AN EVALUATION OF THE IMPACT OF SALES PROMOTION ON CONSUMER LOYALTY IN MTN CAMEROON

CHAPTER ONE

INTRODUCTION

Background of the study 

In this region of the world, the telecommunication industry is experiencing significant growth. Since 2004, following the deregulation, the cellular market in Cameroon has experienced remarkable growth rates of over 170%, and this trend has persisted up to the present time. Several companies have entered the sector over the past decade and are now fiercely competing for market share. The total number of cellular subscribers is reported to be in millions as of the end of the year 2019. 

In order to compete successfully in this situation, cellular operators have developed critical promotion strategies. These strategies involve reducing airtime rates, offering free SMS, providing free credit, and offering small top-ups. The aim of such strategies is not only to surpass the competition and maintain customer loyalty; it also stimulates the interest of potential new customers through the provision of appealing packages. There is no doubt that the ultimate objective of every company is to generate a certain level of sales that can create profit to sustain the business activities. Every business develops the sales estimate and formulates the strategies to achieve it, particularly in the service industry. This critical link between the sales promotion and customer loyalty is of utmost importance. The sales battle has necessitated the continuous engagement of existing customers and the generation of interest in potential customers. The national and multinational companies are investing significant amounts of money to enhance sales in a short period of time. Several research studies have been conducted on one of the most important marketing promotion tools, Sales Promotion. The researchers of social sciences have engaged in a lengthy debate regarding the impact of sales promotion on customer behaviour. The general observation is that sales promotion motivates consumers to act positively towards the offering of the company. The customers are indeed satisfied and will continue to purchase the products even at their regular price.

Contrary to this, Dodson & Taybout (2001) discovered that promotion functions as an external stimulus, resulting in a decreased likelihood of customers repurchasing products once the campaign concludes. It might alter the customer's attitude towards purchasing the product at its regular price. Price discounts may also incentivize individuals with a lower likelihood of making a purchase to give it a try. However, there are customers who are unlikely to make repeat purchases, which consequently results in the promotions having a negative impact on long-term sales. Price is often regarded as a benchmark for quality by numerous consumers of services. In certain situations, the price cuts can sometimes devalue the worth of the brand in the minds of customers.

 Statement of the problem

The sales promotion industry has seen significant transformation over the past three decades. "Conventional pull marketing, which entails advertising directly to consumers, has been replaced by more focused consumer promotions." One of the causes for the rise in the usage of sales promotions is the absence of product differentiation and limited growth in primary demand for various consumer products (Kuntua, 2020).

Concurrently with the growing interest of marketers in incorporating various forms of sales promotions into their marketing strategies, there has also been an increased need for research in the subject of promotion marketing. However, the emphasis on the required type of studies remained ambiguous. According to Cameron (2019), there is uncertainty among researchers on whether sales promotions should be studied separately, like price promotions already are, or if it is more logical to consider sales promotions as a unified concept.

Also, there is a lack of consensus about the lasting impact of consumer sales promotions, as indicated by conflicting findings from Teunter (2019). This can be partially related to the predominant focus of studies on monetary promotions. Peter (2018) argued that monetary advertisements have limited efficacy in enhancing brand knowledge due to their focus on a single brand connection, namely price. In their study, Peter (2018) found that consumers who are less devoted tend to be primarily influenced by promotional efforts and are primarily motivated by economic incentives.

1.3 Objectives of the Study 

The primary objective of this study is to evaluate the impact of sales promotion on consumer loyalty in MTN Cameroon. Specifically the study seeks:

To find out whether sales promotion impacts consumer loyalty in MTN Cameroon.

To examine the sales promotional tools used by MTN Cameroon.

To assess the impact of sales promotion on consumer loyalty in MTN Cameroon.

To explore the challenges of using sales promotion encountered by MTN Cameroon.

1.4 Research Questions

The following research questions will be answered in this study:

Does sales promotion have an impact on consumer loyalty in MTN Cameroon?

What are the sales promotional tools used by MTN Cameroon?

What are the impact of sales promotion on consumer loyalty in MTN Cameroon?

What are the challenges of using sales promotion encountered by MTN Cameroon?

1.5 Research Hypothesis

The following null hypothesis will validate this study:

Ho1: Sales promotion does not have any impact on consumer loyalty in MTN Cameroon.

1.6 Significance of the study

This research is significant in the marketing domain as it expands the existing knowledge in the field of promotion marketing. Specifically, it contributes to our understanding of the relationship between various types of sales promotions, brand loyalty, and involvement.

This research is significant in the marketing domain as it expands the existing knowledge in the field of promotion marketing. Specifically, it contributes to our understanding of the relationship between various types of sales promotions, brand loyalty, and involvement.

1.7 Scope of the study

The study aims to evaluate the impact of sales promotion on consumer loyalty in MTN Cameroon. Empirically, this study will assess whether sales promotion impacts consumer loyalty in Cameroon, the sales promotional tools used by business organizations in Cameroon, the impact of sales promotion on consumer loyalty in business organizations in Cameroon and explore the challenges of using sales promotion encountered by business organizations in Cameroon.

This study will be carried out in Cameroon.

1.8 Limitation of the study

The researchers encountered slight constraints while carrying out the study. The significant constraint was the scanty literature on the subject owing that the impact of sales promotion on consumer loyalty in MTN Cameroon discourse is vast thus the researcher incurred more financial expenses and much time was required in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size covering only residents of Cameroon. Thus findings of this study cannot be used for generalization for other regions within Cameroon. Additionally, the researcher will simultaneously engage in this study with other academic work will impede maximum devotion to the research. Howbeit, despite the constraint encountered during the research, all factors were downplayed in other to give the best and make the research successful.

1.9 Definition of terms

Sales promotion: Sales promotion is a term used to describe a variety of marketing activities and incentives that are specifically created to generate immediate sales or motivate individuals to buy a product or service. These activities are generally of a short-term nature and have the objective of enhancing sales, attracting new customers, or fostering the loyalty of current customers.

Consumer: A consumer is an individual or entity that engages in the act of purchasing goods and services for personal use, as opposed to engaging in the act of purchasing for the purpose of resale or production. Consumers, in the distribution chain of goods and services, are the end-users.

Consumer loyalty: Consumer loyalty refers to the commitment and preference that customers exhibit towards a particular brand, product, or service, leading them to make repeat purchases over time. This loyalty often results from positive experiences, satisfaction, trust, and perceived value, encouraging customers to continue choosing the same brand despite competitors' offerings.