THE LONG TERM EFFECTS OF PREMIUM PROMOTION PROGRAMS

THE LONG TERM EFFECTS OF PREMIUM

PROMOTION PROGRAMS

AN EXPLORATORY STUDY ON THE EFFECTIVENESS OF THE INDIRECT CUSTOMER

REWARDING METHOD

Benady (2003)

Master Thesis

University of Groningen

Faculty of Economics and Business

MSc. Business Administration

Marketing Management

Groningen, May 2010

Oscar Hassink

Master Thesis – Oscar Hassink ₁

THE LONG TERM EFFECTS OF PREMIUM

PROMOTION PROGRAMS

AN EXPLORATORY STUDY ON THE EFFECTIVENESS OF THE INDIRECT CUSTOMER

REWARDING METHOD

Author

O.H. Hassink

Peizerweg 85a

9726 JG Groningen, The Netherlands

ohassink@hotmail.com

0642809168

University of Groningen

Faculty of Economics and Business

MSc Business Administration

Specialization Marketing Management

Supervisors

Faculty Supervisor: Dr. J.A. Voerman

Co-assessor: J.H. Wiebenga

MANAGEMENT SUMMARY

Although retailers use both retailer loyalty programs as retailer promotions to attract and retain customers, this research focuses on one particular characteristic that is used in both marketing techniques. In first instance retailer loyalty programs and retailer promotions are implemented to achieve different goals. As the retailer loyalty program is designed to create customer loyalty and long term customer relationships, the retailer promotion is mainly designed to increase short term sales. Although the objectives of both marketing techniques are different, there is one similarity applied in both marketing techniques which shapes the focus of this research.

This interesting similarity is the indirect way in which both marketing techniques reward customers for their buying behaviour. Although the indirect way of customer rewarding is used in loyalty programs for quite some time, this method is rather new in retailer promotions. A good example of the indirect customer rewarding used in loyalty programs is the saving characteristic of these programs; customers are required to save a certain amount of loyalty points before they are rewarded for their behaviour. Although retailer promotions normally use direct customer rewarding, like in the form of a direct price discount, one particular retailer promotion rewards customers in an indirect way.

The retailer promotion that rewards customers both in a direct as indirect way is the promotion in which supermarket customers receive premiums (small gifts) which can be collected by customers. In this research, this particular retailer promotion is called the retailer premium promotion. First, the retailer premium promotion rewards its customers in a direct way by handing out the premium after a qualified purchase. However, this promotion offers customers the possibility to collect these premiums, in order to complete the premium collection. In this research the final collection is indicated as the indirect customer reward.

As the outcomes of indirect customer rewarding are already determined by loyalty program literature, this research is carried out to find whether indirect customer rewarding has similar outcomes once this rewarding retailer method is used in the premium promotion. The most interesting outcome of indirect customer rewarding determined by loyalty program literature is its ability to increase customer retention (Reinartz & Kumar, 2006). As customers participating in a loyalty program are not directly rewarded for their behaviour, they are prepared to stay with a retailer in order to receive the indirect customer reward somewhere in the future. In marketing literature, this effect is called the customer retention effect.

Master Thesis – Oscar Hassink ₃

to adapt its buying behaviour in the form of increased spending. As the retailer premium promotion also rewards customer in an indirect way, it is the objective of this research to find out whether this retailer promotion results in increased customer retention or increased customer spending.

Next to determining whether the comparable indirect customer rewarding methods have similar outcomes, a secondary research objective is to find out which customer groups have the greatest influence on the retailer premium promotion success. This secondary objective is formulated as most retailer premium promotions have a clear focus on children’s interests. This research discovers why this particular retailer promotion has such a clear focus on children and whether there are other customers influencing the succes of the retailer premium promotion.

Keywords: retailer premium promotion, retailer loyalty program, indirect customer rewarding, customer

PREFACE

Once I completed the study International Business and Languages at the Saxion Hogeschool in Enschede I decided to continue studying. During the four years of higher education my interest for marketing developed and that is the reason why I choose to continue my study with a pre-master program marketing management at the University of Groningen. I decided on studying marketing management at the University of Groningen as this study offers next to the theoretical approach some good practical skills by using real business cases. The master marketing management offered me the courses brand management and communication, the field course marketing, services marketing, retail marketing and finally consumer behaviour, which all fitted a different aspect of my marketing interest.

As my interest has always been on how retailers deal with customer relationships, I knew that my final thesis should have some connection with this marketing topic. Although the most important marketing technique for maintaining customer relationships in retail industry is the retailer loyalty program, I did not want to focus exclusively on this marketing technique.

For that reason I aimed at combining the retailer loyalty program with another interesting marketing topic; the retailer premium promotion. This particular retailer promotion was initially used in 2006 by the Dutch retail chain Albert Heijn and exceeded all expectations. Once Albert Heijn pioneered with this retailer promotion several other retailers followed by introducing similar promotions which all had a significant impact on store sales. Once I started analyzing this retailer promotion, I found an interesting characteristic; next to rewarding customer directly with a free premium, customers are offered the possibility to collect these premiums.

in this research, the collecting of supermarket premiums in order to complete the premium collection is identified as an indirect customer rewarding method; customers are motivated to collect in order to receive the indirect reward, identified as the complete collection. As the outcomes of indirect customer rewarding are already defined in loyalty program literature, I wondered whether this rewarding method used in both marketing techniques have similar outcomes.

Master Thesis – Oscar Hassink ₅

Now that I finished my thesis, I would like to thank my supervisor Mrs. Liane Voerman for her guidance through the research process and the constructive feedback she gave me. Additionally, I would like to thank my co-assessor Mr. Jacob Wiebenga who is currently writing his PhD research in the field of retailer premium promotions and was therefore an interesting co-assessor who gave some motivating comments on my research.

Last but not least I would like to thank my parents, sister and brother who where always there to support me.

Hopefully you read my thesis with interest.

TABLE OF CONTENTS

MANAGEMENT SUMMARY 2

PREFACE 4

LIST OF FIGURES AND TABLES 9

1. RESEARCH INTRODUCTION

1.1 SUBJECT INTRODUCTION: RETAILER PREMIUM PROMOTIONS 10

1.2 RETAILER PREMIUM PROMOTION: DIRECT & INDIRECT REWARD 12

1.3 RESEARCH FOCUS & RESEARCH OBJECTIVE 12

1.4 RELEVANCY OF THE THESIS 13

1.5 PROBLEM STATEMENT & RESEARCH QUESTIONS 14

1.6 THESIS STRUCTURE 15

2. RETAILER PROMOTIONS AND RETAILER LOYALTY PROGRAMS

2.1 SALES PROMOTION CATEGORIZATION 16

2.2 SALES PROMOTION TYPES 17

2.2.1 PRICE PROMOTION 17

2.2.2 BONUS-PACK PROMOTION 18

2.2.3 PRIZES PROMOTION 18

2.2.4 COUPON PROMOTION 18

2.2.5 REFUND PROMOTION 18

2.3 SALES PROMOTION OUTCOMES 19

2.4 RETAILER PREMIUM PROMOTION: CUSTOMER REWARDING 20

2.4.1 RETAILER PREMIUM PROMOTION: DIRECT REWARDING 20

2.4.2 RETAILER PREMIUM PROMOTION: INDIRECT REWARDING 22

2.4.3 RETAILER PREMIUM PROMOTION: THE VALUE OF THE PREMIUM 21 2.4.4 RETAILER PREMIUM PROMOTION: LINK BETWEEN PREMIUM & RETAILER 22 2.4.5 RETAILER PREMIUM PROMOTION: INTERESTING CUSTOMER GROUPS 22

