The Role of Advertisement and Sales Promotion in

Student’s Choice of Service Providers

“Project Report by - Anjali Raj”

Department of Business Management, College of Commerce, Patliputra University, Patna,

Bihar.

Abstract

This Paper Looks at the role played by advertisement and sales promotion on students purchase
behaviour of GSM services, with particular references to university students in selected universities in
north – eastern part of India. The study aimed at determining the role played by advertising and sales
promotion on student’s purchase behaviour.

Questionnaires were administered to both the students and GSM providers to gather information. An
interview was also used to determine the marketing strategies employed in terms of advertising and
sales promotion.

The study established that the students are aware of all the services available, but utilize only few of
them. Sales promotion was found to have greater influence than advertisement. This is due to the
incentives attached to sales promotion

Keywords: Advertising, Sales promotion and purchase Behaviour

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1. Introduction

Information technology is moving at an unprecedented and unimaginable speed, and India and the rest
of Asian Countries cannot afford to be left behind, since technology has become a major yardstick of
development and advancement. The world economy has become part of the global system and this is
made possible by information network.

Developing countries like India that aspire to participate effectively and become equal partners in the
emerging global market need to have in place, a functional and efficient telecommunications system.
Due to the importance of communication, India has joined the international telecommunications
network as a step towards improving and positioning itself to compete in the global economy.

India being the most populous Asian Countries, its citizens are in dire need of basic communication for
effective socio-economic development. Therefore, it becomes a good niche and attractive market for
global systems for mobile (GSM) companies.

1.1Using Source Usage to Predict Satisfaction

Information is often used by consumers to reduce the inherent uncertainties associated with high-cost or
high-profile goods and services. Previous studies have shown that many consumers find value in the
search process and engage in it with the purpose of making a better (and more satisfying) consumer
choice . The author in defines a "poor consumer choice" as a situation where in a consumer would have
chosen a different product if he or she would have had other product information "(1) at no cost to the
consumer and (2) in the amount and form desired by the consumer" (p. 162). Considering that various
sources are likely to contain different types of information, it follows that the information sources that
are used by consumers would impact not only on their choice selection (s), but their satisfaction as
well. Satisfaction—both with the product and with the purchase transaction—is of clear importance to
practitioners, policymakers, and consumers. Note that proposed increases in satisfaction may occur for
one of two reasons.

First, it could be that a particular information source provides critical information that actually results
in a more efficient purchase situation, wherein a better choice (relevant to the particular consumer) is
made. Alternatively, it could be argued that certain information sources do not actually lead to better
decisions, but rather give the impression to the consumer that a good choice was made due to the
consultation of seemingly objective information. In case, purchase and product satisfaction would be
expected to increase for information sources that either provide objective, unbiased, useful information,
or at least appear to do so. Information source is important to customers, that is why companies use
celebrities in their advertisements, customers always associate advertisements with the source from
which the information is received

Conventional research into how advertising works and its effects on consumers tended to focus on the
importance of the advertising message and/or the execution strategy, and moderated this with concepts
such as involvement, motivation and intentionality. This suggested that consumers actively process
those advertisements that coincide with particular purchase needs, and respond to brand, product or
service information according to the cognitive or affective appeals of the advertisement. However, this
type of research also tended to cast the audience (actual or potential customers) as ‘receivers’ of
commercial information, rather than as the central actors in the communication process who co-create
meaning and relationships. More recent research into advertising effectiveness prioritises the dynamic
nature of the relationships between audiences and the advertising information and imagery they choose
to interact with. This shift in emphasis from the advertiser to the audience has coincided with
increasing interest in consumer culture theory, brand communities and the new service dominant logic
of marketing.

Every business activity must start with the understanding of customer needs. It is very important for
organizations to be aware of what the mobile Internet can do for customers. In this new economy,
customers are more demanding for better services with special features and reasonable prices. The
proper information is one of the features that customer are looking for. Introduce two useful concepts
about information: richness, which refers to the quality of information, and reach, which refers to the
number of customers that receive a certain type of information. They mention that there is a trade-off
between reach and richness. Also, from different sources, have selected other important features of
mobile Internet services for creating mobile customer value: ubiquity, localization, convenience,
security, accessibility, personalization, capacity, size and forms, security, and price. In light of this, it is
therefore, important to set out a strategy in order to achieve your set goals.

