CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

Nigerian telecommunication industry has evolved into a competitive sphere as operators endeavour to entreat and win customers through various sales promotion strategies. Owing to this, it is a common phenomenon for organisations to bombard consumers with both monetary and non-monetary forms of sales promotions using either print, electronic, outdoor or digital interactive media. Telecommunication operators use sales promotion to create brand awareness, encourage brand trial and ultimately persuade consumers to be brand loyals with the ultimate desire to increase or maintain market share. In the world today, every single decision and effort of the organisation is evaluated by the relationship existing between the brand and the customers as well as brand managers commitment to the claims made by the brand, which leads to consumers’ satisfaction and ultimately end with brand loyalty. Companies deploy their strength to promote sales in the shortest possible time; hence, sales promotion, a marketing communication tool involves the manufacturers providing incentives alongside their products which gives the consumers enough justification to purchase the product, service or idea.

Going by World Bank record (2012), Nigeria with a population of well over 168.8 million has 65.8% (149,818,906) active subscribers of licenced telecommunication operators. According to Nigerian Communications Commission (NCC, 2016), “Nigerian telecommunication industry is one of the largest in Africa with 151,017,244 GSM users and is still growing with one of the highest fixed line revenue and cumulative revenue of US$16billion as at June, 2016” (p. 2). The major telecommunication operators in Nigeria are MTN, Globacom (Glo), Airtel, Etisalat and they engage in fierce competition through price slash, and data bundles tailored to meet the data needs of various groups of subscribers in order to gain and retain customers as well as increase their profit margin to broaden their market share.

Research has shown that MTN has the highest percentage of GSM subscribers in Nigeria with a market size above 58 million (58,409,767) subscribers making up about 39%. Glo on the other hand has more than 36 million (36,320,572) subscribers’ representing about 24% of the total market share; Airtel has the third position with a growing percentage numbering above 31 million (31,978,848) constituting 21% of the total market share, lastly, Etisalat has more than 22 million (22,469,896) subscribers, constituting 15% of the total market share of telecommunication operators in Nigeria (NCC, 2016; Oyeniyi, 2011; Samuel & Olatokun, 2014). At the inception of the operation of these telecommunication operators which represent the product category introductory stage, a single mobile line was sold for as much as forty thousand naira (N40, 000, equivalent to $108); however, with a strategy called ‘price war’ which entails reduction of tariff, a sim card sells for a maximum of N 100, while some offer it free to subscribers (Oyeniyi, 2011).

Oyeniyi (2011) explains that the Nigerian telecommunication industry is gradually making entrance into its maturity phase, characterised with reducing average profit and faced with fierce competition. With the influx of mobile phones and stiff competition in the telecommunication industry, operators are left with no other choice than to increase their brand value so that subscribers can patronise them. It has become rampant to see telecommunication operators respond to competitors’ marketing activities by adding more to what the initiator of the campaign is offering. For instance, Etisalat Nigeria started with incentivising subscribers to purchase a recharge voucher of N200 and get extra 15mb; other operators have responded by giving not just the voucher value and the megabyte for browsing, they have bonuses, which range from 15% to 100%.

The telecommunication landscape is highly competitive as operators endeavour to neutralise competitors’ offering by suggesting higher value at reduced cost to the clients under the most enabling environment. The purpose of sales promotion is to persuade participants in the purchase process such as vendors, salespeople and final consumers to key into these manufacturers’ corporate strategies through short-term inducements. Telecommunication operators utilise Internet and non-Internet based platforms to disseminate promotional messages to real or prospective subscribers; the non-Internet interactive based platforms include Short Message Service (SMS) while the Internet-based ones include Facebook, Twitter, Instagram and others. England and Finney (2011) define interactive media as:

The integration of digital media including combinations of electronic text, graphics, moving images, and sound, into a structured digital computerized environment that allows people to interact with the data for appropriate purposes. The digital environment can include the Internet, telecoms and interactive digital television (p. 3).

This suggests that telecommunication operators in their bid to disseminate their promotional messages of either airtime, data subscription or other services have categorised their customers by their mobile devices. A category of subscribers use feature phones which perform key functions of calling and returning calls as well as sending of SMS; therefore they do not need Internet access to receive promotional messages from telecommunication operators as their mobile device can function with the use of a registered SIM card. The other category of subscribers are described as smartphone users (Java, Android, Windows or IPhone) because they receive telecommunication operators’ promotional messages on some of the social media platforms such as Facebook. Generally, the essence of telecommunication operators’ sales promotion on the interactive media is to induce rapid sales by enhancing their product’s inherent value, which will in turn persuade consumers to purchase the product. Several objectives can drive a sales promotion activity such as increasing sales, introducing a new product, neutralising competitors’ marketing effort, breaking the seasonality of a product and others.