2.5 RETAILER LOYALTY PROGRAMS 23

2.6 RETAILER LOYALTY PROGRAM TYPES 24

2.7 RETAILER LOYALTY PROGRAM OUTCOMES 25

Master Thesis – Oscar Hassink ₇

2.8.1 RETAILER LOYALTY PROGRAMS: SWITCHING COSTS 27

2.8.2 RETAILER LOYALTY PROGRAM: THE CUSTOMER LOCK-IN EFFECT 27

2.8.3 RETAILER LOYALTY PROGRAM: THE POINTS PRESSURE EFFECT 28

2.8.4 RETAILER LOYALTY PROGRAM: THE NATURE OF REWARDS 29

2.8.5 OTHER VARIABLES 29

2.9 CONCEPTUAL MODEL 30

3. RESEARCH DESIGN

3.1 RESEARCH DESIGN 31

3.2 RESEARCH METHODS & DATA COLLECTION 32

3.2.1 ONLINE SURVEY 33

3.2.2 REACHING THE TARGET POPULATION 34

3.2.3 SAMPLING TECHNIQUE 34

3.2.4 SURVEY DESIGN 35

3.3 DATA ANALYSIS STRATEGY 36

3.3.1 DATA PREPARATION 36

3.3.2 FREQUENCIES & DESCRIPTIVE STATISTICS 36

3.3.3 UNIVARIATE & MULTIVARIATE TECHNIQUES 37

3.3.4 METRIC DATA: T-TEST 38

3.3.5 NONMETRIC DATA: CROSS-TABULATION & CHI-SQUARE 38

3.3.6 MULTIVARIATE TECHNIQUES 39

3.3.7 ANALYSIS OF VARIANCE 39

3.3.8 INTERNAL CONSISTENCY: CRONBACH’S ALPHA 40

4. RESULTS

4.1 FREQUENCIES & DESCRIPTIVE STATISTICS 41

4.1.1 DEMOGRAPHICS OF THE RESPONDENTS 41

4.1.2 FAMILIARITY WITH RETAILER PREMIUM PROMOTION & SHOPPING BEHAVIOUR 42

4.1.3 PROMOTIONAL & PREMIUM PRONENESS 44

4.1.4 SALES PROMOTION OUTCOMES 46

4.1.5 CUSTOMER RETENTION 47

4.1.6 INCREASED CONSUMPTION 49

4.1.7 VALUE DIMENSIONS OF THE PREMIUM & FIT WITH RETAILER 50

4.1.8 REAL LIFE RETAILER PREMIUM PROMOTIONS 51

4.1.10 IMPORTANCE OF PREMIUM RECOGNITION 54

4.1.11 EXCHANGE OF PREMIUMS 55

4.2 ANALYSIS OF VARIANCE – ANOVA 56

4.2.1 ANOVA - GENDER 56

4.2.2 ANOVA - HOUSEHOLD STRUCTURE 57

4.2.3 ANOVA - AGE CATEGORIES 57

4.2.4 ANOVA - RETAILER PREMIUM PARTICIPATION 59

4.2.5 ANOVA – INCOME 60

5. CONCLUSIONS

& LIMITATIONS

5.1 CONCLUSIONS 61

5.1.1 PREMIUM PRONENESS, PARTICIPATION & SALES PROMOTION OUTCOMES 61

5.1.2 CUSTOMER RETENTION 62

5.1.3 INCREASED CONSUMPTION 63

5.1.4 PREMIUM VALUE DIMENSIONS 63

5.1.5 CHILDRENS INFLUENCING PARENTS 63

5.1.6 FOCUS ON CHILDREN & PREMIUM RECOGNITION 63

5.1.7 PREMIUM EXCHANGE 64

5.2 RECOMMENDATIONS 64

5.2 LIMITATIONS & FURTHER RESEARCH 65

REFERENCES

APPENDIX 1 - SURVEY OUTLINE

APPENDIX 2 - ONLINE SURVEY

APPENDIX 3 - SURVEY FLYER

APPENDIX 4 - FREQUENCIES & DESCRIPTIVE STATISTICS

APPENDIX 5 - T-TEST OUTCOMES

APPENDIX 6 - CROSSTABS & CHI-SQUARES

APPENDIX 7 - ANOVA ANALYSIS

APPENDIX 8 - INTERNAL CONSISTENCY- CRONBACH’S ALPHA

APPENDIX 9 - NEW VARIABLES

Master Thesis – Oscar Hassink ₉

LIST OF FIGURES

Figure 1.1 - The First Dutch Retailer Premium Promotion by Albert Heijn : Collecting Wuppies

Figure 1.2 - Indirect Customer Rewarding used by Loyalty Programs and Retailer Premium Promotions Figure 2.1 - Three Sales Promotion Categories - Blattberg & Neslin (1990)

Figure 2.2 - Examples of Retro-Premiums

Figure 2.3 - Distinction between Loyalty Programs using a Direct/Indirect Customer rewarding Method Figure 2.4 - Graphical Representation of the Customer Lock-In Effect

Figure 2.5 - Graphical Representation of the Points Pressure Effect Figure 2.6 - The Conceptual Model

Figure 3.1 - Classification of Marketing Research Designs - Malhotra (2007) Figure 3.2 - Marketing Research Data Techniques used - Based on Malhotra (2007) Figure 3.3 - Classification of Univariate Techniques - Malhotra (2007)

Figure 3.4 - Classification of MultivariateTechniques - Malhotra (2007) Figure 4.1 - Respondents Categorized on Age & Household Structure

Figure 4.2 - Percentage of Respondents who participated in a Retailer Premium Promotion Figure 4.3 - Overview of Dutch Supermarkets in which the Majority of Groceries is bought Figure 4.4 - Average amount of Money spend on Weekly Groceries

Figure 4.5 - Amount of Loyalty Cards Respondents Possess

LIST OF TABLES

Table 1.1 - Several Retailer Premium Promotions used by Dutch Supermarkets

Table 2.1 - Sales Promotions commonly used by Supermarkets - Blattberg & Neslin (1990) Table 2.2 - Sales Promotion Outcomes - Van Heerde (1999)

Table 2.3 - Four Dimension of Value - Larsen & Watson (2001) Table 2.4 - Retailer Loyalty Program Types - Berman (2006) Table 2.5 - Loyalty Program Outcomes - Nunes & Drèze (2006)

