Evaluation of the Impact of Sales Promotion and Store Ambience on Customer Purchase Intention: A Case of Supermarkets in Pakistan MADIHA KAMRAN [email protected] Karachi University Business School Dr. Muhammad Asim Karachi University Business School Salman Manzoor Education and Literacy Department, Govt. of Sindh ABSTRACT This research sets out to evaluate the key factors that affect the consumer purchase intention in retail supermarkets of Pakistan. It filled a lack of studies where not many researchers have investigated the most common factors such as the overall store ambience and sales promotion techniques preferences altogether from a customer‘s perspective. A simple random sample of 300 customers was taken who frequently shop from supermarkets. Data was collected through a well-structured questionnaire which was circulated online and analyzed through descriptive and statistical analysis. The key findings of the study indicated that sales promotion variables such as price discounts (PI) and in-store free samples (ISFS) have a significant impact on consumers‘ purchase intention (PI) whereas buy-one-get-one-free (BOGOF) and coupons came out insignificant. Furthermore, the overall store atmosphere including color, lighting, scent, temperature and store‘s design and display directly affect customer‘s buying behavior in supermarkets. This paper has important implications for entrepreneurs and marketers who wish to successfully create and maintain a strong brand connection with the focal consumer market. The present study also has some limitations that are mentioned at the end of the study. Keywords: Sales Promotion, Store Ambience, Supermarkets, Purchase Intention INTRODUCTION Supermarkets are retail outlets that trade all kinds of Fast-Moving Consumer Goods (FMCG) and are often referred as Modern Trade. The idea of modern trade was first introduced in Pakistan in the early 1980‘s and now Pakistan has both local and international modern trade facilities in abundance. Local modern trade is a supermarket that covers an area of at least 5445 sq.ft and has various retail stores across the city while headquarter being located in the same country. Some examples of local supermarkets or local modern trade (LMT) in Pakistan are Imtiaz, Chase, Naheed, Al-Fatah, HKB etc. Contrary to this, chains of international supermarkets are referred to as International Modern Trade (IMT). Some famous international supermarkets that have franchises in Pakistan are Metro, Hyperstar, Carrefour, Spar. In the early days, only a few big cities in Pakistan enjoyed the privilege of these facilities. Soon the trend penetrated deeper into the society, thus allowing hundreds of LMTs to establish in other cities of Pakistan. Consumers from all backgrounds warmly welcomed this trend because of the pleasure and convenience attached to it. As shopping has always observed an increasing trend with the changing market needs, numerous supermarkets can be found in every nook and corner of the big cities in the country. The reason being the hustled bustled lives of the modern age, where to minimize the time and effort in searching the RJ Journal of Business Management Evaluation of the Impact of Sales Promotion and Store Ambience on & Social Sciences Customer Purchase Intention: A Case of Supermarkets in Pakistan Volume 1, Issue 1 2021 DOI: 10.48112/rjjbmss.v1i1.16 required products consumers prefer shopping everything under one roof. Along with convenience, consumers also desire a pleasant ambience. According to (Turley & Milliman, 2000), the role of store atmosphere in the success of a retail outlet cannot be neglected. Hence it can be said, there are a number of added beneficial elements on the basis of which customers select a supermarket for their purchases. Sales promotional activities is also one such element. With the trend of retail marketing used by supermarkets expanding at a much greater pace globally, retailers have started using all sorts of sales promotional tools and tactics to attract customers in order to stay relevant in time. Furthermore, because of increasing competition among the retailers, each retailer is putting extra effort to standout in the market. The increasing economy and population have impelled the retailers to think differently and creatively in order to catch customer attention (Shamout, 2016). Supermarket retailers have been using sales promotion activities to grab customer attention from the start of their inception in the market. To generate a favored response from the consumer these retailers use diverse short term planned activities (Gilbert, The efficacy of sales promotions in UK supermarkets: a consumer view, 2002). These activities encourage the customers to assess a brand and explore the prospects of