Current challenges to supermarket retailers posed by the growing popularity of online retail, customer desensitisation to advertising, and globalisation of large grocery retail firms, has led to an increased reliance on sales promotion as a means of attracting and retaining customers. Retailers recognise the need to make the shopping experience more rewarding for the consumer (Keh and Teo 2001), and have a keen understanding of which supplementary activities are likely to achieve this in their market. The difficulty faced by manufacturers, therefore, is in assessing which sales promotion activities that support their own goals will be favoured by retailers in culturally diverse environments. In light of China's attractiveness as an export destination for food products (Lo et al 2001), those wishing to do business effectively in China must understand specifically how sales promotion and culture are linked (Lee 2002). This exploratory study considers the use of, and preferences towards, different sales promotion methods in supermarkets in China and New Zealand, highlighting the potential impact of cultural influence on the application of particular tools.
The supermarket industry is faced with a growing number
of challenges in light of globalisation of brands and
products, increased internal and external competition, and
a continuing struggle for power between manufacturers
and retailers. In response to these challenges, the last few
years have seen a shift in marketing emphasis away from
media advertising towards sales promotion strategies
to reach consumers in the supermarket industry. This
however, brings many problems of its own, as multinational
grocery product manufacturers struggle to cope with
the difficulties of producing a suitable sales promotion
strategy for often culturally dissimilar markets.
The use of sales promotion in the supermarket industry
has its roots in customer service and relationship
management. As noted by Keh and Teo (2001), “in
addition to selling merchandise... retailers are also
concerned with making the shopping experience more
rewarding for the consumer” (p. 370), and this has led
to the development of a set of supplementary marketing
activities, including price discounts, coupons, self-
liquidating offers, bargain packages, gifts, sampling, and
merchandising and display, all of which are used to offer
further value to the customer.Perceptions of these promotional incentives can vary
dramatically from country to country, and differences
are frequently culturally inspired (Kashani and Quelch,
1990). However, there is a scarcity of literature devoted
to investigating the use of retail sales promotion within
Asian countries and how culture might affect this type
of marketing communications. In light of the increased
attractiveness of China as an export destination for
supermarket goods (Lo
et al,
2001), this study explores
the use of retail sales promotion in an area of China
that has had, to date, little Western influence in terms
of its use of marketing communications methods, and
compares sales promotion use to that in a Western (New
Zealand) supermarket industry. In addition, China offers
a portrait of a highly attractive market for exporters of
grocery products since its inclusion in the World Trade
Organisation (WTO), however, limitations in the form
of acquiring reliable information and a general lack of
understanding of Chinese markets has created a number
of barriers to development in most areas of this emerging
market (Walters and Samiee 2002).
The research has shown that retail sales promotion in
the Chinese supermarket industry should be designed
to show consumers that they have developed a mutually
beneficial relationship with retailers, and that their
custom is valued and rewarded. This is not however, best
achieved through forced loyalty programmes and the
like, but simply through the use of reward based sales
promotion such as free gifts or premiums and straight
price discounts. The study found the most popular retail
sales promotion methods in Chinese supermarkets to be
price discounts (used in conjunction with P-O-P displays) and free gifts/premiums. The emphasis on these discreet
sales promotion methods appears strongly linked to
Chinese culture, as is the lack of emphasis on interactive
sales promotion methods which require the customer to
deal with a salesperson. In addition, passive discounts,
which remove the risk of embarrassment or loss of face
from ‘asking’ for a cheaper price are far more suited to
this market. In New Zealand, the relationship aspect of supermarket
retailing is less important, as long as customers feel they
are getting a ‘good deal’ in terms of both price and quality
they will continue to patronise a store. A wider mix of
promotional tools can be used in the New Zealand market,
although emphasis should be on price offers (with a
linked P-O-P display) and combination or volume offers,
where the consumer feels they will receive better value for money through the purchase. Loyalty schemes can
also be useful in this market, particularly when targeting
medium to upper income consumers, and this echoes the
findings from the Chinese market – that a country with
low levels of cultural loyalty may need incentive based
schemes to create customer loyalty and a country with
high levels of culture based loyalty will not.
Overall, the current study highlights the need for cultural
awareness when selling in different countries, despite
modernization of many aspects of the retail market.
While aspects such as development of the industry as a
whole, coupled with wider consumer exposure to sales
promotion, mean that some techniques can be applied in
the supermarket industry regardless of country, as seen in
China and New Zealand, some cultural influence endures.
A greater emphasis on customer relationship development
and maintenance through rewards based use of sales
promotion is necessary to be successful in the Chinese
market, as is recognition of the Chinese consumer’s
reluctance to ‘ask’ for discounts and special treatment. As
such, discreet, non-interactive sales promotion tools are
the most useful, supplemented by activities which continue
to build a strong (and thus loyal) relationship between the
retailer, the brand and the consumer. In contrast, loyalty
needs encouraging through the use of special schemes
in an individualistic country such as New Zealand,
although price offers are by nature the most useful tool in
supermarket retailing regardless of store type or country.
Where this exploratory study has examined the potential
influence of culture on the application and success of sales
promotion in the supermarket industry in New Zealand
and China, it is now necessary to explore the conclusions
given here in the context of other Asian, Western and
European countries in order to better understand the
overall impact of culture on sales promotion.