Value for Money versus Premium buyers

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Value for Money versus Premium buyers

Factors that influence the perception of promotions

Sander Rienks

Master Thesis

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Value for Money versus premium buyers

Factors that influence the perception of promotions

Sander Rienks

Master thesis

MSc Business Administration Marketing Management

Author: Sander Rienks

Student number: 1590383

Date: June 2009

University: University Groningen

Faculty: Economy en Management

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Management summary

Sales promotions are an important issue in the world of marketing. The Dutch Laundry market, with 41% of sales in promotion in 2008, show that this is also relevant for this product category. Most of the literature assumes that monetary savings, like price promotions are the only benefit for consumers to respond on sales promotions. But more recent research show that also non price promotions are an important factor.

The Dutch Laundry market consists of three segments: The Premium, Value-for-Money (from now on VfM), and Private label Segment. Most of the literature seems to neglect one of these segments, the VfM segment. Only a couple of studies named this segment (Richardson et al 1994, Verhoef et al 2000, Sayman et al 2002, and Pauwels & Srinivasan 2004).

A combination of these subjects form the base for the problem statement of this study. This problem statement is divided in a theoretical problem statement and a management problem statement.

Theoretical statement

Do consumers perceive a VfM brand and a Premium brand differently and which factors influence the perception of promotions for ‘VfM’ and ‘Premium’ buyers?

Management problem statement

In what way can Henkel create additional value from the differences in perception of promotions for VfM and Premium buyers?

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brands and VfM brands and 6 hypotheses covers how these two different consumers react on price and non price promotions.

To test the hypotheses en answer the problem statement a dataset has been used. The data is collected through a survey that has been plotted at the Householdfair in Amsterdam. The number of respondents was 219 and after filtering a final dataset of 150 respondents, 88 Premium buyers and 62 VfM buyers remain. All the data is analysed with support of the data program SPSS 17.0.

A couple of differences have been found between the buying behaviour of VfM and Premium buyers. It was found that Premium buyers are more impulse buyers, the buying decision to buy detergent is, for most, when they are already in the shop. This is in contrast with the VfM buyer. Another clear difference is the reason for buying a brand. Premium buyers give quality of the product and reputation of the brand as the main reason. VfM buyers on the other side are more interested in price of the product and the price-quality ratio. The last difference concerns the valuation of the quality of the brands. Premium buyers valuate the Premium brands much higher than VfM brands.

The results concerning the perception of promotions show that Premium buyers have a negative influence on the exploration benefit, they are not sensitive for promotions to buy other detergent brand and are not sensitive that they want alternation in their detergent brand. This is in contradiction with the used literature for this study. Another finding is in line with the used literature, Premium buyers are more sensitive for the entertainment benefit, they are more sensitive for non price promotions.

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Preface

After having obtained my Higher professional education Sport, Health and Management at the Hanzehogeschool in Groningen in 2004, there arose a problem for me. For one year I struggled to find a job on the one side and simultaneously thinking about starting a new educational career at the other side. After this year I made the decision to start a new study Business administration with the aim to finish my master Marketing. I have had some (sport)marketing lessons in my first education but I believed that there was still more for me to learn in this interesting area of marketing which could benefit me during my professional career. In the first study I have had internship experience in the local authority but no experience in business. Therefore I choose to end this master with an internship at the Product Marketing division of Henkel Netherlands in Nieuwegein. During this internship I would not only write my thesis but I could also participate in the daily practices of marketing. The last step to obtain my Msc. Marketing Management degree is this thesis.

Writing this thesis would not have been possible without the help of a number of people. First of all I would like to thank my Henkel colleagues of the Laundry & Homecare division and especially the senior product manager and also my supervisor Jeroen Turner. He and the other colleagues really made me feel, from day one, part of the “Laundry & Homecare team”. I also would like to thank my supervisor of the University, Dr. Jaap Wieringa who has professionally guided me throughout the, sometimes difficult, process of finishing my thesis. In the end I want to thank my parents, without them I couldn’t have fulfilled my academic career the way that I have done now.

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Chapter 1 Introduction

1.1 Introduction

Consumer behavior is an important issue in marketing. Promotions are important to influence the behavior of customers. Consumers have a limited set of brands in their mind when making a purchase decision, the so called consideration set (Larochea et al. 2005). It is important for companies to get attention and get their brand in the mind of the customer. Sales promotions are used to improve the perception of the consumer about the value of the product with the goal to get temporary growth in value sales (Taylor 2001). In the Netherlands consumers spend, six billion Euro yearly, on corrections in price, packaging, and composition of the product. In the U.S. consumers spend 240 billion dollar (186 billion Euro) on sales promotions (Leeflang 2005).

Sales promotions are a competitive weapon for marketeers. According to Raghubir (2004), a quarter of the marketing budget is used for consumer promotions. In the Dutch Laundry market promotions are also very important. The laundry market is divided in three segments. The first segment is the Premium segment with the brands Ariel (Procter & Gamble, from now on P&G), Persil (Henkel) and Omo (Unilever). The second

segment is the Value for Money (from now on called VfM) segment with the brands Dash (P&G), Witte Reus (Henkel) and Sunil (Unilever). The final segment is the Private Label segment. There are a lot of competitors in this market which lead to an aggressive market with lots of promotions. In the total laundry market 41% of sales is in promotion. In the Premium segment 49% of sales is in promotion, in the VfM segment 53%, and Private Labels 7% of sales is in promotion1. Although it is a fact that companies spend a lot of their marketing budget on promotions, in the literature is noticed that only 16 % of retail promotions and 11 % of consumer promotions are profitable (Campo, 1998). While these promotions cost a lot of money for the companies it is important to realize which promotion fits which consumer. If companies know the factors that influence the perception of the targeted consumers for their promotions, companies can save a lot of money. That is what this study is all about.

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1.2 Object of study: Henkel

Henkel was founded as a small laundry fabric in Germany in 1876. Nowadays, presented in 127 countries with 55.000 employees worldwide, this organization has grown to one of the largest multinationals. Henkel consists of three business units2. These are:

- Cosmetics & toiletries (Hair, body, skin, oral, and fragrances)

- Adhesives technologies (Office, do-it-yourself, Craftsmen & Construction, and Industrial)

- Laundry and Home care (Laundry, Hand dishwashing, and Cleaning) This research focuses on the business unit Laundry and Home Care.

1.3 Laundry and Homecare market

The Laundry market in The Netherlands is a combination of three categories. 1. The Heavy Duty Detergents (from now on HDD)

2. The Low Duty Detergents (from now on LDD) 3. Cleaners.

According to AC Nielsen HDD products are laundry products which are used for normal laundry, the main products. The LDD contains of specialty laundry products, the so called ‘fine detergents’.

