Buying Behavior In The Mauritian Supermarkets Marketing Essay

To identify the different types of sales promotion used on the Mauritian supermarkets/hypermarkets.

To analyze the awareness of sales promotion among the Mauritian consumers.

To evaluate the different types of buying behavior that arises due to sales promotion.

To examine the impact of different types of sales promotion such as coupon, free sample, buy-one-get-one-free, bonus pack, price discount on the buying behavior of consumers in the Mauritian supermarkets.

2.0 Introduction

This chapter provides a review of past literatures on sales promotion and the different types of sales promotion, such as coupons, free sample, buy-one-get-one-free, bonus pack and price discount.

It also relates consumer response towards sales promotional tools in the Mauritian supermarkets.

2.1 Sales promotion defined

Sales promotion is a direct inducement or incentive to the sales force, the distributor or the consumer with the primary objective of creating an immediate sale. (Schultz and Robinson, 1882).

Quelch (1989) defines sales promotion as temporary incentives targeted at the trade (trade promotions), or at end consumers (consumers promotions). Sales promotion is one of the four ingredients of the promotion mix. The other three are personal selling, publicity and advertising. According to Quelch, sales promotions differ both in role and nature from advertising. Sales promotions are typically viewed as an easily executed means of boosting short-term sales whereas advertising is seen as building brand image.

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Shimp (2003) stated that sales promotion refers to any incentive used by a manufacturer to induce the trade (wholesalers, retailers, or other channel members) and consumers to buy a brand and to encourage the sales force to aggressively sell it. Retailers also use promotional incentives to encourage desired behaviors from consumers. Sales promotion is more short-term oriented and capable of influencing behavior.

The objectives of any promotional strategy are to increase sales; maintain or improve market share; create or improve brand recognition; create a favorable climate for future sales; inform and educate the market; create a competitive advantage, relative to competitors products or market position; improve promotional efficiency. (Rowley, 1998).

2.2 Types of sales promotion

According to Smith (1998), there are three main categories of sales promotion:

Customer promotions (Premiums, gifts and prizes)

Trade promotions (Special terms, point-of-sale materials and free pens, diaries, and competitive prizes among others)

Sales force promotions (Incentive and motivation schemes)

Tellis (1998) brings further that, in practice, there two types of sales promotion: Monetary and Non-monetary sales promotions. Monetary promotions are for example, shelf-price discounts, coupons and sampling. They tend to provide fairly immediate rewards to the consumer and they are transactional in character. On the other hand, non-monetary sales promotions include free gifts, contests and sweepstakes for instance. It tends to involve delayed rewards and are more relationship-based.

2.3 Supermarkets and Hypermarkets defined

A supermarket is relatively large, low cost, low margin, high-volume self service operation design to serve the consumer’s general needs for food, laundry and household maintenance products (Kotler and Armstrong, 2001). The area covered by a supermarket can be about 400 – 2500 square meters. Examples of supermarkets in Mauritius are Winners, Spar, Way and Dream Price, Value Max and Lolo supermarket among others.

Hypermarkets are larger than supermarkets and offer a large assortment of routinely purchased food products, non-food items and services which meet the consumers’ total need. Hypermarkets can have at least 50,000 square feet of selling and can handle more than 40,000 products. These outlets are usually located on the outskirt of towns or cities and are complemented with 30 to 50 shops, specialized in various product lines. The hypermarkets and combination of shops thus offer customers a one-stop shopping. For instance in Mauritius, Shoprite, Jumbo, Super U and Intermart are categorized as hypermarkets.

2.4 Supermarkets and Hypermarkets of Mauritius

It is no doubt that during the past decades considerable changes have been occurring in the Mauritian retail market. Unprecedented growth in new retail formats, changes in competition, consumers, technology and takeovers are occurring throughout virtually every corner of the Mauritian retail industry and many types of retail institutions have been appearing from corner shops to hypermarkets. There have been major developments in the retail sector of Mauritius. For instance, the arrival of Dream Price, Value Max and Lolo supermarket in different location of Mauritius have intensify the level of competition.

2.5 Consumer response towards sales promotions

Promotions arouse two reactions in people. Firstly, it is an increase in consumption, that is, more quantity of a product is acquired. Secondly, it is the storage of the product for the future, that is, the consumer acts in anticipating his purchases.

