Why Contest is both a successful and common promotional tool in Malaysia - Iloka Benneth chiemelie

WHY CONTEST IS A SUCCESSFUL AND COMMON PROMOTIONAL TOOL IN MALAYSIA: AN EMPIRICAL ANALYSIS

Social marketing was "born" as a discipline in the 1970s, when Philip Kotler and Gerald Zaltman realized that the same marketing principles that were being used to sell products to consumers could be used to "sell" ideas, attitudes and behaviors.

An early definition the field defined social marketing as marketing principles used to influence the acceptability of social ideas (Kotler and Zaltman, 1971); but contemporary writers define it as a method to influence voluntary behaviour of target audiences (Andreasen, 1995; Donovan and Henley, 2003; Kotler and Lee, 2008). Manoff (1985), stated that it can include introduction of new products (e.g. Apple Ipad 2), the modification of existing product (e.g. petrol redesigned to reduce emission) and promotion of structural change in existing institutions (e.g. SonyEricson merging together).

A good example of such social marketing practices involved rewarding customers that outperform other customers by setting a contest between all the target markets and influencing their behaviour by persuading them to outperform others in order to win the ultimate set price (e.g. Spend 100RM on celcom reload to win 10RM celcon free airtime). While this idea was initially defined to be a marketing tool meant at promoting socially acceptable standards, it has been adopted by numerous companies in Malaysia such as Petronas and Shell (reducing emission), Boulevard and Spring (Membership for cheaper price), and education institutions (get the best grade for free scholarship or reduced price in school fees e.g. Swimburn University Srawak and Inti International University College Sarawak).

In order to understand why this is both a common and successful marketing tool in Malaysia, we will proceed with defining the elements that makes this common and they will include an analysis of:

1. Contest as a promotional tool;
2. Malaysian consumer buying behaviour.

CONTEST AS A PROMOTIONAL TOOL

Sales promotion can be defined as any incentive used by a producer to induce the distribution channel (wholesalers and retailers) and/or consumers to buy a brand and persuade the sales force to aggressively sell the given brand (Shimp, 2003). Promotional tools can also be configured to induced desired behaviour from consumers. Sale promotional are short-term orientated and has been known to be cable of influence consumer behaviour.

Totten and Block (1994) also stated that sales promotion includes numerous selling incentives and techniques intended to yield immediate or short-term sales effects. Typical sales promotions in Malaysia include coupons, samples, in-pack premiums, discounts, displays, and contest.

Figure 1: sample sales promotion – discounts as a common year end promotional tool in Malaysia

Source: http://megasales.701panduan.com/

In Malaysia, years end discount sales is a common promotional tool adopted by almost if not all retailers within the country. From the figure (1) above, it can be concluded that this tool incorporates all elements of sales promotion which include; short-term goals – it only takes place during the last month of the year, induce purchase behaviour – numerous discounts offered for numerous products to attract customers and increase sales, and awareness – ads are created few weeks or months before the year end sale to create awareness of the discount rates within the market.

CONTEST IN MALAYSIA

Contest just like other promotional tool has the same objective of inducing improved short-term sales, but it exhibits numerous differences that are not common in other promotional cools such as coupons and discounts. For this research paper, contest will be referred to as a competition between a group (target markets) to undertake a given activity (normally to use a brand more frequently) in order to win a special price (e.g. medals, cash price).

Figure 2: Sample Shell contest in Malaysia

From the figure (2) numerous characteristics of contest as a promotional tool can be deducted to be:

1. It is short term – the above contest will Nov 1^st to 15th.
2. Unlike discount, the price of the product or services does not change – the petroleum still sold at the same price.
3. It does not require membership unlike coupons.
4. Compared to samples, contest is normally done for already existing products and services.
5. Compared to other promotional tools, contest offers something in return to the market – e.g. the contest above offers cash prices to the contestants.
6. There is no guaranteed benefit of participating in the contest if compared to other promotional tools like discounts where a pay-off is guaranteed for all participants – e.g. from the contest above, only one few lucky people will win the RM 500,000.
7. Contests normally have accorded terms and conditions contestants must follow.
8. Lastly, contest is mainly designed to yield desired behaviour from the market – winners of the contest above must be a consumer who pumps shells, thus, if you want to win the RM500 thousand on offers; you must pump shell petrol.