This study is for the first category, HDD, in this market, because this investigation is for the brands Witte Reus and Persil. The other categories are not taken into account for this research.

The HDD category in the Dutch Laundry and Home Care market consists of three segments. These segments are the Premium segment with the brands, Ariel (P&G), Omo (Unilever), and Persil (Henkel). The second segment is the VfM segment with the brands, Dash (P&G), Sunil (Unilever), and Witte Reus (Henkel). The final segment is the Private Label segment. The Premium and VfM brands are named together the ‘A-brands’. The

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three multinationals, P&G, Unilever, and Henkel are responsible for the production of these A-brands. The market shares in the Laundry & Home Care market of these multinationals in 2008 are P&G 43%, Henkel 23% and Unilever 14%3. There are some other players in this market but they have a low market share, this is the reason that they are not taken into account in this research.

1.3 Motivation for study

Starting my internship at Henkel I had a few options for the subject of my thesis. In the first place I want to get a good overview what the Dutch Laundry and Homecare market was all about. Within a short period of time I noticed that sales promotions (with 41% of sales in promotion in 20083) have a large influence in this laundry market. Looking at academic research about this subject I noticed that most of this literature assumes that monetary savings, like price promotions, are the only benefit for consumers to respond to sales promotions. But results from more recent research show that monetary savings can not fully explain why or why not consumers buy the product in a sales promotion (Dhar and Hoch, 1996; Na et al. 2007). Non price promotions provide more of the emotional benefits and fewer utilitarian benefits than price promotions (Chandon et al. 2000). Given the fact that all the multinationals, besides price promotions, also use non monetary promotions, like gifts, contents, and in-store events, this was something to take into account.

Another point of attention was the brand positioning. A lot of research has been done about the struggle between national brands and private labels (Ailawadi et al. 2001). Especially the private label segment gets a lot of attention in the literature over the last two decades. This is logical because of the extraordinary grow in market shares in this period of time. Most of the literature compares the Premium segment with the Private Label segment. It appears that there is only a battle going on between these two

segments. However the literature seems to neglect another important segment, the VfM segment. Every Dutch consumer knows brands in this segment like Prodent (toothpaste), Bavaria (beer), Bar-le-Duc (spring water), Remia (sauces), and Witte Reus (laundry).

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According to Nielsen 28% of the turnover in supermarkets comes from VfM brands, so this is an important segment in the market. Only a couple of studies named this segment (Richardson et al. 1994) or by other names like ‘Second-tier brand’ (Sayman et al. 2002 and Pauwels & Srinivasan 2004) or ‘Value flanker’ (Verhoef et al. 2000). The big question is: why are academics not interested in this segment. An explanation for this could be that the VfM segment exists for manufacturers but not in the mind of

consumers. Brand positioning is the association to a particular brand in the mind of the consumer which differentiates the brand from another brand (Keller and Lehmann 2006). Each segment must attract different types of consumers. But is this the case in the VfM segment or are the consumers the same as Premium buyers. And more important is there a possibility for cannibalization of the own Premium brand within the same company. These two questions are the motivation for this research: is there really a difference in positioning between Premium and VfM brands in the mind of the consumer and how do these different consumers, positioned by the manufacturers, react on different kind of promotions?

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1.4 Problem definition 1.4.1 Goal of research

The goal of this research is to formulate recommendations for the marketing team of the Laundry and Homecare division of Henkel Netherlands. The recommendations are meant to give direction to the promotion activities so they can increase their success rate. In short, what are the factors to pay attention to for setting up a new promotion?

1.4.2 Problem statement

Theoretical problem statement:

Do consumers perceive a VfM brand and a Premium brand differently and which factors influence the perception of promotions for ‘VfM’ and ‘Premium’ buyers

Sub questions

1. What is a typical VfM and Premium consumer?

2. What is the influence of the factors, emerged out of the hypotheses, for the perception of promotions for ‘VfM’ and ‘Premium’ buyers?

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1.6 Scientific relevance

This study is unique in two ways. First, this research is relevant because it researches a segment, the VfM segment, where few academic publications are about. As mentioned before, most studies investigate the Premium National Brand segment, Private Label segment, or both. A few studies named the existence of the VfM segment but their focus is on the other two segments. This is strange while the three largest multinationals in the Fast Mover Consumer Goods industry, Unilever, P&G, and Henkel, use this particular segment. According to Nielsen 28% of the turnover in supermarkets come from VfM brands. Secondly, most of the research about promotions is focused on monetary

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Chapter 2 Brand positioning

This chapter contains the first part of the literature study of this research. The chapter starts with a brief introduction of brand positioning, followed by an introduction what segmenting is, and after that a brief introduction of brand types. Finally, this chapter proposes the three different segments, Premium, VfM and Private Label, that had been found in (marketing) literature.

2.1 Brand positioning

Brand positioning is designing the company’s offer and image so that it occupies a distinct and valued place in the target customer’s mind (Keller, 2007). A good brand positioning helps to give direction to the marketing strategy by explaining what a brand is all about, how it is unique (points of difference) and how it is similar to competitive brands (points of parity), and why consumers should buy and use it. Positioning means finding the right “location” in the mind of a group of consumers or market segment with the goal to maximize potential benefit to the company.

2.2 Segmenting

Market segmentation involves grouping together of customers with similar needs and buying behavior. When a consumer enters a supermarket there are three key decisions

she has to make, whether to buy in the product category; if so, which brand she want; and what quantity to buy. Characteristics of a shopper, like brand loyalty, usage rate, etcetera, and the marketing setting, like the price and promotion activity of the different brands, have influence on his or her choice. These effects are different for most shoppers. A price promotion might encourage consumers of one segment to buy another brand while encouraging a different segment with consumers who are loyal to their brand to buy more in advance or to buy early (Bucklin et al. 1998). The advantages of market segmentation are (O’Conner and Sullivan (1995):

• It is easier for marketers to identify and evaluate market opportunities. • Marketers can modify the adjustments in their product and trade appeals.

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2.3 Brand types

According to Jobber (2004) there are two types of brands: manufacturer and own-label brands. The manufacturer brands are created by producers and have their own chosen brand name. The producers are all responsible for their own marketing and also the value of the product lies with the producer. All the A-brands are manufacturer brands.

The second type of brands are the own-label brands or private label brands. According to Jobber (2004) own label brands can provide consistent high value for customers and be a source of retail power as suppliers vie to fill excess productive capacity with

manufacturing products for own-labelling branding.

Because of the power of low-price supermarket brands made manufacturers to introduce the so-called fighter brands. These fighter brands are a low price alternative for the consumer.

