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1 i MAKERERE UNIVERSITY TOPIC: P
i MAKERERE UNIVERSITY TOPIC: PROMOTIONAL ACTIVITIES AND BRAND LOYALTY (A CASE STUDY OF COCA - COLA - NAMANVE PLANT) BY WUBO GERALD 06/U/9282/EXT A RESEARCH REPORT SUBMITED TO MAKERERE UNIVERSITY IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF A BACHELOR OF COMMERCE DEGREE . SEPTEMBER 2011 i DECLARATION I WUBO GERALD declare that this research work is my original work and has not been published or submitted for the award of any discipline to any university or any higher institution of learning be fore. Where it is indebted to the work of others due acknowledgement has been made. Signature…………………………………….. Date……………………… WUBO GERALD 06/U/9282/EXT (STUDENT) ii DEDICATION This piece of work is dedicated to my parents Mr. Mutenyo Solomon (May his soul rest in eternal peace), Mrs. Jeninah Kalanda Mutenyo, Mrs. Zewuliya Kisakye Mutenyo and my guardian as well as blood brother Mr. Kennedy Dustan Mutenyo whose imperishable support and vision i shall stand for ever. iii APPROVAL I hereby certify that this research report by Wubo Gerald has been prepared and completed under my supervision and submitted in upon my approval. MS. Nanyanzi Marion Signature…………………… ………………… Date…………………………………………... ( Supervisor )

2 iv ACKN
iv ACKNOWLEDGEME NT First and fore most I thank the almighty God for protecting me all this time, giving me the wisdom, courage and strength to come through all the obstacles and finally completing this course. Am so grateful to my Mother, Mrs. Jeninah Kalanda for her Pare ntal love, tireless efforts to nurture me up while others watched and mocked her, Struggled to pay my school fees and her Godly guidance in my upbringing. Without her, I would not be who I am today. My beloved blood brother Mr. Kennedy Dustan Mutenyo who s acrificed hard and pondered day and night during my darkest moments when I lost my Father Mr. SKM Solomon Mutenyo( RIP) without whose love and care, I would not have survived the complexities of this world. Special thanks also go to my Friends and course mates; Mr. Martin Mungashow , Mr . Rogers, Mr. Paul Damba , Mr. Gule Swadick, Mr. Kiyemba Robert, Mr. Kaggwa Andrew and Mr. Angeta Wilfred. I extend my sincere vote of thanks to my supervisor Ms Marion Nanyanzi, Lecturer department of marketing and manageme nt at Makerere University, without whose support, guidance, insights and contributions, this research would not have seen the light of the day. Am also greatly indebted to Mr. Joseph Kabela and Mr. Anthony Tibaingana who helped me to identify another super visor after being rejected by my original supervisor. May the g ood lord Jesus Christ reward you king - size. I cannot forget to thank my

3 learning and development manager at
learning and development manager at Century bottling company Mr . Rajaabu Ssenkuba for giving me the opportunity to conduc t this study and also family; my wife Mrs. Sharon Nyiraguhirwa and children Ms . Mutenyo Solomon and Ms Precious Seline Kataha Muyama whose presence and care to them has been an opportunity cost during the compilation of this research work. And Lastly but n ot least, my Sisters and brothers; Mrs. Turyamubona Violet Kituyi, Mrs . Magoola Jackie Mugimba, Mrs . Wabomba Muyama Chritine, Mule mbe Constance and Sisters - in - law; Mrs . Kyamuhangire Annet, and Mrs. Abigaba Helen. You people have been an inspiration in my li fe. God bless you all. v TABLE OF CONTENTS Page DECLARATION ................................ ................................ ................................ ......................... i DEDICATION ................................ ................................ ................................ ........................... ii APPROVAL ................................ ................................ ................................ ............................. iii ACKNOWLEDGEMENT ................................ ................................ ................................ .......... iv TABLE OF CONTENTS ................................ ................................ ................................ ............ v LIST OF TABLES ...............................

4 . ................................ .....
. ................................ ................................ .................... vii LIST OF FIGURES. ................................ ................................ ................................ ................ viii ABSTRACT ................................ ................................ ................................ .............................. ix CHAPTER ONE ................................ ................................ ................................ ....................... 1 INTRODUCTION ................................ ................................ ................................ ...................... 1 1.1: Background to the study: ................................ ................................ ................................ ...... 2 1.2: Statement of th e problem. ................................ ................................ ................................ ..... 5 1.3: Purpose of the study: ................................ ................................ ................................ ............ 5 1.4: Objectives of the study: ................................ ................................ ................................ ........ 5 1.5: Research questions: ................................ ................................ ................................ .............. 6 1.6: The scope of the study: ................................ ................................ ..........

5 ...................... ......... 6 1
...................... ......... 6 1.7: Significance of the study. ................................ ................................ ................................ ..... 7 1.8: Figure 1. Conceptual frame work. ................................ ................................ ......................... 8 CHAPTER TWO : LITERATURE REVIEW ................................ ................................ ........ 13 2.1: Introductio n. ................................ ................................ ................................ ....................... 13 2.2: Promotional activities: ................................ ................................ ................................ ........ 13 2.4: Relationship between promotional activities and brand loyalty: ................................ .......... 21 2.5: Other factors affecting brand loyalty: ................................ ................................ ................. 24 CHAPTER THREE : METHODOLOGY ................................ ................................ .............. 30 3.1: I ntroduction: ................................ ................................ ................................ ....................... 30 3.2: Research designs and strategy ................................ ................................ ............................ 30 3.3 Survey population: ................................ ................................ .............

6 ................... .............. 30
................... .............. 30 vi 3.4 Sample size: ................................ ................................ ................................ ........................ 30 3.5: Sampling methods and techniques: ................................ ................................ ..................... 31 3.6: Data collection sources: ................................ ................................ ................................ ...... 33 3.7: Data collection methods and tools: ................................ ................................ ..................... 33 3.8: Investigative procedure: ................................ ................................ ................................ ..... 34 3.9: D ata processing and analysis: ................................ ................................ ............................. 35 3.10: Challenges encountered. ................................ ................................ ................................ ... 35 CHAPTER FOUR ................................ ................................ ................................ ................... 36 PRESENTATION, ANALYSIS AND DISCUSSION OF RESEARCH FINDINGS. ................ 36 4.1 Introduction ................................ ................................ ................................ ......................... 36 4.2 Background information ................................ ........................

7 ........ ...............................
........ ................................ ...... 36 4.3: Century bottling company and promotional activities. ................................ ........................ 41 4.4: Management of loyalty programs. ................................ ................................ ...................... 49 4.5: Relationship between promotional activities and brand loyalty. ................................ .......... 51 CHAPTER FIVE ................................ ................................ ................................ ..................... 62 SU MMARY, CONCLUSION AND RECOMMENDATIONS. ................................ ................. 62 5.1: Introduction. ................................ ................................ ................................ ....................... 62 5.3: Conclusion. ................................ ................................ ................................ ........................ 63 APPENDICES ................................ ................................ ................................ .......................... 68 MAKERERE UNIVERSITY ................................ ................................ ................................ .... 68 INTRODUCTORY LETTER ................................ ................................ ................................ .... 76 vii LIST OF TABL ES Page Table 1: Illustration of the sample size ................................

8 ................................ ......
................................ ..................... 31 Table 2: Gender of respondents ................................ ................................ ................................ . 37 Table 3: Age bracket of respondents. ................................ ................................ ......................... 37 Table 4: Level of education of respondents ................................ ................................ ............... 38 Table 5: marital status of the resp ondents. ................................ ................................ ................. 39 Table 6: Income of the respondents per month. ................................ ................................ ......... 40 Table 7: Use of coupons. ................................ ................................ ................................ ........... 41 Table 8: Use of Rebates. ................................ ................................ ................................ ............ 42 Table 9: Use of free product trails. ................................ ................................ ............................ 42 Table 10: Use of sales contests: ................................ ................................ ................................ . 43 Table 11: Use of fliers: ................................ ................................ ................................ .............. 44 Table 12: Use of Street advertising ...

9 ............................. ..........
............................. ................................ ............................ 45 Table 13: Us e of event sponsorship. ................................ ................................ .......................... 46 Table 14: Use of Television advertising ................................ ................................ .................... 47 Table 15: Use of radio advertising ................................ ................................ ............................. 48 Table 16: Loyalty programs and consumer rewards. ................................ ................................ .. 49 Table 17: Management of loyalty programs. ................................ ................................ .............. 50 Table 18: Proportion of Coca - Cola consumption. ................................ ................................ ...... 51 Table 19: Preference rate for the coca - cola brand. ................................ ................................ ..... 52 Table 20: Choice on consu mption of Coca - Cola. ................................ ................................ ....... 54 Table 21: Promotions and consumption behavior. ................................ ................................ ..... 55 Table 22: Promotions and consumption decision. ................................ ................................ ...... 56 Table 23: Themes and consumption behaviors. ................................ ...

10 ............................. .........
............................. ......... 57 Table 24: Themes and level of consumption interests. ................................ ............................... 58 Table 25: Promotions and brand switching. ................................ ................................ ............... 59 Table 26: Promotional activities and brand loyalty: ................................ ................................ ... 60 viii LIST OF FIGURES. 1.8: Figure 1. Conceptual frame work. ................................ ................................ ......................... 8 ix ABSTRACT The study aimed at establish ing the relationship between promotion al activities and brand loyalty. The study objectives included: to find out th e exten t to which C entury bottling company conducts promotional activities , to establish how C entury bottling company manages loyalty programs and to establish the relationship between promotional activities and brand loyalty. The study was carried out in C entury bottling company - Namanve plant using a correlation al research design. The researcher used purposive sampling technique in sample selection, stratified random sampling technique in categorizing the sample. A nd lastly simple random sampling to choos e respondents . A total of 44 respondents comprising of Century bottling company employees and consumers in Kampala were selected to parti

11 cipate in the survey and a statist
cipate in the survey and a statistical package for social sciences (SPSS) was us ed to analyze data. The findings were p resented using frequency tables. The study revealed that C entury bottling company had a number of promot ional activities. That Consumers were aware of the promotions and were highly aroused by the activities . The study further revealed that Century bottli ng company has put a number of loyalty programs basically to give back to society. Sponsoring football in secondary schools, community work, free refrigeration programs, were mentioned. In order to manage these programs, Century bottling company has made u se of contracts. The study also found out that there is a strong positive correlation between promotional activities and brand loyalty represented by Pearson correlation coefficiency of r= 0.964 ** . Conclusively, the researcher discovered that promotional a ctivities to a greater extent affect consumers purchase decisions. This implied th at brand loyalty can be achieved through designing well packaged promotions . Century bottling company should therefore continue to put in more efforts in designing and carryi ng out promotional ac tivities. In regard to the above observations, Century bottling company should try as much as possible to man age its loyalty programs in a way that directly reward s consumers and counter competition. 1 CHAPTER ONE INTRODUC TION Since 1987,

12 the Ugandan economy has continued to gro
the Ugandan economy has continued to grow on a positive note thereby creating a delicate and competitive marketing environment. In this regard, buyers operate under various constraints and occasionally make choices that give weight to their personal benefits than to the company benefits (Philip kotler 2003).In fact, its so amazing to see a variety of commodities in the market place that it even becomes quite challenging for a consumer to choose what type of commodities to purchase. To day’s consumers’ are becoming harder to please, they are smarter, more price conscious, more demanding, less forgiving and are usually approached by many competitors with equal or even better offers (Philip Kotler 2003).These together with the growth of consumerism and th e ever burning flame of competition, have greatly affected the consumers relative attitude towards brand portfolios (CCS news April 2005). All over the world, Multinational companies have employed promotional activities such as advertising, sales promotion s, personal selling, publicity and public relations and direct marketing for survival (Engel et al 1991). And in Uganda, the situation is not different either. Soft drinks manufacturing companies for example continuously seek for varying promotional tools basically to gain a competitive advantage over and above their competitors and as such attain a higher degree of consumer loyalty. They as such use promotions as away to differentiating their products

