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www.ccsenet.org/ijms International Journal of Marketing Studies Vol. 6, No. 2; 2014
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5 of 66
Effect of Sales Promotion on the sale of
FMCG products
38,617
Imran Sayed
(2 SlideShares) , Manager at XLCOMM GLOBAL SERVICES
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Published on Mar 06, 2013
Published in: Business
18 Comments
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
Sarfraj choudhary , Store Operation Manager at Landmark Group
PLZ MAIL ME THIS PDF
1 month ago

Kiran Deekonda , Studying at Student
hi can u mail me ur project report please #imran
2 months ago

130

Pratz Saxena at noT yeT woRkiNg !! iM stiLl stUdYinG !!
please somebody send this project as soon as possible on my email id
prateek.9500@gmail.com or prateek_9500@yahoo.com i really need it urgent please
3 months ago

Binita Kakoty , Dancer/Choreographer at Student
plz mail me ur project....kakotybinita@gmail.com
4 months ago

Rochelle Rozario
Pls mail me ur project report at basabi@yahoo.com thanks
4 months ago
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Transcript
1. 1. PILLAI’S INSTITUTE OF MANAGEMENT STUDIES & RESEARCH Sector 16,
New Panvel East, Navi Mumbai - 410206 EFFECT OF SALES PROMOTION ON
THE SALE OF FMCG PRODUCTSA PROJECT ON W.R.T. RETAIL MALLS
(Submitted in Partial Fulfillment of the Award of the Degree of Master in Management
Studies of University of Mumbai) Submitted by SAYED IMRAN ALAMGIR Roll No.
171 UNDER THE GUIDANCE OF PROF. RUCHIKA GOEL MMS 2011-13
2. 2. DECLARATIONI, Mr. Sayed Imran Alamgir of Pillai‘s Institute of Management
Studies and Research herebydeclare that the Project Work titled ―Effect of Sales
Promotion on the sale of FMCG productswrt Retail Malls‖ submitted as part of my
curriculum of MMS degree is the original workdone by me the project has not formed
the basis for an award of any degree, associate ship,fellowship or any similar titles.
Signature of the student Sayed Imran AlamgirPlace:Date: 1
3. 3. CERTIFICATEThis is to certify that the Project Work titled ―Effect of Sales
Promotion on the sale of FMCGproducts wrt Retail Malls‖ is a bonafide work of Mr.
Sayed Imran Alamgircarried out inpartial fulfillment for the award of degree of MMS
under my guidance. This project work isoriginal and not submitted earlier for the award

131
of any degree/ diploma of this or any otherUniversity/ Institution.Prof. RuchikaGoel
Director(Project Guide)Place:Date: 2
4. 4. ACKNOWLEDGEMENTI have taken efforts in this project. However, it would not
have been possible without the kindsupport and help of many individuals and
organizations. I would like to extend my sincerethanks to all of them.First of all, I wish
to express my indebtedness to Prof. RuchikaGoel, Pillai‘s Institute ofManagement
Studies & Research, for her valuable suggestions and guidance throughout theproject.I
would also wish to express my warmest thankfulness to Mr. K. Shivaji, Store
Manager,D‘Mart (New Panvel), who took out some of his valuable time to provide
inputs for thisproject. I would also like to thank Mr. VikramShekhawat, Store Manager,
Reliance Fresh(CBD Belapur) and Mr. Sanjay Dumbare, Store Manager, Big Bazaar
(Kharghar) forallowing me to conduct my research on their premises.I would like to
express my gratitude towards my family & members of D‘Mart (NewPanvel)for their
kind co-operation and encouragement which help me in completion of thisproject.I
would like to express my special gratitude and thanks to industry persons for giving
mesuch attention and time.My thanks and appreciations also go to my colleague in
developing the project and peoplewho have willingly helped me. 3
5. 5. TABLE OF CONTENTS1. 1.0 Executive
Summary………………………………………………… 52. 2.0 Research
Objectives………………………………………………… 63. 2.1
Objectives…………………………………………………… 64. 2.2 Motivation for the
study…………………………………….. 65. 2.3 Research
Hypothesis…………………………………………. 66. 3.0 Introduction to
FMCG………………………………………………. 77. 3.1 FMCG Concept and
Definition……………………………… 78. 3.2 Characteristics of FMCG
Products……………………………. 79. 4.0 Introduction to Retailing & Retail
Malls…………………………….. 1210. 4.1 Retailing in
India……………………………………………… 1211. 4.2 Retail Malls in
India…………………………………………. 1312. 5.0 Introduction to Sales
Promotion………………………………………. 1513. 5.1 Sales
Promotion……………………………………………… 1514. 5.2 Sales Promotion
Tools………………………………………… 1615. 5.3 Purpose of Sales
Promotion…………………………………... 2016. 5.4 How Sales Promotion
Objectives are set…………………….. 2017. 5.5 Sales Promotion
Effectiveness………………………………. 2418. 5.6 Sales Promotions in
India…………………………………… 2519. 6.0 Literature
Review…………………………………………………… 2620. 6.1 Promotion &
Consumption…………………………………… 2621. 6.2 Sales Promotion and
Consumer Response/ Preference……… 2722. 6.3 Price
elasticity………………………………………………… 2823. 6.4 Sales promotion:
immediate price reductions………………… 2924. 6.5 Consumer
goals………………………………………………. 3125. 6.6 Price promotions and pre-
purchase goals…………………….. 3226. 6.7 Promotion format: Discount vs. Free
Gift…………………… 3327. 6.8 Short- and long term effects of Sales
Promotion…………… 3728. 6.9 Price
sensitivity……………………………………………… 3929. 7.0 Research
Methodology……………………………………………… 4030. 7.1 Research
Design……………………………………………… 4031. 7.2 Product categories under
study……………………………… 4032. 7.3 Sampling Design & Data
Collection………………………… 4033. 8.0 Data
Analysis………………………………………………………... 4134. 8.1 Data
Collection & Interpretation……………………………. 4135. 8.2 Retailer

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Interview……………………………………………. 5236. 8.3 Findings of the
report…………………………………………. 5437. 8.4
Recommendation……………………………………………… 5538. 8.5 Limitations of
the study…………………………………….. 5639. 8.6 Demographic
analysis………………………………………. 5740. 9.0 Conclusion of the
survey…………………………………………… 6241. 10.0
Bibliography……………………………………………………… 6342. 11.0 Web
References…………………………………………………… 6443. 12.0
Questionnaire……………………………………………………… 65 4
6. 6. 1.0 Executive SummaryThe Indian FMCG sector is the fourth largest sector in the
economy with a totalmarket size inexcess of US$ 20.1 billion. It has a strong MNC
presence and is characterized by a well-established distribution network, intense
competition between the organized and unorganizedsegments and low operational cost.
Availability of key raw materials, cheaper labor costs andpresence across the entire
value chain givesIndia a competitive advantage. Also, increase inthe urban population,
along with increase in income levels and the availability of newcategories, would help
the urban areas maintain their position in terms of consumption. Atpresent, urban India
accounts for 66% of total FMCG consumption, with rural Indiaaccounting for the
remaining 34%. However, rural India accounts for more than 40%consumption in
major FMCG categories such as personal care, fabric care, and hot beverages.Family
income is one of the variables which should be considered while designing
salespromotion schemes more specifically cash discount. There is significant difference
betweenconsumer preference of cash discount and free gift as sales promotion schemes.
It is also veryclear that consumers prefer cash discount as a sales promotion schemes
compare to free giftas a sales promotion scheme. It is found that Consumer deal
proneness differs according tomarital status. Furthermore, it is also proved that married
are more deal prone compare toUnmarried.Added to it Brand Equity perception differs
according to employment categories. It isconcluded that male prefers the newspaper
and point of purchase material as a source toknow sales promotion schemes over
female.Overall, Sales promotion scheme on international brand, awareness spread out
by word ofmouth, Scheme is value added type with immediate benefit is preferred by
the customers. Sowhile designing sales promotion schemes and its benefits from the
perspectives of thecustomers above mentioned attributes of the sales promotion
schemes should be consideredto achieve the objectives of the sales promotion schemes.
5
7. 7. 2.0 Research Objectives 2.1 Objectives 1. To study consumer preferences with
respect to sales promotion in FMCG sector. 2. To examine tradeoffs, relative
importance of different attributes while responding to a sales promotion offer. 3. To
study the effect of sales promotions in FMCG sector esp. in soaps and detergent
industry. 4. To study consumer behavior in purchase of soaps and detergent 2.2
Motivation for the study With the growth of population and spending power of the
consumer has created the opportunities and challenges for the FMCG companies in the
world market. Simultaneously, competition to win consumers has been increased
drastically. World is becoming the small village and Many MNC‗s have entered in
India and other countries. Marketing paradigm is shifting from consumer satisfaction to
consumer delight. Enticing consumers with the various sales promotion schemes is the
order of the day. If this tool is not used strategically, company has to follow the trend of
promotions to maintain the market share. Considering almost universal applications of
designing the sales promotion schemes and understanding its impact on business has
motivated to take the steps in the direction to study this crucial aspect of promotion
management. 2.3 Research Hypothesis H0: Promotional schemes do not have a

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significant effect on the purchase of brand. H1: Promotional schemes do have an effect
on the purchase of brand. 6
8. 8. 3.0 Introduction to FMCG Industry 3.1 FMCG Concept and Definition 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. Further, difficulties crop up when attempts to
devise a definition for FMCG. The problem arises because the concept has a retail
orientation and distinguishes between consumer products on the basis of how quickly
they move at the retailer‘s shelves. The moot question therefore, is what industry
turnaround threshold should be for the item to qualify as an FMCG. Should the
turnaround happen daily, weekly, or monthly? One of the factors on which the
turnaround depends is the purchase cycle. However, the purchase cycle for the same
product tend to vary across population segments. Many low-income households are
forced to buy certain products more frequently because of lack of liquidity and storage
space while relatively high-income households buy the same products more
infrequently. Similarly, the purchase cycle also tends to vary because of cultural
factors. Most Indians, typically, prefer fresh food articles and therefore to buy relatively
small quantities more frequently. This is in sharp contrast with what happens in most
western countries, where the practice of buying and socking foods for relatively longer
period is more prevalent. Thus, should the inventory turnaround threshold be universal,
or should it allow for income, cultural and behavioral nuances? 3.2 Characteristics of
FMCG Products Individual items are of small value. But all FMCG products put
together account for a significant part of the consumers budget. The consumer keeps
limited inventory of these products and prefers to purchase them frequently, as and
when required. Many of these products are perishable. The consumer spends little time
on the purchase decision. Rarely does he/she look for technical specifications (in
contrast to industrial goods). Brand loyalties or recommendations of reliable
retailer/dealer drive purchase decisions. Trial of a new product i.e. brand switching is
often induced by heavy advertisement, recommendation of the retailer or
neighbors/friends. These products cater to necessities, comforts as well as luxuries.
They meet the demands of the entire cross section of population. Price and income
elasticity of demand varies across products and consumers. 7
9. 9. Table: 1.1 The Top 10 companies in FMCG sector SR.NO. Companies 1. Hindustan
Unilever Ltd. 2. ITC (Indian Tobacco Company) 3. Nestlé India 4. GCMMF (AMUL)
5. Dabur India 6. Asian Paints (India) 7. Cadbury India 8. Britannia Industries 9.
Procter & Gamble Hygiene and Health Care 10. Marico Industries Source:
Naukrihub.comThe companies mentioned in Exhibit I, are the leaders in their
respective sectors. Thepersonal care category has the largest number of brands, i.e., 21,
inclusive of Lux, Lifebuoy,Fair and Lovely, Vicks, and Ponds. There are 11 HUL
brands in the 21, aggregating Rs.3,799 crore or 54% of the personal care category.
Cigarettes account for 17% of the top 100FMCG sales, and just below the personal care
category. ITC alone accounts for 60% volumemarket share and 70% by value of all
filter cigarettes in India.The foods category in FMCG is gaining popularity with a
swing of launches by HUL, ITC,Godrej, and others. This category has 18 major brands,
aggregating Rs. 4,637 crore. Nestleand Amul slug it out in the powders segment. The
food category has also seen innovationslike softies in ice creams, chapattis by HUL,
ready to eat rice by HUL and pizzas by bothGCMMF and Godrej Pillsbury. This
category seems to have faster development than thestagnating personal care category.
Amul, Indias largest foods company has a good presencein the food category with its
ice-creams, curd, milk, butter, cheese, and so on. Britannia alsoranks in the top 100

134
FMCG brands, dominates the biscuits category and has launched a seriesof products at
various prices.In the household care category (like mosquito repellents), Godrej and
Reckitt are two players.Goodknight from Godrej, is worth above Rs 217 crore,
followed by Reckitts Mortein at Rs149 crore. In the shampoo category, HULs Clinic
and Sunsilk make it to the top 100,although P&Gs Head and Shoulders and Pantene are
also trying hard to be positioned on top.Clinic is nearly double the size of Sunsilk 8
10. 10. Dabur is among the top five FMCG companies in India and is the herbal specialist.
With aturnover of Rs. 19 billion (approx. US$ 420 million) in 2005-2006, Dabur has
brands likeDaburAmla, DaburChyawanprash, Vatika, Hajmola and Real. Asian Paints
is enjoying aformidable presence in the Indian sub-continent, Southeast Asia, Far East,
Middle East, SouthPacific, Caribbean, Africa and Europe. Asian Paints is Indias largest
paint company, with aturnover of Rs.22.6 billion (around USD 513 million). Forbes
Global magazine, USA, rankedAsian Paints among the 200 Best Small Companies in
the WorldCadbury India is the market leader in the chocolate confectionery market with
a 70% marketshare and is ranked number two in the total food drinks market. Its
popular brands includeCadburys Dairy Milk, 5 Star, Eclairs, and Gems. The Rs.15.6
billion (USD 380 Million)Marico is a leading Indian group in consumer products and
services in the Global Beauty andWellness space.The Rs.85, 000 crore FMCG market
in India is growing at a fast pace despite of the economicdowntrend. The increasing
disposable income and improved standard of living in most tier IIand tire III cities are
spearheading the FMCG growth across the nation. The changing profileand mind set of
the consumers has shifted the thought to ―Value for Money from ―Moneyfor
Value.Over the years companies like HUL, ITC and Dabur have improved performance
withinnovation and strong distribution channels. Their key categories have strengthened
theirpresence and outperformed peers in the FMCG sector. On the contrary, Colgate
Palmoliveand Britannia Industries are strong in single product category i.e. tooth -
Pastes and Biscuits.In addition companies have been successful in reviving their
presence in the semi-urban andrural market.In 1991, India has opened country to
foreign brands. As per this liberalization policy many aforeign players ventured into our
country finding it a lucrative large mass market. Thisresearch paper is a theoretical
paper studying the coping strategies of Indian players incompetition to the MNC
companies. It studies those Indian players who have stood out in thiscompetition and
have been successful in doing so. 9
11. 11. Table: 1.2 Following is the table summarizes pre and post liberalization scenario
FMCG Sector Major Brands New Brands- 1990s onwards 1970s & 80s Indian Brands
Global brands Soaps Lifebuoy, Cinthol, Nirma Beauty soap Palmolive, Dettol, Liril,
Lux, Dove Pears, Rexona, Mysore Sandal, Neem, Margo Creams & Lotions Fair &
Lovely, Dabur, Himalaya Oriflame, Avon, Pond‗s, Biotique, Amway, Johnson &
Johnson Garnier Detergents Surf, Nirma, Fena, Lakhani Ariel, Tide, Henkel Wheel
Processed foods Maggie, Kissan, MTR, Aashirwaad, Heinz, Pillsbury Parle, Haldiram,
Bikaner Britannia Nescafe, Red Label, Haldiram, Tata Tea, Pepsi, Coke, Sprite, 7
Campa, Thumsup Bisleri, Tajmahal up Beverages Cigarettes Wills, India Kings,
Menthol PanamaReference: JaspreetBhasinChandok and Mr. HariSundar G, Strategies
for Survival of IndianFMCGs, Conference on Global Competition & Competitiveness
of Indian Corporate p. 607 -613 10
12. 12. Table: 1.3 FMCG category and products:Category : Products:Household Care:
Fabric wash (laundry soaps and synthetic detergents); household cleaners (dish/utensil
cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito
repellents, metal polish and furniture polish). Health beverages; soft drinks;Food and
Beverages: staples/cereals; bakery products (biscuits, bread, cakes); snack food;
chocolates; ice cream; tea; coffee; soft drinks; processed fruits, vegetables; dairy
products; bottled water; branded flour; branded Rice; branded sugar; juices etc. Oral