In the Laundry & Homecare market the segmentation focuses on Premium, VfM and Private Label brands. The VfM brands are an other word for the fighter brands named by Jobber (2004) and together with the premium brands they formed the manufacturer brands.

2.4 Premium brands

Although the characteristics of what is meant by ‘premium’ differ in every category, Premium brands are typically of outstanding quality, high priced, and selectively distributed through channels with the highest quality. Consumers willing to pay higher prices for Premium products and look at these products as reasonably priced indulgences, smart investments or status symbols (Quelch 1987). The Premium brands are the

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lower quality. A quality conscious customer chooses the more expensive brand when confronted with two brands with prices in his acceptable range. A price conscious customer in the same condition purchases the brand which has the lowest price in his acceptable range. According to Richardson et al. (1994), whatever the differences in ingredients are, A-brands were better judged in quality. This has everything to do with extrinsic features. In promotion Premium brands sell their products with a discount of 20-30% of the normal price (Ailawadi et al. 2001).

2.5 Private Label

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2.6 Value-for-Money

Most of the categories in the consumer good markets have besides private labels and Premium brands also a segment somewhere in the middle, the VfM brands. Brands in the Dutch market, like Bavaria in the beer category, Remia in the sauces category and Witte Reus in the laundry market are familiar examples in this segment. According to

Richardson et al. (1994) the brands in this segment imply a price/ perceived quality trade-off. The consumer perceives these brands as A-brand quality, but they are sold for a price of 10-15% less than Premium brands. These brands are not so innovative as the brands in the Premium segment. They look for good and successful innovations of Premium brands and after positive results they follow. According to Nielsen 28% of the turnover in supermarkets come from VfM brands.

Some of the marketing literature mentions this segment as a segment somewhere in the middle between the Premium brands and private label brands, for instance the previous named ‘price fighters’ of Jobber (2004). Pauwels & Srinivasan (2004) use another name for VfM brands, the ‘Second-tier-brands’. In this research they distinguished the VfM segment from the Premium segment not in a different positioning strategy. The only distinction they named was the lower price and the fact that these National brands are not the market leader in their market.

Verhoef et al. (2000) use the word ‘Value flanker’ as a synonym, the description of this term comes more close to a VfM positioning strategy. They describe a ‘Value flanker’ as a brand which is positioned between a Premium brand and a private label. It should be a strategy of a manufacturer to create a buffer between the upcoming private labels and their Premium brand. The main difference between VfM positioning and a ‘Value flanker’ is that a ‘value flanker’ is used only as a strategic option besides the Premium brand while a VfM approach exclusively refers to the desired positioning of a

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2.7 Price and quality perception

The segments in the laundry Dutch laundry market are classified with the help of prices. Table 2.1 show that the Premium brands have higher prices than the VfM and Private Label brands4. The VfM brands have a price in the middle of the Premium brands and Private Label brands. Price is defined, from the consumer perspective, as the amount of money, that has to be paid to get a product (Zeithaml 1988). A lot of research has been done to find out the relationship between price and quality. Price has a lager effect on quality when the consumer has no or almost no involvement with the product they buy, this is the case for Fast Moving Consumer Good, like detergents (Bijmolt et al. 2005). In a meta-analyse of Völckner en Hofmann (2007) the conclusion was that at this time the effect of price on quality is less than in the previous century but there is still an

significant positive effect on quality. Another conclusion in this research was that when the awareness of a brand increases the effect of price on quality decreases. The reason for this is that when the consumer tried the product they get aware with it and can judge the product on intern stimuli like ingredients, sense and texture. Promotions are way to create more awareness with the product, the next chapter focuses on this subject.

Brand Liquid (20sc.) Average price segment Powder (18 sc.) Average price segment

Ariel 5,87 5,89 Persil 5,82 5,73 Omo 5,46 5,72 5,46 5,70 Dash 4,87 4,84 Witte Reus 4,83 5,19 Sunil 4,71 4,80 N.A. 5,- PL 2,98 2,98 3,18 3,18

Table 2.1 Average detergent consumer prices in Euro's (January '09) according to Nielsen P1 ‘09 * sc. = scoops = number of washes

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Chapter 3 Promotions

This third chapter contains the second part of the literature study of this study. The chapter starts with a definition of sales promotions, followed by brief introduction of different types of sales promotions. Subsequently, it is explained how and when a sales promotion can be effective. The next two paragraphs make the distinction between the two different subjects of sales promotions, price promotions and non-price promotions. Finally, the last paragraph of this chapter proposes the six different benefits of sales promotions, these benefits are the base for the hypotheses of this research.

3.1 Definition of sales promotions

Sales promotions are often used to provide a short, sharp shock to sales (Jobber 2004). According to Blattberg and Neslin (1990), sales promotions have four characteristics that should receive attention in order to present a good working definition. These

characteristics are: At first, sales promotions are action focused: The customer must take action to get the promotion: For instance, coupons require clipping, saving and

redemption, contests and sweepstakes require consumer effort. Another part of this action is its limited duration time frame, it is temporary. Second, sales promotions are marketing

events: Sales promotions involve a relationship between a manufacturer and its

customers: end-users, retailers or distributors, just like marketing. Furthermore, sales promotions are designed to have a direct impact on behavior: In contrast to advertising, sales promotion works directly on behavior. Response to promotion can certainly involve cognitive activity about the product itself. However, the action focus on the promotion moves the consumer quickly toward behavior. Finally, sales promotions are designed to

influence consumers or marketing intermediaries: A manufacturer can choose to

influence the consumer directly or with the help of an intermediary like a retailer

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of sales promotion is the one from Kottler (1988): “Sales promotions consist of a diverse collection of incentive tools, mostly short-term, designed to stimulate quicker and/ or greater purchase of a particular product by consumers or the trade”.

3.2 Types of sales promotions

According to Blattberg and Neslin (1990), sales promotion can target three groups found in Figure 3.1. When the manufacturer aims directly at the consumer this promotion called a consumer promotion. The intention is to stimulate consumer pull and designed to persuade new category users, induce trial, award existing users or to change purchasing behaviour (Jobber, 2004). Consumer promotions account for nearly a quarter of the marketing budget of consumer product companies (Raghubir et al. 2004). When the retailer offers promotions to the consumer they are called retailer promotions. Their main function is to motivate the sales force in selling more products of the manufacturer. The last type of sales promotion, the trade promotion, targets distributors. Its main purpose is to persuade the distributor to sell more products of the manufacturer, distribution push. Figure 3.1 shows the consumer is the ultimate goal for all of the sales promotions. Every different type of sales promotion has their own tools. In table 3.1 these different

promotion tools are listed. In the table all the tools are listed in one of the three groups. For all the groups there are price promotion tools, like price cuts, trade coupons, and financing incentives and non price promotion tools, like contests, premiums, and sweepstakes.

