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EPRA International Journal of Economic and Business Review Vol - 4, Issue- 7, July 2016
Inno Space (SJIF) Impact Factor : 5.509(Morocco) ISI Impact Factor : 1.259 (Dubai, UAE)
ABSTRACT
T his paper is an attempt to see the effects of sales promotion on brand switching of FMCG in
Kerala. Fast moving consumer goods (FMCGs) are products that have a quick shelf turnover,
at relatively low cost and do not require a lot of thinking time and financial investment to purchase. Fast
Moving Consumer Goods refers to a wide range of frequently purchased consumer products including
toiletries, soaps, cosmetics, teeth cleaning products, shaving products, detergents, other non-durable such
as glassware, bulbs, batteries, paper products and plastic goods, such as buckets. As the risk of purchasing
FMCG is relatively less compared to high involvement buying situations, consumers do not mind
experimenting with different brands. A consumer’s decision of which brand to buy and how much quantity
of that brand to buy depends on brand specific factors like price and promotion of various brands and
consumer specific factors like consumer’s brand loyalty, consumption rate, product inventory and his/her
sensitivity to brand and promotion. Fast moving is in opposition to consumer durables such as kitchen
appliances that replaced less than once a year. The fast moving consumer goods selected for the study are
Tea, Toothpaste, Cereals (including cereal based products), and Detergent, representing the four important
categories of FMCGs like beverages, personal hygiene products, food and toiletries respectively.
Geographically the study is limited to the state of Kerala in India.
KEY WORDS: FMCGs, Brand Switching, Sales Promotion, Post Hoc Analysis, Inter-Product Analysis.
INTRODUCTION
Change is the buzz word in today’s corporate Promotional Strategy which arouses enthusiasm, create
world. Since change is inevitable, it is always better that buying mood or spark an immediate reaction from the
organizations face and manage it, than to avoid the same. consumer. It influences the attitude of the customer by
In a competitive economy, sales do not occur automatically. acquiring the right product at the right time, at the right
The businessman should prepare the ground for future place and at the right price. Due to the emergence of
expansion and evolve new ideas for creating favourable changes in consumers’ attitude, Corporates are in
selling situation through innovation and thus establish a continuous search for identifying areas where
market for his products. This can be done with the help of improvement can be done and bigger market share can
www.eprawisdom.com Vol - 4, Issue- 7, July 2016 52
e-ISSN : 2347 - 9671, p- ISSN : 2349 - 0187 Dr. C Abdul Majeed & Haseena Jasmine C K
be achieved. Therefore, it is essential for every business also reviewed. Most of these studies are by marketing
group to create demand and retain the customers so as faculty members of the Indian Institute of Management,
to survive in the market through some strategy. One of Ahmedabad. Priya Jha Dang, Abraham Koshi and Dinesh
the strategies adapted is sales promotion. Sharma presented an empirical view of various sales
Fast moving consumer goods (FMCGs) are promotions launched in the market for the period, 1996-
products that have a quick shelf turnover, at relatively low 2003. Preeta Hemang Vyas examined the ratio of incentives
cost and do not require a lot of thinking time and financial and outlays when consumers buy fast moving consumer
investment to purchase. According to Wikipedia goods under various sales promotion offers. In another
Encyclopedia Fast Moving Consumer Goods is a study the same author attempted to study consumer
classification that refers to a wide range of frequently preference with regard to sales promotion in FMCG
purchased consumer products including toiletries, soaps, category. In 2004, Preeta Vyas reviewed recent
cosmetics, teeth cleaning products, shaving products, contributions in the area of sales promotion through Meta
detergents, other non-durable such as glassware, bulbs, analysis. Along with Kureshi Sonal, the same author
batteries, paper products and plastic goods, such as conducted some other studies on sales promotion. K.M.
buckets. In the words of Philip Kotler the FMCG is Krishnakumar conducted the only study in Kerala on sales
characterised by products having low unit value and promotion. The researcher studied consumer’s perception
requiring frequent purchases and consumer behaviour about sales promotion strategy adopted by marketers of
reflecting less loyalty, impulse buying and low involvement fast moving consumer goods in Kerala.
on the part of a consumer.
THE RESEARCH PROBLEM
As the risk of purchasing FMCG is relatively less
The FMCG industry has moved to the path of
compared to high involvement buying situations,
globalization and privatization in a novel way. Large private
consumers do not mind experimenting with different
companies and multinational companies (MNCs) entered
brands. A consumer’s decision of which brand to buy and
into the arena and are facing unprecedented competition.
how much quantity of that brand to buy depends on brand
The environment so created by globalization is a great
specific factors like price and promotion of various brands
challenge to Indian FMCG market. The present study
and consumer specific factors like consumer’s brand
examines the effect of sales promotion on brand switching
loyalty, consumption rate, product inventory and his/her
and evaluates the effectiveness of sales promotion tools
sensitivity to brand and promotion. Fast moving is in
in motivating Brand-Switching. Sales promotion technique
opposition to consumer durables such as kitchen
is one of the strategies that help FMCG companies to get
appliances that replaced less than once a year. The term
a better market share for its sustainable growth. Hence,
Consumer Packaged Goods is used inter changeably with
this study has been undertaken to suggest ways for effective
fast moving consumer goods. Three of the largest and
implementation of promotional schemes aiming at brand
best-known examples of FMCG companies are Nestle,
switching in favour of an organisation to achieve
Uniliver and Proctor and Gamble. Examples of FMCG
competitive advantage.
brands are Coca- Cola, Kleener, Pepsi and Mars.