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care, hair care, skin care, personalPersonal Care: wash (soaps); cosmetics and toiletries;
deodorants; Perfumes; feminine hygiene; paper products. 11
13. 13. 4.0 Introduction to Retailing & Retail Malls 4.1 Retailing in India Retailing in India
is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP.The
Indian retail market is estimated to be US$ 450 billion and one of the top five retail
markets in the world by economic value. India is one of the fastest growing retail
market in the world, with 1.2 billion people. Indias retailing industry is essentially
owner manned small shops. In 2010, larger format convenience stores and
supermarkets accounted for about 4 percent of the industry, and these were present only
in large urban centers. Indias retail and logistics industry employs about 40 million
Indians (3.3% of Indian population). Most Indian shopping takes place in open markets
or millions of small, independent grocery and retail shops. Shoppers typically stand
outside the retail shop, ask for what they want, and cannot pick or examine a product
from the shelf. Access to the shelf or product storage area is limited. Once the shopper
requests the food staple or household product they are looking for, the shopkeeper goes
to the container or shelf or to the back of the store, brings it out and offers it for sale to
the shopper. Often the shopkeeper may substitute the product, claiming that it is similar
or equivalent to the product the consumer is asking for. The product typically has no
price label in these small retail shops; although some products do have a manufactured
suggested retail price (MSRP) pre-printed on the packaging. The shopkeeper prices the
food staple and household products arbitrarily, and two consumers may pay different
prices for the same product on the same day. Price is sometimes negotiated between the
shopper and shopkeeper. The shoppers do not have time to examine the product label,
and do not have a choice to make an informed decision between competitive products.
Indias retail and logistics industry, organized and unorganized in combination, employs
about 40 million Indians (3.3% of Indian population). The typical Indian retail shops
are very small. Over 14 million outlets operate in the country and only 4% of them
being larger than 500 sqft (46 m2) in size. India has about 11 shop outlets for every
1000 people. Vast majority of the unorganized retail shops in India employ family
members, do not have the scale to procure or transport products at high volume
wholesale level, have limited to no quality control or fake-versus-authentic product
screening technology and have no training on safe and hygienic storage, packaging or
logistics. The unorganized retail shops source their products from a chain of middlemen
who mark up the product as it moves from farmer or producer to the consumer. The
unorganized retail shops typically offer no after-sales support or 12
14. 14. service. Finally, most transactions at unorganized retail shops are done with
cash,with all sales being final.Until the 1990s, regulations prevented innovation and
entrepreneurship in Indianretailing. Some retails faced complying with over thirty
regulations such as"signboard licenses" and "anti-hoarding measures" before they could
open doors.There are taxes for moving goods to states, from states, and even within
states insome cases. Farmers and producers had to go through middlemen monopolies.
Thelogistics and infrastructure was very poor, with losses exceeding 30
percent.Through the 1990s, India introduced widespread free market reforms, including
somerelated to retail. Between 2000 to 2010, consumers in select Indian cities
havegradually begun to experience the quality, choice, convenience and benefits
oforganized retail industry.4.2 Retail Malls in IndiaOur research would be conducted in
three retail malls in Navi Mumbai. A briefbackground of these retail malls in as
under:D’MartAvenue Super Marts Ltd (ASL) owns and operates hypermarkets and
supermarkets bythe store name D-Mart.D-Mart seeks to be a one-stop shopping
destination for the entire family, meeting alltheir daily household needs. A wide
selection of home utility products is offered,including foods, toiletries, beauty products,
garments, kitchenware, bed and bathlinen, home appliances and much more.Since D-

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Mart first opened its doors in the Mumbai region in 2000, it has grown into atrusted and
well-established shopping destination in Maharashtra, Gujarat, AndhraPradesh and
Karnataka. D-Mart is now looking forward to growing its stores acrossIndia.Big
BazaarBig Bazaar is a chain of hypermarket in India. As of June 2, 2012 there are 214
storesacross 90 cities and towns in India covering around 16 million sq.ft. of retail
space.Big Bazaar is designed as an agglomeration of bazaars or Indian markets with
clustersoffering a wide range of merchandise including fashion and apparels, food
products,general merchandise, furniture, electronics, books, fast food and leisure
andentertainment sections. 13
15. 15. Big Bazaar is part of Future Group, which also owns the Central Hypermarket,
BrandFactory, Pantaloons, eZONE, HomeTown, futurebazaar.com, KBs Fair Price to
namea few and is owned through a wholly owned subsidiary of Pantaloon Retail
IndiaLimited (BSE: 523574 523574), that is listed on Indian stock exchanges.Reliance
FreshReliance Fresh is the convenience store format which forms part of the retail
businessof Reliance Industries of India which is headed by MukeshAmbani. Reliance
plans toinvest in excess of 250 billion in the next 4 years in their retail division. The
companyalready has 453 Reliance Fresh outlets across the country. These stores sell
freshfruits and vegetables, staples, groceries, fresh juice, bars and dairy products.A
typical Reliance Fresh store is approximately 3000–4000 square feet and caters to
acatchment area of 2–3 km. 14
16. 16. 5.0 Introduction to Sales Promotion 5.1 Sales Promotion The importance of
consumer sales promotion in the marketing mix of the fast moving consumer goods
(FMCG) category throughout the world has increased. Companies spend considerable
time in planning such activities. However, in order to enhance the effectiveness of these
activities, manufacturers should understand consumer and retailer interpretations of
their promotional activities. The study here pertains to consumer‘s perceptions
regarding sales promotion. Some past researches have suggested that promotion itself
has an effect on the perceived value of the brand. This is because promotions provide
utilitarian benefits such as monetary savings, added value, increased quality and
convenience as well as hedonic benefits such as entertainment, exploration and self-
expression. Broadly speaking most of the companies using Marketing Mix which
includes… Price Place (Channel of Distribution) Product Promotion These are the four
basic pillar of marketing mix. Most of the marketing strategies are built on the basis of
these criteria. Promotion is one of the important elements of marketing mix. There are
so many elements of promotion such as … Advertising Direct Marketing Public
Relations Sales Promotion Traditionally, sales Promotions have been used by marketer
to increase sales in the short term. However, in the last few decades this communication
tool has evolved and now is considered from a strategic point of view. For this reason,
it is necessary to realize new studies in this area and study how consumers evaluate
sales promotions. Sales promotions have grown in both importance and frequency over
the past few decades. Although an accurate estimate for total sales promotions
expenditures does not exist, we can be sure that the trend is up. Sales promotion serves
three essential roles: It informs, persuades and reminds prospective customers about a
company and its products. Even the most useful product or brand will be a failure if no
one knows that it is available. As we know, 15
17. 17. channels of distribution take more time in creating awareness because a product has
topass through many hands between a producer and consumers.Therefore, a producer
has to inform channel members as well as ultimate consumersabout the attributes and
availability of his products. The second purpose of promotionis persuasion. The cut
throat competition among different products puts tremendouspressure on their
manufacturers and they are compelled to undertake sales promotionactivities. The third
purpose of promotion is reminding consumers about productsavailability and its

137
potential to satisfy their needs.5.2 Sales Promotion ToolsExchange OfferThis
promotion is seen mainly in the consumer durable product category. Thispromotion
requires the consumer to exchange an old product for a new one and getsome benefit,
usually a price reduction. For example, in case of cars, the schemeoffers the consumer a
price reduction of Rs. 10,000 on the new car in exchange for anold car. For pressure
cooker, the scheme offers a price reduction of 40% onexchanging an old cooker for a
new cooker. In case of household durables, thescheme usually requires the consumer to
exchange an old model of a product (e.g.AC, refrigerator, music system, mixer grinder,
gas stove) to get a price reduction onthe new model. Apart from exchanging an old
durable good, the scheme also involvesexchanging a small TV for a big TV. Most
exchange schemes provide an incentive topurchase in the form of a price reduction.
One exchange scheme involved returning anold washing machine for a new one and
getting an electric iron as gift.The purpose of the exchange scheme appears to be
upgrade existing users of durableproducts to newer and larger sized models of a
product.Free Gift OfferThis promotion is popular across a range of product categories.
It offers the consumeran incentive to purchase in the form of a free product/service. For
example, in case ofa car purchase, the consumer is offered a free product such as a
music system oraccessories. The consumer may also be offered a free service such as
extended 3-yearwarranty or free insurance. Often the product offered free is a
complement to theoriginal purchase. This is illustrated by instances of the following
types of free giftoffers:• a free stabilizer with an AC purchase• free pillows with a
mattress purchase 16
18. 18. • free petrol on a 2 wheeler purchase• free toothbrush with toothpaste• free shaving
blade with shaving gel/foam.At times, the product offered as a free gift constitutes an
upgrade to the originalpurchase. For example in case of Computer Printers, a free
Internet connection,Internet telephony kit, software titles and multimedia package is
offered along withthe printer. Or in case of notebook computer/PC, the consumer is
offered a FreeInternet upgrade and 20 GB, Web Camera, Printer, Britannica CDs,
software. In caseof fast food restaurants, the free products are items such as soft drink,
bread stick,pineapple fudge, garlic bread, ice cream cookies. Here the free products
appear to be‗use complements‘ to the original product.At other times the free product
may be a related product or product used in a similarcontext e.g. cooking or cleaning or
personal care or eating. For kitchen products, thefree product are items used in the
kitchen such as plastic containers, metal spoon,tawa, non stick pan, idli stand, serving
bowl, table mat and OTG. In case of detergentpowder/cake the free products are related
cleaning products such as bleach, washingsoap, washing powder, bucket, bath soap,
floor cleaner and utensil cleaner. In the skincare segment, the free products are other
personal care items such as soap, bodylotion, shampoo sachet, shaving cream and
toothpaste. In case of food products, thefree product comprises of other edible items
such as biscuits, coffee, namkeen, salt,chocolate.At other time the free product may be
totally unrelated to the original purchase. Forexample the consumer may be offered a
free pen with a skin care cream or freebatteries with soap. It is possible that, in such,
cases, the products through unrelatedare targeted to the same segment of consumers.
This is particularly seen in free giftpromotions targeted at children. For example, in
case of health drinks, the freeproduct are items such as cricket bat, zoom ball, story
book, pencil box, biscuits,binoculars, toy bike, cricket set, football and trendy
wristwatch which are valued bychildren. Similarly, in case of confectionary products
such as chocolates and biscuit,the free products are products relevant to children such
as comics, sticker, toy, tattoo,magic paint card and magic candle.In some cases, the free
gift offered along with the purchase is another product variantoffered by the company.
For example in case of fruit juice the consumer is offered theguava flavor fruit juice
when he/she buys 5 packs of orange flavor. In case of spices,the consumer is offered

138
Kashmiri mirch along with purchase of the regular spices.Several free gift offers have a
pre commitment of size or value of purchase from theconsumer. The consumer has to
make a certain value of purchase before he is entitledto the free gift. Often, there are
smaller gifts associated with purchase of smaller pack 17
19. 19. sizes and larger gifts associated with purchase of larger pack sizes of a product.
Inmost cases, the price of the free gift is not mentioned. The brand name of the
freeproduct e.g. Timex watch or Motorola handset is mentioned in some
cases.Sweepstake offerThe sweepstake offer gives the consumer a chance to win a large
prize through luck.It usually involves a lucky draw or a scratch card based on which the
winners aredecided. The prizes offered on this promotion can be broadly classified into
twotypes. The first type of prize is a trip to a foreign location e.g. Paris,
London,Thailand, Singapore or Malaysia. Many brands offer a trip to the South Africa
WorldCup as a promotional attraction. The second type of prize are durable products
such asBike, Car, Watch, Washing Machine, Television, Refrigerator, DVD, Mobile
Phone,Cordless phone, PC, Microwave, Camera, Sunglasses, Gold Jewellery, Gold
Coin.Gold has a major appeal as a prize on the sweepstake promotion across
diverseproduct categories such as soap and personal computer. In some cases, the
details ofthe prize on the sweepstake promotion is not specified and is stated as ‗prizes
worthRs. 50 crores.‘Buy more and save/getThis type of promotion requires a consumer
to buy two or more products to avail ofthe promotional advantage. The promotional
benefit is usually in the form of moneysaved as a result of buying two ore more
products at the same time. In certain cases,the promotion requires the consumer to buy
additional units of the same product toavail of the promotional advantage. For example,
in case of bath soaps and detergentcakes, this promotion requires the consumer to buy
three bath soaps/detergent cakesand get one soap/detergent cake free. In case of fruit
juice the consumer is required tobuy 5 packs of fruit juice and get one pack of fruit
juice free. This promotion seems tobe popular in categories where the extra units of the
product offered on the promotioncan be stored for future consumption.When different
products are bundled together on this promotion, there is usually arelationship between
the products. For example in case of computer printers, thisscheme requires the
consumer to buy a printer and scanner together and get a pricereduction. In case of
consumer durables, this scheme attempts to induce the consumerto buy greater number
of products from the same company. For example the schemerequires the consumer to
buy AC and refrigerator or AC and microwave of the samebrand and avail a price
reduction. In FMCG products, this promotion requires theconsumer to buy toothpaste
and toothbrush together or buy shaving cream and bladetogether to get a price
reduction. This promotion is seen in case of Fast FoodRestaurants as well where the
consumer is required to buy a pizza, coke mobile andgarlic bread and get a saving on
the combination purchase. In case of FMCGproducts, this type of promotion bundles
together products that are use complements. 18
20. 20. Contest offersContest offers are seen mostly in products targeted at children. In case
of Fast Foodrestaurant, this promotion requires the consumer to fill up a coupon and get
a chanceto meet a film star such as HrithikRoshan. In case of soft drinks, the contest
offerrequires the consumer to answer a question in an ad and get a chance to meet a
moviestar. In other product categories, the prizes offered on this promotion are similar
tothose on the sweepstake promotion. The consumer is offered the chance to win a
caror a flat or various household durable appliances.Extra Product OffersMost of the
extra product promotions (65%) are seen in the FMCG category wherethe extra units of
product serve as additional consumption units for the consumer.There are no extra
product promotions seen in the durables product category. InFMCG, the specific
products on which the extra product promotion is launchedinclude TalcumPowder,
Detergent Cake, Soaps, Fruit Juices and Hair Oil. In case oftoothpaste the promotion

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requires the consumer to buy one toothpaste and get thesecond toothpaste free. In a
talcum powder extra product promotion, the consumer isoffered 20% extra in the same
pack. This promotion is also seen in the Servicessector. In case of Internet service
provider, this promotion offers extra hours on theInternet and free Internet access on
Sunday. In case of fast Food restaurants, thepromotion offers a second pizza free along
with the original pizza or a slice free alongwith the original pizza.Other OffersA variety
of promotions are seen in the ‗Any Other‘ category. One frequentpromotion in the
consumer durable category is the 0% finance scheme for purchase oftwo wheelers,
notebook/PCs, refrigerator, music system, television, microwave oven,2 wheeler.A
different kind of promotion requires the consumer to invest money in order to availthe
promotional benefit. In case of fans, this sort of promotion requires the consumerto
purchase 3 fans and pay Rs. 90 to get a wristwatch worth Rs. 480. Another
suchpromotion requires the consumer to buy a fan, pay Rs. 40 and get a free camera
worthRs.300. In case of health drinks, the promotion requires the consumer to pay Rs.
7/-more and get a badminton racket free.A variant of this promotion is another
promotion, which requires an investment ofeffort rather than money from the
consumer. For example, in case of tea, theconsumer is required to pay Re. 1 and get a
Britannia biscuit pack free along with thetea pack. In case of salt, the consumer is
required to collect a newspaper coupon andpay Re. 1 to get a pack of salt. 19
21. 21. Yet other types of promotions require an investment of both money and effort
fromthe consumer in order to avail of the promotional benefit. For example, a soft
drinkpromotion requires the consumer to collect crowns and put in some money to get
aprice discount on the soft drink. In case of ice cream the consumer is required tocollect
three ice cream wrappers to get a scratch card which gives him the opportunityto win
lakhs of prizes. In case of chocolates, the promotion requires a consumer toexchange
empty chocolate wrappers to get movie tickets or bunny stickers free.5.3 Purpose of
Sales PromotionThe ultimate aim or purpose of sales promotion is that of increasing the
volume ofsales and profits but it differs from advertising and personal selling both in
approachand techniques. Personal selling involves face to face contact with
specificindividuals, while advertising is directed at a large number of potential
customers.Sales promotion serves as a link between two by focusing selling efforts on
selectedsmall groups of people. Sales promotion usually involves non-recurring and no-
routine methods, in contrast with the routine and recurring nature of advertising
andpersonal selling. Under advertising, the media is not owned and controlled by
theadvertiser except in direct mail advertisings. But sales promotion methods
arecontrolled by the advertiser. Sales promotion covers various stimulants directed to
theconsumers and dealers that is why it is of two types-consumers sales promotion
anddealers‘ sales promotion. The former stimulates consumer‗s buying at the point
ofsale, and latter improves dealer‗s effectiveness at the retail outlets.5.4 How Sales
Promotion Objectives are setSales promotion has dual objective: (A) Basic objectives
and (B) Other objectives.(A) Basic objectives of sales promotion are:(i) Increasing the
buying response of ultimate consumers.(ii) Increasing the selling efforts and intensity
by dealers as well as bysales personnel.(iii) Supplementing and co-coordinating the
efforts of advertising and personalselling(B) The other objectives are:(i) Calling
attention to new products and product improvements.(ii) Informing buyers of new
brand and new packaging.(iii) Improving market share. 20
22. 22. (iv) Obtaining dealer outlets.(v) Meeting competition.These objectives are set on
the basis of following criteria.(i) Cost of reaching an audience member.(ii)
Acceptability of the tools to be used.These criteria are developed taking into
consideration the following variables/factors:(i) Kinds of product:The product is one of
the factors determining the form of promotion. Toys, toiletsoaps and cosmetics are
effectively shown on television. Mass selling consumergoods can be easily promoted