Figure 3.1 Different types of sales promotion (Blattberg and Neslin 1990)

Trade

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Strategically, consumer promotions are part of pull component of a marketing effort and trade promotions are part of the push effort. It is important that this element of the sales promotion strategy is in line with the elements of the rest of the marketing strategy (Blattberg and Neslin, 1990).

Retailer Promotions

Trade promotions Consumer promotions

Price cuts Displays Feature advertising Free goods Retailer coupons Contests/ premiums Case allowances Advertising allowances Display allowances Trade coupons Financing incentives Contests

Couponing Sampling Price packs Value packs Refunds Continuity programs Financing incentives Bonus packs Special events Sweepstakes Contests Premiums Tie-ins

Table 3.1: Specific sales promotion tools (Blattberg and Neslin 1990)

3.3 Effectiveness promotions

Total sales effects of a promotion can be decomposed into different sales components. In table 3.2 these different components are listed. A sales promotion can be beneficial for a manufacturer a retailer or both (Srinivasan et al. 2004). To know the profitability or impact of sales promotion related to competitors it is important to know: what percentage of promotions comes from brand switching, stockpiling etc. For a retailer brand switching is not an advantage when the consumer buys another product in their shop, unless there is a difference in margin. For a manufacturer brand switchers can increase their (short-term) sales.

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Existing customers New customers

>Increase purchase quantity for stockpilling leading to increase In consumption

>Increase purchase by brand switchers >Increase or accelerate purchase frequency >Increase primary demand for category >Reduce brand switching and retain existing

customers

>Increase purchase by store switchers

Promoted products

>Use complements >Spillover brand effects

Non-promoted products

Table 3.2 Main sources of sales increases from a promotion (Raghubir et al. 2004)

Raghubir et al. (2004) decomposed these sources for existing and new customers (table 3.2). Van Heerde et al. (2003) decomposed between primary demand effects and secondary demand effects. The primary demand effects are timing acceleration and increase of quantity. This component is the same as the existing customer component in table 3.2. The secondary demand effect is brand switching, these are the new customers.

Primary demand effects: timing acceleration and increase of quantity

Timing acceleration and increase of quantity are named purchase acceleration by Blattberg and Neslin (1990). This refers to consumers who purchasing a product of different quantities or at different times when there is a promotion. Often this results in larger buying quantities and purchase occasions moved forward in time. For retailers this phenomenon is called “forward buying” whereas the name for consumers is

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Secondary demand effects: Brand switching

Brand switching is the mechanism when the consumer is induced to buy a different brand than he would have purchased without a promotion (Blattberg and Neslin 1990). There is a distinction between aggressive and defensive brand switching due to promotions. The switch is aggressive when the promotion induces the buyer to purchase another brand than he or she purchased the previous time. A defensive switch occur when a promotion for brand A seduce the consumer to buy brand A again and not another brand. The goal of a defensive switch is to keep the consumer buying their brand by offering an

interesting promotion. It is important for manufacturers to decompose brand switching into within-brand (cannibalization) and between brand-effects (Van Heerde et al. 2003). Whitin-brand effects are not profitable for the manufacturer because the sales value does not increase. It is only profitable when a consumer that normally buy another brand is seduced by the promotion to buy the brand of the manufacturer. Brand switching causes asymmetry in price cross-elasticity’s. In their research Blattberg and Wisniewski (1989) concluded that price promotions results in asymmetric sales effects. This asymmetric effect means that higher-price tier and higher-quality brands take market share from their competitors in the same tier and also from the tier below. The other way around this is not the case. With their price promotions, lower price and lower quality brands only take unit sales from their own tier brands and brands in a lower segment but rarely take unit sales from brands in a higher tier. Brand switching is important for manufacturers but less important for retailers. The negative aspect for manufacturers is that brand switching makes the market more aggressive (Van Heerde, 2003).

Decomposition

Gupta (1988) introduces three components of household response on sales promotions: brand switching, purchase acceleration, and purchase quantity (stockpiling). For this study he investigates the coffee category. According to Gupta (1988), brand switching, (or secondary demand effects) was the most important component for own-brand

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Bell et al. (1999) generalize this research to more categories. In their study they found that on average 74% of choice elasticity comes from brand switching and 26% for the primary effects, purchase acceleration and stockpiling. For these studies they use the gross measure.

Van Heerde et al. (2003) show that this does not imply when a particular brand increase their sales with 100 units by promotion, that other brands in the category automatically lose 74 units. They demonstrate that secondary component of the elasticity approach cannot be seen as the ratio of the decrease in sales of competitors to the increase of sales of the promotion (74 of 100 units is not the same as 74% of elasticity). They conclude in their article that the net secondary effect of a sales promotion is 33% of the total unit sales. So, this means that the other competing brands lose just about 33 units when there is a sales promotion (brand switching). The rest of unit sales (66%) is for the primary effect (existing customers). By this approach most of the own-brand unit sales growth comes from primary demand effects.

The difference in results is caused by the difference in measures between elasticity and unit sales. These are complementary measures for the effectiveness of promotion. Gupta (1989) and Bell et al. (1999) focus on the gross change for the competing brands that are not in promotion, when category volume stays the same. Van Heerde et al. (2003) focus on net change, accounting for growing category volume, which moderately benefits the brands that have not a promotion.

3.4 Price promotions

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have emerged as an important part of the marketing mix. More than ever these temporary price reductions represent the main share of the marketing budget for most consumer package goods (Srinivasan et al. 2004). Furthermore, this kind of promotions has become an important issue of the marketing strategy for manufacturers and retailers. The positive effects of these particular promotions are raise in store traffic, create (short-term) sales, and brand switching. However, there are also negative effects such as loosing profit, decline in quality perception, and reduce of brand equity (Mela et al. 1997: Darke and Chung 2005). The response of the consumer can be ‘If the brand is as good as they say, why do they need to keep dropping the price’.

