IMPACT OF SALES PROMOTION ON CONSUMERS’ LOYALTY IN TELECOMMUNICATION INDUSTRY IN NIGERIA, WITH REFERENCE TO MTN SUBSCRIBERS IN PANKSHIN LOCAL GOVERNMENT AREA OF PLATEAU STATE

TABLE OF CONTENT

Title page  – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – i

Declaration – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – ii

Approval page – –  – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – iii

Dedication – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – iv

Acknowledgement   – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – v

Table of content   – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – vi

Abstract – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – vii

CHAPTER ONE

INTRODUCTION

1.1  Background of the study   – – – – – – – – – – – – – – – – – – – – – – – – – – – -1

1.2  Statement of problem   – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 4

1.3  Objectives of study  – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 5

1.4  Research question – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 5

1.5   Statement of hypothesis   – – – – – – – – – – – – – – – – – – – – – – – – – – – – 6

1.6  Significance of the study  – – – – – – – – – – – – – – – – – – – – – – – – – – – – 6

1.7  Scope of the study – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 7

1.8  Definition of terms   – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 7

CHAPTER TWO

REVIEW OF RELATED LITERATURES

2.1     Concept of Sales Promotions

2.2     Classification of Sales Promotion

2.3     Sales Promotional Tools

2.4     Objectives of Sales Promotion

2.5     The Impact / Importance of Sales Promotion

2.6     Concept of Customers Loyalty

2.7     Determinants of Customer Loyalty

2.8     Theoretical Framework

2.9     Relationship between Variables: Sales Promotion and Customers Loyalty

CHAPTER THREE

RESEARCH METHODOLOGY

3.1     Research Design

3.2     Research Population and Sample Size

3.3     Sampling Techniques

3.4     Instrument for Data Collection

3.5     Validity and Reliability of the Instrument

3.6     Method/Procedure for Data Collection

3.7     Method of Data Analysis

CHAPTER FOUR

DATA ANALYSIS, PRESENTATION AND RESULT COMPUTATION:

4.1     Presentation of Data

4.2     Testing the Hypothesis

4.3     Discussion of Findings

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1     Summary

5.2     Conclusions

5.3     Recommendations

5.4     Limitations of the Research

5.5     Contribution to Knowledge/Suggestions for Further Studies

ABSTRACT

The study was carried out to identify the impact of sales promotion on consumers’ loyalty in telecommunication industry in Nigeria, with reference to MTN subscribers in Pankshin Local Government Area of Plateau State. Survey Research Design was used for this study. Sample sizes of 200 staff were drawn. The instrument used for data collection was a questionnaire. Descriptive statistics was used as method of data analysis. The findings shows that direct price, bonus package, free sample, free premium, coupons, contest, games, sweepstakes, stamp redemption, membership programs, patronage reward and joint/tie-in promotion as tools for sales promotion improved and increase customers retention and customers loyalty. The findings further revealed that sales promotion has a great importance and impact on customers loyalty as a result of this, it saves customers money, leads to customers convenience, exploration, increased in quality (high quality service), reduces customers overall cost of using phone, self-expression and leads to increase in customers, thereby making them to be loyal to such service. The researcher recommends that if a telecommunication network business wants to enjoy good profits globally in general and Nigeria in particular, it should work hard to increase customer retention and loyalty through customer satisfaction, strong sale promotional activities, trustworthiness and competitive pricing in the market place. It will help the business to increase customer retention and loyalty and decrease the customer defection

CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

In 1992, the Federal Government of Nigeria established the Nigeria Communications Commission (NCC) by decree 75 to regulate the activities of telecommunications services in the country. The need for the establishment of this commission was partly due to the poor performance of NITEL, the nation’s telephone service provider and partly to open up the telecommunications sector and attract private investors. This poor performance had resulted in the low tele- density of 0.04 in Nigeria up till 1999, a situation that was considered one of the lowest in sub- Saharan Africa. With the coming into existence of the commission, there was the liberalization of the telecommunication sector which allows private sector participation leading to the licensing of Global System of Mobile Communications (GSM) operations in 2001. Through this policy, the nation moved from a monopolistic telecommunication market towards a fully liberalized one which allows competition.  The GSM revolution started in Nigeria in August 2001, with the licensing of three mobile operators, MTEL, Econet (now Airtel) and MTN by NCC, and since then the face of information and communications technology in Nigeria has been transformed. Globacom and Etisalat were later licensed to operate thereby making the GSM operators to be five (5). Since the GSM launch, mobile telephony has rapidly become the most popular method of voice communication in Nigeria, relegating CDMA (Coded Division Multiple Access), a much earlier introduced telecommunication platform, to the background.

