Sales promotion effectiveness: the impact of consumer differences at an ethnic‐group level
| DOI | https://doi.org/10.1108/10610420510601049 |
| Published date | 01 May 2005 |
| Date | 01 May 2005 |
| Pages | 170-186 |
| Author | Simon Kwok,Mark Uncles |
| Subject Matter | Marketing |
Sales promotion effectiveness: the impact of
consumer differences at an ethnic-group level
Simon Kwok and Mark Uncles
School of Marketing, University of New South Wales (UNSW), Sydney, Australia
Abstract
Purpose – Aims to examine the proposition that consumer sales promotions are more effective when they provide benefits that are congruent with
those of the promoted product. This proposition is considered at the ethnic-group level (i.e. do differences in cultural values at this level have an impact
on sales promotion effectiveness?).
Design/methodology/approach – A quasi-experimental design is used to test a series of hypotheses based on a sample of Anglo-Australians and
Chinese-Australians. The main experiment is informed by the results of two pretests.
Findings – First, there are significant differences in consumer cultural values at an ethnic-group level. Second, despite these differences, ethnicity does
not have a significant impact on responses to sales promotions. Third, the expected congruency effects between products and promotion types are not
found.
Research limitations/implications – Some of the detailed results match those reported in previous studies, but there are important differences too.
Practical implications – There is a need to be aware of differing cultural values at an ethnic-group level. Notwithstanding this inference, the second
finding suggests that there continues to be scope for using standardised strategies when promoting to different ethnic groups. Finally, considerable
caution should be exercised when planning promotion strategies around hoped-for congruency effects.
Originality/value – New light is cast on the relationship between consumer differences at an ethnic-group level and the effectiveness of various types
of sales promotion for utilitarian and hedonic products.
Keywords Consumers, Sales, Promotional methods, Ethnic groups, National cultures
Paper type Research paper
Introduction
The widespread use of consumer sales promotions in product
management has sparked considerable debate over their
effectiveness. Critics argue that sales promotions are
ineffective as they make consumers more promotion prone,
resulting in market share losses in the long run (Ehrenberg
et al., 1994; Totten and Block, 1987). However, other
researchers have shown that sales promotions lead to real
long-run increases in sales and profits (Dhar and Hoch, 1996;
Hoch et al., 1994). This discrepancy suggests there are other
factors at work; for instance, that sales promotions are more
effective when they provide benefits that are congruent with
those of the promoted product (Chandon et al., 2000). This
paper explores and extends the congruency framework by
considering the potential impact of differences in consumer
cultural values at an ethnic-group level.
In principle, culturaldifferences at national and ethnic-group
levels can impact many aspects of consumer behaviour, from
service expectations to consumer innovativeness (Steenkamp
et al., 1999; Bridges et al., 1996). An understanding of where
these differences do and do not have an impact can assist in
making marketing decisions, such as whether to pursue
standardised or localised branding, pricing, advertising and
promotion strategies (Fletcher and Brown, 1999).
Many of the published studies in consumer marketing have
only examined the impact of culture across nations, whereas
important differences may also exist at an ethnic-group level
– for instance among Caucasian-Americans, Hispanic-
Americans, North African-French, Italian-Australians, etc.
The importance of these differences is reflected in growing
interest in ethnic marketing by both researchers (e.g. Tan and
McCullough, 1985; Lee et al., 2002) and practitioners (e.g.
Rossman, 1994; AMA, 2003; Keefe, 2004). We contribute to
this body of work by focusing on culture at an ethnic-group
level and its impact on sales promotions.
Several important contributions to both marketing theory
and practice are made. First, aspects of work by Chandon et al.
(2000) are replicated to assess the generality of the
congruency framework of sales promotion effectiveness.
Second, the work of Chandon et al. (2000) is extended –
they attempted a cross-national comparison, but did not
explicitly look at the impact of culture. The study also
develops work by Lowe and Corkindale (1998) who examined
the impact of cultural values across a range of marketing
activities. Third, measures of culture at the ethnic-group level
provide evidence for the popular assumption that consumer
differences do indeed exist at this level. Fourth, the study
contributes to theory development by providing further
validation of a relatively new scale for measuring cultural
differences in a consumer context, namely the CVSCALE
(Yoo et al., 2001; Yoo and Donthu, 2002). Finally, the study
provides insights for product managers in the design of sales
promotion strategies. It addresses the issue of whether to
standardise or localise sales promotions between targeted
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Journal of Product & Brand Management
14/3 (2005) 170–186
qEmerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/10610420510601049]
170
ethnic markets. It also offers insights for managers into the
applicability (or otherwise) of the congruency framework for
sales promotion.
The paper is organised as follows. The next section provides
a review of the sales promotions literature and considers the
potential impact of ethnicity. Hypotheses are presented,
followed by a discussion of key measures and stimuli. Results
are described in subsequent sections. The study was
undertaken in Australia, where a diverse ethnic mix of
consumers exists and where packaged goods manufacturers
and retailers are making increasing use of sales promotions. A
discussion of the findings is presented. We conclude by
highlighting some limitations and by suggesting a few
opportunities for future research.