The question is, what is the effect of price promotions on sales? According to Nijs et al. (2001) promotions in general do not result in to permanent changes in demand. In their paper they investigated the category-demand effects of consumer price promotions. They found out that short-term effects of price promotions are high but the long-term effects are weak. Furthermore, the effectiveness of promotions is also affected by the

competitive construction of the market. With fewer competitors in the market the

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3.5 Non-price promotions

According to Blattberg and Neslin (1993) most models of sales promotions assume that monetary savings are the only benefit for consumers to respond to sales promotions. But results from more recent research show that monetary savings can not fully explain why or why not consumers buy the product in a sales promotion (Dhar and Hoch, 1996; Na et al. 2007). To avoid the negative effects of price promotions retailers seek for alternatives. These alternatives are non-price promotions, or non monetary promotions, like gifts, contents and sweepstakes, and in-store events (Carpenter and Moore, 2008). Unlike price promotions, the costs can be established in advance and does not depend on the number of participants. In contrast with price promotions contests offer requires more time and effort on the part of the participants. The goal of these promotions is to attract attention and interest in a brand (Jobber 2004). These promotions provide more of the hedonic benefits and fewer utilitarian benefits than price promotions (Chandon et al. 2000). This means that this kind of promotions focus more on the emotional aspect of consumers.

3.6 Benefits of sales promotions

Sales promotions have multiple consumer benefits. Consumers respond to promotions because of the different benefits they receive from these promotions. Keller (1993) define these benefits as the perceived value attached to the sales promotion experience, this means seeing a promotion (exposure) and the purchase of a product that is on promotion (use). Chandon et al. (2000) studied this and found out that monetary and non monetary promotions provide consumers with different levels of hedonic and utilitarian benefits. The hedonic perception represents the emotional aspect of purchasing. Authors have found favourable brand attitudes to be similar to the perceived emotional benefits (Ruth, 2001). Chandon et al. (2000) describe hedonism as non-instrumental, experimental and affective gratification from sensory attributes. Utilitarian benefits are easily understood, being primarily instrumental, functional and cognitive (Chandon et al. 2000).

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framework they elaborated on literature about the response of the consumer to sales promotions, customer value, and hedonic consumption with nine in-depth customer interviews. The result of this are six benefits that is the base for this framework: savings benefit, quality benefits, convenience benefits, value expression benefit, entertainment benefit, and exploration benefit. The first three benefits are classified as utilitarian, because help consumers increase the acquisition utility of their purchase and enhance the efficiency of the shopping experience. The last two benefits, entertainment and

exploration benefit, are classified as hedonic, because they are intrinsically satisfying and linked to observed emotions, pleasure and self-esteem. The 6th benefit, value expression is classified as both, utilitarian and hedonic. In the following pages these benefits will be explained further and used for the hypotheses of this research.

3.6.1 Savings benefit

Sales promotions present perceptions of monetary savings by a decrease in the unit price of the product that is in promotion, offering more (multi buy) of the free of charge, or give refunds on purchases of the same or other products. This benefit is relevant for consumers who are price conscious (Chandon et al. 2000). These type of consumers always look at the price of products and they perceive themselves as having financial constraints (Ailawadi, 2001). Sales promotions can help by lowering the unit price, offer more (multi-buy), or providing refunds. With the decrease of the price the value for money of the product increases. This benefit belongs to the utilitarian level.

3.6.2 Quality benefit

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3.6.3 Convenience benefit

The convenience benefit is about shopping efficiency. Because of sales promotions search costs go down. These search costs are related to planning and time pressure of consumers (Ailawadi 2001). With the help of promotions consumers find the product easier or remember that they need a product. This benefit belongs to the utilitarian level.

3.6.4 Value expression benefit

This benefit is related to the expression and improvement of the self-concept and

individual values. Some consumers get self fulfilment by the idea that they buy bargains. They see themselves as a responsible buyer which is an important value for them. This benefit fits both, the utilitarian and the hedonic component, because the consumer can see themselves as being a good shopper (intrinsic), because they buy in promotion on the one hand, and on the other hand can be see by others as a smart shopper which can give them social status (extrinsic) (Chandon et al. 2000)

3.6.5 Exploration benefit

Sales promotions accomplish intrinsic needs for exploration, variety, and information because they are continuously changing and catching the attention of consumers (Baumgartner et al. 1996) Intrinsic needs are emotional so this benefit belongs to the hedonic level.

3.6.6 Entertainment benefit

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29 - - + Hedonic - Entertainment - Exploration - Value expression Utilitarian - Saving - Quality - Convenience - Value expression Hedonic - Entertainment - Exploration - Value expression - + ₊ + - - + + - + - +

Chapter 4 Research framework and hypotheses

4.1 Research framework

The end of the literature part is the research framework and the following hypotheses. The base of this framework is the differences between Premium and VfM buyers. All the multinationals distinguish between these segments. In this research the assumption is that there are differences in the way the consumers of both segments respond to different kind of promotions. This will be investigated with the first hypotheses. The other hypotheses come out of the six benefits which determine the effectiveness of a sales promotion. The benefits are valued with a plus or minus to show the expectation if the benefit have a positive or negative influence on the effectiveness of sales promotion. Paragraph 4.2 explain this expectation with support of academic literature.

Sales promotion

Effectiveness Sales promotion

Premium buyers VfM buyers

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4.2 Hypotheses

Brand positioning

H1: There is a difference in perception of the consumer for a Premium brand and a VfM brand.

The three multinationals in the Dutch market, Unilever, Proctor and Gamble, and Henkel. All distinguish the detergent market in three segments, the Premium segment, the VfM segment, and private label segment. In the literature is not written much about the difference between the Premium and VfM segment. Most of the literature named the main difference between these two segments the price. The goal of this hypotheses is to find out if there is difference in perception in the mind of the consumer.

Monetary savings benefit

H2: The saving benefit is more important for VfM-buyers than for Premium buyers.

As been said before, in paragraph 3.7.1, the saving benefit is relevant for consumers who are price conscious (Chandon et al. 2000). Premium buyers judge their buying behaviour on quality (Richardson et al. 1994). They are willing to pay a higher price for better quality products. According to Richardson et al. (1994) VfM buyers search for a price/ perceived quality trade-off. The price of VfM products is on average 10-15% less than Premium brands. When a detergent is in price promotion the expectation is that VfM buyers respect this more because they are more price conscious than Premium buyers. For this reason VfM buyers get a plus as valuation for the effectiveness of a promotion.

Quality benefit

H3: Sales promotions of a Premium brand results in more brand switchers from the Value for Money segment than the other way around.

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the case. VfM brands are in a lower-price tier than Premium brands because the price is normally 10-15% lower. When a Premium brand is in price promotion the price of this product decreased to a normal price of a VfM brand. The expectation is that more VfM buyers buy a Premium brand when the price is the same because of the Premium promotion.

Convenience benefit

H4: Both segments judge the convenience benefit equal

The convenience benefit is about the shopping efficiency (Chandon et al. 2000). When a detergent brand is in promotion it is often the case that this promotions gets support of posters and displays. This can help the consumer because the products are easier to find or at more places in the shop. Another part of this convenience is that the consumer can remember that they need new detergent when the see the promotional ads or displays. The expectation is that both, Premium and VfM, segments feel the same convenience of a detergent brand that is in promotion.

