PRICE PROMOTIONS BASED ON BRAND LOYALTY IN FMCG

ABSTRACT This paper examines that the price promotion strategy used by retailing units in 200 FMCG products, because of the competition, in order to stay alive in the market. It also studies that when the product category expands, the price promotion is used frequently to attract the consumer. Big players in the market can survive to a greatest extent with is brand name and of loyal customers, small players enter into the market with the competitive pricing, they promote the product easily with price discounts, this can be examined on the basis of premium customers and non premium customers. The brand likelihood depends on the price promotions with subject to number of competitions brands in the market by analyzing the perceptions of the customer based on their age, gender and profession are known as UCP (unique customer perception). Discriminative analysis was used to find out the price promotions strategies, used frequently by the low loyalty brand than the brand with stronger loyalty and also to compete with the stronger brands the low loyalty brand has to spend, more on advertising and discounts to make them available in the market. Keywords: Brand, promotions, UCP and Market.

INTRODUCTION Retailers frequently use price promotions, especially temporary price reductions. The price promotions lead to large increases in sales during the promotion period. However, there is concern about post-promotion effects, especially on brand loyalty. In contrast to the short term success of price promotions, the impact of coupons and multi-item promotions on customers

future brand choices is vague. From a managerial perspective it is crucial whether promotions increase or decrease brand loyalty. Managers hope that price promotions encourage brand loyalty, but recent research shows that price promotions, especially temporary price reductions, reduce brand loyalty. Brand loyalty is more than simple repurchasing, however. Customers may repurchase a brand due to situational constraints a lack of viable alternatives, or out of convenience. Such loyalty is referred to as "spurious loyalty". True brand loyalty exists when customers have a high relative attitude toward the brand which is then exhibited through repurchase behavior. This type of loyalty can be a great asset to the firm: customers are willing to pay higher prices, they may cost less to serve, and can bring new customers to the firm. For example, if Joe has brand loyalty to Company A he will purchase Company A's products even if Company B's are cheaper and/or of a higher quality. The term FMCG (fast moving consumer goods), although popular and frequently used does not have a standard definition and is generally used in India to refer to products of everyday use. Conceptually, however, the term refers to relatively fast moving items that are used directly by the consumer. Thus, a significant gap exists between the general use and the conceptual meaning of the term FMCG. OBJECTIVE OF THE STUDY 1. Analyzing the factor which influences the buyer sensitivity 2. Analyzing the relationship between brand loyalty and price of the product category HYPOTHESIS OF THE STUDY ARE H0: There is no significant relationship between price promotion and brand loyalty H1: There is a significant relationship between price promotion and brand loyalty

DEFINING THE TERMS USED IN THE STUDY For the purpose of our study, we follow the definition of sales promotions as a diverse collection of incentive tools, mostly, short term designed to stimulate quicker and/ or greater purchase of particular products/services by consumers (Kotler, 1998). Sales promotions are classified as price and non- price based on the nature promotions (Campbell and Diamond, 1992; Blattberg and Neslin, 1990). Price promotions are defined as promotions such as Coupons, Cents off, Refunds, and Rebates that temporarily reduce the cost of the goods or service (Cooke, 1983). Non- price promotions are defined as promotions such as giveaways (freebees), or contests in which value is temporarily added to the product at full price.

VARIABLES 1. Coupons Coupon is the oldest and most widely used way of sales promotion. Coupons have been used since 1895. It is mostly used by packaged goods. It is worthwhile to use coupon as a promotion tool because data shows that market for packaged goods increased from 16 billion in 1968 to 310 billion in 1994. To boost up the sales not only manufacturer but retailers personally can also used. A coupon leads to price reductions so as to encourage price sensitive customers. Non users can try a product which may leads to regular sales. 2. Price-off A price-off is simply a reduction in the price of the product to increase sales and is very often used when introduction a new product. A reduction in price always increases sales but the use of this technique should be carefully considered in the current market situation. Price-off is the most preferred sales promotion technique because consumers response very positively to this scheme. Not only that but it also cause large increase in sales volume. Price-off reductions are typically offered tight on the package through specially marked price packs. E.g. Krack Jack offers 30% Price-off.