140
through radio and television. Industrial and specialtygoods should be promoted through
technical journals and through sales engineers.(ii) The buyer:If the marketers are to
provide realistic solutions to the problem of buyers, they mustknow their customers,
their needs and desires, their attitude, values, aspirations andexpectations. Hence
marketers must have up-to-date information about customerdemand and customer
behaviour. If the buyers are educated then demonstrations orinstructions can be used as
sales promotion technique. Similarly, contests and quizzescan be used if buyers are of
young age and educated.(iii) Nature and size of market:The number, geographical
location and purchasing power of potential customersexercise a significant impact on
the sales promotion. Sampling, coupon, money refundorders, premium offer, price-off
and trading stamps etc., are suitable for salespromotion in local markets. On the other
hand, fairs, exhibitions and fashion showsare more appropriate for sales promotion on
the national level particularly forgarments, books and electronic items. 21
23. 23. (iv) Stages in product life cycle:This is an important managerial tool in sales
promotion. A product life cycle consistsof four stages.(a) Introduction of the product
requires lot of energy to create awareness,acceptance and demand for the product.
Introducing a new product for mostcompanies is a costly and difficult exercise that is
why they mostly depend onmiddlemen,(b) Growth. It includes a fast growth both in
sales volume and profit.(c) Maturity (Saturation).This stage is longer. But the speed in
achieving salesvolume reduces during this stage. Profit also starts declining much faster
than thesales.(d) Declining. This is the last stage in product life cycle. After a period
ofstability, the buyers lose interest on the product, and sales start falling more
quickly.At this stage either high cost sales promotion technique may be used or
existingproduct may be improved.(v) Management policy:In the management policy,
first of all, sales promotion objectives are set, thencommunication tools required to
achieve these objectives are designed, and the thirdstep is to determine the cost required
to execute promotional activities andprogrammes. In short sales promotion expenditure
is directly related to the objectivesto be achieved.(vi) Budget allocation available:The
decision on how much to spend on promotion is externally difficult on account
ofmultitude of promotion tools, on the one hand, and varieties of products and
marketson the other. For example, the greater the geographical dispersion of a target
market,the greater the communication expenditure required. Similarly, if an offering is
in itsearly life cycle, there is a greater need of expenditure. But promotion budget
shouldalways justify the tasks to be undertaken. A basic principle would be the cost
andreturns of sales promotion tools to be adopted.Hindustan Lever has its well-drawn
up sales promotion budget. If any business housedoes not have its promotion budget
fixed, then promotion programmes will have to bedesigned to support the marketing
plan. 22
24. 24. (vii) Government regulations:Government has passed various laws and made rules
to protect the consumer interest,such as the prevention of Food Adulteration Act, the
Drugs and Magic Remedies(Objectionable Advertisements) Act, and Drugs and
Cosmetics Act etc. Salespromotion policy must take into consideration the government
regulations relating tothe particular product, e.g. the commodity rates must be specified
on the package andin case of medicines drug contents and date of manufacturing, date
of expire, andprice must be specified. 23
25. 25. 5.5 Sales Promotion EffectivenessAre monetary savings the only explanation for
consumer response to a salespromotion? There are monetary and non-monetary
promotions provide consumerswith different levels of three hedonic benefits
(opportunities for value-expression,entertainment, and exploration), and three utilitarian
benefits (savings, higher productquality, and improved shopping convenience)
explained by Pierre Chandon, BrianWansink et al (2000). They have also described that
for high-equity brands, monetarypromotions are more effective for utilitarian products

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than for hedonic products.Marketers and academics often view the reliance on sales
promotions, especiallymonetary promotions, as a sub-optimal consequence of price
competition caused bymyopic management (Buzzell, Quelch and Salmon 1990). These
critics argue that, inthe short-run, the proliferation of monetary promotions erodes their
capacity tomarket share, which explains why so many are unprofitable (Abraham and
Lodish1990; Kahn and McAlister 1997). In the long run, it is feared that sales
promotionsincrease price sensitivity and destroy brand equity—both with retailers and
consumers(Mela, Gupta, and Lehman 1997). As a result, many industry experts are
calling formore effective and cost-efficient promotions that rely less on price
(PromotionMarketing Association of America 1994), and some go so far as to
recommendeliminating most promotions by switching to an everyday-low-price policy
(Kahn andMcAlister 1997; Lal and Rao 1997).Adopting consumer perspective the
value that sales promotions have for brands isrelated to the value, or benefits, that sales
promotions have for consumers. So, it leadsto the fundamental question of why
consumers respond to sales promotions. Mosteconometric or game-theoretic studies
assume that monetary savings are the onlybenefit that sales promotions have for the
consumer. If this is true, an everyday-lowprice may indeed represent an efficient
solution for providing consumers withthese savings while minimizing search costs for
the consumer and logistical costs forthe firm.On the other hand, if, sales promotions
provide consumers with an array of hedonicand utilitarian benefits beyond monetary
savings, everyday low prices cannot fullyreplace sales promotions without the risk of
alienating consumers who value thenonmonetary benefits of sales promotions. The
existence of multiple consumerbenefits may also help understand some puzzling
consumer responses to salespromotions which cannot be fully explained by the search
for savings (e.g., Dhar andHoch 1996; Hoch, Drèze and Purk 1994; Inman, McAlister,
and Hoyer 1990;Schindler 1992; Soman 1998). 24
26. 26. Beyond its intended contribution to the general debate on the value of
salespromotions or on the antecedents of consumer response to them, studying
theconsumer benefits of sales promotions as practical implications for improving
theireffectiveness. It is obvious because monetary and non-monetary sales
promotionsoffer different benefits; they should be more effective for different types of
products.5.6 Sales Promotions in IndiaThe FMCG sector which had kept the highest
advertisement expenses as theproportion of sales, has kept the ad expenses almost
proportionate to growth in netsales. The elasticity of advertisement of the sector stood
at 0.80 per cent to their netsales during the analyzed period. Income and expenditure
statement of the majorcompanies in the segment analyzed for the FMCG companies,
which used to befervent advertisers in the past, have marginally hiked their ad budget in
2008-09 incomparison with 2007-08. According to the analysis of FMCG sector,
HindustanUnilever Limited increased its advertising costs in 2008-09 by 48 per cent to
2,130.92crore which was at 440.22 crore in 2007-08. Another FMCG major, ITC
Limited,spent nearly 33 per cent more in 2008-09 than the previous year, as the
companyearned 8.37 per cent growth in net sales during the same period whereas
Britanniawhich spent about 17.47 per cent more on advertisements in 2008-09 as
compared tothe previous year recorded a growth of 20.44 per cent in the same
period.Dabur spent nearly 14.85 per cent more on advertisements in 2008-09 as against
thecorresponding period of previous year while the company‗s net sales increased by
15per cent in 2008-09. Marico Limited which cut its advertising expenses in 2008-09
by6.05 per cent saw a growth rate of 22.52 per cent in the net sales figure in 2008-09
ascompared to 2007-08. 25
27. 27. 6.0 Literature Review 6.1 Promotion & Consumption Does consumption respond to
promotion? Many studies have focused on the effects of promotion on brand switching,
purchase quantity, and stockpiling and have documented that promotion makes

142
consumers switch brands and purchase earlier or more. The consumers‘ consumption
decision has long been ignored, and it remains unclear how promotion affects
consumption (Blattberg et al. 1995). Conventional choice models cannot be used to
address this issue because many of these models assume constant consumption rates
over time (usually defined as the total purchases over the entire sample periods divided
by the number of time periods). While this assumption can be appropriate for some
product categories such as detergent and diapers, it might not hold for many other
product categories, such as packaged tuna, candy, orange juice, or yogurt. For these
categories, promotion can actually stimulate consumption in addition to causing brand
switching and stockpiling. Thus, for product categories with a varying consumption
rate, it is critical to recognize the responsiveness of consumption to promotion in order
to measure the effectiveness of promotion on sales more precisely. Emerging literature
in behavioural and economic theory has provided supporting evidence that consumption
for some product categories responds to promotion. Using an experimental approach,
Wansink (1996) establishes that significant holding costs pressure consumers to
consume more of the product. Wansink and Deshpande (1994) show that when the
product is perceived as widely substitutable, consumers will consume more of it in
place of its close substitutes. They also show that higher perishability increases
consumption rates. Adopting scarcity theory, Folkes et al. (1993) show that consumers
curb consumption of products when supply is limited because they perceive smaller
quantities as more valuable. Chandon and Wansink (2002) show that stockpiling
increases consumption of high convenience products more than that of low-
convenience products. In an analytical study, Assuncao and Meyer (1993) show that
consumption is an endogenous decision variable driven by promotion and promotion-
induced stockpiling resulting from forward-looking behaviour. There are some recent
empirical papers addressing the promotion effect on consumer stockpiling behaviour
under price or promotion uncertainty. Erdem and Keane (1996) and Gonul and
Srinivasan (1996) establish that consumers are forward looking. Erdem et al. (2003)
explicitly model consumers‗ expectations about future prices with an exogenous
consumption rate. In their model, consumers form future price expectations and decide
when, what, and how much to buy. Sun et al. (2003) 26
28. 28. demonstrate that ignoring forward looking behaviour leads to an over estimation
ofpromotion elasticity.6.2 Sales Promotion and Consumer Response/
PreferenceConsumer promotions are now more pervasive than ever. Witness 215
billionmanufacturer coupons distributed in 1986, up 500% in the last decade
(ManufacturersCoupon Control Center 1988), and manufacturer expenditures on trade
incentives tofeature or display brands totalling more than $20 billion in the same year,
up 800% inthe last decade (Alsop 1986; Kessler 1986). So far, not much work has been
done toidentify the purchasing strategies that consumers adopt in response to
particularpromotions, or to study how pervasive these strategies are in a population of
interest.Blattberg, Peacock and Sen (1976) define a purchase strategy as a general
buyingpattern which "incorporates several dimensions of buying behaviour such as
brandloyalty, private brand proneness and deal proneness." A greater understanding of
thedifferent types of consumer responses to promotions can help managers to
developeffective promotional programs as well as provide new insights for
consumerbehaviour theorists who seek to understand the influence of different types
ofenvironmental cues on consumer behaviour.Blattberg, Eppen, and Liebermann
(1981), Gupta (1988), Neslin, Henderson, andQuelch (1985), Shoemaker (1979), Ward
and Davis (1978), and Wilson, Newman,and Hastak (1979) find evidence that
promotions are associated with purchaseacceleration in terms of an increase in quantity
purchased and, to a lesser extent,decreased inter purchase timing. Researchers studying
the brand choice decision-forexample, Guadagni and Little (1983) and Gupta (1988)-

143
have found promotions to beassociated with brand switching. Montgomery (1971),
Schneider and Currim (1990),and Webster (1965) found that promotion-prone
households were associated withlower levels of brand loyalty.Blattberg, Peacock, and
Sen (1976, 1978) describe 16 purchasing strategy segmentsbased on three purchase
dimensions: brand loyalty (single brand, single brandshifting, many brands), type of
brand preferred (national, both national and privatelabel), and price sensitivity
(purchase at regular price, purchase at deal price). Thereare other variables that may be
used to describe purchase strategies, examples arewhether the household purchases a
major or minor (share) national brand, store brand,or generic, or whether it is store-
loyal or not. McAlister (1983) and Neslin andShoemaker (1983) use certain segments
derived from those of Blattberg, Peacock, andSen but add a purchase acceleration
variable to study the profitability of productpromotions. 27
29. 29. Throughout the world, consumer sales promotions are an integral part of
themarketing mix for many consumer products. Marketing managers use price-
orientedpromotions such as coupons, rebates, and price discounts to increase sales and
marketshare, entice trial, and encourage brand switching. Non-price promotions such
assweepstakes, frequent user clubs, and premiums add excitement and value to
brandsand may encourage brand loyalty (e.g., Aaker 1991; Shea, 1996). In
addition,consumers like promotions. They provide utilitarian benefits such as
monetarysavings, added value, increased quality, and convenience, as well as hedonic
benefitssuch as entertainment, exploration, and self expression (Chandon, Laurent,
andWansink, 1997).A large body of literature has examined consumer response to sales
promotions, mostnotably coupons (e.g.. Sawyer and Dickson, 1984; Bawa and
Shoemaker, 1987 and1989; Gupta, 1988; Blattberg and Neslin, 1990; Kirshnan and
Rao, 1995; Leone andSrinivasan, 1996). Despite this, important gaps remain to be
studied. It is generallyagreed that sales promotions are difficult to standardize because
of legal, economic,and cultural differences (e.g., Foxman, Tansuhaj, and Wong, 1988;
KashaniandQuelch, 1990; Huff and Alden, 1998). Multinational firms should
thereforeunderstand how consumer response to sales promotions differs between
countries orstates or province.6.3 Price elasticityTraditionally the price has been
considered an informative element, from which theConsumer can create an expectation
on the quality of the product to acquire (Leavit,1954; Tull et al., 1964; McConnell,
1968; Lichtenstein et al., 1988).Similarly, manufacturers and retailers act on the prices
policy to achieve increases intheir sales of products. With these reductions in prices,
consumers are expected to buya greater amount of the product or brand. Although these
are usual effects, they willdepend on the brands submitted to such fluctuations (Hoch
and Banerji, 1993;Aggarwal and Cha, 1998). In the analysis of the effects of price
fluctuations, theconcept of price elasticity of the demand must be unavoidably
mentioned. As Fibichet al. (2005) point out; price elasticity of demand is the percentage
change in quantitydemanded as a result of a 1 per cent change in price. The
individuals‗ sensitivity toprice is conditioned by a series of factors like market share,
level of competition,activity in display, brand loyalty or other variables related to the
consumer like hisincome (Lambin, 1991). Cross price elasticity is adequate to know the
extent to whicha variance in a brand price alters the demand of the rival brands. 28
30. 30. Some phenomena or issues of interest in relation to this have been analyzed in
theprevious literature: asymmetric price effect (Lemon and Winer, 1993;
Bronnenbergand Wathie, 1996; Sethuraman et al., 1998), asymmetric share effect
(Sethuraman,1995; Sethuraman and Srinivasan, 1999) and proximity to neighbor
effect(Sethuraman et al., 1998). The results of Sethuraman (1995) indicate that
whilereductions in the price of manufacturer brands with more market share will
influencethe store brands‗ sales, it is less likely that manufacturer brands are affected
byreductions in the price of store brands.The brand choice made by the consumer at the

144
moment of the purchase will beinfluenced by the price of the different brands of the
category of product. In this way,a reduction in the price of an expensive brand may
make this more attractive fortheconsumer and, therefore, the likelihood of choice of this
brand may be increased tothe detriment of the rest.6.4 Sales promotion: immediate
price reductionsPrice and promotion strategies are closely related. It is very difficult to
distinguishprice variances which are caused by decisions derived from the prices policy
fromthose produced as a result of the promotion policy. Thus, proposal has been
developedby Cummins (1998), according to which sales promotion has to stop being a
part ofthe communication mix to become an autonomous variable.When the promotion
ends, sales are reduced even below the usual levels (withoutpromotion). In the long
term, the sales level tends to go back to a position near theinitial position. Even Mela et
al. (1998) confirm that long-term price promotions makethe consumer more sensitive to
price and therefore their effectiveness is reduced withthe subsequent negative effect on
benefits. These results are coherent with thoseobtained by Mela et al. (1997).
Nevertheless, we must clarify that the effectsprovoked by promotions vary according to
multiple factors: the type of incentive, theamount of discount provided or the type of
product to which the promotion is applied,among others.Some years ago both effects
were more intense than nowadays because the use ofsales promotion was not as
widespread as it is now. Nowadays the consumer observesthat the category of products
is systematically affected by some promotional actions,and as a consequence he will
not modify the planning of his purchase (Fader andLodish, 1990; Lal, 1990). Retail
establishments should modify their promotionalplans in order not to lose the essential
objective: modify favorably the consumer 29
31. 31. buying behaviour surprising him with a promotion action. This element of surprise
isnow in danger.Besides, the presence of promotion actions attractive to consumers
may make thischange establishment (Tellis, 1997). This effect is related to the change
of brand, thatis, consumers who do not usually acquire the brand feel attracted and buy
it. Thegreater increase in sales occurs as a consequence of this reality (Blattbergand
Neslin,1990; Gupta, 1993).It is necessary to be continuously in touch with the market
because on certainoccasions the use of promotions could cause unwanted effects. This
happens when theconsumer perceives that he is paying for unnecessary product
highlighting andpositioning activities, which will make his behaviour, deviate from the
desired one,and thus, he will stop buying the promoted brand (Simonson et al., 1994).
On someoccasions the consumer may also stop buying a brand or avoid its purchase
when it ispromoted so as not to have to justify his behaviour before the group
(Simonson,1989). Or the consumer simply decides not to buy the promoted product
because hefeels that he is being manipulated and he will act punishing the retailers.The
results of works such as those by Suri et al. (2000), detect the need to
introducepromotions as explicit elements of the consumer buying behaviour. Begona
AlvarezAlvarez and Rodolfo Vazquez Casielles (2008) concluded that the brand choice
andbuying behaviour developed by consumers is a complex phenomenon. The
variablesthat influence it are numerous and it is necessary to know them to act and
developuseful strategies that achieve the objectives aimed at in each case. The influence
ofprices on this process is very important.In previous researchers questions related to
reference prices have been approached indepth. It seems widely accepted that when
consumers buy a product they compare itsprice with a subjective level. The problem
focuses on finding the most adequate wayof estimating that level. While some
theoretical trends consider that the consumerforms his reference price from the
observation of the prices at the establishment,others defend that the consumer
remembers the prices paid on previous occasions andhe will form his reference price
from them. The analysis made allows them to proposethe estimations from stimuli or
observation as explanatory of the brand choice anddecision process developed by the

145
consumer.Just as it was expected, Begona Alvarez Alvarez and Rodolfo Vazquez
Casielles(2008) have confirmed the importance of prices in the purchasing process. The
effectsderived from their fluctuations depend on the characteristics of the
brand.Specifically, they have found differences in the intensity of response to price 30
32. 32. variances between manufacturer brands and store brands. The latter appeared to
bemore vulnerable.Since one of the most widely used techniques of sales promotion are
immediatediscounts, they have considered it necessary to clarify the effects this may
produce.Interesting results have been obtained regarding this issue. Discounts are
perceived asattractive and serve to modify consumer preferences, but depending on the
categoryof product.Thus, for those in which consumers show a strong tendency or
preference for thebrand, the expected results are not obtained, because they are not
relevant in the branddecision process. The application of another promotional tool
would be moreadvisable instead. However, for other categories of product with lower
loyalty rates,the application of discounts is the most adequate action, since the use of
otherpromotion actions does not produce any effect.Sellers use various advertising and
promotion tactics to attract customers and increasesales. Previous research has shown
that framing of promotion messages andpresentation of price information influence
consumers‗ perceptions of prices and theirwillingness to buy (Das, 1992; Sinha et al.,
1999; Sinha and Smith, 2000).However, Lan Xia and Kent B. Monroe (2008) have
distinguished betweenconsumers who have prior goals to buy the product relative to
those who do not havesuch purchase goals. Further, they have added whether
consumers‗responses todifferent promotion message framing and price presentations
differ when they do ordo not have pre-purchase goals. Since the same promotion
information may lead todifferent perceptions as consumers‗goals vary (Shavitt et al.,
1994), understandinghow consumers with different purchase goals react to various
promotion messagescan help sellers design effective promotion programs.6.5 Consumer
goalsMany consumer purchasing decisions are goal oriented (Bagozzi, 1997; Bagozzi
andDholakia, 1999). Such goals are important as they direct other stages of
theconsumers‗ decision process. Broadly, there are different levels of consumer
goalspecificity (Lawson, 1997). People with abstract goals tend to search across
productcategories and consider a wider range of information as relevant. For example,
if thegoal is to get away from work and have fun (an abstract goal), consumers
mayconsider multiple activities including going to a movie, visiting friends, or taking
avacation. Many options are relevant and attentions are spread across multiple
productcategories. On the other hand, if the goal is to buy a microwave oven (a
concrete 31
33. 33. goal), only microwave oven information is relevant and tends to get
people‗sattention.In the market place, consumer goals vary along a continuum ranging
from no goal,abstract goal to concrete goal. Goals guide consumers‗ information
gathering anddecision processes. Goals are associated with different levels of
consumerinvolvement (Howard and Kerin, 2006) which guide the allocation of
attention as wellas other cognitive resources for information processing (Peterman,
1997).Whenconsumers have an abstract goal or no goal at all, the involvement with any
particularpurchase is low and they may spread out their attention and no single piece
ofinformation may be regarded as particularly relevant.However, when they have a
specific purchase goal, their involvement is high and theyare more focused in their
information search and processing and perceive some typesof information to be more
relevant than others. As Bargh (2002) has indicated, theparticular goal in place changes
everything – the focus of attention and the evaluationof objects and events, as well as
memory for eventsAlthough the importance of consumer goals has been recognized in
previous research,it has not been explicitly incorporated in research on consumers‗
perceptions of pricepromotions (Mazumdar et al., 2005). Yet, when shopping,