Value expression benefit

H5: VfM buyers find the value expression benefit more important than Premium buyers

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H6: Premium buyers attach higher importants to the exploration benefit

The exploration benefit is about the emotional aspect for sales promotions. Sales

promotions accomplish intrinsic needs for exploration, variety, and information because they are continuously changing and catching the attention of consumers (Baumgartner et al. 1996). Premium buyers are less interested in price and more on quality (Quelch 1987 and Richardson et al. 1994), so the expectation is that this segment is more open for exploration.

Entertainment benefit

H7 Premium buyers are more interested in the entertainment part of sales promotions

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Chapter 5 Research setup and implementation

This chapter explains the setup of this research. Firstly, the type of research used for this research is shown. Followed by a brief explanation of the Householdfair, the place where the survey has been plotted. After that the number of respondents will be explained. Furthermore, there will be explained where the questions for the survey come from. Finally, the paragraph proposes the measurement and analyses & methods.

5.1 Type of research

For this study primary data is used in the form of a survey (see appendix 1). This survey consists of two parts. The first part consists of 16 questions with the goal to retrieve general information of the respondents like gender, age, etcetera and also to retrieve information about the buying behaviour regarding detergents. In this first part there is a screening part where the respondents who are not the right respondents for this research can be filtered out. The criteria for the right respondents are that they do the shopping by themselves or together with their partner and also if they buy VfM or Premium detergent brands. The second part consist of 17 propositions with the goal to find out the utilitarian and hedonic opinions about promotions, price- and non price promotions. The total survey consist of 33 questions and propositions and it takes around 5 minutes to complete it. The total survey can be found in the appendix of this research.

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5.2 Householdfair

The Householdfair is a 9 days during event in the Amsterdam RAI and in 2009 organised for the 64th. time. This fair is the largest consumer event in the Netherlands. Last year, in 2008, this fair attracted 234.155 visitors. The profile of the visitor of this event is: A woman (with 89%, is by far the largest group) who lives in a working environment (77%). Almost 1/3 (31%) has an average gross income till 25.000 euro, more than half (56%) of the visitors has an income between 25.000 and 50.000 euro, and 14% has a higher income. 10% of all the visitors are single, 33% have a household without children and 56% have a household with children.

Age visitors 2008 2% 14% 24% 24% 24% 11% 1% 0% 10% 20% 30% < 17 18 t/m 24 25 t/m 34 35 t/m 44 45 t/m 54 55 t/m 64 > 65 Age in years 5.3 Number of respondents

In total 219 people filled in the survey. 29 of these surveys were not filled in completely and have been deleted for further research. Besides that the respondents must comply to some other requirements to be included in the final research. This is the reason that some questions has been added in the survey that automatically filter to the desired

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5.4 Discussion of survey questions

As been told in paragraph 5.1 the survey consists of two parts. The first part consists of 16 questions with the goal to retrieve general and buying behaviour of the different consumers. A couple of questions, like the filter questions 1 and 4 (see appendix 1), in this part came from a survey that has been performed by a research company, named MSI-ACI Europe, commissioned by the Cosmetics and Toiletries division of Henkel. These questions can also be used for this survey about the detergent market.

The second part of the survey consists of 17 propositions with the goal to find out the utilitarian and hedonic opinions about promotions, price- and non price promotions. These propositions are established with the help of the research op Chandon et al. (2000). In this particular research they investigate how consumers respond to different sales promotions. With support of literature about sales promotions, customer value, and hedonic consumption they elaborated nine in-depth interviews. The result of this is a framework. For each benefit they developed three measures, these measures where used for the propositions of this survey.

5.5 Measurement- and analyses methods

To test the hypotheses the data program SPSS 17.0 will be used. To test if the hypotheses are significant different tests will be used. To test if the differences in results are

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Chapter 6 Results

This chapter gives an answer on the different sub questions and also if the hypotheses are significant. These answers give the direction for the final problem statement in the next chapter.

6.1 Sub question 1: What is a typical VfM and Premium consumer?

The first part of the survey was meant to answer this question. This part of the survey contains questions about demographic data and buying behaviour. Only the consumers who did the daily shopping by themselves or together with their partner are taken in to the final results (183), the other consumers were filtered out (7). When the consumer fill in Ariel, Persil or Omo in Q4 of the survey, they are classified as Premium buyers (48%), when they fill in Dash, Witte Reus or Sunil they are classified as VfM buyers (34%). The other two classifications Private Label buyers (14%) and other buyers (4%) are also taken into these results to give a complete overview.

In table 6.1.1 the difference in demographic factors are listed. These results show that the VfM respondents have more households without children than the Premium respondents. This difference can be explained by the age of the respondents. The VfM respondents have a larger percentage of young adults (18-34) and also a larger percentage older consumers (>55). Demographics Premium VfM PL Others Age in years <17 1% 0% 0% 0% 18-34 22% 27% 35% 29% 35-55 57% 45% 38% 71% >55 20% 27% 27% 0%

Current family situation

Alone 15% 16% 8% 0%

Household without children 36% 48% 42% 71%

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Table 6.1.1 Demographic data

In table 6.1.2 the differences in buying behaviour are listed. To test if the differences are significant the Chi-square test in SPSS is used (see appendix 2.1). The results show that there is difference between VfM buyers and Premium buyers concerning buying

behaviour. Firstly, VfM buyers are more willing to buy their brand when it is in promotion, 58% said they wait with buying new detergent until it is in promotion. The half of the Premium buyers is willing to wait until a promotion. When looking at the significance the P-value is to high, this means that this result is not representative. Secondly, concerning impulse buying the results show that there is a clear difference between both segments in this part. This result has a p-value of 0,000 and is significant. Most of the Premium buyers think about buying new detergent when they are already in the shop and are more impulsive. VfM buyers think more about their buying behaviour, only 34% said they are thinking about buying new detergent when they are already in the shop. The VfM buyers are in the middle between PL buyers and Premium buyers

concerning impulsive buying.

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38 Buying behavior

Premium VfM

Significance

Chi-Square * PL Others

When buy detergent? 0,414

When I need it 50% 42% 73% 29%

When it is on promotion 50% 58% 27% 71%

Where is the buying decision to buy

detergent? 0,000

At home 42% 61% 77% 43%

In the shop 57% 34% 23% 57%

Somewhere else 1% 5% 0% 0%

Reason for buying the brand 0,000

Brand/ reputation 19% 0% 0% 29%

Quality 58% 8% 0% 42%

Price 0% 42% 54% 0%

Ratio price/ quality 15% 47% 38% 29%

Something else 8% 3% 8% 0%

Table 6.1.2 Differences in buying behaviour * Significance between Premium and VfM

In table 6.1.3 the differences in loyalty are listed. More than half, with 52% of the Premium buyers said that they always buy the same brand of detergent. A little bit less than half, with 44% of the VfM buyers said that they always buy the same brand

detergent. This first result is not significant and therefore not representative (see appendix 2.2). The second result show that both segments are loyal to their brand, because 82% of the Premium buyers and 80% of the VfM buyers said they are always or sometimes willing to switch supermarket when their particular brand is out of stock in their supermarket. This result is significant with a p-value of 0,001.

