A study on the Impact of Promotion Ways on Brand Equity: A Survey from the Fast Moving Consumer Goods Industry of Shanghai, China


A study on the Impact of Promotion Ways on Brand Equity: A Survey from the Fast Moving Consumer Goods Industry of Shanghai, China

These are chapters 1 and 3 on the above topic.

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Chapter 1: Introduction

Research Background

In the contemporary business world, the issues of branding and brand equity cannot be ignored. Brand matters when it comes to doing business and especially so on a global scale. Amujo and Laninhun (2013) and Jack Rotfeld (2008) in their studies regarding concepts of brand further support this premise by noting the imperative nature of proper branding in driving an organisation. In addition, branding cuts across the entire realms of business and thus is not constrained to profit organisations or corporations. As such, branding emerges as a critical resource that can drive competition. Besides creating competition, as Nedergaard and Gyrd-Jones (2013) posit, sustainable competition can only be drawn from brand equity with the help of continuous innovation.

A glimpse of the Chinese market has shown a drastic change over time especially in regard to brand issues. Wang (2012) in his analysis of the trends of the Chinese consumer notes initially the shoppers were a lot more sophisticated. They hardly had any understandable trends until recently. Wang (2012) elaborates that customers in china have become more aware of brands – through being constantly being bombarded by new brands – and are more selective. Specifically, customers are after quality and value for money and they would stick to a brand that lets them show their status (taste) as opposed to before. The implication of these to businesses is that competition shifts towards having an edge in branding. A firm with better brand equity gets to net more form the market. This could also define survival or being phased out as firms compete for a customer base of over 400 million middle income earners and more upper class shoppers (Wang, 2012). This case can be extrapolated to the first moving consumer goods.

In a research done by Nyaga (2014) on FMCG in Kenya, he notes that promotion strategies are effective for creating awareness to customers especially in the facet of FMCG. According to a different study done by Buil, de Chernatony and Martínez (2013), they elaborate that both advertising and sales promotion have an impact on brand equity. Further, the distinctive elements of sales promotion including coupons, rebates, price discounts, and exhibitions et cetera directly affect dimensions of brand equity. These dimensions are noted by Lee and Leh (2011) as brand association, brand loyalty, brand awareness and perceived quality. On promotion mix, Trehan and Trehan (2011) identify the broad components as personal selling, advertising, sales promotion, publicity and direct marketing. These are what Buil, de Chernatony and Martínez (2013) maintain have an impact on brand dimensions. Nikabadi, Safui and Agheshlouei (2015) confirm these sentiments that promotion has a positive impact on brand equity. The emphasis in the studies by Nikabadi, Safui and Agheshlouei (2015) and Rahmani, Mojaveri and llahbakhsh (2012)  is on advertising and sales promotion as the main promotion tools.

Research rationale

In light of the background of the research, there emerges a need to establish a relationship between product promotion ways and brand equity for fast moving consumer goods in Shanghai, China. The first attribution of this is that there has been an intensification of competition on a global scale that necessitates companies to employ effective competitive mechanisms. Bala and Kumar (2011) for example note that for Unilever, an FMCG company, their products are consumed in over 150 countries for over 150 million times a day. With such established global players, competition only burgeons. Further, it is important that a firm uses sure ways of pushing the product to the market. As mentioned above, branding and brand equity are fundamental to the success of any firm and achieving the best in terms of brand needs to be the priority of a company. Researches on promotion and FMCG in different geographical locations such as the one by Nyaga (2014) and Rampier (2012) point out that promotion is effective in creating awareness of the brand to the customers. Product promotion thusly, citing its applicability as a brand enhancement tool, needs to be analysed as of its impact on the FMCG in the Chinese market, specifically the shanghai location. This dissertation thus serves to add to the existent body of knowledge as no study has previously investigated the impact of promotional ways on FMCG in the Shanghai market.

Research aims and objectives

Several studies have focused on different dimensions on FMCG with reference to brand issues and sales promotion techniques. These include Nyaga (2014), Rampier (2012) and Sindhu (2011). All these studies note the imperative nature of branding and promotion on general performance. Thusly this study, drawing form this positions, aims to study the impact of promotion ways on brand equity in the fast moving consumer goods industry of Shanghai, China. The specific objective intended are:

  • To figure out the dimensions of promotion ways;
  • To figure out the dimensions of brand equity;
  • To investigate into the impact of different promotion ways on brand equity in the FMCG industry of Shanghai, China;
  • To investigate into the impact of different promotion ways on the different dimensions of brand equity in the FMCG industry of Shanghai, China;
  • To put forward suggestions on how enterprises can improve their brand equity through different promotion ways.