146
consumers mayencounter various price promotion messages for products or services for
which theydo or do not have specific purchase goals. Mazumdar et al. (2005) in a
summary ofreference price research called for more research examining shopping
occasions (i.e.planned vs unplanned purchases) as an important moderating factor of
the effects ofvarious types of reference price information. Lan Xia and Kent B. Monroe
(2008)examined how consumers‗ prior purchase goals interact with
promotioncharacteristics to influence their perceptions of price promotions and their
willingnessto buy.6.6 Price promotions and pre-purchase goalsGoals play a
fundamental role in influencing how information in a promotion messagewill be
processed (Shavitt et al., 1994). When individuals have multiple informationprocessing
strategies available, they select among them on the basis of goals, motives,and the
environmental context (Taylor, 1998). Thus, by definition informationregarding a
specific product attracts more attention when consumers have aprepurchase goal for
that product category compared to when consumers do not havea pre-purchase goal. 32
34. 34. Price promotions usually provide consumers with monetary savings on
specificproducts. If consumers are in a store intentionally searching for these
specificproducts, then it is expected that they would find promotions on such products
moreattractive compared to those consumers who are in the store but do not have a
priorpurchase goal for a promoted product. Therefore, the purchase likelihood is higher.
Inaddition to this main effect, consumers may react to different
promotioncharacteristics in different ways given the existence or absence of a pre-
purchase goal.For example, Howard and Kerin (2006) found that consumers with
different levels ofinvolvement, operationalized by whether they are in the market for a
particularproduct, have different information processing styles and hence respond to
differentprice promotion cues.Price promotion characteristics can be grouped into four
categories: pricepresentation, deal characteristics, situation factors, and study effect
(Krishna et al.,2002). Price presentation research examines whether consumers‗
perceptions of apromotion are influenced by how the promotion is communicated, e.g.
framing.Research on deal characteristics studies the influence of factors such as
dealpercentage, free gift value, and size of the bundle. Situation factors refer to the
overallsituation of the price promotion including types of stores, brands and whether
thepromotion information is received at home or in the store.Finally, study effect
addresses measurement issues including factors such as numberof variables
manipulated and number of participants. Different promotioncharacteristics influence
current as well as future purchase intentions (DelVecchio etal., 2006). Lan Xia and
Kent B. Monroe (2008) examined several important issuesrelated to price presentations
and deal characteristics of price promotions focusing onpromotion framing, format, and
promotion depth.6.7 Promotion format: Discount vs. Free GiftIn addition to promotion
framing, price promotions come in different formats such asdiscount, coupon, rebate,
and purchase with free gift, etc. While most promotionforms involve monetary savings,
some promotions are non-monetary. One type ofnon-monetary promotion often used is
offering consumers a free product or giftinstead of a price discount. 33
35. 35. Compared to price discounts, non-price promotions such as free gifts are likely to
beperceived as small gains (Diamond and Johnson, 1990) and maintain product
qualityperceptions comparing to discounts (Darke and Chung, 2005). Discounts reduce
theprice that consumers have to pay for the product (i.e. reduced sacrifice). However,
ina free gift promotion, while the value of the promotion may be equivalent to
adiscount, nevertheless, it does not reduce the sacrifice with the focal product
purchaseand therefore it could be perceived as a gain. If consumers with and without
prepurchase goals respond differently to gains and losses in price promotion
perceptions,they may react differently to monetary and non-monetary price
promotionsDiamond and Abhijit (1990) found that a price discount was more likely to

147
be choseneven when the discount was less than the retail value of the free product.As
discussed earlier, if consumers who are planning to buy a product are morefocused on
the monetary sacrifice, they would prefer a price discount (reduced loss)over a free gift
promotion (small gain). However, consumers who are not planning tobuy may be more
attracted by a small gain associated with the free gift. Lan Xia andKent B. Monroe
(2008) concluded how consumers with or without a specific pre-purchase goal respond
differently to a price promotion. Not surprisingly, Lan Xia andKent B. Monroe (2008)
showed a consistent main effect of goal onparticipants‗willingness to buy. This main
effect was not mediated by perceivedvalue. This result is consistent with the intuition
that consumers are responsive toinformation that matches their needs. Product or brand
level price promotioninformation is less relevant when consumers do not have a pre-
purchase goal. Theyobserved a main effect of promotion format. Participants preferred
discount over freegift and higher discount level over lower discount level regardless of
the presence of apre-purchase goal. These main effects were mediated by perceived
transaction value.It is also added that the main effect of promotion format probably due
to fact that thetwo promotion framing represented equivalent price savings. In addition
to the maineffects, they show how consumers‗goals interact with some important
characteristicsof price promotions to influence their willingness to buy. The effect of
the promotionmessage framing or format is conditional on consumers‗ prior purchase
goals.Consumers planning to purchase a product are more responsive to
promotionmessages framed as reduction of losses (e.g. ―pay lessǁ and a discount)
whileconsumers without a goal are more responsive to messages framed as additional
gains(e.g. ―save moreǁ and free gift). 34
36. 36. Henceforth, consumers with different purchase goals respond differently to the
depthof a discount. When consumers do not have a purchase goal, they are less
responsivewhen the discount level is either too small or too large. In contrast, such
thresholdsare less observable when consumers have a prior purchase goal. Further
more, it hasbeen concluded that perceived quality is the underlying mechanism for the
effect ofpromotion framing across purchase goals. Overall, introducing consumer goals
as amoderating factor provides some boundary conditions to previous research effects
andadds to knowledge of consumers‗ perceptions of and responses to various
pricepromotions.The notion that targeted deals are more efficient than across-the-board
salespromotions that provide unnecessary discounts to price-insensitive consumers
hasprompted a dramatic growth in customized pricing and sales promotions
(Acquistiand Varian 2005). However, questions have been raised regarding the efficacy
oftargeted offers in general (Homburg, Droll, and Totzek 2008) and customized
pricepromotions in particular (Acquisti and Varian 2005; Feinberg, Krishna, and
Zhang2002).Thus, whether companies should rely on customized promotions remains
an openquestion, highlighting the need for additional research into how consumers
respond totargeted discounts as well as contingencies that affect their response to these
offerings(Franke, Keinz, and Steger 2009; Simonson 2005). In this regard, a variable
that hasreceived little attention in the literature is the relative exclusivity of targeted
pricepromotions. Because such promotions are offered selectively to some consumers
(i.e.,deal recipients) but not to others (i.e., deal non recipients), targeted price
promotionsinvolve a level of exclusivity that surpasses that associated with more
inclusive (i.e.,undifferentiated) offers. At their most exclusive, price discounts can be
customized tomaximize promotional fit with individual consumers (Simonson 2005).
At moremodest levels of exclusivity, targeted promotions can be selectively offered to
entiregroups of consumers, as with affinity marketing programs (e.g., Borders‗
educatorsavings promotions, which limit discounts to current and retired
teachers).Research by Feinberg, Krishna, and Zhang (2002) provides evidence of a
betrayaleffect, in which loyal consumers of a brand provide less favourable preferences

148
forthat brand when they are excluded from a targeted deal offered only
tocompetitors‗customers.Equity frameworks (Adams 1965; Bolton and Ockenfels
2000; Greenberg 1986)presume that people will engage in interpersonal comparisons
that factor not only theoutcomes received (non social utility) but also how such
outcomes compare withthose that others accrue (social utility). When consumers react
to marketing offers 35
37. 37. with the goal of maximizing personal welfare (i.e., they are self-regarding),
thereceipt of an exclusive deal leads to advantageous inequity that enhances
evaluationsof the targeted discount among deal recipients (Greenberg 1987;
Loewenstein,Thompson, and Bazerman 1989). In contrast, non recipients (whose
exclusion fromthe offer results in disadvantageous inequity) should evaluate this type
of promotionless favourably. Thus, as a result of their respective outcomes, recipients
and nonrecipients should differ in their evaluations of a targeted deal.Equity theory
further suggests that evaluations of a targeted offer will depend not onlyon the relative
outcomes associated with the offer (i.e., whether the consumer is arecipient or non
recipient) but also on the inputs or costs associated with receipt of thepromotion. In the
context of targeted deals, these inputs may be represented by theamount of effort
customers have invested in their relationship with a marketer (e.g.,through their past
patronage of the brand) (Feinberg, Krishna, and Zhang 2002;Homburg, Droll, and
Totzek 2008); in turn, these investments should influence howconsumers respond to a
targeted offer (Verhoef 2003). In this regard, the negativereactions of deal non
recipients in Feinberg, Krishna, and Zhang (2002) likely arosebecause of disparities in
both exchange components.In comparison with deal recipients, these consumers
experienced disadvantageousinequity in terms of both the relative outcomes associated
with the offer (non receiptof the targeted promotion) and the relative inputs (brand-
loyal non recipients hadmore invested in their relationship with the marketer than deal
recipients, who wereusers of a competitive offering). Being placed in a situation of
disadvantageousinequity presumably prompted negative emotions (Tabibnia, Satpute,
and Lieberman2008) that undermined the preferences of non recipients for the brand to
which theyhad previously been loyal.However, Michael J. Barone&Tirthankar Roy
(2010), explored was whether, when,and how recipients‗ evaluations of a targeted price
promotion may be affected by theoffer‗s exclusivity (i.e., the extent to which an offer is
available to consumers in themarketplace). If exclusion from a targeted offer can trigger
disadvantageous inequityfor non recipients (as Feinberg, Krishna, and Zhang (2002)
demonstrate), it stands toreason that receipt of an exclusive discount should engender
advantageous equity fordeal recipients.Furthermore, an emerging literature on inequity
aversion (Fehr and Gintis 2007; Fehrand Schmidt 1999) suggests that certain people
desire outcomes that balanceselfregarding (i.e., selfish) interests with other-regarding
interests. Thus, someconsumers may be reluctant to engage in exchanges that provide
them with 36
38. 38. advantageous inequity, and this disinclination is likely to grow with the level
ofinequity characterizing the exchange (Scheer, Kumar, and Steenkamp 2003).Inequity-
averse deal recipients should evaluate a deal less favourably as it becomesmore
exclusive. As a result of their motivation to avoid experiencing the negativeaffect (e.g.,
guilt) that may accompany advantageous inequity (Scheer, Kumar, andSteenkamp
2003), inequity-averse recipients should evaluate exclusive deals lessfavourably than
more inclusive offers. While variations in inequity aversion havebeen examined at more
macro levels (e.g., across cultures; see Scheer, Kumar, andSteenkamp 2003), little work
has explored individual difference factors thatcharacterize inequity-averse
people.However, such an examination affords a means of identifying theoretically
relevantvariables that moderate consumers‗ tendencies toward inequity aversion,
informationthat is useful in developing strategies aimed at more effectively and

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efficientlydelivering targeted deals to the marketplace.6.8 Short- and long term effects
of Sales PromotionThe evidence of short-term effects seems to be well documented in
the literature. It issuggested that SP can build brand awareness and motivate trial,
provide more specificevaluation methods, as they are more immediate and operate in a
specific time frame,(Pham, M.T., Cohen, J.B., Pracejus, J.W. & Hughes, G.D., 2001),
influence sales,(Roberts, John H., 1995) expand the target market (Robertson,
T.S.,1993) and achievecompetitive advantage.( Rothschild, M.L. &Gaidis, W.C.,1981).
According to theirpurpose, SPs are often successful in inducing action, as they
encourage consumers toact on a promotion while it is still available. Also, the strength
of SP lies in itsflexibility to quickly respond to competitor attacks contributed by
Sandra Luxton(2001).Despite these benefits, the question remains whether these effects
are made at theexpense of the long term impact that SP may have on companies.
Sawyer, A. and P.Dickson (1984) and Simonson, I., and Z. Carmon (1994) proved that
there is evidencepointing towards SP having a negative effect on brands, especially in
relation toadvertising. It is argued that SP does not have any brand-building impact and
couldlead to diminishing effects for the brand, particularly well-established ones. In
fact,the Ehrenberg et al. study showed that price-related promotions do not have any
effecton brand performance, either in terms of sales or repeat purchase. 37
39. 39. According to the authors, this is due to the fact that promotions influence
existingcustomers in the first place, with some rare exceptions shared by Simonson, I.,
andZ. Carmon (1994). This is a concern for companies, whose main objective it is
totarget new customers or gain more long-term profit, as new customers might only
takeadvantage of the promotion and then go back to their preferred brand. Also,
evenwhen the existing customers are targeted and the response is satisfying,
theseconsumers‗ price sensitivity may be enhanced, causing difficulties in the long run.
Apremium brand needs to justify its high price and its image, and often does so
throughadvertising, but are these media expenditures a waste of money if the image
isdamaged through other communication channels? Perhaps the easiest advice would
beto simply avoid SP due to this potential risk, but as we have seen in the
FMCGmarkets, SP cannot easily be avoided and market characteristics force companies
toaddress this issue. In addition, it is arguably the FMCG markets that face the
largestissue of competition and lack of differentiation among products; and these are all
theproblems that successful branding might ease.Also, as previously implied, retailers
and the characteristics of the retail environmentplay an important role in customers‗
perception of a brand. Not surprisingly, it hasbeen found that the context in which a
brand is seen influences the brand imageperception, and might damage the brand in
some cases. For instance, display featuresin a store may trigger different responses in
consumers. If a company has investedmarketing communications efforts in establishing
a high-quality brand image and theproduct is then placed in an undesirable context (for
instance, in proximity to thebrands associated with lesser quality), consumers may
perceive less brand valueincorporated by Wakefield, K. L. and Jeffrey J. Inman (1993).
Thus, it may be theretailers who have ultimate control over the brand image.The SP
activities of companies could have an additional impact on the whole marketcategory as
well. It is found that a successful price promotion did expand the categorywhile the
promotion lasted, while having a negative long-term effect of decreasedsales in the
period after the promotion. A reason for this might lie in the fact thatpeople tend to buy
greater quantities during the promotion, and this leads to weakerdemand once the
promotion has finished. Another, equally distressing theory aboutthe promotional
impact on the category is that since SP tends to encourage brandswitching, the category
does not benefit as a whole as people switch to even lowerprices. 38
40. 40. 6.9 Price sensitivityOne of the most discussed negative effects concerns consumer
price sensitivity.Findings show that SP tends to increase consumer price sensitivity, due

150
to theformation of reference prices. When consumers buy a product, they start to
comparethe price to the reference price, as opposed to the actual one. If a consumer is
used tobuying two coffees for the price of one, when the SP is removed, the actual price
ofthe coffee suddenly seems more expensive. However, this implies that, in order
forconsumers to become too price sensitive, promotions would have to
happenfrequently, since consumers do not tend to always remember prices.
Naturally,different consumers react differently to prices and SP, depending on their
ownpredispositions and preferences. For instance, customers loyal to a specific brand
willperhaps not switch even when presented with the most tempting offer while
othersactively search for the best offer available. Promotions can, however, lead to a
greaternumber of people becoming offer-seekers as, Mela et al., (1997) found that,
lookinglong-term, price promotions do make both loyal and non-loyal customers
moresensitive to price 39
41. 41. 7.0 Research Methodology 7.1 Research Design A research design is a framework
or blue print for conducting the research project. It details the procedures necessary for
obtaining the information need to structure and/or solve research problems. The
research design lays the foundation for conducting the project. The descriptive research
design is being used to study the formulated problem. Primary and secondary data has
been collected according to the need of the study. For collecting primary data,
structured questionnaire has been prepared considering objectives of the study. More
over important factors has been considered to measure the interested variable of the
study. 7.2 Product categories under study DETERGENTS: Washing Powder for
Clothes TOILETERIES: Soaps 7.3 Sampling Design & Data Collection The universe of
the study consists of the retail consumers in Navi Mumbai. Sample Size: 100 Sampling
Method: Convenient Sampling Method Data Type: Primary Data & Secondary Data
Data Collection Tool: Structured Questionnaire Scope of Research: 3 Retails Malls
inNaviMumbai. D‘Mart (New Panvel), Big Bazaar (Kharghar) & Reliance Fresh (CBD
Belapur) Method:Questionnaire is one of the tools of the primary data collection. In this
research consumer responses have collected through questionnaire. 40
42. 42. 8.0 Data Analysis 8.1 Data Collection & InterpretationQ1. Which brand of Soap /
Detergent do you use? Bathing –soaps Respondents Lux 41 Hamam 3 Lifebuoy 14
Pears 8 Others 34 Bathing soaps 50 40 30 20 10 0 Lux Hamam Lifebuoy Pears Others
Respondents 41 3 14 8 34Interpretation:The above question has been formed to know
the soaps and detergents at the top of the mindof the customers. It shows those
consumers‘ purchase and use of that particular brand. It willhelp to the company to
know the market scenario and the major brands in the market.From the above result it is
clear that out of 100 customers more than 40 are consumers arehaving the same brand
as theirpreferred brand, whereas ―Others‖ category is also showinghigher numbers
than the other 3 major players(Hamam, Lifebuoy, Nirma). 41
43. 43. Detergent powder Respondents Tide 19 Rin 14 Surf 35 Ariel 18 Others 14
Detergent Powder 40 35 30 25 20 15 10 5 0 Tide Rin Surf Ariel Others Respondents 19
14 35 18 14Interpretation:From the above result it is clear that out of 100 customers 35
are purchasing the same brandof detergent, whereas all others are on same level. 42
44. 44. Q2. Do you always buy the same brand of Soap / Detergent? Particulars
Respondents Yes 56 No 44 Brand loyal 60 50 40 30 20 10 0 Yes No Respondents 56
44Interpretation:The objective behind the formation of this question is to know the
level of brand loyalty ofthe consumers towards the brands of soaps available in the
market. The above figure showsthat on 56% of the respondents are loyal to their brands
of detergent/soap. FMCG are such amarket where the level of loyalty remains low and
this is because of many reasons. 43
45. 45. Q3. Which factors do you normally consider while purchasing a particular brand
ofSoap / Detergents? Bathing Factors soap Det.powder Fragrance 19 18 Quality 33 36

