The Correlation Between Sales Promotion and Customer Purchasing Decision of Alpo (A Case Study in Giant Lebakbulus)

THE CORRELATION BETWEEN SALES PROMOTION AND CUSTOMER PURCHASING DECISION OF ALPO (A CASE STUDY IN GIANT LEBAKBULUS)

BY: Randy Fernando MANONGGA 011200700018

A thesis presented to the faculty of Economics President University in partial fulfillment of the requirements for Bachelor Degree in Economics Major in Management

September 2010

THESIS ADVISER

RECOMMENDATION LETTER

This thesis entitled “The correlation between Sales Promotion and Customer Purchasing Decision of Alpo Purina, a case study in Giant LebakBulus” in partial fulfillment of the requirements for the degree of Bachelor of International Business in the faculty of Economy has been reviewed and found to have satisfied the requirements for a thesis fit to be examined. I therefore recommend this thesis for Oral Defense

Cikarang, Indonesia,

T.Manivasugen,MBA

DECLARATION OF ORIGINALITY

I declare that this thesis, entitled “The correlation between Sales Promotion and Customer Purchasing Decision of Alpo Purina, a case study in Giant LebakBulus” is, to the best of my knowledge and belief, an original piece of work that has not been submitted, either in whole or in part, to another University to obtain a degree.

Cikarang, Indonesia,

Randy Fernando Manongga

iii

ABSTRACT

In this day and age, competition is all around us. From the industrial market, telecommunication market, confectionary or even pet food market. In order to win this competition and maintain their current position in the market, companies has to be reponsive, innovative, and creative to create their marketing strategy to catch the attention of their customers and be one step ahead of their rivals.

The research is aim to recognize the significance correlation of sales promotion and consumer purchasing decisions and as additional information based on the questionaire result to identify the kind of sales promotion that consumer prefer the most. The term Sales Promotion broadly refers to all those promotional activities which are undertaken to stimulate interest, trial or purchase of a product. Or in other word is the short term sales activities in order to push the sales immediately. This research will be conducted at Giant Lebak Bulus.

The research methodology used is quantitative analysis. Through questionaire we can see each variables X (the sales promotion) the correlation to variables Y (purchase decision). Does it have a strong correlation or weak correlation.

This research will be very helpful for companies in choosing the right strategy or types of sales promotion that they are going to use. So they will not just waste money but they will see a significant boost of sales cause by the right sales promotion (incremental sales).

ACKNOWLEDGEMENT

In this chance, I would like to dedicate my special thanks to the name list below:

1. My God Jesus Christ, thank you Lord, without you, all of this would not be possible. All the strength and blessing You give me. 2. My beloved mom and dad, also my brother and sister for always supporting me and pushing me to the next level. 3. Founders, rector, deans and lecturers for all the knowledge that you have given me. I’m still learning up until this moment. 4. Mr. manivasugen as my thesis adviser and Mr. John amewburn as my mentor during internship program. Thank you for the advise, recommendation and correction from beginning until my thesis is finished. 5. My friends in International Business and other majors. Thank you for the wonderful time that we spent in this lovely university and dormitory. 6. Special thanks to my cousin Alvin, for your help distributing the questionnaire with me. 7. Nestle and NPP for all the experience and all the data collected and used in this thesis. And also for the Purina sales team in helping me distributing questionnaires. 8. Friends in E-8 and B12 for all the wonderful time, water day and all things that we spent together. You guys really teach me to become a better person everyday and I will never forget you guys.

There is no such thing as perfect in this world, also for my thesis, so I will be open for any suggestion or critics about this thesis. God Bless

TABLE OF CONTENT

THESIS ADVISER ...... ii RECOMMENDATION LETTER ...... ii DECLARATION OF ORIGINALITY ...... iii ABSTRACT ...... iv ACKNOWLEDGEMENT ...... v TABLE OF CONTENT ...... vi LIST OF TABLES ...... ix LIST OF FIGURES ...... xi CHAPTER I ...... 1 INTRODUCTION ...... 1 1.1 Background of Study ...... 1 1.2. Nestle Purina Petcare ...... 2 1.2.1 Nestle Purina Petcare Indonesia ...... 3 1.3 Problem Identified ...... 5 1.4 Statement of Problem ...... 6 1.5 Research Objective ...... 7 1.6 Significance of Study ...... 8 1.7 Theoretical Framework ...... 8 1.8 Scope and Limitation of Study...... 9 1.9 Assumption and Hypothesis...... 10 1.10 Definition of Terms ...... 10 CHAPTER II ...... 11 LITERATURE REVIEW ...... 11 2.1 Pet Owner Profile ...... 11 2.2 Types of Pet Food Products ...... 12 2.2.1 Premium product ...... 12 2.2.2 Super Premium Product ...... 13 2.3 Sales Promotion ...... 14 2.3.1 Purpose and Effects of Sales Promotion ...... 15 2.3.1.1 Introducing new Products ...... 16 vi

2.3.1.2 Attracting new customers and retain the existing ones ...... 16 2.3.1.3 To maintain sales of seasonal products ...... 16 2.3.1.4 Meeting the challenge of competition ...... 16 2.3.1.5 Gaining immediate boost of sales ...... 16 2.3.1.5 The effect of sales promotion ...... 17 2.3.2 Types of Sales Promotion Used by NPP ...... 17 2.3.2.1 Price Off ...... 17 2.3.2.2 Special Events ...... 18 2.3.2.3 Loyalty Program ...... 19 2.3.2.4 POP (Point of Purchase)/POS(Point of Sales) ...... 19 2.3.2.5 Premium ...... 19 2.3.2.6 Thematic Activity ...... 20 2.4 Consumer Decision Process ...... 21 2.5 Correlation between Sales Promotion and Consumer Purchasing Decision ...... 24 CHAPTER III ...... 26 RESEARCH METHODOLOGY ...... 26 3.1 Research Method ...... 26 3.1.1 Research Design ...... 26 3.1.2 Source of Data ...... 27 3.2 Research Instrument ...... 28 3.2.1 Validity ...... 29 3.2.1 Reliability ...... 30 3.3 Sampling Design ...... 32 3.4 Testing the Hypothesis ...... 33 3.5 Limitation ...... 35 CHAPTER IV ...... 36 ANALYSIS OF DATA AND ...... 36 INTERPRETATION OF RESULTS ...... 36 4.1 Respondent Profile of Respondent Personal Data ...... 36 4.2 The Result OF Validity and Reliability Test For The Elements Or Instruments Of Sales Promotion and Consumer Purchasing Decisions ...... 41 4.2.1 The Test of Data Validity ...... 41 4.2.2. Reliability Testing ...... 44

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4.3 The Correlation between Sales Promotion and Consumer Purchasing Decision ...... 46 4.4 Hypothesis Testing ...... 50 4.5 The Evaluation of Coefficient Determination ...... 52 CHAPTER V ...... 53 CONCLUSION AND RECOMMENDATION ...... 53 5.1 Conclusion ...... 53 5.2 Recommendation ...... 54 REFERENCES ...... 55 Works Cited ...... 55 APPENDICES ...... 57 Appendix A: Company Profile ...... 58 Nestle Company Profile ...... 58 NESTLE’S Development in Indonesia ...... 59 Appendix B: Questionnaire ...... 60 Appendix C: Questionnaire calculation ...... 65 Appendix D: VARIABLE (X) SALES PROMOTIONAL TOOLS ...... 67 Appendix E: VARIABLE (Y) CONSUMER PURCHASING DECISION ...... 69

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LIST OF TABLES

Table 2.1 pet owners profile explanation………………………………………………………….………14

Table 2.2 Marketing Objectives and Strategies…………………………….……………………..………17

Table 3.1 Source of Data……………………………………………………….……….…………………30

Table 4.1 Gender of Respondents……………………………………………………….…...……………38

Table 4.2 Age of Respondents………………………………………………………………..….………..38

Table 4.3 Occupation of Respondents……………………………………………………….…...……….39

Table 4.4 Living Place of Respondents……………………………………………………….….…….....39

Table 4.5 Length of using Alpo of Respondents…………………………………………………...……..40

Table 4.6 Frequency Rate of Visit to Purchase Alpo of Respondents……………………………..…...…41

Table 4.7 Expense to Purchase Alpo of Respondents……………………….……………………….……41

Table 4.8 Sales Promo Preferences Alpo of Respondents……………………………………..…….……42

Table 4.9 The validity testing result using each element of sales promotional tools variables...... 44

Table 4.10 The validity testing result using each element Consumer Purchasing Decision……………...45

Table 4.11 Reliability Table……………………………………………………….……..……………….46

Table 4.12 Cronbach's Alpha…………………………………………………………………...………....47

Table 4.13 Cronbach's Alpha………………………………………………………………………...…....47

Table 4.14 Cronbach's Alpha………………………………………………………………...…………....48 ix

Table 4.15 Cronbach's Alpha………………………………………………………...……………………48

Table 4.16 Table to help calculate the Rank spearman Correlation…………………………...………….49

Table 4.17 Spearman Correlation…………………………………………………………………………51

Table 4.18 coefficient Correlation Level…………………………………………...……………………..51

LIST OF FIGURES

Figure 1.1 Market Share value…………………………………………………………………… 4 Figure 1.2 NPP Indonesia Team ………………………………………………………………….5

Figure 1.3 Alpo and Pedigree Market Situation Jan 09- Oct 09…………………………………..6

Figure 1.4 Purina Competitors logos……………………………………………………………...7

Figure 1.5 Theoretical Frameworks…………………………………………………………….. 10

Figure 2.1 pet owner’s profile……………………………………………………………………13

Figure 2.2 price off samples…………………………………………………………………….. 20

Figure 2.3 Purina and Central Park EasterVaganza……………………………………………...20

Figure 2.3 GIANT hypermart POP displays……………………………………………………. 21

Figure 2.4 Alpo’s Premium……………………………………………………………………... 22

Figure 2.5 Thematic Activities…………………………………………………………………. 23

Figure 2.5 Consumer Decision Process………………………………………………………... 24

Figure 2.5 Stimulus Response Model…………………………………………………………... 27

Figure 3.1 Research design……………………………………………………………………... 28

CHAPTER I

INTRODUCTION

1.1 Background of Study In this era of globalization, competition is very tight in every industry. Companies spend lots and lots of money in order to boost their sales. There are many tools that company use to increase their sales. They would either cut cost by doing downsizing or they will spend lots of money in advertising or sales promotion to increase sales.

Pet food industry in Indonesia is also growing through out the year. Most pet owners are 25-34 years old, married, reside in the Jabotabek, Java and North Sumatra areas with a male-female ratio of almost 1:3.More than 60% of pet owners make purchasing decisions themselves. About 20% involve their spouses and another 14% rely solely on spouses to make decisions.71% of pet owners have at least one child aged under 21 years. More than 30% have at least one child aged between 1-5 years, 19% with at least one child between 6-12 years and over 12% have at least one child between 13-17 years. (Nestle, NPP Indonesia team, 2010)

Differences seen in cat and dog owners are primarily in the areas of religion, household size and household expenditure. Majority of cat owners are Moslems and dog owners are Christians. There are more cat owners in households with 1-3 persons compared to dog owners where dog ownership is highest in households with 4-5 persons. Spending power among dog owners appear to be higher. There are more dog owners who spend more per month per household than cat owners. 60% of dog owners spend Rp700K or more per month compared to only 46% of cat owners. 21% of dog owners spend more than Rp1.5M a month compared to only 9% of cat owners. (Nestle, Alpo , 2010)

This could be a very good opportunities for pet care industry to have a very segmented market, very niche and growing. So in this thesis the researcher wants to know about the impact of sales promotion toward customer purchasing decision especially for Alpo in Giant Lebak Bulus. Alpo has been winning in store especially in Giant Lebak Bulus. From the research, the Researcher

1 will be able to see types of sales promotion that customers prefer the most. And be able to see the impact of sales promotion to brand switching.