Research outline

To properly address the above aim and objectives, the researcher has divided the study into five chapters. Chapters one offers the background, rationale and lists aims and objectives. Chapter two focuses on a review of extant literature relevant to the study. Chapter three elaborates on the methodology. Chapter four consists of findings and analysis and the last chapter offers the conclusion and recommendations.

Chapter 3: Methodology

Research paradigm

In research, the commonly applied research philosophies are interpretivism and positivism. This is according to Saunders, Lewis and Thornhill (2009). Each of the approaches presents a unique perspective to the entire research and thus each is applicable depending on the outlook of the research. The interpretivism view as elaborated by Saunders, Lewis and Thornhill, (2009) maintains that the business world is complex and changes often and this eliminates the need for rules since within a short time these rules and laws become irrelevant. In this view, the subjective outlook as created by people is applied. On the other hand, the positivist view is that rules and laws can be created for business matters just like in scientific experiments. Therefore, through experimentation of social reality, it is possible to generate trends and form them into rules or generalizations.

In view of the above explanations, this research applies a positivist stance. The appropriateness of this philosophy for this research is that it is possible to ascertain the existence of a relationship between promotion ways and brand equity with the aid of statistical analysis. In addition, the nature of this research will involve collection of primary data and as such the responses on the effectiveness of promotion ways on brand equity are expected to be different and divergent due to respondent differences. Thus it can be hard to establish a general relationship between these variable under interpretivist approach. However with positivism, secondary data from extant literature can be used to test these variables objectively and thus arriving and comprehensive analyses. The study will also apply documentary analysis to create a theoretical base, use questionnaire survey for collection of data and apply statistical tools such as Statistical Packages for Social Sciences (SPSS) and MS excel to process and analyse data.

Questionnaire Survey

Reason for selecting the questionnaire survey

This study uses a questionnaire survey approach, a part of the survey methodologies. Saunders, Lewis and Thornhill (2009) although faulting survey questionnaires for non-specificity, praise it for ability to cover large populations efficiently. Additional advantages of survey questionnaire, as observed by Punch (2013), include that questionnaire survey is time-saving, fund-saving and energy-saving. Additionally, the results of questionnaire survey can be easily quantified and statistically processed and analyzed. Lastly, questionnaire survey can be conducted in large scale. Babbie (2013) cites that questionnaires have economy in terms of time and finances and they also lack bias which is often found in techniques such as interviews. Since the researcher focused on minimising costs and time, questionnaires proved more efficient than other methods.

Taylor (2005) notes a study the yields quantitative data usually involves measurable characteristics. In addition, he points out that the nature of demographic or data collected from interviews is qualitative. In view of this sentiments therefore and contrasting them to the objectives of this study, primarily the research shall produce quantitative data. However, the researcher intends to support the positions in quantitative data with qualitative data. Taylor (2005) further identifies the use of questionnaires as appropriate for quantitative data.

Scale design

Scale design for price promotion

Price promotion according to Aydinli, Bertini and Lambrecht (2014) consists of a range of price incentives that are supposed to lure customers to purchase products they would otherwise not purchase. Price promotion includes financial incentives such as cash off, discounts and coupons (Yeshin, 2006: Ang, 2014). Thus from the discussed price promotion activities, the researcher adopted the following scale.

Table 3.1. Measure Scale of Price Promotion

No.Item Description
Cash Discount
1The discount promotion of the brand usually kicks off.
2The discount of the brand is relatively steep.
3The frequency for the discount promotion of the brand is too high.
Sales Promotion such as coupons and rebates
4Bargain goods of the brand are usually offered.
5The price of the bargain goods of the brand is attractive to me.
Measure Scale of Price Promotion

Scale Design of Non-price Promotion

Non-price promotion is promotion activities which are not price oriented. The major ways for non-price promotions include free gift, free trial, lucky draw, point-of-purchase display, etc. (Krafft and Mantrala, 2010). Considering the characteristics of non-price promotion activities in the FMCG industry, the following measure scale is designed.

Table 3.2 Measure Scale of Non-price Promotion

No.Item Description
Free Gift
1Gift promotion activities of the brand are usually carried out.
2I love the gifts offered in the promotion activities of the brand.
3The quality of the gifts offered in the promotion activities of the brand is relatively good.
Free Trial
4Free trial activities of the brand are usually carried out.
5I am willing to take part in the free trial activities of the brand.
Lucky Draw
6Luck draw activities of the brand are usually carried out.
7The luck draw activities of the brand are attractive to me.
Point-of-purchase Display
8The display position of goods of the brand can be easily found.
9The display of goods of the brand is orderly and pleasant.
Measure Scale of Non-price Promotion

Scale Design of Brand Equity

Considering the characteristics of non-price promotion activities in the FMCG industry, the author plans to take reference from the measure scale of Yoo, Donthu & Lee (2000) to describe brand awareness, brand loyalty, brand association, brand perceived quality. As a result, the measure scales of these variables are as set in the following tables.