Table 3.1 - A Comparison of Basic Research Designs – Malhotra (2007) Table 3.2 - Likert-Scale Questioning - Cooper & Schindler (2008) Table 3.3 - Statements measuring Promotional Proneness Table 4.1 - Measuring Promotional Proneness

Table 4.2 - Measuring Premium Proneness Table 4.3 - Measuring Sales Promotion Outcomes

Table 4.4 - Measuring Customer Retention of Retailer Loyalty Programs Table 4.5 - Measuring Customer Retention of Retailer Premium Promotions Table 4.6 - Measuring Increased Consumption of Retailer Loyalty Programs Table 4.7 - Measuring Increased Consumption of Retailer Premium Promotions Table 4.8 - Measuring the Value Dimensions of the Premium

Table 4.9 - Measuring Real Life Premium Promotions and the Fit with Retailer Table 4.10 - Assessment of Real Life Retailer Premium Promotions

Table 4.11 - Measuring the Influence of Children in Relation to the Retailer Premium Promotion Table 4.12 - Measuring the Children Focus & the Importance of Premium Recognition

1. RESEARCH INTRODUCTION

This chapter is written in order to clarify which characteristic of the retailer promotion is analyzed in this research. The element of main interest is customer rewarding method used by the retailer premium promotion. Additionally, this chapter identifies the objective and relevancy of this research and formulates the problem statement together with its research questions.

1.1 RETAILER PREMIUM PROMOTIONS

Supermarkets offering their customers free gifts for buying groceries at their store; one of the major developments in food retail industry. These premium promotions are promotions in which additional value is created by offering premiums; a product offered for free or at a relative low price in return for buying groceries at a particular supermarket (d’Astous & Jacob, 2002). In 2006 the Dutch supermarket chain Albert Heijn pioneered with this retailer promotion, illustrated in figure 1.1 below. Those premiums were distributed to customers spending over 15 euro’s on groceries at an Albert Heijn store (Distrifood, 2006). This first retailer premium promotion resulted in an enormous hype; a total of 15 million wuppies were distributed, however a massive demand for these gifts remained.

Figure 1.1 – The First Dutch Retailer Premium Promotion by Albert Heijn : Collecting Wuppies

Master Thesis – Oscar Hassink ₁₁

Table 1.1 – Several Retailer Premium Promotions used by Dutch Supermarkets

1.2 RETAILER PREMIUM PROMOTION: DIRECT & INDIRECT REWARDING

According to Urbany et al. (1996), more than 70% of the purchase decisions in food retail industry are made in store, which shows the importance of sales promotions as a marketing technique that reaches the customer at the place of decision making (Gedenk et al., 2006). A great variety of sales promotions are used by manufacturers and retailer to encourage customers to try a new product, repeat purchase or stimulate brand switching (Raghubir et al. 2004).

In general, sales promotions are a collection of incentive tools, designed to stimulate faster or larger purchases of products by giving customers a reason to buy immediately (Kotler, 1994; Kotler et al., 2004). In order to stimulate customers to buy instantly, they are rewarded in a direct way. Direct customer rewarding is commonly used by sales promotions as the main objectives are short term oriented like for example a short term sales increase (Kotler et al., 2004).

However, the characteristic that is rather unusual in contrast with other sales promotions is the indirect way of customer rewarding. The retailer premium promotion rewards customers in an indirect way by motivating them to collect the distributed premiums in order to complete the premium collection; the indirect customer reward. As mentioned, the retailer premium promotion has a rather unique promotion characteristic in the form of rewarding customer both in a direct (free premium) as indirect (complete collection) way.

Although the indirect way of customer rewarding is relatively new within a sales promotion setting, this rewarding method is already used for decades by another marketing technique; the retailer loyalty program. In loyalty programs the indirect customer rewarding is performed by motivating customers participating in loyalty programs to save loyalty points. Once a certain level of points is saved, customers have the opportunity to redeem these points and receive the indirect reward; a free product or service.

1.3 RESEARCH FOCUS & RESEARCH OBJECTIVE

As the direct outcomes of sales promotions are often mentioned in marketing literature (van Heerde, 1999; Raghubir et al., 2004) this research aims at discovering the more indirect outcomes, which might result from the indirect way of customer rewarding.

Master Thesis – Oscar Hassink ₁₃ RETAILER LOYALTY PROGRAM SAVING CHARACTERISTIC INDIRECT CUSTOMER REWARDING RETAILER PREMIUM PROMOTION COLLECTION CHARACTERISTIC

Figure 1.2 –Indirect Customer Rewarding used by Loyalty Programs and Retailer Premium Promotions

Interesting is the fact that once customers start participating in a retailer loyalty program, they are less likely to defect from the particular retailer. Another interesting outcome of the saving characteristic is the fact that participating customers change their buying behaviour; customers tend to spend more in order to receive the indirect reward offered by the loyalty program (Nunes & Drèze, 2006). As the retailer premium promotion rewards customers indirectly as well, the research objective is to find out whether this particular retailer promotion has any long term outcomes that are comparable to those identified by loyalty program literature.

Although the research mainly focuses on the indirect customer rewarding method used by both marketing tools, another interesting aspect of retailer premium promotions is the fact that these retailer promotions are strongly focused on children. Therefore, the secondary research objective is to clarify why retailer premium promotions have such a clear focus on children’s interests and whether it is important to include other customer groups. The next paragraph clarifies the thesis relevancy.

1.4 RELEVANCY OF THE THESIS

This study is relevant as there is only little scientific literature written about premium promotions. Although the characteristics and outcomes of other sales promotions are well covered by marketing literature, the premium promotion is still researched unsatisfactorily (Prendergast et al., 2008; Palazon & Delgado-Ballester; 2009). Tammo Bijmolt, professor in market research at the University of Groningen, points out that even though supermarkets are familiar with the short term effects of its retailer promotions, an accurate understanding in further outcomes is often lacking (Fygi, 2009).

The reason why there is still little known about the long term outcomes of retailer premium promotions might be the simple fact that it is a relatively new phenomenon (Fygi, 2009). Even though marketers use premiums in many forms, research on premium effectiveness in a business-to-consumer context is still very limited. This appears remarkable since premiums are occupying an increasingly important place in promotional strategies (Bodur & Grohmann, 2005).

1.5 PROBLEM STATEMENT & RESEARCH QUESTIONS

Resulting from the subject introduction and the research objective, the main research question is formulated as follows:

Does the indirect customer rewarding method used in retailer premium promotions influence customer retention in a similar way as it does in retailer loyalty programs and, if so, what are the outcomes on customer buying behaviour?

This research question is answered by conducting a literature review on the characteristics and outcomes of retailer promotions and retailer loyalty programs. Obviously, a clear focus of this review is on the indirect customer rewarding methods used by both marketing techniques. The objective of the literature review is to clarify what outcomes can be expected from a retailer loyalty program that uses indirect customer rewarding. Once these loyalty program outcomes are clarified, the empirical research is performed with the aim to identify whether the indirect customer rewarding method used by retailer premium promotions has comparable long term outcomes.