3. Freebies Freebies are a popular form of modern marketing and are some of the best things about the internet. The definition of freebies is products or services given away for free at no cost to the consumer. Well thats the definition we came up with. I am a bargain freebie shopper, pretty much going for any free product and informing everyone about it. At different times, big and small companies often give away prizes and money which is too good to be true. Often its in the pursuit of more customers or a larger fan base and it often works. 4. Scratch Cards A scratch card (also called a scratch off, scratch ticket, scratcher, scratchie, scratch-it, scratch game, scratch-and-win or instant game) is a small token, usually made of cardboard, where one or more areas contain concealed information: they are covered by a substance that cannot be seen through, but can be scratched off. 5. Bundling Offers Product bundling is a marketing strategy that involves offering several products for sale as one combined product. This strategy is very common in the software business (for example: bundle a word processor, a spreadsheet, and a database into a single office suite), in the cable television industry (for example, basic cable in the United States generally offers many channels at one price), and in the fast food industry in which multiple items are combined into a complete meal. A bundle of products is sometimes referred to as a package deal or a compilation or an anthology.

Price promotion from the retailers point of view Perceptions on Scheme Preference Perceptions about Buying Roles Perceptions about their role in decision-making Perceptions about Response to Sales Promotion Offers Perceptions about Communications of Sales Promotion Schemes Variations in Information Flow Perceptions about terms and conditions Servicing during duration of Scheme

Q1. Since how long are you in this business?

Particulars 1-5 Years 5-10 Years More than 10 years

Respondents 24 27 49

Interpretation
This question gives idea about the benefit to the retailers who are on the market from long period of time and the benefits they are getting more as compare to others. It also shows their experience in the field and the services they are providing too their new and regular customers. It also gives idea about the benefits they are gaining for wholesalers and direct from the company.

Q2. Name the (Company) you stock for.

Companies Nirma HUL P&G Godrej Others

Responde nts 96 100 90 94 68

Interpretation:
It gives idea about the capacity of the retailers to stock the goods and also the variety of the products they are stocking. It will also make clear the demand of the goods in their stores and the selling of the product in market. Most of the retailer stocks all types of soap and detergent.

Q3. Rank the following factors that customers look for in the purchase (Rank from 1 to 6)
Factors Fragrance Quality Company Image Price Packaging Others 1 3 66 9 18 17 4 1 28 5 2 34 24 2 0 24 16 27 8 11 6 38 34 4 9 24 55 2 24 23 3 33 7 4 22 3 5 10 1 6 8 0

Interpretation:
It gives an idea about the priority the influencing factors too the consumers and also the weight age of that factor over other factors. In the above result people are more quality and price oriented. On the other hand people are also conscious about the company image. Because sometimes the consumer remember that name of the product by the company name and also from the past performance of that company. Fragrance and packaging are not influencing factor as per the respondents.

Q4. Do you suggest customers to purchase a certain brand?

Particul ar Yes No

Respond ents 33 67

Interpretation:
This could be a very help question to understand the role of retailers in the purchase decision. In above graph 67% of retailer are not suggest to purchase particular brand because of personal relation or that customer are brand loyal. While 33% of the retailer are suggesting the consumers to buy particular brand. There could be many reasons like, extra margin, relations with consumers and quality of the products which retailer may get the benefit of the same.

Q5. If Yes why?

Particular High margin Quality Relationship No reason

Responde nts 9 17 7 67

Interpretation:
it gives idea about the reasons why retailers suggest the consumers to buy particular brand. In above graph and table it is clear that for margin and of better relations with consumers and too provide quality product to consumers they suggest consumers too bye particular brand. For the company it may be helpful to target such retailers to sell their product in the market easily.