1.2. Nestle Purina Petcare The animal feed business became the subject of a acquisition bid by Swiss-based Nestlé, whose Friskies brand was the other leading brand of pet food in the U.S. Nestlé S.A. and U.S. Ralston Purina Company announced in January 2001 that they had entered into a definitive merger agreement. Under the agreement, “Nestlé acquired all of the outstanding shares of Ralston Purina (NYSE: RAL) for US$ 33.50 per share in cash. The offer represented a premium of 36 percent over the closing price on Friday, January 12, 2001. The transaction had an enterprise value of US$ 10.3 billion ($ 10.0 billion equity plus $ 1.2 billion of net debt, minus $ 0.9 billion of financial investments). Both corporations saw this major strategic transaction as the ideal way to benefit from their combined know-how, complementary strengths and international presence in the growing pet-care market. Ever since it acquired the Friskies business with Carnation in 1985, Nestlé has considered pet-care as a strategic growth area and it has repeatedly strengthened it through acquisitions (Alpo in 1994, Spillers in 1998, and Cargill Argentina in 2000)” (Nestle I. , 2004).

In Indonesia, the pet food industry begins in 2002 where pedigree, whiskas were the only product in the market under Mars company. Purina joined the market in 2005. Eventhough Purina was late in terms of joining the market. but since 2007 Purina took over the market leader from Mars Company and being the biggest pet food product purchased by customers whether in Petshops or Groceries in Indonesia.

Purina and Mars have been toe to toe in terms on gaining market share in Indonesia Pet food market. In 2009, Purina has marketing strategy 60-40 plus, which means 60 percent of Purina Product display in every shelf in every store around Indonesia. And 40 percent of their competitors Product displayed in every shelf in every store in Indonesia.

Even then Purina keep going strong in gaining market share, as many products come and join the Indonesia Pet food market. Purina has to be creative in choosing the right marketing strategy.

Figure 1.1 Market Share value

Source taken from: Company Record (Nestle I. , 2004)

1.2.1 Nestle Purina Petcare Indonesia The pet care team in which i joined the team during my internship program is consist of:

 Nugi Nugroho (CBM Country Business Manager)  Eddy Prijantono (BU controller)  AryJuni Siagian (CCSD/MDO)  Hapsari prasty (DSP)  Kiki Palupi (Marketing and Channel executive alpo and friskies)  Andrew Soendjojo (Marketing and Channel executive ProPlan)

Figure 1.2 NPP Indonesia Team

Source taken from: Company Record (Nestle, NPP Indonesia team, 2010)

The market situation as per January 2009 until October 2009, data taken from Nestle intranet:

70 67,9 69,8 68,7 69,2 64,9 63,1 62,7 64,2 60 58,6 56,7 50 Alpo Pedigree 40 36,2 34,7 33,8 34,2 35,3 30 30,6 31,7 31,2 30,8 30

0 Jan-09 Feb-09 Mar-09 Apr-09 Mei-09 Jun-09 Jul-09 Agust-09 Sep-09 Okt-09

Figure 1.3 Alpo and Pedigree Market Situation Jan 09- Oct 09

Source taken from: Company Record (Nestle, Alpo , 2010)

From the figure above we can see how Alpo has been performing and dominating the pet food industry.

1.3 Problem Identified The problem that happens in pet food industry is that the competition is very tight between pet food companies. With many companies from various country coming in Indonesian market it will make competition becomes very tight. Because new players appear one by one and previous competitors are trying to maintain and attract new customers.

In order to win the competition and maintain the current position in the market, Purina has to be responsive, sensitive and creative to formulate their marketing strategies to get attention of existing customers and attract new customers. Due to customers in pet food industry is very

5 sensitive in terms of price, visibility and others aspects of sales promotion, they are willing to switch brand to competitors.

That is why having the right type of sales promotion could help not only in terms of boosting their sales but also attracting new customers and open new opportunities. Below are the Alpo competitor’s logos.

Figure 1.4 Purina Competitors logos

Source taken from: Company Record (Nestle, competitors logo, 2007)

1.4 Statement of Problem Understanding what consumer’s needs and want is the key success of running the business in all businesses. But understanding what the pet wants and needs is another story. what the company 6 needs to do is being creative in all aspects so that the pet owner’s will see that their products is best fit to the needs of their pets. But the question is how companies going to inform their customers that their products are the best fit for their pets. Companies may use lots and lots of sales promotional tools or advertising in many media, in trying to grab the attention of their customers (pet owners). So in this thesis researcher would like to see what types of sales promotional tools that customers prefer the most. The Researcher would like to see types of promotional tools that Nestle Purina has in the market in grabbing the attention of their customers.

Question:Is there any impact from sales promotion toward consumer purchasing decision?

Rationale: The research is done in order to help the companies to create the right strategies to maintain previous customers and attract new customers.

1.5 Research Objective The research objective of this study is to explore the impact on sales promotion on customer sales purchasing decision. And as additional information through questioner, and we will also know the right types of sales promotion that the customer prefer the most, because there are many types of sales promotion programs used by Nestle Purina, such as price off, events, loyalty programs, POP(Point of Purchase), POS (Point of Sales), premium on product (on pack promo).

“Wayne Lo Curto, President and CEO of Actmedia, likes to remind retailers and manufacturers that 70% of brand purchase decisions today are made in store, and that the store is the only place where advertising messages, sales promotion on products and consumers ever converge” (Thayer, 2006)

This research purposed to improve average of purchase transaction, and switching from other brands to Purina brand. The research methodology used is quantitative analysis method.

1.6 Significance of Study Every research has its significance for the researcher, company and also academic community. Learning about marketing knowledge in class and what actually happened while doing internship in NPP department. in this thesis the researcher will focus on sales promotion and customer purchase decision and customer behaviour. This thesis will hopefully answer the impact of sales promotion to customer purchasing decision.

The researcher would be able to see the incremental of sales during the month of promotion. Incremental of sales can be seen through pre and post evaluation of each marketing activities. We would see the percentage of sales increase in ROI. By dividing the amount of marketing expense that the marketing team spent for the promo to the sales boost during the month of promotion.

In the company point of view. They will know what types of sales promotion is the most effective in attracting their customers. So they are not just spending money but also they can see the impact of sales promotion to their sales of product.

“Managers know that advertising, Sales promotion and other marketing initiatives are necessary. Their Task is to make sure that the money is spent well” (kotler, 2003, p. 63)

In academic perception, hopefully this research can increase awareness of sales promo in pet food industry. And will give a real condition of pet food industry in Indonesia.

1.7 Theoretical Framework X variables is independent variable whis is sales promotional tools, consist of all sales promotion in Purina Pet Care division from Price off, POP, POS, Premium on Pack Promo, Loyalty program, Online Banner, Special Event. Is this X variables have a correlation to Y variables as dependent variables in which is purchasing decision. Consumer purchasing decision processes have a step from need recognition, information search, evaluation, purchase decision and the last is post purchase behavior.

The theoretical framework that researcher uses is drawn as follow:

X VARIABLES Y VARIABLES

SALES PROMOTION TOOLS: CONSUMER PURCHASING DECISION:  PRICE OFF  SPECIAL EVENTS  NEED RECOGNITION  LOYALTY  INFORMATION PROGRAMS RESEARCH  POP/POS  EVALUATION  PREMIUM  PURCHASE DECISION  THEMATIC ACTIVITY  POSTPURCHASE BEHAVIOUR

QUESTIONAIR

CORRELATI ON VALUE

Figure 1.5 Theoretical Frameworks

Source: Self constructed based on (Jain, 2007)

By using this model or figure, the researcher will prove either there is a strong relation between sales promotion and customer purchasing decision of Alpo study case in Giant Lebak Bulus, using questionnaire and then analyze the data with SPSS. The basis of this research is the theoretical framework stated above.

1.8 Scope and Limitation of Study In this research, the population of that the researcher uses is the customers who uses of purchases pet foods especially Alpo. The total number of sample is 30 customers Alpo in Giant Lebak Bulus. Why in Giant Lebak Bulus? Because from the interview the researcher had with Purina team sales, Alpo has been winning in stores especially in Giant Hypermart in Lebak Bulus. This research is done and applicable to Alpo customer in Giant Lebak Bulus represents Alpo

9 customers in Giant Hypermart nationally. The scope of study is limited only to the sales promotion toward customer purchasing decision.

1.9 Assumption and Hypothesis This research is conducted in Giant Lebak Bulus, which assumes there is relationship between sales promotion and customer purchasing decision. This assumption is based on researcher knowledge having joined NPP team for 7, 5 months and supported by the theory from the book marketing from A to Z from Philip Kotler.

“Sales promotion describes incentives and rewards To get customers to buy now rather than later and primarily Focus on creating immediate action” (kotler, 2003)

Sales promotion is one of the key aspects to attract new customers while maintaining current market situation and do the purchasing decision. As mentioned above there are five stages of purchasing decision until they finally buy the product, and after that the customers will evaluate. From there we would be able to see whether customers will purchase again or switch other brand. To approve the assumption, the researcher will test and evaluate through hypothesis test. The hypothesis that the researcher intend to test:

 Ho: sales promotion has no correlation with customer purchasing decision of Alpo  Hi: sales promotion has correlation with customer purchasing decision of Alpo

1.10 Definition of Terms  Globalization: a process by which people in the world are unified into a single society. Through a combination of economic, technological, socio cultural, and political forces.  Merger: The combining of 2 or more entities into one. Through a purchase acquisition or a pooling of interest , generally by offering the stockholders of one company securities, in the acquiring company in exchange for the surrender of their stock.  NPP: Nestle Purina Pet care  DSP: Demand Supply Planning  CBM: Country Business Manager  ROI: Return On Investment 10

CHAPTER II

LITERATURE REVIEW

2.1 Pet Owner Profile The researcher will go through each types of profile of pet owners to more details, because the researcher believes that different types pet owners profile, companies need different types of sales promotional tools. Below are different types of pet owner’s profile.

Figure 2.1 pet owner’s profile

Source from: (Nestle, 2007)

EXPERT DRIVEN INDULGENT PROVIDER HEALTHY HABITUALIST NUTRITIONIST the pet is best friend / "child" although likeable and fun, the the pet is companion or "child" pet is still an to be protected and loved animal even loved more than most humans the best food is expert nutritious food is an important recommended to optimize part of responsible care giving food must balance, pleasing the pet the pet and healthy

PRACTICAL PAMPERING UNINVOLVED PROVIDER BASIC FOOD FEEDER PREPARER OWNER

the pet is companion or the pet is not more than the pet is likeable family the pet is a pet, often for "child" an animal with apractical member but not special children on whom to dote purpose

food should look like real food should be practical, food food exemplifies love and food sustains the pet convenient, affordable and not require special and thought or effort affection acceptable to pet Table 2.1 pet owners profile explanation

Source: self constructed from (Nestle, 2007)

From this types of profile companies can have different types of segmentation to target. For NPP Indonesia. Their Market is Expert Driven for Specialist Channel for their Super Premium Product. And Indulgent Nutritionist for Premium Channel for their Premium Products.

2.2 Types of Pet Food Products In pet food industry, there are 2 types of pet food product in the market. There are:

 Premium product  Super premium product

These two types product have different types of target market. For premium product the target market is called Indulgent Nutritionist. And for super premium product is called Expert Driven. And below the researcher will go through also more details inquiring the premium products and super premium products.