In order to answer the problem statement, the following research questions are formulated:

 What promotion types are used by food retailers and what are the main outcomes?

Master Thesis – Oscar Hassink ₁₅

 What characteristics make a retailer premium promotions more successful in attracting new customers / retaining existing customers?

 Why do retailer premium promotions clearly focus on children and what other family decision roles play a role in the success of a retailer premium promotion?

 What loyalty program types are used by food retailers and what are the main outcomes on customer buying behaviour?

 What are the effects of the indirect rewarding method used by retailer loyalty programs on customer buying behaviour?

 In what way are retailer premium promotions similar to retailer loyalty programs?

By clarifying the problem statement and the corresponding research questions, the final paragraph of this chapter defines the further structure of this thesis.

1.6 THESIS STRUCTURE

2. RETAILER PROMOTIONS & RETAILER LOYALTY PROGRAMS

This chapter gives an overview of academic literature on the characteristics and outcomes of retailer sales promotions and retailer loyalty programs. This review starts by defining the characteristics and outcomes of sales promotions in greater detail. Additionally, the retailer loyalty program literature is discussed. Obviously, the focus of this review is on the indirect way of customer rewarding and the similarities between the retailer loyalty program and retailer premium promotion. The concluding section of this chapter summarizes the most interesting differences and similarities and clarifies the research model.

2.1 SALES PROMOTION CATEGORIZATION

Blattberg & Neslin (1990) classify three broad sales promotion categories; the consumer sales promotion, the trade promotion and the retailer promotion, which are illustrated in figure 2.1. As this research focuses on the outcomes of direct and indirect rewarding of consumers, the trade promotion is excluded from further analysis as this promotion is situated between manufacturer and retailer. Although the sales promotion categorization by Blattberg & Neslin (1990) implies that there is a significant distinction between consumer sales promotion and retailer promotions, this is actually not the case as both retailers and manufacturers make use of similar promotional techniques (Fygi, 2009). The only difference between consumer sales promotions and retailer promotions is the one initiating the promotion, the used marketing techniques are rather similar.

Figure 2.1– Three Sales Promotion Categories - Blattberg & Neslin (1990)

Master Thesis – Oscar Hassink ₁₇

2.2 SALES PROMOTION TYPES

Although there are many types of sales promotions used in retail industry, the ones that are frequently used by supermarkets are shortly defined in table 2.1. The mentioned sales promotions are further defined in the following sub-sections of this paragraph. Paragraph 2.4 elaborates specifically on the premium promotion as this promotion is the main topic of this study.

PRICE

PROMOTION Temporary price reductions (cents-off or percentage-off)

BONUS-PACK PROMOTION PRIZES PROMOTION COUPON PROMOTION

Special pack with additional product at no extra cost

Promotion in the form of contests, sweepstakes and games

Coupons are certificates that offer savings on selected products

REFUND PROMOTION

PREMIUM PROMOTON

Promotion that returns a certain amount of money to the customer who purchased a promoted product

Premium promotion is a promotional tool in form of a free gift.

PROMOTION DEFINITION

Table 2.1 – Sales Promotions commonly used by Supermarkets - Blattberg & Neslin (1990)

2.2.1 PRICE PROMOTION

2.2.2 BONUS-PACK PROMOTION

A bonus-pack is a special pack that offers customers additional product at no additional cost (Urseth, 1994). On average, the amount of bonus varies between 20 and 40%. At almost every supermarket products are offered with additional value at no extra cost. Because of the financial advantage of bonus-packaging, this promotion type is often seen as a form of price promotion. The majority of bonus-pack promotions are limited time offers to stimulate short-term sales and to boost product and/or retailer awareness (Reiter, 1994). Furthermore, bonus-packs are used to load customers so that they will not purchase competitive brands over a certain period of time (Ong, 1997).

2.2.3 PRIZES PROMOTION

Prizes promotions consist of contests, sweepstakes and games (Floor & Van Raaij). These promotions create excitement by promising impressive prizes free of charge. Contests require customers to compete for one or more prizes based on some sort of ability or talent. Customers are required to submit an entry, like a jingle, suggestion, estimation or completion of a rhyme, which is examined by a panel of judges who select the best entries. The way prizes are promoted is through in-store displays, product packages and through external media like television, radio and magazines (Kotler, 1994).

2.2.4 COUPON PROMOTION

Coupons are certificates distributed by manufacturers and retailers that offer specified savings on selected products. Unlike most sales promotion, the customer does not have to redeem the coupon immediately to take advantage of the promotion. A customer must show the coupon for redemption at the point of purchase in order to obtain the discount (Dhar & Hoch, 1996). Coupons are primarily used to attract new customers by encouraging trial and brand switching (Cook, 2003). The effect of the use of coupons is different from other sales promotions. Coupons do not have a short expiration date and are good for only one purchase, this is why the main encouragement is to switch brands instead of accelerate purchases.

2.2.5 REFUND PROMOTION

Master Thesis – Oscar Hassink ₁₉

2.3 SALES PROMOTION OUTCOMES

Every sales promotion looks for a connection with the customer to generate awareness, inform, entertain and in general convince the customer to change attitudes and behaviour in favour of a brand or retailer. The goal of any sales promotion is looking for a direct response from customers (Ailawadi & Neslin, 1998). In order to obtain this direct response, marketers try to influence purchase time or change the customer’s attitude towards the product or retailer.

Literature on sales promotions demonstrates that promotions have the ability to increase sales, awareness and image and are effective in encouraging customer to switch brand/product (Aaker, 1991; Walters, 1991). Although this research focuses on the possible long term outcomes of the retailer premium promotion, it is essential to have an understanding of the direct (short term) sales promotion outcomes. Van Heerde (1999) identified a diversity of short term sales promotion outcomes, which are mentioned in table 2.2.

Table 2.2 – Sales Promotion Outcomes - Van Heerde (1999)

As is shown in this table, these promotion outcomes are all short term oriented and no long term outcomes can be distinguished. The outcomes of Van Heerde (1999) are in line with the work of Kotler (1994) in which it is stated that sales promotion outcomes are usually short term and thus ineffective in building long term relationships.

2.4 RETAILER PREMIUM PROMOTION: CUSTOMER REWARDING

Having identified the commonly used sales promotions and their short term outcomes, this section continues with the sales promotion that is already mentioned in table 2.1 but which is not yet discussed: the retailer premium promotion. Over the last years several supermarkets implemented this retailer promotion which all had a considerable impact (Van Vugt, 2008). The characteristic that makes the retailer premium promotion different from the other sales promotions is the way in which it rewards customers, which is clarified hereafter. Additionally the premium value and the relationship between the premium and the retailer is discussed.

2.4.1 RETAILER PREMIUM PROMOTION: DIRECT REWARDING

Master Thesis – Oscar Hassink ₂₁

and association. Simonson et al. (1994) state that it is essential that the offered premium is attractive. As the premium used in premium promotions is received directly at the point of sale, it is a direct customer reward. This direct customer rewarding is often used by sales promotions as they are short term oriented (Kotler et al. 2004).

