SPS Preference of Retailers in Impulsing Consumer Buying Behavior

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Abstract

Sales promotion efforts of marketers focusing on the incremental sales volume, acquiring market share, branding, consumer acquisition and retention. FMCG players are providing different schemes to consumers, retailers and sales force to capitalize the industry growth opportunities. Apart from consumer promotion and advertisements, promoting retailers with sales promotion schemes are having more impact on branding and sales achievement. A research report in a business weekly has revealed that about half of the people in India are below the age group of twenty is about 160 million whose major purchases are impulsive in nature. But the FMCG corporate companies are not having a specific plan about the nature type of promotional schemes which are effective and profitable. This study was carried out among the 500 FMCG retailers aimed at understanding their preference level of various sales promotion schemes which impulse the FMCG consumers towards brand preference and product choice.

INTRODUCTION

The expected growth in the retail market in India is estimated at 10 percent (CAGR) and to rise up to US$ 1.6 trillion by 2026. And the traditional retail trade rise at 10 percent, the modern trade would register a quick growth rate of 20 percent per year with an estimated rise of 12 percent per annum in total. Organized retail segment contributes to the total market by only 9 percent but 91 percent contributes to the unorganized retail sector. The retail market focusing Consumer through Business(B2C) would contribute by US$ 26 billion and on the other side retail using internet or e-commerce is estimated to rise as like as physical retail outlets within forthcoming five years. Indian e-commerce retail market is estimated to rise from US$ 30 billion in FY2016 to US$ 120 billion within 2020 supported by internet networks and fast acceptance of e-services by Indian consumers.

FMCG Industry

Fast Moving Consumer Goods(FMCG) are the goods which are demanded more and purchased more frequently by the people. Except for pulses and grains, any usable goods which are purchased at equal intervals in lesser volumes. The products like washing soaps and powders, shaving goods, toothbrushes and pastes, shampoos, packed food items, face creams, hair oil, tea, coffee etc. The major players in the markets are HUL, Cavin care, Nestle, P & G, Colgate, ITC, Nirma, Britannia, Amul, Emami, Marico, and Dabur. A larger amount of monthly family budget occupied by the FMCG products. Among the promotion-strategies (Consumer Promotion, Trade Promotion, and Sales Force Promotion), trade promotion gives a high impact in the retail market to penetrate and rise in a competitive market. Thus, Trade promotion is significant for FMCG companies to market, earn. This made the researcher get interested in this topic to study.

Classification of FMCG Products

Personal care
House-hold care
Packaged food & Beverages
Health Care (OTC Products)

Classification of Trade Promotion Schemes

Quantity Based Discount Scheme(QBDS)
Trade Allowances ( Support to increase sales level )
Trade reward contests (fix target and benefits to top achievers)
Trade support by Branding ( For Brand positioning)

REVIEW OF LITERATURE

Peter Boatwright and Robert McCulloch(1999) stated that Promotional strategies are created to foster the sellers to do product promotion in short term price decrease, using store-display or local media. According to Alvarez et.al (2005), Trade promotion schemes providing best results should be used and manufacturers can withdraw schemes which are not producing any change in consumer behavior. Bawa et.al(2004) in their study discussed the effect of free sample promotion in retailing. In the research work done by Blattberg et.al(1995), marketing results by the trade promotion schemes and positioning of the brands suing the schemes were discussed. Ganesh et.al (2012), revealed the trial purchase and spillover effects on products movement in the market. Gauri(2008) in his research study studied the retail promotion and effect on consumers’ effectiveness towards purchase. Moreau, Krishna and Harlam( 2001) mentioned about the triadic work of manufacturer and retailer. Ravindran and Venkatesakumar(2015,2017) in their studied found that schemes as a promotional tool in softdrinks and other FMCG products, retailers’ promotional preference of schemes with respect to self services and non self services stores. Rampier (2012) found that ‘Price-reduction’ &’ buy one get one ‘ free offers are having an impact in increasing short term sales and induce the first trial. Also, small packed goods reduce the risk of bad quality. Thus the quality of goods and comfort within the store boosts satisfaction level of users along with the scheme promotions while direct reduction in pricing may cannibalize future sales. Tsao and Lu(2016) studied the relevance of promotional tools in manufacturer and retailer supply chain. Jonq et. al (2008) analyzed that Promotions increase the demand for the product by the consumers and incentive for brand owners to boost the products. In Dhruv and Michael (2007) studied the key issues and future research areas in various sectors of Retail industry with respect to price, promotion, service, consumer behavior and others .