2.2.1 Premium product Premium product is sold through big retailers or KA (Key Account) like carrefour, giant, LSM (Local Supermarket) and etc. Customers basically can buy everywhere including in the pet

12 shops. And the target market for this premium product is Indulgent Nutritionist (pet lovers that treat their pets as companion, house guard and etc.) Types of Indulgent Nutritionist:

- Have strong bonding with their pets

- Often treat their pets as companion / family member

- Seek for a balance in Taste and Nutrition, and Variety

- Want to please the pet by giving variety of food

- Willing to switch brand to get variety

2.2.2 Super Premium Product is sold through pet shops, breeders, vet and etc. And the target market for this super premium product is Expert Driven. This specialist channel love their pet more than they love themselves. They love to join events. Winning the events is something like pride for themselves. Types of expert driven:

 Pet is consider “child”  Their pet food is about best ingredients  Ensure the pet has the best performance  Loyal but depends on recommendation from expert (vet or breeder)

2.3 Sales Promotion There are five elements that build up Marketing Communication. There are; Sales Promotion, Direct Marketing, Advertising, Personal Selling, Publicity / Public Relation. In this research, the researcher will focus more on sales promotion.

“The term Sales Promotion broadly refers to all those promotional activities which are undertaken to stimulate interest, trial or purchase of a product by the end user or other intermediaries in between. Besides advertising and personal selling, all other activities undertaken to promote a product can be classified under sales promotion” (Shukla, 2008).

“Sales promotion consists of diverse collection of incentive tools, mostly short-term designed to stimulate quicker and / or greater purchase of a particular product by consumers or the trade.. Sales promotion includes tools for consumer promotion (for example samples, coupons, prizes, cash refund, warranties, demonstrations, contest); trade promotion (for example buying allowances, free goods, merchandise allowances, co-operative advertising, advertising and display allowances, dealer sales contests); and sales-force promotion (for example bonuses, contests, sales rallies).Sales promotion efforts are directed at final consumers and designed to motivate, persuade and remind them of the goods and receives that are offered. Sales persons adopt several techniques for sales promotion” (kotler, 2003).

Suppose a customer go to the market to buy soap. The shopkeeper suggests that if the customer buy two soap Cakes, an extra soap cake will be given to you free of cost under “buy 2 get 3” scheme. Customer would feel Attracted to buy as by doing so customer are saving money on 1 soap. Moreover, soap is an item which is required on a regular basis, and so customer can keep the extra two cakes to be used later.

Like most traditional forms of marketing communication, sales promotion has generally been about a mass offer; however the character of sales promotion is changing rapidly as a result of improved supplier’s relationships. “Similar to advertising, sales promotion is one type of marketing communication. Although advertising is designed to build long term brand awareness, sales promotion is primarily focused on creating action. Many people mixed up on the differences between sales promotion and advertising. Below is the table inquiring the differences between them in terms of marketing objectives” (Jain, 2007).

MARKETING OBJECTIVES MAXIMIZE CREATE PROFIT WHILE REDUCE PRODUCT MAXIMIZE DEFENDING EXPENDITURE AWARENESS MARKET MARKET AND MILK THE STRATEGIES AND TRIAL SHARE SHARE BRAND

build product awareness among build awareness stress brand reduce the level early adopters and and interest in the differences and needed to retain ADVERTISING dealers mass market benefits hard-core loyal

reduce to take use heavy sales advantage of increase to SALES promotion to heavy consumer encourage brand reduce to minimal PROMOTION entice trial demand switching level

Table 2.2 Marketing Objectives and Strategies

Source: Self constructed based on (Kotler, 2006)

From this table we can see significant differences between advertising and sales promotion in terms of their marketing objectives.

2.3.1 Purpose and Effects of Sales Promotion There are 5 keys of sales promotion purpose. They are:

 To introduce new products  To attract new customers and retain the existing ones  To maintain sales of seasonal products  To meet the challenge of competition  To gain immediate boost of sales

2.3.1.1 Introducing new Products Have you ever heard about distribution of free samples? Perhaps you know that many companies distribute free samples while introducing new products. The consumers after using these free samples may develop a taste for it and buy the products later for consumption. Companies may also provide premium on product of “on pack promo” on a launching date of their products.

2.3.1.2 Attracting new customers and retain the existing ones Sales promotion measures help to attract or create new customers for the products. While moving in the market, customers are generally attracted towards the product that offers discount, gift, prize, etc on buying. These are some of the tools used to encourage the customers to buy the goods. Thus, it helps to retain the existing customers, and at the same time it also attracts some new customers to buy the product.

2.3.1.3 To maintain sales of seasonal products There are some products like air conditioner, fan, refrigerator, cooler, winter clothes, room heater, sunscreen lotion, glycerin soap etc., which are used only in particular seasons. To maintain the sale of these types of products normally the manufacturers and dealers give off- season discount. For example, you can buy air conditioner in winter at a reduced price. Similarly you may get discount on winter clothes during summer.

2.3.1.4 Meeting the challenge of competition Today’s business faces competition all the time. New products frequently come to the market and at the same time improvement also takes place. So, sales promotion measures have become essential to retain the market share of the seller or producer in the product-market.

2.3.1.5 Gaining immediate boost of sales Like mentioned earlier, that sales promotion is used to get an immediate impact boost of sales during a specific time. Totally different than advertising. In measuring the impact we can use pre and post evaluation for each promotional activity.

2.3.1.5 The effect of sales promotion 1. The present day market is very competitive due to the large number of rivals and substitutes. With the help of promotion producer must create product differentiation in the minds of consumers.

2. Promotion is very essential to communicate the use of the product and the nature of the product to consumers and middlemen

3. Nowadays most of the consumers market their products in wider area and the consumers are also very large in number. In such cases personal selling alone cannot be used and so all the steps for promotion are to be followed.

4. During the periods of depression it is essential to maintain at least some minimum market. Therefore it is very essential to use promotion.

2.3.2 Types of Sales Promotion Used by NPP There are 5 types of sales promotional tools used by NPP. They are:

 PRICE OFF  SPECIAL EVENTS  LOYALTY PROGRAMS  POP/POS  PREMIUM  THEMATIC ACTIVITY

The researcher will go through each sales promotional tool in details.

2.3.2.1 Price Off A very popular sales promotional technique by reducing the price of products temporary during a stated period of time. Companies may do that to boost immediate sales. NPP uses price off in a different ways by creating poster or wobblers in the shelf. Below are the examples of poster used by NPP and their competitors Pedigree in terms of price off.

Figure 2.2 price off samples

Source taken from: NPP Indonesia

2.3.2.2 Special Events Marketers use special promotional events, such as a tour to the appearance of the product or its spokesperson at a mall. To gain the attention and the involvement of people in the target audience who attend the event. For example dog seminar by Purina or Purina Dog Show events.

Figure 2.3 Purina and Central Park EasterVaganza

Source taken from: Researcher Internship Program at NPP

2.3.2.3 Loyalty Program During researcher Internship program NPP had loyalty program promo. There are Pet Grooming Kits in which customers will have to buy our products in terms of getting the premium. By purchasing at minimum of Rp.50.000 will get one item of pet grooming kits. There are 5 items of pet grooming kits. This type of loyalty program will boost sales and encourage brand switching.

2.3.2.4 POP (Point of Purchase)/POS(Point of Sales) POP or POS are one of the tools to gain customers attention and awareness. Pop or Pos is displayed in KA and other big Hypermart, to increase brand awareness that will also increase sales at the same time. POP and POS are provided by NPP in every store and Pet Shops all around the nation. Below are the sample of POP and POS

Figure 2.3 GIANT hypermart POP displays

Source: from Researcher Internship Market Visit

2.3.2.5 Premium Giving out premium or merchandise or what they call with “on-pack promo” is very useful as one of promotional tools in NPP in every activity done which include premium had always been more than 100 % ROI. We can see the result by conducting Pre and Post Evaluation. Pet owners are attracted by having merchandise by buying the products. Premium can be merchandise for pets. Or it could also be another Nestle Products. It is like buying 2 different things with the price of one. Below are the examples of premium used by NPP.

Figure 2.4 Alpo’s Premium

Source taken from: NPP Indonesia

2.3.2.6 Thematic Activity Differences seen in cat and dog owners are primarily in the areas of religion, household size and household expenditure. Majority of cat owners are Moslems and dog owners are Christians and Chinese. There for NPP sales promotion have different kind of promotional activities to grab those targeted market, by having thematic activity like Christmas activity and Chinese New Year activity. Below are the examples of those activities.

Figure 2.5 Thematic Activities

Source taken from: NPP Indonesia & Researcher Internship Report

2.4 Consumer Decision Process Buyer decision processes are the decision making processes undertaken by consumers in regard to a potential market transaction before, during, and after the purchase of a product or service.

In general there are three ways of analysing consumer buying decisions. They are:

 Economic models - These models are largely quantitative and are based on the assumptions of rationality and near perfect knowledge. The consumer is seen to maximize their utility. See consumer theory. Game theory can also be used in some circumstances.  Psychological models - These models concentrate on psychological and cognitive processes such as motivation and need recognition. They are qualitative rather than quantitative and build on sociological factors like cultural influences and family influences.  Consumer behaviour models - These are practical models used by marketers. They typically blend both economic and psychological models.

A general model of the buyer decision process consists of the following steps:

 Problem recognition;  Information Search  Evaluation of Alternative  Purchase decision  Post-purchase behavior/buyer's remorse (cognitive dissonance)

Post Purchase Problem Information Evaluation of Purchase Decision: Value recognition: search: alternatives: decision: in Consumption perceiving seeking Assessing Buying or Value in Use need value value Value

Figure 2.5 Consumer Decision Process

Source taken from: www-rohan.sdsu.edu

Problem Recognition

It is the result of a difference between a desired state and an actual state that is sufficient to stimulate and activate the decision process. Actual state is the way an individual perceives his or her feelings and situation to be at the present time. Desired state is the way an individual wants to be feel or be at the present time.

Problem recognition is the first step towards consumer purchasing decision. In this condition, potential customers have a problem that can be resolved by consuming products and service. The problems may be from routine problems of depletion, the unexpected breakdown of a major appliance, customer feelings, such as boredom, anxiety, unhappiness, may arise quickly or slowly overtime. Marketers develop products to help consumer solve problems. In problem recognition potential customer have a lack of detail about the product Alpo.

Information Search

It is the buyer decision process, in which the consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into active information search.

Internal Search: once a problem is recognized, relevant information from long term memory is used to determine if a satisfactory solution is known, what the characteristic of potential solutions are, and what the appropriate ways to compare solutions are.

External Search: if a resolution is not reached through internal search, then the search process is focused on external information relevant to solving the problem.

Consumer tends to get a lot of information about the product they are about to buy before buying the product. They may do internal search by recognizing the problem of their own needs. And try to find the right solution to satisfy their needs. If a solution is still not reached through internal search consumer may get external information enquiring the product from external search, could be from people that already use the product, word of mouth, or by surfing through the internet.

For Purina, consumer can get information from the internet in anjingkita.com and from all the leaflet and poster about Purina’s nutrition for pets.

Evaluation Alternatives

This means buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set.

After getting all the required information regarding the product, consumer may analyze and evaluate all the alternatives solution. Consumer may choose one of the fit solutions for their problem.

Purchase Decision

The buyers decision about which product to purchase. In this stage represents the activities that occur during the final decision making and actual purchase of products. Customer decides to use Alpo instead of other pet food products instead of other pet food products.