13 since they provide inducements or cont
since they provide inducements or contributions that g ive additional value to consumers leading to a strong and quick response (Shiffman and kanuk 1991). 2 1.1: Background to the study: Promotion comes from a Latin word meaning to move forward. The meaning has narrowed down so that promotions refer to communica tion undertaken to persuade others to accept ideas, concepts or things (F.James Engel et al 1994). Therefore promotions is one of the four elements of the marketing mix i.e. product, price, promotions, and distribution. It is the communication link betwee n sellers and buyers for the purpose of influencing, informing, or persuading a potential buyer’s purchasing decision (Kurtz and Dave 2010). The specification of five elements creates a promotional mix. These elements are personal selling, advertising, sal es promotions, direct marketing and publicity (Rajapogal 2007). A promotional mix can have a wide range of objectives including: sales increases, new product acceptance, creation of the brand equity, positioning, competitive retaliations or creation of a c ooperate image. Fundamentally; however there are three basic objectives of promotion. These are: to present information to consumers as well as others, to increase demand and also to differentiate a product. (Kurtz and Dave 2010) There are different ways t o promote a product in different areas of the media. Promoters use internet advertisement, special events, endorsements and newspapers t

14 o advertise their products. Many times
o advertise their products. Many times with the purchase of the product there is an incentive like discounts, free items or a contest. There is therefore an increasing need for brands to build a deep and meaningful connect with consumers’ so that brands rise above market clutter. Successful brands deliver on these timeless values, build on them and resonate not just with th e immediate needs of the consumer but also their larger aspirations. In doing so, brands deliver on their immediate promise and also build a long term relationship with customers. But this relationship must negotiate a marketawash with growing brands and m ultiple messages, making it that much more difficult to differentiate brands and sustain brand loyalty. (Dowling and Uncles). 3 Brand loyalty in marketing, consists of consumer’s commitment to re - purchase or otherwise continue using a brand and can be demon strated by a repeated buying of a product or service or other positive behaviors’ such as word of mouth advocacy ( Dick et al 1994). Brand loyalty is more than simple purchasing. Customers’ may repurchase a brand due to situational constraints such as ve ndor lock in (Jones, Micheal.A.et al). Such loyalty is referred to as spurious loyalty. True loyalty exists when customers have a high relative attitude towards the brand which is exhibited through re - purchase behavior (Dick et al 1994). This type of loyal ty can be a great asset to the firm: customers’ are willing t

15 o pay higher prices, they may cost less
o pay higher prices, they may cost less to serve, and can bring new customers’ to the firm (Riechheld et al 1990). Many multi - national companies in Uganda, for example soft drinks manufacturing companies continuously seek for varying promotional tools basically to gain a competitive advantage and as such attain a higher degree of customer loyalty thereby discouraging other firms from competing directly. They therefore use promotions as a way of d ifferentiating their products since it provides inducements or contributions that give additional value to customers leading to stronger and quick responses (Shiffman and Kanuk 1994). In this regard, the coco - cola brand is not an exception. Coca - cola was invented in 1876 by Dr. John Pembaton and was availed in only Atlanta - Georgia USA. It was first sold as energy drink in form of syrup in Jacob’s pharmacy. Its sales gained momentum during the First World War as it was served whenever there was a monument s ervice unit. Pembaton had a partner known as Frank Robinson. Frank Robinson sold the plant to Asa Candler at $250000 who later sold it to Robert Woodruff at $25million. It was Robert woodruff who 4 grew the business to this magnitude when he introduced the i dea of bottling it as a soft drink. (CBC sales reports 2003) In Uganda, the official bottlers, Century bottling company ltd started in 1988 by the Bagaalaliwo family in partnership with the coca - cola international whose head quarters are ba

16 sed in Atlanta - Georgia. However the fi
sed in Atlanta - Georgia. However the first bottle came off the line on 5 th may 1989. The plant started with the production of three core brands namely; coca - cola, Fanta orange and Sprite. Over the years, Century bottling company expanded its’ product portfolios to include Krest, Stoney, Novida Dasani water and the newly introduced Minute maid juice. The performance of Century Bottling Company, has been growing at a double digit over the past two decades with the highest contribution of 50% coming from the Coca - cola brand. However, over the last two decades, the contribution of the coca - cola brand to the overall sales of the company has been fluctuating up to the current 36%. (CBC sales report March 2011). As a way of revamping the Coca - cola brand performance the company ha s launched such promotion themes as life tastes good, Coca - cola real, Enjoy Coca - cola, Open happiness among others and also conducted such promotional activities as: Brr on the Coke side of life, Bonga s na Coke, Coke with meals combos’, Coca - cola music wave and the frequent Coca - cola free product samples basically to attract customers and retain them. (CBC sales report Dec. 2010) Despite of all these innovations, consumer’s degree of pre - depositional commitment towards Coca - cola brand has remained low. One t herefore wonders if these promotional activities really result into creation of loyal consumers. In this regard, the study focuses on the promotional

17 activities of which Advertising, direct
activities of which Advertising, direct marketing, personal selling, sales promotions and publicity and pu blic relations are an integral element basically to explore and establish the relationship between promotion activities and brand loyalty. 5 1.2: Statement of the problem. The contribution of brand C oca - cola to the total sales of C entury bottling comp any has reduced over the past two decades.( CBC Sales reports Nov. 2010).In this regard, Century bottling company has launched such promotional activities as bonganaCoke,BRR on the coke side of life, Coke and meals combos, and has also initiated such prom otional themes as Coke real, Live on the coke side of life, Life tastes good, Enjoy coca - cola, always coca - cola, Open happiness among others basically to attract and retain consumers. (CBC Sales reports Dec 2010).Despite of all these innovations, consumers ’ degree of pre - dispositional commitment towards the Coca - cola brand has remained unsatisfactory to the management of Century bottling company and the shareholders. One therefore wonders if these promotional activities really result into creation of loyal consumers. This coupled with the heavy investment in consumer promotions by the competitors’ leaves a lot to be desired. The study therefore sought to explore and establish the relationship between promotional activities and brand loyalty. 1.3: Purpose of the study: The purpose of the study was to establish the relationsh

18 ip between promotional activities and b
ip between promotional activities and brand loyalty in Century bottling company ltd. 1.4: Objectives of the study: T o find out the extent to which C entury bottling company conducts promotio nal activities. To establish how C entury bottling company manages loyalty programs. To determine the relationship between promotional activities and brand loyalty. 6 1.5: Research questions: To what extent d oes Century bottling company conduct promotions? How are loyalty programs handled in Century bottl ing company? What is the relationship between promotions and brand loyalty? 1.6: The scope of the study: 1.6.1: Geographical scope: The study targeted consumers in and around Kampala District and the comme rcial team in Century bottling company ltd located 28 km from Kampala city on plot 964,kyagwe block 111 Namanve industrial area. The Researcher used Century bottling company ltd because it’s the plan t that manufactures, distributes and sales Coca - Cola, a b rand which is experiencing a fluctuating performance. 1.6.2: Subject content: The study focused on establishing the relationship between promotional activities as an independent variable and brand loyalty as a dependent variable. It therefore covered prom otional tools such as sales promotions, advertising, public relations, personal selling, and direct marketing. 1.6.3: Time period: The study covered a period r anging from 1990 to 2011.This was because it’s th

19 e period over which the performance of
e period over which the performance of Coca - Cola brand started fluctuating. 7 1.7: Significance of the study. The study intends to benefit the following people: Business community. The research study will go a long way in enabling the business community in similar business environment to make rational a nd informed business decisions in strategy implementation. Researcher. The research study will also help in equipping the researcher with the knowledge and the skills of collecting, coding, editing, analyzing and interpreting data and presenting informatio n . This will enhance the researchers’ competency and therefore the researchers ‗career development in marketing and sales management. Future research and academicians: The findings of the research study will also go along way in producing empirically gro unded data from which students may form a foundation for further research on promotional activities and brand loyalty. Management of Century bottling company. The research study will help management of century bottling company to identify the relevant mark eting mix elements that add value to the core business and therefore improve on its operational excellence through reducing costs. 8 1.8: Figure 1. Conceptual frame work. Independent variable Dep endent variable. Source: Adopted from Philip Kotler (2003) ―Mar

20 keting Management ―,7 th edition.
keting Management ―,7 th edition. Extraneous variables price peer influence Promotional activities Advertising sales promotions Publicity and public relations personal selling di rect marketing Brand loyalty commitment perceived value brand trust satisfaction 9 Advertising: Is a form of communication intended to persuade an audience (viewers, readers of listeners) to purchase or take some act ion upon products, ideas or services. It includes the name of the product or service and how that product or service could benefit the consumer, to persuade a target market to purchase or consume that particular brand. These messages are usually paid for b y sponsors and viewed via various Media. Sales promotions: Sales promotions is a set of paid marketing activity (other than advertising, and personal selling) undertaken to stimulate buyer action. It includes such inducements as point of sale, displays, a nd coupons. It assumes a much greater role with low priced mass products than specialty product s such as sports, watches . Sales promotions therefore consist of short term incentives to encourage purchase or sale of a product or service. Whereas advertising and personal selling offers reasons to buy a product or service, sales prom otions offers reasons to buy now . Publicity and public relations: From the Wikipedia, a free encyclopedia, publicity is a deliberate attempt to manage the public

21 ’s perceptions of a subject. Accord
’s perceptions of a subject. According to Philip Kotler 2003, a public is any group that has an actual of potential interest in or impact on a company’s ability to achieve its objective. Public relations involve a variety of programs designed to promote or protect company image or its individual’s products. 10 Personal selling: Personal selling is the most effective tool at the later stages of the buying process particularly in building up buyer preference, conviction and action. It’s believed to be effective because: it i nvolves an immediate and interactive relationship between two or more persons. Here each party is able to observe the others reactions, it also permits all kinds of relationships to spring up ranging from a matter – of - fact selling relationship to a deep pe rsonal friendship and it makes the buyer feel under some obligation for having listened to the sales person talk. Direct marketing: Direct marketing is a form o f advertising that reaches its audience w ithout using traditional formal channels of advertising, such as TV, newspapers or radio. Businesses communicate straight to the consumer with advertising techniques such as fliers, catalogue distribution, promotional letters, and street advertising. A wel l - executed direct advertising campaign can offer a positive return on investment as the message is not hidden with over complicated branding. Instead, direct advertising is straight to the point; offers a

22 product, service, or event; and explain
product, service, or event; and explains how to get the offered product, service, or event. Commitment: According to the psychological theories, commitment is the set of acts and cognitions that link a person to h is behavior . The organizational literature considers it as an affective attachment to an organ ization val ues and purposes , or a relative intensity of the identification and the involvement in a particular organization. The latter is characterized at least by three factors: a strong 11 conviction and acceptance of the organization ‟ goals and values, a w ill to produce great efforts for the benefit of the organization and lastly, a strong desire to remain m ember in it . Brand trust : Brand trust is defined as the willingness of the average consumer to rely on the ability of the brand to perform its stated f unctio n , as the confident expectations of the brand ‟ s reliability and intentions and as the confidence a consumer develops in the brand ’ s reliability and integrity (Chatterjee and Chaudhuri, 2005). Perceived value : Perceived value is regarded as a strategic weapon in attracting and retaining customers an d has become one of the most significant factors in the success of both manufacturing businesses and servi ce providers . The construct of perceived value has been identified as one of the most important ingredients for gaining competitive edge and repurcha se intention s . Price: It is postulated that b

23 uyers, generally, have a range of accept
uyers, generally, have a range of acceptable prices for considering purchases. Thus, buyers may not purchase a product when price is perceived to be too high, nor when price is perceived to be too low. 12 Peer i nfluence: Peer pressure is ‗a social instance of social influence, which typically produces conformity to a specific way of acting o r thinking.’ Under peer pressure, adolescents may emerge desires for conformity, which has been associated with the needs fo r acceptance, approval and harmonious relationships with others . Adolescents usually seek the feelings of ―fitting in‖ and sense of belon ging in peer groups , as well as avoid negative emotions, such as feelings of isolation and inadequacy by participating in behavi ors with peers . Hence, it is logical that many brand name marketers attempt to directly attract adolescent consumers or indirectly affect adolescent consumption behaviors through peer pressure Satisfaction: It is viewed as an emotion or a conse quence of both cognitive and affectiv e process . Total or cumulative satisfaction is an overall evaluation that is based on the purchase and the consumption experience with a product or service throug h the time . Customer satisfaction that is inherent to a s pecific transaction represents an immediate post - purchase evaluation. It can either indicate the affective reaction toward the recent experience with the product or service . Relationship: Promotions ar