Table 3.3 Measure Scale of Brand Awareness

No.Item Description
1When talking about a specific category of products, I would first think of the brand.
2The brand is with good reputation among like products.
3The products of the brand are well-known.
Measure Scale of Brand Awareness

Table 3.4 Measure Scale of Brand Perceived Quality

No.Item Description
1The products of the brand make me feel safe.
2The products of the brand are with high quality.
3The quality of the products of the brand is reliable.
Measure Scale of Brand Perceived Quality

Table 3.5 Measure Scale of Brand Association

No.Item Description
1When talking about the brand, I instantly associate it with excellent quality.
2When talking about the brand, I instantly associate it with reliable brands.
3When talking about the brand, I instantly associate it with excellent service.
Measure Scale of Brand Association

Table 3.6 Measure Scale of Brand Loyalty

No.Item Description
1I have always liked the products of the brand.
2The brand is my priority when purchasing like products.
3I am willing to repurchase the products of the brand.
Measure Scale of Brand Loyalty

Table 3.7 Measure Scale of Brand Equity

No.Item Description
1Even if the products of the brand are a little more expensive than like products, I would still buy the products of the brand.
2In like products, I feel that the products of the brand are more valuable.
3When products of other brands are similar with the products of this brand, I prefer to this brand.
Measure Scale of Brand Equity

Questionnaire design

As can be seen, the final version of the questionnaire is presented in the Appendix. The questionnaire contains four sections. In the first section, respondents are required to select their most-recently used brand of FMCG and they can refer to the table in which brands that can be commonly accessed are presented. The second and third sections are the main body of the questionnaire. In these two sections, respondents are asked about their understanding about the ways of promotion and the brand equity of the brand they select. All the questions in these two sections employ five-point Likert-type scale. 1 means disagree, 2 means tend to disagree, 3 mains not sure, 4 means tend to agree, and 5 means agree. The fourth section is about the survey of the demographic information of respondents from the following aspects: gender, age, educational level and monthly disposable income.

Sampling, Data collection and analysis

This research targets at ordinary consumers in Shanghai, China. Nearly nobody can live without FMCG. Therefore, all the ordinary consumers in Shanghai, China can be targeted at. But considering the time and energy constraints, it is impossible to survey every qualified sample. Hence, the author plans to apply non-probability sampling. Among the various methods of non-probability sampling convenience sampling is used. In convenience sampling, according to Saunders, Lewis and Thornhill (2009), the study sample is selected based on the ease of access and availability of the members of the population. As a result, the major business circles in Shanghai, China would be selected as the positions for survey. But since the author is not in the domestic China, the author plans to distribute these questionnaires with the help of the friends in Shanghai.

As to the quantity of questionnaires to be sent out, the author plans to send out 100 copies. As believed by Fabrigar (2013), the number of valid questionnaires sent out should be about three to five times of the total number of the questions asked in the survey. Altogether there are 29 questions involved in the questionnaires (see Appendix). As a result, 87 to 145 copies of questionnaire should be sent out. Considering the return rate and the valid rate, to send out 100 copies is suitable. However, the sample may not be statistically significant in consideration to the population but the researcher was limited by financial and time constraints. The study area would include major business circles, such as Xujiahui area and Lujiazui area.

According to Saunders et al (2009), statistical analysis on data collected from a population is essential to establish trends, differences and similarities between pieces of data. In this case for example, SPSS and MS excel are used to analyse the data statistically. Correlation analysis is used to establish the strength of relationships between variables. Since the research also intends to ascertain causal relationship, tables and charts as obtained from excel are used to achieve this.

Ethical issues

The ethical issues involved in this research are as followings. First one is voluntariness. Since a large proportion of the survey of this research is conducted on the streets of Shanghai, China, before the survey, the surveyors should make sure that the respondents are willing to accept the survey. No survey would be carried out without the permission of the respondents. Second one is privacy. The author should bear in mind in the process of questionnaire design that no questions relating to the private situation of respondents are asked. Third, no survey would be carried out when respondents are in embarrassment or not at ease. Fourth one is data safekeeping. All data and information should be well stored and should not be disclosed to a third party without the permission of the respondents.


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