Strategy is defined as the creation of a unique and valuable position, involving a different set of
activities, and is the starting point to set proper goals for your business. Porter argues that strategy is
more vital than ever in this new economy, and suggests that Internet initiatives and strategy should be
integrated to create competitive advantage. Also emphasize the importance of strategy in today’s
unpredictable and complex markets. They mention keeping strategy clear and simple by focusing on a
unique set of strategic processes, while setting out the strategy, it is also proper to have a business
model for the organization set out in – line with the objectives of the said organization.

1.1 Consumer Learning Model

In many service industries, consumers choose a service plan according to their expected consumption.
However, choice of plans and consumption of services differ from the traditionally analyzed choice and
quantity decisions of grocery products in two distinct ways. Focus on wireless services to illustrate
these differences. First, unlike the situation in products, the quality of a service is difficult to assess
because of the large variability inherent in service delivery. For example, the quality of Coke is fairly
consistent over time, but the quality of a wireless service may vary depending on customer contact.
Therefore, a customer can learn about the true quality of a service provider only after repeated usage.
Second, services are perishable. If a consumer buys more Coke than he or she wants to
consume in a period, it can be easily stored for future usage. However, except for a few wireless service
providers (e.g Cingular Wireless) if a customer does not use his or her free minutes for a month, they
cannot be carried over to the next month. In other words, consumers observe their usage and, over time,
learn about their own consumption. In turn, this can lead them to change their service plan in the future.

Some researchers have also focused on usage uncertainty, shows that as the two consumer decisions of
choice of service and consumption of service are separated, consumers are uncertain about how much
they might eventually consume. Similarly, analyse the effect of consumers’ future use of an interactive
television entertainment service on whether they will continue the service. Analyse data from an
experiment conducted by south Central Bell. They developed a model for plan choice and consumption
that incorporates consumers’ usage uncertainty. In their experiment, people had a choice between a
flat-rate pricing scheme and a two-part tariff.

Service contexts also have another unique aspect namely, the presence of nonlinear pricing schemes.
Within the wireless industry, pricing schemes are typically characterized by an access fee, included
free minutes, and a per-minute marginal price for any consumption in excess of the free minutes. Such
pricing schemes are termed “increasing block” because the applicable marginal price increases with
consumption. Although the focus on the wireless industry, increasing-block schemes are also used for
other services. For example, in the electricity and water supply industry, the total charges payable by
consumers are based on their consumption in the billing period, and the applied per-unit rates typically
increase with increasing consumption.

1.3 An Overview of Sales Promotion

Sales promotions are all around us. The GSM industries are always in one form of promotion or the
other trying to induce customers to patronize their services rather than their competitors’. Within the
field of marketing communications the term ‘sales promotion’ is frequently used as a ‘catch – all’ term
encompassing those elements which cannot be classified as advertising, selling or public relations.
Sales promotion can be defined as: ‘marketing activities usually specific to a time period, place or
customer group, which encourage a direct response from consumers or marketing intermediaries,
through the offer of additional benefits,’

1.4 Promotion Response When Competitive Promotions Are Unobservable

Researchers in marketing have devoted considerable attention to the estimation of promotion response
models to assess the effects of promotional efforts by a brand on its own and competitors’ sales (for a
comprehensive review, see. A vast literature already exists in areas such as the effects of advertising,
personal selling, sales promotion, and price discounts on brand sales at the national and market levels.
Most studies on the development and application of promotion response models in marketing focus on
packaged goods, for which data on sales and marketing efforts
by the leading brands competing in each product category are often available from syndicated sources.
This wealth of data enables researchers to develop elegant and sophisticated models of brand
competition that provide estimates of own and cross-elasticities. Under this situation, the brand
manager can draw inferences about the impact of marketing efforts on his or her own brand and
competitor brands and, furthermore, about his or her vulnerability to competitive efforts, is of the view
that disaggregate analyses using single source data provide an even clearer picture of cross competitive
effects, enabling the manager to tailor his or her efforts to each individual household on the basis of
individual-level estimates of down- and cross-elasticities.