24 e being used with increasing frequency b
e being used with increasing frequency by manufacturers facing highly competitive markets, which are causing concern among some marketers who feel that frequent promotions can hurt a brand. Allan Baldinger and Joel Rubiuson noted that if all brands in a product market have high brand loyalty then, Price promot ion will not be useful to any of the brands. Nevertheless, there is little evidence to either confirm or dispel these fears. 13 CHAPTER TWO LITERATURE REVIEW 2.1: Introduction. This chapter reviews the existing literature on the variables under study. I n thi s regard, it focuses on the relationship between promotional activities and brand loyalty. This chapter is as such divided into five sections. The first section (2.1) is an introduction to chapter two , the second section (2.2) deals with promotional activities, the third section (2.3) deals with brand loyalty, the fourth section (2.4) discus es the relationship between promotional activities and brand loyalty and the fifth section (2.5) discus es the oth er factors that influence brand loyalty. 2.2: Promotional activities: 2.2.1 Sales promotions: Sales promotions is a set of paid marketing activity (other than advertising, and personal selling) undertaken to stimulate buyer action. It includes such induce ments as point of sale, displays, and coupons. It assumes a much greater role with low priced mass products than sp

25 ecialty products such as sports, watche
ecialty products such as sports, watches etc. (James .f. Engel et al 1991). Sales promotions therefore consist of short term incentives to en courage purchase or sale of a product or service. Whereas advertising and personal selling offers reasons to buy a product or service, sales promotions offers reasons to buy now.(P.Kotler and G. Armstrong 2001). According to Phillip Kotler (2003), consume r promotional tools include; Samples:These are offers of a free amount of a product or service delivered from door to door or sent in mail, picked up in a store, attached to another product that featured in an advertising offer , Cash refund offers (Rebates ): These provide a price reduction after purchase rather than at the retail shops. Here consumers send a specified proof of purchase to the manufacturer, who refunds part of the 14 purchase price by mail, Coupons: These are certificates entitling the bearer to a stated saving on the purchase of a specific product either mailed, enclosed in other products or attached to or inserted in magazine and newspapers adverts, Price packs (Cents off deals):These are offers to consumers of savings off the regular price of the product, flagged on the label or package . A reduced price pack is a single package sold at a reduced price (such as two for the price of one), a bonded pack is two related products bonded together (such as a tooth brush and toothpaste),Premium (gift ):This is merchandise offered at a relatively low

26 cost or free as an incentive to purcha
cost or free as an incentive to purchase a particular product. A pack premium accompanies the product inside the package. A free in the mail premium is mailed to consumers who send in a proof of purchase su ch as a box top is sold below its normal retail price to consumers who request it. Frequency programs: These are programs providing rewards related to the consumers frequency and intensity in purchasing the company products or services, Prizes (contests sw eep stakes, games): Prizes are offers of the chance to win cash, trips or merchandise as a result of purchasing something. A contest calls for consumers to submit an entry to be examined by a panel of Judges who will select the best entries. A sweep stake, asks consumers to submit their names in a drawing. A game presents consumers with something every time they buy bingo numbers, missing letter which might help them win a prizes, Patronage awards: These are values in cash or in other forms that are proport ional to patronage of a certain vendor or group of vendors, free trials: These invite prospective purchases to try the product without a cost with the hope that they will buy, Product warranties: These are explicit or implicit promises by sellers that the product will perform as specified or that the seller will fix it or refund the customer’s money during a specified period. Point ofpurchase (pop): These are displays and demonstrations that take place at the point of purchase or sale, Price offs (off -

27 invoi ce off list): Is a straight disco
invoi ce off list): Is a straight discount off the list 15 price on each case purchased during a stated time period. Allowance: Is on amount offered in return for the retailers agreeing to feature the manufacturer’s products in some way. An advertising allowance co mpensates retailers for advertising the manufacturer’s products. A display allowance compensates them for carrying a special product display, free goods: These are offers of extra cases of merchandise to intermediaries who buy a certain quality who feature a certain flavor or size, and lastly sales contests: These aims at inducing the sales force or dealers to increase their sales results over a stated period with prizes (money, trips, gift or points) going to those who succeed. 2.2.2 Advertising: Is a for m of communication intended to persuade an audience (viewers, readers of listeners) to purchase or take some action upon products, ideas or services. It includes the name of the product or service and how that product or service could benefit the consumer, to persuade a target market to purchase or consume that particular brand. These messages are usually paid for by sponsors and viewed via various Media Bhatia (2000).Advertising permits the seller to repeat a message many times. It also allows a buyer to r eceive and compare the messages of various competitors. Large scale advertising says something positive about the seller’s size, power and success (Phillip kotler 2003). The purp

28 ose of advertising is to get consumers t
ose of advertising is to get consumers to think about or react to the product or company in a certain way (Phillip Kotler and Garry Armstrong 2001). There are many forms of advertising and these include; Digital advertising: This is further classified into the following sub categories i.e. Television advertising/Music in advertising : The TV commercials is generally considered the most effective mass market advertising format as is 1 6 reflected by high price. TV network charge for commercial airtime during popular T.V events. The majorities of television commercials feature a song or jin gle that listeners soon relate to the product. Virtual advertisements may be inserted into regular television programming through computer graphic (Mscarthy, Micheal 2002) or used to replace local bill board that are not relevant to remote broad cast audie nce (Keith Mcarther 2009).Others include: RadioAdvertising, On line advertising, Product placements, Press advertising, Bill board advertising, Mobile billboard advertising, In - store advertising, street advertising, Celebrity branding to mention but a few 2.2.3 Publicity and public relations: From the Wikipedia, the free encyclopedia, publicity is a deliberate attempt to manage the public’s perceptions of a subject. According to Philip Kotler 2003, a public is any group that has an actual of potential inte rest in or impact on a company’s ability to achieve its objective. Public relations involve a variety

29 of programs designed to promote or prot
of programs designed to promote or protect company image or its individual’s products. He furthers notes that, clearly, creative public relations can affe ct public awareness at a fraction of the cost of advertising. That the company does not pay for the space if time obtained in the media. It only circulates the messages stories and manages on certain events. Public relation and publicity can be managed via art exhibitions event sponsorship, arrange a speech of talk, make an analysis or prediction conduct a poll or survey, issue a report, take a stand on a controversial subject, arrange for a testimonial announce an appointment, invent then present an award, stage a debate, organize a tour of your business or pr ojects, issue a commendation . 17 2.2.4 Direct marketing: Direct marketing is a form of advertising t hat reaches its audience without using traditiona l formal channels of advertising, such as TV, newspapers or radio. Businesses communicate straight to the consumer with advertising techniques such as fliers, catalogue distribution, promotional letters, and street advertising. Direct marketing is predomin antly used by small to medium - size enterprises with limited advertising budgets that do not have a well - recognized brand message. A well - executed direct advertising campaign can offer a positive return on inv estment as the message is not hidden with over complicated branding. Instead, direct advertising is straight to the point;

30 offers a product, service, or event; and
offers a product, service, or event; and explains how to get the offered product, service, or event. Direct marketing can be conducte d through the following forms; Direct mail : Direct mail includes advertising circulars, catalogs, free trial CDs , pre - approved credit card applications, and other unsolicited merchandising invitations delivered by mail or t o homes and businesses, or delivered to consumers' mailboxes by delivery services other than the Post Office. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tou rism industries, Telemarketing: This is another common form of direct marketing in which marketers contact consumers on phone, Door - to - Door Leaflet Marketing: Here leaflet distribution service s are used extensively by the fast food industries, and much other business focusing on a local catchment. Business to consumer business model, similar to direct mail marketing, this method is targeted purely by area, and costs a fraction of the amount of a mail shot due to not having to purchase stamps, envelopes or having to buy address lists and the names of home occupants, Voicemail Marketing: This is another type of direct marketing which emerged out of the market prevalence of personal voice mailboxes , and business voicemail systems. Due to the ubiquity of email 18 marketing, and the expense of direct mail and telemarketin

31 g, voicemail marketing presented a cost
g, voicemail marketing presented a cost effective means by which to reach people directly, Direct - response television marketing: Direct marketing on TV (commonly referred to as DRTV) has two basic forms: long form (usually half - hour or hour - long segments that explain a product in detail and are commonly referred to as infomercials) and short form, which refers to typical 30 - second or 60 - s econd commercials that ask viewers for an immediate response (typically to call a phone number on screen or go to a Web site), Direct selling: This refers to selling products by face - to - face contact with the customer, either by having salespeople approach potential customers in person, or through indirect means such as Tupperware parties. 2.2.5: Personal selling: Personal selling is the most effect ive tool at the later stages of the buying process particularly in building up buyer preference, conviction and action. It’s believed to be effective because: it involves an immediate and interactive relationship between two or more persons. Here each part y is able to observe the others reactions, it also permits all kinds of relationships to spring up ranging from a matter – of - fact selling relationship to a deep personal friendship and it makes the buyer feel under some obligation for having listened to th e sales person talk. 2.3: Brand loyalty: The History of loyalty marketing dates way back in 1929 when Betty Crocker issued coupons that could

32 be used to redeem for items like flatwar
be used to redeem for items like flatware. (Reichheld ,1996 ).Therefore the discipline of customer loyalty marketi ng has been around for many years, but expansions from it merely being a model for conducting business to becoming a vehicle for marketing and advertising have made it Omni present in consumer marketing organizations since the mid to late 1990s (Fred Reich held,1996). 19 There are several definitions and measures of brand loyalty; some focus on the attitudinal dimension and others focus on the behavioral aspect of brand loyalty (Gee et al., 2008; Oliver, 1997).In this approach, brand loyalty ―is a deeply held commitment to rebuy or repatronize a preferred brand consistently in the future, despite situational influences and marketing efforts having the potential to cause switching behavior (Oliver, 1997). In a related development, Brand loyalty in marketing cons ists of a consumer’s commitment to repurchase or otherwise continue using the brand and can be demonstrated by repeated buying of the product or service or other possible behavior such as word of mouth advocacy (Dick et al, 1994 ). Therefore Brand loyalty is an important consideration when estimating the value of a brand as loyalty can translate into profit (Aaker, 1991).Besides, Brand loyalty is a barrier for new competitors and forms the basis for a price premium (Aaker, 1996b). Brand loyalty also encoura ges repeated purchase behavior from consumers, and discourages them froms

33 witching to competitor brands (Yoo,
witching to competitor brands (Yoo, Donthu and Lee, 2000). Brand loyalty is as such a valuable asset for every brand. Research has indicated that the cost of recruiting new customer s is very high due to advertising, personal selling, establishing new accounts, and customer training (Mittal and Lassar, 1998). More importantly, profits generated increase significantly over time (Reichheld and Sasser, 1990). From the poi nt of view of many marketers, loyalty to the brand in terms of consumer usage is a key factor. Most important of all, in this contest , is usually the rate of usage to which the par - to 80 - 20 rule applies. Philip Kotler also contends that heavy users are likely to be disproportionately important to the brand. As a result, suppliers often segment their customers into heavy, medium and light users. 20 Past research on segmentation has also proposed various approaches to classify consumers into diffe rent segments. Typically, most of them rely on the assumption that there exist two groups of consumers — loyal and non - loyal in the market (Jacoby and Chestnut 1978; Lattin 1987; Bawa 1990) or inertia land variety - seeking (Jeuland 1979; Givon 1984; Seetharam an and Chintagunta 1998). Specifically, past research in this stream, assumes that consumers who have shown high loyalty level in the past will repeat purchase the same brand (i.e., repurchase exclusivity; Banasiewicz 2005); as a result, the impac

