A S;fUDY OF EFFICACY OF SALES PROMOTIONS OF TOPS SUPERMARKET IN BANGKOK By PIMOLRAT KHUNVIROJPANICH I A Thesis submitted in partial fulfillment of the requirement for the degree of Master of Business Administration Examination Committee : 1. Dr. Ishwar C. Gupta (Advisor) 2. Dr. Thongdee Kijboonchoo (Member) ,{_~-..:..... 3. Dr. Sirion Chaipoopirutana (Member) "?";c"~'j 4. Dr. Jakarin Srimoon (Member) IJ ..(( 14 .. krrt?..0( 5. Assoc. Prof. Poonsak Sangsunt (MOE Representative) Examined on : 23 June 2004 Approved for Graduation on : Graduate School of Business Assumption University Bangkok, Thailand June 2004 ABSTRACT There is an intense competition in the retail business. Customers have many alternatives to select. They move away from tradition trade to modern trade such as supermarket. One of the several reasons is sales promotion tools which are used by supermarkets to attract the customers. Therefore, it is useful and interesting to study the relationship between sales promotion tools and consumers behavior response. Tops Supermarket is chosen for this study. The research problem for this study is "What is the relationship between sales promotion tools and consumer behavior". The objective of this research is to find out the relationship of four different sales promotion tools which are coupon, price discount, buy-one-get-one-free, and premium, with four different consumer behavior responses which are brand switching, brand loyalty, stockpiling, and purchase acceleration. The research instrument was administered 400 respondents, both male and female which were completed by the target population who have experienced in shopping at Tops Supermarket. After data were collected from respondents, the data were processed by SPSS program. Descriptive analysis was used to describe general information of demographic data by showing percentage and frequency analysis. Pearson Correlation Coefficient was used to test the sixteen hypotheses. The demographic characteristics of respondents are female between 21-30 years old, with Bachelor degree. The majority of respondents' were employees and the salary between 5,000-20,000 Baht per month. The result of sixteen hypotheses presented that coupon, buy-one-get-one-free, and premium are low positive related to consumer's brand switching whereas price discount is medium positive related ·10 consumer's brand switching. It is also found that coupon and buy-one-get-one-free are low positive related to consumer's brand loyalty while it is found that price discount does not related to consumer's brand loyalty. However, premium is low negative related to consumer's brand loyalty. Moreover, it has seen that coupon, price discount, and buy-one-get-one-free are medium positive related to consumer's stockpiling while premium is low positive related to consumer's stockpiling. Finally, coupon, price discount, and buy-one-get-one-free are medium positive related to consumer's purchase acceleration whereas premium is low positive related to consumer's purchase acceleration. 11 ACKNOWLEDGEMENT For complete this thesis, cooperation of many people is required. I would like to take this opportunity to convey my gratitude to all of those who helped me in completing this study. First of all, I would like to specially thank my advisor, Dr.Ishwar C. Gupta for his guidance, support, and encouragement from the beginning till the completion of thesis. Moreover, sincerely thanks to all of the committee members; Dr.Thongdee Kijboonchoo, Dr.Sirion Chaipoopiruratana, Dr.Jakarin Srimoon for their useful and valuable comments to help me complete this task. May I extend heartiest thanks to my beloved family for the support, encouragement, understanding, and for their assistance in everything. Finally, sincerely thanks to all my friends for their care, encouragement, and assistances throughout the making of this thesis. lll St. Gabriefs l_.ibrary, An TABLE OF CONTENTS Page No. Abstract Acknowledgement lll Table of Contents IV List of Tables Vll List of Figures x Chapter 1 Generalities of the Study 1.1 Introduction to the research 1 1.2 Statement of problem 13 1.3 Objective of the research 13 1.4 Scope of the research 14 1.5 Limitation of the research ·14 1.6 Significance of the research 15 1.7 Definition of terms 15 Chapter 2 Review of Related Literature and Studies 2.1 Literature support for Independent variable 18 2.1.1 Definition of sales promotion 19 2.1.2 Types of promotion 20 2.1.3 Types of consumer promotion 22 2.2 Literature Support for Dependent variable 27 2.2. l Consumer responsive to promotion deals 27 2.3 Other Related Literature Support 32 IV 2.3.1 Demographic Factors 32 2.4 Empirical Research 37 Chapter 3 Research Frameworks 3.1 Theoretical Framework 43 3.2 Conceptual Framework 45 3.3 Research Hypothesis 46 3.4 Operational Component Variable 50 Chapter 4 Research Methodology 4.1 