University of Nigeria Research Publications

UMORU, Titus Amodu A

utho

r

PG/M.ED/00/27738

Title

Utilization of Non-Price Competition as a Marketing

Strategy by Beverage Companies in the North Central States of Nigeria

Facu

lty

Education

Dep

artm

ent

Vocational Teacher Education (Business Education)

Dat

e

March, 2004

Sign

atur

e

UTILIZATION OF NON-PRICE COMPETITION AS A M A m T I N G STRATEGY BY BEVERAGE

COMPANIES IN THE NORTH CENTRAL STATES OF NIGERIA

UMORU, TITUS AMODU PG/Ph.D/00/27738

.,,. . . I . * . r .'P

DEPARTMENT OF VOCATIONAL TEACHER EDUCATION

(BUSINESS ED UCA TION) UNIVERSITY OF NIGERIA, NSUKKA

MARCH, 2004. 7

UTILIZATION OF NON-PRICE COMPETITION AS A MARKETING STRATEGY BY BEVERAGE

COMPANIES IN THE NORTH CENTRAL STATES OF NIGERIA

A THESIS SUBMITTED TO THE DEPARTMENT OF VOCATIONAL TEACHER EDUCATION, UNIVERSITY

OF NIGERIA, NSUKKA

IN FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF DOCTOR OF

PHILOSOPHY (Ph.D.) IN BUSINESS EDUCATION

UMORU, TITUS AMODU PGIPh.D100/27738

UNIVERSITY OF NIGERIA, NSUKKA FACULTY OF EDUCATION

UTILIZATION OF NON-PRICE COMPETITION AS A MARKETING STiL4TEGY BY BEVE,WGE COMf ANIES IN THE NORTH CENTRAL

STATES OF NIGERIA

UMORU, TITUS AMODU PG/Ph.D/00/27738

A THESIS SUBMITTED TO THE DEPARTMENT OF VOCATIONAL TEACHER EDUCATION IN FULFILMENT OF THE REQUIREMENT FOR

THE AWARD OF THE DEGREE OF DOCTOR OF PHILOSOPHY (Ph.D) IN BUSINESS EDUCATION

APPROVED BY . , ,, * 4 wl. .*. . I

I

THESIS SUPERVISOR .

HEAD OF DEPARTMENT A

DEAN OF FACULTY

CERTIFICATION

UMORU, TITUS AMODU, a postgraduate student of the Department of

Vocational Teacher Education with Registration Number PG/Ph.D./00/27738,

has satisfactorily completed the requirement for research work for the degree of

DOCTOR of PHILOSOPHY (Ph.D) in BUSINESS EDUCATION. The work

embodied in this thesis is original and has not been submitted in part or full for

any diploma or degree of this or any other University.

/

/PROF. E.C. OSUALA,

THESIS SUPERVISOR

2 & q € & & - L . DR (MRST) B. C. EBOH

HEAD OF DEPARTMENT

DEDICATION

This thesis is dedicated to my wife

- Gloria Nwakaego Umoru

and my children:

- Collins

- Henry

- Donald

- Edmond

- Dilys

ACKNOWLEDGEMENTS

With deep sense of appreciation, I acknowledge the immense

contributions of my supervisor Prof. E.C. Osuala to the completion of this

work. Prof. Osuala is my role model. His commitment, untiring guidance,

accessibility and tolerance inspired me to pursue this study vigorously to its

logical end.

I am indebted to my readers, Prof. J.U. Okorie, Dr. E. Agomuo, Dr. C.

E. Ezedum, Prof. D. N. Ezeh and Dr. (Mrs) Obi for their useful suggestions. I

am also indebted to all the lecturers in the Department of Vocational Teacher

Education, University of Nigeria, Nsukka particularly Prof. (Sir) SCOA Ezeji,

Prof. (Mrs.) E.U. Anyakoha, Prof. O.M. Okoro, Dr. Osinem, Prof. Oranu

and Dr. Mama for their useful suggestions in the course of this study.

I wish to extend my warmest gratitude to my close friends who

supported me during the preparation of this work. They are: Mr. Emmanuel

Osayi, Mal. A.D. Ibrahim, Dr. MBA Makoju mni and Hon Emmanuel

Adejoh, JP. To my other colleagues - Ojo, Eleanor, Amaka and Stella - I

remain grateful for their assistamwand support which brought this work to

fmition. I am also grateful to Gem Charles C. Ugbor and Solomon S. Edem

who did the word processing.

I express my sincere love to my, darling wife Mrs Gloria Nwakaego , f

Umoru for her inestimable support. Only a little world have been possible

without her by my side. I thank my lovely children - Collins, Henry, Donald,

Edmond and Dilys - for enduring my absence and for coping with the little I

could offer them throughout the course of my study.

To God Almighty, in whose hand I am but a pencil, the greatest thanks

and glory are ever humbly due.

Umoru, Titus Amodu

TABLE OF CONTENTS

Title Page

Approval Page

Certification Page

Dedication

Acknowledgements

Table of Contents

List of Tables

Abstract

CHAPTER 1

INTRODUCTION

Background of the Study

Statement of the Problem

Purpose of the Study

Significance of the Study

Research Questions

Hypotheses ., ,,. .-I. .,. ..,+

Delimitation of the Study

Limitation of Study

CHAPTER I1 ( 1

REVIEW OF RELATED LITERATURE

Conceptual Framework

Non-price Competition Strategies Utilized by Beverage Companies.

Factors that encourage the Utilization of Non-price Competition and discourage price competition.

Problems facing Beverage Companies by the adoption of Non-price Competition Strategies

The benefits of utilizing Non-price competition strategies by Beverage Companies

vii

Related Empirical Studies on Non-price Competition.

Summary of Related Literature

CHAPTER III

METHODOLOGY

Design of the Study

Area of the Study

Population for the Study

Sample of the Study

Description of the Instrument

Validation of the Instrument

Reliability of the Instrument

Questionnaire Administration and Retrieval

Techniques for Data Analysis.

CHAPTER IV

PRESENTATION AND ANALYSIS OF DATA

Research Question One

Research Question Two., 1 3 . *' .

Research Question Three

Research Question Four

Research Question Five 1 f

Hypothesis 1

Hypothesis 2

Hypothesis 3

Principal Findings - Research Questions

Hypotheses

Discussion of the Findings

viii

CHAPTER V

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

Re-statement of the Problem

Summary of the Findings

Implication for Marketing Education

Conclusion

Recommendation

Suggestions for Further Study

REFERENCES

APPENDICES

A Population Distribution for the Study

B Letter of Introduction

C Questionnaire

D Calculation of Cronbach Alpha

E Calculation of Analysis of Variance

LIST OF TABLES

1. Non-price competition strategies utilized by beverage companies. 62

2. Factors that encourage non-price competition among beverage companies. 66

3. Factors which discourage price competition among beverage companies. 69

4. Problems of adopting non-price competition strategies. 7 1

5 . Benefits of non-price competition strategies 7 6

6. Summary of analysis of variance (ANOVA) on non-price competition strategies utilized. 8 1

7. Summary of analysis of variance (ANOVA) on the mean responses of managers on problems of adopting non-price competition strategies. 82

8. Summary of analysis of variance (ANOVA) on the mean responses of managers on benefits of non-price competition strategies. 8 3

ABSTRACT

The major purpose of this study was to assess the utilization of non-price

competition as a marketing strategy by beverage companies in the North

Central States of Nigeria. The study was a survey research design. The

population consisted of 102 marketing managers, sales managers and

advertising managers drawn from 23 registered beverage companies in the

North central states of Nigeria. The reliability coefficient of the instrument

was 0.84 using Cronbach Alpha Reliability test. The instrument was face-

validated by specialists in the University of Nigeria, Nsukka. Mean was used

to analyze the five research questions while analysis of variance was used to

test the three hypotheses at 0.05 level of significance. The major findings of

the study were (1) Eleven non-price competition strategies were utilized by

beverage companies. (2) The managers were in agreement with the fifteen

identified factors which constituted problems to their beverage companies by

the adoption of non-price competition. (3) The managers agreed with the

sixteen benefits that could accrue to beverage companies by the adoption of

non-price competition strategies. (4) There were no significant differences in

the mean responses of managers.-ori the non-price competition strategies

utilized by the beverage companies. It was concluded that the managers made

extensive use of non-price competition strategies in marketing their beverage

products. Tt was recommended that ( I ) beverage companies should ensure that 11

the identified non-price competition strategies are effectively employed in such

a way that they fit into their marketing mix tool to achieve product

performance. (2) Beverage manufacturing companies should ensure that factors

encouraging non-price competition are adopted for improved competition in

the market place.

CHAPTER I

INTRODUCTION

Background of the study

Non-price competition is one of the marketing strategies used by marketing

organizations to tackle the challenges of price competition in the market place. Non-

price competition involves the conscious use of product, place and promotion so that

the organisation can carve out a market for itself and avoid a competitive price

situation (McCarthy, 1971). Non-price competition aims at shifting to the right the

demand curve facing the individual seller. For instance, Cadbury Nigeria Plc might

consider whether to hold the price of a 450 gram tin of Total Vitality Bournvita at

N200.00 and to undertake an advertising campaign in an attempt to double sales, or to

accomplish the same result by cutting its price to N180.00. If the campaign proves

successful, a considerable number of consumers who are acquainted with Total

Vitality Bournvita would be convinced of its merits. Furthermore, some of the

customers who are willing to buy the product at N180.00 may be impressed through

the advertising to buy at a higher price. As a result of this situation, Cadbury Nigeria

Plc would sell twice as much bournvita as before the campaign and at the same price.

Price competition, on the other hand, takes the demand curve as a given

factor and attempts to incrW$t"'s&% by lowering the price. For instance, if

Cadbury Nigeria Plc prices its 450 gram tin of Total Vitality Bournvita at

N200.00 and sells 10,000 tins a day but decided to lower the price to N180.00

sales could be doubled; and at N150.00 a tin, sales would increase to 30,000

tins a day. Under this situation, beverage companies move towards pure

competition in markets characterized by many buyers and sellers offering very

similar or homogenous products. Consequently price war is engendered and

forces profits down until some companies are eliminated (McCarthy, 1971). In

order to avoid this situation, the marketing manager defines the beverage

company's overall mission and objectives. Thus, he develops a marketing

strategy that must be geared towards the needs of customers and also to meet

the challenges of other competitors. The competitive marketing strategy a

company adopts depends on its industry position. Coca-Cola which dominates

the soft drink market can adopt one or more of several market-leader strategies.

Market challengers are runner-up companies that aggressively attack

competitors to get more market share. An example is Pepsi that challenges

Coke. According to McCarthy (1971) these factors require careful analysis of

the market grid and the selection of marketing mixes which appeal to distinct

target markets.

According to Hornby (1995) beverage is any type of drink except water.

Beverage companies are companies involved in producing beverage products.

Most beverage companies in Nigeria may be adopting non-price competition in

order to achieve their marketing objectives. Various non-price competition

strategies are employed by beverage companies in Nigeria. Traditionally, the

promotional mix tools include advertising, sales promotion, and personal selling.

However, many marketing companies see direct to consumer marketing as additional

modem tools that can be used to accomplish an orgnization's objectives. Most

beverage companies spend huge sums of money on their products in advertisements, . ,, - . .I. d' ' . 'C

jingles, and sales promotions in an effort to provide freedom of choice for customers

(Belch and Belch, 2001). This is important because price of similar beverage

products differ, not only from town to town, but also from shop to shop in a given

town. under these conditions, non-price cbmpetition strategies become perfect tools

which the marketing manager utilizes to retain his customers. Advertising involves

mass media (e.g., TV., Radio, magazines, newspapers) that can transmit a message to

large groups of individuals, often at the same time. The beverage market in Nigeria

may not be familiar with consumer-oriented sales promotion activities which are

targeted at the ultimate user of the product, service or ideas. These include couponing,

sampling, premiums, rebates, contests and sweepstakes and various point-of-purchase

materials. Personal selling is another form of non-price competition whereby the

marketing organization seeks direct contact with its customers as a way of influencing

them to buy (Philips and Duncan, 1968).

In modern selling, competition on the basis of quality and service and

fashion are very important and are being utilized by many beverage companies.

The improved efficiency of beverage companies, the development and

increased reliability on marketing strategy and competition, have made price

appeal less effective. As a result, companies have shown a tendency to enter

the field of quality and service competition. Consequently, more attractive and

fashionable products are now the rule and the offering of "free" services is a

common policy. Factors which encourage the use of non-price competition in

the market place are diverse. In many beverage companies, there is the

tendency toward price uniformity. According to Osuala (1998) under basing-

point system, all companies (including beverage companies) tend to quote the

same price. If Coca-Cola prices its 50 cl bottle at N20.00 and Pepsi does the

same, it becomes inevitable that any of the beverage companies wishing to

expand its output must use non-price factor such as advertising. Thus, price

competition is discouraged. Most marketing managers are aware of the need to ., ,, . . "I. \*' .

hold customers since customers are more permanent in patronising a product if

they are attracted on a non-price basis than on a price basis.

When advertising is employed by beverage companies to convince customers

of quality, service, and high calibre"sales"force, price competition is discouraged.

Similarly, non-price competition of competitors discourages price competition. Pepsi

could advertise stressing the same factors as Coca-Cola and may hold or regain its

customers. Thus, advertisement undertaken by Pepsi in self-defence has resulted in

more non-price competition. Another factor that could stimulate non-price

competition is imitation of successful companies. For instance, the success of Coca-

Cola in building an established clientele surely led to its imitation by other bottling

companies. This emulation factor discourages price competition (Kotler and

Armstrong, 1997).

The adoption of non-price competition strategy has an inherent problem.

Foremost amongst these problems is the prohibitive cost of promotional

activities in the market place. The second problem is that poorer companies or

groups that cannot afford this cost would resort to adjusting prices. Price

competition is encouraged when price is adjusted either upward or downward.

This action affects competition negatively in the market place. According to

Kotler and Armstrong (1997) marketers are sometimes accused of deceptive

practices in pricing, promotion and packaging. Furthermore, these practices

mislead consumers to believe they could get more value from their purchases.

Beverage companies that use non-price competition strategies

effectively could benefit immensely. Non-price competition creates a dynamic,

heterogeneous market place and enables a marketing organization to be

selective. The consumer, on the other hand, would have the choice, not only on

what to buy, but where and how to spend his income. The use of non-price

competition discourages competitive reaction by other competitors in the

beverage market. According*$g. .. ,. B'usch and Houston, (1985), this engenders

price stability and healthy market practices. Furthermore, they explained that

non-price competition creates stable industry conditions on which depends the

very existence of any organization. ( 1 . ..

Statement of the Problem

The success of beverage companies depends on their ability to create

awareness of the benefits of their products. Hence, the development and

execution of their marketing strategy must fit into their overall promotional

goals within the marketing mix to achieve product performance. Marketing

management according to McCarthy (1971) has successfully evolved from a

product-oriented phase to sales-oriented and finally to a consumer-oriented

philosophy. As a result, organisations tend to develop unique marketing

strategies, catering to unsatisfied target markets, that recognize the company's

product as unique.

In Nigeria, when goods are identical or scarce, business organizations

tend to use price to compete with one another. In such a competitive market, a

business organisation strives to charge higher price than its competitor.

Conversely, a company that reduces price to attract more customers can be

matched immediately by similar competition and this leads to the chaos of

price wars (Busch and Houston, 1985). McCarthy, (1971) lamented that the

consequence of price wars is that profits are pushed down until some

companies are liquidated and eliminated. Hence, prices must be consistent with

the perceptions of the product as well as the communications strategy (Belch

and Belch, 2001).

Kotler and Armstrong (1997) suggested that companies should de- <

emphasize price and use marketing-mix tools to create non-price positions.

The stability of non-price..:wqe$ition offers companies better basis for

developing unique marketing strategies. However, utilization of non-price

competition strategies such as advertising and sales promotion have inherent

problems. According to O'Donohoe (1995), promotion strategies engender

some concerns among consumers who complain that advertising is misleading,

untruthful and deceitful. Furthermore, Osuala (1998) maintains that non-price

strategies are very costly as effective institutional campaign alone may run into

thousands of Naira.

The various problems associated with non-price competition strategies

and their implications may not be clearly understood by beverage companies in

Nigeria. Similarly, adult literacy is low and most consumers do not seem to

grasp the importance of non-price competition strategies. Furthermore, research

studies on non-price competition strategies in Nigeria are staggering and

fragmented. This study was therefore undertaken to find out the extent of

utilisation of non-price competition as a marketing strategy by beverage

companies operating in the North Central States of Nigeria.

Purpose of the Study

The major purpose of the study was to identify and assess the utilisation

of non-price competition as a marketing strategy by beverage companies in the

North Central States of Nigeria.

Specifically, the study:

1. identified the non-price competition strategies that are utilized by

beverage companies in the North Central States of Nigeria.

2. ascertained the factors that encourage non-price competition among

beverage companies in the North Central States of Nigeria.

3. ascertained the factors which discourage the use of price

competition among beverage companies.

4. ascertained the problems faced by beverage companies by the

adoption of non-price competition strategies.

5 . assessed the benefits of utiliziug non-price competition strategies by

beverage companies in the ~ o r t h Central States of Nigeria.

Significance of the Study

The findings of this study when published, would be beneficial to

manufacturers of beverage products in North Central States of Nigeria. The

knowledge gained from the findings would enable the beverage companies

know the various non-price competition strategies they could employ in

marketing their beverage products. Beverage companies would achieve

accelerated selling process that maximizes sales volume. Thus, they would be

able to make profits and avoid being eliminated or forcing other competitors

out of the market.

Based on the findings of this study, marketing students and lecturers of

marketing in Nigeria would have a broader understanding of non-price

competition. This study would make a significant contribution to the existing

literature in the discipline

The result of the study would be useful to the consumers of beverage

products, as it would provide them with current information about products. In

a free-market system, consumer education on product and service offering is

very vital for consumer purchase decision making. As a result complaints

associated with promotional strategies would be reduced.

Finally the findings of the study would be of immense benefit to the

Federal Ministry of Commerce and the Consumer Protection Council in 4

designing sound competition laws and policies that would protect markets and

consumers. This would. sbengthm .the market mechanism and promote

economic efficiency and consumer welfare.

Research Questions , I . .

The study answered the following research questions:

1. What are the non-price competition strategies that are uti

beverage companies in the North Central States of Nigeria?

ilized

2. What are the factors that encourage non-price competition among

beverage companies in the North Central States of Nigeria?

3. What are the factors which discourage the use of price competition

among beverage companies?

4. What are the problems faced by beverage companies by the adoption

of non-price competition strategies?

5. What are the benefits of utilizing non-price competition strategies by

beverage companies in the North Central States of Nigeria?

Hypotheses

The following hypotheses were tested at 0.05 level of significance:

Ho, - There is no significant difference in the mean responses of

marketing managers, sales managers and advertising managers

on the non-price competition strategies that are utilized by

beverage companies in the North Central States of Nigeria.

Ho2 - There is no significant difference in the mean responses of

marketing managers, sales managers and advertising managers

on the problems faced by beverage companies by the adoption

of non-price competition strategies.

Hoj - There is no$.signi.f;ioant difference in the mean responses of

marketing managers, sales managers and advertising managers

on the benefits of utilizing non-price competition strategies by

. beverage companies in the North Central States of Nigeria. 11

Delimitation of the Study

The study is delimited to price, product and promotional strategies

covering sales promotion, personal selling, advertising, quality and service

competition and positioning. The use of place was not included.

Limitations of the Study

Questionnaire was the main instrument for gathering data for this study.