The explosive growth rate in the market has thrown up intense rivalry among the GSM operators and necessitated the need to engage in marketing activities that would enable them to retain a large chunk of their customers and make them loyal. This is more so as the market has become saturated and with little opportunity to attract new customers. The resultant competition has led to the reduction in tariff, introduction of new and innovative products, advertising blitz, rising sales promotion, and innovative customer service (care). All of these are aimed at both attracting new customers and retaining the existing customers. The high growth of subscribers resulting in impressive financial performance of the GSM providers has necessitated the need to examine the factors that influence customer loyalty in the market.

The business environment has become very competitive in the 21st century due to the growth in technology, infrastructure and access to information around the globe. This has made the environment very complex and consumer preferences keep 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 on attracting and retaining its customers. The ever increasing competition in the global market has prompted organizations to be determined and ensure satisfaction of customer needs and wants more efficiently and effectively than ones competitors (Kotler, 1988).

This increased competition in the industry, has however resulted in several communication tools being employed by marketers to help them succeed in this era of competitions. One of the commonly used communication tools by Nigerian telecom providers is sales promotion.

Sales promotion is an initiative undertaken by organizations to promote and increase sales, usage or trial of a product or services (Aderemi, 2003). Sales promotion refers to the provision of incentives to customers or to the distribution channel to stimulate demand for a product. It is an important component of an organizations overall marketing strategy along with advertising, public relations and personal selling. Sales promotion acts as a competitive weapon by providing an extra incentive for the target audience to purchase or support one brand over the other. It is particularly effective in spurring product trials and unplanned purchases (Aderemi, 2003).

Sales promotion is a marketing activity that adds to the basic value proposition behind a product (i.e. getting more for less) for a limited time in order to stimulate consumer purchasing, selling effectiveness or the effort of the sales force (Aderemi, 2003). This implies that, sales promotion may be directed either at end consumer or at selling intermediaries such as retailers or sales crews.

Most marketers believe that a given product or service has an established perceived price or value, and they use sales promotion to change this price/ value relationship by increasing the value and /or lowering the price compared with other components of the marketing mix (Odunlami and Ogunsiji, 2011). In determining the relative importance to place sales promotion in the overall marketing mix, an organization should consider its marketing budget, the stage of the product in the life cycle, the nature of competition in the market, the target of the promotion and the nature of the product (Odunlami and Ogunsiji, 2011).

Sales promotion can be an effective tool in a highly competitive market, when the objective is to convince retailers to carry a new product or influence consumers to select it over those of competitors. More so, sales promotion tend to work best when it is applied to items whose features can be judged at the point of purchase, rather than more complex, expensive items that might require hands of demonstration (Kotler and Keller, 2006). Sales promotion includes communication activities that provide extra value or incentives to ultimate customers, wholesalers, retailers or other organizational customers. It also stimulates sales product trial (Kotler and Keller, 2006).

The emergence of new operators and increased competition in the telecom industry in Nigerian has pushed the industry to be customer oriented and focus most of its sales promotion on the customer. The essence of this is to attract potential customers, retain its existing customers and boost sales as well. Over the years the operators have experienced both increase and decrease in their market shares.