Post Purchase Behavior

The buyers decision process in which consumers take further action after purchasing the product, based on their level of satisfaction or dissatisfaction. In this final stage of the purchasing decision, this stage can be critical importance to both customer and to the future marketing sales potential. Customer may buy or not buy the product in the future. In this stage also the marketing should get feedback from the customer about their products, to either improve the product or analyze what missing in the product.

2.5 Correlation between Sales Promotion and Consumer Purchasing Decision The correlation between sales promotion and consumer purchasing decision is very close. With the right types of strategy in sales promotion will create exciting reimbursement in terms of increase of sales, attracted new customers, maintain the current position in the market. So in here good marketer must approach the strategy step by step to choose the right sales promotion activities. We can see the effect of sales promotion by determining baseline sales (what sales would have been without promotion) and measuring the increase over baseline associated with the promotion from there we can see the incremental of sale.

“Sales promotion is marketing activities that stimulates consumer purchasing (includes: displays, trade shows, coupons, premiums, contest, product demonstration, and various non recurrent selling efforts)” (kotler, 2003)

It means that all Purina strategy in sales promotion such as; premium, samples, special events, loyalty program, pop/pos, price off and thematic activity, will trigger and influences customers to buy the product.

The sales promotion is conducted from time to time; this is not something done on impulse, sales promotion activates have to be well prepared, organized and integrated in the company’s marketing plan. It is also crucial for companies to decide, the choice for the sales promotions are. When the objectives are decided, the choice of promotion technique can be decided. The sales promotion activities chosen will depend on the objectives. Below is the stimulus response model.

BUY OR NOT BUY THE PRODUCT

Figure 2.5 Stimulus Response Model

Source taken from: (www.dspace.fe.unibraw.ac.id)

From the theory above means the marketing mix as one of the stimulus or supporting factors toward the consumer purchasing decision. Marketing mix variable consist of product, price, promotion, and place. All those variables have an important task to influence the customer purchasing decision. Sales promotion, that is part of marketing mix variables, also has strong relationship with consumer purchasing decision. By setting the right and appropriate sales promotion, it will support the customer response to do the purchasing decision.

CHAPTER III

RESEARCH METHODOLOGY

3.1 Research Method In research methodology stage the researcher will describe the procedure that would be use in the process of research. Including Investigating, sampling design, and selecting respondents and also the set of questionaire and their validation and reliability process, procedure in gathering the data and how it has been treated by statistical application.

“Research Method usually refers to specific activities designed to generate data (e.g. questionnaires, interviews, focus groups, observation) and research methodology is more about your attitude to and your understanding of research and the strategy you choose to answer research question”. (Greener, 2008)

3.1.1 Research Design Research design is a “framework or blueprint for conducting the marketing research project that specifies the procedures necessary to obtain the information needed to structure and solve the marketing research problem.

Research design can be define into two main groups, which is quantitative and qualitative. What differs the two methods are on their method, structure and sample size.

Qualitative research means “an unstructured, exploratory research methodology based on small samples that provide insights and understanding of the problem setting” (Greener, 2008)

Quantitative research means “a research methodology that seeks to quantify the data and typically applies some form of statistical analysis” (Greener, 2008)

Exploratory design Research Descriptive Design Design qualitative

Causal Design Conclusive Design

quantitative

Figure 3.1 Research design

Source: (Greener, 2008)

Qualitative research provides insight and understanding of the problem setting. It explores the problem with few preconceived notions about the outcome of that exploration. In addition to defining the problem and developing an approach, qualitative research is also appropriate when facing a situation of uncertainty, such as when conclusive results differ from expectations.

Quantitative research seeks to quantify of data. It seeks conclusive evidence, which is based on large, representative samples, and typically applies some form of statistical analysis. In contrast to qualitative research, the findings of quantitative research can be treated as conclusive and used to recommend a final course of action.

This research will use quantitative research, which is examine and test the correlation between sales promotion and consumer purchasing decision again at Alpo Purina a case study in Giant Hypermart and for additional information based on the questionnaire is to know the kind of sales promotion that customers prefer the most. The result of this research will explain that the sales promotion has a strong or weak relationship toward purchasing decision.

3.1.2 Source of Data The source of data can be divided into 2 main categories.

1. Primary Data

Primary data is “data originated by the researcher for the specific purpose of addressing the research problem” (Greener, 2008)

Example: Survey, Questionnaires.

2. Secondary Data

Secondary data is “data collected for some purpose other than the problem at hand” (Greener, 2008)

Data Source Example Internal Data In company reports, Memos, etc. Syndicated Data Syndication Services like AC Nielson Expert Advice News Paper, Interviews, Reports Internet Various Search Engines, portals websites Industry Data Industry or Trade Associations Macro Data Government and international publications Market Research Report Independent Market Research Firms

Table 3.1 Source of Data

Source: (Peterson, 2002)

In this thesis the researcher will only use the primary data. By giving questionnaire to respondents for primary data.

3.2 Research Instrument In general term, survey can be defined as “a structured questionnaire given to a sample of population and designed to elicit specific information from respondent.” (Shukla, 2008)

Survey consists of telephone interview, personal interview, self-completion survey, mail interview, and also electronic interview.

Data collection is done through customer survey method by using questionnaires toward some respondents. “Questionnaires is a structure technique for data collection that consists of a series of questions, written or verbal that a respondents answers”. (Peterson, 2002)

In this thesis, researcher use questionnaire as a formalized set of question for obtaining information from respondents, and it has three objectives. First is to translate the researcher’s information needs into a specific question that respondents are willing and able to answer. While this may seem straightforward, question may yield very different and unanticipated response.

Questionnaires should be written to minimize demands imposed on respondents. It should encourage respondents to participate in the entire interview, without biasing their responses. A questionnaire should minimize response error. These errors arise from respondents who give inaccurate answers or from misreporting or misinterpretation of their answer.

The questionnaires given to the respondents or customers used close ended question in which respondents are provided some choices to be chosen. The survey questionnaires used was self- constructed. Whenever a test or other measuring device is used as part of the data collection process, the validity and reliability of that test is important. So it must be tested for the validity and reliability.

Multiple questions chosen for this study in order to limit the answer, so the answer will not very broad. Multiple questions mean the researcher provides a choice of answers, and respondents are asked to select one or more of the alternatives given (Peterson, 2002).

The questionnaire will cover, personal information: this of question will cover the general information of the respondent profile. Name and address will be the exceptions for this type of question. Second is sales promotional tools: this type of question will cover promotional tools that Purina Alpo give and affected to customers, and the last is consumer purchasing decision : what type of sales promotions that affects to consumer purchasing decisions.

3.2.1 Validity Validity is defined as the extent to which differences in observed scale scores reflect the true differences among objects on the characteristics being measured. In simple words, by testing validity researcher can decide is the scale measuring what it is meant to measure. A perfectly valid scale will have no measurement errors.

Validity can be divided into two categories, which are: External validity and Internal Validity. External validity of Research is finding the data’s ability to be generalized across persons, settings, and times. While internal validity is the ability of a research instrument to measure what is supposed to measure.

So the measurement of data validity is important when doing a research. The researcher can continue the research only if data is valid. There is a formula to test the validity of data (Sales promotion tools and Consumer purchasing decision stages) by using Pearson Product moment correlation coefficient. The computational formula for the pearson r is:

Since S x = √ ∑ /n and Sy= √ ∑ /n n= the number of subjects/pair of cases

X= independent variable

Y= dependent variable

Sx and Sy = the standard deviations for X and Y

If the result with a positive covariance, the variables move in agreement; with a negative one, the move in opposition.

3.2.1 Reliability “Reliability in research relates to consistency of results over a period of time” (Shukla, 2008). A scale is called reliable if it produces consistent results when repeated measurements are made. Systematic errors do not have an effect on reliability however random errors do. Reliability is concerned with estimates of the degree to which a measurement is free of random or unstable error. Reliable instruments can be used with confidence that passing and situational factors are not interfering. Reliable instruments are robust; they work well at different times under different conditions. “Reliability is a necessary contributor to validity but is not a sufficient condition for validity”. (Cooper, 2006)

This distinction of time and condition is the basis of frequently used perspective on test-retest reliability, alternative forms reliability and internal consistency reliability. As the name suggest, in test-retest reliability measurement, same respondents are administered identical sets of scale

30 items at two different times. The degree of similarity between the measurements determines the reliability. The higher the correlation between the two measurements, the higher the scale of reliability. In measuring alternative forms reliability, two equivalent forms of the scale are constructed and then the same respondents are measure at two different times.

Internal consistency reliability is used to assess the reliability of a summated scale where several items are summated to form a total score. In simple words, each item in the scale must measure part of what the scale is developed to measure. Various techniques such as split-half reliability or coefficient alpha are used to measure the internal consistency reliability. In this thesis the researcher would used the Coefficient Alpha also known as Cronbach’s alpha which splits all the questions on the instruments every possible way and computes correlation values for them all.

Cronbach’s Coefficient Alpha can be defined as:

Source: http://en.wikipedia.org.wiki/cronbach’s_alpha

Cronbach's α (alpha) = instrument reliability

= average of correlation between items

K = number of items

The rating of questionnaire used five-Likert scale where analysis of the data will be scored. The Likert scale, developed by Rensis Likert, is the most frequently used variation of the summated rating scale. Summated rating scales consist of statements that express either a favourable or an unfavourable attitude toward object of interest. The participant is asked to agree or disagree with each statement. A typical Likert scale constitutes of five items ranging from strongly disagree to strongly agree. The representation of Likert scale makes it easier for the respondents to answer the questions.

The analysis on Likert scale can be conducted on item basis or on the basis of the total score which can be calculated for each respondent by summing across items. Likert scale can also help in developing comparison constructs. The Likert scale has several advantages including ease of development and understanding. It can be administer using any survey method. On the other

31 hand, Likert scale can take much time to complete as respondents have to read each statement and provide a response relating to it.

Each answer will be processed as a tool to measure the variables in this research. It is important to avoid confusion, or offensive question and techniques. The researcher had to discuss with the researcher advisors first and after several discussion and revisions, he approved.

3.3 Sampling Design Another step in planning the design is to identify the target population and select the sample if a census is not desired. The researcher must determine who and how many people to interview, what and how many events to observe, or what and how many records to inspect. Measuring population becomes very important before collecting the data. Population is the collection of elements or objects that possesses the information the researcher seeks and about which the researcher will make inference.

Furthermore, in order to conduct the further, sample is need to represents the study population. Sample is the basic unit containing the elements of the population to be sampled. “From a general perspective, sampling involves selecting a relatively small number of elements or characteristics from a larger defined group of elements and expecting that the information gathered from the small group of elements will provide accurate judgment about the larger group” (Shukla, 2008).

In this research the researcher uses purposive sampling from a non probability sampling. Purposive sampling can be divided into two categories; judgment sampling and quota sampling. In this research the researcher will use judgment sampling. “Judgment sampling is an extension to the convenience sampling where the researcher arbitrary selects sample units to conform to some criterion” (Shukla, 2008). This method also incorporates a great deal of sampling errors since the researcher’s judgment may be wrong however it tends to be used in industrial markets quite regularly when small well-defined populations are to be researched judgment sampling will be highly appropriate. In this research, the researcher chooses the target respondents for

32 sampling purpose are customers who buys Purina Products specifically Alpo in Giant Lebak Bulus.

Another important thing in sampling is the sample size, because it will affect the degree of accuracy, “sample size means the number of elements to be included in a study” (Shukla, 2008). The bigger the sample size, the more accurate it will be, and the closer to reality.

