The Impacts of Price Discounts on Consumers Buying Behavior: The Case of George Weston Foods, Australia
SECTION I
Introduction and Problem Statement
Shopping has turned into a social affair (van Rompay, Krooshoop, Verhoeven & Pruyn, 2012), where today’s consumers often expect a multi-tactile, intelligent, and all-encompassing shopping experience that engages, stimulates, influences and innovatively challenges them (Foster & McLelland, 2015). These conditions offer retailers the avenues to express their uniqueness and distinguish them from their competitors by planning retail environments that will create paramount customer experiences (Petermans, Janssen & Van Cleempoel, 2013). In the present dynamic business environment, it has turned out to be essential for retail managers to unmistakably comprehend and anticipate how different types of consumers act when purchasing distinctive products and services, in order to satisfy their wants and needs. Thus, in line with Shamsher’s (2015) thought-process, to attain a competitive advantage in the marketplace, numerous retailers have concentrated on creating ideal images about their brands and products in the minds of their consumers to impact their buying behaviour.
Understanding buying behaviour is not simple, since each consumer’s preference is dependent on numerous factors. For instance, consumer buying behaviour depends upon price, quality, and market condition, availability of substitutes, preference and income (Wee, Zakuan & Tajudin, 2014). Sometimes, consumers tend to invest less energy in pondering about either low-or high-value products or services, since they consider that satisfying their needs is more critical (Hanaysha, 2018). Thus, it is essential that each industry and every business conducts specific and periodic studies in relation to the sales promotion strategies. With a focus on George Weston Foods (GWF), the current study aims to focus on the impact of price discounting policy on consumers in the context of Australian food products company. GWF faces serious competition from online and offline retailers and it is important that a study in relation to pricing strategies be conducted, especially related to grocery items to help the consumers products company retain the market share. While this is the central thesis of the paper, it is important to note that, it is impossible that a comprehensive review of the consumer shopping experience is conceivable within the bounds of a scholarly paper such as the current paper (Alhouti, Gillespie, Chang & Davis, 2015). Nevertheless, it is important to offer distinctive perspectives on consumer buying behaviours, particularly identified with price discounts to gain some legitimization to the context of the investigation.
Research Aim, Objectives and Research Questions
Research Aim
The aim of the study is to assess the impacts of price discounts on consumers buying behavior at the GWF, Australia. The aim is to conduct this examination from a general perspective and socio-demographic factors’ perspective.
Research Objectives
To achieve the aim of the examination, the following objectives can be outlined:
Research Questions
SECTION II
Justification and Potential Output of the Research
The current study has potential to impact three different stakeholders, consumers, the supply chain managers, and management team of GWF. From the consumers’ viewpoint, this examination demonstrates the customers’ state of mind towards sales promotion and henceforth make them aware of their conduct that influences the business advancement. It likewise gives more data to the consumers about their buying behaviour which is influenced contrastingly by various promotional apparatuses. From a supply chain managers’ perspective, understanding the buying behavior of consumers at the GWF will provide clarity regarding the demand-supply quotient and help the management manage its supply-chain effectively. From GWF management perspective, exploration of marketing instruments is imperative to comprehend the most persuasive devices to contend in the market. With the assistance of this information, retailers and marketers can use their assets to their greatest benefit. Along these lines, marketers will know about the consumers’ conduct with a specific end goal to offer the most appropriate promotional techniques and tools to attract consumers. The marketing team can adopt systems that influence consumers to buy their products and services by creating customized and powerful promotional arrangement. The managers can know about their consumers’ qualities and inclinations as they assume a critical role in forming purchasing decisions. This data could empower them to cultivate their competitiveness and guarantee their long-term survival and growth.
SECTION III
Conceptual Framework and Research Hypothesis
Conceptual Framework
The Prospect Theory.
