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Effectiveness of Sales Promotion of Pizza Restaurants

Know the Effectiveness of Sales Promotion of Pizza Restaurants by Experts

ABSTRACT

The extensive exercise of consumer sales promotions has ignited substantial interest and consent for the effectiveness of such promotional stunts. According to the arguments of some critics, sales promotion schemes are not useful as they infuse more sensitive in consumers for the promotions, which may result in declined market shares in the long run. On the other hand, other researchers opine that sales promotions direct towards real growth in sales and profits. This inconsistency suggests that there are circumstances and factors, which can manipulate the effectiveness of such sales promotions strategies. For example, it has been shown that sales promotions are more effectual especially when they offer benefits that are going well together with those of the promoted product.

Pizza pie has reached its current delicious state backed by an almost 3000 year’s history of food evolution. Now, one can have pizza in any corner of the world and need not to go all the way to U.S. or Italy for this delicious dish. India is a productive economy especially for international companies and their products. It is quite obvious looking towards the ever escalating growth of fast food particularly Indian pizza market whereas Pizza has confirmed to be a resilient market throughout the tenure of recession, as it has been an tolerant yet reasonable food backed by steady promotional support among the major food options.

Looking into the scenario of Pizza market, this strategy is most widely used to maintain the competitiveness in the market in the turmoil of recession. Pizza market is the growing and prospering market. Consumers belonging to different cultures will respond to the promotion schemes in diverse manner that is why different sale promotion strategies are used for different geographical markets. This dissertation attempts to spot the key similarities and disparities between the Indian and UK pizza market sales promotion strategies.

1: INTRODUCTION

Burton Anderson (1994) while writing the book "Treasures of the Italian Table" has found that in case the Naples would have managed to patent its pizza that might result in placing it among the wealthiest cities of Italy instead of one of the poorest. He was no doubt correct. Looking into the popularity statistics of this food, the suppositions may have lived up to the words of Burton Anderson.

We can find pizza in any corner of the world. The ingredients may differ from region to the region for example, in India, pizzas are topped with minced mutton, in Japan eel and squid are preferred, in Russia, it is red herring, in Costa Rica coconut, in Brazil green peas, in Australia shrimp etc (Harte, 2003). In UK food industry, Pizza is among the largest revenue generating fast food alternative.

The elastic UK pizza market has emerged again from the recession turmoil in good health. The total sales value of the market has risen by 22 percent between 2006 and 2011 and reached to an estimated £825 million revenue figure (Bainbridge, 2011). Where in Indian markets, just a decade ago, it has been very hard to envisage that the preferences of millions of Indians for a takeaway food may be a parched dish of Italian origin i.e. Pizza, now pizza is among the first choice food for individuals of all ages (Pizza market place, 2002).

In recent years, there has been growth for the industry in both the countries. While Indian market is new as compared to the UK market but it has been over a decade now when pizza giants like Domino’s and Pizza Hut entered in Indian market and they have gained a lot of experience and growth since then. On contrary to this, in UK there are number of customers for the industry and that’s why there are number of companies operating successfully over a period of time.

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Food marketing expenditures worldwide are dominated by the promotional expenditures, which are supported by advertising and shore up product popularity and sales (Belch and Belch, 2011 and Kolker, 2004). Shimp (1993) defines sales promotion as the activities of using any sort of incentives to induce the trade by the manufacturer. This action will lure the wholesalers and retailers and/or customers to purchase the product, whereas Schoell and Guiltinan (1995) have defined sales promotion as an activity offering incentives to encourage a desired response from the targeted audience. Sales promotion may be through discount in the price or by decreasing the price of any particular item or even adding more value to the particular item with intact price. Therefore Sales or price Promotion tend to consume the larger piece of the marketing pie for the fast food industry (Ailawadi et al., 2009).

The extensive exercise of consumer sales promotions has ignited substantial interest and consent for the effectiveness of such promotional stunts. According to the arguments of some critics, sales promotion schemes are not useful as they infuse more sensitive in consumers for the promotions, which may result in declined market shares in the long run (Totten and Block, 1987; Ehrenberg, Hammond and Goodhardt, 1994). On the other hand, other researchers opine that sales promotions direct towards real growth in sales and profits (Hoch, Dreze and Purk, 1994). This inconsistency suggests that there are circumstances and factors, which can manipulate the effectiveness of such sales promotions strategies. For example, it has been shown that sales promotions are more effectual especially when they offer benefits that are going well together with those of the promoted product itself (Chandon, Wansink and Laurent, 2000).