34 t of pas t purchases on current purchase
t of pas t purchases on current purchase decision and loyalty is not accounted for. In practice, consumers ‗preferences are changing over time. For instance, Heilman, Bowman, and Wright (2000) demonstrate that consumers’ preferences may either strengthen or weake n. That when loyal consumers repeat purchase the same brand, their decision is driven by their brand preference – as a result of the unique value of this brand (Ailawadi, Neslin, and Gedenk 2001). In contrast, when switching to a different brand, they may be motivated by the attractiveness of new brand’s promotional incentives (such as price - cut). Analogously, non - loyal consumers may repeat purchase the same brand in response to the aggressive economic incentives provided by that specific brand (Brown 1974 ; Schneider and Currim 1990; Currim and Schneider 1991) or switch to another brand due to their desire for variety (McAlister and Pessemier 1982; Givon 1984; Seetharaman and Chintagunta 1998). This suggests that both loyal and non - loyal consumers may exhib it different levels of sensitivity to various marketing variables – especially to prices – when making repeat purchases and switching 21 Brands. Recently, Yoon (2008) and Yoon and Kwak (2009) demonstrate that consumers are morelikely to use the habit tactics when making repeat purchases. 2.4: Relationship between promotional activities and brand loyalty: In the long term, brand loyalty is perceived to

35 be the key to sustainable competitive a
be the key to sustainable competitive advantage. Just as people are more likely now than ever to change jobs, homes, even spouses brand choice is also in question. (Aaker David .A 1996.).New products, more media communication choices, wider variety of distribution channels and greater choice in financing lead to difficulty in maintaining loya lty. Shari Caldron attributes this decline in brand loyalty to rising consumer price sensitivity, a decrease in advertising effectiveness, and an increase in new brands.. In an analysis of price – related promotions, across 13 different pro duct categories, Andrew S.C, Ehrenberg, Kathy Hammond and G.J Goodhardt found at that price promotion often reward the brand existing customers. That those consumers’ rarely responds to a price promotion if the brand has not previously been tried . They assert that when these one off - purchase do occur, it is the result of a selective consumer reaction which is not likely to result in additional brand loyal customers. According to them, at best there are temporary brand switchers. Brand loyalty may seem strong, yet still be short lived leaving brands venerable. Therefore, brand loyalty of moderate loyals who may or may not buy the brand on any given occasion, can be enhanced through promotional programs. Price promotion such a s rebates , cash discounts, other promotional offer can serve as a mechanism

36 to say thank you making the promotion
to say thank you making the promotion a reward rather than an enticement at least for the long term conserve as a positive reinforcement for loyal purchasers of the brand. 22 They further explain that price promotion strategies have been linked directly to customer brand loyalty and that another potential goal for sales promotion is to address the moderate loyal or systems beaters who are not yet loyal users of the brand but have the greatest potential for becoming long term brand loyal consumers. Sales promotions therefore reinforce the brand for this group and some people may even be convert into highly loyal product purchases. In a related dev elopment, Huff et al ( 1999) , asserts that sales promotions comprises of a wide variety of promotional tools designed to achieve short term objectives. For instance monetary promotions, such as price discounts and coupons, are the most common form of sale s promotions used by organizations. However, non - monetary promotions, such as free gifts, free samples, sweepstakes and contests, are gaining popularity given the negative effects of frequent discounts. Recent studies to date have shown that non - monetary promotions may help to reinforce brand equity (Palazo´n and Delgado, 2005; Montaner and Pina, 2008). Unlike monetary promotions, with non - monetary promotions the incentive is not directly experienced through a lower purchase price making it more difficult that these t

37 ypes of promotion influence consumers’
ypes of promotion influence consumers’ internal reference prices (Campbell and Diamond, 1990). Consequently, when consumers are exposed to non - monetary promotions, it is less likely that those promotions will negatively influence perceived qua lity and brand associations. Similarly, non - monetary promotions can differentiate brand and help communicate distinctive brand attributes, contributing to the improved brand equity (Papatla and Krishnamurthi, 1996; Mela et al., 1998; Chu and Keh, 2006). O f the non - monetary promotional tools, gifts or premiums are becoming increasingly important in promotional strategies (Raghubir, 2005; Banerjee, 2009; Palazo´n and Delgado, 2009a). 23 A gift or premium is a product or service offered free, or at a relatively low price, in return for the purchase of one or many products or services (d’Astous and Landreville, 2003).Surprisingly, while gift promotions are widely used in marketing, academic research into this subject is limited (D’Astous and Landreville, 2003; Bo dur and Grohmann, 2005; Prendergast et al., 2008). As such, manufacturers tend to make decisions about gift promotions on the basis of experience and intuition (Hiam, 2000; d’Astous and Landreville, 2003). Consequently, gift promotions do not always achi eve their objectives, such as significantly increasing sales (Gedenk et al., 2004). Gifts are used to influence attitudes and purchase intentions of potential consumers, maintain or inc

38 rease purchases by existing consumers, a
rease purchases by existing consumers, along with other short term obje ctives (Bodur and Grohmann, 2005). However, as the findings of previous studies suggest, the effects from a free gift offer may be limited by different factors (Drake and Chung, 2005; Chang, 2009). For instance, Simonson et al. (1994) found that sales pro motions, such as premiums, can reduce purchase intentions when consumers perceive the gift as providing little or no value. d’Astous and Jacob’s (2002) study was one of the first to delve into the impact of several factors on consumer reactions to gift pro motions. Specifically, these authors studied the impact of three categories of variables on gift promotions success: objective characteristics of the offer (whether the value of the gift was mentioned), attitudinal variables (the interest in the product, i nterest in the gift or the attitude toward the brand), and consumer characteristics (deal proneness or compulsive buying tendencies). Extending this work, d’Astous and Landreville (2003) showed that complex dynamics appear to underpin the relationships bet ween the characteristics of gift promotions (e.g. gift attractiveness, the fit with the product category, etc.) and consumer reactions. Bodur and Grohmann (2005) found that a stronger relationship between the consumer 24 and the business and an implicit reque st for reciprocation positively affect consumer responses to gifts. In another development, Chandon also contends that

39 sales promotions can be used across va
sales promotions can be used across various product types. Two general categories of products have been studied in sales promotions resea rch: utilitarian and hedonic products. Utilitarian products are viewed as more functional and instrumental. Consequently they are judged in terms of how well they function. On the other hand, hedonic products are typically linked to more experiential consu mption. Therefore, they are judged in terms of how much pleasure they provide. The benefit congruence framework proposed by Chandon et al. (2000) points that sales promotions should be more effective if there is congruence between the benefits the promoted product provides and the benefits the promotion generates. These authors showed that monetary promotions provide stronger utilitarian benefits (i.e. monetary savings, product quality and shopping convenience) while non - monetary promotions provide stronger hedonic benefits (i.e. value expression, entertainment and exploration). Therefore, the use of monetary promotions should be more successful forutilitarian products, whereas non - monetary promotions should be more effective for hedonic products. According to these authors, non - monetary promotions can also be useful with utilitarian products because they provide consumers with experiential benefits that are not generate from the product itself. In this sense, gift promotions could offer consumers experiences such as fun, amusement and diversion, and provide a sy

40 mbolic meaning that supplements the cha
mbolic meaning that supplements the characteristics of the utilitarian products thereby encouraging them to make a repeat purchase (Palazo´n and Delgado, 2005). 2.5: Other factors affecting brand loyal ty : Brand loyalty is perceived as multidimensional construct. It is determined by several distinct psychological processes: 25 2.5.1: Peer influence: Previous literature has indicated that the presence of peer pressure also facilitates the generation of wider - ranging, synergistic alternatives (Peel and Dansereau, 1998). For example, wearing a certain brand name of apparel or a pair of branded athlete shoes is an effective way of ―fitting in‖ in peers for adolescents (Forney & Forney, 1995). Elliott and Leon ard’s (2004) study supported this argument and contended that peer pressure fulfills a critical role in determining adolescent attitudes and behaviors. As literature demonstrated, peer pressure is a critical determinant in confirming adolescent percept ions and consumption behaviors (Evans, 2004). That is, adolescents tend to learn about their peers' product favorites and take them into account while evaluating products on their own (Gunter and Furnham, 1998). Furthermore, adolescents are much more like ly than adults to have positive attitudes toward brand name products under peer pressure (Miller, 2002). Pilgrim and Lawrence (2001) also asserted that peer pressure is probably the strongest influence on adolescent brand choices, a

41 nd this influence is e ven evident on su
nd this influence is e ven evident on such symbolic goods as clothes and fashion items (Brittain, 1963). 2.5.2: Perceived value: It has been long acknowledged that creating and delivering superior customers ‟ perceived value is regarded as a strategic weapon in attracting and re taining customers and has become one of the most significant factors in the success of both manufacturing businesses and service providers (Wang et al., 2004). The construct of perceived value has been identified as one of the most important ingredients f or gaining competitive edge (Spiteri and Dion, 2004; Mizik and Jacobson, 2003; Baker, 26 Parasuraman, Grewal and Voss, 2002) and repurchase intentions (Parasuraman and Grewal, 2000). In general, perceived value is the result or benefits customers receive in r elation to total costs (Woodruff, 1997). Consistently, Sirdeshmukh et al. (2002) and Hellier et al. (2003) defined value in the service context as the consumer ’ s perception of the benefits minus the costs of maintaining an ongoing relationship with a servi ce provider. Thus, customers are more likely to stay in a relationship when they perceive the sum of benefits (e.g. satisfaction with core service attributes, supplementary services and relationship benefits) exceeds the cost. Traditionally, perceived valu e is most commonly conceptualized as a unidimensional measure (Gale, 1994). However, research scholars argued that this unidimensional measure lacks validity (Woo

42 druff and Gardial. 1996) and fails to g
druff and Gardial. 1996) and fails to give specific direction on how to improve value with a v iew to retain customers (Petrick, 2002). Earlier empirical evidence indicated that perceived value on repurchase intention was completely mediated via customer satisfaction (Patterson and Spreng, 1997). Based on equity theory (Oliver and DeSarbo, 1988), c ustomers are inclined to feel equitably treated if they perceive that the ratio of their outcome to inputs is comparable to the ratio of outcome of inputs experience by the company. As a consequence, they are more likely to develop affect and satisfaction with the service (Bolton and Drew, 1991 ). 2.5.3: Brand trust Brand trust is defined as the willingness of the average consumer to rely on the ability of the brand to perform its stated function (Chaudhuri and Holbrook, 2002), as the confident expectations of the brands reliability and intentions (Delgado, Munuera et al., 2003) and as the confidence a consumer develops in the brands reliability and integrity (Chatterjee and Chaudhuri, 2005). In consonance with previous studies, brand trust was further concep tualized to 27 feature two dimensions: brand reliability and brand intentions (Delgado - Ballester , 2004; Delgado - Ballester and Munuera - Alemán , 2005). Brand reliability has a competence or technical nature and is based on the consumer ’ s belief that the brand accomplishes its value promise. This reflects a sense of predictability that the brand s

43 atisfies the individual ’ s needs in c
atisfies the individual ’ s needs in consistently positive ways. Brand intentions are based on the consumer ’ s belief that the brand would hold the consumer ’ s interest whe n unexpected problems with the consumption of the product arise. Recent studies have suggested a positive association between loyalty and trust, defined as containing elements such as honesty, competence, benevolence, reliability, and customer orientation (Chow and Holden 1997; Doney and Cannon 1997; Morgan and Hunt 1994; Moorman, Zaltman and Deshpande 1992). In general, trust is viewed as the determinant of relationship commitment and future purchase intentions in the context of buyer - seller relationships and business - to - business relationships (Morgan and Hunt 1994; Moorman et al. 1992; Crosby et al. 1990). In addition, trust has been found to be predictive of both purchase and attitudinal loyalty in the consumer market context (Chaudhuri and Holbrook 2001 ). Consistently, Urban, Sultan et al. (2000) proposed customer trust as an essential element in building strong customer relationships and sustainable market share. Reichheld and Scheffer (2000) also inform that ―to gain the loyalty of customers, you must first gain their trust‖. With regard to developing brand loyalty, it has been suggested that brand trust is necessary to create brand loyalty, apart from brand affect (Ringberg and Gupta, 2003; Urban and Sultan. 2000). 2.5.4 : Customer satisfaction. Custom er satisf