Loyalty

Premium VfM

Significance

Always buy the same brand detergent 0,744

Yes 52% 44% 50% 86%

No 48% 56% 50% 14%

Switch supermarket when your brand is

out of stock 0,001

Always 45% 40% 42% 57%

Regular 37% 40% 46% 43%

Never 18% 20% 12% 0%

Table 6.1.3 differences in loyalty

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The final table, table 6.1.4, listed the differences in buying behaviour, concerning buying of detergent in promotion. All of the variables are significant so these results are

representative (see appendix 2.3). These results show not very clear differences between Premium buyers and VfM buyers. The only difference is shown concerning buying extra stock when their brand is in promotion. With 92%, most of the Premium buyers buy always or at least sometimes extra stock. In the VfM segment also the largest part, with 80%, said that they buy extra stock, but this is a little bit less than the 92% of the

Premium buyers. For both segments a price promotion gets the preferences for buying in promotion.

Promotion

Premium VfM

Significance

Buy detergents in promotion 0,000

Always 40% 36% 19% 43%

Regular 59% 61% 73% 57%

Never 1% 3% 8% 0%

Switch supermarket when your brand is

somewhere else in promotion 0,000

Always 25% 23% 17% 29%

Regular 61% 57% 50% 57%

Never 14% 20% 33% 14%

Willing to buy other brand when it is in

promotion 0,000

Always 21% 25% 21% 0%

Regular 58% 57% 67% 43%

Never 21% 18% 12% 57%

Buy stock when in promotion 0,000

Always 39% 33% 17% 43% Regular 53% 47% 50% 43% Never 8% 20% 33% 14% Preference of promotion 0,000 Price discount 86% 85% 92% 100% Game 5% 8% 4% 0%

Free present or saving for present 9% 7% 4% 0%

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Test H1: There is a difference in perception of the consumer for a Premium brand and a VfM brand.

Measurement- and analyses methods

Question 2: If you must give a mark for the quality of these brands, which mark would you give? The respondents give their mark, from 1 till 10, for all the seven different brands, Ariel, Persil, Omo, Dash, Witte Reus, Sunil, and Private Label.

Sort of database: Only the respondents who give the answer to question 1 with ‘themselves’ or ‘together with their partner’ and to question 4 and said they buy the Premium brands, Ariel, Persil, Omo or the VfM brands, Dash, Witte Reus, Sunil, are taken into account.

Analyse: Independent T-test in SPSS (see appendix 2.4 and 2.5)

Goal: To test the mean of the given marks of both segments

Test H1

The independent t-test gives the average marks that both segments give to the perception of quality of both segments. The VfM buyers give an average mark of 6,5 for the clustered Premium brands and an average mark of 6,8 for the clustered VfM brands. This result is not significant so not a reliable statement (Appendix 2).

The Premium buyers give an average mark of 6,0 for the clustered VfM brands and an average mark of 7,3 for the

quality of the clustered Premium brands. This result is significant on 95% scale.

0 1 2 3 4 5 6 7 8

Premium buyers VfM buyers

M

a

rk

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With the help of the independent T-test we can look to the quality perception of the brands separately. All the results are significant on a 90% scale, only the average mark for Sunil is not significant (See appendix 3). In the graph below the results are shown. The Premium buyers give the Premium brands better marks, all better than a 7. The VfM brands gets lower marks, only Witte Reus gets a mark higher than a 6. The VfM buyers gave all the brands, both Premium brands and VfM brands, between the 6 and 7. Only Witte Reus gets a higher mark with a 7,5. A reason for the higher marks for Witte Reus could be that the participants fill in the survey at a stand of the Witte Reus brand at the Household fair. Quality perception 0 1 2 3 4 5 6 7 8 9

Ariel Persil Omo Dash Witte Reus Sunil

Brand A v g . m a rk

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6.2 What is the influence of the factors, as expressed in the hypotheses, for the perception of promotions for ‘VfM’ and ‘Premium’ buyers?

This sub question will be answered with the help of the hypotheses 2 till 7 emerged from the theory in chapter 3 with the result of 6 different benefits to buy a product in

promotion. To test these hypotheses Binary logistic regression analysis in SPSS has been used (see appendix 2.12). A logistic regression is a method to predict the probability that a consumer buys a product. In this case we want to predict the probability that a Premium consumer buys a detergent product in promotion. Before the use of this regression the first part is to test the reliability with the help of the reliability analysis in SPSS (see appendix 2.6-2.11). When the result of this test is a number above the 0,6 we can use the binary logistic regression. All these benefits have their own hypotheses. The dependent variable is the Premium buyer and the independent variable is one of the six benefits.

Measurement- and analyses methods

To test all the other hypotheses the measurement and analyses method is the same. The only difference are the statements used for the test. With the help of the reliability analysis in SPSS we can look if the variable is good for a binary logistic regression. When this is the case the variables had been tested with the help of the regression analysis in SPSS.

Sort of database: Only the respondents who give the answer to question 1 with ‘themselves’ or ‘together with their partner’ and to question 4 and said they buy the Premium brands, Ariel, Persil, Omo or the VfM brands, Dash, Witte Reus, Sunil, are taken into account.

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Binary logistic regression in SPSS

Goal: To test the mean of the given marks of both segments

B S.E. Wald df Sig. Exp(B)

Savings benefit 0,083 0,291 0,082 1 0,775 1,087 Quality benefit -0,223 0,245 0,825 1 0,364 0,801 Convenience benefit 0,114 0,17 0,455 1 0,5 1,121 Value expression benefit 0,34 0,275 1,525 1 0,217 1,404 Exploration benefit -0,419 0,23 3,31 1 0,069 0,658 Entertainment benefit 0,308 0,185 2,765 1 0,096 1,36 Constant -0,414 1,093 0,144 1 0,705 _0,661

Table 6.1: Results binary logistic regression of all the benefits

H2: The saving benefit is more important for VfM-buyers than for Premium buyers.

The reliability analysis for the benefit savings results in a Cronbach’s Alpha score of 0,556. This is just enough to use this benefit in the followed regression analysis. The results of the Logistic regression are shown in the table 6.1. The ouput shows that the savings benefit is not significant. For this reason there could be no statement about this benefit.