According to the Central Limit theorem, for sufficiently large samples (n=30), the sample means will be distributed around the population, mean approximately in a normal distribution. Even if the population is not normally distributed, the distribution of sample means will be normal if there is large enough set of samples. This sampling size will use the quota sampling, which means this sample is limited to a certain number of respondents. Based on the theory above, the researcher got 50 respondents as the sample size for this research due to time limitations.

The customer survey research is conducted from 15-17 August, which is period of 3 days. The researcher must ask first whether the respondents is Alpo Purina user or not, and the researcher also tried to make respondents feel as comfortable as possible. To avoid bias answer, researcher always assists the respondents.

On the first day the researcher started to interview the respondents from 9.30 am, and got 20 respondents. On the second day, the researcher got 15 respondents and for the last day the researcher got 15 respondents to round the total of 50 respondents.

3.4 Testing the Hypothesis Another measure related to the coefficient of determination is the coefficient of correlation. These measures also express the degree or strength of the linear relationship. It is usually expressed as r and can be any number between and including +1 and -1. This example looks at the strength of the link between Sales promotion and Consumer purchasing decision at Alpo Purina. In other words, it is a tool to show whether any one set of numbers has an effect on another set of numbers.

Correlation Spearman rank method not sequence with assumption of research populations must have normal distributions, sample of population have take to maximal sample 5

To find correlation, the researcher will use spearman’s r, and the equation is:

Rs= the spearman’s Rank correlation Coefficient

∑ = Total the difference between each rank of corresponding values of x and y

N= Total items

Procedure for using Spearman’s rank correlation

1. State the null hypothesis “there is no relationship between the two sets of data” 2. Rank both sets of data from the highest to the lowest. Make sure to check for tied ranks 3. Subtracts the two sets of rank to get the difference d. 4. Square the values of d. 5. Add the squared values of d to get sigma 6. If the value of r s : a. Is -1, there is a perfect negative correlation b. Falls between -1 and 0, there is weak negative correlation c. Is 0, there is no correlation d. Falls between 0 and 0.5 there is weak positive correlation e. Falls between 0.5 and 1, there is a strong positive correlation f. Is -1, there is a perfect positive correlation between the 2 sets of data. 7. If the r value is 0, state that null hypothesis is accepted. Otherwise, say it rejected.

The next step is testing whether the correlation value is significant or not, which is using below equation:

Z= rs √ / 1

Source: Riduwan&akudon. 2004:121

Z= z test value

Rs= the spearman’s rank correlation

N= total sample

To Evaluate the coefficient determination by using the formula to know the percentage of the correlation of sales promotion toward consumer purchasing decision. The formula is as follow:

CD = rs x 100%

CD= Coefficient of Determination

Rs= Spearman’s Rank correlation

3.5 Limitation Limitation of experiment consists of three main factors (Peterson, 2002), which are; time, cost and administration of an experiment.

Firstly the researcher faced difficulties related to time concern in doing structured research. The researcher just has four months period to choose the best title, find the appropriate theories, decide the research method used, distributes the questionnaires and analyze and interpret the data collected then conclude the result. Due to fasting month the researcher also found difficulties in getting the respondents and also rejection from potential respondents because of limitations of time such as potential respondents have to go home early because late at night.

CHAPTER IV

ANALYSIS OF DATA AND

INTERPRETATION OF RESULTS

This chapter interprets and evaluates the implication of the finding and referring to each problem.

4.1 Respondent Profile of Respondent Personal Data This part of survey consist of; gender, age, batch, residence, length of using Alpo, total expense per month to buy Alpo.

Table 4.1 Gender of Respondents

Gender Frequency percentage Male 22 44% Female 28 56% Total 50 100% Source: Primary Data

Based on the data above, the researcher can see there is no significant gender difference of respondents of Alpo user. As data mentioned above 44 % are male and 56 % are female. So Gender is not the issue of using Alpo.

Table 4.2 Age of Respondents

Age Frequency Percentage <25 7 14% <30 18 36% <35 10 20% <40 12 24% <45 3 6% Total 50 100% Source: Primary Data

Based on data above (Table 4.2), the researcher can see the range of age of customers purchasing Alpo in Giant Lebak Bulus. From customer with age below 25 years old with percentage of 14% , customers whose age below 30 years old with percentage of 36%, customer whose age below 35 years old with percentage of 20%, customers age below 40 years old with percentage of 24% and last customers whose age below 45 years old with percentage with only 6%.

Table 4.3 Occupation of Respondents

Occupation Frequency Percentage Student 10 20% Civil Servant 6 12% Private owned enterprise 17 34% Entrepreneur 6 12% Housewife 11 22% Total 50 100% Source: Primary Data

From the data mentioned above (Table 4.3), the researcher can also segment the range of occupation of customers that purchase Alpo in Giant Lebak Bulus. The researcher segment customers based on occupation from Student, Civil Servant, Private owned enterprise, Entrepreneur, and housewife. For student based on data above the percentage around 20%, Civil Servant with 12% , Private owned enterprise with 34%, Entrepreneur with 12%, and housewife with 22%.

Table 4.4 Living Place of Respondents

Living Place Frequency Percentage Central Jakarta 0 South Jakarta 33 66% East Jakarta 10 20% North Jakarta 0 Outside Jakarta 7 14% Total 50 100% Source: Primary Data

From the data mentioned above (Table 4.5), the researcher can analyze customers living place that purchase Alpo in Giant Lebak Bulus. From the data above 14% of customers Alpo live Outside Jakarta. 20% of customers purchase Alpo from East of Jakarta, respondents purchase Alpo in Giant Lebak Bulus due to near of their office. And 66% of customers live in South of Jakarta. Obviously due to, the place itself in Lebak Bulus South Jakarta. The respondents are people living in South of Jakarta and people who work in South of Jakarta and live in South of Jakarta.

Table 4.5 Length of using Alpo of Respondents

Length Frequency Percentage <6months 11 22% >6months-<1year 13 26% >1year - <1,5 years 16 32% >1,5 years - <2 years 6 12% >2 years 4 8% Total 50 100% Source: Primary Data

Based on the data mentioned above (Table 4.5), the researcher is able to see and analyze the length of people using Alpo in Giant Lebak Bulus. 8% of respondent are very loyal customers that have been using alpo for more than 2 years. Around 12% of respondent are loyal customers due to length of using alpo is indicating that respondents been using alpo for more than 1, 5 year to 2 years. And 32% of respondent are loyal with length of using Alpo from 1 year to 1, 5 years. Around 26% of Alpo user in Giant Lebak Bulus with length of using alpo from 6 months to 1 year. The last are new customers with percentage of 22% respondent have been using alpo less than 6 months.

Table 4.6 Frequency Rate of Visit to Purchase Alpo of Respondents

Frequency Rate of visit Frequency Percentage once a month 14 28% twice a month 17 34% once a week 9 18% twice a week 6 12% every day 4 8% Total 50 100% Source: Primary Data

Based on the data mentioned above (Table 4.6), the researcher is able to analyze the frequency rate of visit of respondents in purchasing Alpo in Giant Lebak Bulus. Around 8% of respondent purchasing alpo everyday these respondents are majority housewives. 12% of alpo customer purchase Alpo in Giant Lebak Bulus twice a week. Around 18% of customers purchase alpo once a week. There are 34% of alpo Customers purchasing Alpo in Giant Lebak Bulus twice a month. And last 28% of Alpo Customers purchase Alpo once a month.

Table 4.7 Expense to Purchase Alpo of Respondents

Expense Frequency Percentage <50.000 2 4% >50.000-<100.000 16 32% >100.000- <150.000 19 38% >150.000- <200.000 11 22% >200.000 2 4% Total 50 100% Source: Primary Data

Based on the data mentioned above (Table 4.7), the researcher is able to analyze the expense of respondents in purchasing Alpo in one month. From the data above 4% of respondents are spending more than Rp.200.000 in one month for purchasing Alpo. Around 4% of respondents

39 are also spending not more than Rp. 50.000 in one month. Around 22% of respondents are spending around Rp. 150.000 to 200.000 in one month. 32% of respondents expense of purchasing alpo in one month around Rp. 50.000 to 100.000. And around 38% of respondents are spending more than Rp. 100.000 to 150.000 in one month in purchasing Alpo in Giant Lebak Bulus.

Table 4.8 Sales Promo Preferences Alpo of Respondents

Prefer Frequency Percentage PRICE OFF 24 48% SPECIAL EVENTS 3 6% LOYALTY PROGRAMS 4 8% POP/POS 1 2% PREMIUM 15 30% THEMATIC ACTIVITY 3 6% Total 50 100% Source: Primary Data

Based on data mentioned above (Table 4.8), the researcher is able to analyze the type of sales promotional tools that the respondents prefer the most. 2% of respondents choose POP (Point of Purchase) and POS (Point of Sales) purchasing alpo in Giant Lebak Bulus. There are 6% of respondents for both Special Events and Thematic Activity. As alpo also have a lot of Dog Show event and many Thematic Activity to support their Sales promo strategy. Around 8% of respondents are choosing loyalty programs as type of promo that they prefer. Alpo uses this type of sales promo strategy to attract customer to buy more alpo product to complete all their programs. Around 30% of respondents are attracted with Alpo Premium as one of their preference as alpo distributes many merchandise or premium as their strategy that they called on pack promo, this type of strategy is very much preferred by respondents. Almost half of the respondents around 48% of respondents preferred price off. As the price of alpo is way below the competitors giving price off to people would give a boost of sales of Alpo products in the market.

4.2 The Result OF Validity and Reliability Test For The Elements Or Instruments Of Sales Promotion and Consumer Purchasing Decisions

4.2.1 The Test of Data Validity The researcher use Pearson Product moment Correlation Coefficient with SPSS Program. To test the validity of the construct (Sales Promotional Tools and Consumer Purchasing Decision

Stages), data was processed using both r table and counted r (SPSS result). Each item in the questionnaire will be valid if the correlation value that has a minimum value as big as 0.279.

Below is the result of the calculation using SPSS:

Table 4.9 The validity testing result using each element of sales promotional tools variables

Correlations

X1 X2 X3 X4 X5 X6 TOTAL_X

X1 Pearson Correlation 1 .346* .411** .215 .338* .164 .634**

Sig. (2-tailed) .014 .003 .134 .016 .256 .000

N 50 50 50 50 50 50 50

X2 Pearson Correlation .346* 1 .601** .364** .465** .400** .806**

Sig. (2-tailed) .014 .000 .009 .001 .004 .000

N 50 50 50 50 50 50 50

X3 Pearson Correlation .411** .601** 1 .288* .360* .318* .753**

Sig. (2-tailed) .003 .000 .042 .010 .024 .000

N 50 50 50 50 50 50 50

X4 Pearson Correlation .215 .364** .288* 1 .077 .239 .540**

Sig. (2-tailed) .134 .009 .042 .594 .094 .000

N 50 50 50 50 50 50 50

X5 Pearson Correlation .338* .465** .360* .077 1 .507** .661**

Sig. (2-tailed) .016 .001 .010 .594 .000 .000

N 50 50 50 50 50 50 50

X6 Pearson Correlation .164 .400** .318* .239 .507** 1 .624**

Sig. (2-tailed) .256 .004 .024 .094 .000 .000

N 50 50 50 50 50 50 50

TOTAL_X Pearson Correlation .634** .806** .753** .540** .661** .624** 1

Sig. (2-tailed) .000 .000 .000 .000 .000 .000

N 50 50 50 50 50 50 50

*. Correlation is significant at the 0.05 level (2-tailed).