FINDINGS

The retailers though exposed to various types of promotions by different companies for different products, their preference are mostly related to promotions linked to quantity or volume of purchase followed by the trade allowance for enhancing liquidation of products in secondary sales.

From the study it was found that the FMCG retailers expressed their opinion that consumers would not respond to the components like value of promotion, coincidence with another promotion, first use of promotion, Product awareness, confusing nature of the deal, execution of the promotion, premium or deal attractiveness, good correlation of other products and competition level. Thus the retailers’ opinion on consumers’ response to schemes alone were not considered for planning the trade scheme operations. But the same was found to be having variations with a different category of products.

Thus the retailers and manufacturers have to plan any sales promotion schemes based on the impulsing nature of products and schemes together considering the type of outlets and their capability to sell the products in their market.

CONCLUSION

In FMCG product categories retailers, preference of sales promotion schemes is an important task in budgeting for promotion schemes and allocating to retailers based on the location of outlets and retailer characteristics are challenging task for any manufacturers Among the product categories, Food & Beverages are having huge growth opportunities and have more brand switching nature of consumers with respect to available sales promotion schemes. Since Healthcare category products do not show any significant difference based on the existing trade schemes, another type of promotions should be adopted to influence health care customers So if the type of schemes, location, and type of retailers are studied before designing the sales promotion budget, then the sales promotion schemes will be more effective in influencing the consumers buying behavior . The sales promotion schemes need to be customized according to the product and retail characteristics to impulse consumer behavior.

BIBLIOGRAPHY

Alvarez Alvarez, B., & Vázquez Casielles, R. (2005). Consumer evaluations of sales promotion: the effect on brand choice: European Journal of Marketing, 39(1/2), 54–70.
Blattberg, R. C., Briesch, R., & Fox, E. J. (1995). How Promotions Work: Marketing Science, 14(3_supplement), G122–G132.
Dhruv Grewal and Michael Levy(2007),Retailing research: Past, present, and future: Journal of Retailing ,83(4,2007),447-464.
Ganesh Hariharan, V., Bezawada, R., & Talukdar, D. (2012). Trial, repeat purchase and spillover effects of cobranded extensions: Journal of Product & Brand Management, 21(2), 76–88.
Gauri, D. K. (2008). Retail promotions: Consumers’ effectiveness in availing them and retailers’ success in using them. Dissertation Abstracts International Section A: Humanities and Social Sciences, 68(9–A), 3967.
Jong Ying Lee et.al(2008)The Impacts of Retail Promotions on the Demand for Orange Juice: A Study of a Retail Chain: Journal of Food Products Marketing,15(2).
Moreau, P., Krishna, A., & Harlam, B. (2001). The manufacturer-retailer-consumer triad: Differing perceptions regarding price promotions: Journal of Retailing, 77(4), 547–569.
Peter Boatwright and Robert McCulloch(1999), Account-Level Modeling For Trade Promotion: An Application Of A Constrained Parameter Hierarchical Model: Journal Of The American Statistical Association 94(448), 1999; 1063-1073
Rampier, M. (2012). Sales Promotion of Fast Moving Consumer Goods: International Journal of Logistics & Supply Chain Management Perspectives, 1(1), 59–63.
Ravindran,D., and Venkatesakumar,V.,(2015). SDM-An Emerging Promotional Tool in Retailing of Softdrinks. Jamal Academic Research Journal,60(7) , 41-49.
Ravindran,D., and Venkatesakumar,V.,(2017). Retail Preference of Promotion in Cashless Economy -FMCG Products: Shanlax International Journal of Commerce,104(93): pp. 457-462.
Ravindran,D., and Venkatesakumar, V.,(2017). Differences in Evaluation of Trade Promotional Schemes -A Comparison of Self- Service Stores Vs Non-Self Service Stores: Asia Pacific Journal of Research, 17(1): pp. 1-5.
Tsao, Y. C., & Lu, J. C. (2016). Trade promotion policies in manufacturer-retailer supply chains. Transportation Research Part E: Logistics and Transportation Review, 96, 20–39.

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