From the above analyses, it can be seen why contest is one of the most powerful promotional tool because of the high possible return to all contestants, where in this case the price at stake is RM 500,000. This contest is likely influence dramatic damage on the purchasing behaviours of customers that are aware of the contest; mainly due to the high price on offer for successful winners.

CONTEST IS NOT LUCKY-DRAW OR GAMBLING

As a promotional tool, Contest offer guaranteed value (tangible) to consumers – from the above contest customers will still get petroleum at the same price (normal price before contest) and for the same purpose (e.g. to run their automobiles). Values are not in lucky-draw as customer can undertake in lucky draws with the objectives of helping the society (e.g. donate to UNICEF to win a car); but there is no tangible benefit for donating or gambling (Play RM10 to win Jackpot in TOTO Malaysia). Therefore, it can be concluded that all lucky-draws and gambling are contests (competition), but contests as a promotional tool (get value for the same price and stand a chance to win more) is not lucky-draws or gambling.

CONSUMER BUYING BEHAVIOUR

Numerous studies are of the consensus that decision-making style is a patterned, mental cognitive orientation towards shopping and purchasing, which continuously dominate the consumer’s choice, and these traits are always present, predictable, centralized decision making process (Sproles, 1985, p. 79). Based on his previous literature review,Sproles and Kendall (1986) refined an inventory of 50 items related to consumers’ cognitive and effective orientation towards shopping activities and developed the Consumer Style Inventor (CSI) which consists of eight mental style characteristics as listed below.

1. Perfectionistic, high-quality conscious consumers – these consumers carefully and systematically search for the best quality products through numerous techniques that scrutinize each product and find every single possible fault in the product.
2. Brand conscious, “price equals quality” consumers – these consumers go for well-established and expensive brands.
3. Novelty-fashion conscious consumers – these consumers prefer new and innovative brands and are excited by trying new things.
4. Recreational, hedonistic consumers - these consumers are mainly women, and they enjoy shopping just for the fact that they think it is fun and pleasant.
5. Price conscious “value for money” consumers – these consumers are highly conscious of price for goods and services and seek alternative low prices before making final purchase decision.
6. Impulsive, careless consumers – mainly men, these consumers buy on the spur of moment and are less concerned about the price of the goods and how much they spend.
7. Confused by overchoice consumers – these consumers experience market information overload and are confused on what brand to choice from numerous perceived brands at their disposal.
8. Habitual, brand-loyal consumers – these consumers have particular brand and shop choices and have formed a habit of repeatedly buying from these shops and brands.

MALAYSIAN CONSUMERS’ ANALYSIS

INCOME AND BUYING POWER

Malaysia has been classified as an upper-middle income country, and considered one of the most developed amongst developing countries. The middle-income household proportion increased from 47.7% in 1999 to 47.9% in 2002. Mean monthly gross income per household saw a rise from MYR2, 472 in 1999 to MYR3, 011 in 2002 which represent an average monthly income growth of 6.8% per annum.

Malaysian has continued to experience steady increase in the standard of living and, with it, its purchasing power per capita income exceeds MYR14, 600. On an average, households living in the urban areas in 2004 spend 1.5 times more at an average of MYR1, 943 per month more than household in the rural areas who spent an average of MYR1, 270 per month.

As per consumer savings, according to ACNielsen, Malaysia is one of the top three countries in the Asia Pacific for consumers with the highest penchant to save money. In malaysia, the top-two priorities for the usage of spare cash are for saving or deposits (58%) and paying off credit card debts or loans (48%).

CONSUMER BEHAVIOUR

Average household spending patterns

Malaysians spend a high percentage of their household income on fast moving consumer goods (FMCGs) such as foods, groceries and personal care items which ranks them third out of the top ten economies in the Asia-Pacific region (excl. Japan). The figure (3) below illustrated the average monthly expenditure of households in Malaysia on an adoption from the Malaysian Department of Statistics.

Figure 3: Malaysian household expenditures based on average month expenditure

Source: Department of Statistics Malaysia (2000)

LIFESTYLES AND SHOPPING HABITS

The rising affluences and education levels of Malaysians have seen rapid evolution and changes in their consumer lifestyles. High-profile international retailers and the global mass media have played a huge role in shaping Malaysian consumers buying behaviour. The market is becoming more affluent, sophisticated and cosmopolitan. They have shifted from the simple need for sustenance to key leisure themes such as health, beauty, lifestyle and fitness.