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Company image 16 13 Price 23 19 Packaging 6 11 Others 3 3 Factors affecting
purchase behavior 40 30 20 10 0 Company Fragrance Quality Price Packaging Others
image Bathing soap 19 33 16 23 6 3 Det.powder 18 36 13 19 11 3Interpretation:The
objective behind this question is to know the effect of influencing factors in the
purchasedecision of the soaps and detergent powders. It mainly contains the factors
like, quality whichplayers an important role in the purchase decision of the soaps and
detergents both.If we look at the graph of the soaps and detergent it shows quality as
the most influencingfactors in the purchase decision while price is also an important for
purchase decision. 44
46. 46. Q4. Do you consider promotional schemes while purchasing a particular brand of
Soap/ Detergent? Particulars Respondents Yes 78 No 22H0: Promotional schemes do
not have a significant effect on the purchase of brand.H1: Promotional schemes do have
an effect on the purchase of brand. Effect of schemes purchase behavior 100 80 60 40
20 0 Yes No Respondents 78 22Interpretation:Answer of this question will give idea
about the effect of promotional schemes in thepurchase decisions. Such types of
schemes always attract more and more consumers towardsparticular brand.
Simultaneously it gives idea about the factors which consumers look most inthe product
before they make final decision.Here H1 is accepted as the graph shows that 78 out of
100 consumers are looking for suchschemes before they make purchase. 45
47. 47. Q5. Which of the following promotional schemes you have come across so far?
Promotional schemes Respondents Coupons 16 price off 84 Freebies 24 scratch cards
12 lucky draw 9 Bundling 31 extra qty. 44 Familiarity of promotional Schemes 100 80
60 40 20 0 scratch Coupons price off Freebies lucky draw Bundling extra qty. cards
Respondents 16 84 24 12 9 31 44Interpretation:The above stated question clearly states
the awareness of promotional schemes offered in themarket by the marketers to attract
more and more consumers.The results show that price off and extra quantities are the
two main offers/schemes whichconsumers have come across at the time of purchase. It
will help the manufacturers andmarketers too how to launch their new products in the
market with which schemes. 46
48. 48. Q6. Which medium do you feel is suitable to promote the various promotional
schemes? Source Respondents Radio 11 TV 69 Newspaper 43 Hoarding 15 Others 12
Mediums to promote the promotional schemes 80 60 40 20 0 Radio TV News.ppr
Hoarding Others Respondents 11 69 43 15 12Interpretation:This question gives stress
on the media habit of the people and through which the productshould be launch or they
think it would be better than other Medias.The above result shows TV as the best media
to market the product which will cover majorityof the viewer ship. On the second place
it shows newspapers as the media to promote theproduct in the market. 47
49. 49. Q7. Is there any existing scheme on the Soap / Detergent you are currently using?
Particulars Respondents Yes 58 No 42 Existing scheme on the Soap / Detergent 70 60
50 40 30 20 10 0 Yes No Respondents 58 42Interpretation:The answer of the
respondents give idea about the awareness of the promotional schemesoffered in the
market on their existing soaps and detergents.In this situation more than 40% of the
people are not aware or having vague idea about thepromotional schemes running into
the market.It shows that people are not much aware of the schemes which continue in
the market it maybe because of the present stock of the product at their place. 48
50. 50. Q8. If yes, please specify? Particulars Respondents 3+1/Other Free 36 Discount 22
No idea 6 No answer 36 40 35 30 25 20 15 10 5 0 3+1/Other Free Discount No idea No
answer Series1 36 22 6 36Interpretation:This question supports the above question. It
enlists the answers of those customers who areaware of the present schemes offered in
the market and also those schemes which are moredemanded in the market.The result
shows that 1+1 or 2+1 or other free schemes are more demanded and more

152
awareschemes in the market.So manufacturers may go for the same at the time of
launching their product. 49
51. 51. Q9. If you get an attractive promotional offer in the product other than of your
choicewill you switch over? Particulars Respondents Yes 73 No 27 Switching behavior
80 70 60 50 40 30 20 10 0 Yes No Respondents 73 27Interpretation:It shows the level
of brand loyalty among the consumers. The result clearly shows that out of100, 73
people are ready to switch over to another brand if they find better promotionalschemes
which suits their budget means more quantity + less cost + quality.Combination of all
these schemes will run better in the market. 50
52. 52. Q10. Give reason for the same? Particulars Respondents Cost+qty 16 Quality 17
Satisfaction 2 Brand loyal 5 More benefit/budget 22 Season change 2 No answer 36
Reason 40 30 20 10 0 More Season Cost+qty Quality Satisfaction Brand loyal No
answer Benefit/bud change Respondents 16 17 2 5 22 2 36Interpretation:Above
question it gives specific reasons for switching too other products. It shows that
extraquantity with less or same price, more satisfaction, quality and other factors
influenceconsumers to switch over too other brands. 51
53. 53. 8.2 Retailer InterviewFollowing are the excerpts from an interview with Mr. K.
Shivaji, Store Manager,D’Mart (New Panvel). This interview highlighted the retailer‘s
side view on salespromotion tools and their effectiveness:Q.1. Tell us something about
D’Mart and what do you think makes D’Martdifferent from other similar malls?Ans.
D‘Mart is a retail supermarket and we deal with all kind of consumer productsfalling in
the categories of FMCG and Consumer Durables. We are known for ourlarge-scale of
operations that also allows us to get good deals from our suppliers. Thesame benefit is
passed on to our customers in form of price discounts. D‘Mart ishaving a competitive
advantage on giving price discounts on each of the products onthe shelves. This is not
offered by many other retail malls.Q.2. So you think consumers are only looking for a
price discount and do not getinfluenced by other kind of sales promotions?Ans. There
are two kinds of promotions; one is supplier side and the other is retailerside. Suppliers
do not tend to offer price discounts. They would go for things likebundling, which
would force the sales of a product that is not doing so well in themarket. Retailer side
promotions depend on the inventory and the cash benefitsderived from the supplier. If
we have a choked inventory, we would put them onoffer. The cash benefits received is
offered to consumer in face of price discounts. So,you see, we try to create a win-win
offer for everyone involved.As far as consumers are concerned, we always see a happy
smile on our consumerfaces when they see the amount of savings they made as
mentioned on their invoices.So, yes, consumers are always looking for a better deal and
price discounts rate asnumber one promotion tool from retailer side. From supplier side,
it is the freeproduct or bundling offer that does well.Q.3. Do you think consumers
switch brands depending on the deals they receive?Ans. The answer is a big yes. Indian
consumers‘ loyalty is becoming fickle. There aremany switchers now than they were
earlier. This is mainly due to the number ofchoices on offer. If a FMCG manufacturer
can bring out a good promotional scheme,it will attract consumers to their products. It
is also a good product launch tool. 52
54. 54. Q.4. So sales promotions do well with new products rather than with anestablished
brand?Ans. Sales promotions would do well with any kind of product. A manufacturer
isalways trying to gain maximum sales and market share. With promotional offers,
theyensure that they get maximum visibility and word of mouth publicity from
consumers.We have observed that whenever the sales are down, the manufacturer come
up with apromotional offer, and then it helps them boost sales. A new product finds it
tough tomake a holding in the market. The manufacturer mostly adopts a penetrative
pricingstrategy and plays on prices. Then comes bundling and then free products and
then theother forms like scratch cards and coupons.Q.5. Do sales promotions always

153
work in boosting the sales?Ans. Not always. Some fail miserably, while some succeed a
lot.Q.6. Can you give us some examples of such successes and failures?Ans. Nestle
Milk came up with a bundled offer with Maggi noodles. It did well. But itgot more
success when they reduced Rs.15 from their retail price. Recently, McCainwas offering
a smaller packet of their alootikkis with their big packets. It was notcatching up as the
consumers preferred French fries as their big pack choice. Also,once we had to clear off
huge stock of Kiwi shoe polish. We blundered by offering itwith Lizol. Both products
faced loss of sale. Milo never achieved high sales figures,in spite of running several
free product offers. Overall, I would say, price discounts dovery well with any kind of
product.Q.7. Now we will be having big giants like Walmart in India, who can get
betterdeals from the suppliers. How do you plan to cater this challenge?Ans. Walmart is
a large size retail format and they can face issues with getting realestate for their space.
So, we will see them coming up on city outskirts. Actually, weare still threatened by
local kiranas only because of their reach. I feel, India‘s retailspace would be divided in
to three spaces in the future. First one will be theunorganized retailing, which is the
local kirana shops. Second would be the organizedretail space with Indian retailers like
D‘Mart and Big Bazaar. Third would be theorganized foreign retailers. I personally feel
all three formats can co-exist peacefully.Q.8. My final question is what does the future
holds?Ans. The future is bright for the Indian consumers and they can look forward to
wholelot of deals and offers from both the suppliers and the retailers. 53
55. 55. 8.3Findings of the reportSales Promotion, a short-term inducement, offered to a
consumer or trade has gainedmomentum as a promotional tool world over. It represents
nearly three fourth of themarketing budget at most consumer product companies. Sales
promotions canenhance consumers‘ self-perception of being ―smart‖ or a ―good‖
shopper FMCG is such a market where the level of loyalty remains low and this is
because of many reasons. Quality as the most influencing factors in the purchase
decision while price is also an important for purchase decision. Schemes always attract
more and more consumers towards particular brand. Simultaneously it gives idea about
the factors which consumers look most in the product before they make final decision
Price off and extra quantity is the two main offers/schemes which consumers have
come across at the time of purchase TV is the best media to market the product which
will cover majority of the viewer ship. On the second place it shows newspapers as the
media to promote the product in the market People are not much aware of the schemes
which continue in the market it may be because of the present stock of the product at
their place. 1+1 or 2+1 or other free schemes are more demanded and more aware
schemes in the market. People are ready to switch over to another brand if they find
better promotional schemes which suits their budget means more quantity + less cost +
quality. Extra quantity with less or same price, more satisfaction, quality and other
factors influence consumers to switch over too other brands. Retailer stocks all types of
soap and detergent because of competition. People are more quality and price oriented.
Consumer remember that name of the product by the company name and also from the
past performance of that company Consumer remembers that name of the product by
the company name and also from the past performance of that company Retailers are
not suggest to purchase particular brand because of personal relation or that customer
are brand loyal 54
56. 56. Margin and of better relations with consumers and too provide quality product to
consumers they suggest consumers too bye particular brand. Customers are looking for
any type of the promotions on the product before them going to purchase. Price off,
product bundling and extra quantity are more demanded by the consumers over others
schemes. HUL attracts more consumers through such promotions, such as display of the
product, banners etc.8.4 Recommendations The findings of the empirical study indicate
that unless the brand to be promoted is in the consideration set of the consumer, sales

154
promotion by itself is unlikely to have any major impact. Managers need to invest into
brand building exercise so that his/her brand appears in the consideration set of the
target consumers. Only after this should he spend time, money and energy on sales
promotion activities. Sales promotion should not be used in isolation but need to be
integrated with other tools and in line with the overall positioning of the brand. Also the
importance of the role of mass media came out clearly in the study. Companies need to
create sufficient awareness about sales promotion schemes through mass media in order
to create awareness. FMCG products are low involvement products characterized by
switching behavior. Also the person going to the shop for the purchase of soap is the
final decision maker of the brand. Hence it is essential that companies need to design
attractive, striking, visible POPs for scheme announcements. With respect to nature of
scheme, the finding suggested that premium (free gift) was popular with companies.
While both retailers and consumers preferred price offs. So it is necessary that the
perceived value of a free gift has to be appealing and high for the target consumers.
Repetitive use of the same premium for a prolonged period may have negative effect on
the loyal customers. When the company is giving its own product free as premium, it
needs to ensure the quality of the product from it as it is likely to jeopardize the image
of both its products. The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the companies for increasing
sales in short term and clearing excess stocks. What it implies is that companies need to
use sales promotion synergistically and communicate so that they provide value to the
target audience and enhance brand quality/image perceptions.Companies need to 55
57. 57. systematize information flow regarding sales promotion activities particularly at
dealer and retailer level. Ensuring proper information flow and devising checks and
measures to reduce misappropriations and implementation flows should be considered
critical aspects for the success of sales promotion activities by the companies. As
retailing is fragmented, direct reach by companies is next to impossible. Through
dealers and proper feedback mechanism, companies keep in touch with the market.
From the study it was found that smaller retailers felt neglected and not enthused to
implement the schemes, particularly when additional handling, stocking, accounting
was required on the part of a retailer without compensatory margins. It can be seen that
the retailer and consumer perceptions matched with respect to preferences of schemes,
underlying motivations and role of mass media. This implies that the retailer would be a
rich source of information about the consumer and the likely response to sales
promotion activities. Developing a system to tap such responses from time to time both
at retailer and consumer level would be helpful for planning future sales promotion
activities. In order to build trust and commitment companies should tap preferences,
perceptions of retailers as well as consumers.8.5Limitations of the study• We
considered NaviMumbai region only because of limited time duration.• Due to this, our
sample size is only 100, which is not very large.• All the respondents could not fill their
questionnaire on their own due to languageproblem and also problem of time and lack
of positive behavior.• Respondent may give biased answer due to some lack of
information about otherbrands.• Findings of the study are based on the assumption that
the respondents have givencorrect information. 56
58. 58. 8.6 Demographic analysisAgeI met mostlyyoung consumers because their
frequency of visit is generally more thanothers and also young consumers know how to
interpret advertisements. 57
59. 59. GenderMale to Female ratio in this survey is 35:65. Generally, females shop more
than malesin retail mall. 58
60. 60. OccupationMajority of the surveyed consumers were home makers. Next were the
salariedemployees and businessperson. 59

155
61. 61. Family TypeI surveyed about nearly same number of consumers of the three family
types. So ithelped to find, analyze and remove biasness of error. 60
62. 62. Family incomeI have surveyed consumers in almost every income group. The
locations of the threeselected malls allowed me to cover all such income groups. 61
63. 63. 9.0Conclusion of the SurveyThe study reflects that the use of sales promotion
undeniably has increased over the years inIndia. 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 allcompanies offering similar freebies
and gifts. As a result now marketers have to find outsome innovative ways of sales
promotion to differentiate from competitors. Currently Priceoff and Bye one get one
free offers are very effective to attract the consumers towards theproducts.We have
noted that these kind of promotional tools are useful for short term increase in salesand
to induce first trial. These types of promotional schemes should be consistent
andchanged from time to time depending upon season and competitor‘s schemes.With
the Increasing number of supermarket, the branded packaged goods work as silent
salesperson. So in such stores, sales promotion plays a more effective role in
stimulatingconsumers‘ demands.One of the very important facts we came to know from
this project is that sale of goods whichcontain large quantity and having big packaging
e.g. detergent are stagnating becauseconsumer prefer to buy small pack goods, the
reasons are: small pack goods reduce risk ofbad quality, It had low cost or say price,
and last but important factor i.e. mentality topurchase just to try first. Sales of small
pack goods are quite high, but from the company‘spoint 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 tacticslike price off and percentage extra. 62
64. 64. 10.0 BibliographyBlattberg R. and Scott A. Neslin (1990), Sales Promotion:
Concepts, Methods, and Strategies.Englewood Cliffs, NJ: Prentice Hall.Blattberg R.C,
Briesch R. and Fox E.J. (1995), ―How Promotions Work,‖ Marketing Science,Vol. 14,
G122-132.Campbell, L. and Diamond, W. D. (1990), ―Framing and Sales Promotion:
the Characteristicsof a Good Deal,‖ Journal of Consumer Marketing, Vol. 7, pp.25-
31Cooke, Ernest F., ―What is Sales Promotion?‖ paper presented at Sales Promotion
Workshop,Babson College, May 23, 1983.Diamond W. D. (1992) ―Just what is a
‗Dollar‘s Worth? Consumer Reactions to Price Discountsvs. Extra Product Promotions,
‖ Journal of Retailing, Vol. 68, pp. 254-270.Diamond W.D., and Sanyal A., (1990),
―The Effect of Framing on Choice of SupermarketCoupons,‘‘ Advances in Consumer
Research, Vol. 17, pp. 494-500Diamond W.D., and Campbell, L. (1989) ―The
Framing of Sales Promotions: Effects onReference Price Change,‖ Advances in
Consumer Research, Vol. 16, pp. 241-247.Simonson, I., Carmon Z. and OCurry S.
(1994) ―Experimental Evidence on the NegativeEffect of Product Features and Sales
Promotion on Brand Choice,‖ Marketing Science, Vol. 13(1), pp. 23-41.Smith M.F.
and Sinha I. (2000), ― The Impact of Price and Extra Product Promotions on
StorePreference,‖ International Journal of Retail and Distribution Management,‖ Vol.
28, pp. 83-92.Philip Kotler, ―Marketing Management‖, 11th edition, Pearson
education Asia Publication.C.R.Kothari, ―Research Methodology methods
&techniques‖,New AgeInternational(p)ltd.publishers,2nd edition. 63
65. 65. 11.0 Web
Referenceshttp://www.indiamart.com/atds/services.htmlhttp://taurusindia.in/fmcg.htmh
ttp://www.fmcg.nl/english/promo.htm
http://en.wikipedia.org/wiki/Sales_promotionhttp://www.marketingteacher.com/lesson-
store/lesson-sales-promotion.htmlhttp://hubpages.com/hub/consumer-sales-promotion-
marketing-mix-
strategyhttp://www.businesswireindia.com/PressRelease.asp?b2mid=24770http://www.
nios.ac.in/srsec319/319-24.pdfwww.business-