There is always a degree of error in the final analysis of the data gathered by

means of questionnaire. This study is limited therefore, to the degree of co-

operation received from respondents and their ability to interpret the items and

their objectivity in answering the questions.

CHAPTER I1

REVIEW OF RELATED LITERATURE

In this chapter, literature related to the present study is reviewed. The

review is presented under the following headings:

1. Conceptual framework.

2. Non-price competition strategies utilized by beverage companies.

3. Factors that encourage the utilization of non-price competition and

discourage price competition.

4. Problems inherent in the adoption of non-price competition

strategies.

5. The benefits of utilizing non-price competition strategies by

beverage companies.

6. Related empirical studies on non-price competition.

7. Summary of related literature.

Conceptual Framework

Non-price competition is the competition that exists between two or

more businesses to attrac,t,,customers~ from each other on a basis other than

price. This is usually accomplished through various promotional and

advertising activities. Non-price competition means that the entire set of

marketing strategy variables is the basis for competition (Busch and Houston, , I . ..

1985). McCarthy (1 97 1) similarly stressed that non-price competition involves

the conscious use of the other three variables - product, place, and promotion -

so that the marketing manager can carve out a market for himself and avoid a

competitive price situation. To achieve this, a careful analysis of the marketing

grid and the selection of marketing mixes, which appeal to distinct target

markets, are necessary

Kotler and Armstrong (1997) defined marketing as a social and

managerial process by which individuals and groups obtain what they need and

want through creating and exchanging products and value with others. The

American Marketing association offers the following definition: Marketing is

the process of planning and executing the conception, pricing, promotion and

distribution of ideas, goods and services to create exchanges that satisfy

individual and organizational objectives (Bennett, 1995).

A business organization can seek a competitive advantage through

product differentiation or market segmentation, conceptual advertising and

selling efforts, unique distribution or service. Non-price competition is the tool

marketers use to achieve these objectives. In non-price competition, the

manager does set prices. After all, every market contains a price. But

according to McCarthy (1971), the major point is that in non-price competition

a marketing manager does not rely on a lower price to carry his mix. Instead,

he and his competitors carefully avoid aggressive pricing moves to avoid

, provoking others to follow. Rather, McCarthy stated that each competitor may

price near the "competitive" level and then do his best to bring out a better

product at this price le~e1,~~advertise more effectively, build better relations

within his channels, and so on. He opined that as long as the marketing

manager serves somewhat separate markets, he may be able to maintain an

extremely profitably position without worrying too much about others' prices. 11 . .

According to Philips and Duncan (1968) non-price competition does not

always attempt to shift the demand curve to the right, that is, to increase the

amount people would take at all possible prices. It may attempt to hold the

demand curve constant or to slow up a shift to the left. This, McCarthy (1971)

stresses, implies that the marketing manager must then seek to obtain his own

downsloping demand curve, which ideally, should be as far to the right and

inelastic as possible. Therefore, non-price competition is the attempt by the

seller or group of sellers to influence the demand curve with which he is faced.

Non-price competition, if carefully handled, can lead to lower prices, too, as

the product moves through the product life cycle and some of the economies of

mass production are achieved.

According to Monroe (1 979) price is the value assigned to the utility one

receives from products or services. Usually, price is the amount of money that

is given up to acquire a given quantity of goods or services. Kotler and

Armstrong (1997) viewed price as the sum of the values that customers

exchange for the benefits of having or using the product or service. Pricing

and price competition is the number one problem facing many marketing

executives. One reason that can be adduced for this problem is that price is one

of the most flexible elements of the marketing mix and can be changed quickly.

Another is that price is the only element in the marketing mix that produces

revenues; all other elements represent costs. Many marketing organisations fall

prey to the seeming ease of price adjustments and make mistakes while setting

price. Kotler and Armstrong (1997) explained, the result is pricing that is too

cost oriented; prices tha t ,am not revised often enough to reflect market

changes; pricing that does not take the rest of the marketing mix into account;

and prices that are not varied enough for different products, market segments,

and purchase occasions. ( 1 . ..

The marketing manager that wants to set a final price for a product must

find an approximate price level to use as a starting point. Berkowitz., Kerin,

and Rudelius, (1989) pointed out that four approaches to help in finding this

approximate price level are: demand-based, cost-based, profit-based, and

competition-based methods. Tellis (1986) further stated that an effective

marketing manager would consider several of these methods in arriving at an

approximate price level for a product.

Lancaster and Massingham (1994) pointed out that through pricing a

company covers the cost of separate elements of its various activities: research

and development, raw materials, labour and administrative cost, marketing

cost, and promoting, selling and distribution costs. But in setting prices,

Lancaster and Massingham (1994) warned that:

1. Pricing decisions should be made in the context of overall marketing

objectives and strategy.

2. Pricing decisions should be consistent with the other elements of the

marketing mix.

3. Care should be taken not to make price the overriding competitive

factor. Alternatively, often more appropriate strategies for

competition should not be neglected or ignored.

4. Pricing decisions should not become a matter of routine to be

administered by accounting departments.

5. Pricing decisions should not place too much emphasis on cost inputs

to the decision., ,,. ..,. .. , <,a .

Price must always be influenced by cost, demand and competitive

factors. Economists have developed models that specify how market structure

affects pricing strategy. Such factors as number of buyers and sellers, buyer's , I . .

knowledge, and the amount of product differentiation explained how

monopoly, oligopoly, monopolistic competition, and pure competition function

in the market place (Busch and Houston, 1971). It is important to understand

market structures because they reduce the freedom of the marketing manager in

effectively handling competition. McCarthy (1971) explained that when the

demand for a particular product of a business organization is elastic, the

demand curve is completely flat, and the marketing manager would have no

control whatsoever over price.

In pure competition, a perfectly flat demand curve for a particular

business organisation exists. McCarthy (1971) stressed that pure competition

develops in markets characterized by many buyers and many sellers offering

very similar or homogenous products. As more competitors enter the market,

the supply is increased and price is pushed down. This tends to force profit

down until some competitors are eliminated. To avoid pure competition,

McCarthy, suggested that marketing managers should seek to develop a

differentiated or heterogeneous product, perhaps one of special interest to

certain segments of a marketing grid. He further explained that avoiding pure

competition seems advisable, and certainly fits with emphasis on trying to

develop unique marketing strategies, catering to unsatisfied target markets that

recognise the company's product as unique.

If products were differentiated in some way, then price competition

would not be a serious factor. Kotler and Armstrong (1997) maintained that

the best strategy is not to charge lowest price, but rather to differentiate the

marketing offer to make it ,uvorth a.Aigher price. According to Drucker (1973)

the aim of marketing is to know and understand the customer so well that the

product or service fits . . . and sells itself. This aim can only be achieved

thr-ough hard task of selecting an o~era l l company strategy for long-run ( 1 I ..

survival and growth. According to Kotler (1994) marketing strategy is the

marketing logic by which the business unit hopes to achieve its marketing

objectives. Kotler also defined marketing strategy planning as the process of

developing and maintaining a strategic fit between the organization's goals and

capabilities and its changing marketing opportunities. Marketing strategy relies

on developing a clear company mission, supporting objectives, a sound

business portfolio, and co-ordinated functional strategies.

Kotler and Armstrong (1994) emphasized that the benefits of marketing

strategy include: encouraging management to think ahead systematically;

forces the company to sharpen its objectives and policies; leads to better co-

ordination of company efforts, and provides clearer performance standards for

control. It helps the company to anticipate and respond quickly to

environmental changes, and to better prepare for sudden developments. On the

other hand competitive marketing strategy protects the company against

competition and gives it the strongest possible strategic advantage (Kotler and

Armstrong, 1997). According to them, a further benefit of marketing strategy

is that it identifies key competitors, assesses their objectives, and reaction

pattern; and selecting which competitors to attack or avoid.

Nigerian beverage companies are marketing organizations. As such,

conditions which prevail in non-price and price competitions must attract their

attention. Similarly, as marketing organizations, their goals and objectives <

must require effective and efficient marketing strategies to be realized. For this

reason, beverage companies4 iwNtgeria develop such marketing strategies to

deal with the ever changing competitive conditions in the market place.

According to Berkowitz et al., (1989) beverage organizations must always pay

attention to details about a specific target market and marketing programmes to

reach the market.

Non-Price Competition Strategies Utilized by Beverage Companies

According to Philips and Duncan in Osuala (1998), non-price is the

competition that exists between two or more businesses to attract customers

from each other on a basis other than price. Philips and Duncan (1968)

explained that sales promotion - which, broadly considered, includes

advertising, personal selling, quality and service and product positioning - are

all forms of non-price competition. According to Ray (1982) promotion is the

co-ordination of all seller-initiated efforts to set up channels of information and

persuasion to sell goods and services or promote an idea. The basic tools used

to accomplish an organisation's communication objectives are often referred to

as the promotional mix.

Hagin (1983) defined sales promotion as a direct inducement that offers

an extra value or incentive for the product to the sales force, distributors, or the

ultimate consumer with the primary objective of creating an immediate sale.

Neilson, Quelch, and Henderson, (1984) added that sales promotion is

essentially an acceleration tool, directed to speed up the selling process and

maximize sales volume. Belch and Belch (2001) maintained that an important

point regarding sales promotion activities is that they can be targeted to

different parties in the marketing channel and that the ideal sales promotion

programme generates sales that would not be achieved by other means.

Belch and Belch (2001) further observed that sales promotion is

important in non-price .c,ompatiti~n because it involves some type of

inducement that provides an extra incentive to buy. This incentive, they

emphasized, is usually the key element in the promotional programme: it may

be a coupon or price reduction, the. opportunity to enter a contest or ,I

sweepstakes, a money-back refund or rebate, or an extra amount of a product.

The incentive may also be free sample of the product, given in hopes of

generating a future purchase, or a premium that serves as a reminder of the

brand and reinforces its image. Imam and McAlister (1994) also stated that

beverage companies use limited-time offers such as price-off deals to retailers

or a coupon with an expiration date to accelerate the purchase.

Belch and Belch (2001) advanced reasons for the increase in sales

promotion. Among these reasons are the growing power of retailers, declining

brand loyalty, increased promotional sensitivity, brand proliferation,

fragmentation of the consumer market, short-term focus, increased

accountability, competition and cluster. Sales promotion is in the increase all

over the world. Strong economy has resulted in massive consumer spending

which has helped propel the sales promotion industry to an annual growth rate

of 5 to 7 per cent. In 1999, spending on promotion reached a record $93 billion

while another $155 billion was spent on promotions targeted at retailers and

wholesalers (Promotion Trends 2000).

Osuala (1 998) considered the objectives of consumer sales promotion as

that of: (1) Introduce new products, (2) Attracting new customers, (3) Inducing

present customers to buy, (4) Enabling the company to remain competitive, (5)

Increasing sales in off season, and (6) Increasing the incentives of business

buyers.

Belch and Belch (2001) emphasized that companies must consider what they

hope to accomplish through their customer promotions and how they interact

with other promotional ar;tivities..such as advertising, direct marketing and

personal selling. Otherwise, they do little more than create short-term spikes in

the sales curve. In the beverage market, thousands of new products are

introduced every year. Belch and Belch (2001) revealed that many of these

products fail largely because new product or brand lacks the promotional

support needed either to encourage initial trial by enough customers or to

induce enough of those trying the brand to repurchase it. Moreover, they

stressed, many new brands are merely new versions of an existing product

without unique benefits. In this kind of situation, they recommended that sales

promotion tools should become an important part of new brand introduction

strategies; the level of initial trial can be increased through techniques such as

sampling, couponing and refund offers. They supported this claim by

explaining that when Lever Brothers introduced its Lever 2000 brand of

chocolate food drinks, it distributed millions of free samples along with a 75-

cent coupon. The sample allowed consumers to try the new chocolate drink,

while the coupon provided an incentive to purchase it. According to Bezjian-

Avery (1998) another strategy for increasing sales of established brand is to use

promotions that attract nonusers of the product category or users of a

competing brand. This, according to him, can be done by giving them an

incentive to switch, such as a coupon, premium offer, bonus pack, price deal or

sampling.

Beverage companies targeting a specific market segment have found

that sales promotion tools such as contests and sweepstakes, events, coupons,

and samplings are very effective ways to reach specific geographic,

demographic, psychographic, and ethnic markets (Belch and Belch, 2001).

Marketers use various sales promotion techniques to meet promotional

objectives. According to Osuala (1998) sampling involves providing a small

size of the company's product to consumer for "try out" purposes. Examples

of the use of sampling in Nigeria include canned pronto food drinks or milk

sachets by Cowbell which Rossiter and Percy (1987) stated is an effective way

to induce a prospective buyer to try a product or service. They stated that , I

approximately 75 per cent of the households receiving a sample would try it.

According to Breen (1994) the sampling method chosen is important, not only

because of the cost, but because it influences the type of consumer who

receives the sample. He stated that the best sampling method gets the product

to the best prospects for trial and subsequent purchase. According to Belch and

Belch (2001) some basic distribution methods of samples include: Door-to-

door sampling, sampling through the mail, in-store sampling and on-package

sampling.

The oldest, most widely and most effective sales promotion strategies, is

the cents-off coupon which had been in use in United States since 1895.

According to NCH Promotional Service (1999), over 80 per cent of consumers

in the United States use coupons and nearly 25 per cent say they always use

them when they shop. It claimed that the average face value of coupons

distributed increased from 2 1 cents in 198 1 to 70 cents in 1998. It concluded

that consumers generally seek out the coupons offering the highest savings, as

the average face value of the 4.8 billion coupons that were redeemed in 1998

was 75 cents. Osuala (1998) similarly observed that coupons are placed in

newspapers and magazines and sent through the mail. However, Belch and

Belch (2001) emphasized that the use of newspapers and magazines as a

couponing vehicle has declined. They pointed out that current methods of

distributing coupons include direct mail and packages.

Premium is a sales promotion device used by many marketers.

According to Osuala (1998), it is a product offered free or at a reduced price to

encourage a customer ta, buy.the promoted product. The magic power of the

premium, he explained, is based on the psychology of "something for nothing."

According to Oxtoby-Smith Incorporated (1989) the two basic types of offers

are the free premium and the self-liquidating premium. It explained that free , I

premiums are usually small gifts or merchandise included in the product

package or sent to consumers who mail in a request along with a proof of

purchase. Self-liquidating premium, on the other hand, is a premium sold

below its normal retail price to consumers who request it (Kotler, 1994). A

survey conducted by Oxtoby-Smith Incorporated has shown that inlon package

premiums are consumers' favourite type of promotion.

Osuala (1998) noted that contests and sweepstakes, are important sales

promotion devices. He explained that contests require skill of the individuals.

Sweepstakes, on the other hand, are based on chance and everyone has an equal

opportunity to win a prize. Contests and sweepstakes according to "Forbes"

(1998) are exciting because many consumers have a "pot of gold at the end of

the rainbow mentality" and think they can win the big prizes being offered. It

observed that the lure of sweepstakes and promotion has also been influenced

by the "instant millionaire syndrome" that has derived from huge cash prizes

given by lotteries. According to Sale (1994) marketers are attracted to contests

and sweepstakes as a way of generating attention and interest among a large

number of consumers. She reported that a recent sweepstakes by AT & T

WorldNet generated more than 4 million entries and 870,000 new internet

subscriber services.

According to NTA Newsline (2002) a Nigerian Brewery Gulder

promotion offer, through contests and sweepstakes, gives the consumers an

opportunity to win prizes as it offers 300 television sets, 1000 t-shirts, 40,000

key holders, half a million pens, 50,000 face caps and a raffle draw that entitles

fifty lucky winners to a free .$icket to Manchester City, England to watch the

European Football League finals. Numerous other beverage companies give

similar offers as can be seen in posters everywhere. Belch and Belch (2001)

stated that refunds (also known as rebates) are offers by companies to return a ( 1

portion of the product purchase price, usually after the consumer supplies some

proof of purchase. They also observe that consumers may perceive the savings

offered through a cash refund as an immediate value that lowers the cost of the

item, even though those savings are realized only if the consumer redeems that

refund or rebate offer. They concluded that refund offers also encourage repeat

purchase.

Bonus pack is another sales promotion technique. Kotler (1994)

explained that consumers are offered an extra amount of a product at regular

price by providing larger containers or extra units. He stated that price-off

deals, also known as price packs, are offers to consumers of savings off the

regular price of a product, flagged on the label or package. He explained that

they can take the form of a reduced-price pack, which is single package sold at

a reduced price (such as two for the price of one), or a banded pack, which is

two related products banded together (such as a tooth brush and toothpaste).

Blair and Landon (1981) observed that beverage companies use price-

reduction promotions for several reasons. The first reason is that since price-

offs are controlled by the manufacturers, it can make sure the promotional

discount reaches the consumers rather than being kept by the trade. The second

reason is that like bonus pack, price- reduction deals usually present a readily

apparent value to shoppers.

One of the fastest growing areas of sales promotion as a non-price

competition is the use of frequency programmes also referred to continuity or C

loyalty programmes (Belch and Belch, 2001). They observed that Nestle and

others have recently intr~duced mntinuity programmes that offer consumers

the opportunity to accumulate points for continuing to purchase their brands.

The points can be redeemed for gifts and prizes. Furthermore, they

emphasized, marketers view frequency programmes as a way of encouraging , . ..

customers to use their products or services on a continual basis as a way of

developing strong customer loyalty. Thus, it is a challenge to marketers in

Nigeria to use frequency programmes as a means of differentiating their

product, service, business, or retail store.

Event marketing, according to Belch and Belch (2001) is a type of

promotion where a company or brand is linked to an event or where teemed

activity is developed for the purpose of creating experiences for consumers and

promoting a product or service. For instance, Coca-Cola develops actual

sponsorship relations with FIFA for World Cup finals and provides financial

support in return for the right to display a brand name, logo or advertising

message and be identified as a supporter of that event. This type of

promotional technique creates experiences for consumers and associates the

brands with certain lifestyles and activities such as sport.

Trading stamp is another form of non-price competition through which

retailers promote sales. Philips and Duncan (1968) explained that when the

customer in the stamp-giving store pays for her purchase, a number of the

stamps are handed over to her. These stamps are accumulated and eventually

turned in for merchandise at a stamp-redemption store or mail order centre.

Philips and Duncan stated that the retailer's goal in offering stamps is to

increase his ability to attract new customers and to obtain additional purchase

from existing customers. In other words, the retailer seeks to leave the quoted

price of merchandise unchanged and to shift to the right the demand curve with

which he is faced.

According to Udell(1867)- slhmps appeal to many buyers. He explained

that trading stamps were saved by 90 per cent of all the respondents and in

general respondents in all four midwestern cities of United States had

favourable attimdes towards trading stamps. However, evidence of use of ,I

trading stamps by beverage companies in Nigeria seems lacking.

Advertising is a major form of non-price competition. Advertising

derives from the Latin word "Advertere" - which means "to draw attention."

Dalrymple and Parsons (1990) defined advertising as paid non-personal

communication in measured media. Kaufman (1 980) and Osuala (1 999) cited

in Oguejiofor-Osakwe (2002) defined advertising as any form of non-personal

presentation of goods, services and ideas for action, openly paid for, by an

identified sponsor. A further expatiation given by Osuala (1999) is necessary

in view of the importance of advertising as a form of non-price competition.

According to him "any form" means any form of presentation, a sign, an

advertisement in a magazine or newspaper, a commercial on radio or

television, circulars distributed through the mail or handed out on a street

comer, sky writing, billboards, posters, and matchbooks - the possibilities are

limited by the imagination of the advertiser and the conditions of the definition.