1.5 The Sales Impact of Promotion-Induced Stockpiling

Consumers buy more of goods and services when there is promotion, they tend to buy more than what
they really need because of the reduction in price is of the belief that consumer stockpiling is a
fundamental consequence of sales promotion. It occurs because the promotion induces consumers to
buy sooner or to buy more than they would have otherwise. Either way, consumers end up with more
quantity than they would have had in the absence of promotion. Show that promotion-induced
stockpiling allows retailers to transfer inventory holding costs to consumers. Evidence of consumer
stockpiling is found directly in panel data analyses of purchase incidence and quantity and indirectly in
the detection of post promotion dips in weekly sales data.

Whether consumer stockpiling hurts or benefits the manufacturer of the promoted brand depends on
what consumers do after the promotion. If the resultant extra household inventory leads people to
consume more of the category, this is a benefit to the manufacturer. We call this the “consumption
effect.” If the extra inventory pre-empts future purchases of the promoted brand, this is a cost to the
manufacturer because the manufacturer’s profit margin is typically lower during promotion periods
than during non promotion periods. We call pre-emption of the promoted brand’s future purchases
“loyal acceleration.” If the extra inventory pre-empts future purchases of competing brands, this is a
benefit to the manufacturer because it takes consumers out of the market for competing brands. We call
this “pre-emptive switching.” If the extra inventory affects future brand choice after the promotion, this
can either benefit or hurt the manufacturer, depending on whether the brand’s future purchase
probability increases or decreases. We call this the “repeat purchase effect.”

2. Materials and Methods

There were two instruments used in collecting data for this work: i) questionnaire and interview
schedule. There were two questionnaires; one administered to students, while the other one was
administered to the service providers. An interview schedule was also utilized to clarify some issues in
the questionnaire with the service providers. The service providers were asked several questions on
how they felt about advertising and sales promotion in relation to Marketing of their services. The
primary data came mainly from the questionnaire. The questionnaire consists of different categories of
questions relating to advertising, sales promotion and consumer choice of GSM service. The
preparation of the questionnaire was guided by the research problems.

3. Results:

Reasons how Advertisement and Sales Promotion Influence Purchases

Table 1: Distribution of Respondents based on the Role Played by Advertisement on Initial

Purchase, Additions and Change

Initial Purchase Additional Purchase Change of Network

Frequency % Frequency % Frequency %

Regular contacts 391 85.55 382 81.62 296 63.25

Adverts were
entertaining
393 83.97 379 80.98 371 79.27

Adverts were
appealing
390 83.33 371 79.27 385 82.26

Adverts were
informative
378 80.77 386 82.48 286 61.11

Adverts were unique 385 82.26 371 79.27 326 69.66

Slogans were
captivating
381 81.41 344 73.50 323 69.02
Total

Source: Fieldwork

*Multiple Responses

Advertisement has a significant effect on initial purchases, additions and change. However, advertising
is found to have higher effect on initial purchase than additions and change. Advertisements are said to
be entertaining. The students have regular contact with the advertisements, and they found the
advertisements to be appealing.
Sales promotion is also found to have more effect on initial purchase, than additions and change.
Though the responses were equally distributed, the initial purchase has a slightly higher weight than
additions and change of network. When compared with advertising, sales promotion has more influence
on purchases than advertising. Students found sales promotions to be entertaining, while they were
looking forward to getting bonus airtime; free text messages and the likelihood of winning something;
this was shown on table 2 below. In all the purchases there is only slight differences in the distribution,
which indicate that both advertisement and sales promotion has effect on student purchases.