156
standard.com/india/newswww.businessworld.in/bw/2010_12_23_A_www.Ibef.orgww
w.thehindubusinessline.com/catalystwww.valuenotes.com/valuenotes/research 64
66. 66. 12.0 Questionnaire CONSUMER SURVEY FORMName:
______________________________________________________________________
Gender: _____________ Age: _________________ Monthly Income:
___________________Occupation: ________________ Family Type:
________________ Mall: _________________1) Which brand of soap & detergent to
you
use?__________________________________________________________________
__________2) Do you always buy the same brand of soap &
detergent?______________________________________________________________
_____________3) Which factors do you normally consider while purchasing a
particular brand of Soap /Detergents? Fragrance Price Quality Packaging Company
Image Others_______________________4) Do you consider promotional schemes
while purchasing a particular brand of Soap /Detergent? Yes No5) Which of the
following promotional schemes you have come across so far? Coupons Price Off
Freebies Scratch Cards Lucky Draw Bundling Extra Quantity Others
______________________6) Which medium do you feel is suitable to promote the
various promotional schemes? Radio TV Newspaper Hoardings
Others_________________7) Is there any existing scheme on the Soap / Detergent you
are currently using? Yes No8) If yes, please
specify________________________________________________________________
_____________9) If you get an attractive promotional offer in the product other than of
your choice will youswitch over? Yes No10) Give reason for the
same?_________________________________________________________________
___________ 65
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LinkedIn Corporation © 2015
International Journal of Marketing Studies;
Vol. 6, No. 2; 2014 ISSN 1918-719X E-ISSN
1918-7203 Published by Canadian Center of
Science and Education
EFFECT OF MOBILE NUMBER PORTABILITY ADOPTION ON CONSUMER
SWITCHING INTENTION
Simon Gyasi Nimako1, Benjamin A. Ntim2& Anthony Freeman Mensah

162
1 Department of Management Studies Education, University of Education, Winneba, Ghana
2 Department of Innovation and Industrial Partnerships, Accra Institute of Technology, P. O.
Box AN 19782, Accra, Ghana
Correspondence: Simon GyasiNimako, Department of Management Studies Education,
University of Education, Winneba, Kumasi Campus, Box 1277, Kumasi, Ghana. E-mail:
sim.ekomerce@gmail.com
Received: December 10, 2013 Accepted: December 31, 2013 Online Published: March 24,
2014 doi:10.5539/ijms.v6n2p117 URL: http://dx.doi.org/10.5539/ijms.v6n2p117
Abstract
The paper proposes a model that helps to explain consumer behaviour towards Mobile Number
Portability (MNP) policy and the influence of MNP adoption factors on consumer switching
intention process in the telecommunication industry. The proposed model was tested using data
from a cross-section of 736 subscribers of six global companies in Ghana’s mobile
telecommunication industry, where MNP has been introduced. The findings indicate that MNP
adoption can positively influence consumer switching. The effects of MNP adoption on
switching intention is realised through three main channels; directly through MNP-induced
self-efficacy (or switching efficacy) and indirectly through perceived switching costs and
attitude towards switching. The proposed model helps explain about 50% of switching
intention. The paper discusses implications of the findings to marketing theory and practice and
provides directions for future research. The paper advances our knowledge in the impact of
government/industrial policy on consumer behaviour in marketing.
Keywords: mobile number portability policy, consumer behaviour, porting, switching
behaviour,
telecommunication service
1. Introduction
The mobile telecommunication industry, globally, has seen a lot of innovations such as the
integration of global positioning systems, mobile internet facilities, mobile money and mobile
payment facilities, mobile number portability (MNP) policy adoption and implementation,
among others. Among the innovations, the MNP appears to be the latest in many developing
countries across Africa and the Middle East. The MNP innovation allows mobile subscribers to
retain their mobile SIM numbers while changing to use other service providers such as voice
calls. MNP facility is intended to enable effective service delivery and provide consumers

163
considerable freedom to switch between and among service providers in an attempt to increase
consumer empowerment (Buehler &Haucap, 2004; Lin, Chlamtac, & Yu, 2003; Reinke, 1998).
Thus, to the subscriber, MNP means to have the freedom to switch between and among the
many service providers for telecom services. According to the National Communications
Authority report (NCA, 2011, p. 15), in Ghana the adoption of MNP
"... requires new modes of thinking and operation across the industry as each new porting
request involves a customer, a recipient network, a donor network, a central service provider,
and all other networks which must route traffic correctly after the port is completed. This is far
more complex than a simple interaction between one network and its customers.”
Therefore, the adoption of MNP by consumers will have important implications for marketing
theory and practice in consumer behaviour areas such as switching behaviour.
The problem addressed in this study is two-fold. The first is the need to theoretically
understand how MNP adoption factors can positively influence consumer behaviour, and
second, is the need to provide practitioners with empirical knowledge for strategic management
of MNP policy implementation in mobile telecom industry, especially in emerging country
contexts. Theoretically, although consumer adoption has been extensively studied in B2C and
B2B contexts (e.g., Hoehle, Scornavacca, & Huff, 2012; Legris, Ingham, &Collerette, 2004;
Prins,

164
Verhoef, &Franses, 2009; Venkatesh, Morris, Davis, & Davis, 2003; Venkatesh, Thong, James,
&Xu, 2012), relatively little research work has been done in the area of adoption of MNP innovation
(e.g., Buehler &Haucap, 2004; Lin, Chlamtac, & Yu, 2003; Reinke, 1998). Moreover, in spite of the
growing importance of MNP policy implementation in many emerging economies in Asia, Africa
and South America, very few studies have examined only the perceptions of consumers about MNP
policy in the mobile telecommunication industry in the African emerging economies contexts (e.g.,
Abdramon, &Mejabi, 2012; Larkotey, Ansong, Damoah, &Abandoh-Sam, 2012; Odunaike, 2010;
Tiamiyu&Mejabi, 2012). There is a void in the literature regarding the influence of MNP adoption
on consumer behavioural intentions.
Apart from this void in the extant CSB literature, in many emerging countries in Africa, Asia and
South America, there seems to be great implementation challenges with the adoption of the MNP
policy by consumers. In Ghana, for example, the NCA (2013, p. 9) reported that some agents of
mobile networks attempt to deceive customers who are not well-educated and knowledgeable about
the MNP through many dubious behaviours.
Given that the critical goal of MNP policy is to facilitate consumer switching and that more
empirical knowledge is needed to manage consumer challenges in the adoption of the policy, it
becomes important to research into the factors that influence the consumer adoption of MNP policy
and how these factors could affect consumer intention to switch to new service providers. These
findings will not only advance our knowledge about the relevance and impact of MNP policy
implementation on consumer behaviour, but also it will provide the basis for strategy development
for telecommunication management and future government regulations. Therefore, the main
purpose of this paper is to assess the extent to which MNP policy adoption factors influence
consumer switching intentions in the mobile telecommunication industry.
2. Literature Review and Conceptual Framework
2.1 Overview of MNP Concept and Its Implementation
MNP is the ability of end-users to retain their telephone numbers when changing service providers,
service types or locations (NCA, 2012). MNP has the effect of reducing or removing one of the
most significant switching costs for consumers and will encourage competition in the
telecommunications industry. Literature points to the usefulness of MNP such as creating a level
playing field for small mobile operators and new entrants and providing the ideal opportunity to
increase market share (Buehler &Haucap, 2004; Katka, 2004; Ovum, 2000). Some of the challenges
that come with MNP have also been identified including significant increase in churn rates,

165
consumers inability to distinguish between different networks when placing call due to unchanging
mobile number prefix, increase in termination and porting charges against consumers (Gans& King,
2000; Wright, 2002).
This facility has been implemented in many developed and developing countries by enactment of
special Acts and legal instruments in both wireline and wireless information systems environments.
MNP was first introduced in Singapore in 1997, followed by UK, Hong Kong and the Netherlands
in 1999. As of 2013, a number of other countries, especially in America, Europe, Asia, Africa, and
across the globe have successfully introduced MNP in their telecom industry (Buehler &Haucap,
2004; Larkotey, Ansong, Damoah, &Abandoh-Sam, 2012; Odunaike, 2010; Tiamiyu&Mejabi,
2012). In Africa, MNP has been implemented in countries such as Egypt, Ghana, Nigeria, Kenya,
and South Africa. In West Africa, Ghana was the first to introduce the MNP policy followed by
Nigeria.
2.2 MNP Implementation in Ghana
On July 7, 2011, the MNP policy was launched in Ghana’s mobile telecommunication industry
(GMTI), under the auspices of the National Communication Authority and in collaboration with the
mobile telecom operators. Currently, there are six mobile telecom brands and operators, namely,
MTN of Scancom Ltd, Tigo of Millicom Ltd, Kasapa of Kasapa Telecom, Vodafone of Vodafone
Group of Public Limited Companies, Airtel of Airtel Ghana Ltd and Glo of Globacom (NCA,
2013). Mobile Number Portability (MNP) system in Ghana allows mobile subscribers to change
from one network to another without changing any part of their mobile number (NCA report, 2013).
During the second year of its operation, 817, 202 mobile numbers were successfully ported by
customers, representing 1.6% of the total active mobile numbers in Ghana. According to the report,
the majority of customers who have ported have remained on their network to which they ported,
and they indicated satisfaction with the process and the choice they made. The rate of success of
porting requests submitted rose from 75% to 82%, with an average porting speed of 5 minutes 25
seconds between 2012 and 2013.
Untill September 2013, MTN consistently had the greatest loss (275, 963) representing 2.19% of
their customer base while Tigo and Vodafone consistently had great gains in porting representing
5.12% and 1.63% of their customer base respectively. On the key challenges, the report (NCA,
2012, p. 14) informs that some mobile telecom service providers still experience operational and
technical problems that are yet to be resolved. In addition, there is low consumer awareness and
education of the facility. Apart from this, NCA’s (2013, p. 9) report also reveals that some dubious

166
behaviour by agents of mobile networks has continued as they deceive customers who are not well-
educated and knowledgeable in many ways about the policy. The study addresses consumer
knowledge as a key driver of MNP adoption in the proposed model.
2.3 Theoretical Framework for MNP Adoption
Several theoretical frameworks have been developed to explain the interrelated concept of consumer
adoption of innovation and use of technology in the extant marketing and information systems
literature. This study draws on constructs in existing literature and models of consumer adoption to
develop a conceptual framework for MNP adoption factors and their influence on consumers’
intentions to switch to new service providers in the mobile telecom industry. The following section
provides a brief review of the relevant theoretical models such as: Theory of Planned Behaviour,
Technology Acceptance Model, and The Unified Theory of Acceptance and Use of Technology.
2.3.1 The Theory of Planned Behaviour
Theory of planned behaviour (TPB) was developed by Ajzen (1991) as an extension of the theory of
reasoned action (Ajzen&Fishbein, 1980; Fishbein&Ajzen, 1975) due to the original model’s
limitations in dealing with behaviours over which people have incomplete volitional control. Thus,
the TPB was developed to account for conditions where individuals do not have complete control
over their behaviour (Ajzen, 1991) by the inclusion of perceived behavioural control in TPB.
This theory provides a framework to the study of attitudes toward behaviours. According to the
theory, the most important determinant of a person's behaviour is behavioural intention. The TPB
postulates three conceptually independent determinants of intention. The first is the attitude toward
the behaviour and refers to the degree to which a person has a favourable or unfavourable evaluation
or appraisal of the behaviour in question. The second predictor is a social factor termed subjective
norm; it refers to the perceived social pressure to perform or not to perform the behaviour. The third
antecedent of intention is the degree of perceived behavioural control which refers to the perceived
ease or difficulty of performing the behaviour and it is assumed to reflect past experience as well as
anticipated impediments and obstacles. As a general rule, the more favourable the attitude and
subjective norm with respect to a behaviour, and the greater the perceived behavioural control, the
stronger should be an individual’s intention to perform the behaviour under consideration. The
relative importance of attitude, subjective norm, and perceived behavioural control in the prediction
of intention is expected to vary across behaviours and situations.

167
The TPB and its constructs have been operationalized and validated in many research contexts
(Schlegel, d’Avernas, Zanna, DeCourville, &Manske, 1990). In spite of the limitations of the TPB,
it provides a useful framework for understanding how attitudes, subjective norms, and behavioural
control should combine to influence both planned and actual behaviour (Bansal& Taylor, 1999).
2.3.2 The Diffusion of Innovation Theory
The diffusion of innovation theory was proposed by Rogers (1962) to explain the process by which
individuals adopt innovations and the factors that influence their decision to adoption at different
levels. According to Rogers (2003), “An innovation is an idea, practice, or project that is perceived
as new by an individual or other unit of adoption” (p. 12). The individual’s adoption process
involves identified sequence of stages from: (i) an initial knowledge of an innovation, (ii) forming
an attitude towards it and (iii) reaching an adoption decision (Rogers, 1962). In the adoption process
three types of knowledge play a key role, these are: (1) awareness-knowledge, (2) how-to-
knowledge, and (3) principles-knowledge. The author maintains that adoption of innovation is
influenced by factors such as relative advantage, compatibility, trailability, observability. Based on
this adoption characteristics could be used to classify different adopters into Innovators, Early
Adopters, Early Majority, Late Majority and Laggards. In spite of the criticisms it has received, the
theory of diffusion of innovation has received widespread application in many research contexts.
2.3.3 The Technology Acceptance Model (TAM)
The Technology Acceptance Model (TAM) was developed by Davis, Bagozzi, and Warshaw (1989)
to explain the factors that influence individual’s adoption and acceptance of a technology. It
provides useful foundation for understanding the factors that drive technology acceptance. It has,
therefore, been one of the most widely adopted theoretical framework in understanding user
acceptance of technology (Bagozzi, 2007). The TAM (see Figure 2) came from Ajzen and
Figure 1. Theory of planned behaviour

168
Fishbein’s (1980). According to the TAM, perceived usefulness and perceived ease of use of the
technology in question are hypothesized to be fundamental determinants of user acceptance. The
TAM posits that users’ actual or behavioural acceptance is principally determined by behavioural
intentions to use the technology in question. Behavioural intentions are in turn influenced by the
user’s attitude towards technology. Davis et al. (1989) maintain that perceived usefulness and
perceived ease of use are beliefs that lead to favourable attitudes and intentions to accept and use
technology.
Despite the fact that the TAM has been criticized for having attracted a lot of modifications and
extensions, which tend to suggest that the model is inadequate to explain technology acceptance in
many research context (Bagozzi, 2007), it continues to be empirically proven for its ability to
predict about 40% of a system use (Legris, Ingham, &Collerette, 2004), and has received praise for
its parsimony and predictive powers over the years. The TAM, therefore, could become an
important reference theory in understanding the MNP adoption in telecom markets.
2.3.4 The Unified Theory of Acceptance and Use of Technology (UTAUT)
Recently, there have been attempts by scholars to combine the TPB, TAM and other similar models
into a Unified Theory of Acceptance and Use of Technology (UTAUT) by Venkatesh, Morris,
Davis, and Davis (2003). The authors proposed the UTAUT after a thorough review and comparison
of eight models, which are the theory of reasoned action, the technology acceptance model, the
motivational model, the theory of planned behaviour, a model combining the technology acceptance
model and the theory of planned behaviour, the model of PC utilization, the innovation diffusion
Figure 2. Technology acceptance model (adapted from Davis, Bagozzi,
&Warshaw, 1989)
Note. INT—Intention to Use Technology, ATT—Computer Attitude,
PEU—Perceived Ease of Use, PUS—Perceived Usefulness, EXT—
External Variables.