He used "non-personal" to mean a phrase which excludes personal selling,

which is usually done on person-to-person or in some cases, such as a party, on

a people-to-people basis. If it is personal it is not advertising.

Guiltinan and Paul (1982) stated that advertising objectives can provide

guidance for the development of message and media decisions and can also

serve as standards for evaluating the performance of the advertising

programme. According to them, the six types of objectives can be identified,

namely: (1) awareness, (2) reminder to use, (3) changing attitudes about the use

of the product form, (4) changing perception about the importance of brand

attributes, (5) changing belief~~itbout~~brands, and (6) attitude reinforcement.

Osuala (1998) pointed out that the primary objective of advertising is to

help increase sale. However, according to him, a company's specific

objectives of advertising may include one .or a combination of the following:

1. to increase the number of units of product purchased 2. to introduce new products. 3. to counteract competition from competitors 4. to increase the number of product uses 5. to remind consumers about a product and reinforce promotional

messages 6. to increase sales in an off season 7. to maintain brand loyalty 8. to build a positive business image

9. to obtain dealer support, and 10. to lend assistance and secure leads for sales people.

Bel-Molokwu (2000) summarised the objectives of advertising to

include the following:

1. Attracting attention to a product or service or concept.

2. Getting the target audience to actually accept the product, service, or idea by developing an interest on it.

3. Getting the target audience to actually acquire the product, service, or idea.

4. Sustaining these positive dispositions and attaining constant acquisition.

5 . Evaluating and reviewing the above antecedents, so as to remain abreast with performance.

McCarthy (19971) observed that advertising is meant to arrest attention,

hold interest, arouse desire to own or use a product or service and take action

by purchasing eventually. Kotler (1994) emphasized that reminder advertising

is highly important with mature products as Coca-Cola and advertisements in

magazines have the purpose3tio't"of Ynfonning or persuading but of reminding

people to purchase Coca-Cola.

According to Social Marketing (2001) advertising is of high importance

as a non-price competition strategy. It stated that there are magazines -

consumers, business and trade magazines, and magazines for enthusiasts.

There is out-of-home advertising - bill boards, mall posters and pillar adverts,

transit shelter and airport advertising and of course, buses, subways, trucks,

streetcars and taxicabs. One might say that anything that moves today is

carrying a message. Even the human body has become a walking billboard for

Adidas, Coca-Cola. All types of clothing, including hats, t-shirts, sweatshirts

and shoes are being used to promote message. Trout (1981) stated that as a

defence against the sheer volume of today's communications where the mind

screens and rejects much of the information that is offered to it, the one hope

for success lies in effective advertising.

Philips and Duncan (1968) noted that the rise in the American standard

of living is due in no small measure to the imaginative genius of advertising

which not only crates and sharpens demand but also, by its impact upon the

competitive process, stimulates the never ceasing quest of improvement in

quality of the product. Tellis (1988) explained that the impact of advertising on

inducing brand switching or brand loyalty is high. He analyzed household

purchases of 12 key brands of a frequently purchased product. He concluded

that advertising appears effective in increasing the volume purchased by loyal

buyers but less effective in wining new buyers. For loyal buyers, high level of

exposure per week may be unproductive because of a levelling off

advertisement effectiveness.. .. Advertising appears unlikely to have some

cumulative effect that leads to loyalty . . . Features, displays and especially price

have a stronger impact on response than does advertising. Ukpore (1993) also

explained that the fai1ureaFad~ertising in some cases is due to individual's

attitude and basic clues which are strongly influenced by his or her culture and

are more likely to listen to friends and neighbours than advertisements. In

writing an advertising message, Kotler f 1994) adduced that a message should ( 1

be presented in different execution styles or strategy such as slice of life,

lifestyle, fantasy, mood or image, musical, personality symbol, technical

expertise, scientific evidence and testimonial evidence.

Personal selling is a form of non-price competition which Osuala (1998)

defined as the face-to-face contact of a company's representative with target

customers. Philips and Duncan (1968) added that it is a unique, hard-to-replace

force in modem marketing because it makes possible two-way communication

of ideas between a seller and buyer. They maintained that it is the only form of

sales promotion that can encourage and make immediate, on-the-spot use of

response from buyers. Osuala (1998) stated that the purpose of personal selling

includes finding potential buyers, convincing them to buy and keeping

customers satisfied.

The functions of the salesperson are becoming complex. Daves (1999)

emphasized that today successful salesperson is more of a marketer than a

salesperson. He noted that she or he is armed with a laptop and planogrames

rather than pens, desk calendars, and baseball and football tickets. He

emphasized that successful sales people are solution providers and problem

solvers, not time consumers andlor "snake oil" sellers. According to him, what

caused this change is the change in purchasing behaviours. Buyers and the

business they represent have more commerce power and more flexible, more

efficient, more demanding and above all, more informed.

Lorge (1998) observed that new practices point to the fact that some

companies believe in the very near hture, there would no longer be a need for

sales representatives. He .said; sellers could offer their products, along with

pricing information, through online catalogue. He maintained that

demonstrations could take place through the website, or a demo could be

mailed to prospects, orders could be placed instantaneously and save money in 11

the process. Storace (1998) agreed with Lorge (1998) that some marketers and

retailers are looking to the Internet as a medium for distributing coupons.

Wotruba (1991) stated that the personal selling area is constantly

evolving as the market environment itself evolves. He identified five distinct

stages of personal selling evolution as follows: (1) provider stage, (2) persuader

stage, (3) prospector stage, (4) problem-solver stage, and (5) procreator stage.

However, Champy (1999) emphasized that the business world is going

through a very rapid transition as: ( I) Individuals and corporations gain more

knowledge and economic power, (2) Value is replacing efficiency, and (3)

Industry boundary are changing.

Champy observed that competitors are joining forces to achieve more

buying power. As a result, he said, the role of the sales force will also

significantly change. Similarly, Hoffberg and Corcoran (2000) noted that sales

people would engage in surveying, map making, guiding, and fire starting.

This new role, they concluded, would create added value and develop a

relationship between buyer and seller.

Beverage companies in Nigeria could combine advertising and personal

selling to attain the objectives sought. Levit (1967) stated that sales

.representatives from well known companies are better received by buyers than

those from companies that do not spend advertising money to create awareness.

Similarly, Morrill (1970) explained that selling costs were 2 to 28 per cent

lower if the buyer had received an advertising message before the salesperson's

arrival. McGraw-Hill Corp (1987) in a review of 54 studies, concluded that the

combination of advertising, adpersonal selling is important since "less than 10

per cent of industrial decision makers had been called upon by a salesperson

from a specific company about a specific product in the previous two months.

According to Philips and Duncan (1968) quality and service competition , I

is a chief form of non-price competition. They stated that chains have shown a

tendency to enter the field of quality and service competition through better

located, more attractive, and better equipped stores with broader lines of

merchandise offering "free" services. In Nigeria, beverage companies deliver

their products to the doorsteps of customers.

Philips and Duncan (1968), see credit as service competition that is

important because about one third of all sales at retail and in excess of 75 per

cent of all wholesale sales are made on credit basis. The reasons they advanced

for this development are that it offers an opportunity for increased sales and

competition may make unwise any other course. In Nigeria, credit sale is a

tradition. Some beverage companies in the food drink industry offer products

on credit and customers make returns after sales.

Belch and Belch (2001) noted that market positioning can be used to set

products apart. They explained that the position of the product, service or even

store is the image that comes to mind and the attributes consumers perceive as

related to it. According to Ayer (1976) positioning can be defined as the art

and science of fitting the product or service to one or more segments of the

broad market in such a way as to set it meaningfully apart from competition.

Many advertising practitioners consider market positioning the most important

factor in the establishment of a brand in the market place. Aaker and Myers

(1987) stressed that the term position has recently been used to indicate the

brand's or product's image in the market place. Trout and Ries (1972)

suggested that this brand.image. must contrast with competitors. They noted

that in today's marketplace, the competitor's image is just as important as your

own, sometimes more important. Thus, positioning as they used it then, relates

to the image of the product and or. brand relative to competing products or

brands.

To create a position for a product or service, Trout and Ries (1972)

suggested that managers ask themselves six basic questions:

1. What position, if any, do we already have in the prospect's mind?

2. What position do we want to own?

3. What companies must be outgunned if we are to establish that position?

4. Do we have enough marketing money to occupy and hold the position?

5. Do we have the guts to stick with one consistent positioning strategy?

6. Does one creative approach match our positioning strategy?

A number of positioning strategies might be employed by beverage

companies in developing a promotional programme. Aaker and Shansby (1982)

suggested six such strategies: positioning by product attributes, pricelquality,

use, product class, users, and competitor. Aaker and Myers (1987) added one

more approach, positioning by cultural symbols.

Positioning have been used by Coca-Cola and PepsiCo in their battle for

control of the global soft-drink market. Deogun (1999) observed that Pepsi

launched its Pepsi Challenge which showed consumers preferring the taste of

Pepsi over Coke in blind taste test as a result of which it achieved 2 per cent

market share lead over Coke supermarket sales and forced Coke to change its .,,...* 1 . d . . . I + '

formula of 99-year old brand. As the battle shifted to the taste growing diet

segment of the soft drink market, Sellers (1996) stated that Pepsi's campaign

for Diet Pepsi that featured Ray Charles singing "You've got the right one

baby, ~ h - h u h " seemed to give P e p i the edge.

Factors that encourage the Utilisation of Non-price Competition and

Discourage Price Competition

Osuala (1998) enumerated the factors responsible for the growth of non-

price competition as follows: (1) The tendency towards price uniformity, (2)

The effectiveness of non-price competition in holding customers, (3) The non-

price competition of competitors, (4) The imitation of successful organisations.

According to Kotler and Armstrong (1997), the seller uses basing-point

pricing, under uniform pricing system, to select a given city as a basing point.

He charged all customers the freight cost from that city to the customer

location, regardless of the city from which the goods actually are shipped.

They explained that, when all sellers use the same basing-point city, delivered

prices would be the same for all customers and price competition would be

eliminated. However, Philips and Duncan (1968) stated that some factors other

than price such as advertising and sales promotion- should be used if the

company must progress. The problem with basing-point pricing is that price

dispersion will prevail especially in Nigeria where consumers may not have

perfect information about prices and products that companies offer may not be

identical (Clay, Krishnan, Wolf and Fernandes, 2002). But Osuola (1998)

maintained that if prices are the same, competitors may try to attract additional

sales by adding "free" services such as credit and delivery and better trained

personnel.

Another factor encouraging .non.price competition is the desire to 'hold'

customers. Price lowering or price fixing engenders price war. According to

McCarthy (1971) each competitor is well aware that price war may lead to

lower price l.evels, squeezing margins and profits to the extent that there would

be little money later to pay the cost of non-price competition. Then, the only

remaining course may be additional price costs. However, Clay et al., (2002)

emphasized that no retailer would be able to charge more because customers

would not buy from him and since companies prefer not to compete directly on

price because of low profits that result, they seek to differentiate themselves.

In this case, non-price competition is the answer. Philips and Duncan (1968)

stated that the reputation of the store for handling quality merchandise, the

services offered, and the high calibre of its sales force may be emphasized.

According to them, if people are convinced of the quality of these, then the

factor of price loses some of its significance.

Non-price competition of competitors is another factor which

discourages price competition. Philips and Duncan (1968) explained that a

store losing patronage could retaliate on a non-price basis. They maintained

that a store could begin an institutional advertising campaign stressing the same

factors as the first store and perhaps add a few more approach for good

measure and thus hold or regain its customers. According to them, they

contended that a large part of the advertising of competing retailers and product

adjustments of competing manufacturers are undertaken in self-defence.

The Coca-Cola and Pepsi battle is an example of non-price competition

of competitors. Deogun (1999) reported that for more than two decades, the

Coca-Cola company and its archrival, Pepsi, have been battling for control at

the global soft drink market. According to her, Coca-Cola revitalised its <

advertising and overcame the conception that Pepsi is the hip soft drink for the

youth market. The result, yas. Co.k7s overcome of Pepsi's 10-year lead. She

concluded that it was Pepsi's institutional advertising that forced Coke to

change her 99-year old flagship brand and launched new Coke in 1985.

However, Osuala (1998) observed that non-price competition is costly ( 1

as effective institutional campaign alone may run into thousands of Naira and

even after this expenditure, the amount of business that would be attracted is

very difficult to estimate. It is for these reasons that he advised that sometimes,

it may be better judgement to lose some customers than to spend thousands of

Naira to regain them.

Imitation of successful companies encourages non-price competition.

Osuala (1998) maintained that while it would be impossible to say how much

of the business of a company results from price and how much from non-price

factors, many manufacturers and retailers built upon important part of their

business on non-price factors. He explained that the success of these

companies in building an established clientele nationally leads to imitation by

other companies.

The use of non-price competition is encourage by a tremendous number

of directly and indirectly competing products in the market. There are so many

that only few are well known to the majority of potential buyers. Philips and

Duncan (1968) observed that when most manufactures are eager to extend the

sale of their products and as a means of extending their markets, they turn to

non-price competition. They stated that it is for this reason that the "Cola"

companies compete so keenly with large expenditures for promotion and

adjustments in container sizes.

The increase in knowledge of how to influence the mind of the buyer

has been important (Osuala, 1998). This has led to the development of modern

advertising media, making. possible the application of the knowledge. Another

factor that encourages non-price competition is the doubt whether an increase

in selling cost or a cut in price gives the greatest increase in sales. Osuala

(1998) .explained that in such a situation, the competitor might choose to

advertise. According to him, if advertising proves ineffective, it can be

stopped. But, if a price cut does not result in a sufficient sales gain, to restore

the cut and keep old sales volume may be difficult. Hence, non-price

competition is preferred.

Some non-price competition is actually necessary to make price

competition effective. To increase sales, it is not enough for a seller to reduce

price. He must advertise the cuts, to be sure that potential customers know

about it. According to Myers (1985), a sales promotion trap or spiral can result

when several competitors use promotions extensively. McAlister (1988)

emphasized that when a promotion is successful and leads to a differential

advantage (or even appears to do so), competitors may quickly copy it. When

all the competitors are using sales promotion, this not only lowers profit margin

for each firm but also makes it difficult for any one firm to hop off the

promotional band wagon. This encourages competition.

Problems facing beverage companies by the adoption of non-price

competition strategies.

The increasing use of sales promotion in marketing could be a pointer

that marketers are becoming dependent on this element of the marketing

strategy (Neff, 1999; Shapiro, 1977 and Strang, 1976). The value of this

increased emphasis on sales promotion has been questioned by experts

especially with regard to inadequate planning and management of sales

promotion. Beverage companies are bound to face many problems by adopting

non-price competition s,tr&.gies,, .

Overuse of sales promotion can be detrimental to a brand in several

ways. According to Belch and Belch (2001) a brand that is constantly

promoted may lose perceived value., Consumers often end up purchasing a ( 1 I ..

brand because it is on sale, they get a premium, or a coupon, rather than basing

their decision on a favourable attitude they have developed. They emphasized

that when the extra promotional incentive is not available, the consumers

switch to another brand.

Sawyer and Dickson (1984) have used the concept of attrition theory to

examine how sales promotion may affect consumer attitude formation.

According to this theory, people acquire attitudes by observing their own

behaviour and considering why they acted in a certain manner. They observed

that consumers who consistently purchase a brand because of a coupon or

price-off deal, may attribute their behaviour to the external promotional

incentive rather than to a favourable attitude towards the brand. Similarly,

sales promotion trap or spiral can result when several competitors use

promotions extensively (Myers, 1985).

According to Philips and Duncan (1968) cost of sales promotion is

great. They contended that this great cost have materially interfered with

effective price competition in a number of consumer goods markets and have

led to high, monopolistic prices. Kotler and Armstrong (1997) and Philips and

Duncan similarly agreed that promotions encourage the consumers to buy

shoddy and overpriced merchandise, in part through misleading and false

information, fictitious list prices, deceptive purchasing and by destroying

rational choice of goods by appealing to irrational, emotional motives. Philips

and Duncan also claimed that heavily promoted products are actually harmful

to the consumer. An example is Coke or other soft drinks that are said to

contain large quantities af,sugar,. . ..+ ,

Osuala (1998) stated that sales promotion is often designed to persuade

consumers that indistinguishable products are distinguishable and thus merely

direct buying from one product to aqother, which may be equally good or ( 1

equally poor. There are other unfavourable repercussions of sales promotion

activities. Philips and Duncan (1968) claimed that promotions may have led

consumers to expect merchandise of uniform quality, and this may be difficult

to maintain. Furthermore, they stated that large sums of money may have been

spent for promotional activities which produce little change in sales, a

likelihood which grows with the multiplication of different brands of the same

type of product and the rising number of advertisements competing for the

consumer's attention. Philips and Duncan maintained that marketers who rely

largely upon sales promotion create an additional element of uncertainty for

themselves. This is because the marketer may never be sure just when a

competitor would find an appeal that "takes" and thus draw off part of his

market.

The use of samples has attracted some criticisms. It is said that a brand

must have some unique and superior benefits for a sampling programme to be

worthwhile. Otherwise, sampled consumers revert back to other brands and do

not become repeat purchasers (Belch and Belch, 2001). They maintained that

the cost of a sampling programme could be recovered only if it gets a number

of consumers to become regular users of the brand at full retail price. Belch

and Belch further observed that when sample is used, the benefits of some

products are difficult to gauge immediately. Furthermore the learning period

required to appreciate the brand may demand supplying the customer with

large amounts of the brand than are affordable. An example would be an

expensive beverage that is promoted as energy boosting for sportsmen but has

to be used for an extended ~~I+X-I before any effects are noticed.

There are a number of problems with coupons. McAlister (1988)

observed that it can be difficult to estimate how many consumers would use a

coupon and when. According to him, response lo a coupon is rarely , I . .

immediate, it typically takes anywhere from two to six months to redeem one.

In their contribution, Belch and Belch (2001) stated that a problem associated

with using coupons to attract new users to an established brand is that it is

difficult to prevent the coupons from being used by consumers who already use

the brand. Rather than attracting new users, coupons can end up reducing the

company's profit margins among consumers who would probably purchase the

product anyway. Other problems with coupons according to the authors,

include low redemption rates and high costs; the expenses of couponing

programme; cost of production; distribution; and handling. Beverage

companies must track costs closely to ensure the promotion is economically

feasible.

Several problems are associated with the use of premiums. The first

problem is the factor which results from the premium itself as well as extra

packaging that may be needed. Belch and Belch (2001) maintained that

finding desirable premiums at reasonable costs could be difficult particularly

for adult markets, and using a poor premium may do more harm than good. A

mail-in premium has a major draw back. According to Dean (1980), mail-in

premiums do not offer immediate reinforcement or reward to purchasers so

they may not provide enough incentive to purchase the brand. He stressed that

few consumers take advantage of mail-in premium offers and that the average

redemption rate is only two to four per cent.

Robinson (1980) explained that self-liquidating premium offers have the

same basic limitation as mail-in premiums. According to him, fewer than 10

per cent of United States.householQs have ever sent for a premium and fewer

than one per cent of self-liquidating offers are actually redeemed. He further

stressed that low redemption rates can leave the marketer with a large supply of

items with a logo or some other brand identification that makes them hard to I I

dispose of. According to Belch and Belch (2001), beverage companies that

wish to use premiums must test consumer's reaction to a premium incentive

and determine whether they perceive the offer as a value.