44 action is the expression of a judgment t
action is the expression of a judgment that a product or service has provided or is providing a pleasurable level of consumption - related fulfillment (Oliver 1997). An extensive literature has verified the role of satisfaction in determining post p urchase attitudes and 28 intentions and has demonstrated that satisfied customers engage in repurchase behavior (e.g., Anderson and Sullivan 1993; Fornell et al. 1996). Moreover, several authors have shown that satisfaction affects the customer attitude towar d the brand or firm (e.g., Bloemer and Kasper 1995; LaBarbera and Mazursky 1983). Therefore, we expect to find positive effects of satisfaction on attitudinal and behavioral loyalty. 2.5.5: Commitment: According to the psychological theories, the commitmen t is the set of acts and cognitions that link a person to his behavior (Crosby &Tylor 1983) In the marketing context, Cunningham (1956) considers that commitment results from the confrontation of the consumer to changes. In marketing services, commitment is viewed as a consumer ’ s will to continue in a relationship with an operator (Morgan & Hunt 1994). It makes possible to differentiate the loyal from the inert consumers. The commitment could be associated to a brand, a brand retailing or a person (Terrass e 2003). The commitment refers to an implicit or an explicit promise of relational continuity between the exchanges ‟ actors (Dwyer et al. 1987). It is the most advanced phase of interdepende

45 nce between the seller and the purchase
nce between the seller and the purchaser. The latter can reach a level of satisfaction that might dissuade him to seek another partner providing a similar advantage (Dwyer et al. 19 87). The durability of the relationship can be guided by the habit or the constraints of the market. Customer ’ s commitment corresponds to a strong desire to preserve the relationship with the seller with agreeing to provide the efforts that might be essent ial (Morgan & Hunt 1994). 29 2.5.6: Price: It is postulated that buyers, generally, have a range of acceptable prices for considering purchases. Thus, buyers may not purchase a product when price is perceived to be too high, or when price is perceived to be too low (Monroe, 1984). Some evidence that endpoints of the evoked range of prices may impact price judgments. Biswas and Blair (1991) in Janiszewski and Lichtenstein (1999) have shown that consumer purchase intention are sensitive to their perception of t he lowest and highest prices in the market place. The consumer reactions are irrational in the sense that consumers are maximizing something other than a utility function that depends only on their own material payoffs. Rather, they also wish to harm (or a t least not to help) firms that they see as having given them a bad deal. Understandably, this leads firms to be careful not to induce these emotional reactions (Rotemberg,2003). . When considering buying a store - branded garment, price may be a key element in

46 the decision process. Baltas (1997) has
the decision process. Baltas (1997) has shown that price is an informational cue that increases consume r sensitivity to private brands. 30 CHAPTER THREE METHODOLOGY 3.1: Introduction: This chapter defines the methodological aspects which the researcher used to collect, analyze and interpret data. This chapter includes the research design and strategy, the survey population, sample size, sampling methods and techniques, data collection sources and methods and tools, data processing and analysis and the a ssociated problems and their solutions. 3.2: Research designs and strategy A correlation research design was used. This was because the researcher wanted to establish the degree and direction of the relationship between promotion activities and brand loya lty. This study specifically focused on a casual form of correlation research. 3.3 Survey population: The survey population comprised of a total of 50 respondents randomly selected from the commercial team from Century bottling company ltd, located 28km from Kampala city on plot 964, block 111 kyagwe road Namanve industrial area and consumers mainly the young adults in and around Kampala district. 3.4 Sample size: The research comprised of 44 respondents. That’s to say: Five Top officials from Century bo ttling company ltd. This was because they design, implement, and evaluate the performance of promotions, five middle - line - managers from Century bottling company ltd. This

47 was because they frequently interface w
was because they frequently interface with the consumers and are often involved in decision making, nine 31 randomly selected sales representatives. This was because they are always in close contact with the consumers and are also directly involved in customer service delivery and twenty five randomly selected consumers especially the young adults in and around Kampala. This was because they are the people who consume these soft drinks and have got the desire to explore based on logic. Table 1 : Illustration of the sample size Area of Selection Description of responde nts Number of respondents Century bottling company commercial team Top officials 5 Century bottling company commercial team Middle line mangers 5 Century bottling company commercial team Sales representatives 9 Kampala District Consumers 25 Totals 44 Source: primary data 3.5: Sampling methods and techniques: Purposive, simple random and stratified random sampling research designs were used basically to ensure that the sample is a true representative of the survey population . 3.5.1 Purposive samplin g technique: This is a sampling technique where the elements in the sample are selected from the population because they conform to a certain characteristic that the researcher is looking for. This is based on the researcher’s judgment in as far as the pur pose for which the information is sought. The researcher used purposive research design bec

48 ause it’s a more representative sampli
ause it’s a more representative sampling technique 32 of typical conditions in the survey. The researcher employed purposive sampling technique when selecting the parti cipants from a variety of participants. 3.5.2 Stratified random sampling: This is a sampling method where the population is classified into homogenous groups called strata. The researcher used stratified random sampling when identifying and defining a samp le of study from which the participants were selected .The researcher therefore identified and defined the population ,determined the sample size of the participants, identified the participants for which the researcher guaranteed appropriate representatio n, classified them as members belonging to any of the identified stratum, used a table of random numbers to randomly select an appropriate number of participants from each of the stratum and a total from these strata was assembled to form a sample of study . The researcher used stratified random sampling because: it improves on the generalizability of the different categories of the respondents. The respondents were then categorized into homogenous groups comprising of; Top commercial team, Middle line mana gers and Sales representatives from century bottling company and the Consumers especially the young adults in and around Kampala. 3.5.3 Simple random sampling: This is a sampling technique where each member of the population has a known and an equal chance of being selected. The

49 researcher used simple random sampling
researcher used simple random sampling technique when choosing the representatives to participate in the survey. The researcher therefore identified and defined a sample of study obtained purposively and classified into a strata, de termined the number of participants in each and every stratum, made a list of all the participants in each and every stratum, assigned consecutive numbers ranging from zero onwards to the last participants in each 33 and every stratum and then selected an arb itrary number in the table of the random numbers from each and every stratum. 3.6: Data collection sources: The researcher visited Century bottling company ltd and used both primary and secondary sources of data. 3.6.1 Primary sources of data: These refer to sources of data where raw facts are collected for the first time. There as such original in nature. The researcher used primary sources of data because they are accurate. 3.6.2 Secondary sources of data: These refer to sources of data that has been pre pared and developed for some other purpose but not to solve the problem at hand. Such sources can either be internal or external to the organization under study. In this source of data the researcher looked at various documents such as sales reports, marke ting research sources, and also looked at the literature from published books, journals, company internal reports, in house magazines, information on consumer research and the internet. The researcher used secon

50 dary research sources of data because th
dary research sources of data because they ar e cheap, time saving, always available and dependable. 3.7: Data collection methods and tools: Both qualitative and quantitative data collection methods were used to collect and gather data through the questionnaires. 34 3.7.1 Quantitative research methods: These are research methods that are used to gather data which are numerical in natur e and form such as age, length and years. 3.7.2. Qualitative research methods: These are data research methods that are used to gather data that is descriptive in nature an d form. They are often used to collect abstract variables where opinions, feelings, perceptions and attitudes are studied. Data collection instruments such as the structured questionnaires were employed. 3.7.3 Questionnaire: Is a set of formalized question s used in a survey to collect information which is later analyzed to provide results necessary for solving a given research problem. Like any good test, questionnaires ask for information that respondents have. The researcher used the questionnaire as a d ata collection instrument because it’s cheap, time saving, easy to administer, effective and it’s the best form of obtaining information from the top executives. In this instrument, the researcher used both closed and open questions. 3.8: Investigative pr ocedure: The researcher presented a letter of introduction from Makerere university - Kampala. This was intended to introduce

51 the researcher to the concerned authorit
the researcher to the concerned authorities at the area of study basically to seek for permission to conduct the survey and reduce o n the non - response rate . 35 3.9: Data processing and analysis: Data was electronically captured and coded. To obtain descriptive and inferential statistics, a regression analysis was employed basically to establish the relationship between promotional a ctivi ties and brand loyalty. Pearso n’s correlation coefficiency was used to determine the degree and the direction of the relationship between promotional activities and brand loyalty. 3.10: Challenges encountered. While conducting research, the researcher face d the following challenges as; High costs in terms of transport, purchasing stationary, typing and photocopying. This was solved by working within the budget sparingly. Uncooperative respondents to help in providing the necessary information. This was sol ved by availing them with a letter of introduction from Makerere University and also assured them that the information provided was confidential. Time constraint in data collection, capturing, coding, editing analyzing and the final presentation of the re port. This was solved by ensuring that the time element was put into consideration and honoring each and every appointment as agreed upon with the respondents in the survey population. 36 CHAPTER FOUR PRESENTATION, ANALYSIS AND DISCUSSION OF RESEARCH FINDINGS .

52 4.1 Introduction This chapter deals
4.1 Introduction This chapter deals with the presentation and interpretation of the findings of the study which were done in relation to the reviewed literature and in regard to specific objectives of the study outlined below: T o find out the ext ent to which C entury bottling company conducts promotional activities. To establish how C entury bottling company manages loyalty programs. To determine the relationship between promotional activities and brand loyalty. The findings are presented with the h elp of tables for purposes of easier understanding, clarity and interpretation. 4.2 Background information Findings on background characteristics of respondents were considered in order to establish the bio data of the respondents and findi ngs were as in t he tables below; 4.2.1 Gender of the respondents Respondents were asked to state their gender and the following data was obtained ; 37 Table 2 : Gender of respondents Gender Frequency Percent Valid Percent Cumulative percent Male 28 6 3.6 64 64 Female 16 36.4 36 100 Total 44 100. 100 Source: primary data From table 2 above, majority of the respondents at 64 percent were males and 36 percent were females. This finding indicates that the researcher took gender balance into considerati on though there was a difference of 28 percent. This implies that the purchase decisions are generally dominated by Males. 4.2.2 Age bracket of the respondents.

53 Respondents were asked to indicate the
Respondents were asked to indicate their age brac ket and below were the findings; Table 3 : Age bracket of respondents. Age bracket Frequency Percent Valid percent Cumulative percent 16 - 20 years 2 4.5 5 5 21 - 25 years 22 50.0 50 55 26 - 30 years 11 25.0 25 80 31 - 35 years 4 9.1 9 89 36 - above years 5 11.4 11 100 Total 44 100 .0 100 38 Source: primary data From table 3 above, it is clearly seen that the majority of respondents, 55% were aged between 21 - 25 years. Followed by those in the age group ranging from 26 - 30 years at 25%, then 36+ years at 11%, then 31 - 35 years at 9%, an d lastly those below the age of 20 years at 5%. This finding implied that the young adults in the age bracket ranging from 21 - 25 years are the ones who are impressed by promotions and thus are attracted and taken up by the promotional activities. This expl ains why most promotions by century bottling company are geared towards the youth. This is also the age at whic h people are yearning for adventure. 4.2.3 Level of education of the respondents. Respondents were asked to identify their educational levels and below are the responses. The educational level of the respondents was considered in the study so as to establish the skills and knowledge of the respondents in relation to answering the questionnaires. The table below presents the findings ; Table 4 : Level of education of respondents .