In line with the telecommunication operators’ utilisation of sales promotion for several functions, Yoo, Donthu and Lee (2000) assert that as long as the consumers are loyal to a brand, its equity will increase as brand equity is hinged on consumer’s attitude to a brand as against other brands in the same market category based on experience which is translated to consumers' loyalty and their willingness to pay higher price for the brand. Brand equity refers to the value of a brand as well as the position it occupies in consumer’s mental judgment. Brand equity can also be likened to a valuable source of competitive returns for companies and is measured as a precursor of market performance indices such as market share, profitability, price premium, extension capability and so on. Companies strive to create, maintain and increase brand equity by deploying optimally designed marketing mix strategies. Brand equity is measured in terms of brand awareness, perceived product quality, brand association and brand loyalty. According to Bumm and Gon Kim (2005), brand awareness means the ability of a consumer to recognise and recall a brand in different situations. Literature has shown that consumers’ purchase intention and decisions are largely dependent on the extent to which they are aware of the product (Gustafson & Chabot, 2007; Hosseini, Abolfazli & Rahimi, 2007; Lagazian, 2007; Macdonald & Sharp, 2000; Rundle & Bennet, 2001).

Telecommunication operators alternate between monetary and non-monetary promotion offer in order to persuade subscribers to patronise them. In the local scene, MTN at some point encouraged subscribers to recharge their mobile lines with a minimum of N 200 in order to win an airplane or to qualify for a trip to United Arab Emirate. All these are ways in which telecommunication operators encourage people to patronise them using various sales promotion typologies.

According to Animashaun (2013), the sales promotion typologies adopted by telecommunication operators are assumed to portend an influence on their brand’s equity. This is probably because consumers’ acceptance level of the sales promotion strategies utilised by telecommunication operators will determine consumers’ attitude and perception of the brands.  Owing to the development in the Information, Communication and Technology sector (ICT), there has been wide adoption of mobile technology by Nigerians both in the rural and urban areas (Samuel & Olatokun, 2014) which has led to the wide usage of the social media as well as Internet enabled devices, hence, telecommunication operators utilise the social media such as Facebook to disseminate promotional messages about their brands.

The major offerings of these telecommunication operators are airtime, data and other value added services, which facilitate rapid and easy communication. Telecommunication operators’ response to one another’s sales promotion activities allude to the competition and price war existing among them in Nigeria; as such, it is imperative to examine the role that interactive media’s sales promotion typologies play on telecommunication operators’ brand equity among state civil servants in  South-West Nigeria.

1.2       Statement of the Problem

Increasing brand equity in the presence of competing brands is the goal of many organisations. Brand owners striving to grow and expand their brands adopt two broad types of sales promotion typologies namely monetary and non-monetary with various techniques such as product sampling, coupons, premiums, price off, sweepstakes, rebates and discounts in order to accelerate the product sales and widen profit margin.

A growing concern among companies is the debate on the sales promotion typologies to be used in order to create brand awareness, ensure positive brand association, reinforce maximum product quality as well as sustain brand loyalty. In the face of growing competition, it will be essential to determine the right sales promotions typologies that will help build brand equity.

Several authorities (Bingqun, Kejia &Tingjui, 2016; Chandon, Wansink & Laurent, 2000; Keller, 2007; Luk & Yip, 2008; Yoo, Donthu & Lee, 2000) in the field of brand equity have debated the impact of monetary and non-monetary typologies of sales promotion on brand equity; while Fogel & Thornton, (2008) and Luk & Yip (2008) argue that monetary sales promotions portend a negative impact on brand equity because repeated occurrence of a brand’s promotional effort could connote quality and value reduction to the consumers, other scholars (Chandon, Wansink & Laurent, 2000; Keller, 2007) provide empirical justification to back up the claim that non-monetary sales promotion positively influences brand equity. This divide shows that though sales promotion may help to build brand awareness by creating recognition and recall, the nature and quality of the typologies adopted is of essence to be identified by this study with the potential of creating brand association, boost perceived brand quality and ultimately brand loyalty among telecommunication operators. 

While telecommunication operators are building a strong brand that will help to reinforce their brands’ equity, the typology to be used is a crucial factor that should be considered critically; some years back, a telecommunication operator in Nigeria asked subscribers to recharge their mobile lines to win an airplane and this generated public criticism as it was believed that the promotional technique was not realistic. In addition, telecommunication operators’ utilisation of SMS and Facebook for disseminating promotional messages in recent time has generated reactions from subscribers, hence NCC’s move to mandate all GSM service providers to generate a code (2442, “Don’t Disturb Me”) which exempts subscribers from receiving bulk SMS from telecommunication operators; with this code, telecommunication operators are faced with the challenge of disseminating promotional messages to subscribers.