**. Correlation is significant at the 0.01 level (2-tailed).

Source: SPSS 17

From the calculation above, result of validity coefficient that has been done above, it seems that all items used to measure the sales promotion variables have a significant correlation with the total value (in the right column). So it can be concluded that six items elements used to measure the sales promotion variables already fulfill the validity requirement because it has the validity coefficient above 0.279. Where the calculation for the consumer purchasing decision variable in using Alpo, the data as following:

Table 4.10 The validity testing result using each element Consumer Purchasing Decision

Correlations

Y1 Y2 Y3 Y4 Y5 TOTAL_Y

Y1 Pearson Correlation 1 .279 .289* .165 .448** .483**

Sig. (2-tailed) .050 .042 .253 .001 .000

N 50 50 50 50 50 50

Y2 Pearson Correlation .279 1 .709** .739** .629** .876**

Sig. (2-tailed) .050 .000 .000 .000 .000

N 50 50 50 50 50 50

Y3 Pearson Correlation .289* .709** 1 .629** .797** .872**

Sig. (2-tailed) .042 .000 .000 .000 .000

N 50 50 50 50 50 50

Y4 Pearson Correlation .165 .739** .629** 1 .601** .828**

Sig. (2-tailed) .253 .000 .000 .000 .000

N 50 50 50 50 50 50

Y5 Pearson Correlation .448** .629** .797** .601** 1 .872**

Sig. (2-tailed) .001 .000 .000 .000 .000

N 50 50 50 50 50 50

TOTAL_Y Pearson Correlation .483** .876** .872** .828** .872** 1

Sig. (2-tailed) .000 .000 .000 .000 .000

N 50 50 50 50 50 50

*. Correlation is significant at the 0.05 level (2-tailed).

**. Correlation is significant at the 0.01 level (2-tailed). Source: SPSS 17

From the calculation result above (Table 4.10) of validity coefficient that has been done above it. It seems that all the items that is used to measure the consumer Purchasing Decision variables have a significant correlation value with the total value (in the right column). So the researcher can conclude that the five items of instruments or elements used to measure the consumer purchasing decision variables have already fulfilled the requirement of the validity, because they have the coefficient validity above 0.279.

4.2.2. Reliability Testing To test whether the variables in each questionnaire are reliable or not, the researcher has to measure it by using Cronbach’s Alpha Coefficient.

Table 4.11 Reliability Table

<0.20 Not Reliable 0.20-<0.40 Low Reliable 0.40-<0.70 Moderate Reliable 0.70-<0.90 High Reliable 0.90-<1.00 Very High Reliable 1 Perfect Reliable Source: Sugiyono (2000)

By using SPSS 17 for windows, the researcher gets the coefficient value of reliability for sales promotional tools variables as the following below:

Table 4.12

Case Processing Summary

N % Reliability Statistics Cases Valid 50 100.0 Cronbach's Alpha N of Items Excludeda 0 .0 .756 6 Total 50 100.0 a. Listwise deletion based on all variables in the procedure.

Table 4.13

Item-Total Statistics

Scale Mean if Scale Variance if Corrected Item- Cronbach's Alpha Item Deleted Item Deleted Total Correlation if Item Deleted

X1 15.84 16.749 .425 .743

X2 15.54 14.253 .660 .670

X3 15.84 15.647 .604 .691

X4 15.36 18.398 .340 .760

X5 15.62 17.506 .510 .719

X6 15.90 17.806 .460 .731 Source: SPSS 17

Based on calculation result of the coefficient reliability above, the value of coefficient is as big as 0.756. so the instruments or elements used to measure the Sales promotional tools variables have High Reliability. It indicates that there is consistency in measurement of the 50 respondents.

While for the consumer purchasing decision variables, the researcher got the value of coefficient reliability as follows:

Table 4.14

Case Processing Summary

N % Reliability Statistics

Cases Valid 50 100.0 Cronbach's Alpha N of Items

a Excluded 0 .0 .856 5

Total 50 100.0 a. Listwise deletion based on all variables in the procedure.

Table 4.15

Item-Total Statistics

Scale Mean if Scale Variance if Corrected Item- Cronbach's Alpha Item Deleted Item Deleted Total Correlation if Item Deleted

Y1 12.40 20.122 .333 .893

Y2 12.68 13.365 .771 .799

Y3 12.94 15.078 .793 .796

Y4 12.60 14.245 .697 .821

Y5 12.90 14.541 .785 .796 Source: SPSS17 Based on the calculation result of coefficient reliability above, the researcher got the coefficient value as big as 0.856. So the instruments or elements used to measure the consumer purchasing decisions variables have High Reliability. It indicates that there is consistency in the measurement of the 50 respondents.

4.3 The Correlation between Sales Promotion and Consumer Purchasing Decision The correlation between sales promotion and consumer purchasing decision of Alpo can be seen through Rank Spearman Correlation test. Rank Spearman is correlation between independent variable and dependent variable that uses ordinal scale.

To see the correlation between two variables, the researcher has to use hypothesis test, with following below:

H0: sales promotion has no correlation with customer purchasing decision of Alpo

H1: sales promotion has correlation with customer purchasing decision of Alpo

By using output, the result is as follows, from population sample that take as 50 samples:

Table 4.16

Table to help calculate the Rank spearman Correlation

Variable (X) Variable (Y) TOTAL_ TOTAL_ RANK_ RANK_ d d^2 X X X X X X Y Y Y Y Y X Y X Y 1 2 3 4 5 6 1 2 3 4 5 - 11. 121. 3 4 3 3 4 4 3 3 2 4 3 21 15 32.5 21.5 0 0 14. 196. 1 2 2 3 2 3 3 4 4 2 2 13 15 7.5 21.5 0 0 14. 196. 3 5 4 5 2 2 5 5 4 5 4 21 23 32.5 46.5 0 0 2 3 3 4 4 4 4 4 2 3 3 20 16 29.0 27.5 -1.5 2.3 1 1 2 3 3 2 3 2 1 1 2 12 9 4.0 5.0 1.0 1.0 3 4 4 5 3 3 5 3 3 4 4 22 19 36.5 36.0 -0.5 0.3 3 5 3 3 5 3 3 3 3 5 3 22 17 36.5 32.0 -4.5 20.3 1 2 3 4 3 3 3 2 3 2 3 16 13 14.0 15.0 1.0 1.0 4 4 4 5 4 4 4 4 4 4 4 25 20 45.0 37.0 -8.0 64.0 1 1 1 2 1 2 3 1 1 1 1 8 7 1.0 1.5 0.5 0.3 3 3 3 4 3 2 3 3 3 3 3 18 15 23.5 21.5 -2.0 4.0 5 5 5 4 4 3 2 5 5 5 5 26 22 48.0 43.5 -4.5 20.3 2 2 2 3 3 3 3 2 2 2 2 15 11 11.5 10.0 -1.5 2.3 3 3 2 4 4 2 3 3 2 3 2 18 13 23.5 15.0 -8.5 72.3 5 4 4 5 3 4 5 4 4 4 4 25 21 45.0 40.0 -5.0 25.0 4 5 4 4 4 3 3 5 4 5 4 24 21 41.0 40.0 -1.0 1.0 2 4 2 3 4 4 4 4 2 4 2 19 16 26.5 27.5 1.0 1.0 1 2 1 3 3 3 3 2 1 2 1 13 9 7.5 5.0 -2.5 6.3 18. 324. 3 3 3 3 2 2 5 3 3 3 3 16 17 14.0 32.0 0 0 2 3 3 2 4 3 3 3 3 3 3 17 15 18.5 21.5 3.0 9.0 3 4 3 3 3 4 3 4 3 4 3 20 17 29.0 32.0 3.0 9.0

3 5 5 4 4 4 4 5 5 5 5 25 24 45.0 49.5 4.5 20.3 - 18. 342. 4 1 2 5 3 3 3 1 2 1 2 18 9 23.5 5.0 5 3 5 5 4 5 4 4 4 5 4 5 4 27 22 49.5 43.5 -6.0 36.0 13. 182. 2 3 4 4 2 2 3 3 4 3 4 17 17 18.5 32.0 5 3 4 4 3 3 3 5 4 5 2 4 3 22 18 36.5 35.0 -1.5 2.3 3 5 5 5 3 4 4 5 5 5 5 25 24 45.0 49.5 4.5 20.3 14. 196. 2 3 1 3 3 1 3 4 4 3 1 13 15 7.5 21.5 0 0 1 5 2 4 3 2 2 1 2 5 2 17 12 18.5 12.5 -6.0 36.0 3 5 5 4 5 5 4 5 4 5 5 27 23 49.5 46.5 -3.0 9.0 3 4 4 1 4 4 3 2 3 4 4 20 16 29.0 27.5 -1.5 2.3 3 1 2 3 2 1 3 1 2 1 2 12 9 4.0 5.0 1.0 1.0 10. 100. 4 5 4 5 2 2 5 5 4 5 4 22 23 36.5 46.5 0 0 2 2 3 3 4 4 4 2 3 2 3 18 14 23.5 17.0 -6.5 42.3 2 1 2 3 2 3 3 1 2 1 2 13 9 7.5 5.0 -2.5 6.3 3 4 4 4 3 3 5 4 4 4 4 21 21 32.5 40.0 7.5 56.3 5 5 5 2 5 3 3 5 5 5 5 25 23 45.0 46.5 1.5 2.3 3 2 3 4 2 3 3 2 3 2 3 17 13 18.5 15.0 -3.5 12.3 6 1 2 1 4 1 4 1 2 1 2 15 10 11.5 8.0 -3.5 12.3 2 1 1 2 1 2 3 1 1 1 1 9 7 2.0 1.5 -0.5 0.3 3 3 3 4 4 2 3 3 3 3 3 19 15 26.5 21.5 -5.0 25.0 - 26. 702. 5 4 1 4 4 5 2 4 1 4 1 23 12 39.0 12.5 5 3 1 2 2 3 3 3 3 2 2 2 2 14 11 10.0 10.0 0.0 0.0 4 3 2 2 3 2 3 4 3 3 2 16 15 14.0 21.5 7.5 56.3 - 11. 121. 5 2 4 5 3 2 5 2 2 2 4 21 15 32.5 21.5 0 0 3 5 4 4 5 3 3 5 4 5 4 24 21 41.0 40.0 -1.0 1.0 - 13. 182. 5 4 2 5 4 4 4 3 3 4 2 24 16 41.0 27.5 5 3 2 4 1 3 1 1 3 1 2 4 1 12 11 4.0 10.0 6.0 36.0 21. 462. 4 3 5 1 2 2 5 4 4 3 5 17 21 18.5 40.0 5 3 13. 182. 2 3 3 2 4 3 3 5 3 3 3 17 17 18.5 32.0 5 3 Source: Primary data

To find rs=

Rs= =1-(6*3923.5)/(50*(50^2-1))= 0.810

Table 4.17 Spearman Correlation

Correlations

Rank of Sales Promotional Rank of Consumer Tools Purchasing Decision

Spearman's rho Rank of Sales Promotional Correlation Coefficient 1.000 .810** Tools Sig. (2-tailed) . .000

N 50 50

Rank of Consumer Correlation Coefficient .810** 1.000 Purchasing Decision Sig. (2-tailed) .000 .

N 50 50

**. Correlation is significant at the 0.01 level (2-tailed). Source: SPSS 17

From the calculation result, the researcher can know that the rank spearman is as big as 0.810. The interpretation is as follow:

Table 4.18 Coefficient Correlation Level

Correlation Correlation Level 0-0.199 very weak 0.2-0.399 weak 0.4-0.599 medium 0.6-0.799 strong 0.8-1 very strong

Source: Sugiyono, 1999:p.183 Based on the rule above, the researcher can conclude that there is correlation between sales promotion and Consumer Purchasing Decision at Alpo and this correlation is very strong. In other word, Sales promotional Tools is very effective in increasing Consumer Purchasing Decision.