Contests and sweepstakes are very popular with beverage companies in

Nigeria. So, problems associated with contests and sweepstakes must be of

special interest to beverage companies. Sale (1998) stressed that the

sweepstakes industry has received a considerable amount of negative publicity.

According to him, lawsuits were filed in courts all over the world for

misleading consumers regarding their odds of wining large cash prizes in

sweepstakes. Lans (1994) warned that numerous legal considerations affect the

design and administration of contests and sweepstakes but advised that

beverage companies must still be careful in designing a contest or sweepstakes.

According to Smith (1998) when these promotions do not go as planned, they

can embarrass a company or even create legal problems. For example, Coca-

Cola lost millions of dollars and went through great turmoil in the summer of

1991 when its magi-can promotion went awry.

A final problem with contest and sweepstakes is participation by

professionals or hobbyists who submit many entries but have no intention of

purchasing the product or service. According to (Belch and Belch, 2001)

professional players sometimes enter on sweepstakes several times, depending

on the nature of the prizes and the number of entries the promotion attracts.

They stressed that the presence of these professional entrants not only defeats

the purpose of the promotion but may also encourage entries from consumers

who think chances of winning ar.eJimited.

Some problems are associated with refunds and rebates. According to a

survey conducted by Oxtoby Smith Inc. (1998) many consumers are not

motivated .by a refund offer because of the delay and the effort required to , I . ..

obtain the savings. It further found out that consumers do not want to be

bothered saving cash register receipts and proof of purchase, filling out forms,

and mailing in the offer. Also, consumers could become dependent on rebates

and delay their purchases or purchase only brands for which a rebate is

available. Graves (1989) cautioned that beverage companies should be careful

not to overuse rebate offers or customers may become disenchanted with

rebates and the bother and expense of administering them.

Bonus packs require additional shelf space without providing any extra

profit margins for the retailer. So, the marketer can encounter problem with

bonus packs if trade relationships are not good Belch and Belch (2001).

According to Belch and Belch, another problem is that bonus packs may appeal

primarily to current users who probably would have purchased the brand

anyway or to promotion sensitive consumers who may not become loyal to the

brand.

Belch and Belch (200 1) stated that price- reduction promotions may not

be favourably received by retailers, since they could create pricing and

inventory problems. Most retailers would not accept packages with a specific

price shown, so the familiar amount off the regular must be used. They further

stressed that price-off deals, like bonus packs, appeal primarily to regular users

instead of attracting nonusers.

According to McCarthy (1 971) the early users of stamps seem to gain a

competitive advantage, but when competitors also start offering stamps, as

some feel they must to meet toIYipetition, the advantage may be cancelled.

Then, the marketer is stuck with the stamps. McCarthy further emphasized that

the rapid growth in the use of stamps is over as a drop in use has already

occurred because of the major inroads made by marketers in the use of other

non-price competition strategies.

As marketers intensify efforts to get the attention of consumers,

resentment against their integrated communications efforts is likely to increase.

Belch and Belch (2001) stated that advertising has been the subject of a great

deal of controversy and criticism because of its high visibility and

perversiveness along with its persuasive character. Voight (2000) maintained

that as telemarketing, advertising, promotions and the rest continue at a

frenzied pace, the value of the messages decrease and the system seems headed

for a large implosion. It is perhaps due to these adverse criticisms that

Heilbroner (1981, p. 40) lamented: "If 1 were to name the deadliest subversive

force within capitalism, the single greatest source of its waning morality - I

would without hesitation name advertising. How else should one identify a

force that debases language, drains thought, and undoes dignity?"

Helm (1999, p. 10) similarly highlighted the problem of advertising

when he lamented that:

One of the reasons advertising is becoming increasingly criticized is because it is so prevalent. Not only are there more magazines, newspaper, outdoor, television, and radio advertisements than ever, but more and more public space is becoming commercialized. Between the stickered bananas and the advertisements over the urinals and the ones on the floor of the supermarkets, we are exposed to 3,000 commercial messages a day. That is one every 15 seconds, assuming we sleep for 8 hours, and I would guess right now there is someone figuring out how to get us while our eyes aie"c10'ied.

One of the major complaints against advertising is that many

advertisements are misleading or untruthful and deceive consumers. I! . ..

O'Donohoe (1995) stressed that there is a general mistrust of advertising

among consumers. Mittal (1994) similarly concluded that consumers felt that

less than one-quarter of TV commercials are honest and believable. Another

problem is the general belief that advertising is offensive, tasteless, irritating,

boring, obnoxious, and so on. A number of authors agreed that consumers feel

most advertising insults their intelligence and that many advertisements are in

poor taste (Mittal, 1994; Andrews, 1989; and Alsop, 1987).

Certain consumers simply hated advertising for the sake of it and no

matter how genuine the intention, they would still not buy. Greyser (1973)

confirmed that consumers are more likely to dislike advertisements for

products they do not use and for brands they would not buy. Moreover, the

prohibitive cost of advertising is a serious problem to beverage companies.

According to Erickson (1996) total global spending in advertising reached

$355 billion in 1995. He projects global spending in advertising business to

reach $1.95 1 billion in 2020. Bel-Molokwu (2000) put Nigeria's share of this

cost to N3.5 billion.

Another area the beverage companies seem to experience problem is

advertising to children. Children are vulnerable to advertising because they

lack knowledge and experience for critical evaluation of information received.

Ward (1974) argued that advertising is part of life and children must learn to

deal with it in the consumer socialization process of acquiring the skills needed

., to fimction in the market place. However, there is a consensus that pre-school

children cannot differentiate between commercials and programmes; do not .<,,.,. I . , * . .

perceive the selling intent of commercials, and cannot distinguish between

reality and fantasy (Robertson and Rossitter, 1974; Ward and Wackman,

( I . ..

Benefits of Utilizing Non-price competition Strategies by Beverage

Companies in Nigeria

Sales promotion is a form of non-price competition strategy that can

attract immense benefits to beverage companies. Philips and Duncan (1968)

enumerated the benefits of sales promotion to include:

1. Increase in sales resulting from sales promotion typically leads to lower production costs.

2. The manufacturer or middleman obtains some relief from the necessity of meeting all price cuts made by competitors.

3. It reduces the overall cost of selling a product.

4. Sales promotion of a brand brings the owner closer to the ultimate consumer with the result that he creates goodwill.

5. Sales promotion may lead not only to increased sales but, in some cases, to greater stability in production.

According to Belch and Belch (2001), a major benefit of sales

promotion which every marketer hopes to achieve is the accelerated selling

process that maximizes sales volume. They explained that brand managers use

sales promotions routinely, not only to introduce new products or defend

against the competition but also to meet quarterly or yearly sales and market

share goals. They further stressed that when sales volume is achieved, the

beverage companies would meet profit target and are in better shape to meet all

business commitments. Gibson (1991) stated that part of the pay managers , . . . 4 . d . *

receive depends on the sales a promotion generates relative to its costs. He

further explained that manufacturers also rely on sales promotion to match

competitors' competition or even gain competitive advantage. On the benefits

of sales promotion Sottosanti (198g: p. 54) stated:

Today's marketers who appreciate the potential of sales promotion as an ongoing strategy that works to build a brand's franchise recognise that promotion's potential goes well beyond mere quick-fix, price-off tactics. The promotion professional is familiar with a variety of approaches to generating consumer involvement - that is, sweepstakes, special events, premiums, or rebates - and understands that the given

campaign must work in harmony with long-term goals and brand positioning.

Sampling is a handy non-price competition strategy when companies

need to get people to try a product because sampling generates much higher

trial rates than advertising or other sales promotion strategies. According to

Belch and Belch (2001), consumers experience brands directly, gaining a

greater appreciation for its benefits. They claim that this can be particularly

important when a product's features and benefits are difficult to describe

through advertising. Most foods and beverages have features that are most

appreciated when experienced directly. Heitsmith (1993) stated that sampling

creates more competition and helps keep sampling costs down. According to

him, a combination of technology and creativity is driving new sampling

strategy that let marketers target more efficiently. He further stressed that the

subsequent sell-in of a sampled product exceeded projections by 30 per cent.

Coupons is also a non-price competition strategy that can attract

immense benefits to beverage companies. According to Belch and Belch

(2001) beverage companies that use coupons benefit greatly since coupons 4 " h 7 .

make it possible to offer'a'price $duction only to those consumers who are

price sensitive. They explained that such consumers generally purchase

because of coupons while those who are not concerned about price buy the

brand at full value. Coupons are,,only:second to sampling as a promotional

strategy in generating trial. Belch and Belch emphasized that coupons make it

possible to reduce the retail price of a product without relying on retailers for

co-operation. Since a coupon lowers the price of a product, it reduced the

customer perceived risk associated with trial of a new brand. They stressed

that it could also encourage repurchase after initial trial and this is achieved by

including cents-off coupon inside the package to encourage repeat purchase.

Premium is another non-price competition strategy which beverage

companies could employ to their advantage. Package-carried free premiums

have high impulse value and can provide an extra incentive to buy the product.

According to Schmuckler (1996), free premiums have become very popular in

the beverage and restaurant industry, which use premium offer to attract

children in particular. Self-liquidating premiums, in addition to cost savings,

offer several benefits to marketers. Artzt (1991) enumerated those benefits to

include:

1. Offering values to consumers through the premium products can create interest in the brand and goodwill that enhances the brand's image.

2. Premium can encourage trade support and gain in-store displays from the brand and the premium offer.

3. Self-liquidating premiums are tied to the advertising coupon, so they extend the advertising message and contribute to consumer franchise building.

Beverage companies that use non-price competition strategies such as

contests and sweepstakes benefit immensely. Belch and Belch (2001) stressed

that the cost of mounting B bweep'siakes is predictable. They suggested that

companies could buy insurance to indemnify them and protect against the

expenses of awarding a big prize. This presents the company with the

advantage of a fixed cost that makes f ~ r effective budgeting for promotions.

Belch and Belch pointed out that another benefit of sweepstakes and contests is

that marketers can use them to build brand equity by connecting the prizes to

the lifestyle, needs or interests of the target audience. They stressed that soft

drinks and alcoholic beverage companies use sweepstakes and contests to

generate excitement by involving people with a popular and timely event (like

world cup).

According to Arnforfer (1998) companies that utilize refund or rebate

offers as non-price competition strategy do so to induce trial of a new product,

encourage users of another brand to switch or encourage repeat purchase.

Belch and Belch (2001) confirmed that consumers perceived the savings

offered through a cash refund as an immediate value that lowers the cost of the

item. However, Bonus pack, in which a customer is offered extra amount of a

product at a regular price, have several advantages. Belch and Belch (2001)

stated that bonus pack give marketers a direct way to provide extra value

without having to get involved with complicated coupons or refund offers.

They explained that this additional value is obvious to the consumer and can

have a strong impact on the purchase decision at the time of purchase.

Moreover, Spethmann (1997) emphasized that bonus pack can also be an

effective defensive manoeuvre against a competitor's promotion or

introduction of a new brand.

Price-off deals which reduces price of products from 10 to 25 per cent

can be a strong influence at the point of purchase when price comparisons are

being made. Price-off promotions can also encourage consumers to purchase

larger quantities pre-empting.competitors' promotions and leading to greater

trade support (Belch and Belch, 2001). Frequency programme on the other

hand, is a continuity programme which offers consumers opportunity to

accumulate points for continuing to purchase a product. The benefits which ( 1

can accrue to beverage companies using frequency programmes is that it

encourages consumers to use their products or services on a continual basis as

a way of developing strong customer loyalty. Furthermore, beverage

companies can use frequency programme as a means of differentiating their

product, service, business or retail store (Belch and Belch, 2001).

When companies use event marketing as promotion strategy, it is

creating experience for consumers by associating the brand with certain

lifestyles. This builds goodwill and brand loyalty between the company and

the consumers (Belch and Belch, 2001). However, when Trading stamps are

given to a customer on each purchase he accumulates and turns them in for

merchandise. Companies that use trading stamps may derive certain benefits.

Philips and Duncan (1968) stated that customers see stamps as a relatively

painless way of saving. They explained that stamps offer certain psychological

satisfaction which include: (1) A reputation for being thrifty, (2) A response to

the collection instinct, (3) A sense of accomplishment in filling one's stamp

books, (4) Redeeming them for merchandise.

Advertising is a very important promotional strategy, particularly for

companies whose products and services are targeted at mass consumer

markets. Advertising can be a very cost-effective strategy for communicating

with large audiences. For example, during the 1994-2000 television season,

the average 30 second spot on primetime network television reached nearly 10

million households. The cost per thousand households was around 14.00

dollars (Trends in Media, .200A.)-r According to Philips and Duncan (1968) the

cost of promotion is not entirely wasted. They stressed that advertising is a

necessary strategy for stimulating consumption in the economy and

consumption has become the fundamental characteristics of continuing I! . ..

economic progress. Furthermore, they attributed improved standard of living

to the imaginative genius of advertising which not only creates and sharpens

demand, but also, stimulates the never ceasing quest of improvement in quality

of the product.

Emphasising the benefits of advertising, Bel-Molokwu (2001) stated

that advertising is the tool which forces operators to recognize the need for

business success. It enables organisations to review their overall operations

and keep an eye on competitors. According to him, without advertising the

existence or performance of competing products or services, could not be

known. This could lead to complacency in managing production facilities.

The benefits of personal selling strategy to beverage companies were

enumerated by Belch and Belch (2001) as follows:

1. Allowing for two-way interactions. This allows the sender to determine the impact of the message.

2. Personal selling allows for tailoring of the message to meet the occasion.

3. Personal selling reduces distraction.

4. Personal selling involves the customer in the decision process.

5 . Sales force can serve as a source of research information.

The significance of personal selling strategy to beverage companies is

evidenced by its use and variety of forms it takes. According to Philips and

Duncan (1968), the vigour of the economy depends on effective personal

selling without which the. ,entire marketing mechanism would break down.

They contended that when salespersons are well trained and exhibit

demonstrable skill and judgement in presenting their argument, the buyer's

impression of the whole firm is favourab1.e. , I . ..

Competition on the basis of quality and service is central to modem

business operations. Beverage companies would rely on quality delivery and

service to make progress in their marketing programme. According to Philips

and Duncan (1968), quality and service competition, in many instances, has

resulted in lower prices, increased productivity, and high standard of living.

Related Empirical Studies

Considerable empirical studies have been conducted in the area of the

present study. Raghubir and Corfman (1999) conducted a study on the

influence of sales promotion on brand purchase by consumers. The major

purpose of the study was to determine whether price promotions affect pre-trial

evaluation of a brand. They found that offering promotion is more likely to

lower brand's evaluation when the brand has not been promoted previously

and that promotion are likely to result in a negative evaluation. The study

suggested that marketers must be careful in the use of price promotion or they

may inhibit trial of a brand in certain situations. The present study is related to

Raghubir and Corfman study in that both focused on the effects of price

promotions on products. But the present study assesses the influence of sales

promotion generally as non-price competition strategies that could be

employed by the beverage companies in the North Central States of Nigeria.

NCH Promotional Services (1999) conducted a study on worldwide

coupon distribution and redemption trends. The major purpose of the study I

was to identify how coupons are distributed and coupon redemption trends in

the United States. It was .found. that over 80 per cent of consumers use

coupons. It was also found that the average face value of coupons distributed

increased from 2 1 cents in 198 1 to 70 cents in 1998. The study concluded that

consumers generally seek out the coupons .offering the highest savings, as the , I . .

average face value of the 4.8 billion coupons that were redeemed in 1998 was

75 cents. The present study is related to NCH Promotional Services study in

that both are concerned with competition strategies utilized by marketing

companies in the sale of consumer products. However, the scope of the NCH

Promotional Services study was delimited to the use of coupons in the United

States. But the present study assesses the utilisation of, not only coupons, but

also other non-price competition strategies by beverage companies in Nigeria.

Eisman (1991) conducted a study on coupon mis-redemption. The

major purpose of the study was to determine reasons for coupon mis-

redemption or the cashing of a coupon without purchasing of a brand. The

study found that coupon misredemption or fraud occurs in a number of ways

including:

1. Redemption of coupons by consumers for a product or size not specified in the coupon.

2. Redemption of coupons by salesclerks in the exchange for cash.

3. Gathering and redemption of coupons by store managers or owners without the accompanying sale of the product.

4. Gathering and printing of coupons by criminals who sell them to unethical merchants, who in turn redeem them.

The present study is related to the Eisman (1991) study because both studies

looked into the problems associated with coupons but the present study went

further to identify and consider the usefulness of other non-price competition

strategies to beverage comp'adieS'in"Nigeria.

Shavitt, Lowery and Haefner (1998) conducted a study on public view

of advertising. The major purpose of the study was to determine the general

public's current attitudes toward aqd confidence in advertising. They surveyed

over 1, 000 adult consumers of beverage products are found that the public

generally do not trust advertising, although they tend to feel more confident in

advertising claims when focused on their actual purchase decisions. The

present study is related to the Shavitt et al., study in that both are concerned

with how advertising influences consumers. However, the present study went

beyond the influence of advertising to cover non-price competition strategies.

Mangleburg and Bristol (1998) conducted a study on the problem of

advertising to children. The major purpose of the study was to ascertain

whether advertising is injurious to children. It was found that market place

knowledge plays an important role in adolescents' scepticism toward

advertising. It was found that greater knowledge of the market place appears

to give the teens a basis by which to evaluate advertisements and makes them

more likely to recognize the persuasion strategies used by advertisers. The

present study is related to that of Mangleburg and Bristol in that both focused

on advertising as a means of non-price competition. But while Mangleburg

and Bristol focused on children's vulnerability to advertising, the present study

covered beverage companies in Nigeria and how sales promotion generally

influences the companies' decisions.

Tat, Cunningham and Babakus (1988) conducted a study on rebate

offers. The major purpose of the study was to ascertain the consumer

perceptions of rebates as a form of non-price competition. It was found that a

negative relationship exists between the use of rebates and the perceived

difficulties associated with the redemption process. The study also found that

consumers perceived manufii~tuers~as offering rebates to sell products that are

not faring well. The third finding of the study was that non-users of rebate

were particularly likely to perceive the redemption process as too complicated

and to suspect manufacturer's motives. .The present study deals in part with , . .

rebate offers as one of the non-price competition strategies adopted by

beverage companies in Nigeria while Tat et al., study ascertained the

consumers' perception of rebates as a form of non-price competition.

Woods (1998) conducted a study on the suitability of contest and

sweepstakes as a promotional strategy. The major purpose of the study was to

determine whether contests and sweepstakes contribute to consumer franchise

building. He found that promotions do little to contribute to customer

franchise building for a product or service and may even detract from it.

Another finding was that contests and sweepstakes become the dominant focus

rather than the brand and finally, that little is accomplished other than giving

away substantial amounts of money andlor prizes. Wood's study is related to

the present study in that both studies highlighted the suitability of contests and

sweepstakes as a promotional strategy. However, the present study

concentrates on the problems and benefits of utilizing non-price competition

strategies by beverage companies.

Blair and Landon (1981) conducted a study on the effects of reference

prices in retail advertising. The major purpose of the study was to determine

reasons for the use of price-off promotions by beverage companies. The

major findings of the study include: Price-offs are controlled by the

manufacturer and it makes sure promotional discounts reaches the consumer

rather than being kept by the trade; and like bonus pack, price-off deals usually

present a readily apparent value to shoppers, especially when they have a

reference price point for the brand and thus recognise the value of the discount.

The present study and the&udybyBlair and Landon attempt to determine the

extent of use of price-off deals by beverage consumers. The present study

went further to assess the problems and benefits of, not only price-off deals,

but also promotional strategies adopted by beverage companies. 11 . ..