H3: Sales promotions of a Premium brand results in more brand switchers from the Value for Money segment than the other way around.

The reliability analysis for the quality benefit shows an Cronbach’s Alpha score of 0,677, enough to go further with the logistic regression. The results in table 6.1 show, just like the saving benefit, that this quality benefit is not significant. For this reason it is

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The reliability analysis for the convenience benfit results in a Cronbach’s Alpha score of 0,656. Table 6.1 show a significance that is much to high to give a proper statement about this benefit

H5: VfM buyers find the value expression benefit more important than Premium buyers

The Value Expression benefits show the same problem as the other benefits above. The reliability is good to go further with a Cronbach’s Alpha of 0,771. The problem lies in the significance of this benefit, it is to high to give a good statement about this benefit.

H6: Premium buyers give higher results to the exploration benefit

The Cronbach’s Alpha score of this benefit is 0,829. The table 6.1 show the results of the regression. On a 90% interval scale this benefit is significant. The Beta shows a negative number, this means that Premium buyers are less interested in this exploration benefit.

H7 Premium buyers are more interested in the entertainment part of sales promotions

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Chapter 7 Conclusion

The base of this research were two different problem statements, a theoretical and management statement. This chapter will answer both statements. The first, the theoretical statement will be answered with the help of the hypotheses.

The Theoretical problem statement is:

Do consumers perceive a VfM brand and a Premium brand differently and which factors influence the perception of promotions for ‘VfM’ and ‘Premium’ buyers?

This theoretical statement is built around two subjects, the first part is about the different perception of the brand for VfM buyers and Premium buyers and the second part is about the perception of promotions for the two different segments. The first part will be

answered with hypotheses 1, the second part with the help of the other 6 hypotheses.

Hypotheses Significant

H1: There is a difference in perception of the consumer for

a premium brand and a VfM brand Yes

H2: The saving benefit is more important for VfM-buyers

than for premium buyers No

H3: Sales promotions of a premium brand results in more brand switchers from the Value for Money segment than the other way around

No

H5: VfM buyers find the value expression benefit more

important than premium buyers No

H6: Premium buyers give lower results to the exploration

benefit Yes

H7 Premium buyers are more interested in the

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Most of the results show that there are not many differences between the buying behaviour of VfM and Premium buyers (table 6.1.2/ 6.1.3). The results show that Premium buyers are a little bit more loyal than the VfM buyers. A main difference in perception of the brand lies in the reason for buying the brand. The Premium buyers give the quality of the Premium product and reputation of the brand as their main reason for buying the brand. None of the Premium buyers say price was the main reason to buy their Premium detergent brand. The VfM buyers are more interested in the price of their product and the price-quality ratio.

Another difference concerns the marks the two different buyers give to all the brands. This is tested with hypotheses 1. For VfM buyers there is not much difference in their perception of quality of the brand. The average mark for the clustered Premium brands is a 6,5 and the average mark for the clustered VfM brands is 6,8. This result of VfM buyers is not significant thus this part of H1 can not be supported. For the Premium buyers there is a larger gap between the average marks. Both clustered brands get a sufficient mark but the Premium buyers give an average mark of 7,3 for the Premium brands and an average mark of 6,0 for the VfM brands. This result is found to be significant. With the help of these results the conclusion is that for VfM buyers the price is the issue to buy the VfM brand. In the mind of the Premium buyer the quality of the Premium brands is much better than the quality of the VfM brands.

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result for the entertainment benefit and the VfM buyers a negative result. This means that Premium buyers are more sensitive for non price promotions like contests and the

collection for other products. This result is in line with the literature because Premium buyers are less price conscious than VfM buyers.

Sub question 1 show that there are some differences between VfM and Premium buyers. Premium buyers have a higher perception about the quality of the Premium brands, this is in line with the literature that has been used for this research. For Henkel it is important to focus on these difference in perception. The results of the survey showed that Premium buyers are more impulse buyers than Premium buyers. 57% of the Premium buyers said they make their buying decision to buy detergent when they are already in the shop. This is a difference with the VfM buyer where only 34% make their buying decision in the shop. This result showed that VfM buyers are more conscious when they buy their detergent. To benefit from on this difference Henkel can differentiate in the approach of the different consumers. Because most of the Premium buyers decide in the shop it is better to focus on displays in the supermarket. With the help of this display there is a second place in the shop and more important a second change to get a in contact with the brand. To get the attention of the VfM buyer for your promotion it is better to focus on ads, most of them decide when they are still at home so it is better to give them the knowledge of the promotion when they are deciding to buy detergent, at home.

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Chapter 8 Limitations and future research

This research must be viewed as an attempt to understand the differences between VfM and Premium buyers regarding sales promotions. Even though this research tries to account for a multitude of factors potentially responsible for changes in the perception of promotions, there are a lot of other factors that can influence promotions. It is nearly impossible to explain all these other factors in a Fast Moving Consumer Goods category in which every small change could evoke an ongoing circle of reactions.

The first part of this research is a first attempt to understand the differences in buying behavior between VfM and Premium brands. Certain findings in this research seem to question the existence of a separate VfM consumer segment. Most of the VfM buyers buy the detergent brand because of price. Therefore, to complement and complete this research, future qualitative research (e.g. focus groups) examining perceived positioning together with willingness to buy for detergents is recommended. This additional research could reveal to what extent the VfM brands are perceived to be different from the Premium brands and examine which consumers these products appeal to.

The second part of this research , the perception of promotions, studied six factors of promotion benefits that could be of influence of for the perception of the different consumers in the VfM and Premium segment. There are a lot of other factors that can have an influence of buying detergent in sales promotion like the place in the folder, support with different types of advertising (e.g. tv commercials & ads), store differences, number of units in promotion pack, reduction percentage, etc. To complement this study, future research with the help of consumer panel data is recommended. This data can provide a careful view of buying effects resulting from a promotion.

To get a total overview the findings of the qualitative research and the findings of the consumer panel data can be combined to get a good image of the VfM or Premium consumer

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Value for Money versus Premium buyers

Value for Money versus Premium buyers

Factors that influence the perception of promotions

Sander Rienks

Master Thesis

Value for Money versus premium buyers

Factors that influence the perception of promotions

Sander Rienks

Management summary

Preface

Table of contents

Chapter 1 Introduction

Chapter 2 Brand positioning

Chapter 3 Promotions

Chapter 4 Research framework and hypotheses

Chapter 5 Research setup and implementation

Chapter 6 Results

Chapter 7 Conclusion

Chapter 8 Limitations and future research