Promotions have been shown to affect consumers directly in a variety of ways, leading to:

Brand switching

Brand loyalty

Purchase acceleration

Stockpiling

Product trial

2.5.1 Brand switching

According to Gupta (1993), it is possible that consumers who do not buy a brand will want to acquire it because they are attracted by the sales promotion. But, Brandweek (1994) found that some people who change brand due to a promotion, change back to their favourite brand due to a promotion change back to their favourite brand when buying that category of product later.

2.5.2 Brand loyalty

Brand loyalty is an important concept in understanding consumer buying behavior. It is “a deeply held commitment to re-buy or re-patronise a preferred product/service consistently in the future, thereby causing repetitive same brand purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior” (Oliver, 1999)

2.5.3 Purchase acceleration

Two aspects of purchase acceleration should be considered: Increased quantity and Decreased interpurchase time (Neslin, Quelich, Henderson 1982). However, there is a very important question on how these two aspects will influence each other due to the stockpiling effect. Purchase acceleration is predominantly exhibited in increased purchase quantities rather than shortened interpurchase time (Gupta, 1988)

2.5.4 Stockpiling

Research has found that promotions have a negative effect on brand equity (Jedidi et al., 1999), increase variability and volatility in sales and thus increase inventory management problems, increase consumer price sensitivity which leads to increased purchases made on deals, and produce stockpiling behavior (buying in all volumes that decreases long-term sales volume).

2.5.5 Product trial

Peter and Olson (1996) put forward that trial ability refers to the degree to which a product can be tried on a limited basis or divided into small quantities for an inexpensive trial. Banks (2003) wrote that with sales promotion, brands have a chance to quickly affect consumer choice and behavior by adding value through an on-pack offer, by achieving incremental display or by encouraging trial via sampling and/or coupons.

According to the trial and repeat model mentioned by Thomas (1993), it is generally assumed that of all potential buyers in a given time period, only those who are aware of the new product could potentially try it (trial), and only those who try it could potentially buy it again (repeat).

2.6 Sales promotional tools

2.6.1 Coupons

Coupons are easily understood by the consumer and highly useful for trial purchase (Cook, 2003). According to Blackwell et al. (2001), a manufacturer might utilize coupon incentives to encourage consumers to try a new flavored product at a discounted price, instead of buying the same flavor they normally do at full price. Cheong (1993) found that supermarket coupons increase the number of items bought without increasing the total amount spent.

2.6.2 Price reduction

It is well-known that price reduction produces a short-term volume gain for the brand being promoted. After studying the effects of price reduction on the sales of 25 products in four countries, Ehrenberg et al. (1994) determined that short-term peaks in sales were due primarily t purchases made by occasional users of a brand rather than by new customers. Also, after taking advantage of the price reduction, consumers mostly return to their favorite brands in their portfolio rather than buy the promoted brand at full price.

2.6.3 Free sample

Free sample is another important promotional tool often used by marketers. Marketers often mail free samples of products to consumers so that they can try the products for themselves, rather than just hear about the products (Kardes, 1999). But, Gilbert and Jackaria (2002) found that a free sample as a promotional tool often had no significance on consumers’ reported buying behavior.

2.6.4Bonus pack and Buy-one-get-one-free

Lee (1963) mentioned that factory bonus pack is used to increase consumer trial of the brand. Since more of the product is included at no extra cost, consumers can be persuaded to buy the product if they feel it represents a deal that produces the greatest value for their money. According to Gilbert and Jackaria (2002), packs with “Buy-one-get-one-free” may not increase brand awareness before trial purchase because the customer will only come across the product once in the store (unlike samples or coupons), however, it the promotion is noticeable, it will facilitate brand recognition and brand recall for future purchases. Since an additional amount is given for free, consumers may be persuaded to buy the product if they feel it represents a fair deal that provides value for money.

2.6.5 In-store display

In-store display is the product featuring and display in-store (Pramataris, 2001). Display promotions could be an important part of an integrated marketing communication programme. Good display material leads to better attention, especially for brands driven by recognition awareness. Percy et al. (2001) advised that display must be consistent with consumer promotion and advertising, eith the same look and feel, in order to increase recognition at the point of purchase.

2.7 Summary

Due to high profitability, many retail outlets have entered the retail industry in Mauritius. The arrival of supermarkets and hypermarkets seems to continue to emerge and exist, but they are however facing greater competition. Distance is no more a problem in Mauritius since many people have their own transport facility and the local transport service is as well more efficient as compared to long ago.

One main analysis in the literature is that little research has been carried out on the marketing tools in Mauritius. As such, this provides room for a thorough research to be carried out on several types of sales promotional tools adopted in our supermarkets/hypermarkets; and the responded behavior of the consumers towards the tools utilized.