The conceptual framework of the current study can be understood from the fundamentals of the prospect theory as indicated in Kahneman and Tversky’s (1979) work. The authors perceived that purchasing decision is extraordinarily affected by cognitive difficulties. The term ‘framing effect’ can be utilized to depict the phenomenon that occurs when there is an adjustment in an individual’s preference between two or more choices caused by the manner in which the scenario is introduced. The individual’s decision-making procedure with regards to the uncertainty in the decision-making can be understood in two phases: the main stage, which includes an investigation of the choices, which results in the discernment that rationales and introduces an official choice and the second stage, which is a careful assessment of the issue (Isabella, Pozzani, Chen & Gomes, 2012). Through this process, two fundamental outcomes are evident, gains or losses with respect to a reference point (actual price in this scenario). If the outcomes are gains (high-price discount), there will be more noteworthy accentuation on the risk-taking; however, if when observed from the reference point, the outcomes are viewed as losses (low-price discount), there will be risk aversion. As to reference point, the gains and losses are assessed regarding their subjective and individual value, which is called utility, and estimated by the level of fulfilment related with the decision’s end-goals.
Understanding sales promotion and price discounts.
In the extant marketing literature, promotion is viewed as a key component of marketing mix that focuses on educating, encouraging and reminding the target market about a product or service offer with a goal to impact the consumers’ sentiments, perceptions or buying behavior. As indicated by Kotler and Keller (2012), sales promotion is a powerful motivating force for attracting consumers and expanding sales volumes. In the past investigations, it can be observed that price promotion is one of the principle strategies which is regularly utilized by various marketing managers to exploit their deals and performance (Zoellner & Schaefers, 2015). Basically, sales promotion can be understood through a few methodologies, for example, client coupons, displays and price discounts, which are generally utilized as a part of differing retail store experience around the globe. Price promotions as clarified by Mullin and Cummins (2010) can include various structures, for example, buy one get one, two or more free, additional packs, price discounts and/or cash-off coupons. Since the mid-1990s, a few retailers utilized extensive price promotions to impact consumers’ buying behaviour who are sensitive to price by exhibiting them the discounts on various products and services, which is continued even today. Generally, retail managers apply promotional methodologies as motivating forces for acquiring a noteworthy number of consumers and enhance their business incomes (Cui, Yang & Chou, 2016). Köksal (2014) included that sales promotions have significant beneficial outcomes on product and brand preference and consumers’ buying behaviour Moreover, past examinations ahve indicated that sales promotion affect customer’s purchasing intent (Andreti, Zhafira, Akmal & Kumar, 2013; Biswas, Bhowmick, Guha & Grewal, 2013). Since the study is specific to GWF, based on the results of the previous studies, the current study extends the relationship of sales promotion and buying behavior to specifically test the relationship between low-price discounts and high-price discounts on the consumers high or low-level purchasing intent. Thus, price discount constitutes as the independent variable of the study.
Consumer Buying Intent.
The consumer decision-making procedure can be portrayed as the stages that consumers experience in settling on a final purchasing decision. The errand of a marketer is to centre around the entire buying process as opposed to underlining exclusively on the purchasing decision, since consumers encounter distinctive stages before arriving at the conclusion (Basil, Etuk & Ebitu, 2013). Consumer behaviour accentuates on understanding the purchasing decision procedure of individual consumers and how they use their current assets, for example, time, finances and energy to get a product or service (Schiffman & Kanuk, 2007). Buying decision includes a succession of decisions shaped by a buyer before making a purchase which begins once he/she has an urge or willingness to satisfy a need. The consumer should arrive at a choice with respect to the place of purchasing, the coveted brand or product, model, quantity, time to purchase, value or benefit and mode of payment. These choices can be impacted by marketers by relevant giving data about products or services that may suitably influence the consumer’s appraisal procedure. Since buying intent is varying in nature, given the role of numerous antecedents, a high or low buying intent is evident. Thus, consumer buying behavior constitutes as the dependent variable of the study.
Socio-demographic factors.