169
theory, and the social cognitive theory. The UTAUT was conceptualised as having four core
determinants of intention and usage, and up to four moderators of key relationships.
The determinants are performance expectancy, effort expectancy, social influence, and facilitating
conditions, which are hypothesized to have significant role as direct determinants of user acceptance
and usage behaviour. Moreover, attitude toward using technology, self-efficacy, and anxiety are
theorized not to be direct determinants of intention.
The authors noted that all their newly branded proposed constructs had similarities in previous
studies. For example, the authors admitted that, “The similarities among these constructs have been
noted in prior research (Davis et al., 1989; Moore &Benbasat, 1991; Plouffe et al., 2001; Thompson
et al., 1991)” (p. 450). The UTAUT model was found to outperform the eight individual models by
predicting behavioural intention by 69%. UTAUT, thus provides a useful tool for managers needing
to assess the likelihood of success for new technology introductions.
2.3.5 The Unified Theory of Acceptance and Use of Technology2 (UTAUT2)
More recently, the UTAUT has been extended to UTAUT2 by Venkatesh, Thong, James, Xu,
(2012). The authors capitalised on the limitations of the former UTAUT and proposed and validated
the UTAUT2 using data from 1,512 mobile Internet consumers. The UTAUT2 incorporates three
constructs into UTAUT: hedonic motivation, price value, and habit. Individual differences—
namely, age, gender, and experience, which are hypothesized to moderate the effects of these
constructs on behavioural intention and technology use (Venkatesh, Thong, James &Xu, 2012).
Compared to UTAUT, the extensions proposed in UTAUT2 produced a substantial improvement in
the variance explained in behavioural intention. Thus, whereas the UTAUT explains 56 percent of
behavioural intention and 40% of technology use, the UTAUT2 predicts 74% of behavioural
intentions and 52% of technology use.
These recent advances have tried to summarise and extend our knowledge of technology and
innovation acceptance and adoption from different industry contexts. Basically, all these models
have used the different terminologies for essentially the same constructs. Therefore, the choice of
model to use may depend on the research problem, research context and the researcher’s
preferences.
2.4 Linking MNP Adoption to Consumer Switching Process
The theoretical relationship between MNP adoption and CSB could be traced to consumer
empowerment provided by MNP. Fundamentally, MNP policy implementation provides the
opportunity to switch, serves as an essential tool and resource to switch, and a facilitating condition

170
that influences consumers’ belief in their ability to switch. This belief power to switch is also
described as perceived behavioural control in Ajzen (1991) or self-efficacy which is an antecedent
to behavioural intentions (Ajzen, 1991). In this regard, Ajzen (1991, p. 184) noted that “The present
view of perceived behavioural control, however, is most compatible with Bandura’s (1977, 1982)
concept of perceived self-efficacy which ‘is concerned with judgments of how well one can execute
courses of action required to deal with prospective situations’ (Bandura, 1982, p. 122)” (Ajzen,
1991, p. 184).
In addition to MNP-induced self-efficacy affecting perceived switching intention, other factors
identified in the literature (e.g., in TPB, TAM, UTAUT) such as perceived ease of use, perceived
adoption costs, perceived usefulness of MNP, peer influence, consumer knowledge of MNP, attitude
towards MNP, attitude towards switching and perceived switching cost could play significant role in
influencing consumer switching intentions in telecommunication industry. These are included in the
conceptual framework for this study.
2.5 Research Model and Hypotheses
Based on the literature review and a preliminary focus group interview conducted to clarify the
factors that influence the adoption MNP in the research context, a research model was developed
(see Figure 3). In the
research model, there are five key factors that could influence MNP adoption, namely, perceived
ease of use or perceived adoption costs, perceived usefulness of MNP, consumer knowledge of
MNP, attitude towards MNP and perceived MNP-induced self-efficacy. Moreover, there are two
antecedents to switching intentions that serve as channels through which MNP adoption factors
could affect switching intentions, namely: attitude towards switching and perceived switching cost.
We now define each construct in the context of the research problem and establish the hypothesized
relationships among the constructs in the research model for empirical testing. The proposed model
did not consider intention to port because it sought to examine actual porting behaviour and its
determinants, and not intentions to port.

171
Moreover, social influence was not included in the model because the outcome of the preliminary
focus group interview strongly indicated that social or peer influence was not a critical factor,
probably because the MNP policy appears to be new in the research context and not well known or
understood by many consumers to generate critical social influence.
2.5.1 Consumer Knowledge of MNP (KWMNP)
Consumer knowledge of MNP (KWMNP) is defined as the extent to which consumers have
adequate information and understanding about MNP policy, its implementation process, its
proposed usefulness, its requirements, and consumer responsibility in porting process. Consumer
knowledge about innovations and new technology is an essential condition for adoption of an
innovation or technology (Rogers, 2003). Cordell (1997) empirically found that consumers’
knowledge of the existing product or service category is a leading factor that affects the adoption
process. Similarly Marcketti and Shelley (2009) maintained that consumers’ knowledge of products
has a significantly positive effect on their adopting intentions. More recently, Huang, Hsieh and
Chang (2011) found that consumer knowledge was positive factor that influenced the adoption of
Location-Based Services. The more consumers’ knowledge and understanding of MNP policy and
its implementation increase, the more they are likely to understand the perceived benefits or
usefulness of MNP, have a favourable attitude towards MNP, have strong belief in their ability to
switch (self-efficacy) through MNP, and finally adopt or port their mobile numbers. Therefore, the
Figure 3. Research model and hypothesized relationships
Note. Consumer knowledge of MNP (KWMNP), Perceived
Usefulness of MNP (PUMNP), Perceived Porting Costs (PPC),
Attitude towards MNP (ATTMNP), MNP-induced Self-
Efficacy (MNPSEF), Attitude towards switching (ATTSW),
Perceived switching cost (PSC), Switching intention (SINT).

172
following hypotheses are postulated:
H1: Consumer level of knowledge of MNP will have significantly positive influence on perceived
usefulness of MNP policy.
H2: Consumer level of knowledge of MNP will have significantly positive influence on attitude
toward MNP policy.
H3: Consumer level of knowledge of MNP will have significantly positive influence on MNP-
induced self-efficacy.
2.5.2 Perceived Usefulness of MNP (PUMNP)
Perceived usefulness of MNP (PUMNP) is defined as the degree to which a person believes that
porting their mobile number to another mobile network operator will enhance his or her personal
well-being or will be beneficial to the society as a whole (Davis, Bagozzi, &Warshaw, 1989; Legris,
Ingham, &Collerette, 2004). Perceived usefulness of MNP is expected to induce a favourable or
positive consumer attitude towards MNP policy, and also affect consumer general attitude towards
switching. Therefore, it is hypothesized that:
H4: Perceived usefulness of MNP will have significantly positive influence on attitude towards
MNP policy.
H5: Perceived usefulness of MNP will have significantly positive influence on consumer general
attitude towards switching.
2.5.3 Perceived Porting Costs (PPC)
Perceived porting costs is defined as consumer perception of the sacrifices they have to make into
order to start and complete the process of porting their mobile numbers to another network. PPC is
based on the understanding that the consumer has some responsibility to bear which involves some
efforts, financial and non-financial sacrifices which they have to make in porting their mobile
number (Gans& King, 2000; Wright, 2002). Even though in many countries such as Ghana there is
no porting fees for consumers, there could be other porting costs such as time, effort, and even
money for making calls to or transport fare to go to the designated firm’s office to complete the
porting process. These perceived poring costs are likely to cause favourable or unfavourable attitude
to porting or MNP adoption by consumers. Therefore, it is hypothesized that:
H6: Perceived porting cost will have significantly positive influence on attitude towards MNP
policy.
2.5.4 Attitude towards MNP (ATTMNP)

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Attitude towards MNP refers to the degree to which a person, generally, has a favourable or
unfavourable evaluation or appraisal of the MNP policy (Ajzen, 1999). It is well documented in the
literature that attitude towards a behaviour strongly and directly predicts actual behaviour in many
research contexts (e.g., Ajzen&Fishbein, 2000, 2005; Lee, Cheung, & Chen, 2005, Lin & Lu, 2000;
Liu, Liao, &Peng, 2005; Park, 2009), even though some studies indicate that this relationship may
not always be direct (Davis, Bagozzi, &Warshaw, 1989; Venkatesh, 2000; Venkatesh& Davis,
2000). It is expected that consumers’ favourable or unfavourable attitude towards MNP can affect
their self-efficacy to switch (or port). Unfavourable attitude towards MNP policy can negatively
affect their self-efficacy. Therefore, it is hypothesized that:
H7: Attitude towards MNP will have significantly positive effect on MNP-induced self-efficacy.
2.5.5 MNP-Induced Self-Efficacy (MNPSEF)
Generally, self-efficacy “is concerned with judgments of how well one can execute courses of
action required to deal with prospective situations” (Bandura, 1982, p. 122). It is described as the
belief in one’s ability to be able to perform a given task effectively. Self-efficacy could be likened to
the concept of perceived behavioural control (PBC) which refers to the perceived ease or difficulty
of performing the behaviour and it is assumed to reflect past experience as well as anticipated
impediments and obstacles (Ajzen, 1991). PBC conveys the meaning that people have the necessary
resources, abilities, and opportunities to perform such behaviour (Ajzen, 1991; Conner, Warren, &
Close, 2001; Lam & Hsu, 2006). People’s behaviour is strongly influenced by their confidence in
their ability to perform it (Ajzen, 1991). Some past studies have drawn attention to internal and
external components of PBC (e.g., Kidwell & Jewell, 2003). In this regard, MNP is perceived to be
an externally oriented factor that provides the facilitating condition, resources, and opportunity to
induce confidence in consumers’ ability to switch. MNP-induced self-efficacy is expected to induce
favourable consumer attitude towards switching and have a direct influence on consumer switching
intention. Moreover, since MNP is intended to reduce switching barrier or costs, it is expected that
switching efficacy will reduce perceived switching cost. Therefore, it is hypothesized that:
H8: MNP-induced self-efficacy will have significantly positive effect on attitude towards switching.
H9: MNP-induced self-efficacy will have significantly positive and direct effect on switching
intention.
H10: MNP-induced self-efficacy will have significantly negative effect on perceived switching cost.
2.5.6 Attitude towards Switching (ATTSW)
Attitude towards switching refers to the degree to which a person has, generally, a favourable or

174
unfavourable evaluation or appraisal of the idea of switching from one service provider to another
(Ajzen, 1999). This is one of the channels through which MNP adoption is expected to affect
consumer switching intentions and behaviour. Previous studies have established that attitude is a
strong predictor of intention to perform or act (e.g., Ajzen&Fishbein, 2000, 2005; Liu, Liao, &Peng,
2005; Park, 2009). It is expected that consumers’ favourable or unfavourable attitude towards
switching can affect their intention to switch positively or negatively. Therefore, it is hypothesized
that:
H11: Attitude towards switching will have significantly positive effect on switching intention.
2.5.7 Perceived Switching Cost (PSC)
Perceived switching cost (PSC) refers to consumer perception of the sacrifices they have to make in
order to be able to partially or totally switching from one network to another. PSC may be
distinguished from perceived porting costs (PPC) in that whereas PPC relates perceived costs
associated porting process such as porting fees, time and other financial and non-financial porting
efforts, PSC broadly relates to costs such as financial cost (buying new SIM), relationship cost in
losing important relationship with firm’s staff, loss of one’s phone number that uniquely identifies
them, having to inform contacts of a number change, cost of time and effort in activating new SIM
cards, among others (Buehler, Dewenter, &Haucap, 2006; Dick &Basu, 1994). In the switching
behaviour literature, PSC has been found to be an important factor that affects consumer switching
process, intention and behaviour (e.g., Bansal, Taylor, & James. 2005; Bansal, Irving, & Taylor,
2004; Keaveney, 1995). Where consumers perceive switching cost to be high, switching intention is
more likely be low and where switching cost is low, switching intention will more likely be high as
consumers will have high incentive to switch due to low switching barriers. Where consumers’
incentive to switch is discouraged by high PSC, it will not only reduce switching intentions, but also
cause consumers to stay with and be committed to current service provider as there will be no gains
in changing their service provider. In effect PSC becomes one of the channels through MNP
adoption can affect consumer switching intentions. Therefore, it is hypothesized that:
H12: Perceived switching cost will have significantly negative effect on attitude towards switching.
H13: Perceived switching cost will have significantly negative effect on switching intention.
2.5.8 Switching Intention (SINT)
Switching intention refers to the extent to which a consumer is willing to switch from one service
provider to another. Switching intentions to capture the motivational factors that influence a
behaviour; they are indications of how hard people are willing to try, of how much of an effort they

175
are planning to exert, in order to perform the behaviourAjzen (1991). Therefore, since MNP
adoption by a consumer indicates a partial intention to switch, it is expected that the motivational
factors that affect adoption are likely to ultimately influence consumers’ intentions to switch
completely to a new service providers, especially by raising attitude towards switching and reducing
switching cost. Thus, all the hypothesized relationships are expected to contribute significantly to
overall explanation of the dependent variable of consumer switching intentions, to be assessed
through the co-efficient of determination (R2).
3. Methodology
3.1 Population and Sampling
The population consisted of 26,591,124 individual subscribers as of April, 2013 (NCA, 2013) from
all the six mobile telecommunication operators in Ghana, operating under these brand names: MTN
Ghana, Vodafone Ghana, Airtel Ghana, Tigo, Expresso and Glo Ghana. The appropriate sample size
was estimated using Yamene’s (1967) formula that yielded a minimum sample size of 400. In order
to collect data of high quality that reflect customers’ opinion and have quality of good
representativeness, a survey was conducted from a cross-section of subscribers of mobile telecom
service providers across the country in July 2013. The survey yielded a usable 736 questionnaires
returned representing 73.6% response rate for analysis.
To investigate potential non-response bias, we compared responses from early and late respondents
(Armstrong & Overton, 1977). Early respondents were described as the usable questionnaires
returned within the first week and late respondents were those who responded in the third week and
those who were followed up with telephone call to remind them to return the completed
questionnaires. At the 5% level of significance, no significant differences were observed, thus
indicating that response bias was unlikely to be a major problem in the present study.
3.2 Research Instrument
A self-administered, structured questionnaire was developed and pre-tested to a sample of twenty
(20) customers. Adjustments were made based on the pre-test to get a more effective instrument.
After that the questionnaire was finally administered to mobile subscribers through personal contact
by researchers for nearly three weeks. Since high predictive validity was a major concern, a five-
point Likert scale was used, as recommended in previous work (Danaher &Haddrell, 1996), to
measure variables for the eleven research constructs. The Likert scale ranged from strongly disagree
to strongly agree, coded 1 to 5 respectively. In all, the measurement items for the eleven constructs
had 31 items that were derived from previous studies and modified within the context of the mobile

176
subscribers in GMTI as shown in Table 1. The questionnaire also contained respondents’
demographic data: gender, age, education, income, marital status, and whether customer has ported
their mobile number or not.
4. Results
4.1 Respondents ’ Characteristics
For the characteristics of the respondents, in terms of gender, 67.7% of the respondents were males
and 32.3% were females. 20.7% of the respondents were below 25 years, 67.3% of them were
within the ages of 25-36 years, 11.4% were between 37 and 50 years, and .6% were 50 years and
above. This implies that majority of them were in the economically active population. All
respondents were educated with about 58.7% of them
having tertiary level of education, while about 5% and 33% had Senior High School (SHS) and
post-SHS education respectively. About 3% had other forms of education. In terms of income,
33.5% of respondents earned monthly income up to GH0500, while 43.9% earned between GH0500
and GH01000, about 6.5% earned monthly income above GH01000. This indicates that most of
them earned considerably low incomes. In terms of marital status, 61.7% of the respondents were
married, about 36% were single (not married) and about 2% of them were in other marital category.
4.2 Method of Analysis for Proposed Model
Data were analysed using SPSS version 16.0 and Amos version 18.0 to perform Confirmatory
Factor Analysis (CFA) and Structural Equation Modelling (SEM) to test the hypothesized
relationships among the constructs in the proposed model (Figure 1). Since the study involved
testing the relationships among series of separate, but interdependent, multi-dimensional constructs
simultaneously, SEM method was the most suitable method to adopt (Hair, Black, Babin, &
Anderson, 2010). A two-stage SEM approach was adopted in analysing the proposed model
(Anderson &Gerbing, 1988), first the reliability and validity of the constructs are assessed, followed
by assessment of model fitness and then the path co-efficients of the hypothesized relationships.
Before the CFA, the normality of the data were assessed via the use of scatterplots, normality plots
and normality assessment available in AMOS 18.0 and the results indicated that data was
considerably normal with Skewness and Kurtosis of items within +/- 1.96 (Razali&Wah, 2011). The
sample size of 736 was deemed appropriate for testing the proposed model since as a rule of thumb
a sample of 200 is considered adequate (Hair, Black, Babin& Anderson, 2010). Covariance-based
SEM was chosen because the study focused on model testing.
4.3 CFA and Model Modification

177
To ensure item and construct reliability and validity, the items in the first-order constructs in the
proposed model were subject to a CFA using AMOS 18.0 for Windows. The CFA model fit results
indicated the following initial fit statistics: X2 = 2422.549, df = 1137, CMIN/DF = 2.131, GFI =
.908, AGFI = .880, CFI = .943, TLI = .931, PCFI = .769, RMR = .072, RMSEA = .028. Following
inspection of the factors loadings, three items (LTY3, ATTMNP3 and PPC1) had factor loadings
less than .50; consequently these items were removed from further analysis. Since the perceived
porting cost (PPC) construct had two items (PPC1 and PPC2), deleting one item meant deleting the
construct, too. Further examination of the modification index (MI) and the standardized residuals
(SR) suggested that two items (ATTSW3 and CMT3) were problematic in that they had MI greater
than 10 and 18 respectively and SR greater than 3; so they were removed to improve the model
further: X2 = 373.226, df = 173, CMIN/DF = 1.574, GFI = .968, AGFI = .953, CFI = .989, TLI =
.985, RMR = .029, RMSEA = .028.
4.4 Assessment of Model Reliability and Validity
For the remaining items in the first-order constructs, item, construct reliability and construct validity
were assessed. Reliability refers to the extent to which a measuring instrument yields consistent
results under similar conditions (Hair, Black, Babin& Anderson, 2010). Item reliability was
assessed through the factor loadings (see Table 2), which should be equal to or greater than .50 to
indicate item reliability (Hair, Black, Babin, & Anderson, 2010). From Table 2, all the measurement
had factor loadings greater than .50 implying that the individual items explain well the variances of
the construct they represent (Anderson &Gerbing, 1988). Moreover, construct reliability was
assessed through Cronbach alpha (CA) and Composite Reliability (CR) (see Table 2). The
recommended value for Cronbach alpha is .70 or better (DeVellis, 2003). From Table 2, the CA and
CR values are greater than .70, implying acceptable level of reliability for each construct.
Construct validity was assessed through criterion validity, convergent and discriminant validity
results (see Table 2). From Table 1, all constructs had strong theoretical background to support
criterion validity. Convergent validity refers to how indicators together explain a construct and
shows the extent to which each measure correlates with other measures of the same latent construct
(Hair, Black, Babin, & Anderson, 2010). Convergent validity could be assessed through item
reliability, composite reliability, and the average variance extracted (AVE) (Fornell&Larcker,
1981). As already demonstrated in Table 2, item and composite reliabilities are adequate. AVE
measures the amount of variance captured by the construct in relation to the amount of variance
attributable to measurement error.