4.4 Hypothesis Testing After getting the correlation value, the next step is testing whether the correlation value is significant or not. The testing that has been done toward the hypothesis is as follows:

= 5 %

n = 50

rs tabel = 0,273 (source : Nugroho,2005)

Correlations

Rank of Sales Promotional Rank of Consumer Tools Purchasing Decision

Spearman's rho Rank of Sales Promotional Correlation Coefficient 1.000 .810** Tools Sig. (2-tailed) . .000

N 50 50

Rank of Consumer Correlation Coefficient .810** 1.000 Purchasing Decision Sig. (2-tailed) .000 .

N 50 50

**. Correlation

H0: sales promotion has no correlation with customer purchasing decision of Alpo

H1: sales promotion has correlation with customer purchasing decision of Alpo

rs = 0,810

For testing the hypothesis the researcher is using below equation:

 If r- > r-tabel, or p-value in column sig.(2-tailed) < level of significant ( =5%=0,05) then H1 accepted and reject H0.

Z= rs √ / 1 =0,810 √ 5,67

Figure 4.1 Z test

Source: primary data

As the value of rs: 0.810 then there is a strong positive correlation between the 2 sets of data.

If the value of r s :

a. Is -1, there is a perfect negative correlation b. Falls between -1 and 0, there is weak negative correlation c. Is 0, there is no correlation d. Falls between 0 and 0.5 there is weak positive correlation e. Falls between 0.5 and 1, there is a strong positive correlation f. Is -1, there is a perfect positive correlation between the 2 sets of data.

If the r value is 0, state that null hypothesis is accepted. Otherwise, say it rejected.

4.5 The Evaluation of Coefficient Determination To know the percentage of contribution about the correlation of sales promotional tools (X) toward consumer purchasing decision (Y) at Alpo, by using Coefficient determination

Coefficient Determination (CD)

2 CD = rs x 100% = (0,810) x 100% = 65,61 %

From the calculation above, the coefficient determination value as big as 0.6561, it means that, there is 65,61% change of variation of Consumer Purchasing Decision at Alpo, which influenced by Sales Promotion, and the rest which is as big as 34.39% is influenced by other factors.

CHAPTER V

CONCLUSION AND RECOMMENDATION

5.1 Conclusion Chapter five is the last parts of the thesis that allow the researcher to evaluate the problems have been answered by the researcher. Based on the research results and problem analysis, the researcher gave the conclusions as follows:

1. Sales promotion is one of the points or variables from marketing mix (product, price, place, and sales promotion) that has a strong correlation toward the consumer purchasing decision at Alpo. Within this thesis, researcher has proven by the result of the analysis toward 50 questionnaires score that distributed to customers in Giant Lebak Bulus. The calculation result is as big as 8.10. This value is more than r-table value of the significant level of 5% so H0 is rejected. It means that sales promotion in Alpo has correlation toward customer purchasing decision. Then based on the rank spearman correlation coefficient, the result as big as 0.810. it means that a sales promotion has strong correlation toward the consumer purchasing decision at Alpo.

2. The sales promotion tools in Alpo are; Price off, Special events, Loyalty programs, POP/POS, Premium, and Thematic Activity. The most of favorite sales promotion strategy or program at Alpo is Price Off which scores around 48% of total respondents. As alpo products are known with best quality with fewer prices, giving price off strategy will definitely boost sales.

After Price Off around 30% of respondent’s scores for Premium, it is obvious that people loves this kind of promotion as people will get merchandise every time they purchase the products. These on pack promotion also believe to be one of the key to boost sales for Alpo. The last parts are for special events, loyalty programs, pop/pos, and thematic activity that scores 6%, 8%, 2%, and 6% relatively. In this case Alpo customers are very price sensitive. Customer will to switch product whenever possible. Marketing staff for alpo has to be innovative in giving the right type of sales promotion for their loyal customers.

5.2 Recommendation

 Sales promotion as the well-known to support Alpo has a strong correlation toward consumer purchasing decision as big as 65,61% compared to other factors. So the implementation of sales promotion programs has to consider the things as follows:  Alpo price-off is the most favorite sales promotion tools. Its implementing has to be maintained and the strategy has to be done with more variations, such as price off for all dry pet food products. Because normally price off are given just for specific variant to boost sales of one particular variant.  Sales promotion must be carefully planned and offer target customer genuine value. Before Alpo issuing program such as price-off or premium on pack promo. The sales team will take this strategy seriously not only for achieving target of the sales people but also for growing the business itself.  Special events are also important. Alpo needs to have more events not only focusing in Jakarta as the central of their main sales, But also outside Jakarta. By having a successful event people will not only recognize alpo as a product but also Purina. From the last project that the researcher was appointed as PIC (Person in Charge) in Central Park, the hype for dog lovers are adorable, having more than 300 people coming and join the events. This type of event is very good for awareness of Alpo and also for boosting sales. Loyalty program in Alpo should attract customers and make Alpo users or customers to use Alpo as their pet food products and continue to buy alpo in the future.

REFERENCES

BOOKS AND COMPANY RECORD:

Works Cited Cooper, S. a. (2006). Marketing Research. Chicago: McGraw Hill.

Greener, S. D. (2008). introduction to research method. Sweeden: Ventus Publishing ApS.

Jain, S. (2007). MARKETING PLANNING AND STRATEGY 6th edition. Pearson Custom Publishing.

Jean Heer. (1991). Nestle 125 years. Geneve: Nestle. kotler, P. (2003). marketing insight from A to Z. New jersey, USA: John wiley and sons inc.

Nestle. (2010). Alpo . jakarta indonesia.

Nestle. (2007). competitors logo. jakarta Indonesia.

Nestle. (2010). NPP Indonesia team. Jakarta Indonesia.

Nestle, I. (2004). market situation. Jakarta Indonesia.

Peterson, M. a. (2002). Marketing Research. USA: Mc Graw Hill.

Shukla, P. (2008). The Essential of Marketing Research. Sweden: Ventus Publishing ApS.

Thayer, W. (2006). Winning in Store Promo. Frozen Food Age , 45.

Sugiyono Reliability Table (2000),p.109

Sugiyono, Coefficient Correlation Level 1999:p.183

Nugroho,Hypothesis Testing Z-test value. 2005

INTERNET:

Customer decision process. July 18, 2010 from

Www-rohan.sdsu.edu/renglish/370/notes/chapt05

Stimulus response model. Retrieved July 18, 2010 from (www.dspace.fe.unibraw.ac.id)

Croenbach alpha. Retrieved August, 5, 2010 from http://en.wikipedia.org.wiki/cronbach’s_alpha

APPENDICES

 COMPANY PROFILE

 QUESTIONNAIRE  QUESTIONNAIRE CALCULATION  VARIABLE X (SALES PROMOTIONAL TOOLS)  VARIABLE Y (CUSTOMER PURCHASING DECISION)

Appendix A: Company Profile

Nestle Company Profile Nestlé is the largest nutrition and Foods Company in the world, founded and headquartered in Vevey, Switzerland. Nestlé originated in a 1905 merger of the Anglo-Swiss Milk Company, which was established in 1866 by brothers George Page and Charles Page, and the Farine Lactée Henri Nestlé Company, which was founded in 1866 by Henri Nestlé. (Jean Heer, 1991) “The company grew significantly during the First World War and following the Second World War, eventually expanding its offerings beyond its early condensed milk and infant formula products. Today, the company operates in 86 countries around the world and employs nearly 283,000 individuals” (Jean Heer, 1991).

“The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled and world markets developed into more or less integrated trading areas. Since 1996 there have been acquisitions including San Pellegrino (1997), Spillers Pet foods (1998), and Ralston Purina (2002). There were two major acquisitions in North America, both in 2002: in June, Nestlé merged its U.S. ice cream business into Dreyer's, and in August a US$2.6 billion acquisition was announced of Chef America, the creator of Hot Pockets. In the same time frame, Nestlé came close to purchasing the iconic American company Hershey's, though the deal fell through. Another recent purchase includes the Jenny Craig weight loss program for US$600 million” (Nestle I. , 2004).

Nestle Indonesia

Nestlé products have been known and loved in Indonesia since the end of the 19th century, including “MILKMAID” sweetened condensed milk, which is known here as “Cap Nona” milk. The marketing of Nestlé products in Indonesia in the early days was directed by the office in Singapore. In the 1930s, Nestlé controlled the milk-product market to such an extent that consumers gave the name “Cap Nona” to all similar milk products.

Now, we have more than 200 distributors supplying Nestlé products every day to 400 thousand stores throughout Indonesia, including around 2,000 modern outlets. The trust and loyalty shown

58 by our customers are also the fruits of an efficient distribution system and professional marketing management.

NESTLE’S Development in Indonesia 1971 Nestlé S.A established a subsidiary in Indonesia on 29 March. This was originally called PT Food Specialties Indonesia, but subsequently changed its name to PT Nestlé Indonesia in 1993.

1972 The first Nestlé plant in Indonesia started operating. This was a milk processing plant located in Waru, Sidoarjo Regency, East Java.

1979 The NESCAFÉ instant coffee factory in Panjang, Lampung, started operating.

1988 A milk processing plant located in Kejayan, Pasuruan Regency, East Java, started operating. This used the fresh milk produced by thousands of dairy farmers in East Java. 1989 A confectionery factory located in Cikupa, Tangerang Regency, Banten, started operating.

2001 The production of the Waru plant was integrated with the Kejayan plant Source taken from: Company Record (Nestle I. , 2004)

Appendix B: Questionnaire Dear Sir or Madam,

My name is Randy Fernando Manongga, a student of President University majoring in International Business. I would like to propose this questionnaire, especially for Alpo Purina user, about sales promo toward purchasing decision to use Alpo. This questionnaire is to fulfill my research and in order to complete my thesis and obtain my degree at President University. The purpose of this questionnaire is to provide valid and reliable data as input for Purina team especially for the marketing department in the future.

For your convenience, your answer will be treated confidential.

Personal Data Respondent

1. Jenis kelamin (Gender) male female

2. Usia (Age) ………

3. Pekerjaan (Occupation) a. Pelajar (Student)

b. PNS (Civil Servant) c. Pegawai Swasta (Private-owned enterprise) d. Pengusaha (Entrepreneur) e. Ibu rumah tangga (Housewife)

4. Tempat tinggal (living place) a. Jakarta Pusat (Central Jakarta)

b. Jakarta Selatan (South Jakarta)

c. Jakarta Timur (East Jakarta)

d. Jakarta Utara (North Jakarta)

e. Luar Jakarta (Outside Jakarta)

5. Sudah berapa lama menggunakan Alpo (Length of Using Alpo Purina)

a. <6months 60

b. >6months-<1year

c. >1year - <1,5 years

d. >1,5 years - <2 years

e. >2 years

6. Frekuensi kunjungan anda ke Giant Lebak Bulus dalam kurun waktu 1 bulan untuk membeli Alpo? (The frequency rate of your visit to Giant Lebak Bulus in a month to buy Alpo?) a. sebulan sekali (once a month)

b. sebulan dua kali (twice a month)

c. seminggu sekali (once a week)

d. seminggu dua kali (twice a week)

e. setiap hari (every day)

7. Total pengeluaran untuk belanja Alpo selama satu bulan di Giant Lebak Bulus? (Total expenses per month to buy Alpo in Giant Lebak Bulus?)

a. <50.000

b. >50.000-<100.000

c. >100.000-<150.000

d. >150.000-<200.000

e. >200.000

8. Jenis promosi penjualan apa yang anda paling sukai? (What kind of Sales Promotion do you prefer the most?) a) PRICE OFF b) SPECIAL EVENTS c) LOYALTY PROGRAMS d) POP/POS e) PREMIUM f) THEMATIC ACTIVITY

Part I X variable (Sales Promotion Tools)

1. Potongan harga yang di berikan oleh Alpo Purina menjadi alasan mengapa anda menggunakan Alpo Purina. (price off offered by Purina attracts your attention to use them) 1 2 3 4 5

Sangat Tidak Tidak Setuju Netral Setuju Sangat Setuju Setuju (Strongly (Disagree) (Strongly Agree) Disagree) (Nor Disagree (Agree) or Agree)

2. Special Event yang di buat oleh Alpo Purina membuat anda menggunakan produk mereka? (Special Events conducted by Purina attract you to use their products (Alpo)?