Q6. Do customers look for various schemes in the product?

Partic ular Yes No

Respond ents 92 8

Interpretation:
This gives a real helpful data for checking the effect of sales promotions in the market and how seriously consumers follow the promotions before they go for purchase particular brand. The above result shows that only 8 out 0f 100 didnt go for the promotion otherwise all are looking for any type of the promotions on the product.

Q7. If yes which schemes?

Promotional Schemes Coupons Price Off Freebies Scratch Cards

Respondents

11 82 35 2

Lucky Draws Bundling Offer Extra Quantity

19 65 79

Interpretation:
The above stated results show the demand of various types of promotional schemes in the market by the consumers. Almost all types of schemes are being demanded by the consumers in the market but there are three major schemes which consumers generally look at the time of purchase or before that. Price off, product bundling and extra quantity are more demanded by the consumers over others schemes.

Q8. Which Trade Promotions do various companies offer?

NIRMA
Promotio ns Extra Margin Extra Units credit facility Gifts promo. Exp. Responde nts 46 34 55 24 8

H0: Effect of trade promotions for all four brands is similar. H1: Effect of trade promotions for all four brands is not similar.

Interpretation:
From the above graph shows the trade promotions offered by the NIRMA Ltd to the retailers to attract them towards stocking their goods and also stop them switching them too other major players in the market. NIRMA is mainly offering credit facility which is offered by all major players it may differ in the time limit of the credit. It is also providing extra margin, and units with occasional gift with their schemes.

HUL
Promotion s Extra Margin Extra Units Credit facility Gifts Promo. Exp. Responden ts 47 34 58 25 22

Interpretation:
The advantage of HUL over NIRMA is that it bare promotional expenses which NIRMA is not doing. It attracts more consumers through such promotions, such as display of the product, banners etc. So this may help it to attract more retailers. It may because of its less cost of production in other segments in which nirma is not operating.

P&G
Promotion s Extra Margin Extra Units Credit facility Gifts Promo. Exp. Responden ts 40 33 55 20 12

Interpretation: P&G is also a big player in the FMCG market. It is also providing all the facilities which others are providing to retail GODREJ
Promotions Extra Margin Extra Units Credit facility Gifts Promo. Exp. Responden ts 46 32 57 19 18

Interpretation:
Godrej is a big player in the FMCG market. It is also providing all the facilities which others are providing to retailers. But it is lacking in bearing expenses which HUL is providing to maximum number of retailers

OTHERS
Promotion s Extra Margin Extra Units Credit facility Gifts Promo. Exp. Responden ts 30 18 38 15 7

Interpretation:
Others include local players, as well as we established players like, wipro but their products are not in demand like other players but still they are providing all the facilities to retailers to attract towards stocking their products. CONCLUSION The study reflects that the use of sales promotion undeniably has increased over the years in India. Future holds lot of promise for such schemes across wider range of product-markets. Sales Promotion has ceased to be major differentiator at least in the metros, with almost all companies offering similar freebies and gifts. As a result now

marketers have to find out some innovative ways of sales promotion to differentiate from competitors. Currently Price off and Bye one get one free offers are very effective to attract the consumers towards the products. We have noted that these kind of promotional tools are useful for short term increase in sales and to induce first trial. These types of promotional schemes should be consistent and changed from time to time depending upon season and competitors schemes. With the Increasing number of supermarket, the branded packaged goods work as silent sales person. So in such stores, sales promotion plays a more effective role in stimulating consumers demands. One of the very important facts we came to know from this project is that sale of goods which contain large quantity and having big packaging e.g. detergent are stagnating because consumer prefer to buy small pack goods, the reasons are: small pack goods reduce risk of bad quality, It had low cost or say price, and last but important factor i.e. mentality to purchase just to try first. Sales of small pack goods are quite high, but from the companys point of view small pack goods is less profitable compare to large pack goods. So here marketer tries to increase sales of large pack goods by using sales promotion tactics like price off and percentage extra. References
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