2.4.2 RETAILER PREMIUM PROMOTION: INDIRECT REWARDING

When analyzing the retailer premium promotion it becomes clear that most premium promotions implemented by retailers have one interesting characteristic in common; the promotions motivate customers to collect the premiums with as objective to complete the premium collection. The completed collection is identified as the indirect customer reward. This indirect customer rewarding results from the collection characteristic implemented in this retailer promotion; customers are required to visit a supermarket multiple times before they are rewarded. The following section defines the premium value and clarifies the link between premium and retailer.

2.4.3 RETAILER PREMIUM PROMOTION: THE VALUE OF THE PREMIUM

According to Shimp (1990) sales promotions can be classified in price and nonprice- oriented promotions. Some promotions offer a discount which results in lower purchase prices (like price-, coupon- and refund promotions). Nonprice promotions on the other hand do not offer a financial advantage. Examples of these nonprice promotions are premium and prizes promotions. In line with this Chandon and colleagues (2000) state that sales promotions offer the customer utilitarian or hedonic benefits. Utilitarian benefits are savings, quality and convenience, while hedonic benefits are value expression, exploration and entertainment. According to Chandon et al. (2000), promotions with a utilitarian benefit can be compared with a price promotion, and a promotion with a hedonic benefit can be compared to non-price promotions, like for instance premium promotions. Larsen & Watson (2001) developed a model in which they determined how customers value gifts and identified four value dimensions; economic, functional, social, and expressive, illustrated in table 2.3.

ECONOMIC VALUE Premiums valued for their economic worth

FUNCTIONAL VALUE

SOCIAL VALUE

EXPRESSIVE VALUE

Premiums valued for their utilitarian characteristics

Premiums valued for maintaining relationships

Premiums valued for caputuring some aspect of the giver

VALUE DIMENSION DEFINITION

The economic value is the concept with which people are most familiar; premiums can be valued simply for their economic worth. Premiums may also be valued for their utilitarian characteristics or attributes (functional value), their role in maintaining relationships (social value), and their ability to provide an expressive quality in which the gift may capture some aspect of the giver (expressive value). Especially the expressive value is an interesting one as it is related to the idea that a bit of identity is passed on from the giver (the retailer) to the recipient (the customer) through the gift itself.

2.4.4 RETAILER PREMIUM PROMOTION: THE LINK BETWEEN PREMIUM & RETAILER

This expressive value is in line with the work of Rossiter & Percy (1997) in which it is stated that a fundamental element that must be considered in designing premium-based sales promotions is whether the distributed premium is integrated within the brand’s identity and positioning. Although sales promotions typically pursue short term sales objectives, it is essential to consider the possible effects of the relationships between the premium, product, and brand on the long-term variables such as brand image and brand equity. Therefore, it must be considered as part of the overall marketing communication and should never be considered in isolation (Percy & Elliott, 2005).

Thus, regardless of the premium type, it should be supported and integrated into the retailer’s overall marketing communication; a certain fit between brand and premium should exist for a successful premium promotion (D’Astous & Landreville, 2003). Although the work of Rossiter & Percy (2005) and D’Astous & Landreville (2003) is related to premium promotions used by manufacturers, it might also be related to premium promotions used by retailers and therefore it is stated that the premium should be in line with the positioning and identity of the retailer. The final section of the retailer premium promotion literature aims at identifying whether the retailer premium promotion has such a clear focus on children’s interests and whether there are other customer groups influencing the succes of the retailer premium promotion.

2.4.5 RETAILER PREMIUM PROMOTION: INTERESTING CUSTOMER GROUPS

Master Thesis – Oscar Hassink ₂₃

Figure 2.2 – Examples of Retro-Premiums

Since the early 1990s children are increasingly popular in research on family decision making as it became obvious that, besides being customers on their own, children increasingly influence family purchasing decisions (Caruana & Vassallo, 2003). Cooper (1999) for instance found that an average of 43% of total family purchases made by parents are influenced by children. Furthermore Liebeck (1994) reports that mothers who shop for groceries with their children wind up spending 30% more then they originally intended and fathers spending even 70% more. These outcomes illustrate that children are occupying an increasingly important role in family decision making and are therefore an interesting customer group for sales promotion activities. According to Wilson & Wood (2004) children can be seen as a target market, as influencers on their parents’ decision making and finally as potential future adult consumers. In conclusion it appears obvious that supermarkets focus on this specific customer group. Although children are an important family group to consider, there might be other family members influencing the succes of the retailer premium promotion. This is further analyzed in the explorative research.

2.5 RETAILER LOYALTY PROGRAMS

Now the retailer premium promotion is discussed, this paragraph continues with literature on loyalty programs as the indirect way of customer rewarding used by retailer premium promotions is similar to the method used by retailer loyalty programs. Traditionally, retailers focused their attention on encouraging customers to visit their stores. In order to accomplish this, mass media advertising and retailer promotions were used (Levy & Weitz, 2009). Although it is found that retailer promotions attract new customers and increase short term sales (Kotler, 1994), they hardly create customer loyalty and are also easily copied by competitors and therefore do not result in a long term competitive advantage.

by increasing their loyalty. As a result retailer promotions are often accompanied by a long term oriented retailer loyalty program (Leenheer, 1999). This changing customer approach is mentioned in several studies indicating that customers are not equally profitable (Leenheer, 1999; Reichheld & Sasser, 2008). The next paragraph defines which loyalty program types can be distinguished and which of these are interesting for this research.

2.6 RETAILER LOYALTY PROGRAM TYPES

Over the years, different retailer loyalty programs are developed and Berman (2006) identified four different types which are mentioned in table 2.4. The first program type is the most basic in which membership is open to all customers and in which participating customers receive a discount on selected products. A good example of a type 1-program is the loyalty card program (Bonuskaart) used by the Dutch supermarket Albert Heijn in which program members receive a direct reward in the form of a price discount on a pre-selected group of products.

The remaining three program types attempt to increase a customer’s total purchases from the retailer by offering additional discounts, rebates, or free goods once a customers’ purchases exceeds a given level. The type 2-program for instance offers customers a product or service for free after buying a selected number of items at full price, this program type is often used by hairdressers in the form of saving stamps. The type 2 program apparently uses an indirect customer rewarding method as customers are only rewarded after several visits.

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The third program type is often used in the airline industry (frequent flyer programs) and retail industry (loyalty saving programs) in which customers save retailer points (loyalty points) based on how often and how much they use the program. Customers who participate in a type 3 loyalty program are expected to transact more with a particular retailer, in this way giving up the free choice they have otherwise. In exchange for concentrating their purchases, they accumulate loyalty points which can be exchanged for an indirect reward in the future (Reinartz & Kumar, 2006). An example of a type 3 program is the saving program used by the Dutch supermarket chain Super de Boer: With every 5 euro’s spend on groceries customers receive one loyalty point and after saving 220 loyalty points, customers obtain a 5 euro coupon. In order to illustrate the distinction between direct and indirect customer rewarding, figure 2.3 is inserted using the examples of the Albert Heijn Bonuskaart (direct) and the Super de Boer Rock’s saving program (indirect).