1 2 3 4 5 Sangat Tidak Tidak Setuju Netral Setuju Sangat Setuju Setuju (Strongly (Disagree) (Strongly Disagree) (Nor Disagree (Agree) Agree) or Agree)

3. Apakah program loyalty dari Alpo Purina membuat anda tertarik untuk menggunakan Alpo Purina? (Loyalty Program offered by Alpo Purina attracts you to use Alpo?) 1 2 3 4 5

Sangat Tidak Tidak Setuju Netral Setuju Sangat Setuju Setuju (Disagree) (Strongly (Strongly (Nor Disagree (Agree) Agree) Disagree) or Agree)

4. Apakah display produk mereka dengan segala pajangan membuat anda menggunakan Alpo Purina? (POP or POS in terms of display attracts you to continuously to use Purina products) 1 2 3 4 5

Sangat Tidak Tidak Setuju Netral Setuju Sangat Setuju Setuju (Strongly (Disagree) (Strongly Disagree) (Nor Disagree (Agree) Agree) 62 or Agree)

5. Hadiah langsung yang di berikan oleh Alpo Purina menjadi alasan mengapa anda memilih Alpo Purina? (Does premium (could be product, merchandise) offered by Purina Attracts you to buy their products)

1 2 3 4 5

Sangat Tidak Tidak Setuju Netral Setuju Sangat Setuju Setuju (Strongly (Disagree) (Strongly Disagree) (Nor Disagree (Agree) Agree) or Agree)

6. Apakah Aktivitas promosi yang bertema seperti Christmast dan Tahun baru China dari Alpo Purina membuat anda menggunakan produk Alpo Purina? (Does Thematic Activity offered by Alpo Purina attracts you to use Alpo Purina?)

1 2 3 4 5

Sangat Tidak Tidak Setuju Netral Setuju Sangat Setuju Setuju (Strongly (Disagree) (Stronglyy Disagree) (Nor Disagree (Agree) Agree) or Agree)

Part II Y variable (Consumer Purchasing Decision)

1. Saya tahu dan mengenal promosi dari Alpo Purina (I know and recognized promo by Alpo Purina)

1 2 3 4 5

Sangat Tidak Tidak Setuju Netral Setuju Sangat Setuju Setuju (Strongly (Disagree) (Strongly Agree) Disagree) (Nor Disagree or (Agree) Agree)

2. Saya mendapatkan informasi mengenai promosi dari Alpo Purina dengan mudah. (I get information of sales promotion from Purina easily.)

1 2 3 4 5

Sangat Tidak Tidak Setuju Netral Setuju Sangat Setuju Setuju (Strongly (Disagree) (Strongly Disagree) (Nor Disagree (Agree) Agree) or Agree)

3. Promosi yang diberikan oleh Alpo Purina lebih atraktive dibandingkan produk lain. (Promo offered by Alpo Purina is more attrative that other pet food products)

1 2 3 4 5

Sangat Tidak Tidak Setuju Netral Setuju Sangat Setuju Setuju (Disagree) (Strongly (Strongly (Nor Disagree (Agree) Agree) Disagree) or Agree)

4. Saya lebih menyukai promosi yang dilakukan oleh Alpo Purina dibandingkan dengan produk pet food yang lain. (I prefer promo offered by Purina to other competitors)

1 2 3 4 5

Sangat Tidak Tidak Setuju Netral Setuju Sangat Setuju Setuju (Strongly (Disagree) (Strongly Disagree) (Nor Disagree (Agree) Agree) or Agree)

5. Saya merasa puas dengan promosi yang di berikan oleh Alpo Purina. (I feel satisfied by promo offered by Purina)

1 2 3 4 5

Sangat Tidak Tidak Setuju Netral Setuju Sangat Setuju Setuju (Disagree) (Strongly (Strongly (Nor Disagree (Agree) Agree) Disagree) or Agree)

Appendix C: Questionnaire calculation Gender Age Occupation Living Place Respondent a b c d e a b c d e a b c d e a b c d e 1 1 1 1 1 2 1 1 1 1 3 1 1 1 1 4 1 1 1 1 5 1 1 1 1 6 1 1 1 1 7 1 1 1 1 8 1 1 1 1 9 1 1 1 1 10 1 1 1 1 11 1 1 1 1 12 1 1 1 1 13 1 1 1 1 14 1 1 1 1 15 1 1 1 1 16 1 1 1 1 17 1 1 1 1 18 1 1 1 1 19 1 1 1 1 20 1 1 1 1 21 1 1 1 1 22 1 1 1 1 23 1 1 1 1 24 1 1 1 1 25 1 1 1 1 26 1 1 1 1 27 1 1 1 1 28 1 1 1 1 29 1 1 1 1 30 1 1 1 1 31 1 1 1 1 32 1 1 1 1 33 1 1 1 1 34 1 1 1 1 35 1 1 1 1 36 1 1 1 1 37 1 1 1 1 38 1 1 1 1 39 1 1 1 1 40 1 1 1 1 41 1 1 1 1 42 1 1 1 1 43 1 1 1 1 44 1 1 1 1 45 1 1 1 1 46 1 1 1 1 47 1 1 1 1 48 1 1 1 1 49 1 1 1 1 50 1 1 1 1 Total 22 28 0 0 0 7 18 10 12 3 10 6 17 6 11 0 33 10 0 7 Total 50 50 50 50

Length Frequency Rate Expense Prefer Respondent a b c d e a b c d e a b c d e a b c d e f 1 1 1 1 1 2 1 1 1 1 3 1 1 1 1 4 1 1 1 1 5 1 1 1 1 6 1 1 1 1 7 1 1 1 1 8 1 1 1 1 9 1 1 1 1 10 1 1 1 1 11 1 1 1 1 12 1 1 1 1 13 1 1 1 1 14 1 1 1 1 15 1 1 1 1 16 1 1 1 1 17 1 1 1 1 18 1 1 1 1 19 1 1 1 1 20 1 1 1 1 21 1 1 1 1 22 1 1 1 1 23 1 1 1 1 24 1 1 1 1 25 1 1 1 1 26 1 1 1 1 27 1 1 1 1 28 1 1 1 1 29 1 1 1 1 30 1 1 1 1 31 1 1 1 1 32 1 1 1 1 33 1 1 1 1 34 1 1 1 1 35 1 1 1 1 36 1 1 1 1 37 1 1 1 1 38 1 1 1 1 39 1 1 1 1 40 1 1 1 1 41 1 1 1 1 42 1 1 1 1 43 1 1 1 1 44 1 1 1 1 45 1 1 1 1 46 1 1 1 1 47 1 1 1 1 48 1 1 1 1 49 1 1 1 1 50 1 1 1 1 Total 11 13 16 6 4 14 17 9 6 4 2 16 19 11 2 24 3 4 1 15 3 Total 50 50 50 50

Appendix D: VARIABLE (X) SALES PROMOTIONAL TOOLS

score of item declaration

Respondent 1 2 3 4 5 6 Total Score item 1 3 4 3 3 4 4 21 2 1 2 2 3 2 3 13 3 3 5 4 5 2 2 21 4 2 3 3 4 4 4 20 5 1 1 2 3 3 2 12 6 3 4 4 5 3 3 22 7 3 5 3 3 5 3 22 8 1 2 3 4 3 3 16 9 4 4 4 5 4 4 25 10 1 1 1 2 1 2 8 11 3 3 3 4 3 2 18 12 5 5 5 4 4 3 26 13 2 2 2 3 3 3 15 14 3 3 2 4 4 2 18 15 5 4 4 5 3 4 25 16 4 5 4 4 4 3 24 17 2 4 2 3 4 4 19 18 1 2 1 3 3 3 13 19 3 3 3 3 2 2 16 20 2 3 3 2 4 3 17 21 3 4 3 3 3 4 20 22 3 5 5 4 4 4 25 23 4 1 2 5 3 3 18 24 5 5 4 5 4 4 27 25 2 3 4 4 2 2 17 26 4 4 3 3 3 5 22 27 3 5 5 5 3 4 25 28 2 3 1 3 3 1 13 29 1 5 2 4 3 2 17 30 3 5 5 4 5 5 27 31 3 4 4 1 4 4 20 32 3 1 2 3 2 1 12 33 4 5 4 5 2 2 22 34 2 2 3 3 4 4 18 35 2 1 2 3 2 3 13 36 3 4 4 4 3 3 21 37 5 5 5 2 5 3 25 38 3 2 3 4 2 3 17

39 6 1 2 1 4 1 15 40 2 1 1 2 1 2 9 41 3 3 3 4 4 2 19 42 5 4 1 4 4 5 23 43 1 2 2 3 3 3 14 44 4 3 2 2 3 2 16 45 5 2 4 5 3 2 21 46 3 5 4 4 5 3 24 47 5 4 2 5 4 4 24 48 2 4 1 3 1 1 12 49 4 3 5 1 2 2 17 50 2 3 3 2 4 3 17

Appendix E: VARIABLE (Y) CONSUMER PURCHASING DECISION score of item declaration Respondent 1 2 3 4 5 Total Score item 1 3 3 2 4 3 15 2 3 4 4 2 2 15 3 5 5 4 5 4 23 4 4 4 2 3 3 16 5 3 2 1 1 2 9 6 5 3 3 4 4 19 7 3 3 3 5 3 17 8 3 2 3 2 3 13 9 4 4 4 4 4 20 10 3 1 1 1 1 7 11 3 3 3 3 3 15 12 2 5 5 5 5 22 13 3 2 2 2 2 11 14 3 3 2 3 2 13 15 5 4 4 4 4 21 16 3 5 4 5 4 21 17 4 4 2 4 2 16 18 3 2 1 2 1 9 19 5 3 3 3 3 17 20 3 3 3 3 3 15 21 3 4 3 4 3 17 22 4 5 5 5 5 24 23 3 1 2 1 2 9 24 4 5 4 5 4 22 25 3 3 4 3 4 17 26 4 5 2 4 3 18 27 4 5 5 5 5 24 28 3 4 4 3 1 15 29 2 1 2 5 2 12 30 4 5 4 5 5 23 31 3 2 3 4 4 16 32 3 1 2 1 2 9 33 5 5 4 5 4 23 34 4 2 3 2 3 14 35 3 1 2 1 2 9 36 5 4 4 4 4 21 37 3 5 5 5 5 23 38 3 2 3 2 3 13 69

39 4 1 2 1 2 10 40 3 1 1 1 1 7 41 3 3 3 3 3 15 42 2 4 1 4 1 12 43 3 2 2 2 2 11 44 3 4 3 3 2 15 45 5 2 2 2 4 15 46 3 5 4 5 4 21 47 4 3 3 4 2 16 48 3 1 2 4 1 11 49 5 4 4 3 5 21 50 3 5 3 3 3 17