54 Education level Frequency Percent
Education level Frequency Percent Valid percent Cumulative percent secondary level 2 4.5 5 5 tertiary level 7 15.9 16 21 University 35 79.5 79 100 Total 44 100.0 100 Source: primary data . Accordi ng to table 4 above, it is seen that 79 percent of the respondents were educated up to the level of university, followed by those from tertiary level at 16 percent and lastly from the 39 secondary level at 5 percent. This means that the researcher considered the level of education when selecting respondents to participate in the survey. This was a key factor given the fact that the survey was to be administered through the questionnaires besides obtaining quality data. This finding was a representative of the sample size from which 43 percent were employees of century bottling company and 56 percent were the consumers selected from within and around Kampala District. In relation to the study, this finding indicated that respondents were knowledgeable and theref ore had the capacity to provide reliable and meaningful information. 4.2.4 Marital status of the respondents. The respondents were asked to state their marital sta tus and below are the responses; Table 5 : marital status . Marital st atus Frequency Percent Valid percent Cumulative percent Single 27 61.4 61 61 Married 17 38.6 39 100 Widowed 0 0 0 100 Divorced 0 0 0 100 Totals 44 100 100 Source: p

55 rimary data Table 5 above clearly in
rimary data Table 5 above clearly indicates that majority of the consumers of the co ca - cola brand at 61 percent are single, followed by the married at 39 percent, the widows and divorced contributing zero percent each. This implies that single people are most attracted to the promotional activities and are thus loyal to the brand coca - co la. Therefore management should design promotional 40 activities geared towards attracting many singles since such a category’s consumption decisions are greatly influenced by promotional activities. 4.2.5: Income of the respondents per month. The respondents were asked to state their levels of inco me and below were the responses; Table 6 : Inc ome of the respondents . Level of incomes Frequency Percent Valid percent Cumulative percent 0 - 140000 0 0% 0% 0% 150000 - 350000 4 9.09% 9% 9% 360 000 - 560000 23 52.27% 52% 61% 570000 - 770000 10 22.7% 23% 84% 780000 + 7 15.9% 16% 100 Totals 44 100% 100 Source: primary data Table 6 above clearly indicates that majority of the consumers of the Coca - Cola brand at 52 percent have monthly earnings ran ging between 360000 shillings and 560000 shillings, followed by those earning between 570000 and 770000 at 23 percent, then those earning between from 780000 and above at 16 percent, then those earning between 150000 and 350000 at 9 percent and lastly thos e earning between zero and 140000 shillings at

56 zero percent. This implies that the re
zero percent. This implies that the research study focused on the target population who have the need, will and authority to make a purchase. 41 4.3: Century bottling company and promotional activities. Responde nts were asked to state the extent to which century bottling company conducts promotional activities. The findi ngs were as in the tables below; 4.3.1: Use of coupons: Respondents were asked to state the extent to which century bottling company uses coupons as sales promotion activity and the respo nses were as in the table below; Table 7 : Use of coupons. Response Frequency Percent Valid percent Cumulative percent Greater extent 3 6.81 7 7 Average 7 15.9 16 23 Lesser extent 34 77.2 7 77 100 Total 44 100 100 Source: primary data From table 7 above, the study shows that century bottling company uses coupons as a sales promotion activity to a lesser extent .This is indicated by a majority response rate of 77 percent, while 16 percent registered a moderate use and only 7 percent reported a greater use of coupons as a sales promotion ac tivity. It was therefore concluded that century bottling company does not use coupons in its promotion techniques. 4.3.2: Use of Rebates. Respondents we re asked to state the extent to which century b ottling company uses Rebates in sales promotion and below were the responses; 42 Table 8 : Use of Rebates. Response Frequency Percent V

57 alid percent Cumulative percent Grea
alid percent Cumulative percent Greater extent 26 59.09 59 59 Average 15 34.09 34 93 Lesser extent 3 6.81 7 100 Total 44 100 100 Source: primary data From table 8 above, the study shows that century bottling company uses Rebates as a sales promotion activity to a greater extent .This is indicated by a majority response rate of 59 percent, while 34 percent registered a moderate use and only 7 percent reported a lesser use of coupons as a sales promotion ac tivity. It was therefore concluded that ce ntury bottling company use s Rebates in its promotion te chniques to drive loyalty. 4. 3.3: Use of free product trails. Respondents were asked to state the extent to which century bottling company uses free product trails as sales promotion activity and the respo nses were as in the table below; Table 9 : F ree product trails. Response Frequency Percent Valid percent Cumulative percent Greater extent 36 81.81 82 82 Average 8 18.18 18 100 Lesser extent 0 0 0 0 Total 44 100 100 43 Source: primary data From table 9 above, the study shows tha t century bottling company uses free product trails as a sales promotion activity to a greater extent .This is revealed by a majority response rate of 82 percent, while 18 percent registered a modera te use. It was therefore concluded that C entury bottling c ompany to a greater extent use s free product trails in its prom

58 otion techniques. Management should t
otion techniques. Management should therefore design a promotion program with the intention of giving free product trails to consumers and customers most e specially on slow moving brands. Thes e activities should be carried out preferably from a Manual distribution center level on a quarterly basis. Preference should be given to manual distribution level because at this level product trails can reach each and every corner of the intended market segment. This will attract many consumers to taste and may in the long run remain loyal to the promoted brand. 4.3.4: Use of sales contests. Respondents were asked to state the extent to which century bottling company uses sales contest as promotion activ ity and the respons es were as in the table below; Table 10 : Use of sales contests . Response Frequency Percent Valid percent Cumulative percent Greater extent 3 6.81 7 7 Average 14 31.81 32 39 Lesser extent 27 61.36 61 100 Total 44 100 100 Source: primary data 44 From table 10 a bove, the study shows that century bottling company uses sales contests as a personal sales activity to a lesser extent .This is revealed by a majority response rate of 61 percent, while 32 percent registe red a moderate use and 7 percent recorded a greater use of s ales contents. This means that C entury bottling company uses sales contests to a lesser extent. Management should take note that Human resource is part

59 and parcel of the finished product;
and parcel of the finished product; in fact it’s the heart of the organization and is as such the most valued asset of any business organization since they act as a mirror in the face of the customer. No amount of clever work or modern technology and application of theories or principles can achieve anything unless people decide willingly to work. In this regard , management should come up with performance recognition and rewarding scheme either on a monthly or quarterly basis in order to ensure that its sales force is motivated en ough to think for th e organization they work for instead of acting . 4.3.5: Use of flayers’ . Respondents were asked to state the extent to which c entury bottling company uses flye rs as publicity activity and the responses were as in the table below ; Table 11 : Use of flay ers . Response Frequency Percent Valid percent Cumulative percent Greater extent 26 59.09 59 59 Average 12 27.27 27 86 Lesser extent 6 13.63 14 100 Total 44 100 100 Source: primary data 45 From table 11 ab ove, the study shows that ce ntury bottling co mpany to greater extent uses flay ers as a publicity activity. This is revealed by a majority response rate of 59 percent, while 27 percent registered a moderate us e and 14 percent reported that Century bottling company uses flay ers to a le sser exten t. This shows that Century bottling company uses flay ers to greater exte

60 nt. Management shou ld therefore con
nt. Management shou ld therefore continue to use flay ers as a means of reaching out to its customers since it’s cheap and can be consulted in case of misunderstanding for clar ification unlike Television and radio advertising. 4.3.6: Use of Street advertising: Respondents were asked to state the extent to which century bottling company uses street advertising as a promotion activity and the respo nses were as in the table below; Table 12 : Street advertising . Response Frequency Percent Valid percent Cumulative percent Greater extent 41 93.18 93 93 Average 3 6.81 7 100 Lesser extent 0 0 0 100 Total 44 100 100 Source: primary data From table 12 a bove, the study indicated that C entury bottling company to greater extent uses street advertising. This is revealed by a majority response rate of 93 percent, while 7 percent registered a moderate use. This means that C entury bottling company uses street adverti sing to greater extent in its publicity campaigns. Management at Century bottling company should therefore work towards continuous improvement of street advertising in urban markets and also 46 extend the same efforts in rural markets so as to create awarenes s of its products for market share reasons. 4.3.7: Use of event sponsorship: Respondents were aske d to state the extent to which C entury bottling company uses event sponsorship as a promotion activity and the

61 respo nses were as in the table below;
respo nses were as in the table below; Table 13 : Event sponsorship. Response Frequency Percent Valid percent Cumulative percent Greater extent 12 27.27 27 27 Average 25 56.8 57 84 Lesser extent 7 15.9 16 100 Total 44 100 100 Source: primary data From table 13 above , res pondents showed use of event sponsorship on average at majority score of 57 percent, f ollowed by those who said that C entury bottling company uses event sponsorships to a greater extent at 27 percent and lastly by those who said that C entury bottling compa ny uses event sponsorship as a promotional activity to a lesser extent at 16 percent. This implies that C entury bottling company on average uses event sponsorship in its promotional campaigns. Amidist the financial constraints facing global businesses, man agement at Century bottling company should allow a flexible budget and strategically invest in community based programs which directly supports its business strategy. This, if well implemented will 47 significantly give the brand the necessary competitive imp etus it so requires toenhance competitive advantage and consolidate it’s hard earned reputation. 4.3.8: Use of Television advertising: Respondents were asked to state the extent to which century bottling company uses T.V advertising and the respo nses were as in the table below; Table 14 : Television advertising . Response Frequency

62 Percent Valid percent Cumulative p
Percent Valid percent Cumulative percent Greater extent 8 18.18 18 18 Average 28 63.63 64 82 Lesser extent 8 18.18 18 100 Total 44 100 100 Source: primary data From table 14 ab ove, the majority of the respondents showed use of T.V advertising on average with majority score of 64 percent, followed by those who said that century bottling company uses T.V advertising to a greater extent and to a lesser extent at 18 percent r espectively. This implies that C entury bottling company on average uses TV. Advertising in its promotional campaigns. Advertising is good especially when it comes to creating awareness. Management should however note that these telev ision slots are too expensive and a choice to whether or not to invest in television advertising must be critically analyzed because the greater percentage of the audience watching these television adverts, including the sales force its self ,do not 48 underst and them besides getting the time to watch television . Therefore management should only invest in advertising if it’s contented that the message communicated will enhance brand awareness and stimulate curiosity. The messages should be eye catching enough t o attract the viewer and entice them to long for more commercial airtime. 4.3.9: Use of radio advertising Respondents were ask ed to state the extent to which C entury bottling company uses Radio advertising and the r

63 espo nses were as in the table below;
espo nses were as in the table below; Ta ble 15 : Radio advertising . Response Frequency Percent Valid percent Cumulative percent Greater extent 16 36.36 36 36 Average 21 47.72 48 84 Lesser extent 7 15.9 16 100 Total 44 100 100 Source: primary data From table 15 above majority of the respondents at 48 percent showed use of radio advertising on average, f ollowed by those who said that C entury bottling company uses radio advertising to a greater extent at 36 percent and lastly those who said century bottling company uses Radio advertising to a lesser extent at 16 percent. This implies that C e ntury bottling company on average uses radio advertising in its promotional campaigns. Century bottling company should therefore increase on its radio campaigns so as to connect its b rands with the consumer. Radio is a widely used media whether in urban or rural setting and can as such be used to associate the 49 brand with the consumer since its cheaper compared to T.V adertising.The only evil around it, is that so often organizations fo rmulate fancy ideas and push the media to hastily develop the already done communications and at the end , they fail to deliver on their promise. In order to avert this risk, management at Century bottling company should from the word go involve its adverti sing agency, distributors, sales force and the media because t hey know the market and will

64 guide the communication to cater for
guide the communication to cater for various audiences. 4.4: Management of loyalty programs. Objective number two of the study was to establish how century bottling company manages loyalty programs the findings were as below ; 4.4.1 Loyalty programs and consumer rewards. Respondents were asked to state whether century bottling company has devised loyalty programs that reward consumers. This section intended to establi sh whether century bottling company had loyalty programs that reward customer. The respo nses were as in the table below; Table 16 : Loyalty programs and consumer rewards. Responses Frequency Percent Valid percent Cumulative percent Strongly agree 20 45.45 45 45 Agree 10 22.7 23 68 not sure 12 27.27 27 95 Disagree 2 4.5 5 100 Total 44 100.0 100 Source: primary data 50 Table 16 above , clearly shows that majority of respondents at 45 percent strongly agreed that C entury bottling c ompany has devised loyalty programs that directly rewards customers, followed by those who were not sure at 27 percent, then followed by those who agreed with the preposition at 23 percent and lastly those who disagreed with the preposition at 5 percent. This implies that much as Century bottling company has devised loyalty programs, consumers’ are not informedbesides , they are sophisticated and concentrated in urban settings. This could be a waste of funds. Management at