Table 2: Distribution of Respondents based on the Role Played by Sales Promotion on

Initial Purchase, Additions and Change of Network

Initial Purchase Additional Purchase Change of Network

Frequency % Frequency % Frequency %
Bonus air time 412 88.03 381 81.41 341 72.86

Free text 398 85.04 388 82.91 342 73.08

Winning something 394 84.19 377 80.56 339 72.43

Used celebrities 394 84.19 376 80.34` 341 72.86

Frequency of
promotions
397 84.83 370 79.06 335 71.58

Promotions were
entertaining
391 83.55 357 76.28 326 69.66

Promotions were
informative
401 85.68 357 76.28 327 69.87

Promotions were
appealing
390 83.33 355 75.85 324 69.23
Promotions were
ungula
382 81.62 342 73.08 306 65.38

Total 3,559 3,303 2,981

Source: Fieldwork

*Multiple Responses

Based on the other factors that influences initial purchase, additions and change of networks as shown
on table 3 below, Availability of services is one of the important factors in all purchases, cost of service
and then geographical coverage is also shown to be important. There is higher influence on initial
purchases than additions and change.

Table 3: Distribution of Respondents based on other Factors that Influenced Initial

purchase, Additions and Change of Network

Initial Purchase Additional Purchase Change of Network

Frequency % Frequency % Frequency %
Geographical 454 97.01 437 93.38 437 93.38

Coverage
availability of
service

457 97.65 438 93.59 438 93.59

Cost of Service 456 97.44 432 92.31 436 93.16

Efficiency of service 450 96.15 435 92.95 430 91.88

Prompt response to
complaints
443 94.66 421 89.96 430 91.88

Range of services
provided
430 91.88 404 86.32 417 89.10
Total 2,690 2,567 2,588

Source: Fieldwork. *Multiple Responses.

Sales promotion is accepted by the respondents as having played a role in the purchase of GSM
services. Promotions used by the GSM operators included: bonus air time, draws, free text messages
and more. Promotions also include use of celebrities. On the network first patronized, respondents were
also almost equally distributed on their responses .These factors include: Geographical coverage,
availability of services, cost, and efficiency of services, and response to complaints and range of
services provided .These factors are all obviously vital in selection of network and are therefore, bound
to have some respondents patronizing networks based on them. It may also explain why the responses
were almost equally distributed among them suggesting that they are of relatively equal importance to
respondents in the choice of services. When it comes to making advertisements, a critical fact – based
scrutiny of the dynamic details of how consumers are feeling, thinking, processing and behaving are
essential in informing effective advertising solutions.

About 82% indicated that they use other networks. The reason given by the respondents for such action
is due to disappointment or dissatisfaction with the initial line or superior services and incentives
provided by the other network. Only a quarter of the respondents stuck to their initial network. It is
possible that these categories of respondents are not avid users of GSM. Such category of customers
would not crave for incentives and are not likely to be frequently disappointed if services are disrupted
or inefficient because of their low usage of the service.

Respondents added other line to their initial ones, the study revealed that Globacom was the most
frequently added because 33% added it to their initial network. Globacom is the newest of these
networks studied and they seem to have an aggressive expansion strategy. Also it is likely that
advertisement and other incentives as well as value for money were at play in their choice of Globacom
over other networks .Globacom was closely followed by Zain 32% and MTN 30% as networks added
to the initial ones by the respondents. Advertisement and sales promotion obviously played an
important role in additions of networks by the respondents. This was affirmed by 80% of the
respondents as shown in Table 1. On the advertisement attributes, respondents ranked the factors listed
almost equally (ranging from 61% to 82%). This means that although some of the advertisement
attributes may be more appealing than others to some respondents; they evened out when viewed
holistically. These advertisement attributes include: regular contact, informativeness, appeal,
uniqueness, and how captivating the adverts were.