Research Methodology 52 4.1.1 Research Method 52 4.2 Respondents and sampling procedures 52 4.2.1 Target Population 52 4.2.2 Sample Unit 53 4.2.3 Sample Size 53 4.2.4 Sampling Procedures 54 4.2.5 Sampling Plan 54 4.3 Research Instrument 55 4.4 Pretest 56 4.5 Collection of Data 58 4.6 Statistical treatment of Data 58 v Chapter 5 Data Analysis 5.1 Descriptive Analysis 62 5.2 Test of the Hypotheses 67 Chapter 6 Summary, Conclusion, and Recommendations 6.1 Summary of Findings 84 6.1.1 Characteristics of Respondents 84 6.2 Hypothesis Testing Results 87 6.2.1 Summary of Hypothesis Testing Results 87 6.2.2 Elaboration of Hypothesis Results 90 6.3 Conclusion 97 6.4 Recommendations 99 Appendix A Questionnaire in English B Questionnaire in Thai C Reliability Test VI LIST OF TABLES Page No. Table 1.1 Expansion outlet of retail 4 Table 1.2 Supermarket in Bangkok 6 Table 1.3 Sales Volume in Tops Supermarket 6 Table 1.4 Customers transaction in Tops Supermarket 7 Table 1.5 Types of promotion in different types of store 9 Table 2.1 Empirical research 37 Table 3.1 Operational definition of variables 50 Table 4.1 Sample sizes used in research studies 53 Table 4.2 Reliability result 57 Table 4.3 r-value and measure the strength of association 60 Table 5.1 Frequency Distribution of Gender of the respondents 63 Table 5.2 Frequency Distribution of Age of the respondents 63 Table 5.3 Frequency Distribution oflncome Level of the respondents 64 Table 5.4 Frequency Distribution of Occupation of the respondents 65 Table 5.5 Frequency Distribution of Level of Education of the respondents 65 Table 5.6 Mean and Standard deviation of sales promotion tools 66 Table 5.7 Pearson Correlation test between coupon and 67 consumer's brand switching Table 5.8 Pearson Correlation test between coupon and 68 consumer's brand loyalty Table 5.9 Pearson Correlation test between coupon and 69 Vil consumer's stockpiling Table5.10 Pearson Correlation test between coupon and 70 consumer's purchase acceleration Table 5.11 Pearson Correlation test between price discount 71 and consumer's brand switching Table 5.12 Pearson Correlation test between price discount 72 and consumer's brand loyalty Table 5.13 Pearson Correlation test between price discount 73 and consumer's stockpiling Table 5.14 Pearson Correlation test between price discount 74 and consumer's purchase acceleration Table 5.15 Pearson Correlation test between buy-one-get-one-free 75 and consumer's brand switching Table 5.16 Pearson Correlation test between buy-one-get-one-free 76 and consumer's brand loyalty Table 5.17 Pearson Correlation test between buy-one-get-one-free 77 and consumer's stockpiling Table 5.18 Pearson Correlation test between buy-one-get-one-free 78 and consumer's purchase acceleration Table 5.19 Pearson Correlation test between premium 79 and consumer's brand switching Table 5.20 Pearson Correlation test between premium 80 and consumer's brand loyalty Table 5.21 Pearson Correlation test between premium 80 Vlll and consumer's stockpiling Table 5.22 Pearson Correlation test between premium 81 and consumer's purchase acceleration Table 6.1 Summary of Characteristics of Respondents 86 Table 6.2 Summary of Relationship between Independent 87 and Dependent Variable lX LIST OF FIGURES Page No. Figure 2.1 Types of sales promotion 21 Figure 2.2 A Segmentation Model of Consumer Response 28 to Sales Promotion Figure 3.2 Conceptual Framework 45 x Chapter 1 Generalities of the study This chapter consists of seven sections. The first section explains the background of the research. The second section and third section present the statement of problem and the research objectives. The forth and fifth section explain scope and the limitation of the research. The last two sections explain the significance and the definition of term of the research. Introduction There are many types of businesses in retail industries nowadays such as discount stores, supermarkets, convenience stores and hypermarkets. Among intense competition, each retailer uses many strategies and tools to satisfy and attract the customers. Sales promotion is one of the important tools that used by every retailers, and different promotion tools effect consumer behavior in different ways. As a result of a globalizing economy, and the exposure of Thai people to a global culture via the media, flourishing modern shopping environments are now threatening the existence of traditional Thai shopping environments. Many Thais enjoy spending time in the comfortable atmospheres of modern shopping environments. As a consequence, traditional shopping environments are taken for granted and are beginning to disappear. Consumers are moving away from traditional retail outlets as they realize that they can get similar or better quality products from modern trades like supermarkets, superstores, hypermarkets, and cash and carry stores.