CHAPTER ONE

1.0  INTRODUCTION

1.1   BACKGROUND OF STUDY

Promotion is one of the key factors in the marketing mix and has a key role in market success. Promotion is used to ensure that customers are aware of the products that the organization is offering. The promotional mix is the combination of the different channels that can be used to communicate the promotional message to the consumers.

The channels that can be used are: advertising, direct marketing, public relations, publicity, personal selling, sponsorship and sales promotion (Rowley, 1998). Formerly, sales promotion was sometimes considered as an activity of less importance; but today, companies increasingly make use of sales promotion to promote the marketability of their products. All businesses need to communicate to the customer what they have to offer (Jobber & Lancaster, 2006).

Sales promotion can be defined as „special offers (Peattie, 1998). More specifically, referring to the institute of sales promotion, it is a range of tactical marketing techniques designed within a strategic framework to add value in order to achieve specific sales and marketing objectives (Bunn & Banks, 2004).

According to Bruncl (1990), sales promotion excludes all paid media advertising, but includes techniques like coupons, self-liquidating offers, bargain packages, gifts, sampling and points of purchase promotions and displays. Sales promotion works as short-term incentives to encourage purchase of a product or service (Kotler, Brown, Adam, &Amstrong, 2006), therefore is value to the customers in a short – term orientation.

 It essentially aims to stimulate demand during the period in which it is set (Peattie&Peatie, 1995; Lehman &Winer, 2002, Walsh 2000). The potential benefits of using sales promotion could range from attracting new consumers from competitors to persuading consumer to switch to brands with higher profit margins or simply inducing existing customers to buy more. Since the end of Second World War, the insurance industry in the world over has experienced remarkable growth. Concurrent with the growth has been significant changes within the industry.

 The Nigerian insurance industry is not affected by this general malady. The growth of multiple line transition introduction of package policies, the universal banking system, grassroots insurance, the variable annuity, growth life insurance, universal life policy, changes in regulatory framework, continued expansion of the social security system and the involvement of government as a provider of private insurance are all part of the changes with which the insurance industry must contend with.

Although the future of insurance industry in Nigeria appears bright, a number of unresolved problems still exist; of particular interest is the insurance marketing system, which has affected the consumption of insurance products. In Nigeria, this problem seems to be even more pronounced because of the level of literacy of the Nigeria populace. Insurance policy has remained one of the least purchased items within the financial market. Records reveal that about only 10percent of the Nigerian population have insurance of any sort (Mordi, 1990;Oworen, 1991; Wilson, 2004). In general, this negative marketability of insurance products has become a problem not only to the insurance industry, but has also affected economic development.

 The problem has existed for a long time and has increased somewhat with the sophisticated of the Nigerian society which has grown knowledgeably in recent years (Ibok, 2006). However, the increase importance of insurance industry as a provider of financial services and investments funds in the capital market is especially pronounced in developed economies whereas in many developing countries is still very low. Looking at the various sectors of Nigerian economy and taking insurance industry as a case study, it is an undisputable fact that insurance industry were set to achieve certain specific objectives such as profitability, expansion, and return on investments and so on.

For such organization to achieve its objectives maximally in the competitive world there is need to incorporate marketing mix into its management portfolio Over the years, many organizations embarked on various promotion activities that will increase the patronage of their customers and on those promotional programmers that will make them acquire large percentage of share of the market. They also embarked on the promotional programmes in order to increase their profit and satisfy their shareholders profitably, since wants and satisfaction have generally replaced the necessity of fulfilling the basic physiological requirement. As a result of this development, customers become more selective in their choice of service been rendered by various insurance firms, which will eventually satisfy their wants.

A good promotional programme is therefore needed to reach the customer and also to motivate them for more understanding in patronizing the industry.

1.2   STATEMENT OF THE PROBLEM

The study on the impacts and challenges of sales promotional based strategies on brand and store patronage motives came about as a result of inability to create awareness in that both wholesalers and retailers find it difficult in going around places telling people what they are into, but forgetting that there is necessity for awareness creation for not just the products, but the location of the business and possibly how the products can be used. Finally, most of the research has been carried out sales promotional strategies, but not even a single research has been carried out on the impact and challenges of sales promotional based strategies on Brand and store patronage motives in the urban area.

1.3   AIMS AND OBJECTIVES OF STUDY

The main aim of this research work is to determine the impacts and challenges of sale promotional based strategies on the brand and store patronage motives. Other specific objectives of the study includes:

1. to determine the relationship between sales promotional based strategy and store patronage motives in the urban area.
2. to determine the extent to which sales promotional base strategy has influenced brand and store patronage motives.
3. to determine the factors affecting the implementation of sales promotional based strategies on brand and store patronage motives.
4. to proffer solution to the problems concerning promotional based strategies on brand and store patronage motives.

1.4   RESEARCH QUESTIONS

1. What is the relationship between sales promotional based strategy and store patronage motives in the urban area?
2. What is  the extent to which sales promotional base strategy has influenced brand and store patronage motives?
3. What are the factors affecting the implementation of sales promotional based strategies on brand and store patronage motives?
4. What is the solution to the problems concerning promotional based strategies on brand and store patronage motives?

1.5   STATEMENT OF RESEARCH HYPOTHESIS

Ho:   Sales promotional based strategies has no significant effect on brand and store patronage motives.

H1       Sales promotional based strategies has a significant effect on brand and store patronage motives.

1.6   SIGNIFICANCE OF STUDY

The study on the impacts and challenges of sales promotional based strategies on brand and store patronage motive will be of immense benefit to the entire urban area, Enugu metropolis in the sense that it will educate them on how to create awareness on their different goods, secondly, it will educate them on the method of goods packaging in other to give it an attractive look to the buyer, it will also enable them to capitalize on the weaknesses of their competitors for a better sales performance. Finally the study will contribute to the body of existing literature and knowledge in this field of study and provide a basis for further research.

1.7   SCOPE OF STUDY

The study on the impacts and challenges of sales promotional based strategies on brand and store patronage motives is limited to the urban area of Enugu state.

1.8   LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9   DEFINITION OF TERMS

Impact    The action of one object coming forcibly into contact with another.

Challenges          Something that needs great mental or physical effort in order to be done successfully

Sales           Is activity related to selling or the amount of goods or services sold in a given time period.

Promotional    The state of being promoted. something devised to publicize or advertise a product, cause, institution, etc., as a brochure, free sample, poster, television or radio commercial, or personal appearance.

Based          Use (something specified) as the foundation or starting point for something

Strategies       A plan of action designed to achieve a long-term or overall aim.

Brand       Is a name, term, design, symbol, or other feature that distinguishes an organization or product from its rivals in the eyes of the customer. 

Store       Where merchandise is sold, usually a product, usually on a retail basis, and where wares are often kept

Patronage       Is the support, encouragement, privilege, or financial aid that an organization or individual bestows to another.

Motives   A reason for doing something.