Figure 2.3– Distinction between Loyalty Programs using a Direct/Indirect Customer rewarding Method

The fourth program type shows great similarity with the third format except that this type is able to offer individual members specialized communications, promotions and rewards based on their purchase history. Identifying the different types of retailer loyalty programs, the next paragraph describes the most interesting program outcomes.

2.7 RETAILER LOYALTY PROGRAM OUTCOMES

tempting customers with rewards is unlikely to create true loyalty. Nunes & Drèze (2006) on the other hand identified five loyalty program outcomes that can actually be accomplished, these outcomes are inserted in table 2.5.

Table 2.5 – Loyalty Program Outcomes - Nunes & Drèze (2006)

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2.8 RETAILER LOYALTY PROGRAM: CUSTOMER REWARDING

The indirect customer rewarding method that is used in a majority of retailer loyalty programs offers participating customers the opportunity to save loyalty points with every purchase. By accumulating these points, customers give up their free choice, yet the expected indirect reward seems to make this reduction in free choice worthwhile (Reinartz & Kumar, 2006). The different processes at hand are discussed next.

2.8.1 RETAILER LOYALTY PROGRAMS: SWITCHING COSTS

Interesting is the fact that indirect customer rewarding motivates participating customers to show loyal buying behaviour in order to reach these threshold levels (Lewis, 2004). In marketing literature it is stated that the indirect customer rewarding method creates so called switching cost that can best be described as the saved loyalty points that are lost when a customer discontinues buying from a particular retailer. As a result, these switching costs result in retailer dependence (Heide & John, 1988; Morgan & Hunt, 1994). Porter (1980) states that even though customers are dissatisfied with a retailer, they continue the relationship as the existing switching costs act as an exit barrier. Even though Morgan & Hunt (1994) only mention the economic nature of switching costs, like losing the saved loyalty points, switching costs might also comprise psychological and emotional costs (Sharma & Patterson, 2000; Meyer-Waarden & Benavent, 2001). These psychological and emotional costs play a role in case social bonds and personal connections are established. Although the psychological and emotional switching costs are interesting for further analysis, this research focuses purely on the economic switching costs in the form of losing the saved retailer loyalty points.

2.8.2 RETAILER LOYALTY PROGRAMS: THE CUSTOMER LOCK-IN EFFECT

Figure 2.4 – Graphical Representation of the Customer Lock-In Effect

When using delayed customer rewarding, retailers should take into consideration that the more the reward is delayed in time, the less interesting it is for customers and therefore a settlement between retention and customer motivation is necessary (Meyer-Waarden & Benavent, 2001).

2.8.3 RETAILER LOYALTY PROGRAM: THE POINTS PRESSURE EFFECT

Next to the customer lock-in effect, Taylor & Neslin (2005) found that there is a certain pressure from the customers point of view to save loyalty points in order to obtain the indirect reward. This effect is called the points-pressure effect (Taylor & Neslin, 2005). Research has shown that the further along customers are in a loyalty program, the more they use it (Nunes & Drèze, 2006; Kopalle et al., 2007). Hence, proximity to a goal is at the heart of what has been labelled the goal gradient effect: organisms apply more effort towards reaching a goal the closer they come to the goal (Hull, 1932). In other words, customers are willing to increase their purchase levels in order to receive the indirect reward (Nunes & Drèze, 2006). In particular customers that are in the final stage of a loyalty program (nearly at the point of redemption) are willing to change their buying behaviour. The points pressure effect is illustrated in figure 2.5.

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2.8.4 RETAILER LOYALTY PROGRAM: THE NATURE OF REWARDS

Next to the customer lock-in effect and points pressure effect, Nunes & Drèze (2006) identified another characteristic of the indirect customer rewarding method; the indirect reward itself. The principal motivation for consumers to sign up for a retailer loyalty program is to build up benefits from rewards that can be attributed to their purchase transactions over time. Thus, from a customer’s perspective, rewards are the key design benefit (Reinartz & Kumar, 2006). According to Leenheer et al. (2007) loyalty programs primarily provide economic (tangible) rewards that are frequently enriched with social (intangible) rewards. This distinction is similar to the work of Liu & Yang (2009) as they identified rewards as being hard (price discounts and free products) or soft (special communications or preferential treatment). Furthermore, customers participating in a loyalty program respond more heavily to rewards that promise pleasure (hedonic rewards) than to simply practical rewards like price discounts; hedonic rewards makes customers feel like preferred customers and accordingly identify more strongly with a retailer (Meyer-Waarden & Benavent, 2006).

2.8.5 OTHER VARIABLES

Although the most interesting factors influencing the effectiveness of a retailer premium promotion are mentioned in this literature review, there are obviously other factors influencing the promotion effectiveness. One of these factors is promotional proneness which refers to the customer tendency to respond to a sales promotion. Although promotional proneness is not covered in this literature review, this factor influences the retailer premium promotion effectiveness (Schneider & Currim, 1991) and is therefore included into the exploratory research.

2.9 CONCEPTUAL MODEL

This final section literature is written to summarize this chapter and clarify the most important elements for the research. The most important elements drawn from the literature review are illustrated in the conceptual model, mentioned in figure 2.6 below.

Figure 2.6 – The Conceptual Model

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3. RESEARCH DESIGN

This chapter clarifies the way in which this research is conducted. First the different research designs are explained. According to Malhotra (2007), a research design is a blueprint for conducting the marketing research project; it specifies the details of the procedures necessary for obtaining the information needed to structure and solve marketing problems. Two major research designs exists; the exploratory and the conclusive design. Both research designs are clarified. Next to defining the research design, the section clarifies the research- and data collection methods.

3.1 RESEARCH DESIGN

According to Malhotra (2007) and Cooper & Schindler (2008), two main research designs can be distinguished; the exploratory- and the conclusive design, mentioned in figure 3.1. Exploratory studies tend toward loose structures with the objective of discovering future research tasks. The direct purpose of exploration is usually to develop hypotheses or questions for further research. The more formal (conclusive) studies begin where the exploration stops, it often begins with a hypothesis or research question and involves precise procedures and data source specifications. Exploratory research is often used as the initial step in the marketing research framework. The exploratory research design is useful when researchers lack a clear idea of the problems they will meet during the study; through exploration researchers establish priorities, develop operational definitions, and improve the final research design (Cooper & Schindler, 2008).

Figure 3.1 - Classification of Marketing Research Designs - Malhotra (2007)

Exploratory research is frequently followed by conclusive research (descriptive or causal). In general, conclusive research is used to test specific hypotheses and examine exact relationships. Conclusions drawn from conclusive research are based on relatively large, representative samples and the data analysis is quantitative.

hand is often used to establish causal relationships between variables. Additional information on the objectives, characteristics and possible research methods of these research designs are inserted in table 3.1.