Sales promotion and the potential impact of
ethnicity
Types of sales promotion
Typically, past studies of the effectiveness of consumer sales
promotion have focused on monetary sales promotions (Dhar
and Hoch, 1996; Hoch et al., 1994). However, in practice, both
monetary and non-monetary sales promotions are used widely
(Tellis, 1998). There are important differences between these
two types: monetary promotions (e.g. shelf-price discounts,
coupons, rebates and price packs) tend to provide fairly
immediate rewards to the consumer and they are transactional
in character; non-monetary promotions (e.g. sweepstakes, free
gifts and loyalty programmes) tend to involve delayed rewards
and are more relationship-based. In assessing the effectiveness
of sales promotions it is necessary to examine both types.
Benefits of sales promotion
Sales promotions can offer many consumer benefits, the most
obvious being monetary savings, although consumers also
may be motivated by the desire for quality, convenience, value
expression, exploration and entertainment (Babin et al., 1994;
Hirschman and Holbrook, 1982). These benefits are further
classified as either utilitarian or hedonic (see Chandon et al.,
2000, Table I). Utilitarian benefits are primarily functional
and relatively tangible. They enable consumers to maximise
their shopping utility, efficiency and economy. In general, the
benefits of savings, quality and convenience can be classified
as utilitarian benefits. By contrast, hedonic benefits are more
experiential and relatively intangible, associated as they are
with intrinsic stimulation, fun and pleasure. Consistent with
this definition, the benefits of value expression, exploration
and entertainment can be classified as hedonic benefits.
Promotion types and promotion benefits
Basedonthedistinctionbetweenthetypesofsales
promotions and promotion benefits, Chandon et al. (2000)
showed that monetary promotions provide more utilitarian
benefits whilst non-monetary promotions provide more
hedonic benefits. These relationships are a matter of degree
rather than absolutes; for example, coupon promotions (i.e. a
monetary promotion) may still provide some hedonic benefits
such as the enjoyment in redemption, although its main
benefit of saving is utilitarian.
Congruency theory and sales promotion
The basic principle of congruency theory is that changes in
evaluation are always in the direction that increases congruity
with the existing frame of reference (Osgood and
Tannenbaum, 1955). In other words, people have a natural
preference for consistent information. The principle has been
examined in many marketing contexts, including studies of
brand extensions and advertising appeals. Applying the
congruity principle to sales promotions, it is expected that
sales promotions will be more effective when they provide
benefits that are compatible with the benefits sought from the
promoted product. For example, Dowling and Uncles (1997)
suggested the effectiveness of loyalty programmes is enhanced
if programme benefits directly support the value proposition
of the brand. Roehm et al. (2002) went on to show that loyalty
programmes are indeed more successful if they provide
incentives that are compatible with the brand.
Congruency effects for consumer sales promotions were
directly tested and confirmed by Chandon et al. (2000), who
showed that: monetary promotions are more effective for
utilitarian products as they provide more utilitarian benefits,
which are compatible to those sought from utilitarian
products; and non-monetary promotions are more effective
for hedonic products as they provide more hedonic benefits,
which are compatible to those sought from hedonic products.
For example, price cuts are more effective than free gifts for
influencing brand choice of laundry detergent (i.e. a
utilitarian product), whereas sweepstakes are more effective
than price cuts for influencing brand choice of chocolates (i.e.
a hedonic product). However, it is noted that there are other
factors that may have an impact on the congr uency effects,
including the product life cycle, purchases situations and
consumer demographics. Another possible factor, and the
focus of this study, is culture at the ethnic-group level.
Culture, sub-culture and ethnic groups
Culture is complex and difficult to define, but typically it is
seen as a set of norms and beliefs that are shared among a
group of people and that providethe guiding principles of their
lives (Goodenough, 1971; Kroeber and Kluckholn, 1952;
Schwartz and Bilsky, 1987, 1990). The focusin this study is on
one particular aspect of culture: the way of life of people
grouped by ethnicity, including shared norms and beliefs. For
members of the ethnic group these shared norms and beliefs
represent a prevailing way of life in a society, which will
ultimately have an impact on their dispositions andbehaviours,
including their behaviour as consumers (Triandis, 1989).
The definition here is flexible in allowing cultural
differences to be evident at various levels (consistent with
conceptualisations by Dawar and Parker (1994) and Hofstede
(1991)). The notion of “society” within the definition means
culture is not necessarily restricted to a country basis, but
instead it can exist at the sub-national level (e.g. ethnic-
Chinese in Malaysia) or at a cross-country level (e.g. ethnic-
Chinese throughout SE Asia). It has been suggested that
equating culture with nation-states is often inappropriate
because of very strong ethnic differences within countries
(Lenartowicz and Roth, 1999; Usunier, 2000). In fact, intra-
country variations of culture can be as large as the variation
across countries (Au, 1999). This is important given the intra-
country focus of this study.
Here culture is examined at the ethnic-group level within
the domestic Australian context. Ethnic groups can be
considered as cultures or sub-cultures within a country. They
preserve the main characteristics of the national culture from
which they originate but also develop their own unique norms
Sales promotion effectiveness: the impact of consumer differences
Simon Kwok and Mark Uncles
Journal of Product & Brand Management
Volume 14 · Number 3 · 2005 · 170– 186
171
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