65 Century bottling company should th eref
Century bottling company should th erefore design ways to sensitize the consumers about the loyalty rewards in place so that at least every consumer can participate. Management as such needs to design better communication systems and try as much as possible to involve its sales force in pas sing on the communication even as low as retail outlet level. This will help in boasting sales and therefore the financial goal of the organization. 4.4.2 Management of loyalty programs. Here resp ondents were asked to state if C entury bottling company has devised mechanisms to manage loyalty programs and the responses were as in the t able below; Table 17 : Management of loyalty programs. Responses Frequency Percent Valid percent Cumulative percent Yes 24 54.5 55 55 not sure 19 43. 2 43 98 No 1 2.3 2 100 Total 44 100.0 100 Source: primary data 51 Table 17 above, clearly indicates that majority of the resp ondents 55 percent agreed that C entury bottling company has put in place mecha nism to manage loyalty programs, this was followed b y those who were not sure at 43 percent and l astly those who disagreed that C entury bottling company has devised mechanisms to manage loyalty programs. When asked to mention the mechanisms in place, the following were listed: Third party distribution progr am, free refrigeration to its customers, corporate nights, exclusive programs, credit programs to key accounts and

66 sponsorship of football in secondary sch
sponsorship of football in secondary schools. This means that Century bottling company has set up mechanisms to manage its loyalty programs . However, there is need innovation and also more flexible controls need to be designed for purposes of simplicity and effective management of these loyalty programs without compromising on the internal controls and procedures . 4.5: Relationship between pr omotional activities and brand loyalty. 4.5.1: Proportion of Coca - Cola consumption. Respondents were asked to state whether they consume Coca - Cola or not and the respo nses were as in the table below; Table 18 : Proportion of Coca - Co la consumption. Responses Frequency Percent Valid percent Cumulative percent Yes 39 88.6 89 89 No 5 11.4 11 100 Total 44 100.0 100 Source: primary data . 52 From table 18 above , 89 percent of the respondents consume Coca - Cola brand. This implies that maj ority of respondents were lo yal to Coca - Cola as a brand of C entury bottlin g company. This finding is in agreement with (Dick et al 1994) who asserted that brand loyalty consist of a customer’s commitment to repurchase or otherwise continue using the brand and can be demonstrated by repeated buying of the product or service. Management at Century bottling company should therefore devise specific brand promotional activities to continuously remind and give support to its core brands. It can also loo

67 k at expan ding on the brand portfoliosâ
k at expan ding on the brand portfolios’ through introducing new different flavors like it’s the case with fanta.In fact what is happening is that consumers for the coca - cola brand are simply switching to the frequent new fantaflovours.Some change permanently and st ay loyal to fanta thereby affecting the coca - cola market share. 4.5.2: Preference rate for the coca - cola brand. Here Respondents were asked to rate their preference for the coca - cola brand and the findings were as illustrated in the table below; Table 19 : Preference rate for the coca - cola brand. Response Frequency Percent Valid percent Cumulative percent High 32 72.7 73 73 Medium 7 15.9 16 89 Low 5 11.4 11 100 Total 44 100.0 100 Source: primary data 53 From table 19,above, most respondents at 73 percent had high preference for coca - cola brand, while 16 percent had a moderate preference and lastly 11 percent had a low preference for the brand coca - cola. This concurs with Philip Kotler who contends that suppliers segment their cu stomers into heavy, medium and light users. In practice consumers preferences are changing over time. For instance Heilman, Bowman and Wright (2000) demonstrate that consumers’ preferences may either strengthen or weaken. That when loyal consumers repeat p urchase the same brand, their decision is driven by their brand preference as a result of this unique value of the brand( Ailawadi,

68 Neslin and Gedenk 2001).This findings a
Neslin and Gedenk 2001).This findings also measures the level of trust respondents have on coca - cola brand. This conforms to Reichheld and Scheffer 2000,who argues out that to gain the loyalty of customers, you must first gain their trust with regard to developing brand loyalty and so is Ring berg and Gupta 2003,who suggested that brand trust is necessary to create brand loyal ty apart from brand affect. There is therefore a need to revise promotion strategy so as to convert the 27 percent into loyal consumers. Promotions should be designed in such a way that drives a strong conviction so as to encourage acceptance for brand coc a - cola. 4.5.3: Choice on consumption of Coca - Cola. Respondents were asked to state why they consume Coca - Cola and the respo nses were as in the table below; 54 Table 20 : C onsumption of Coca - Cola. Responses Frequency Percent Valid pe rcent Cumulative percent Taste 24 54.54 54 54 Satisfying 13 29.5 30 84 others 7 15.9 16 100 Total 44 100.0 100 Source: primary data From table 20 above, 54 percent of the respondents consume Coca - Cola brand due to the taste, followed by those who co nsume Coca - Cola because it satisfies their desires at 30 percent and lastly by those who stated other reasons like price,availability,image convenience and other reasons at 16 percent. This implies that creating and delivering superior consumer perceived v alue is a strateg

69 ic weapon in attracting and retaining c
ic weapon in attracting and retaining consumers. Management at Century bottling company shouldnote that future business environment requires mass production but tailor made to consumer specifications and tastes focusing on size, packaging and delivering consumer needs, when they need it. Therefore Century bottling company through its quality assurance competency must continuously review the quality of its core brands specifically Coca - cola as this will help the company to deliver a brand t hat can fulfill the needs and wants of the consumers besides creation of a continuous demand . 55 4.5.4: Promotions and consumption behavior. Respondents were asked to state whether promotional activities influence their decision to consume Coca - Cola and the respo nses were as in the table below; Table 21 : Promotions and consumption behavior. Responses Frequency Percent Valid percent Cumulative percent Yes 37 84.1 84 84 No 7 15.9 16 100 Total 44 100.0 100 Source: primary data Table 21 , above , clearly shows that 84 percent of the respondents acknowledged the fact that their loyalty to brand Coca - Cola was driven by promotional activities while 16 percent of the respondents said that their loyalty to brand Coca - Cola was as a result of other factors other than promotional activities. Therefore it was concluded that the diffe rent promotional activities by C entury bottling company helped to build

70 Coca - Cola brand loyalty. This is in ag
Coca - Cola brand loyalty. This is in agreement wi th Andrew S.C., Ehrenberg et al who asserted that there exists temporal brand switchers and that in such situations, brand loyalty may seem strong yet still be short lived leaving brands vulnerable . And that brand loyalty of moderate loyals who may or may not buy a brand on any given occasion can be enhanced through promotional activit ies. These promotional activities shouldfocus onperiodical free product sampling , basically to re - energize product repeat purchases. 56 4.5.5: Promotions and consumption decision: Here respondents were asked to state the promotion that influenced their decision to consume Coca - Cola and the responses were il lustrated as in the table below; Table 22 : Promotions and consumption . Promotion activities Frequency Percent Valid percent Cumulative percent Bongana coke 22 50.0 50 50 W in school fees 16 36.36 36 86 Brr on the coke side of life 4 9.09 9 95 Bongana billions 2 4.5 5 100 Total 44 100.0 100 Source: primary data From table 22 above, 50 percent of the respondents pointed out that bonga na cok e influenced their decision to consume coca - cola, this was followed by win school fees at 36 percent, then Brr on the coke side of coke and lastly bongana billions at 5 percent. Given the finding on the age bracket, most respondents could have consumed coc a - cola with the hope of winning school f

71 ees which was offered. Sales promotion
ees which was offered. Sales promotion comprises of a wide range of promotional tools designed to achieve short term objectives, for instance monetary promotions are the most common form of sales promotion used by or ganizations (Huff et at 1999), therefore such monetary and non monetary offer of school fees could have played a major role in luring respondents to consume Coca - Cola. Therefore management at Century bottling company should desi gn a fresh annual monetary a nd non monetary country wide promotion program that instantly rewards consumers especially in periods were the consumption of soft drinks ranks low or holds no ranking on the 57 budget pie. Management should also carefully think about promotional activities in terms of their execution, mechanism and how to associate the consumer with the promotional activity taking into consideration the target market . 4.5.6: Themes and consumption behaviors. Respondents were asked to state the theme that aroused their interest s to consume Coca - Cola and the responses were illustrated in t he table below; Table 23 : Themes and consumption behaviors. Theme Frequency Percent Valid percent Cumulative percent Enjoy coca - cola 23 52.3 52 52 Llife tastes good 1 4 31.8 32 84 Coca - cola music wave 1 2.3 2 86 Open happiness with coke 6 13.6 14 100 Total 44 100.0 100 Source: primary data From table 23 above, majority respondents 52 pe

72 rcent mentioned Enjoy Coca - Cola as the
rcent mentioned Enjoy Coca - Cola as the major theme that aroused them. While tho se who mentioned life tastes good were at 32 percent, then those who mentioned open happiness with coke were at 14 percent and lastly those who mentioned Coca - Cola music wave were at 2 percent. This means that the design of a promotional theme can greatly affect brand loyalty. Th is is because to day’s consumers are becoming harder to please, they are smarter, more price conscious, more demanding, less forgiving and are usually approached by many competitors wi th equal or even better offers.T herefore in order to win them, 58 Management at Century bottling company should design well and convincing promotional themes and must note that advertising communicates not only attributes and the functional benefits but also provides emotional and self - expressive benefits t hat have got a personality and provides a platform for differentiation. 4.5.7: Themes and level of consumption interests. Here Respondents were asked to state the extent to which promotional themes aroused their consumption interests and the respo nses were as in the table below; Table 24 : Themes and consumption interests. Response Frequency Percent Valid percent Cumulative percent Greater extent 30 68.2 68 68 Average 11 25.0 25 93 Lesser extent 3 6.8 7 100 Total 44 100.0 100 Source: primary data From table 24 above, the promotional t

73 hemes, to a greater extent aroused the m
hemes, to a greater extent aroused the majority of the respondents at 68 percent, while 25 percent were moderately influenced by the promotional themes and only 7 percent of the respondents report ed that their interest were to a lesser extent affected by the promotional themes. This implies that promotional themes play a big role in positively arousing consumer interests and intentions to consume a brand. In this regard, management at Century bottl ing company should carefully think through the message content, 59 structure and format such that the theme formulated can predict brand performance in the consumer’s mind and therefore elicit effective responses from the consumer. 4.4.8: Promotions and brand switching. Respondents were asked to give reasons as to why they would not change to a particular substitute as they were being promoted and the respo nses were as in the table below; Table 25 : Promotions and brand switching. Reas ons Frequency Percent Valid percent Cumulative percent Used to the brand 5 11.4 11 11 Prefers the brand 26 59.1 59 70 No new brand can meet the desire 13 29.6 30 100 Total 44 100 100 Source: primary data In table 25 above, most respondents at 59 per cent said that they prefer the brand, followed by those who said that there are no new brands that can satisfy their desire and lastly those who said they are used to the brand at 11 percent. This is in agreem

74 ent with past research in this stream w
ent with past research in this stream which ass umes that consu mers who have shown high prefernce levels in the past will repeat purchase the same brand (Banaseiwiez 2005).This is also in total agreement with Yoo,Donthu and lee 2000,who argue that brand loyalty encourages repeated purchase behavior from consumers and discourages them from switching to competitor brands. Brand loyalty is such a valuable asset for every brand and t herefore management at Century bottling company should 60 design promotional activities that reward consumers so as to remind them about their preferred brands. 4. 5.9: Promotional activities and brand loyalty: Respondents were asked whether promotional activities influence brand loyalty and the responses were illustrat ed as shown in the table below; Table 26 : Promotional activities and brand loyalty: PROMOTIONAL ACTIVITIES BRAND LOYALTY Promotional activities Pearson Correlation 1 .964(**) Sig. (2 - tailed) . .000 N 44 44 Brand loyalty Pearson Correlation .964(**) 1 Sig. (2 - tailed) .000 . N 44 44 ** Correlation is significant at the 0.01 level (2 - tailed). The Pearson correlation coefficient above reveals that there is a strong positive relationship between promotional activities and brand loyalty. This is represented by Pearson correlation coeffici ent of r=0.964** tested at 0.01 level of significance. Also the correlation shows a gap of 61

75 0.036 that need to be closed by the ma
0.036 that need to be closed by the management of C entury bottling company. This means that promotional activities affect brand loyalty by 96.4% and 3.6% by other f actors. Given the fact that the correlation is significant, it was concluded that promotional activities affect brand loyalty. The positive sign of this correlation implied that if century bottling company increased its promotional activities, brand loyalt y to a particular brand would increase. 62 CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATIONS . 5.1 : Introduction . This chapter presents a summa ry of the findings of the study and then goes ahead to present the conclusion and recommendations from both the respondents and researchers perspective in relation to the existing literature. 5.2 : Summary of findings ; 5.2.1 : P romotional activities . Findings revealed that C entury bottling company had a number of promotional activities put in place to promote partic ularly Coca - Cola brand. It was further realized that most customers were aware of these promotional activities through various mechanism put in place such as advertisements, sales promotions a nd direct selling. Customers were highly aroused by the promotio nal activities hence it was concluded that C entury bottling company’s promotional activities h ave been successful in linking the brand Coca - Cola to customers which is the major aim of promotion as noted by (Kurtz and Dave 2010).