Tellis (1988) conducted a study on advertising exposure, loyalty and

brand purchase. The major purpose of the study was to know the impact of

advertising on inducing brand switching and brand loyalty. The Tellis study

analysed household purchase of 12 key brands of a frequently purchased

product. It was found that advertising appears effective in increasing the

volume purchased by loyal buyers but less effective in winning new buyers.

For loyal buyers, high level of exposure per week may be unproductive

because of levelling off advertisement effectiveness. Advertising appears

unlikely to have some cumulative effect that leads to loyalty and that features,

displays, and especially price have a stronger impact on response than does

advertising. The present study is related to the Tellis' study in that both studies

share concerns for influence of advertising on brand switching and loyalty.

However, the present study departs from the Tellis' study in that it focused on

advertisements as well as on non-price competition strategies employed by

beverage companies.

Champy (1999) conducted a study on selling to tomorrow's customer.

The major purpose of the study was to determine the modern role of the

salesperson. He found that the role of the sales force will significantly change

since the business world is going through a very rapid transition. He identified

reasons for this to include: that individuals and corporations gain more

knowledge and economic power; that value is replacing efficiency; and that

industry boundary are changing. The present study deals extensively with

personal selling and it is related to Champy study. However, the present study

also gives full consideration.ta.~thm non-price competition strategies.

Okpala (1996) conducted a study on the impact of advertising on beer

products. The major purpose of the study was to determine how the consumers

perceive the impact of advertising on. beer products. Her major findings , I

include:

1. Advertising creates and promotes general awareness among consumers of the availability of alternative products.

2. The impact of advertising helps the beer producers to secure a section of the Nigerian market.

3. Marketers understood customers well through the daily experiences of selling to them.

The present study is related to Okpala's study in that both studies compared the

impact of advertising on consumer choice of beverage products. However, the

present study went further to assess the uses of other promotional strategies

and problems associated with using them.

Emefo (1989) conducted a study on the role of advertising in motivating

consumer brand preferences for beer products. The major purpose of this

study was to ascertain the market acceptance of various beer products in

Anambra State. The researcher formulated six objectives and tested two

hypotheses. He found that: the various media vehicles were quite effective in

creating awareness; consumers brand choice of beer products cannot be

attributed to advertising; and that advertising helps to create awareness and

motivate consumers' brand preferences for beer products. The present study is

related to the Emefo's study in that both studies attempted to establish the

influence of advertising on consumer choice of beer products. However, the

present study incorporated other forms of non-price competition strategies.

Edu and Ibanga (1.9S8)1.conducted a study on consumers' assessment of

advertising in Cross River Breweries Limited, Uyo, Akwa Ibom State. 'The

purpose of the study was to determine consumers' assessment of the influence

of advertising in the Cross River Breweries. The researchers found that there , I . .

was a positive correlation between exposure to advertisement messages, and

consumer brand loyalty. The present study is related to the Edu and Ibanga's

study because both studies investigated beer consumers and how advertisement

influences their choice of brand. However, the present study departs from the

Edu and Ibanga's study in its in-depth investigation of problems, benefits and

other numerous sales promotion activities covered.

Nwokolo (1996) carried out a study on the influence of television

advertising as a strategy for consumers' demand for soft drinks in Enugu

metropolis. The purpose of the study was to examine the contributions of

television advertisements to the consumer's demand of Seven Up soft drinks.

Six specific objectives were formulated and four hypotheses were tested. The

findings of the study revealed that television was the most effective medium of

reaching consumers; there was no strong brand loyalty to any of the soft drinks

bottled in Enugu. The factors that influenced Seven Up soft drinks did not

have equal ratings; and the relatively low acceptance of Seven Up soft drinks

with Enugu metropolis was mainly a factor of its unavailability. Nwokolo's

study is related to the present study in that both studies focused on advertising

as a form of non-price competition strategy. However while Nwokolo's study

focused on the influence of television as a sales promotion strategy, the present

study focused on television and other promotional strategies that are associated

with non-price competition, and their benefits to beverage companies in

Nigeria.

Clay et al., (2002) studied price and non-price competition in the online

book industry. The purpose, gf, ihe study was to determine the effects of non-

price competition as a strategy in the online book industry. They postulated

and tested two hypotheses and found that the availability of low-cost

information on price would lead all Internet retailers to charge the same price , I . .

for mass-produced physical goods and that price would be approximately cost.

They also found that companies preferred not to compete directly on price

because of the low profits that would result. The present study is related to

Clay's et al., in that the studies focused on price and non-price competition

strategies. However, while the Clay et al. study focused on online book

industry, the present study focused on beverage products.

Summary of Related Literature

Non-price competition has been defined as the competition that exists

between two or more businesses to attract customers from each other on a basis

other than price. The non-price form of competition includes sales promotion

which broadly considered include contest/sweepstakes, premiums, sampling,

etc., advertising, personal selling, quality and service competition and product

positioning.

Sales promotion strategies provide consumers with an extra incentive or

reward for engaging in a certain form of behaviour such as purchasing a brand.

The marketers often evaluate sales promotion strategies in terms of their ability

to accomplish specific objectives and consider whether the impact of the

promotion will be immediate or delayed. Authors advocate the use of these

non-price competition strategies as part of marketing performances to leverage

trade support.

Factors which encourage non-price competition and discourage price

competition include the tendency towards price uniformity; the effectiveness of

non-price competition in holding customers; the non-price competition of

competitors; and the imitat iand swcessful business organisations. There is a

consensus that some non-price competition is actually necessary to make price

competition effective.

Literature dealing with problems facing beverage companies in Nigeria , I . .

indicate that promotions lead consumers to expect merchandise of uniform

quality and this may be difficult to maintain. Further, marketers who rely

largely upon sales promotion to hold up their business have created an

additional element of uncertainty for themselves. The authors agree that

overuse of sales promotion can be detrimental to a brand because it may lose

its perceived value.

According to the authors, many contests and sweepstakes promotions do

little to contribute to consumer franchise building for a product or service and

may even detract from it. When contests and sweepstakes become the

dominant focus rather than the brand, little is accomplished other than giving

away substantial amount of money andlor prizes. When promotions fail, they

can embarrass a company. Many companies have lost great amount of money

when promotions went awry. Advertising particularly was viewed by the

authors as misleading, deceitful and untruthful.

The authors were in agreement with the benefits of utilizing non-price

competition strategies by beverage companies. Available literature reveal that

increase in sales resulting from sales promotion typically leads to lower

production costs; it reduces the overall cost of selling a product. The

manufacturer or middleman obtains some relief from meeting all price cuts

made by competitors. Besides, sales promotion of a brand brings the owner

closer to the ultimate consumer. Furthermore, sales promotion does not only

, increase sales but also greater stability in production.

The beverage companies can use some promotional strategies to build

brand equity by connecting thelpricm to the lifestyle, needs or interests of the

target audience. Through the use of sales promotions, marketers maximize

sales volume and achieve target profit with which they meet their

commitments. There is a consensus that promotions are helpful in introducing 1

new products and defending competitors against competition.

Various authors consulted dwelt on some aspects of non-price

competition. For instance, the application of sales promotion tools in other

marketing activities were studied by many authors. Advertising, personal

selling, positioning and quality and service competition have been studied in

part by many of the authors consulted. Unfortunately, none of the authors or

studies dealt fully with all the non-price competition strategies and their

utilization by beverage companies in Nigeria. These gaps are what the study

seeks to fill.

CHAPTER I11

METHODOLOGY

This chapter describes the procedures used in this study which include

design of the study, Area of the study, Population of the study, Sample of the

study, Description of instrument, Validation of instrument, Reliability of

instrument, Questionnaire administration and retrieval, and Techniques for data

analysis.

Design of the Study

The study utilized a descriptive survey design. A survey of marketing

managers, sales managers and advertising managers in beverage companies in

the North Central states of Nigeria, was carried out to collect data on their

opinions on the use of non-price competition as a marketing strategy. A survey

research design is suitable for this study because according to Osuala (2001),

survey research focuses on people, the vital fact of people, their beliefs,

opinions, attitudes, motivation and behaviours.

Area of the Study . ,, 4 "1. .,'

The area of study was the North central states of Nigeria. The study was

carried out in the following states: Benue, Kaduna, Kogi, Kwara, Nasarawa,

Niger, Plateau and Federal Capital Territory. The area has twenty-three

registered beverage companies. The number of the companies was collected

from National Agency for Food and Drug Administration and Control

(NAFDAC)

Population for the Study

The population of this study comprises 102 respondents made up of 34

marketing managers, 34 sales managers and 34 advertising managers in the

beverage companies in the North Central States of Nigeria. These Managers

were selected because they are responsible in the use of these strategies in

marketing organizations. (See Appendix A).

Sampling of the Study

There was no sampling in this study. The entire population was studied

because the population was manageable.

Description of Instrument

Questionnaire was used in gathering data for this study. The questionnaire

contained 72 items that were divided into six sections. Section A dealt with

general information about the respondents. This section contained four

questionnaire items with options and blank spaces that enabled the respondents

tick or fill as appropriate.

Section B dealt with research question one. It contained 16 items that

were used to collect data to'a'iiiwer rGearch question one. It was structured on

a five-point Likert scale and was used to elicit information on the respondents'

opinion of the utilization of non-price competition by beverage companies in

the area. The.response options of ''Vighl~ Utilized", "Utilized", Undecided,

Least Utilized", and "Not Utilized, was used.

Section C dealt with research question two. It contained 8 items. This

section was used to ascertain the factors that encourage non-price competition

among beverage companies in Nigeria. It was structured on a five-point Likert

rating scale and was used to elicit the information. The response options

Population for the Study

The population of this study comprises 102 respondents made up of 34

marketing managers, 34 sales managers and 34 advertising managers in the

beverage companies in the North Central States of Nigeria. These Managers

were selected because they are responsible in the use of these strategies in

marketing organizations. (See Appendix A).

Sampling of the Study

There was no sampling in this study. The entire population was studied

because the population was manageable.

Description of Instrument

Questionnaire was used in gathering data for this study. The questionnaire

contained 72 items that were divided into six sections. Section A dealt with

general information about the respondents. This section contained four

questionnaire items with options and blank spaces that enabled the respondents

tick or fill as appropriate.

Section B dealt with research question one. It contained 16 items that

were used to collect data to.a'ns'w& rekearch question one. It was structured on

a five-point Likert scale and was used to elicit information on the respondents'

opinion of the utilization of non-price competition by beverage companies in

the area. The.response options of ''JiIighl~ Utilized", "Utilized, Undecided,

Least Utilized", and "Not Utilized, was used.

Section C dealt with research question two. It contained 8 items. This

section was used to ascertain the factors that encourage non-price competition

among beverage companies in Nigeria. It was structured on a five-point Likert

rating scale and was used to elicit the information. The response options

Population for the Study

The population of this study comprises 102 respondents made up of 34

marketing managers, 34 sales managers and 34 advertising managers in the

beverage companies in the North Central States of Nigeria. These Managers

were selected because they are responsible in the use of these strategies in

marketing organizations. (See Appendix A).

Sampling of the Study

There was no sampling in this study. The entire population was studied

because the population was manageable.

Description of Instrument

Questionnaire was used in gathering data for this study. The questionnaire

contained 72 items that were divided into six sections. Section A dealt with

general information about the respondents. This section contained four

questionnaire items with options and blank spaces that enabled the respondents

tick or fill as appropriate.

Section B dealt with research question one. It contained 16 items that

were used to collect data to.8'ns'wer 'rehearch question one. It was structured on

a five-point Likert scale and was used to elicit information on the respondents'

opinion of the utilization of non-price competition by beverage companies in

the area. The.response options of "flighly Utilized", "Utilized", Undecided",

Least Utilized", and "Not Utilized", was used.

Section C dealt with research question two. It contained 8 items. This

section was used to ascertain the factors that encourage non-price competition

among beverage companies in Nigeria. It was structured on a five-point Likert

rating scale and was used to elicit the information. The response options

"Strongly Agree", "Agree", "Undecided", "Disagree" and "Strongly Disagree",

was used.

Section D dealt with research question three and it contained 8 items.

This section was used to ascertain the opinion of respondents on the factors that

discourage price competition among beverage companies in Nigeria. It was

also structured on a five-point Likert rating scale and was used to elicit the

information. The response options "Strongly Agree", "Agree", "Undecided",

"Disagree" and "Strongly Disagree", was used.

Section E dealt with research question four. It contained 20 items. This

section was used to ascertain the problems faced by beverage companies by the

adoption of non-price competition strategies. It was also structured on a Likert

rating scale.

Section F dealt with research question five. It contained 20 items. This

section was used to ascertain the benefits of utilizing non-price competition

strategies by beverage companies in Nigeria. The questionnaire was structured

on a five-point Likert scale.

Validation of Instrument-. 8 q , i v 7 . .

The questionnaire was subjected to face validity by three specialists

from the Department of Vocational Teacher Education, University of Nigeria,

Nsukka and. four lecturers from the Department of Marketing, University of 1 ) . ..

Nigeria, Enugu Campus. Their suggestions and observations were used to

refine the questionnaire items.

Reliability of the Instrument

Cronbach Alpha reliability test was used to determine the internal

consistency of the instrument. The instrument was administered on 30

respondents made up of 10 marketing managers, 10 sales managers and 10

advertising managers randomly selected from equivalent companies in Enugu

State. This was to ensure that subjects used in the reliability test were excluded

from the study sample. Their responses were used to determine the reliability

coefficient. The reliability coefficient of 0.84 was obtained which suggested

that the internal consistency of the instrument was very high. See Appendix D.

The use of Cronbach Alpha was appropriate in determining the internal

consistency of instrument. Internal consistency reliability measure yields

information about the precision of various items in an instrument in measuring

the common underlying phenomenon.

Questionnaire Administration and Retrieval

The questionnaire was administered on the marketing managers, sales

managers and advertising managers in beverage companies in the North

Central States of Nigeria. With the aid of five trained research assistants the

researcher delivered copies of the questionnaire to the respondents. While each

of the five research assistants covered a state each, the researcher covered three

states. Copies of the questionnaire were distributed and collected within two

weeks. This reduced the delays associated with completing questionnaire and . ,<.*"<. .*' .v '

equally enhanced the return rate of the questionnaire.

Techniques for Data Analysis

Research 'questions 1, 2, 3, 4 apd 5 .were analysed using a five-point Likert

rating scale. The mean was computed and interpreted for each item as follows:

Response Categories Point Boundary Limit

Strongly AgreeIHighly utilized 5 4.5 - 5 Agreelutilized 4 3.5 - 4.49 Undecided 3 2.5 - 3.49 DisagreeILeast utilized 2 1.5 - 2.49 Strongly DisagreeINot utilized 1 0.5 - 1.49

The mean score for each item was computed by multiplying the

frequency count of each response option with the corresponding value of the

response category and dividing it by the number of responses to each question.

Decision rule: A criterion mean that was equal to or greater than (2) 3.50 was

taken as utilizedlagreed, while a mean that was equal to or less than (I) 3.49

was taken aslnot utilizedldisagreed.

Hypothesis: The three hypotheses were tested using one way ANOVA

statistics at 0.05 level of significance.

Decision rule: If the calculated F-ratio value at 0.05 level of significance was

equal or greater than the given critical (table) F-ratio value, the null hypothesis

was rejected. If the obtained value of F-ratio was less than the given critical

(table) F-ratio value, the null hypothesis was accepted.

CHAPTER IV

PRESENTATION AND ANALYSIS OF DATA

In this chapter, the summary of the analyzed data and the results are

presented in line with the research questions and formulated hypotheses.

Research Question 1

What are the non-price competition strategies used by beverage

companies in the North Central States of Nigeria?

To answer the above research question, items that have utilitarian values

as non-price competition strategies were presented to the respondents to

indicate the extent of their utilization. The mean scores of the responses to

each item are presented in Table 1.

Item Non-price competition HU U UD LU NU X Decision No strategies

Coupons 46 24 17 Price reduction 45 32 10 Contents 42 37 8 Sweepstakes 46 28 13 Money-back refundlrebate 16 28 15 Samples . , ' . . * I . "' "40' 30 17 Premiums 40 26 15 Price-off deals 5 8 54 Bonus pack 16 21 20 Event marketing 44 , 35 8 Frequency programme 1 , _ 12 58 Trading stamps - - 11 Advertising 51 36 - Personal selling 42 27 18 Quality and service 30 44 13 competition

N= 87 U = Utilized; NU = Not Utilized

Table 1 above showed the mean distribution of the opinions of marketing

managers, sales managers and advertising managers on the non-price

competition strategies that are utilized by beverage companies in the North

Central States of Nigeria. With regard to coupons in table 1, the data showed

that 46 respondents highly utilized coupons, 24 utilized coupons while 17 were

undecided. The high mean score of 4.33 was an indication that the respondents

agreed that coupons were very effective non-price competition strategy. For

price reduction, 45 respondents agreed that they highly utilized price reduction,

32 utilized price reduction strategy, while 10 were undecided showing an

overwhelming mean of 4.40. This implied that the respondents agreed that

price reduction is a non-price competition strategy utilized by beverage

companies in the North Central States of Nigeria. A total of 42 respondents

agreed that contests are highly utilized by beverage companies in Nigeria, 37

utilized contests while 8 were undecided. With an astounding mean score of

4.39, it was clear that the respondents accepted contests as a non-price

competition strategy utilized by beverage companies in the North Central

States of Nigeria. ., ,,.."t. .,' . .,+ '

With regard to sweepstakes, 46 respondents highly utilized sweepstakes,

28 utilized it while 13 were undecided. This showed a high mean score of 4.38

indicating that the respondents agreed that sweepstakes is very much utilized

by beverage companies in Nigeria. For money-back rebate, 16 respondents

accepted that it has a high utility value, 28 accepted that it is utilized, 15 were

undecided, 20 accepted it is least utilized while 8 said that money-back rebate

is not utilized. This showed a low mean rate of 3.28. It would appear that the

respondents disagreed that money-back refund is much utilized by beverage

companies in the North Central States of Nigeria.

As regards samples, 40 respondents agreed that samples were highly

utilized, 30 agreed that samples were utilized while 17 were undecided. With a

high mean score of 4.26, it implied that samples were highly utilized by

beverage companies in Nigeria. For price-off deals, 5 respondents agreed that

price-off deals were highly utilized. 8 respondents agreed it was utilized, 54

were undecided, 13 reported that it was least utilized while 7 indicated it was

not utilized. By implication, the very low mean score of 2.90 was an indication

that price-off deals were not utilized by beverage companies in the North

Central States of Nigeria.

A total of 16 respondents agreed that bonus pack was highly utilized, 21

agreed that it was utilized, 20 were undecided, 16 reported it was least utilized

while 14 reported it was not utilized. The low mean of 3.10 was an indication

that beverage companies in Nigeria did not utilize bonus pack. On event

marketing, 44 respondents indicated that event marketing was highly utilized as

a non-price competition strategy. 35 respondents agreed it was utilized while 8

were undecided showing an overwhelming mean score of 4.41. This implied

that event marketing was utilized by marketing, sales and advertising managers

as a non-price competition, strategy,,.- .

With regard to frequency programme, 12 respondents agreed it was

utilized, 58 were undecided, 10 indicated it was least utilized while 7 reported

that it was not utilized. With a low mean of 2.82, it implied that frequency ( 1

programme was not utilized by beverage companies in Nigeria. For trading

stamps, 11 respondents were undecided on trading stamps as a marketing

strategy, 30 respondents indicated that it was least utilized while 46

respondents answered that it was not used. With a very low mean of 1.60, it

implied that most beverage companies do not utilize trading stamps as a non-

price competition strategy. On the use of advertising, 51 respondents agreed

that it was highly utilized while 36 respondents indicated that it was utilized.

