Customer satisfaction of priced-based sales promotion techniques: a Central Asian perspective

1. Introduction

Customer satisfaction is seen as a key differentiator of product/service quality, or value offerings (Thaler 1985) and is known to the key driver of good customer-brand relationship. Despite the volume of literatures on customer satisfaction and sales promotion techniques, few studies have been initiated within the central Asian perspective. This study addresses this void by investigating customer satisfaction of price-based sales promotion techniques in Kazakhstan. Three hypotheses are proposed and tested in this study. Results from 187 surveys (questionnaire) in this study revealed that there were higher levels of customer satisfaction with percentage discount and membership discount than rebates and coupons discount for specific product in Kazakhstan. Women are more satisfied with membership discount than men while the later are more satisfied with percentage discount for specific product. Implications for businesses are presented.

2. Literature review

Sales promotions can be considered as ‘special offers’ to stimulate demand during the period in which they are set (Lehman & Winer 2002). Sales promotions can be priced-based (dollar discount, percentage discount, refund/rebate, coupon) or non-priced based (buy two get one free, special orders, free gifts). The potential benefits of using sales promotion can range from attracting new customers from competitors, to persuading customers to switch to brands with higher profit margins or simply inducing existing customers to purchase more. Customer satisfaction refers to an individual’s perception of the performance of the purchased product/service in relation to his/her expectation (Kotler & Philips 2010). If a product or service performance met users’ expectation, then there is customer satisfaction. Satisfaction with a promotion can not only be linked to repurchase, but may in fact be able to be linked to a transfer of satisfaction to the brand or company offering the promotion (Tat & Schwepker 1998). When consumers are satisfied, this generates positive word of mouth and purchase recommendations (Wirtz & Chew 2002) and thus the sales promotion achieves its target by directly impacting consumer purchases (Alavarez & Casielles 2004).

From a sales promotion perspective, the transaction utility theory Thaler (1985) tells us that consumers will make overall satisfaction or dissatisfaction judgments about a price-based promotion after the purchase experience, driving their intention to repeat/ discontinue the process in the future. Overall judgments about price promotion are formed through consideration of the acquisition utility of the deal (satisfaction or dissatisfaction with the intrinsic utility of the item purchased less its price) and transaction utility. Customer satisfaction with particular sales promotions may be moderated by factors such as price sensitivity and perceived value (Rajagopal 2007), driven by the purchasing power (income) of the consumer. This suggests that higher priced items are capable of achieving greater levels of satisfaction with the promotional deal than lower value items purchases (Tat & Schwepker 1998). Thus,

H1: Satisfaction with price-based sales promotion techniques is likely to be greater when related to a high-value purchase than a low value purchase.

In addition, there are gender differences with respect to shopping habits. According to the Wharton Research (2007) conducted in the USA, women are happy to meander through sprawling clothing and accessory collections or detour through the shoe department while shopping is a mission for men and they are more likely to respond to more utilitarian aspects of the experience – availability of stocks and parking space (sale context). Similar research in the UK (Jenno 2007) suggest that men are being much happier to go for the kill, whereas women are still far more inclined to value shopping as a social and therapeutic activity. It suggests that men are easier to satisfy on acquisition utilities with specific products and that women are more prone to attraction from storewide discounts. Thus,

H2: Satisfaction with percentage discount on specific products is more likely to be greater when related to men than to women.

H3: Satisfaction with membership discount for storewide purchases is more likely to be greater when related to women than to men.

3. Methodology

3.1 Samples and measurement scales

Data are collected in two cites of Kazakhstan (Almaty and Asatana) using a multi-item questionnaire which required respondents to answer rating scaled questions in relation to their attitudes towards sales promotion techniques. Scale items were drawn from existing, pre-tested marketing scales relating to consumption satisfaction and sales promotion (Bearden & Netemeyer 1999). High value items are referred in this study as product costing more than USD350 (half of the average monthly salary in Kazakhstan). Respondents were drawn from a wide range of occupations and lifestyles. Overall 220 questionnaires were randomly collected and only 187 (Almaty n= 98, Astana n=89) were valid for further analysis because of incomplete fillings. Females constitute 57.7% of the valid data sample (n=108). About 20% of respondents identified themselves as office workers, 12% as management professionals, 16% as technical/engineering staff and 40% as university/college students.

3.2 Analysis

Analysis of data was completed using SPSS 17. Test of normality of data, homogeneity of variances and post-hoc test were conducted.

4. Findings

The descriptive statistics revealed that that percentage discount (mean: 5.89 out max 7) and membership discount (mean=5.54) are the top two highest scored variables (Table 1). Rebates (mean=1.75) and coupons discount (mean=1.27) for specific product generated the lowest scores for satisfaction. Gender has significant impact on customer satisfaction with priced-based sale promotion techniques (Wilks’ lambda=0.977, F=3.100, p=0.047) in Kazakhstan. The Tests of between-subject effects revealed that the ‘membership discount’ recorded significant value (F=6.223, p=0.013), with female scoring higher (mean=6.31) than male (mean=5.22) while men scoring higher (mean= 6.24) than female (mean=4.80) on ‘percentage discount on specific product’. Thus, the following hypotheses were supported at the 5% significant level:

H2: Satisfaction with a percentage discount on specific products are more likely to be greater when related to men than to women.

H3: Satisfaction with a membership discount for storewide purchases are more likely to be greater when related to women than to men.

However, there was no evidence to support H1: Satisfaction with price-based sales promotion techniques are likely to be greater when related to a high-value purchase than a low value purchase (Wilks’ lambda=0.837, F=.081, p=0.965). This implies that the values of purchases (high or low tickets items) have limited impact on the level of satisfaction on priced-based sales promotion techniques.

Table 1: Satisfaction scores for price-based sales promotion techniques

5. Conclusion and limitations of research

This study revealed that customers are most satisfied with percentage discount of specific product and membership discount for future (storewide) purchases. Coupons for specific product discount generated the less satisfaction. Women are more satisfied than men with membership discount (for future purchases) while men are more satisfied than women with percentage discount for specific product. There is no evidence to suggest that low or high values purchases (>USD350) have on an impact on customer satisfaction with price-based sales promotion techniques. The limitations of this study are, first, the questionnaire survey is dependent on the respondent’s own account of their behavior, attitude or perception. Second, the low samples in this survey may be misrepresentative of the whole Kazakhstan population. Also, variation among the population at the level of interest in the research topic can result in a biased, unrepresentative response.

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