the introduction of global system for mobile communication: (GSM).
The network providers operating on the 900/1800 MH2 spectrum are MTN Nigeria, Airtel, Globacom and Etisalat. (Source) just like many other African countries the use of cell-phone have soared and have mostly replaced the unreliable services provided by the Nigeria Telecommunication Limited (NITEL). With the tight nature of competition in the telecom sector as a result of growth of technology and information, consumers preference keeps changing, because of the low switching cost in the market. Due to this increasing demand of consumers in the market, management of business organizations have to increase their resources with attention focused more attracting and retaining its customers (Koller 2003).
The ensure this is done, major telecommunication sectors have employed the use of sales promotion to the point that consumers keeps switching from one network to the other as a result of the incentives or extra value they get. Sales promotion includes communication activities that provide extra value or incentive to ultimate customers, wholesalers, retailers or other organizational customers; it also stimulates sales product trial. (Kotler and Keller 2006). Thus stimulating consumers’ attitude towards a positive world of selecting the messages and acting suit. According to Keller (2003) consumer buying behaviour is the process by which individual search for, select, purchase, use and disposes goods and service in satisfaction of their needs and wants. Despite the use of sales promotion tools by the telecom industries the final purchase and determinants of how effective a product is, is the final consumers. In line with the above this study seeks to look into how select telecom industry utilizes sales promotion and how it influences her market performance.
1.2. Statement of Problem
Organizational performance is measured by the output of a promotional strategy in relation to the output of the organizational aim or goal. Sales promotion is to ensure a consumer buys now, but does not guarantee brand loyalty; which makes it obvious that consumers have the liberty to run around brands and utilize products as it suits them during promos.
The Telecomm Industry: MTN, GLO, Etisalat and Airtel are lined with the objective of high performance and profit maximization as bedrock. This has made them engage a great height of aggressive sales promotion programme in other to fit into or better still, win the competition in the GSM market. Sales promo tools utilized ranges from free sim packs, raffle draws of various items (automobiles, TV sets, generators), free calls, who wants to be a millionaire, free airtime, excessive overload of data amongst others. These promotional strategies used can be termed as promotional war because they keep changing strategies week in week out as their competitors change. It’s in line with the above that this research seeks to examine the concept of sales promotion to know if it influences market performance. Thus this question comes to mind to what extents do the select telecomm companies utilize sales promotion and how does it influence her market performance?
1.3. Research Objectives
The objectives of the study are:
