The impact of advertising Essay
The impact of advertising
To what extent do promotional strategies in supermarkets affect the buying behaviour of students in Glasgow?
With the rapid expansion of supermarkets, the competition within this industry has become more intense. In order to neutralise this competition, supermarkets nowadays have offered a series of promotional strategies to keep consumers’ interest and increase turnover (Keillo and David, 2007: 165; Sun, 2005: 430). Advertisements, sales promotions, personal selling and publicity are four general categories of promotional strategy (Peter and Olson, 2010: 414; Pilbeam et al., 2008: 54). However, since personal selling rarely exists in the supermarkets and it is difficult to measure the efficacy of publicity, in this literature review, only advertisement and sales promotions will be discussed.
Current studies have mainly focussed on the association between promotional strategies and consumer behaviour. In contrast, little is known about students’ buying patterns, even though the purchasing power of students can be potentially substantial. In order to explore students’ buying patterns towards promotional strategies in supermarkets, this literature review will examine general theory of customer behaviour. The reason for prioritising promotional strategies will be discussed first, and then purchasers’ buying behaviour in the supermarket will be explored. Why supermarkets prioritise certain promotional strategies
Coupons, direct price deductions and advertisements are promotional strategies with high ubiquity in supermarkets. Extant literature shows that as the most accepted promotion for both supermarkets and customers, coupons have a significant influence in the market and suits almost 75 per cent of all products (Jackson, 2002 cited in Chung, 2007: 24). Despite its popularity, Shaffer and Zhang (1995:395) argued that although distributing coupons can bring consumers into stores, supermarkets only distribute coupons on a limited scale. This might be because superstores need to maintain profit at a high level. Hu et al. (2004: 29) developed this point, indicating that coupons are the best application for promotional strategies because they serve as an instrument of price discrimination to extract shoppers’ surplus. An explanation could be drawn by the fact that in a situation with no direct price deduction, only those shoppers who use the coupon could receive discounts; others should pay the full price (Shaffer and Zhang, 1995:395).
This indicates that when customers use coupons, it could be profitable for supermarkets. According to these corresponding theories, it seems like supermarket could have gained benefit when distributing coupons. Other scholars noted that the application of promotional strategies should be based on the categorisation of different products. Chandon et al. (2000: 65) classified products into the hedonic (products can bring pleasure) and the utilitarian (daily products). They discovered that in supermarkets, it is likely that the promotions’ frequency of those utilitarian products is higher than hedonic products since utilitarian products , including perishable products such as milk and bread, usually have a high carrying cost (Chandon et al., 2000: 65; Nijs et al., 2001: 1; Sun, 2005: 441). Based on their findings, Lewis (2005: 986) suggested that a series of direct price discount on utilitarian products is more advantageous for supermarkets than the coupon as it attracts consumers with constant low price. Other evidence (Lal and Rao, 1995: 61; Lewis, 2005: 986) shows that for superstores which employ the direct price deduction, their sales are higher than those that only apply advertising campaigns.
On the contrary, unlike low frequency but high promotion depth of couponing (Hu et al., 2004: 30), direct price deduction usually has a high frequency of promotions but with small discounts (Neslin et al., 1995: 762). Therefore, Neslin et al., (1995: 762) and Lewis (2005: 987) concluded that with the low promotion depth, frequent direct price deduction might also increase sales volume for supermarkets. However, on the other hand, O’Guinn et al. (2011: 83) emphasised that the power of advertisement cannot be underestimated because it is well recognised that the retail industry spends a huge amount of its budget in advertising. For instance, as early as in 1990, the retail industry in America had already accounted for 70 per cent of the total $20 billion media expense for advertising campaigns (Rajiv et al., 2002: 75).
The aim of advertising is to inform customers and bring them into the store initially and let them consume afterwards. This is different from price deduction, because for discounts, their user is the one who is already in the store (Steerkamp et al., 2005: 37). Based on O’Guinn et al. and Steenkamp et al.’s exploration, it could be understood that advertising is a profitable strategy for retailers since it attracts both proposed buying group and unintended buying people, which is similar to the profit-enhancing effect of ‘couponing’ and ‘direct price deduction’.
The effects of these strategies on buying behaviour
According to on economic principles, demand and supply are a pair of elements which are mutually inclusive. Yet Steenkamp et al. (2005: 35) assumed that it is consumers’ response that mainly leaves impact on the buildings of promotions and advertising campaigns. Their claim might be right; however, this is only a one-way model. For other researchers, they believe that the consumer’s response and promotional strategies are operating communally (Mela et al., 1997: 250; Rajiv et al., 2002: 75). Existing literature has summarised two common behaviours for customers in superstores in the light of this mutual relationship. Firstly, as Bawa and Ghosh (1999: 149) noted , in the case of most consumers, although they want to follow their budget and minimise cost, they make little price comparison before selecting products. This could be explained by some common-sense ideas: time constraints, the prices is already satisfactory, and brand loyalty (Dickson and Sawyer, 1990: 51).
Secondly, in a typical study on buyers’ decision-making, Perrey and Pillecke (2011: 169) found that approximately 70 percent of buyers tend to make decisions in the store while there is only 30 percent of customers use or follow a shopping list in advance of entering the supermarket. Thus it is possible for promotional strategies with salient labels to affect consumers’ shopping conduct. Some studies have evaluated the effect of couponing on purchasers. Chandon et al.(2000: 77) found that for some consumers, they are more likely to respond to coupon than direct price reduction. This might be because selecting and collecting various numbers of different coupons requires more ‘skills and effort’, and thus it makes the shoppers enhance their personal fulfilments (Chandon et al., 2000: 77; Chung, 2007: 25).
This process shows that coupons could affect consumers’ behaviour to a large extant: it even alters the way they plan. This is partially because with the intention of employing coupons, more consumers might have made a shopping plan. Conversely, Shaffer and Zhang (1995: 395) and Hu et al. (2004: 30) strongly indicated that there is an imbalance for consumers between using coupons and direct price reduction, as it could be inequitable for those customers who do not obtain coupons. Therefore, in the view of consumers, they might prefer using direct price deduction, which is largely because supermarkets distribute coupons randomly and they cannot ensure that ever y client receives the coupon. Other scholars have focussed on the effectiveness of advertising to customers. According to Lal and Rao (1997: 76), shoppers are usually rational for the unadvertised products. However, their price-sensitivity drops when faced with advertised products.
Furthermore, in the long run, advertisements decrease the price sensitivity of consumers while promotions increase their sensitiveness (Mela et al., 1997: 259). In other words, consumers are more rational when encountered with promotions such as price deduction, whereas they are more likely to overspend by exaggerated advertisements. However, it is worth pointing out that for perishable products, buyers keep a high enthusiasm for both long term and short term promotions (Nijs et al., 2001: 1). This is because the perishable products have low price elasticity, and customers think this could be a bargain for daily products which rarely have discounts.
In conclusion, this literature review has attempted to compare the three commonest promotional strategies in the supermarket in connection to consumers’ response. Scholars in different periods have drawn a great deal of conclusion. However, it seems that there is no certain type of promotional strategy that could satisfy both supermarkets and consumers at the same time. In addition, it can be seen that numerous studies have concentrated on promotional strategy with regard to purchasers, while the students’ buying behaviours has yet to be distinctly examined.
Therefore, this research will be conducted to investigate the promotional strategies in supermarkets with respect to students’ buying patterns . Besides, further research by other scholars for better comprehending of the students’ consuming pattern is also needed. Therefore, this study has the following objectives: to understand student attitudes towards promotional strategies in supermarkets to explore the degree to which students perceive they have been affected by promotions to examine the variables that influence students’ decisions