Table 3.1 – A Comparison of Basic Research Designs – Malhotra (2007)

This research is best characterized as a combination of exploratory- and descriptive research. The first step in this study is finding secondary data (literature review) in order to clarify some first insights into the outcomes of retailer premium promotions. The descriptive part of this research is the survey that is based on the outcomes of the literature review. The elements of interest are mentioned in the conceptual model and are measured with statements about that particular element. The formulated statements are based on former marketing research and added in appendix 1. In order to increase the research reliability, several statements per research element were formulated. Having mentioned the different types of research designs and indicating the design combination of this research, the next paragraph defines the used research methods in detail.

3.2 RESEARCH METHODS & DATA COLLECTION

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Figure 3.2 – Marketing Research Data Techniques used - Based on Malhotra (2007)

3.2.1 ONLINE SURVEY

The survey method is structured which refers to the degree of standardization imposed on the data collection process. In a structured data collection such as the survey, a formal questionnaire is prepared and the questions are asked in a prearranged order. The survey method has several advantages like the fact that a survey is simple to manage and the data obtained is reliable as the responses are limited to the alternatives stated. Moreover, the analysis and interpretation of data is relatively simple (Malhotra, 2007).

The survey type that is used in this research is the type that is conducted through e-mail and placed on the internet; the online survey. The online survey is favored as this method makes it possible to collect large amounts of data in a relatively short period of time and the fact that participants feel relatively anonymous when filling in an online survey (Cooper & Schindler, 2008). The final motive for selecting the online survey is the fact that it enables the use of graphics and other questioning tools more easily then for example telephone surveys.

As the survey is conducted with as main objective to figure out the attitudes/opinions of customers towards retailer premium promotions, the questioning should fit this objective. A good way of clarifying the attitudes of participants is by using rating scales (Cooper & Schindler, 2008). The Likert scale is the most frequently used variation of the rating scale. Rating scales consist of statements that express either a favorable or unfavorable attitude toward the object of interest, the participant is asked to agree or disagree with each statement. The Likert-scale questioning is added in table 3.2.

3.2.2 REACHING THE TARGET POPULATION

According to Malhotra (2007), defining the target population involves translating the problem definition into a precise statement of who should and should not be included in the sample. The target group for this research are Dutch parents with children aged 5-18 and who are familiar with the retailer premium promotion and retailer loyalty programs. Although parents with children are identified as target group, the exploratory research (online survey) includes a broader group of respondents, this is done in order to get a better view on the opinions and behaviour of a broader customer group, which obviously results in more interesting outcomes. Thus, even though the research target group are parents with younger children, respondents who did not fit within this particular group are considered in the exploratory research

In order to reach the target group, the survey is send by email to family and friends who fit this group. In this email the people are asked to fill out the survey and whether they could send the email to family and friends who also fitted the target group. By doing this a snowball effect was established. Secondly, the internet-link that leads towards the online survey was placed on several online supermarket forums. Finally, customers fitting the target population were approached at supermarkets in Groningen. As the supermarket chains Super de Boer, C1000 and Albert Heijn already introduced several retailer premium promotions, flyers with a short research introduction and the internet link leading to the online survey were distributed in and around these supermarkets. The distributed flyer can be found in appendix 3. In this appendix the specific supermarkets that were approached are also shortly mentioned. By approaching supermarket customers, a total of 400 flyers were distributed. Important to note is the fact that the approached customers were not forced to fill out the complete survey. In this way respondents did not feel the pressure of filling in the survey right away but instead could answer the survey questions at home in a relaxed environment.

3.2.3 SAMPLING TECHNIQUE

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3.2.4 SURVEY DESIGN

A survey is a formalized set of questions for obtaining information from respondents. Any survey has three specific objectives (Malhotra, 2007). First, it must translate the information needed into a set of specific questions that the respondents can and will answer. Secondly, a survey should motivate and encourage the respondent to become involved in the survey, to cooperate, and to complete the interview. Preliminary to the survey there is a short introduction which clearly explains what the research is about and furthermore triggers the respondents to complete the survey. The final objective of a the survey is to minimize response error which is defined as the error that arises when respondents give inaccurate answers or their answers are misrecoded or misanalyzed.

According to Malhotra (2007) it is important to have a clear idea of the target population as the characteristics of the respondent group have great influence on the survey design. Especially online questionnaires, as used in this research, must be simple. Every question in a survey should contribute to the information needed or serve some specific purpose. The survey designed for this research starts with some neutral questions, in order to increase the respondent’s involvement.

Any survey exists of structured and unstructured questions. Unstructured questions are open-ended questions that respondents answer in their own words. With unstructured questions respondents are free to express any views, their comments and explanations can provide the researcher with rich data insights. However, unstructured questions are not suitable for self-administrating surveys like the online survey as most respondents tend to be more brief in writing than in speaking. Another major disadvantage of unstructured questions is that the coding of responses is costly and time consuming (Malhotra, 2007).

Therefore the majority of the questions used in the survey are structured; questions that specify a set of response alternatives. A structured question may be multiple choice, dichotomous (only two response alternatives), or scale (like the Likert-scale, mentioned in table 3.2). In case a question is poorly worded, respondents might refuse to answer it.

3.3 DATA ANALYSIS STRATEGY

Once the survey is conducted, the first step is to check for acceptable surveys. This is followed by editing, coding, and transcribing the data (Malhotra, 2007). After that the data is cleaned and a treatment for missing responses prescribed.

3.3.1 DATA PREPARATION

The initial step in survey checking involves a check of all surveys for completeness and quality, this is called editing. Editing is reviewing the surveys to increase accuracy and precision. This consists of screening surveys in order to identify illegible, incomplete, inconsistent or ambiguous responses. Unsatisfactory answers can be treated in three different ways; returning to the field to get better data, assigning them as missing values or rejecting unsatisfactory respondents.

After approaching the customers mentioned in section 3.2.2, a total of 245 people filled out the survey. After editing these 245 surveys, 26 surveys were not suitable for further investigation as they were filled out so poorly that they could not serve as appropriate input for the research. Examples of these deleted surveys are the ones in which more than half of the questions were unanswered. As a result, 219 surveys remained for the quantitative part of the research. Furthermore the collected data is cleaned with consistency checks and treatment of missing responses. Although preliminary consistency checks have been made during editing, the checks at this stage are more thorough and extensive as they are made by computer. Consistency checks identify data that are out of range, logically inconsistent, or have extreme values. Computer packages like SPSS can be programmed to identify out-of-range values, this makes it easy to check each variable systematically for out-of-range values.

A final way of data cleaning is the treatment of missing responses; missing responses represent values of a variable that are unknown, either because respondents provided ambiguous answers or their answers are not properly recoded. Two treatments of missing responses are given; substitute a neutral value (1) or substitute an imputed response (2). In case of missing responses, the first treatment is used; substituting the missing value by a neutral value which is the mean response to the variable. In this way the mean of the variable remains unchanged and other statistics such as correlations are not affected much (Malhotra, 2007).