With an astounding mean score of 4.59 it implied that most beverage

companies in Nigeria use advertising as a non-price marketing strategy.

A total of 42 respondents agreed that personal selling was highly utilized

as a non-price competition strategy, 27 respondents indicated that personal

selling was utilized while 18 were undecided. This showed a high mean of

4.28 which is an indication that many beverage companies in Nigeria utilize

personal selling as a non-price competition strategy.

On quality and service competition, 30 respondents indicated that it was

highly utilized, 44 indicated it was utilized while 17 were undecided. With a

mean score of 4.20, it implied that quality and service competition is accepted

as a non-price competition strategy used by beverage companies in Nigeria. As

regards positioning, 25 respondents agreed that it was highly utilized, 49

indicated that it was utilized and 13 respondents were undecided. With a mean

score of 4.14, the implication was that positioning was utilized as a non-price

competition strategy by most beverage companies in Nigeria.

Research Question 2. ,, .-,. .,. . .>. .

What are the factors that encourage non-price competition among

beverage companies in Nigeria?

Data for answering the above.question were presented in Table 2. , '

Table 2: Factors that encourage non-price competition among beverage companies.

Item Factors that encourage non- -

No price competition SA A U D SD X Decision 17 Buyers attracted on a non-

price basis are likely to be more permanent customers than those secured on price basis. 30 38 10 7 2 4.14 Agree

18 Stores can take customers from competitors without lowering prices because they might have been attracted on non-price basis in the first place. 27 30 8 12 10 3.60 Agree

19 Certain brands may actually be costlier but patronized more than identical ones by customers. 25 24 21 10 7 3.57 Agree

2 0 A marketer who loses patronage often uses advertising campaign to regain it. 31 30 9 15 2 3.84 Agree

2 1 Some companies use advertising in self-defense. 10 25 35 17 - 3.32 Disagree

22 New entrants into , .,.(be $.,+

beverage industry are likely to imitate successful ones 35 25 17 5 5 3.92 Agree

23 Non-price competition is useful in distinguishing between directly and, indirectly competing products 29 30 17 8 3 3.85 Agree

24 The need to understand customer behaviour makes it imperative for marketers to appeal to buyer's attention. 30 30 11 8 8 3.76 Agree

N = 87

Data presented in Table 2 showed that 30 respondents strongly agreed

that buyers attracted on non-price basis were likely to be more permanent

customers than those secured on price basis, 38 agreed, 10 undecided , 7

disagreed while 2 strongly disagreed. With a high mean of 4.14, it implied that

many respondents were in agreement that buyers attracted on a non-price basis

were likely to be more permanent customers than those secured on price basis.

For questionnaire item 18, 27 respondents strongly agreed, 30 agreed, 8

undecided, 12 disagreed while 10 strongly disagreed. With a mean of 3.60, it

implied that respondents agreed that stores can take customers from

competitors without lowering prices because they might have been attracted on

non-price basis in the first place.

The responses to questionnaire item 20 showed that 25 respondents

strongly agreed that certain brands may actually be costlier but patronized more

than identical ones by customers, 24 agreed, 21 were undecided, 10 disagreed

while 7 strongly disagreed. This showed a mean of 3.57 and implied that

respondents agreed that certain brands may actually be costlier but patronized

more than identical ones by customers. On whether a marketer who loses

patronage often uses advehsingcampaign to regain it, 3 1 respondents strongly

agreed, 30 agreed, 9 were undecided, 15 disagreed and 2 strongly disagreed.

With a mean score of 3.83, it was an indication that respondents agreed that a

marketer who loses patronage often uses .advertising campaign to regain it. 1,

With regard to item 21, 10 respondents strongly agreed, 25 agreed, 35

were undecided while 17 disagreed. This showed a mean score of 3.32 and

implied that the respondents disagreed that some companies use advertising in

self-defense. On item 22, 35 respondents strongly agreed, 25 agreed 17

undecided, 5 disagreed and 5 strongly disagreed. With a mean score of 3.92, it

appeared that the respondents agreed that new entrants into the beverage

industry are likely to imitate successful ones.

Of the 87 respondents that responded to item 23, 29 strongly agreed, 30

agreed, 17 undecided, 8 disagreed and 3 strongly disagreed. With a mean of

3.85, the implication was that the respondents agreed that non-price

competition was useful in distinguishing between directly and indirectly

competing products. On questionnaire item 24, 30 respondents strongly

agreed, 30 agreed, 11 undecided, 8 disagreed while 8 strongly disagreed. This

showed a mean score of 3.76 implying that the need to understand customer

behaviour makes it imperative for marketers to appeal to buyer's attention.

Research Question 3

What are the factors which discourage the use of price competition

among beverage companies in Nigeria?

Data for answering the research question were presented in Table 3.

Table 3: Factors which discourage price competition among beverage companies.

- Item Factors that discourage price SA A U D SD x Decision No comvetition 25 Basing-point pricing system

discourages price competition 32 3 1 10 8 6 3.86 Agree 26 If prices are uniform, non-

price competition is necessary to attract business 34 27 12 7 7 3.85 Agree

27 When competitors charge the same price, any company desiring to expand must use some factors other than price 11 10 35 6 25 2.74 Disagree

28 Price uniformity is practised by beverage companies in Nigeria 3 16 38 22 8 2.82 Disagree

29 Non-price competition of competitors result in more non-price competition and discourages price competition 2 1 45 2 1 - - 4.0 Agree

30 When advertising proves inefficient, it can be discouraged easily 24 21 33 4 5 3.63 Agree

3 1 When price-cut does not result in a sufficient sales gain, to restore cut and ke,ep ,aid .sales volume may be difficult 8 28 15 18 18 2.89 Disagree

32 Even when price-cut is preferred, it is still necessary to advertise 22 32 25 4 4 3.74 Agree

I * . . N= 87

Data presented in Table 3 revealed that 32 respondents strongly agreed

on questionnaire item 25, 31 agreed, 10 undecided, 8 disagreed while 6

strongly disagreed. With a mean of 3.86, it implied that the respondents agreed

that basing-point pricing system discourages price competition. On item 26, 34

respondents strongly agreed, 27 agreed, 12 undecided, 7 disagreed and 7

strongly disagreed. This result showed a high mean score of 3.85 implying that

the respondents agreed that when prices are uniform, non-price competition is

necessary to attract business.

For questionnaire item 27, 1 1 respondents strongly agreed, 10 agreed, 35

undecided, 6 disagreed and 25 strongly disagreed. With a mean of 2.74 it

implied that when competitors charge the same price, any company desiring to

expand must use some factors other than price.

As regards item 28, 3 respondents strongly agreed, 16 agreed, 38

undecided, 22 disagreed and 8 strongly disagreed. This result showed a low

mean of 2.83. This implied that the respondents disagreed that price uniformity

is practised by beverage companies in Nigeria. On questionnaire item 29, 21

respondents strongly agreed, 45 agreed, while the rest 21 were undecided

showing a mean score of 3.76. This implied that the respondents agreed that

non-price competition of competitors result in more non-price competition and

discourages price competition.

For questionnaire item 30 dealing with effectiveness of advertising, 24

respondents strongly agreed, 21 agreed, 33 undecided, 4 disagreed and 5 strongly

disagreed. With a mean 'sdk"of'3.63, it implied that respondent agreed that when

advertising proves ineffective, it can be discontinued easily. With regard to

questionnaire item 31, 8 respondents strongly agreed, 28 agreed, 15 undecided, 18

disagreed and 18 strongly disagreed. Ths result showed a mean of 2.89, an indication

that the respondents disagreed that when price-cut does not result in a sufficient sales

gain, to restore cut and keep old sales volume may be difficult. On item 32, 22

strongly agreed, 32 agreed 25 undecided, 4 disagreed while 4 strongly disagreed.

With a mean score of 3.76, it implied that most of the respondents agreed that even

when price-cut is preferred, it is still necessary to advertise.

Research Question 4

What are the problems faced by beverage companies by the adoption of non-

price competition strategies?

Data relating to this research question were presented in Table 4:

Table 4: Problems of adopting non-price competition strategies.

Item Problems of non-price SA A U D SD X Decision No competition strategies

Non-price competition strategies are costly and consumers bear this burden 20 30 22 8 7 3.55 Agree Advertisement encourages consumers to buy shoddy products 7 24 26 14 16 2.91 Disagree Some heavily promoted products such as soft-drinks and alcoholic beverages are harmful to the consumers. 32 27 20 5 3 3.92 Agree A brand must have some unique feature for a sampling programme to be worthwhile - 30 30 27 - 3.03 Disagree The benefits to be gained from some products are difficult to

gawe It is difficult to many consumers coupon and when Sweepstakes and

., ,, ,rl. ,,. $ S T . 10 19 20 18 20 2.78 Disagree estimate how would use a

30 35 12 6 4 3.93 Agree contests do

little to. contribute to consumer . .: satisfaction 23 29 15 11 9 3.53 Agree Sweepstakes and contests have a

high rate of negative publicity. 10 12 24 21 20 2.67 Disagree

Bonus pack requires additional shelf space without providing any extra profit margin for the retailer. 35 25 14 13 - 3.94 Agree Price-off deals create pricing and

-

inventory problems for the retailer The utilization of other non-price competition strategies has made trading stamps outdated and difficult to use Many advertisements are misleading and deceptive Advertising is sometimes offensive, tasteless and irritating Advertisement of some products, e.g., soft-drinks and alcoholic beverages may have negative effect on the children. The public do not generally trust advertisements The rise of self-service reduces the need for sales persons The cost of hiring sales personnel is exorbitant The increased flow of information from internet to the buyer reduces the need for sales personnel Quality and service competition is difficult to maintain , $ 3 . "J. ,I.

The problem of positioning i;(e with the difficulty of differentiating the brand image with competitors 30 25 Agree

N = 87 1,

As can be seen from the data presented in Table 4, 20 respondents

strongly agreed on item 33, 30 agreed, 22 were undecided, 8 disagreed and 7

strongly disagreed. With a mean of 3.55, it implied that respondents agreed

that non-price competition strategies are costly and consumers bear this burden.

In connection with item 34, 7 strongly agreed, 24 agreed, 26 undecided, 14

Agree

Agree

Disagree

Agree

Agree

Agree

Agree

Agree

Agree

Agree

disagreed and 16 strongly disagreed. This gave a low mean of 2.91, which

implied that a majority of respondents disagreed that advertisement encourages

consumers to buy shoddy products.

As regards item 35, 32 respondents strongly agreed, 27 agreed 20

undecided, 5 disagreed while 3 strongly disagreed. This gave a mean of 3.92

indicating that the respondents agreed that some heavily promoted products

such as soft-drinks and alcoholic beverages are harmful to the consumers. On

questionnaire item 36, 30 respondents agreed, 30 undecided and 27 disagreed.

With a low mean of 3.03, it appeared that the respondents disagreed that a

brand must have some unique feature for a sampling programme to be

worthwhile.

With reference to item 37, 10 respondents strongly agreed, 19 agreed, 20

undecided, 18 disagreed and 20 strongly disagreed. This gave a low mean

score of 2.78. It implied that the respondents disagreed that the benefits to be

gained from some products are difficult to gauge. On questionnaire item 38, 30

respondents strongly agreed, 35 agreed, 12 undecided, 6 disagreed while 4

strongly disagreed. This showed a mean of 3.93 implying that respondents

agreed that it is difficult to estimate how many consumers would use a coupon

and when. . , ,, .. . .I, .,. . s s, 8 '

With regard to questionnaire item 39, 23 respondents strongly agreed,

29 agreed, 15 undecided, 11 disagreed and 9 strongly disagreed. This gave a

mean of 3.53. This was an indication that the respondents agreed that ,'

sweepstakes and contests do little to contribute to consumer satisfaction. On

whether sweepstakes and contests have a high rate of negative publicity, 10

strongly agreed, 12 agreed, 24 undecided, 21 disagreed and 20 strongly

disagreed. With a low mean of 2.67, it implied that the respondents disagreed

that sweepstakes and contests have a high rate of negative publicity.

With regard to questionnaire item 41, 35 respondents strongly agreed,

25 agreed, 14 undecided while 13 disagreed. This translated to a mean of 3.94

implying that most of the respondents where in agreement that bonus pack

requires additional shelf space without providing any extra profit margin for

the retailer. On questionnaire item 42, 26 respondents strongly agreed, 24

agreed, 28 undecided, 5 disagreed while 4 strongly disagreed. This gave a

mean score of 3.72 and implied that the respondents agreed that price-off deals

create pricing and inventory problems for the retailer.

As regards questionnaire item 43, 3 1 respondents strongly agreed, 36

agreed while 20 were undecided. With a mean of 4.13, it implied that the

respondents agreed that the utilization of other non-price competition strategies

has made trading stamps outdated and difficult to use. On whether many

advertisements are misleading and deceptive, 10 respondents strongly agreed, 4

agreed, 21 undecided, 20 disagreed while 32 strongly disagreed. With a low

mean of 2.3 1, it implied that a majority of the respondents disagreed with the

statement that many advertisements are misleading and deceptive.

With regard to questionnaire item 45, 25 respondents strongly agreed,

38 agreed, 14 undecided, 8,disagred and 2 strongly disagreed. With a mean

score of 3.87, it implied that the respondents agreed that advertising is

sometimes offensive, tasteless and irritating. For questionnaire item 46, 30

respondents .strongly agreed, 35 agreed, 10 undecided, 5 disagreed while 7 I t . .

strongly disagreed. This resulted in a mean score of 3.87, which implied that

the respondents agreed that advertisement of some products, e.g., soft drinks

and alcoholic beverages do have negative effect on children. On questionnaire

item 47,33 respondents strongly agreed, 24 agreed, 17 undecided, 6 disagreed

while 7 strongly disagreed. This gave a mean score of 3.80 which implied that

the respondents agreed that the public does not generally trust advertisements.

On item 48 which sought to know whether the use of self-service

reduces the need for sales persons, 33 respondents strongly agreed, 34 agreed

while 20 were undecided. This gave a high mean score of 4.15 which implied

that most of the respondents agreed that the rise of self-service reduces the

need for sales persons. On questionnaire item 49, 37 respondents strongly

agreed, 29 agreed, 10 undecided, 7 disagreed and 4 strongly disagreed. This

gave a mean of 4.01, which implied that most of the respondents were in

agreement that the cost of hiring sales personnel is exorbitant.

With regard to questionnaire item 50, 25 respondents strongly agreed,

40 agreed, 8 undecided while 14 disagreed. This gave a mean of 3.87 and

implied that the respondents agreed that the increased flow of information from

internet to the buyer reduces the need for sales personnel. On questionnaire 5 1,

24 respondents strongly agreed, 3 1 agreed, 10 undecided, 12 disagreed and 10

strongly disagreed indicating a mean of 3.54. This implied that the respondents

agreed that quality and service competition is difficult to maintain. On item 52,

30 respondents strongly agreed, 25 agreed, 20 undecided while 12 disagreed

showing a mean of 3.84. This implied that most of the respondents agreed that

the problem of positioning~~~ie~~wi.th~the difficulty of differentiating the brand

image with competitors.

Research Question 5 , I . .

What are the benefits of utilizing non-price competition strategies by

beverage companies in Nigeria?

The data relevant to this research question were presented in Table 5.

Table 5: Benefits of non-price competition strategies to beverage companies.

Item Benefits of non-price SA A U D SD X Decision No com~etition strategies

Trade allowance or discount gives retailers financial incentive to stock and this also promotes manufacturer's product Premium offers induce brand loyalty Package-carried premiums encourage high impulse purchase and stimulate sales. The use of premiums encourages repeat purchase The use of bonus packs is very effective in stimulating short- term sales Price-offs have strong influence at the point of purchase when price comparisons are being made Price-reduction encourages consumers to purchase large quantities and leads . to ,, greater w l ,, .,>

trade support Frequency programme encourages the consumer to use products on continual basis Frequency programme encourages development of ' customer loyalty Refund offers encourage repeat purchase Refund offers are used to induce trial of a new product Refund (rebate) helps crease new users and encourages brand switching.

Agree

Agree

Agree

Agree

Agree

Disagree

Agree

Disagree

Agree

Disagree

Agree

Agree

Customer advertisement encourages a customer to shop in a particular shop 34 25 16 6 6 3.86 Agree Advertising helps in introducing new products 40 35 12 - - 4.32 Agree Advertising encourages improvements in the quality of a product 29 36 11 9 2 3.93 Agree Advertising stimulates demands in the economy 22 34 22 6 3 3.76 Agree Personal selling helps tailor the message to the consumer 30 33 15 7 2 3.94 Agree Event marketing (where a brand is linked to an event) creates experience for consumers by associating the brand with certain lifestyle, e.g. Coca-Cola with world cup 23 30 14 10 10 3.53 Agree Positioning helps to set products meaningfully apart from competition 35 30 14 8 - 4.06 Agree Market positioning is the most important factor in the establishment of a brand 10 25 20 14 18 2.94 Disagree

N = 87

As can be seen from.&e data presented in Table 5, 28 respondents

strongly agreed that trade allowance or discount gives retailers financial

incentive to stock products, 34 agreed, 14 undecided, 6 disagreed and 5

strongly disagreed. This gave a mean of.3.85 indicating that trade allowance or

discount gives retailers financial incentive to stock and promote manufacturer's

products. A total of 30 respondents strongly agreed, 36 agreed, 10 undecided, 5

disagreed and 6 strongly disagreed on questionnaire item 54. This result

showed a mean of 3.91, which implied that the respondents agreed that

premium offers induce brand loyalty.

On questionnaire item 55, 29 strongly agreed, 30 agreed, 19 undecided,

6 disagreed while 3 strongly disagreed. This showed a mean score of 3.87 and

implied that the respondents agreed that package carried premiums encourage

high impulse purchase and stimulate sales. With reference to questionnaire

item 56, 34 respondents strongly agreed, 28 agreed while 25 were undecided.

With a mean score of 4.10, it implied that the respondents agreed that the use

of premiums encourages repeat purchase. On questionnaire item 57, 18

respondents strongly agree, 43 agreed, 6 undecided, 13 disagreed while 7

strongly disagreed. This gave a mean score of 3.60 and implied that the

respondents agreed that the use of bonus-packs is very effective in stimulating

short-term sales.

With reference to questionnaire item 58, 6 respondents strongly agreed,

35 agreed, 38 undecided, 5 disagreed while 3 strongly disagreed. With a mean

score of 3.41, it indicated that the respondents disagreed that price-offs have

strong influence at the point of purchase when price comparisons are being

made. As regards questionnaire item 59, 35 respondents strongly agreed, 28

agreed, 13 undecided, 5 disagreed and 6 strongly disagreed. This showed a

mean score of 3.93 which, Urnplied that the respondents agreed that price-

reduction encourages consumers to purchase large quantities and leads to

greater trade support. For questionnaire item 60, 5 respondents strongly

agreed, 26 agreed, 40 undecided while 1.6 disagreed. This resulted to a mean 1,

score of 3.23 indicating that the respondents disagreed that frequency

programme encourages consumers to use products on continual basis.

On questionnaire item 6 1, 32 respondents strongly agreed, 20 agreed, 1 1

undecided, 14 disagreed while 10 strongly disagreed. This showed a mean

score of 3.57 and implied that the respondents agreed that frequency

programme encourages development of customer loyalty.