1.2       Statement of the Problem

The astronomical growth in the subscriber base of the GSM has led to intense and cut-throating competition in the GSM market of Nigeria. The competition is exacerbated by the lower switching costs among the subscribers of the various networks, which manifest in the frequency with which they (subscribers) freely enter and leave the networks. In term of financial outlay it costs subscribers as low as N100 to acquire SIM (Subscriber Identification Module) and this makes it cheaper for subscribers to traverse from one network to another. The negative effect of this is the inability of the operators to retain and make existing customers loyal. With the competition becoming tough, service providers realized that retaining one’s existing customer base is important as much as the acquiring of a new customer (Coyles and Gokey, 2005). There is also a problem of the declining growth in the GSM subscriber base in Nigeria making it more difficult to attract new subscribers and necessitating again the need to retain the acquired customers. The situation, according to Long and Chun (2004) makes mobile telecommunication companies not only to promote their service quality, but also change their marketing core strategy to holding their existing customers by enhancing and optimizing the customer loyalty.   In the light of this intense competition, the major challenge confronting all the mobile operators in Nigeria, therefore is the determination and execution of various marketing initiatives that would not only lead to attraction of new subscribers, but also retention of the existing ones who would then become loyal customers. There are overwhelming arguments supporting that it is more expensive to win new customers than to keep existing ones (Reichheld and Sasser, 1990; Ennew and Binks, 1996; Harmozi and Giles, 2004; Pfeifer, 2005;)

1.3       Objectives of the Study

The main objective of this research is to assess the impact of sales promotion on customers loyalty in telecommunication industry in Nigeria, with reference to MTN subscribers in Pankshin LGA, Plateau State-Nigeria.

Therefore, this research seeks specifically:

1. To find out the factors/Determinants of customer loyalty in telecommunication industry in Nigeria.
2. To find out the various types of sales promotion tools used in telecommunication industry in order to enhance customers retention and loyalty.
3. To assess the impact of sales promotion on customers loyalty in the telecommunication industry in Nigeria.
4. To recommend suggestions on measures for improvement.

1.4       Research Questions

This research seeks to find answers to questions such as;

1. What are the factors/Determinants of customer loyalty in telecommunication industry in Nigeria?
2. What are the various types of sales promotion tools used in the telecommunication industry in order to enhance customer’s retention and loyalty?
3. What impact does sales promotion have on customer’s loyalty in the telecom industry?
4. What are the suggested measures for improvement of sales promotion?

1.5       Research Hypothesis

To achieve the objectives of this study, the under listed hypothesis shall be tested using the inferential statistical tool of Chi – square (X²) model as specified under methodology below:

Hypothesis

H_o:      There is no significant relationship between sales promotion and customers loyalty.

H_a:      There exist a significant relationship between sales promotion and customers loyalty.

1.6       Significance of the Study

The benefits that shall accrue from these study are many especially to telecommunication industries, business managers, telecommunication subscribers (customers) and future researchers. The results here offer a new compelling competing framework for understanding sales promotion and customer’s retention and loyalty among telecommunication industries, regardless of their training and experience in telecommunication business. Other groups of people that will benefit are business managers. This is because such individual coaching with guided practice can improve one’s comfort and confidence. The findings of the study will be of immense benefit to the consumers by helping them understand more on the telecommunication market situation among telecommunication networks that exist in Pankshin Local Government Area. The future researchers would benefit since it will provide a basis for them to work on other findings and recommendation from these study. Hence, the study will form a theoretical framework for further studies.

1.7    Scope of the Study

This study focuses on the impact of sales promotion on customer’s loyalty with a particular reference to MTN subscribers in Pankshin Local Government of Plateau State – Nigeria. These include the determinants of customer’s loyalty, the various types of sales promotion tools used in telecommunication industry and the impact sales promotion has on customer’s loyalty.

The task of this research will be difficult to accomplish if one should go around all the towns and villages in Pankshin Local Government Area. For this reason, the researcher has limited the scope of this study to Federal College of Education Pankshin in Bwarak Community to make his presentation adequate.

We shall have samples from customers who are MTN subscribers. The simple random sampling system will be used to evaluate the samples. Methods of data collection shall include questionnaire administration and semi-interviews.

1.8       Definition of Operational Terms

SIM:   Subscribers Identification Number

GSM:  Global System Module

Communication: the activities or process of expressing ideas and feelings or giving people information.

Telecommunication:  the technology of sending signals, images and message over long distance by radio, telephone, television, satellite.

Industry: Is a place or organization where goods and services are produce or delivered,

Sales promotion:                               Sales promotion refers to the provision of incentives to customers or to the distribution channel to stimulate demand for a product.

Customer: someone who buys goods or services from a shop/store or business.

Loyalty: the quality of being faithful to a particular person, business, goods or services.

Customer loyalty: Customer loyalty is customer repeating purchase intention to some specific products or services in the future