Behaviour or response of consumer towards the sales promotion schemes adopted by the business makes them effective or ineffective, where the culture has an impact on numerous aspects of consumer behaviour such as service expectations, consumer innovativeness etc (Kotler, 2004). It also has been recommended that an understanding of culture can help in taking much better marketing decisions, like decisions to pursue standardised or localised strategies, something which has been discussed in recent times in the context of retailing strategies (Mooij and Hofstede, 2002). It is very interesting to find out the effects of the sales promotion on the consumer behaviour because, considering the past studies and researches the effects or the pattern of effects have always been different for different industries.

Research Aims

This research paper aims to identify the differences in promotional strategies adopted by the pizza restaurants in India and UK. In the current dissertation, the motive is to evaluate the effectiveness of different sales promotion strategies on the consumer behaviour in different countries. The research will be carried out around the Pizza restaurant/takeaways in Indian and UK. Their sales promotion strategies will be analysed extensively and a comparative study will be done. It will assist in identifying the differences and similarities in the promotional activities of different Pizza restaurants in both the countries. Besides, it will enable us to spot the key factors determining the effectiveness of any promotional activity in the two countries.
The purpose was to get an idea about the effects of sales promotion schemes on pizza retail industry of both the countries (UK & India) and to find out the differences and similarities of these effects between them. As the sales promotion represents the industry’s largest share of marketing budget, most of the time during recent years, it was accounted with over double the expenditure relative to advertising in both the respective countries. Successful confirmation of any such information would have profound commercial implication for the Industry as a whole.

Research Questions

This dissertation would attempt to answer the following questions:

Research Objectives

This research is structured for attaining three research objectives. First objective is to have an insight of different promotion schemes used by Pizza retailers in different countries and their advantages. Secondly, the research objective is to explore the Pizza retail industry in India and UK. Last but certainly not the least third objective is to identifying differences and similarities in the responses of the consumers for these promotional schemes. Objective statements are as follows:

Research Methodology

It is basically an exploratory research, which aims to spot out different promotion strategies adopted by the Pizza restaurant or takeaways and measure the effectiveness of such campaigns. It is involves both qualitative and quantitative research approaches. Here in order to attain the research objectives, two sort of research method will be used such as primary research and the secondary data research. 
In the former, data will be collected an online survey questionnaires. This survey questionnaire will include both open and close ended question. Also to measure the effectiveness of different promotion strategies used by the Pizza restaurants, we will use a likert scale question. The population under study is the customers of Pizza restaurants or takeaways in two countries i.e. UK and India. 100 responses from each country will be collected by the survey and further these responses will be analyzed using different qualitative and quantitative research tools, including charts, graphs, and tables, excel formulae, SPSS software, cross tabulation etc. The sample will be a random sample. Questionnaire will be get filled through an online web portal. Under this the first 100 entries from each country will be taken for the analysis. This web portal will be published in conjunction with the already popular social web site in the particular country. 
The secondary data will be collected from the respective company sources and industry regulatory bodies of the particular country. An exploratory study method is applied for analyzing these secondary data. From the secondary data different promotional strategies used by different Pizza retailers in both the countries will be identified. Then, an analysis to carry out differences and similarities will be done. Finally, results of both the methods are combined to derive answers to the research questions.

Significance of Research

The research is important as not much work has been done in the given subject especially covering the two different economic zone countries i.e. India and UK. Also a difference between marketing strategy of the industry for different countries and consumer’s behaviour towards the offers, pricing, advertising has always supposed to be different just because of differences of cultures, traditions, habits, income etc. This study will spot out the factors, which may affect the promotional strategy and the expected changes in the mechanics of conducting business to gain profit and survive long in both the markets for the pizza retailers.

This dissertation will be fruitful not only to the scholars but also help the Pizza retailers framing their promotion strategy for different countries differently. It will be of much use for the academic as well as professional field. Since here, an analysis of the consumer response to the promotional activities by Pizza restaurants/takeaways will be done, it will offer theoretical base to the scholars for future research and practical directives to the managers and professionals of the Pizza retailers.