The country is open to foreign product demand and it is easy to see goods marketed by international brands such as Coca-Cola, Procter and Gamble, Nestles and numerous others in Malaysia. Urban resident have become accustomed to shopping for groceries in hypermarkets and supermarkets, while rural residents continue to purchase from traditional grocers, convenience stores and mini-markets (Pasa Raya).

As per eating out, Malaysia is one of the countries in the world where a whole household can afford to eat out for all days of the week. Choices can range from mini-hotels, sidewalk cafes, fast-food restaurants or hawker stalls depending on price. The verities of both international and local cuisines at most outlets have influenced consumers’ desires, tastes and preferences in eating outside.  

Malaysia also has a strong shopping desire, especially during weekends and public holidays, but consumers can be classified into three categories: periodic shopping spree consumers with high purchasing powers, consumers who shop for necessities, and bargain hunters. Most consumers do their shopping in hypermarkets, followed by supermarkets and traditional grocery stores.

BRAND AND PRICE SENSITIVITY AMONGST MALAYSAN CONSUMERS

As Malaysian consumers become more knowledgeable and discerning, they are no longer easily influenced by advertisement and promotions. They are price-conscious, but at the same time desire brand quality. With the growing affluence and changing lifestyle, consumers are becoming more demanding; not only about the quality of the products but also about the services they receive. According to ACNielsen, strong brand influenced about 90% of consumers’ purchase decision. Strong brand were also found to retain at least 75% of loyal customers.

In another study, Safiek and Hayatul (2009) found that, decision-making styles amongst both genders in the Malaysian market are influenced by quality consciousness, brand consciousness, fashion consciousness and confusions due to overchoice. This supports the argument that consumers decision in Malaysian not highly influenced by price of good and services, but more influenced by quality, convince and brand.

 WHY IS CONTEST A SUCCESSFUL TOO IN MALAYSIA: LINKAGE WITH CONSUMER BEHAVIOUR

In order to answer the research question, consumer behaviour will be integrated into the meaning of contest to take a closer look on why this is becoming a common promotional tool in Malaysia. From the above analysis and arguments, Malaysian consumer behaviour can be said to characterize:

1. Quality – they are willing to pay more for less as long as it is quality product or services.
2. Brand – they are willing to purchase the same brand even with an increase in price.
3. Fashion – they have been accustomed with certain buying behaviour that they find it difficult to change (e.g. eating outside.

Thus, it can be argued that since the consumer purchasing behaviour is no longer influenced by reduction in price, and whereas reduction in price can be seen as reduction in quality within the market, producers and retailer had to develop a new ways that does not reduce price (to avoid being perceived as reduced quality), but offers more valued in return (to encourage more purchase as consumers seek to gain the value on offer). Thus, change in consumer behaviour can be said to be the main reason why contest is now a common and yet successful promotional tool in the Malaysian market.

Figure 4: Maybank contest campaign

From the above contest in figure (4), Maybank is persuading consumer to change their consumption behaviour on their services, by offering 10 Units of Garmin GPS to 10 consumers amongst all consumers who will successful transfer money from other banks into their bank account with Maybank. From the above contest, Maybank applies the terms and conditions which is that: consumers must transfer money into their account, and the money must be an interbank transfer, and it must be done from another bank besides Malaysia. Through this means, Maybank  (beneficiary bank) and the bank the money was transferred from (Third-party bank) will still charge the same price for interbank transfer (commission – no reduction in commission price like discounts etc.,). This further supports the idea that contest is fast becoming a common and successful promotional tool in Malaysia because of change in consumer behaviour, where consumers no longer purchase goods and services just because of reduced price.

CONCLUSION AND IMPLICATIONS

Although this practice is fast becoming a common and successful practice among heavy industries and service institutions, it must be argued that fast moving consumer goods (FMCGs) such as foods, groceries retailers and health care provider are still adopting other promotional tools such as discounts, trials, displays, and coupons. These others tools are still successful promotional tools both within and beyond the Malaysian market.

From the analyses, it can also be concluded that contest is common among companies where adoption of other promotional tools cannot be utilized. For instance, trail, display, coupons and possibly discounts cannot be adopted in SHELL Malaysia or MayBank, as these companies don’t offer such services or products that need to be tested (tried) before use e.g. perfumes, or operated with coupons e.g. Groceries shopping. The only possible promotional tool these companies can utilize is contests.

BIBLIOGRAPHY

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