Socio-demographic factors such as gender, age, education, occupation, income, frequency of visits have the capacity to influence consumer buying behavior. For instance, in a study conducted by Samik and Aindrila (2012) on the topic of discounted coupons and purchasing behavior in India. Based on the opinions of 200 individuals, the study highlighted the role of geography, race/ethnic identities, gender and age as the influencing factors of coupon purchases. Hefer and Cant (2013) conducted a marketing study on promotion and buying behavior in South Africa. The results of the study indicated the role of gender as an influencing factor. Malik et al. (2013) conducted a study on sales promotion and purchasing intent based on the questionnaires of 175 respondents. The authors highlighted the presence of age as an influencing factor in purchasing behavior. In a recent, study Kalia (2017) aimed at assessing the role of demographic factors on the online purchasing behavior. The authors highlighted the role of gender and occupation in influencing the purchasing frequency. While these studies have explored the role of sales promotion or advertising on the consumer buying behavior retail or otherwise, they have failed to specifically address the behavior of the consumers during the two levels of price discounts. This is important to assess to develop unique and customized promotional strategies that cater to specific consumers, especially at the retail level to ensure organizational agility and growth. Thus, socio-demographic factors constitute as the independent variable of the study.
Figure 1 The conceptual framework used in the current study (Source: Author)
A review of the literature on the individual variables, highlights the presence of gaps in recent marketing literature, especially in the retail field, regarding the role of price discounts and socio-demographic factors on the consumer buying behavior. Accordingly, this study proposes that price discount affects purchasing intentions of promoted products in a positive manner and strengthens consumer confidence in the promoted product/s. However, it is proposed in the current study that the levels of discount play a significant role in deciding the levels of buying intent. For better understanding, it is supposed that discounts above 50% can be referred as high-price discount and discounts below 10% are indicated as low-price discount (Mir, 2012). The impact of the two variations in the price discounts on consumers’ buying intentions divided into high buying intent and low buying intent in addition to the influence of socio-demographic factors constitutes as the conceptual framework of the current study, which is represented in the figure below. Thus, it is supposed that, if a promoted product has 50% or greater discount off of the actual price value, the consumers at GWF have higher buying intent, as opposed to 10% or lesser discount off of the actual price value. In addition, this supposition is influenced by the socio-demographic factors of the customers at the GWF.
Research Hypothesis
To achieve the research aim and objectives, the following hypotheses will be tested, based on the conceptual framework
Hypothesis 1
H01: Null hypothesis: There is no variation in the consumer buying behavior during the two occasions of price discounts, high and low.
H1A: Alternative hypothesis: There exists strong variation in the consumer buying behavior during the two occasions of price discounts, high and low.
Hypothesis 2
H02: Null hypothesis: Higher price discounts (50% and greater discount off of the original price) have an indirect and negative impact on the consumer buying behavior at the GWF.
H2A: Alternative hypothesis: Higher price discounts (50% and greater discount off of the original price) have a direct and positive impact on the consumer buying behavior at the GWF.
Hypothesis 3
H03: Null hypothesis: Lower price discounts (10% and lesser discount off of the original price) have an indirect and positive impact on the consumer buying behavior at the GWF.
H3A: Alternative hypothesis: Lower price discounts (10% and lesser discount off of the original price) have a direct and negative impact on the consumer buying behavior at the GWF.
Hypothesis 4
H04: Null hypothesis: Socio-demographic factors do not play a significant role in impacting the relationship between price discounts and consumer buying behavior at the GWF.
H4A: Alternative hypothesis: Socio-demographic factors play a significant role in impacting the relationship between price discounts and consumer buying behavior at the GWF.
SECTION IV
Methodology
Methodology Type
The purpose of the study is to assess the relationship between price discounts and consumers buying behavior at the GWF. The study aims to describe the characteristics of a specific population (consumers at the GWF), in addition to highlighting the facts and phenomena of a reality such as the buying behavior on the price discounts (low and high). The results may provide a larger recognition with the issue, making it more obvious and supporting the change of thoughts and contemplations of the most dynamic viewpoints connected to the reality examined (Kumar, 2014). Furthermore, the current study in line with the characteristics of a descriptive design can be used for making judgements pertinent to the relationship between price discounts and buying behavior for further generalization (McGregor, 2018). Thus, with the purpose of identifying and describing the role of high-price discounts and low-price discounts on consumer buying behavior from a general and socio-demographic perspective, the methodology type of the current study is descriptive in nature.