Hypothesis one: There is no Significant Relationship between Advertisement, Sales Promotion

and Students’ Choice of GSM Services

In determining the relationship, the researcher used correlation coefficient to establish if there is any
relationship between advertisement, sales promotion and students’ choice of GSM services. Hypothesis
one shows the various services providers, then the correlation between the GSM operators and
advertisement, as well as sales promotion.
Hypothesis 1: As shown on the table indicated that Glo has positive and significant result in relation to
sales promotion with a correlation coefficient of 0.598, the significant value is at 5%, while Zain is
positive and significant in relation to advertisement at 0.418% correlation coefficient.

H1: Hypothesis one: Results of the Correlation Coefficient between Advertisement, Sales
Promotion and Students’ Choice of Service Providers

Service providers Advertisement Sales promotion

Correlation Significant Correlation Significant level
coefficient level coefficient

Zain 0.418 0.000 0.216 0.010

Mtn 0.205 0.046 0.212 0.008

Glo 0.391 0.001 0.598 0.000

Combined 0.208 0.011 0.488 0.000

Source: Statistical Analysis

In determining the relationship, the researcher used correlation coefficient to establish if there is any
relationship between advertisement, sales promotion and students’ choice of GSM services. Hypothesis
one shows the various services providers, then the correlation between the GSM operators and
advertisement, as well as sales promotion.

Hypothesis 1: As shown on the table indicated that Glo has positive and significant resulin relation to
sales promotion with a correlation coefficient of 0.598, the significant value is at 5%, while Zain is
positive and significant in relation to advertisement at 0.418% correlation coefficient. The result also
shows acceptance at a very high level that advertisement and sales promotions influence student
patronage of the GSM services.

Advertisement effectiveness is an important factor to be considered by advertisers. It is also important

that adverts are cost effective otherwise companies can spend money on advertisements without
realizing commensurate benefits.

Advertisement and sales promotion were not the only determinant factors that influenced purchase
behaviour of GSM services. There are other factors which include: geographical coverage, availability
of service, efficiency of service, prompt response to complaints and the range of services provided.
Cost of service was also found to have a positive relationship.
Advertisement played a significant role in influencing students to purchase aparticular network, due to
their regular contacts with the adverts.

Sales promotion is also said to affect students in their choice of networks, because students always look
for promos such as free text messages and bonus airtime, they indicated that they liked promotions
because of the likelihood of winning something. Apart from advertisement and sales promotions other
factors which mostly influence choice of network are the availability of service and geographical
coverage.

Advertisement and sales promotions has influence on initial purchase and additions, this was indicated
by the respondents when 80% of them agree that advertisement and sales promotions played a role in
their addition of network. Out of the total number of respondents, 143 changed their lines. 120 added
other lines, which mean that majority of the respondents either, use their initial network or change to
another network for reliability of services such as; geographical coverage, availability of services, cost
efficiency of service, prompt response to complaints and the range of services provided. In all these
factors most of the responses were evenly distributed among the respondents, this indicated that all are
more or less important to the respondents.

It is Obvious that the service providers were conscious of the effectiveness of their advertisements.
Advertisement effectiveness is an important factor to be considered by advertisers. It is also important
that adverts are cost effective otherwise companies can spend money on advertisements without
realizing commensurate benefits. The GSM service providers were also conscious of the importance of
quality of service as a major determinant of patronage by customers and they all mentioned this as the
reason why they are patronized by customers.

4. Conclusion:

In conclusion therefore, the research found out that advertisement and sales promotion have significant
influence on the purchase of GSM services by University students. Sales promotion was shown to have
greater influence than advertisement on students’ choice of GSM services. Students were aware of all
the services available, but utilize only few of the services. Other factors such as; availability of
services, prompt response to complaints, efficiency of service also influence purchase behaviour.

There is also need to study other segments in greater details to elucidate their purchase / consumption
behaviour so as to enable the GSM operators to better target their services more effectively. This work
basically involved studying the role of advertisement and sales promotion on purchase bahavior, the
study is restricted to students of Universities in the north – eastern part of India. There is therefore the
need; for a benefit – cost study by GSM companies to find out which particular advertisement and
media are effective for use. Also the sales promotion should be subjected to benefit – cost analysis to
find out the best means of achieving the desired objective.
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