purchasing. Since customer preference is directly linked to sales; marketeers utilize sales promotional activities to know customer preferences and improve their sales. Generally, the term ―SALE‖ triggers a customer mind. In the words of (Gilbert, The efficacy of sales promotions in UK supermarkets: a consumer view, 2002), sales promotional tools such as price discounts, coupons, refunds, free samples and buy-one-get- one-free strongly encourage customers to buy more than they expect. Supermarket retailers thus use a variety of these sales promotion tools and tactics to attract customers that eventually increases their sales. Another benefit other than convenience that the supermarket trend brought with itself is the shopping experience that it provides to its customers. This shopping experience is largely dependent on the atmosphere that creates the complete ambience of the supermarket. Also, it is the factor that differentiates LMTs and IMTs from traditional retailers. (Kotler, Marketing Management an Asian Perspectives, 2008) describes the atmosphere as ―the design of the of retail chain outlet that produces specific emotional effects on the buyer that enhances his purchasing probability‖ The impressive ambience of a supermarket provides an overall experience to the customers that in turn affects their purchasing intention and decision- making process. According to (Bohl, 2012), a customer spends more time in a supermarket and buys more when he feels satisfied from the complete environment of the store. This happens because of the pleasant environment stimuli. The atmospheric stimulus increases the probability of a consumer to stay longer in a store (Wakefield & Baker, 1998). Thus, other than the convenience of shopping everything at reasonable prices under one roof, the attractive ambience of a supermarket greatly impacts on consumers‘ emotion and satisfaction. Both, the purchase experience and satisfaction of the consumer are enhanced by an impressive atmosphere of a MT facility (Silva & Giraldi, 2010). Regardless of the numerous benefits associated with using sales promotion and improving the store ambience, it is becoming difficult with time for the supermarket owners to balance their own and their stake holder‘s investments sensibly and earn maximum profits and an increased market share. This is because it is tough to make a decision between lasting benefits such as customer loyalty and temporary benefits such as sudden spike in sales and number of customers for a small period of time because of sales promotion and an attractive store ambience (Kotler, Marketing Management an Asian Perspectives, 2008). It has thus become extremely difficult for retailers to offer sales promotion and invest on the creativity of store ambience while maintaining profitability and a reasonable return on investment to the stake holders. Supermarkets are however gradually replacing small traditional retail stores because of the attributed convenience, choice of goods, huge space, and frequent sale promotions. This study aims to evaluate the impact of sales promotion and store ambience on customer purchase intention in supermarkets. This study becomes more relevant in the milieu of a developing state such as Pakistan, where focusing on store ambience hand in hand with sales promotional activities is a relatively new trend to attract customers. The agenda of 2 RJ Journal of Business Management Evaluation of the Impact of Sales Promotion and Store Ambience on & Social Sciences Customer Purchase Intention: A Case of Supermarkets in Pakistan Volume 1, Issue 1 2021 DOI: 10.48112/rjjbmss.v1i1.16 this study is to explore the relationship between Sales Promotional tools (price discounts, BOGOF, coupons and in-store free samples) and Store Ambience and Customer Purchase Intention especially in the scenario of shopping from supermarkets – both local and international modern trade stores located in Pakistan. Hence, the problem statement is condensed as follows: Evaluation of the Impact of Sales Promotion and Store Ambience on Customer Purchase Intention – a case study of the Supermarkets in Pakistan. The following research questions highlight the above problem statement; RQ1: What is the influence of Price Discounts (PD) on customer Purchase Intention (PI)? RQ2: What is the influence of Buy-one-get-one-Free (BOGOF) on customer Purchase Intention (PI)? RQ3: What is the influence of Coupons (C) on customer Purchase Intention (PI)? RQ4: What is the influence of In-store Free Samples (ISFS) on customer Purchase Intention (PI)? RQ5: What is the influence of Store Ambience (SA) on customer Purchase Intention (PI)? Research Gap In a pragmatic study done by (Martins, 2018) found that sales promotional tools have a positive significant impact on customer