Research Obstacles

Every research work is confined by some obstacles. Here also, the research has to carry out the work under some limitations. These are as under:
Finding the right data sources: It is quite hard to confirm the authenticity of responses, especially in case of an online survey. Also it becomes hard to spot out the right data source among the large number of available sources. This all cause an obstacle to derive the research in the proper direction. 
Time constraint: Researchers are always time bound. As they have to carry out the study in the allotted time irrespective of the economic conditions or geographic constraints. It may result in some deviations in the results and the actual pertaining scenario.

Communication barriers: The results of this entire research will be based on the responses coming from different respondents belonging to different regions. As it is an online survey, respondent can be from London or Wales or in case of India it may belong to southern India or Northern India, and the psychological communication barriers may spoil the responses authenticity.

Structure of dissertation

This dissertation is segregated into six chapters to follow a proper research process. These are named as Introduction, Literature Review, Research Methodology, Findings and data analysis, Discussion and interpretation of findings and finally Conclusion, implications and recommendations.

Chapter one is of introductory chapter. This chapter acquaint the reader with the ground of the study. Here the research aims, objectives methods etc. are disclosed. Beginning of the chapter sketches the pertaining scenario of the Pizza restaurants in India and UK from the sales promotion view point. Later, the process of the research, its significance and importance along with the obstacles of the research are stated.

The second chapter deals with the literature review. This chapter provides details about the previous studies on the concerning topic. Also define the key terms and provide theories required for the completion of the study. This chapter is concluded giving ground to the research. 

Research tools and methods used for deriving the objectives of the study are defined here. Complete illustration of the process from data collection to the final data analysis and interpretation is described in this section. Techniques of sampling, sample size, data analysis tools are also given here. It continues with a description of the two research methods and justify the adoption of particular technique.

Data analysis and findings chapter is numbered four. Here at the initial stage, primary data collected from survey through questionnaire is discussed and analyzed. Also definition of variables used and the survey techniques is given in the early section of the chapter. In this analysis are done using charts and tables for each instance observed from the questionnaire. SPSS software is also used for constructing cross tabulation and analysis. Chapter is concluded with hypothesis testing and objective derivation.

In the fifth section of the dissertation a detailed discussion of findings is done. Through the discussion, research interpretations are done. These interpretations are further generalized so that results can be implemented for the universe at large. In the end, all findings of the study are summarized along with the limitations of the study. Finally giving ground to the further research opportunities, dissertation ends.

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REFERENCES

  • Ailawadi, K. and Harlam, B., 2009. Retailer Promotion Pass-Through: A Measure, Its Magnitude, and Its Determinants. Marketing Science. 28( 4). pp.782-791.
  • Ailawadi, K. et. all 2010. Empirical Models of Manufacturer-Retailer Interaction: A Review and Agenda for Future Research. Marketing Letters. 21(3). pp.273-285.
  • Ailawadi, K., Paul, F. and Mark, P., 2009. Explaining Variations in Advertising and Promotional Costs/Sales Ratio: A reanalysis. Journal of Marketing. Vol.61. pp. 93-96.
  • Anderson, B., 1994. The Treasures of Italian Tables. New York: William Marrow and company.
  • Babin, B. J., Darden, W. R. & Griffin, M., 1994. Work and/or fun: measuring hedonic and utilitarian shopping value. Journal of Consumer Research. Vol.20. pp. 644– 656.
  • Balasumbamanian S. and Kumar V., 1990. Analyzing Variations in Advertising and Promotional Expenditures: Key Correlates in Consumer, Industrial and Service Marketing. Journal of Marketing. Vol.54. pp. 57-68.
  • Balasumbamanian S. and Kumar V., 1997. Explaining Variations in Advertising and Promotional Costs/Sales Ratio: A reanalysis. Journal of Marketing. Vol.61. pp. 85-92.
  • Bariley, D. A., Morris, M. W. and Simonson, I. R., 2000. Reasons as Carriers of Culture: Dynamic versus Dispositional Models of Cultural Influence on Decision making. Journal of Consumer Response. Vol.27. pp.157-178.
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