As regards whether refund offers encourage repeat purchase, 4

respondents strongly agreed, 32 agreed, 12 undecided, 16 disagreed while 2

strongly disagreed. This resulted to a low mean score of 2.75 which indicated

that the respondents disagreed that refund offers encourage repeat purchase.

On questionnaire item 63, 25 respondents strongly agreed, 40 agreed, 12

undecided, 8 disagreed while 2 strongly disagreed. This gave a mean score of

3.90 and implied that respondents agreed that refund offers are used to induce

trial of a new product. With reference to questionnaire item 64, 3 1 respondents

strongly agreed, 38 agreed, 9 undecided 7 disagreed while 2 strongly disagreed.

This result showed a high mean score of 4.02 and implied that refund (rebate)

helps create new users and encourage brand switching.

With regard to questionnaire item 65, 34 respondents strongly agreed,

25 agreed, 16 undecided, 6 disagreed while 6 strongly disagreed. This result

showed a mean score of 3.86 and indicated that the respondents agreed that

customer advertisement encourages a customer to shop in a particular shop.

On questionnaire item 66, 40 respondents strongly agreed, 35 agreed while 12

were undecided. This result gave a high mean score of 4.32, which implied

that most of the responden@,agawd. that advertising helps in introducing new

products. For questionnaire item 67, 29 strongly agreed, 36 agreed, 11

undecided, 9 disagreed while only 2 respondents strongly disagreed. This

resulted to a mean of 3.93 indicating that the respondents agreed that I f . .

advertising encourages improvements in the quality of a product.

Of the 87 respondents that responded to questionnaire item 68, 22

strongly agreed, 34 agreed, 22 undecided, 6 disagreed while 3 strongly

disagreed. With a mean score of 3.76, it appeared that the respondents agreed

that advertising stimulates demand in the economy. On questionnaire item 69,

3 respondents strongly agreed, 33 agreed, 15 undecided, 7 disagreed and 2

respondents strongly disagreed. This resulted to a mean score of 3.94

indicating that the respondents agreed that personal selling helps tailor the

message to the consumer. For questionnaire item 70, 23 respondents strongly

agreed, 30 agreed, 14 undecided, 10 disagreed while 10 strongly disagreed.

With a mean score of 3.53, it implied that event marketing (where a brand is

linked to an event) creates experience for consumer by associating the brand

with certain lifestyle, e.g. coca - cola with world cup .

With regard to questionnaire item 71, 35 respondents strongly agreed,

30 agreed, 14 undecided while 8 disagreed,. This gave a high mean score of

4.06 which implied that a majority of the respondents agreed with the statement

that positioning helps to set products meaningfully apart from competition. As

regards questionnaire item 72, 10 respondents strongly agreed, 25 agreed, 20

undecided, 14 disagreed while 18 strongly disagreed. This result showed a

mean of 2.94 and implied that most of the respondents disagreed that market

positioning is the most important factor in the establishment of a brand.

Hypothesis 1

There is no significant .,dlffaence in the mean responses of marketing

managers, sales managers and advertising managers on the non-price

competition strategies that are utilized by beverage companies in the North

Central States of Nigeria. , I I .

The data relating to this hypothesis were presented in Table 6.

Table 6. Summary of Analysis of Variance (Anova) on non-price Competition strategies utilized by beverage companies.

Between 1 57.04

Source of

variation

Group I

Sum of

squares

Degree Mean

of squares

freedom

Within

Group 1

Note; for ANOVA calculations, see Appen

10402.44

-

-

- ix E (i).

F - Tab. Level

of sign

Decision

Accept

The results on Table 6 above showed that the calculated F- value of 0.12

was less than the table F- value of 3.23 with 2 and 45 degrees of freedom at

P=0.05. Based on the values, the null hypothesis of no significant difference

was accepted. This means that the marketing managers, sales managers and

adverting managers agreed on the items as having utility value. In other words,

all identified non-price competition strategies have utility potential for

enhancing beverage marketing in the North Central States of Nigeria. . , 1 .'+

Hypothesis 2.

There will be no significant difference in the mean responses of marketing

managers, sale managers and advertising managers on the problems faced by

beverage companies by the adoption of non-price competition strategies.

Table 7:

Source of variation

Between Group Within Group

summary responses competitic Sum of squares

of Analysis of variance (ANOVA) on the mean of managers on problems of adopting non-price 1 strategic Degree of freedom

squares u F-Tab Level of Decision sign.

Note for ANOVA calculations, see Appendix E(ii).

The data presented in Table above showed the summary of Analysis of

variance (ANOVA) on the problems faced by beverage companies by the

adoption of non-price competition strategies. The analysis of data revealed that

the calculated -12.25 was less than table F-value of 3.15 with 2 and 57 degrees

of freedom at p =0.05. Therefore, there was no significant difference in the

mean responses of marketing managers, sales, managers, and advertising

managers on the problems faced by the adoption of non-price competition

strategies. . , , I , a

Hypothesis 3

There is no significant difference in the mean responses of marketing

managers, sales managers and ad;ertising managers on the benefits of utilizing

non-price competition in the North Central States of Nigeria.

Data relating to the above hypothesis were presented in table 8.

Table 8: Summary of Analysis of Variance (ANOVA) on the mean responses of managers on benefits of non-price competition

Note: for ANOVA calculations, see Appendix E(II1)

-

strategies.

The data in Table 8 showed that the calculated F-value of 0.72 was less

than the table F-value of 3.15 with 2 and 57 degrees of freedom at p = 0.05.

Based on the values, there was no significant difference in the mean responses

of marketing managers, sales managers and advertising managers on the

benefits of non-price competition strategies. The null hypothesis of no

significant difference was accepted.

Source of variation Between Group Within Groux,

Principal Findings

Research Questions:

1. It was found that the following non-price competition strategies are . , . . " 1 " 7 ' .. utilized by the beverage companies.

(a) Coupons

(b) Price reduction

(c) Contests

(d) Sweepstakes

(e) Samples

(f) premiums

(g) Event marketing

(h) Advertising

Sum of squares 296.3

12012.68

Degree of freedom 2

57

Mean squares 148.15

210.15

F-cal.

0.72

F-Tab.

3.15

Level of sign. 0.05

Decision

A ccept.

(i) Personal selling

Cj) Quality and service competition

(k) Positioning.

It was also found that the following non-price competition strategies are not

utilized by the beverage companies:

(a) Money-back refund ( rebate)

(b) Price-off deals

(c) Frequency programme

(d) Bonus pack

(e) Trading stamps

2. The marketing managers, sales managers and advertising managers were in

agreement that the following are the factors that encourage non-price

competition among beverage companies. The factors are:

(a) Permanence of customers

(b) Attraction of non-price competition

(c) Patronizing costlier brands

(d) Advertising to regain patronage . ,, .wl ,*, ' )>

(e) Imitation of successful companies

(f) Distinguishing between products

(g) The need to understand customer behaviour

However, the marketidg managers, sales managers and advertising

managers disagreed with the use of advertising in self deference.

3. Based on the data presented in Table 3, marketing managers, sales

managers and advertising managers were in agreement that the following

factors discourage price competition among the beverage companies.

Basing-point pricing system

Price uniformity

Non-price competition of competitions

Effectiveness of advertisements

Need for information

It was also found that the marketing managers, sales managers and advertising,

managers disagreed with the following factors that discourage price competition

among the beverage companies. These include: (a) desire to expand, (b) practising

price uniformity, (c) difficulty in restoring price-cut.

4. Based on the data presented in Table 4. The marketing managers, sales,

managers and advertising managers were in agreement with the following

problems faced by beverage companies by the adoption of non-price

competition strategies.

Costs

Harmful products

Difficulty in estimating . ,, "?. use ., o$ coupons

Dissatisfaction of sweepstakes

Additional shelf space required for bonus pack

Inventory problems of price -off deals

Difficulty of using trading stlamps.

Offensive, tasteless and irritating advertising

Negative effects of advertising on children

Public hate of advertisement

Rise of self service

Exorbitant cost of hiring sales personnel

(m) The waning need of sales personnel

(n) Difficulty of maintaining quality service

(0) Difficulty of brand image differentiation

However, the marketing managers, sales managers and advertising

managers, disagreed with the following as problems faced by beverage

companies by the adoption of non-price competition.

(a) Advertising encourages purchase of shoddy products

(b) Brand must be unique to be worthwhile

(c) Benefits of products are difficult to gauge

(d) Sweepstakes and contests have a high rate of negative publicity

(e) Advertising is misleading and deceptive.

Based on the data presented in Table 5, the marketing managers, sales

managers and advertising mangers agreed with the following benefits of

utilizing non-price competition strategies.

Trade allowance gives incentives to stock goods and also promotes

manufacture's product. . ,, . W T . \ ? . ' > a

Premium offers induce brand loyalty.

Package-carried premiums encourage high impulse purchase and

stimulate sales

Premiums encourage repeat"purchase

Bonus pack is effective in stimulating short -term sales

Price-offs encourage large purchases and lead to greater trade support

Frequency programme encourages development of customer loyalty

Refund offers induce trial of a new product

Refund (rebate) creates new users and encourages brand switching.

Customer advertisement encourages customers to shop in a particular

shop

Advertising helps in introducing new products

Advertising encourages improvement in the quality of a product

Advertising stimulates demand in the economy.

Personal selling helps tailor messages to the customer.

Event marketing creates new experience for customers.

Positioning helps to set products meaningfully apart from competitors.

The managers however, disagreed with the following as the benefits to

beverage companies which adopt non-price competition strategies.

Price-offs have strong influence at the point of purchase when price

comparisons are being made.

Frequency programme encourages the consumer to use products on

continual basis.

Refund offers encourage repeat purchase.

Market portioning,is ,the )most important factor in the establishment of a

brand.

Hypotheses: , I . .

1. Findings on corresponding hypothesis revealed that there were no significant

differences in the mean responses of the marketing managers and advertising

managers on the following non-price competition strategies:

(a) Coupons

(b) Price reduction

(c) Contests

Sweepstakes

Money-back refund /rebate

Samples

Premiums

Price -off deals

Bonus pack

Event marketing

Frequency programme

Trading stamps

Advertising

Personal selling

Quality and service competition

Positioning .

2. There were no significant differences in the mean responses of marketing

managers, sales managers and advertising managers on the problems faced

by beverage companies by the adoption of non-price competition strategies.

The calculated F- va1ue.d -12.25 for item 33-52 is less than the critical F-

value of 3.15 at 0.05 level of significance .

3. There were no significant differences in the mean responses of marketing

managers, sales manager and advertising managers on the benefits of 11

utilizing non-price competition strategies by beverage companies in the

North Central States of Nigeria. The calculated F-value of 0.72 for item 53

-72 is less than the table F-value of 3.15 at 0.05 level of significance.

Discussion of the Findings

The findings pertaining to the research questions revealed that the non-

price competition strategies utilized by the beverage companies are coupons,

price reduction, contests, sweepstakes, samples, premiums, event marketing,

advertising, personal selling, quality and service competition and positioning.

This finding was consistent with Belch and Belch (2001), Bezjian-Avery

(1998) and Osuala (1999) who found that marketing companies use the

enumerated non-price competition strategies in their marketing activities .

Price-off deals and bonus pack were found to be unpopular with

marketers of beverage products. This finding corroborated the earlier study of

Belch and Belch (2001) who found that price-off and bonus pack were not

popular because they are not favourably received by retailers. It is the belief of

the researcher too that price-off deals are regarded with discount as a result are

often neglected. Similarly, trading stamps were not used by beverage

companies. This finding was in agreement with McCarthy (1971) who found

that the rapid growth in the use of stamps was over as a drop in use of trading

stamps has already occurred because of the major inroads made by marketers in

the use of other non-price sonapetition strategies.

It was found that marketing managers, sale managers and adverting

managers, are in agreement that buyers attracted on non-price basis are likely

to be more permanent customers than those secured on price basis. It was also

found that stores can take customers from competitors without lowering price

because they might have been attracted' on non-price basis in the first place.

The earlier study by McCarthy (1971) supported these findings as he revealed

that price lowering or price fixing engenders price wars. Similarly, it was found

that certain brands may actually be costlier but patronized more than identical

ones by customers. This finding was supported by Philips and Duncan (1968)

who found that if consumers are convinced of the quality of products and the

reputation of the store, then the factor of price loses some of its significance.

It was further found that a marketer who loses patronage often uses

advertising campaign to regain it. This finding conforms with that of Philips

and Duncan (1968) who explained that a store losing patronage could retaliate

on a non-price basis. They maintained that a store could begin an institutional

advertising campaign stressing the same factor as the first store and perhaps

add a few approach for good measure and hold or regain its customers.

The study found that new entrants into the beverage industry are likely

to imitate successful ones. This finding was in line with earlier study by

McAlister (1988) who found that when a company becomes successful and

gains differential advantage, competitors may quickly copy it.

It was found that non-price competition is useful in distinguishing

between directly and indirectly competing products. This finding is in line

with that of Clay et al. (2002) who found that companies prefer not to compete

directly on price. In view of the low profits that result, the companies usually

seek to differentiate themselves. Furthermore, the need to understand customer

behaviour makes it impaati.~e.~.for~ marketers to appeal to buyers' attention.

This finding is in consonance with that of Osuala (1998) which revealed that

the increase in knowledge of how to influence the mind of the buyer has been

intensified by marketers. , .

It was found that basing-point pricing system discourages price

competition. This finding is in consonance with that of Kotler and Armstrong

(1997) who found that when all sellers use the same basing-point city,

delivered prices would be eliminated. It was further found that if prices are

uniform, non-price competition is necessary to attract business. This finding

corroborates that of Osuala (1998) which stated that the factor responsible for

the growth of non-price competition was the tendency toward price uniformity.

Similarly, non-price competition of competitors result in more non-price

competition. This study is in consonance with that of Adeogun (1999) who

found that Pepsi's institutional advertisement forced Coke to change her 99-

year old flagship brand and launched new Coke in 1985.

A majority of the marketing managers, sales managers and advertising

managers rated non-price competition strategies as problematic. The study

found that non-price competition strategies are costly and consumers bear this

burden. This finding is consistent with that of Philips and Duncan (1968),

Kotler and Armstrong (1997) and Osuala (1998). It was further found that

advertisement does not encourage consumers to buy shoddy products.

However, this is contrary to the findings of Philips and Duncan (1968) and

Kotler and Amstrong (1997) who found that promotions encourages the

consumers to buy shoddy and overpriced merchandise, in part, through

misleading and false information.

It was found that majority of the respondents (;= 3.93) agreed that

some heavily promoted produets such as soft-drinks and alcoholic beverages

are harmful to customers. The study of Eaton (1994) buttressed this finding

when he recommended a ban on alcoholic related advertising and promotions

as harmful to consumers. ,* . ,.

The respondents agreed that it is difficult to estimate how many

consumers would use a coupon and when. This view agreed with that of Belch

and Belch (2001) who found that when a sample is used, the benefits from it

are difficult to gauge immediately. Similarly, McAlister (1988) found that

response to a coupon is rarely immediate and that it typically took anywhere

from two to six months to redeem one. However, sweepstakes and contests do

not have a high rate of negative publicity. This finding contradicts that of Sale

(1998) who stressed that the sweepstakes industry has received a considerable

amount of negative publicity. In the same venue bonus pack requires additional

space without providing any extra profit margin for the retailer. Belch and

Belch (2001) in confirmation observed that besides the problem of shelf space,

the marketer can encounter problem with bonus pack if trade relations are not

good.

It was found that price-off deals create pricing and inventory problems

for the retailer. This finding was in line with the study of Belch and Belch

(2001) which revealed that due to pricing and inventory problems of price - off

deals, most retailers do not accept packages with a specific price shown, so the

familiar amount off the regular must be used. It was also found that majority

of the managers disagreed that many advertisements are misleading and

deceptive. However, this finding disagreed with that of O'Donohoe (1995)

who found that promotion strategies engender some concerns among

consumers who complained that advertising is misleading, untruthful and

deceitful. The managers also agreed that advertising is sometimes offensive,

tasteless and irritating. Thi.s.finding is consistent with the studies of (Mittal,

1994; Andrews, 1989; and Alsop, 1987) which claimed that advertising insults

consumers intelligence and that many advertisements, are in poor taste. The

study revealed that majority of respondents agreed that advertisement of some , I I .

products, e.g., soft-drinks and alcoholic beverages may have negative effect on

children. This finding was in consonance with that of Robertson and Rossitter

(1974) and Ward and Wackman (1974) who found that children cannot

differentiate between commercials and programmes, do not perceive the selling

intent of commercials, and cannot distinguish between reality and fantasy.

It was found that premium offers encourage repeat purchase, encourage

high impulse purchase and induce brand loyalty. This finding was supported

by Schmuckler (1996) who found that premium offers have a high impulse

value and can provide an extra incentive to buy the product. However, the use

of bonus packs is very effective in stimulating short-term sales. Belch and

Belch (2001) confirmed this finding when they reported that the additional

value of a bonus pack is generally obvious to the consumer and can have a

strong impact on the purchase decision at the time of purchase.

The finding of this study revealed that refund offers did not encourage

repeat purchase but that refund offers are used to induce trial of a new product

and it helps create new users and encourages brand switching. These findings

conform with that of Belch and Belch (2001) who found that refund offers

induce trial of a new product; encourage users of another brand to switch;

encourage repeat purchase behaviour and they can be a way to offer a

temporary price reduction.

The finding of this study revealed that advertising helps introduce new

products; encourages improvements in the quality of a product and stimulates

demands in the economy. TJxse.,fmdings were supported by that of Philips and

Duncan (1968); Osuala (1998); and Belch and Belch (2001). Similarly, the

findings revealed that positioning helps to set products meaningfully apart from

competitors. However, majority of the. respondents disagreed that market , '

positioning was the most important factor in the establishment of a brand.

These findings agreed with Aaker and Shausby (1982) who found that

positioning is important in differentiating products from competitors but that

positioning goes beyond to cover product attributes, price/quality, use, product

class, users and competitors.

Hypotheses:

The findings pertaining to the hypotheses revealed that there was no

significant difference in the mean responses of marketing managers, sales

managers and advertising managers on the non-price competition strategies

utilized by beverage companies in Nigeria. The null hypothesis therefore was

accepted for the following non-price competition strategies used by beverage

companies in Nigeria: coupons, samples, price reduction, contests,

sweepstakes, premiums, event marketing, advertising, personal selling, quality

and service competition and positioning. A majority of the managers agreed on

the credibility of these non-price competition strategies to beverage companies.

It was further found that there was no significant difference in the mean

responses of marketing managers, sales managers and advertising managers on

the problems faced by beverage companies by the adoption of the non-price

competition strategies. The null hypothesis was accepted for majority of the

items. The opinions of the respondents did not differ significantly with regard

to the problems faced by beverage companies by the adoption of non-price

competition strategies.

It was found that the.r~..w,as no significant difference in the mean

response of marketing managers, sales managers and advertising managers on

the benefits of utilizing non-price competition strategies by beverage

companies in Nigeria. The null hypothesis was therefore accepted because the , I , .

opinions of the managers did not differ significantly with regard to the benefits

of non-price competition strategies to companies which made use of them.

CHAPTER V

SUMMARY OF FINDINGS, CONCLUSIONS AND

RECOMMENDATIONS

This chapter presents the summary of the study, conclusions and

recommendations.