178
Convergent validity is judged to be adequate when AVE equals or exceeds .50. It is estimated as the
sum of all the square of factor loadings for a given construct (square multiple correlations) divided
by the total number of items measuring the construct (Hair, Black, Babin, & Anderson, 2010). As
shown in Table 2, all the AVE values are greater than .50, ranging from .520 to .826. Therefore,
taken together, the evidence from the high composite reliability values, high factor loadings, and
high AVE estimates provide strong evidence in support of convergent
validity.
Discriminant validity refers to the extent to which a construct is distinct from other constructs
Table 1. Constructs and measurement items
Constructs Code Measurement items Source
Knowledge of
MNP
KNMN
P1
How much knowledge do you have about the mobile
number portability (MNP)
Self-developed
based
policy by which you can switch to other telecom
networks with an existing
on Cordell
(1997);
mobile number? Roger (2003).
KNMN
P2
To what extent do you really understand how the whole
MNP works?
Perceived PUMNP
1
To what extent do you think the MNP is useful a
policy?
Davis et al.
(1989);
Usefulness of
MNP
PUMNP
2
To what extent do you think the MNP will benefit you? Legris et al.
(2004)
Attitude
towards
ATTMN
P1
I think the idea of MNP policy is Self-developed
based
MNP ATTMN
P2
I believe adopting the MNP policy is ... on Lee et al.
(2005);
ATTMN
P3
Generally I have positive attitude towards the MNP
policy.
Park (2009)
MNP-induced
Self-
MNPSE
F1
The Mobile Number Portability policy (MNP) can help
me to switch easily to
Self-developed
based
Efficacy use other mobile network services in Ghana on Ajzen
(1991);
MNPSE
F2
I belief that in Ghana, with the MNP, now I have every
opportunity to switch to
Ajzen&Fishbein
any mobile telecom network I like. (2000, 2005).
MNPSE
F3
I belief that with the MNP, I can easily switch to any
mobile network I like.
Perceived
Porting
PPC1 To what extent do you think the process of porting your
mobile number is time
Self-developed
based
Cost consuming? on Gans& King
PPC2 To what extent do you think the process of porting my
XYZ number comes with
(2000); Wright
inconveniences? (2002)
Switching
intention
SINT1 Do you have the intention of switching to use a better
mobile network services
Developed
based on
in the next year? Bansal et
al.(2005)
SINT2 How likely are you to switch from XYZ to a different
network in the next two years?SINT3 Are you considering changing from XYZ to a better
mobile telecom network
soon?
Attitude
towards
ATTSW
1
For me switching from one mobile network to another
is .
Venkatesh et al.
switching ATTSW
2
For me changing from one network to another is a
decision that is . .
(2012); Ajzen&
ATTSW
3
The idea of changing from one mobile network to
another is to me a ..
Fishbein (2000,
attitude. 2005) etc.
Perceived
switching
PSC1 I think it would cost me a lot of time and money trying
to switch to another
Barroso&Picon
cost telecom network. (2011); Bansal
et al.
PSC2 Generally, I will lose other important contacts (or
relationship benefits) with
(2005);
staff of service provider if I switch from XYZ to
another network.
Buehler et al.
(2006);
PSC3 I think it would cost me a lot of effort trying to switch
to another telecom
network.
Dick &Basu
(1994)

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in the research model (Farrell, 2010). At the construct level, discriminant validity is
considered adequate when the variance shared between a construct and any other constructs
(covariance) in the model is less than the variance which that construct shares with its
measures (Farrell, 2010).
As indicated in Table 2, the AVE estimates in the diagonal are greater than the covariance
below the diagonal (inter-construct correlations). Therefore, discriminant validity appears
satisfactory at the construct level in the case of all constructs. This indicates that each
construct shared more variance with its items than it does with other constructs. Since the
results show good discriminant validity for the constructs, the constructs in the proposed
research model are deemed to be adequate.
4.5 Model Goodness-of-Fit
In using SEM, in examining the model fitness, the usual method is the use of the chi-square
method or the ratio of the chi-square to its degree of freedom, with a value less than three
indicating acceptable fit (Hair, Black, Babin, & Anderson, 2010). However, due to the fact
that the chi-square of the default model could be affected by large sample size greater than
250, many researchers recommend a combination of several goodness-of-fit indices for
judging fitness of a structural model (ibid). Several benchmarks for good-fit indices have been
suggested by many scholars (e.g., Bagozzi& Yi, 1988; Hair, Black, Babin, & Anderson,
2010) as shown in Table 3. These authors recommend that a combination of at least one
Table 2. Factor loading, AVE, construct reliability and validity
Constructs PSC MNPSE
F
SINTATTM
NP
ATTS
W
PUMN
P
KNMN
P
AVE CR a
PSC .721 .520 .700 .76
8
MNPSEF -.049.768 .590 .758 .79
8
SINT .314 .018 .809 .655 .800 .82
9
ATTMNP .052 -.233 .010 .816 .666 .815 .79
7
ATTSW .258 -.025 .670 .083 .821 .674 .810 .79
0
PUMNP .050 -.291 .032 .496 .098 .882 .778 .795 .76
9
KNMNP -.190.383 .030 -.182 -.071 -.199 .909 .826 .905 .89
6
Factor
Loadings
PSC MNPSE
F
SINTATTM
NP
ATTS
W
PUMN
P
KNMN
P
Item 1 .803 .733 .912 .850 .772 .733 .822
Item 2 .734 .832 .637 .780 .848 .858 .988
Item 3 .649 .710 .852 - - - -
Note. All correlations are significant at .01 or .05, AVE (Average Variance
Extracted), Square root of AVE are bold in the diagonal, CR—Composite
reliability, a—Cronbach Alpha.

180
absolute goodness-of-fit measure, one absolute badness-of-fit index, one incremental fit
measure and one comparative fit index is required for strong evidence of good model fitness.
In this study, as shown in Table 3, the results show a significant Chi-square which is to be
expected due to the large sample size above 250 (n = 736) as noted in previous work (Hair,
Black, Babin, & Anderson, 2010). All other fit-indices are better than their corresponding
recommended values (GFI = .964, AGFI = .953, NFI = .965, CFI = .986, TLI = .984, PGFI =
.728, PCFI = .816, PNFI = .841), RMR = .066, RMSEA = .020. Therefore, there is good fit
for the model. Thus, we proceed to examine the regression co-efficients for the estimated
structural model; this is presented in Table 4.
Table 3. Goodness-of-fit indices for structural model
Goodness-of-fit Indices Benchmark Value
Absolute goodness of fit measure
Chi-square (CMIN) P > .05 .000
Chi-square /degree of freedom < 3 308.7/191= 1.616
Goodness-of-fit Index (GFI) > .90 .964
Adjusted Goodness-of-fit Index
(AGFI)
> .80 .953
Absolute badness of fit measure
Root Mean Square Residual
(RMSR/RMR)
< .1 .044
Root mean Square Error of
Approximation (RMSEA)
< .08 .029
Incremental fit measure
Normed Fit Index (NFI) > .90 .965
Comparative Fit Index (CFI) > .90 .986
Turker Lewis Index (TLI) > .90 .984
Parsimony fit measure
Parsimony Goodness-of-Fit index
(PGFI)
> .50 .728
Parsimony Comparative of Fit index
(PCFI)
> .50 .816
Parsimony Normed of Fit index
(PNFI)
> .50 .841
Note. Table 3 shows the goodness-of-fit indices for the proposed model against
the benchmark (Hair et al., 2010).

181
4.6 Assessing Hypothesized Relationships
Table 4 and Figures 2 provide a summary of the results for testing the hypotheses and analysing
the path co-efficients respectively. Generally, it is evident that all the hypotheses were supported
by the data, except H8. In sum, KNMNP and PUMNP explain about 68.6% of ATTMNP, and
ATTMNP and KNMNP together explain about 35.8% of MNPSEF. Together, the model
predicts 50% (R2 = .50) of the variations in consumer SINT.
Hypothe
sis
Path Std.p S.E. C.R. ^-value Results
1 PUM
NP
<--- KNMN
P
-.178 .03 -4.154 *** Supported
2 ATTM
NP
<--- KNMN
P
-.067 .017 -2.041 .041* Supported
3 MNPS
EF
<--- KNMN
P
.306 .027 6.866 * ** Supported
4 ATTM
NP
<--- PUMN
P
.814 .04 15.526 *** Supported
5 ATTS
W
<--- PUMN
P
.122 .045 2.542 .011* Supported
7 MNPS
EF
<--- ATTM
NP
-.453 .056 -9.145 *** Supported
8 ATTS
W
<--- MNPS
EF
.051 .053 1.043 .297 Not Supported
9 SINT <--- MNPS
EF
.071 .052 2.078 .038* Supported
10 PSC <--- MNPS
EF
-.104 .043 -2.277 .023* Supported
11 SINT <--- ATTS
W
.655 .068 13.474 *** Supported
12 ATTS
W
<--- PSC .433 .057 8.874 *** Supported
13 SINT <--- PSC .106 .067 2.552 .011* Supported
Note.
***Significant at
.001,
*Significant at
.05, Std.p
=
Standardi
sed
regressio
n co
efficient,
S.E.
= Standard error, P-value =
significant
Table 4. Results for hypothesis
testing
co-efficients are Maximum Likelihood Estimates,
C.R. = Critical Ratio (t-values).

182
Note. Hypothesis H6 representing relationship between PPC and ATTMNP was removed due to
construct validity issues; broken lines denote significant relationships (H1-H18, except H8) and
unbroken lines denotes insignificant relationships (H8).
Figure 4. Assessment of
hypothesized
relationships
5. Discussion of
Findings and
Implications to Theory
The overarching
purpose of this study
was to assess the extent to which MNP adoption factors influence consumer switching in an
emerging economy context. The study extends the adoption of innovations to the
telecommunication industry in developing countries, and advances our knowledge on the effects
of external business environment variables such as the MNP implementation on consumer
behaviour.
To address the first objective of the present study, four factors were found to influence the
adoption of MNP policy. These four factors are consumer knowledge of MNP, perceived
usefulness of MNP, attitude towards MNP and MNP-induced self-efficacy. The influence of
consumer knowledge on their acceptance of service brands and adoption of new technology and
innovation has long been established in the marketing and consumer behaviour literature. Thus,
the findings confirm numerous studies (e.g., Rogers, 1962, 2003; Rogers, 2003; Cordell, 1997;
Huang, Hsieh, & Chang 2011; Marcketti& Shelley, 2009) that consumers’ knowledge plays a
key and leading

183
role, as an important starting point, in their acceptance and use of technological innovation in the
telecommunication industry.
This study also confirms the findings of numerous studies that perceived usefulness is a
fundamental factor that drives consumer attitude towards the acceptance, adoption or use of new
technology and innovations (Davis, Bagozzi, &Warshaw, 1989; Moore &Benbasat, 1991; Rogers,
2003; Venkatesh, Morris, Davis, & Davis, 2003; Venkatesh, Thong, James, &Xu, 2012). Moreover,
the study found that consumer attitude towards MNP is fundamentally formed from consumer
perceived usefulness and depth of consumer knowledge of the policy, and that perceived usefulness
contributes about 67% of attitude towards MNP adoption.
Furthermore, attitude was found to be a strong predictor of self-efficacy. However strong consumer
self-efficacy to adopt MNP is, if they have unfavourable attitude towards MNP, their belief in their
ability to switch and therefore adopt MNP will be negatively affected. This underscores the
importance of favourable attitude in consumer adoption of MNP and therefore, their porting
behaviour; this is consistent with much of the consumer behaviour literature (Ajzen&Fishbein,
2000, 2005; Liu, Liao, &Peng, 2005; Park, 2009, Venkatesh, Morris, Davis, & Davis, 2003;
Venkatesh, Thong, James, &Xu, 2012; Davis, Bagozzi, &Warshaw, 1989; Moore &Benbasat,
1991).
For the second and final objective, the study confirms that MNP adoption factors will influence
consumer switching behaviour through three important channels: attitude towards switching, MNP-
induced self-efficacy (switching efficacy) and perceived switching costs. Specifically, the study
found that consumer attitude towards switching is affected by perceived usefulness of MNP, which
in turn influences switching intentions. This means that when consumer understand the usefulness
of MNP, it could induce positive attitude towards switching as well as a strong switching intention.
Moreover, switching efficacy was a strong predictor of switching intention. The implication is that
when consumers have strong belief in their ability to switch through the platform of MNP policy,
this will induce a strong willingness to port for the purpose of being able to switch. This confirms
many previous studies (e.g., Ajzen, 1991; Conner, Warren, & Close, 2001; Lam & Hsu, 2006), but
contradicts the findings of Venkatesh, Morris, Davis & Davis (2003) that self-efficacy is not a direct
determinant of intention.
For perceived switching costs channel, switching efficacy was found to negatively influence it. This
implies that when consumers efficacy to switch increases as a result of MNP policy, it can reduce
switching cost. This confirms that MNP implementation could be an effective way of reducing

184
perceived switching barriers in the telecom industry, thereby achieving one of the Policy’s purposes.
Finally, for the attitude towards switching channel, the study found that MNP-induced self-efficacy,
perceived usefulness of MNP and perceived switching cost influence it. Thus, perceived switching
cost acts to increase switching barrier and therefore negatively influences attitude towards
switching, while perceived usefulness and switching efficacy act to induce positive attitude towards
switching.
6. Implications to Management and Industry Regulators
To practitioners, the paper offers the following implications and recommendations for strategic
management and industry regulation. First, the study has identified factors in consumer behaviour
that are critical to the adoption of MNP policy at its introduction in mobile telecommunication
industry. Management of mobile networks and government agencies would benefit from this study
by incorporating these key variables in the design and implementation of strategies for managing
MNP policy implementation in telecommunication markets (Peter & Olson, 1993) in order to
achieve the desired results of this innovation.
Second, practitioners in countries that are yet to adopt MNP policy can learn from the findings of
the present study by understanding some key consumer behaviour issues that affect the adoption of
MNP policy for the purposes of porting, and how to influence consumer behaviour towards
adoption of MNP policy.
Third, in countries where MNP is implemented, especially at its introduction stage, managers and
governments should focus on developing and enhancing consumer knowledge about MNP policy in
general through quality consumer education. Any new innovations require effective dissemination
of knowledge for end-users (Roger, 2003). The need for relevant, consistent, timely, consumer
oriented and comprehensive quality consumer education on MNP policy becomes the starting point
for influence consumer porting behaviour. Therefore, much effort and resources should be
committed to consumer education on MNP at different stages of the adoption process. In this regard,
the content of such customer education should be relevant, principally focus on, among other things,
the rationale of the MNP policy, usefulness of the policy to consumers, the role and responsibilities
consumers in the porting process, the benefits of MNP to the telecom industry and the nation as a
whole, and the
channels for reporting complains and issues about the MNP.
Moreover, such consumer education should be consistent in its delivery to consumers about MNP.
Stakeholders, especially mobile network operator and government agencies responsible for MNP

185
should, individually and collaboratively, ensure that there is periodic delivery of effective marketing
communications on MNP policy through all available advertising and public relations media.
Furthermore, the MNP education should be customer oriented and comprehensive. MNP education
should reflect consumer interest and preferences regarding the porting process, and targeted at
positively influencing three important consumer behaviours, namely, increased consumer curiosity
for the adoption of MNP (Loewenstein, 1994), favourable consumer attitude towards porting or
MNP, and lowering perceived switching cost.
In addition, consumer education on MNP should be comprehensive enough to highlight likely
consumer efforts required in the porting process, authorities and agents responsible for porting and
their contacts, offices and customer service centres of mobile operators responsible for assisting
customers in completing their porting process, as well as all other relevant information consumer
would require to know and have for the porting.
Fourth, for the policy makers such as NCA in Ghana, there is the need to protect consumer interest
and right by developing regulations to sanction staff of mobile networks who make attempt to
deceive consumers who have little knowledge about MNP. More avenues should be created for
consumer complaints and consumer should be informed well about such complaint channels. In
view of this, such complaint channels should only include web media such as emails and social
networks chats, as well as mobile contact numbers of regulatory offices for consumer complaint
purposes.
Fifth, the study implies that practitioners in other countries that have implemented MNP policy can
adopt the validated model as an empirical guide in planning and predicting the impact of MNP
adoption on consumer switching behaviour towards current service providers.
7. Limitations and Directions for Future Research
The main limitation of this present study is that the proposed model did not examine moderating
factors that affect consumer adoption such as demographic factors and religious factors, adoption
timing characteristics, as well as competitor attraction in the telecom industry. While generalisation
may be useful for national policy and strategic management direction, recent research indicate that
specific analysis of sub-group differences in adoption research may yield useful results (Arts,
Frambacha, &Bijmolt, 2011). Therefore, future research should include these factors and apply the
model in other research contexts to validate the external validity of the proposed model.
Future research should examine cross-context adoption of MNP by consumers at different stages of
the MNP adoption life cycle, namely, introduction, growth, maturity and decline stages. As a

186
follow-up on this paper, future research will be conducted by the researchers using the same dataset
to perform a comprehensive multi-group analysis investigating differences in MNP adoption factors
among different consumer groups.
8. Conclusion
In summary, this paper aimed at examining the extent to which MNP adoption can influence
switching behaviour in the telecom industry. Drawing on relevant theoretical models in consumer
behaviour and technology adoption literature, a theoretical model was developed and validated in
the telecommunication industry in a developing country context where MNP policy adoption
appears to be at its introduction stage or infancy. The findings indicate that MNP adoption by
consumers can influence consumer switching through three main channels: perceived switching
costs and attitude towards switching. Typically, these channel factors appear to be attitudinal and
belief factors that have been found to play important role in consumer behaviour (Ajzen, and
Fishbein, 2000, 2005; Venkatesh, Morris, Davis & Davis 2003; Venkatesh, Thong, James &Xu,
2012). In spite of the limitations, the study offers useful theoretical explanation for the link between
MNP adoption and consumer behaviour. The managerial implications discussed emphasise the role
of consumer education as a key driver of MNP adoption in telecommunication industries, especially
in developing countries.
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