State civil servants form a major backbone of the economy in the South-West Nigeria; without them many businesses will be negatively impacted; this is exemplified in the recent inability of many South-West states to pay civil servants’ salaries regularly and the spillover negative effect on the demand for goods and services. Therefore, it is important for telecommunication operators to consider civil servants as they make up an important market segment that cannot be overlooked in South-West Nigeria. Hence, this study examined the influence of interactive media sales promotion typologies on telecommunication operators’ brand equity among state civil servants in South-West region of Nigeria.

1.3       Objective of the Study

The main objective of this study is to ascertain the influence of interactive media sales promotion typologies on telecommunication operators’ brand equity among state civil servants in South-West, Nigeria. The specific objectives were to:

1. explore consumers’ level of awareness of monetary sales promotion typology used by telecommunication operators on interactive media;
2. find out consumers’ level of awareness of non-monetary sales promotion typology used by telecommunication operators on interactive media;
3. investigate consumers’ level of brand awareness of telecommunication operators on interactive media;
4. ascertain consumers’ level of perceived brand quality of telecommunication operators on interactive media;
5. determine consumers’ level of brand association of telecommunication operators on interactive media and
6. examine consumers’ level of brand loyalty to telecommunication operators on interactive media

1.4        Research Questions

To add to the ongoing debate on the extent to which sales promotion typologies affect telecommunication operators’ brand equity, the following questions were addressed in the course of this study:

1. What are consumers’ level of awareness of monetary sales promotion typology used by telecommunication operators on interactive media?
2. What are consumers’ level of awareness of non-monetary sales promotion typology used by telecommunication operators on interactive media?
3. What is the level of consumers’ brand awareness of telecommunication operators on interactive media?
4. What is the level of consumers’ perceived brand quality of telecommunication operators on interactive media?
5. What are consumers’ level of brand association of telecommunication operators on interactive media?
6. What are consumers’ level of brand loyalty to telecommunication operators on interactive media?

1.5                 Hypotheses

The hypotheses were tested at 0.05 level of significance.

Ho1        Monetary sales promotion typology significantly influences brand awareness of telecommunication operators on interactive media.

Ho2        Monetary sales promotion typology significantly influences perceived brand quality of telecommunication operators on interactive media.

Ho3      Monetary sales promotion typology significantly influences brand association of telecommunication operators on interactive media.

Ho4        Monetary sales promotion typology significantly influences brand loyalty of telecommunication operators on interactive media.

Ho5        Non-monetary sales promotion typology significantly influences brand awareness of telecommunication operators on interactive media.

Ho6        Non-monetary sales promotion typology significantly influences perceived brand quality of telecommunication operators on interactive media.

Ho7        Non-monetary sales promotion typology significantly influences brand association of telecommunication operators on interactive media.

Ho8      Non-monetary sales promotion typology significantly influences brand loyalty of telecommunication operators on interactive media.

Ho9        Telecommunication operators’ interactive media sales promotion typologies significantly influence brand equity.

1.6        Significance of the Study

Organisations are concerned about the perception that consumers hold about their products, services and ideas, hence their integration of marketing communication tools to influence consumers’ attitude to their brands and increase sales and patronage; the short-term tools used to ensure these objectives widely used by telecommunication service providers are sales promotion typologies. This study presented subscribers’ perception of monetary and non-monetary sales promotion typologies and the factors that influence such attitude. Among the major stakeholders that this work was of value to are the brand managers who are saddled with the responsibility of building favourable brand image in an highly competitive market as well as managing brand reputation. Through this study, stakeholders were exposed to the implication of each typology of sales promotion that may enhance a brand’s equity in the minds of the customers. A glance through the social media especially Facebook showed subscribers’ opinions about sales promotion activities done by telecommunication operators as well as the services being provided by these operators thus, findings from this study may help telecommunication service providers understand the sales promotion strategies that subscribers find more appealing as well as subscribers’ brand association with these operators.

It may redirect their focus to see the need to proactively react to consumers’ growing concern in order to ascertain the brand equity of their services. It wass expected that this study would be of assistance to the telecommunication operators in helping to identify best ways of positioning their sales promotion activities as well as the right sales promotion typologies to use in order to get the attention of the middle class and persuade them to patronise their brands. Also, the researcher hopes that the outcome of this study would add to the existing debate on the association existing between sales promotion and brand equity. As such, researchers would be provided with empirical literature and data that will assist future studies in this field.