OBJECTIVES OF THE STUDY
The Indian FMCG sector is the fourth largest
The study discusses the effect of sales promotion
sector in the economy with a total market size of in excess
on consumer’s buying and consumption behaviour.
of US $ 13.1 billion. It has a strong presence of multi-
Specifically it examines:
national companies and characterised by a well-
1. How far important sales promotion tools succeed
established distribution network, intense competition
in effecting brand switching.
between organised and unorganised segments and low
2. The effectiveness of Sales Promotion Tools in
operational cost. Availability of key raw materials, cheaper
Motivating Brand-Switching.
labour costs and presence across the entire value chain
3. Ways for effective implementation of promotional
has given India a competitive advantage in this sector.
schemes which are aiming at brand switching in
REVIEW OF LITERATURE favour of an organisation to achieve competitive
Most of the studies conducted so far on sales advantage.
promotion were done in developed countries. Studies HYPOTHESIS
reported from developing countries are very limited. H.0: There is no significant difference in the effectiveness
Planning aspect of promotion received maximum attention among important sales promotion tools in promoting
of researchers. A few studies conducted in India were brand switching.
www.eprawisdom.com Vol - 4, Issue- 7, July 2016 53
EPRA International Journal of Economic and Business Review
H.1: There is significant difference in the effectiveness ANALYSIS AND INTERPRETATION
among important sales promotion tools in promoting Consumer sales promotion of FMCGs has both
brand switching. short-term and long-term objectives. Short-term objectives
RESEARCH METHODOLOGY include warding off competition by loading the consumers,
The study is designed as a descriptive one based initiating trial purchase of the brand in a highly competitive
on primary and secondary data. The study is mainly based market and clearing out stock during the off-season. Long-
on primary data collected from consumers of Fast Moving term objectives include building brand image, loyalty and
Consumer Goods in Kerala. Secondary data relating to category expansion. Successful sales promotion creates
the study have been collected from various Journals, additional revenue to the marketer or helps to maintain
Textbooks, Periodicals and Dailies. For the purpose of current revenue. While switching in favour of the
collecting data a Questionnaire and Structured Interview marketer’s brand, stockpiling and consumption
Schedule were used. acceleration help the former, preventing a switch out
The data were collected from the respondents byusing an appropriate promotion strategy is required to
directly through an undisguised personal interview by the attain the latter.
researcher himself.Multistage sampling technique was Four products, representing four important
adopted to select the required number of respondents categories of fast moving consumer goods, have been
from different parts of Kerala. The state is divided into selected in order to study the effect of sales promotion on
two equal parts on the basis of number of revenue districts. customer’s buying and consumption behaviour. These
Southern districts including Thiruvananthapuram, Kollam, products are Tea, Toothpaste, Cereals and Detergent
Pathanamthitta, Alappuzha, Kottayam, Idukki and representing beverages, personal hygiene, food and
Ernakulam constitute the first part. The second part toiletries respectively.
comprises of districts like Thrissur, Palakkad, Malappuram, Brand Switching Possibility Due to
Kozhikode, Wayand, Kannur and Kasargode. From each Promotional Offers:-
part one district is selected randomly viz. Ernakulam and Brand switching, considered as one of the most
Malappuram. From each of the selected district 200 important effects of sales promotion and advertisement,
respondents were selected after giving due representation is a buyer’s tendency to move from one brand to another
to the diverse groups of consumers. Altogether there are across a product category. Many studies have revealed
400 respondents who represent a cross section of that sales promotion has a very strong effect on consumer’s
consumers of fast moving consumer goods in Kerala. brand switching behavior. The share of brand switching
To understand the veracity of data, mathematical in the total incremental sales due to promotion has been
and statistical tools such as Percentages, Standard found as high as 80 percent in the case of some products
Deviation, Mode, Chi-square test, t-test, One-Way ANOVA, when such increased sales were decomposed in to brand
Least Squared Deviation (Post-Hoc), Correspondence switching, stockpiling and category expansion. The
Analysis were used. switching possibilities are measured in terms of some
percentages such as zero (no possibility), less than 25 (very
PERIOD OF THE STUDY
low possibility), 25 to 50 (low possibility), 50 to75 (high
The study is conducted during the period of two
possibility) and 75 to100 (very high possibility).
years ie., from January 2005 to February 2007.
Very Low Possibility 104 26.0 108 27.0 101 25.2 95 23.7