Research Method
The purpose of the study is to assess the association between price discounts and consumer buying behavior at the GWF from a general and socio-demographic perspective. With an aim to test hypothesis and conduct an objective study to identify the association between the dependent variable (DV) consumer buying behavior and independent variables (low-high-price discount), the research method is based on quantitative approach. Since the focus of the current study is to analyze the collected data in relation to the frequency of occurrence (consumer buying) instead of in-depth analysis of the reasons for consumers to buy during high or low-price discounts (McCusker & Gunaydin, 2014; Smith, 2015), quantitative approach is applied. The information and estimations of the data are quantitative or quantifiable in nature. Likewise, trademark advantages of the quantitative approach, for instance, cost-productivity and time-proficiency are used in the present investigation.
Data Type and Sources
Both primary and secondary data will be accommodated in the current study. Primary data, which is the first-hand data (Adams & Raeside, 2014), will be collected from consumers of GWF who are willing to participate in the study and secondary data, which can be defined as existing data (Adams & Raeside, 2014) will be taken from credible books, journals, reports and other reliable sources, which will be presented in the references section of the paper.
Data Collection
Primary data will be collected from consumers of GWF through random sampling method, which allows equal opportunity for all (Thompson, 2012) consumers to express their opinions on their buying behavior during price discounts. A survey method, which is the most common method in quantitative approach (Saris & Gallhofer, 2014) will be used to collect the data after gaining approval from the management team of the GWF. Once the approval is obtained, the reliability of the questionnaire will be subjected to testing using the Cronbach’s alpha (α) analysis. The questionnaire adapted from Mir’s study on price discounts and consumer buying behavior in a poor economy (2012) will be used as a tool to conduct surveys. The questionnaire is divided into two parts. Part A will collect demographic information of the consumers such as gender, age, education, occupation, income, frequency of visits, and part B will collect data regarding the purchasing behavior during two price discounts – low-price discounts and high-price discounts using a Likert scale, a scale of 1-5 1 = definitely not, 2 = probably not, 3 = maybe, 4 = probably, 5 = definitely. Nominal measurements of data will be obtained from part A of the questionnaire and ordinal measurements of data will be obtained from part B which will subjected to hypothesis testing and data analysis.
Data Analysis Methods
The first objective of the study can be achieved using frequency analysis, which will clearly identify the variation in the buying intention (high or low) of the consumers at the GWF. The second objective of the study can be achieved using Pearson’s correlation analysis, where the relationship between high-price discount and buying intention, and low-price discount and buying intention can be assessed. The third objective of the study can be evaluated using Pearson’s partial correlation analysis, where the role of each socio-demographic factor in influencing the relationship between price discounts and consumer buying intention can be assessed. The data analysis will be conducted using SPSS 24 tool and the hypotheses will be objectively tested. Table and graphs will be used to present the data.
Organization of the Study
The research study will be structured in five chapters as listed below:
Chapter 1: Project Proposal
Chapter 2: Introduction and Literature Review
Chapter 3: Conceptual Framework and Research Methodology
Chapter 4: Data Analysis and Discussion
Chapter 5: Conclusion and Recommendations
Schedule – Gantt Chart
The schedule for project accomplished is presented in the tables below in the form of Gnatt Charts.
Table 1
Gnatt Chart highlighting the activity, the start and end date, and the duration in number of days for each research activity
|
Activity |
Start Date |
End Date |
Duration (Number of Days) |
|
Project Proposal |
22/05/2018 |
30/05/2018 |
8 |
|
Literature Review |
31/05/2018 |
14/06/2018 |
15 |
|
Development of Conceptual Framework and Variables |
15/06/2018 |
05/07/2018 |
20 |
|
Identification of Sample and Approvals |
06/07/2018 |
11/07/2018 |
5 |
|
Data Collection |
12/07/2018 |
22/07/2018 |
10 |
|
Data Analysis |
23/07/2018 |
28/07/2018 |
5 |
|
First Draft with Conclusion and Introduction |
29/07/2018 |
01/08/2018 |
3 |
|
Final Draft |
02/08/2018 |
05/08/2018 |
3 |
Table 2
Periodic representation of the Gnatt chart highlighting each research activity
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