3.3.2 FREQUENCIES & DESCRIPTIVE STATISTICS

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complete overview of the frequencies and descriptive statistics of all the survey questions / statement are mentioned in appendix 4 of this research.

3.3.3 UNIVARIATE TECHNIQUES

Although answers to questions related to a single variable are interesting, they often raise additional questions about how to link that variable to other variables. An example might be to determine whether males are more/less likely to participate in a retailer premium promotion than females. The answers to these questions are determined by examining cross-tabulations. In order to answer these type of questions the survey also includes some demographic variables like gender and household structure. With these demographic variables it is possible to determine whether different respondents (on the basis of gender or household structure) respond differently to certain survey statements. The determination of these differences is done with crosstab-tabulations/ chi-squares and/or t-tests, depending on the measurement scale of the variables. In this research only the significant results are mentioned.

Statistical techniques can be classified as univariate or multivariate. Univariate techniques are appropriate when there is a single measurement of each element in the sample, or if there are several measurements of each element but each variable is analyzed in isolation. Multivariate techniques on the other hand are suitable for analyzing data when there are two or more measurements of each element and the variables are analyzed simultaneously.

Figure 3.3 – Classification of Univariate Techniques - Malhotra (2007)

3.3.4 METRIC DATA: T-TEST

In this research, the t-test is used to determine differences between metric data. The t-test is designed in order to identify whether a sample mean corresponds with another research value. The null hypothesis states that the sample mean is equal to the average score. The alternative hypothesis states that the sample mean is unequal to that value. An overview of the t-test outcomes is added in appendix 5. In case of the Likert-scale statements that are used often in the survey, the test value is set on 3 as this is the average score of a 5-point Likert-scale. In case the p-value is larger than the usual 0,05 it means that the null hypothesis cannot be rejected and thus the test score is not significantly different. In case the difference of the variable was significant on a 95% confidence interval, these variables were measured on a 99% confidence interval level.

3.3.5 NONMETRIC DATA: CROSS-TABULATION & CHI-SQUARE

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The most often used chi-square statistic is the Pearson chi-square statistic. In case the calculated significance is larger than 0,05, it means that the null hypothesis (there is no connection between the two variables) cannot be rejected and should therefore be accepted. Before the chi-square test can be conducted two conditions must be settled: all the expected frequencies must be minimal 1 and maximal 20% of the expected frequencies are allowed be smaller than 5 (Huizingh, 2002). Whether these two conditions are settled is mentioned in the footnote of the test. In this research only the analysis that show significant outcomes are mentioned. The significant cross-tabulation and chi-square outcomes are added in appendix 6

3.3.6 MULTIVARIATE TECHNIQUES

Contrary to univariate techniques, multivariate statistical techniques are classified as dependence or interdependence techniques, see figure 3.4. Dependence techniques are appropriate in case one or more variables can be identified as dependent variables and the remaining as independent variables. In interdependence techniques, the variables are not classified as dependent or independent; rather, the whole set of interdependent relationships is examined. These techniques focus on either variable interdependence or interobject similarity.

Figure 3.4 – Classification of MultivariateTechniques - Malhotra (2007)

3.3.7 ANALYSIS OF VARIANCE

effect of the controlled independent variables, after taking into account the influence of the uncontrolled independent variables. Essentially, analysis of variance (anova) is used as a test of means for two or more populations. The null hypothesis, typically, is that all means are equal. In its simplest form, analysis of variance must have a dependent variable that is metric. There must also be one or more independent variables. The independent variables must be all categorical. One-way analysis of variance involves only one categorical variable. The anova analysis involves, like with the t-test only a metric dependent variable. For an analysis of variance it is important to first identify the dependent and independent variables. Analysis of variance is so named because it examines the variability or variation in the sample, and based on the variability determines whether there is reason to believe that the population means differ. In the one-way analysis of variance, the interest lies in testing the null hypothesis that the category means are equal in the population. The significant anova outcomes are added in appendix 7. In case the computed p-value is below 0,05 it can be stated that the mean scores of the involved groups are not equal; at least two means are unequal from each other. The groups that are analyzed are the groups based on gender, age category, household structure, education, annual income and whether the respondents did/did not participate in any retailer premium promotion.

3.3.8 INTERNAL CONSISTENCY: CRONBACH’S ALPHA

In order to measure a certain construct several survey statements are formulated. Like in order to measure the promotional proneness of the respondents three survey statements are formulated, see table 3.3 below.

variable survey statement

promotionalprone I always check the supermarket brochure for special offers before I do my groceries. I use the supermarket brochure to decide what groceries to buy.

I always pay attention to special offers in supermarkets.

Table 3.3 – Statements measuring Promotional Proneness

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4. RESULTS

As stated, a total of 245 people filled out the survey. After editing these 245 surveys, 26 surveys appeared not suitable for further investigation as they were filled out so poorly that they could not serve as input for the research and are therefore identified as item non response. As a result, 219 surveys remained for the quantitative part of the research.

4.1 FREQUENCIES & DESCRIPTIVE STATISTICS

This initial analysis starts by determining the frequency distribution of the used variables, in this frequency distribution variables are measured independently. A frequency distribution is a basic analysis however clearly demonstrates how the respondents reacted on the given statements. The frequency distribution is extended with the determination of other descriptives like mean scores, maximums, minimums, standard deviations and variances.

4.1.1 DEMOGRAPHICS OF THE RESPONDENTS

This chapter starts with some interesting demographics of the respondents. First of all 103 surveys were filled out by males (47%) and 116 were filled out by females (53%). In addition, the average age of the 219 respondents is 38 years, with a minimum age of 16 and a maximum of 68. Figure 4.1 shows two graphs in which the respondents are categorized by age and household structure. The left graph shows that the research target group (parents with younger children) are sufficiently represented as the age categories 30-40 and 40-50 represent around 45% of the complete sample.

Figure 4.1 – Respondents Categorized on Age & Household Structure

single with children. Furthermore 32,4% of the respondents complete a study at higher vocational education, 37,4% a study at higher education and 16,0% completed a study at the university. In addition, 33% of the respondents earn a modal income (around 30.000 euro’s), 22,8% earn 1,5 the modal income (around 45.000 euro’s) and 14,2% earn a double modal income (around 60.000 euro’s). Now the most essential and interesting descriptive statistics are clarified the next section deals with determining whether the identified scores are significantly different from the average scale. This is done by analyzing the data with a one sample t-test, described in the following paragraph.

4.1.2 FAMILIARITY WITH RETAILER PREMIUM PROMOTION & SHOPPING BEHAVIOUR

First of all it is interesting to know how many respondents are actually familiar with the retailer premium promotion. From the entire sample of 219 respondents, 99,5% of them are familiar with this supermarket promotion. In addition, almost 85% of the respondents participated in such a retailer promotion. This is illustrated in figure 4.2 below.

Figure 4.2 – Percentage of Respondents who participated in a Retailer Premium Promotion