76 5.2.2 : B rand loyalty . Find ings
5.2.2 : B rand loyalty . Find ings revealed that there is a strong loyalty for brand Coca - Cola. T his conclusion was reached because majority of respondents agreed that ; they consume the brand, had high preference for the brand and that they would continue to consume the brand even if a promotion was run on a competitive brand. 63 5.2.3 R elationship between promotional activities and brand loyalty . Findings showed that there was a strong positive relationship between promotional activities and brand loyalty at Pearson ’s correlation coeffici ency r = 0.964 ** . This implied that promotional activities affect brand loyalty and therefore management should pay attention to the d esign of promotional activities so as to close a gap of r = 0.036 **. 5.3 : Conclusion . The strong positive relationship b etween promotional activities and brand loyalty at Pearson’s correlation coefficiency of r= 0.964** is attributed to well - designed promotional activities that help ed to build brand loyalty for its products. The se promotional activities designed to promote Coca - Cola to a greater extent achieved the intended promise of building the brand’s loyalty among the consu mers and this has been achieved through well - managed loyalty programs. 5.4: R ecommendations . The study is not only intended to serve the academic pur pose of the researcher because of the

77 analytical nature and the depth of the i
analytical nature and the depth of the issues raised herein but also to help in guiding organizations in formulating and implementing their business strategy . It’s therefore recommended that: Century bottling company should continue putting more efforts in designing and carrying out promotional activities aiming at building brand loyalty particularly for Coca - Cola, a brand whose performance is fluctuating and also carefully think about promotional activities in terms of their execution, mechanism and how to associate the consumer with the promotional activity taking into consideration the target market . 64 T he future business environment requires mass production but tailor made to consumer specifications and tastes focusing on size, packaging and delivering consumer needs, when they need it. Therefore Century bottling company through its quality assurance competency must continuously review the quality of its core brands and most especially coca - cola as this will hel p the co mpany to deliver a brand that can fulfill the needs and wants of the consumers besides creation of a continuous demand . This calls for flexibility on the internal controls so that they do not override the effectiveness of customer service delivery. This ho wever should be achieved without compromising company processes and procedures . Century bottling company should manage its loya lty programs in such a way that customers

78 are directly rewar ded by the promotion
are directly rewar ded by the promotional activity in order to counter compe titors’ unde rtakings . 5.5 A reas for further research . Ha ving conducted a research on the influence of promotional activities on brand loyalty, future research ers should carry out further research on the following areas such as ; the effect of price on brand loyalty a nd the influence of peer pressure on brand loyalty. 65 REFERENCES Aaker, D. A. (1991), Managing Brand Equity: Capitalizing on the Value of a Brand Name, the Free Press, New York. Management Review, Vol.38 No.3, pp.102 - 120. Aaker, David A., Building St rong Brands (New York: The Free Press, 1996).1 - 17. 205 - 222. 22.65. Baldinger, Allan, and Joel Rubinson, "Brand Loyalty: The Link between Attitude and Behavior," Journal of Advertising Research, 36 (November/December 1996), 22 - 34 Bloemer, Josè M. M. and Han s D. P. Kasper (1995), ―The Complex Relationship between Consumer Satisfaction and Brand Loyalty,‖ Journal of Economic Psychology, 16 (2), 311 - 329. Bodur.H.O. and Grohmann.B (2005),‖Consumer responses to gift receipts in business to business consumer conte xts‖ ‗ Psychology and marketing, Vol.22 No.5, pp 441 - 456. Brown, Robert George (1974), ―Sales Response to Promotions and Advertising,‖ Journal of Advertising Research, 14 (4), 33 - 9. Campbell, L. and Diamond, W. (1990), ―Framing and sales promotions: the cha racteri

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81 eting management Roman, S. & S. Rui
eting management Roman, S. & S. Ruiz 2005. „Relationship outcomes of perceived ethical sales behavior: the customer’s perspective. Journal of Business Research, 58: 439 - 445 67 Schiffman lean G and Leslie Lazar Kanuk, Consumer behavior (1994). Trawick, I.F, J.E Swan, G.W Mcgee. & D. R. Rink 1991. „Influence of buyer ethics and salesperson behavior on intention to choose a supplier. Journal of Academy of Marketing Science, 19, 1, 17 - 23. Urban, G. L., F. Sultan, et al. 2000, ― Placing trust at the center of your internet strategy ‖ Sloan Management Review, 42(fall), pp.39 - 49. Woodruff, R.B. 1997, „Customer value: the next source for competitive advantage, Journal of the Academy of Marketing Science, vol. 25, no. 2, Spring, pp. 139 - 153. 76. Yoo, B., Donthu, N. and Lee, S. (2000), ―An exami nation of selected marketing mix elements and brand equity‖, Academy of Marketing Science, Vol.28 No.2, pp.195 - 211. Yoon, Kanghyun (2008), ― Identifying the Truly and the Deal - Prone Hard - Core Loyals,‖ 68 APPENDICES MAKERERE UNIVERSITY QUESTION AIRE Topic: Promotion al Activities and Brand Loyalty (To be filled by Employees of Century Bottling company and consumers of the Coca - Cola ) Dear sir/madam. Am Wubo Gerald, a student of Makerere University with registration number 06/U/9282/Ext and student number 206009683 carrying out research on promotional activ

82 ities and brand loyalty in partial fulf
ities and brand loyalty in partial fulfillment of the requirement for the award of a Bechelors’degree in commerce. Your response herein is highly treasured, important and it’s required strictly fo r academic purposes and therefore be assured of utmost confidentiality. Please spare some time and answer the following questions. Thank you for your time and co - operation. SECTION A : GENERAL INFORMATION. (Please tick the most suitable option ). Qn 1. What is your Gender? ( a) Male. ( b) Female Qn 2. What is your Age bracket? (a) 16 to 20 years (b) 21 to 25 years ( c) 26 to 30 years (d) 31 to 35 years ( e) 36 and above 69 Qn 3. What is your Level of Education? (a) Secondary level (b) Tertiary level ( c) University level Qn 4: What is your marital status? (a) Single (b) Married (c ) widowed (d) divorced Qn 5: What is your level of income? (a) 0 – 140000 (b) 150000 – 350000 (c) 360000 – 560000 (d) 570000 – 770000 (e) 780000 and above SECTION B: Century bottling company and promotional activities. ( Pleases tick the most appropriate option and explain where necessary) Qn 5: Do you consume coca - cola brand? (a) Yes.

83 (b) No 70 Qn 6: I
(b) No 70 Qn 6: If your answer in question (5) above is yes, what could be the main reason you consider to consume coca - cola? ………………………… …………………………………………………………………………… Qn 7: Do promotional activities influence you to consume coca - cola brand? (a) Yes (b) No Qn 8: which of the following pr omotions influenced your decision to consume a coca - cola? (a) Bongana coke (b) BRR on the coke side of life ( c) Coca - cola music wave (d) Win school fees (e) Juzzae’kikapu Qn 9: From the following list, please tick the themes that you have ever heard about? (a) Enjoy coca - cola. (b) Life tastes good (c) Coca - Cola music wave (d) Open happiness with coke. Qn 10: Which of the above themes aroused you most to consume coca - cola………….……? Qn 11: To what extent we re you aroused? (a) Greater extent (b) Average (c) Lesser extent 71 Qn 12: To what extent does century bottling company use coupons as a promotional activity? (a) Greater extent (b) Average (c) Lesser extent Qn 13: To what extent does century bottling company use rebates as a promotional activity? (a) Greater extent (b) Average (c) Lesser ext

84 ent Qn 14: To what extent d oes
ent Qn 14: To what extent d oes century bottling company use free product trails as a promotional activity? (a) Greater extent (b) Avera ge (c) Lesser extent Qn 15: To what extent does century bottling company use sales contests as a promotional activity? (a) Greater extent (b) Average (c) Lesser extent Qn 17: To what extent does century bottling company use fliers as a promotional activity? (a) Greater extent (b) Average (c) Lesser extent 72 Qn 18: To what extent does century bottling company use street advertising as a promotional activity? (a) Greater extent (b) Average (c) Les ser extent Qn 19: To what extent does century bottling company use event sponsorship as a promotional activity? (a) Greater extent (b) Average (c) Lesser extent Qn 20: To what extent does century bottling company use T.V advertising as a promotional activity? (a) Greater extent (b) Average (c) Lesser extent Qn 21: To what extent does century bottling company use radio advertising as a promotional activity? (a) Greater extent (b) Average (c) Lesser extent

85 73 SECTION C: Management
73 SECTION C: Management of Loyalty Programs (Please tick, outline or explain where necessary) . Qn 26 : Century bottling company has devised loyalty programs that directly reward customers? (a)Strongly agree (b) Agree (c) Not sure (d) Disagree (e) Strongly disagree. Qn 27 : In reference to your option in question 12 a bove, outline the loyalty programs carried out by century bottling company that you are aware of in the space provided below. ………………………… ………………………………………………………………………… Qn 28 : Is there any mechanism that century bottling company has put in place to manage the loyalty programs listed above? (a) Yes (b) Not sure (c) No Qn 29 : If your answer in question 14 above is yes, how does Century bottling company ensure that the above loyalty programs are perfectly implemente d ? ........................................................... ……………………………… ……………………………………………………………………… 74 SECTION D : Relationship between promotional activities and brand loyalty (Please tick, outline or explain where necessary) Qn 30 : What is your prefere nce rate on the coca - cola brand? (a) High (b) Medium (c) Low Qn 31 : What is the

86 main reason behind your rate of preferen
main reason behind your rate of preference for the coca - cola brand? ................................................................ ............................................................................................ Qn 32 : Assuming a promotion is run on different brands, say by the same company or the competitor company, can you continue consuming the coca - cola brand? (a) Ye s (b) No Qn 33 : If your answer in question (18) above is ―Yes‖, please tick the statement that best describes your opinion why you would not change your preference of the coca - cola brand. (a) Used to the brand (b) Prefers the brand (c) No new brand can meet the desire Qn 34 : If the answer in question (19) is ―No‖, please tick the most likely reason why you / one may change his /her choice against the coca - cola brand. (a) Convinced by the promotion (b) New bra nd can meet the desire © All brands are alike 75 Qn 35: P romotional activities conducted by coca - cola have got an influence on consumer ’s brand loyalty? (a)Strongly agree (b) Agree (c) Not sure (d) Disagree ( e) strongly disagree. Qn 36: There is a relationship between promotional activities and brand loyalty? (a)Strongly agree (b) Agree (c) Not sure (d) Disagree (e) Strongly disagree. Thank yo u for your time 76