1.7        Scope of the Study

This study examined the influence of interactive media sales promotion typologies on telecommunication operators’ brand equity among state civil servants in Lagos and Ogun state, Nigeria.  The motive behind the respondents selected was the assumption that the larger the middle class, the larger the country’s Gross Domestic Product (GDP), and for a manufacturer, the middle class employees are considered as important members in the product purchase cycle because of their purchase power as they constitute the largest share of buyers. Individuals who subscribe to either MTN, Globacom, Airtel or Etisalat were considered in this study from September 2016 to January 2017. Furthermore, this study focused solely on sales promotion programmes, activities and messages on interactive media used by telecommunication services specifically SMS and Facebook and not any other media because telecommunication service providers employ SMS to disseminate information about their sales promotion activities; Jobber (2007) asserts that in reaching out to customers, Short Messaging Services (SMS) is most effective buzz-phrase for Business to-Consumer (B2C) markets (p. 743). It is believed that more than 50% of the respondents are likely to be exposed to interactive media sales promotion messages; this is because SMS as an interactive medium does not require Internet access, which is balanced by Facebook which requires Internet access. This suggests that subscribers are likely to be exposed to sales promotion messages on SMS (non-Internet based) or Facebook (Internet based). The choice of telecommunication service providers was dictated that by the increasing competition experience in the industry through regulation of NCC.

1.8         Operational Definition of Terms

The following concepts have other meanings in different contexts. Nonetheless, this study will use them based on the meanings provided:

Sales Promotion: This refers to telecommunication operators’ short-term initiative to give subscribers extra value more than what they are paying for. For instance, ‘Load  N200 and 50mb free’, ‘Buy new sim and browse free for the first month’, ‘Load N2000 and get 3.5gb extra’, ‘send in a code to ***** to activate caller tune free for two months’. All these refers to telecommunication operators sales promotion activities.

Sales Promotion Typologies: This means any telecommunication operator’s monetary or non-monetary value intended to increase sales of airtime or data being offered to the subscribers. The monetary sales promotion typology involves financial reward such as free airtime or opportunity to get real money back after a purchase or series of purchase is made while the non-monetary sales promotion typology entails non-financial reward or gifts given to subscribers to make them patronise the brand more or to appreciate it for earlier patronage.

Non-monetary Sales Promotion Typology: This refers to promotional offers used by telecommunication operators to induce subscribers to patronise them by adding to the product; for example, buy Etisalat airtime worth N200 and you will be given 200MB of data alongside the airtime purchased. This study used sweepstakes, Buy one, get one free’, premium and company gifts (free gifts) as non-monetary sales promotion typology utilised by telecommunication operators.

Monetary Sales Promotion Typology: They are promotions that provide financial benefit to consumers in order to increase patronage. This study identifies discount, coupon and bonus as monetary sales promotion typology used by telecommunication operators.

Interactive media: This refers to platforms where subscribers receive, send or access telecommunication operators’ promotional messages. For the purpose of this study, SMS and Facebook will represent interactive media.

Influence: In this study, influence was determined by a change in consumer’s awareness of the telecommunication services, association with the services, quality of product and ultimately their loyalty to a specific telecommunication service provider based on the sales promotion typology they have been exposed to.

Brand Equity: refers to subscribers’ familiarity with and perception of the telecommunication service providers as well as their products and services.  This will be measured by subscribers’ brand awareness, brand association, perceived brand quality and ultimately brand loyalty to telecommunication operators.

Brand Awareness:  refers to subscribers’ ability to identify and differentiate between a telecommunication service provider and the others. For example, if a subscriber is able to tell the MTN’s jingle, slogan of Globacom, Etisalat’s colour and Airtel’s sales promotion, then it is safe to say there is brand awareness. This will be measured in terms of brand recognition and recall.

Brand Association: In this study, brand association connotes subscribers’ perception of a brand’s attribute and benefit which will determine their attitude to the brand that is communicated in terms of positive, negative, or indifference to the brand. In this case, brand association can be likened to subscribers’ disposition to telecommunication service providers, which is based on their experience, observation or experience of others. Example is Airtel’s data bundle is the best because I receive bonus after every subscription; here, subscribers’ attitude to Airtel as a brand is positive.

Brand Perceived Quality: This refers to the value that consumers attach to a brand based on their association with the brand. In this, a brand’s perceived quality is determined by subscribers’ experience with telecommunication operators’ services. For instance, call quality, SMS, data bundles, Internet signal strength and other value-added services; all these will determine the value that subscribers attach to telecommunication operators’ brands. 

Brand Loyalty: This refers to subscribers’ allegiance to patronise a specific telecommunication service provider regardless of the value or benefit that other service providers are offering. If a subscriber patronised only MTN by buying its airtime and subscribing to its data package even when other operators are offering greater value at a reduced price, such a person is a brand loyal.

Telecommunication Operators: These are communication service providers licenced by Nigerian Communications Commission (NCC) to provide telecommunication access to data services and telephony for subscribers in Nigeria. Primarily, this study focuses on MTN, Airtel, Globacom and Etisalat.

Subscribers: Subscribers are individuals who utilise any of the telecommunication services provided by any or all of the licenced GSM operators in Nigeria listed in this study, such as MTN, Airtel, Etisalat and Globacom.  Usually, a subscriber may use more than one of the mobile lines for specific functions.