Restatement of the Problem

The success of beverage companies depends on their ability to create

awareness of the benefits of their products. Hence, the development and

execution of their marketing strategy must fit into their overall promotional

goals within the marketing mix to achieve product performance. Modern

marketing management has successfully evolved from a product-oriented phase

to sales-oriented and finally to a consumer-oriented philosophy. As a result

organizations tend to develop unique marketing strategies, catering to

unsatisfied target markets that recognize the company's product as unique

(McCarthy, 197 1).

In a competitive market, business organizations tend to use higher price

to compete with one another. Conversely, a company that reduces price to < , ,, * w I - \?' '

attract more customers can be matched immediately by seminar competition

and this leads to the chaos of price wars (Basch and Houston, 1985). McCarthy

(1971) lamented that the consequence of price wars is that profits are pushed

down until some companies are liqtiidated and eliminated. Hence, prices must

be consistent with the perceptions of the product as well as the communications

strategy (Belch and Belch, 2001).

Kotler and Armstrong (1997) suggested that companies should de-

emphasize price and use marketing mix tools to create non-price positions.

The stability of non-price competition offers companies better basis for

developing unique strategies. However, utilization of non-price competition

strategies have inherent problems. According to O'Donohoe (1995), promotion

strategies engender some concerns among consumers who complain that

advertising is misleading, untruthful and deceitful. Furthermore, Osuala (1998)

maintains that non-price competition strategies are very costly.

The various problems associated with non-price competition strategies

and their implications may not be clearly understood by beverage companies in

Nigeria. Similarly, adult literacy is low and most consumers do not seem to

grasp the importance of non-price competition strategies. Furthermore,

research studies on non-price competition strategies in Nigeria are staggering

and fragmented. This study was therefore undertaken to assess the utilization

of non-price competition as a marketing strategy by beverage companies in the

North Central States of Nigeria.

The study utilized a survey research design. Five research questions

were answered. Three hypotheses were tested at 0.05 level of significance. A

structured questionnaire was used to elicit information for the study. The target

population comprised 102 respondents made up of marketing managers, sales

managers and advertising.mnagers.drawn from all the 23 registered beverage

companies in the North central states of Nigeria. The entire population was

studied. The research instrument was subjected to face validity by three

specialists from the department of vocational Teacher Education and four ( I . .I

specialists from the Department of Marketing, University of Nigeria, Enugu

Campus. The reliability coefficient of the instrument for this study was 0.84,

which was calculated using Cronbach Alpha Reliability Test. The questionnaire

were administered by personal contact and with the help of five trained

research assistants. Eighty-seven copies were duly completed and returned

reflecting about 85 per cent return. The research questions were answered using

mean while the hypotheses were tested using analysis of variance (ANOVA).

Summary of Findings

Based on the data analyzed, the following findings were made:

Eleven non-price competition strategies were found to be utilized by

marketing managers, sales managers and advertising managers. They

are: coupons, price reduction, contests, sweepstakes, samples,

premiums, event marketing, advertising, personal selling, quality and

services competition and positioning.

Seven factors were identified by marketing managers, sales managers

and advertising managers as being responsible for encouraging non-

price competition among beverage companies in the North Central

States of Nigeria. They include: permanence of customers, attraction of

non-price competition, patronizing costlier brands, advertising to regain

patronage, imitation of successful companies, distinguishing between

products and the need to understand customer behaviour. ., ,, . 4 "1. %,' .,+ '

The managers also identified five factors responsible for discouraging

price competition. They are: basing-point system, price uniformity,

non-price competition of competitors, effectiveness of advertisements

and need for information'l

Marketing managers, sales managers and advertising managers were in

agreement that the following fifteen factors constituted problems to their

beverage companies by the adoption of non-price competition strategies:

Cost

Advertising of harmful products

Difficulty in estimating use of coupons

Dissatisfaction with sweepstakes

Space problem of bonus-pack

Inventory problem of price-off deals

Misleading advertising

Public mistrust of advertising

Negative effects of advertising on children

Problem of obsolesce of trading stamps

Rise of self-service

Exorbitant cost of hiring sales personnel

The reduced need of sales personnel

Difficulty of maintaining quality service

Difficulty in differentiating brand image.

5 . The managers agreed that the following sixteen benefits could accrue to

their companies by the adoption of non-price competition strategies:

(a) Non-price competition strategies encourage the stock of goods

(b) Induce brand loyalty.

(c) Encourage high impulse.:pl;chse and stimulate sales.

(d) Encourage repeat purchase

(e) Effective in stimulating short term sales

(f) Leads to greater trade support. , . .I

(g) Effective in promoting offers and products

(h) Induce trial of new products

(i) Create new users and encourage brand switching

Cj) Help in introducing new products

(k) Encourage improvement in the quality of the product

(1) Stimulate demand in the economy

Help tailor messages to the consumer

Create experience for consumers

Encourage development of customer loyalty

Help set products meaningfully apart from competition

There were no significant differences in the mean responses of

marketing managers, sales managers and advertising managers on the

non-price competition strategies utilized by beverage companies in the

North Central States of Nigeria.

There were no significant differences in the mean responses of

marketing managers, sales managers and advertising managers on the

problems faced by beverage companies by the adoption of non-price

competition strategies

There were no significant differences in the mean responses of

marketing managers, sales managers and advertising managers on the

benefits of utilizing non-price competition strategies by beverage

companies in the North Central States of Nigeria.

Implications for Marketing Education

The findings of this study have positive implications for Marketing

Education. The teachers and students of Marketing Education would find in

this study a valuable literature for "scholarly investigations. Teaching and

learning in this discipline will be enhanced. The teachers and students would

broaden their knowledge, especially in the area of non-price competition. The

knowledge acquired would enable the graduates of Marketing Education meet

the demands and practices of modern marketing management.

Conclusions

Based on the findings of the study, the following conclusions were

drawn.

1. The managers made extensive use of non-price competition strategies in

marketing their beverage products in the North Central State of Nigeria.

2. Most of the managers agreed with the seven factors that are responsible

for encouraging non-price competition.

3. The managers are unanimous in their opinions of the factors that

discourage price competition.

4. Marketing managers, sales managers and advertising managers agreed

with almost all the factors that were identified as problems emanating

from the adoption of non-price competition strategies.

5 . The managers were also unanimous in their agreement with regard to the

benefits that could accrue to beverage companies upon the adoption of

non-price competition strategies.

Recommendations

Based on the findings made and conclusions drawn from the study, the

following recommendations were made: . ,, . w l .?'

1. Beverage companies should ensure that the identified non-price

competition strategies are effectively employed in such a way that they

fit into their marketing mix tool in order to achieve product

performance.

2. Beverage manufacturing companies should ensure that factors

encouraging non-price competition are adopted for improved

competition in the market place.

3. The factors which discourage price competition should be sustained by

beverage companies.

4. The beverage manufacturing companies should avoid the identified

problems militating against a successful application of non-price

competition strategies.

5 . The benefits which accrue to beverage companies such as maintaining

adequate stock, encouraging brand loyalty, repeat purchase, etc should

be sustained to ensure stable profit.

6. Beverage manufacturing companies should not make false claims while

advertising their products.

7. The Consumer Protection Council should design sound competition

laws which protect the consumers from the shoddy practices of

marketers and also encourage consumers' choice and welfare.

8. The ministry of commerce and industry should initiate sound policies

that are capable of improving market competition in Nigeria and also

engender economic efficiency and growth.

9. The beverage manufacturing companies should ensure that their

products meet the standard of National Agency for Food and Drug

Administration and Control and international standard in general.

Suggestion for further Research.

The following suggestions were made for further research . ,,. . W I " .?' , . I >

1. A study should be conducted to ascertain the utilization of non-price

competition as a marketing strategy by other companies in Nigeria.

2. The current study should be replicated in other geo-political zones in

Nigeria, especially in the* south-west zone, where majority of the

beverage companies are situated.

3. A study on the comparative analysis of the extent of utilization by food,

spirit and soft-drink companies in Nigeria should be conducted.

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Appendix A

Population of Marketing, Sales and Advertising Managers of Beverage

Companies in the North Central States of Nigeria.

State

Benue

Kaduna

Beverage company

Benue Brewery Lt., K5 Gboko Rd, Markurdi.

Nigerian Bottling Company Ltd., Km5 Gboko Rd., Markurdi.

Ranlito Dairies Ltd., 1A Kashim Ibrahim Rd., Markurdi.

Nigerian Bottling Company, Industrial Estate, Kaduna.

7Up Bottling Company, Industrial Estate, Kaduna.

Nigerian Breweries Plc., Kaduna.

International Breweries and Beverage Industry (IBBI), Kaduna.

Niyya Farm "ctd.w,l' '66 " ~ a d u n a - ~ b u j a Expressway, Kaduna.

Jamil (Nig.) Ltd., No. 24/30 Azikiwe Rd., Express Bypass, Barkin-Ruwa, Kaduna.

I ) . .

Bardy Foods (Nig.) Ltd. U7B Dan- Alhaji Rd. Barawa, Kaduna.

Total

Kogi

Kwara

Nasarawa

Niger

Plateau

Nil

Breweries Ltd., Breweries Rd., Ijagbo- Offa.

Nigerian Bottling company, Coca-Cola Rd. Ilorin.

7Up Bottling co., Coca-Cola Rd, Ilorin.

Niyamco, Bacita Industrial Estate.

Tolman Industries, Breweries Rd., Ijagbo-Offa

Nil

Bilway ventures Ltd., off London street Dusten Kura, Minna.

Rhema Faith Ltd., Plot 280 Usman Alana Rd., off Bay clinic Rd., Tunga, Minna

Jos International Breweries Plc., No. 1 Brewery Rd., Jos Industrial Area.

Nigerian Bottling company Plc., Bukuru Rd'.; 7r4SI' ' ""

West African Milk company, Vom.

Amabenco Investment Company Ltd., 138T Behind St. Murqmba Church, Zaria Rd, Jos. ' ' . -

Andrew Nwaneru & Co. Ltd., Gyel Bukuru, Jos.

International Drinks (Nig.) Ltd., 1 & 2 Alex Okeke Close, Dutse UkaITina Junction, Bauchi Ring Road, Jos. Nil FCT

Total

Nil

2

2

2

1

1

Nil

1

1

Nil

Nil

2

2

2

1

1

Nil

1

1

Nil

Nil

2

2

2

1

1

Nil

1

1

Nil

34

Source: NAFDAC list of registered beverage companies in the north central zone of Nigeria.

Nil

6

6

6

3

3

Nil

3

3

6

6

6

3

3

3

Nil

Appendix B

Department of Vocational Teacher Education University of Nigeria Nsukka January, 2003

Dear Sirlmadam,

LETTER OF INTRODUCTION

I am a doctoral student in the above department. I am conducting a

research on the utilization of non-price competition as a marketing strategy by

beverage companies in Nigeria.

You are required to fill in the attached questionnaire. You are assured

that any information which you give was treated in strict confidentiality and

used only for this study.

Thank you.

Yours faithfully,

. ,, .rlr ,?. *Vmoru, Titus A.

(PG/Ph.D.l00/2773 8).

APPENDIX C

QUESTIONNAIRE

SECTION A: GENERAL INFORMATION

Please complete the following questionnaire items by marking (v) or filling the

spaces provided.

1. Sex: Male )) Female T I 2. Position held

a. Marketing manager I

b. Sales manager U - c. Advertising manager I 1

3. Name of organization:

.......................................................................................... . , , . . , , , . '

4. Years of experience:

a. 5 years

b. 10 years

c. 15 years

d. 20 years and above. I I

SECTION B:

The following are the identified non-price competition strategies that

can be utilized by beverage companies. Please mark (v) to indicate your degree

of agreement or disagreement with the following questionnaire items.

Key:

5 - Highly utilized (HU)

4 - Utilized (U)

3 - Undecided (UD)

2 - Least utilized (LU)

1 - Not utilized (NU)

SIN

1

2

3

4

5

6

7

8

9

10

ITEM STATEMENTS

Coupons

Price reduction

Contests .,.$ ? - I ., it".

Sweepstakes

Money-back refundlrebate

samples I

Premiums

Price-off deals

Bonus pack

Event marketing

UD HU U LU NU

SECTION C:

14

15

16

The following are factors which encourage non-price competition.

Please tick (v) to indicate your degree of agreement or disagreement of the

questionnaire items.

Personal selling

Quality and service competition

Positioning

Key:

5 - Strongly Agree (SA)

4 - Agree (A) . ,, . . "7. ,,. , .>, .

3 - Undecided (U)

2 - Disagree (D)

1' - Strongly Disagree (SD), .'

SIN -

17

ITEM STATEMENTS

Buyers attracted on a non-price basis are likely to be more permanent customers than those secured on mice basis

Stores can take customers from competitors without lowering prices because they might have been attracted on non-price basis in the first dace.

Certain brands may actually be costlier but patronized more than identical ones by customers

A marketer who loses patronage often uses advertising campaign to regain it

Some companies use advertising in self defence.

New entrants into the beverage industry are likely to imitate successful ones

Non-price competition was useful in distinguishing between directly and indirectly competing products.

., ., - . .i. .1. , ',.I ,

The need to understand customer behaviour makes it imperative for marketers to appeal to the buyer's attention.

SECTION D:

The following are factors which can discourage price competition.

Please tick (v) to indicate your degree of agreement or disagreement of the

following questionnaire items.

ITEM STATEMENTS

Basing-point pricing system discourages price competition.

If prices are uniform, non-price competition was necessarv to attract business.

When competitors charge the same price, any company desiring to expand must use some factors other than price

Price uniformity was practised by beverage com~anies in Nigeria

Non-price competition of competitors result in more non-price competition and discourages price competition.

When advertising proves ineffective, it can be discontinued easily

. . . '1.I

When price-cut does not result in a sufficient sales gain, to restore cut and keep old sales volume may be difficult.

Even when price-cut was prqfeq-ed, it was still necessary to advertise.

SECTION E:

The following are problems that may face beverage companies by the

adoption of non-price competition strategies. Please tick (v) to indicate your

degree of agreement or disagreement of the following questionnaire items.

ITEM STATEMENTS SA

Non-price competition strategies are costly I

Advertisement encourages consumers to

Some heavily promoted products such as soft-drinks and alcoholic beverages are harmful to the consumers.

It was difficult to estimate how many consumers would use a counon and when.

Sweeptakes . .and,?. contests do little to contribute to consumer satisfaction.

Sweeptakes and contests have a high rate of negative publicity.

Bonus pack requires additional shelf space without providing any extra profit margin for the retailer.

Price-off deals create pricing and inventory problems for the retailer.

The utilization of other non-price competition strategies has made trading stamps outdated and difficult to use.

Many advertisements are misleading and deceptive

Advertising was sometimes offensive, tasteless and irritating.

Advertisements of some products, e.g., soft- drinks and alcoholic beverages may have negative effect on the children.

The public do not generally trust advertisements.

The rise of self-service reduces the need for sales persons.

The cost of hiring sales personnel is exorbitant.

The increased flow of information from internet to the buyer reduces the need for sales personnel.

Quality and service competition was difficult to maintain.

The problem of positioning lie with the difficulty of differentiating the brand image with competitors-: -?'

SECTION F: 1, , .

The following are identified benefits of non-price competition strategies

that can accrue to beverage companies that utilize them. Please tick (v) to

indicate your degree of agreement or disagreement of the following

questionnaire items.

SIN - 53 Trade allowance or discount gives retailers

financial incentive to stock and this also promotes manufacturer's product.

Premium offers and induce brand loyalty.

Package-carried premiums encourage high impulse purchase and stimulate sales.

The use of premiums encourages repeat ourchase.

ITEM STATEMENTS

The use of price-packs is very effective in stimulating short-term sales.

Price-offs have strong influence at the point of purchase when price comparisons are being made.

SA

Price-reduction encourage consumers to purchase large quantities and lead to greater trade support.

Frequency programme (a continuity programme that offers customers the opportunity to accumulate points) encourages the consumer to use products1services on a continual basis.

. , . . . , .1+

Frequency programme encourages development of customer loyalty.

Refund offers encourage repeat purchase.

Refund offers are used tol'induce trial of a new product.

Refund (rebate) helps create new users and encourages brand switching.

Consumer advertisement encourages a customer to shop in a particular shop.

Advertising helps in introducing new ~roducts.

67

68

69

70

71

72

Advertising encourages improvements in the quality of a product.

Advertising stimulates demands in the economy.

Personal selling helps tailor the message to the consumer.

Event marketing (where a brand was linked to an event) creates experience for consumers by associating the brand with certain lifestyles, e.g., Coca-Cola with World cup.

Positioning helps to set products meaningfully apart from competition.

Market positioning was the most important factor in the establishment of a brand.

Appendix D

Calculation of Cronbach Alpha

where

a = alpha

k = Number of items in the instrument

vi = variance on each item

Vt = total variance of the instrument

By substitution:

Appendix E

The formula for analysis of variance was as follows:

1. Total sum of Squares:

2. Sum of squares between groups

3. Sum of squares within groups

4. df between groups = K - 1

5 . dfwithingroups = (n, - 1) + (n2- 1) +(n3- 1).

6. Between groups mean square

7. Within group mean square

, t . ., MSw = S&

dfw

8. F- ratio

Appendix E (i)

Item Marketing Sales

No managers managers

(XI) (X2)

Advertising

managers

(X3)

C,, 692 ' . .. C\.; = 174410 C,, = 180781 I

C x = C,, + X r 2 + C X , = 1 6 5 2 + 1 6 8 5 + 1 6 9 2 = 5029

C,r2 = C r 1 2 + Cr12 + Cr,' = I 7 4 4 1 0 + I 8 0 7 8 1 + I 8 2 1 6 1 = 537352

N = n, + t i Z + n, = 1 6 + 16 + 16 = 4 8

2 (q ss,o,,,, = = ,y

- - N

By substitution

By substitution

SSwithin = ;SS ,,,,, - SS ,,,,,, . .

= 10459.48 - 57.04

= 10402.44

Degrees of freedom between =

dJh = G - 1, where G =number of groups

.'. 3-1=2

Degrees of freedom within =

dfw= (nl-l)+(n2 -l)+(n3-1)

=(16-1)+(16-1)+(16-1)

15 + 15 + 15

4 5

Mean square

sum o f sauares

degrees of freedom

:. Mean square between = SS bernecn

df ,,e/,,e,,,

- 57.04 -- 2

=28.52

Mean square within

- - sum of squares within

df within

f - ratio = ratio of mean square between and mean square within

f - ratio = 0.12

Appendix E (ii)

Sales Advertising

managers managers x2 1 xz2 ~ 3 ~

( ~ 2 ) 6 3 )

Item Marketing

No managers

By substitution

By substitution

"within = " ~ o t n l - "between 11 . .

Degrees of freedom between

Dfb = G - 1, where G = number of groups

Degrees of freedom within

Sum of Squares Mean square = degrees of freedom

SSb Mean square between - dfb

Mean square within =

f = ratio = ratio of mean square between and mean square within . 1 . .1+ '

- MSB --

MSW

Appendix E (iii)

Advertising x12 ~2~ ~3~

manager

(X3)

Marketin Sales

managers

(X2) managers

C,, =2 179

By substitution

(zr,)2 (z.%)2 (z.K3') (b)2 SS between- + - + --- - -

By substitution

SS within = SSt - SSb

= 12308.98-296.3

Degrees of freedom between df i = G - 1, where G = number of groups

:. 3-1 = 2

Degrees of freedom within =

SS Mean square = -

df

SSb 296.3 :. Mean square between = - = - = 148.15 dfb 2

SSw 12012.68 Mean square within = - = = 210.75

d f i 57

f - ratio = ratio of mean square between and mean square within

- Msb - 148.15 ---- MSw 210.75

f -ratio = 0.72