THE EFFECTS OF BRANDING ON SALES PERFORMANCE OF FAST MOVING CONSUMER GOODS IN GHANA

1.1 Background to the study

Branding of fast moving consumer goods has occupied an important place in the arena of marketing strategies. The advent of globalization has given birth to intense competition in today’s business environment thus making branding the cog of differentiation in consumer goods. Indeed, during the past two decades it has become evident that branding is the most important asset of producers of fast moving consumer goods (Nijssen, 1999). According to Davis (2002), the most powerful corporations in the world have all had success related to their strong brands.

There is a clear difference between producers of fast moving consumer goods in developed and developing countries. Whereas firms in developed countries operate under the societal marketing concept, whose main tenets are satisfying customer needs and wants using environmentally friendly methods, the latter operate either under the product and production concepts (Chimboza and Motandwa 2007). Clearly, firms in developing countries mostly produce goods with little consideration for consumer needs, wants and aspirations.

Successful brands are known to create and articulate the sustainable differential advantage of the underlying product (Ward, 2004). The concept of “branding” a product began as early as the sixteenth century (Chimboza and Motandwa 2007) and since those early times, building and maintaining strong brands have been the hallmark of all successful companies. According to Kohli and Thakor (1997) the essence of brands is underpinned by three main reasons: new product introductions are expensive, the marketplace is crowded and successful brands have a long life span over which they provide higher returns.

Building the right relationship between the brand and its customers will certainly create successful brands. Brands with the greatest equity are the most profitable because their customers are generally more loyal and willing to pay higher prices for the product, and have a closer relationship with the brand (VNU Marketing Information Services, 2003). Besides, branding clearly has advantages for the manufacturer and the retailer, since it helps to differentiate the product from the competitor’s product. Further, economies of scale and scope are attributed to branding, and a brand with high sales will generate production economies (Chimboza and Motandwa 2007). According to a study by Murphy (2007) brand loyalty is becoming more important as most customers are satisfied by buying the brands they trust.

Studies in some sectors have shown that customers who are ‘most loyal’ to a brand will pay as much as a 20% premium before they will switch to a different company’s product (Chimboza and Motandwa 2007). A clear understanding of the effects of branding on the performance of fast moving consumer goods will ensure that branding efforts by companies are synchronized with the needs of local consumers of fast moving consumer goods.

1.2 Problem Statement

Today, huge amounts of money are invested in creating a strong brand image and on attracting customers with advertisements (Nordfält, 2007). Branding creates a visual impression on consumers which makes them to readily identify a particular brand and its associated quality. Besides, certain brands are also easily recognized and accepted by customers and their subsequent patronage and loyalty. However, to gauge the effects of branding on the consumption patterns and subsequent sales of various brands in urban areas of developing countries like Ghana has been a problem. This research will be interrogated by this study.

There are many well-known multinational companies such as Coca Cola, Unilever, Cadbury to mention but a few which sell retail products and has succeeded in creating a world known brands of their own. These brands are intended to represent quality, design and innovative thinking, however, how the concept of brand is transferred through the retail outlets to the final consumer and the impact have been the missing dimension which this research intends to find out.

Further, retail outlets such as shopping malls, super and hypermarkets have made Ghanaians who live in urban areas to become accustomed to shopping for fast moving consumer goods at such markets and shopping malls. Besides, many wayside table-top operated sales of fast moving consumer goods with many brands dotted all over the city have also added to easy accessibility of fast moving consumer goods. These have led Ghanaian’s consumer lifestyle to evolve over time. However, other factors such as rising cost of living, poverty, affluence, educational levels and other demography factors have contributed to consumer loyalty towards a brand.

Besides, the glut of different shades of brands of various consumer goods have seen a keen competition where some brands of consumer goods are not doing well in terms of sales in the urban markets in Accra . This development has therefore, prompted an investigation to assess the effects of branding on consumer goods in terms of how well consumers recognize and accept them (brand familiarity) and the real (such as lower cost and superior quality) or intangible (such as company reputation) competitive advantages which they possess and ascertain the underlying influences.

1.3 Research Aim

The broad aim of this study is to examine how the concept of branding has affected the sales levels of fast moving consumer goods in the Greater Accra Region

1.4 Specific objectives of the Study

The objectives are:

1. To assess the relationship between brand awareness and loyalty of fast moving consumer goods ,

2. To identify the importance of brand attributes which are most important to the consumers of fast moving consumer goods,

3. To determine the relationship between brand label and the frequency of purchases of fast moving consumer goods.

1.5 Research hypotheses

The following propositions will be tested by the study:

H0(a): There is no relationship between brand awareness and loyalty of fast moving consumer goods

H0(b): Brand attributes are not important to consumers of fast moving consumer goods,

H0(c): There is no relationship between brand label and frequency of purchases of fast moving consumer goods

1.6 Significance of the study

Customers always have information about the quality of the brand of products they choose to exchange money for. They are satisfied where the quality of the brand commensurates with the price paid. If a brand consistently fails to meet consumer expectation and satisfaction, the brand will be abandoned by the consumers. The difficult part of this is that consumers do not just walk away quietly, but tell others about the poor nature of the brand. A way to avert this situation is what the current study seeks to do.

Branding has advantages for the manufacturer and the retailer, since it helps to differentiate the product from the competitor’s product. Economies of scale and scope are attributed to branding, and a brand with high sales will generate production economies. Studies in some sectors have shown that customers who are ‘most loyal’ to a brand will pay as much as a 20% premium before they will switch to a different company’s product. A clear understanding of the factors affecting brand preference is critical to ensure that branding efforts by the company are synchronized with the needs of local consumers of consumer goods

With the increasing competition within the consumer goods market in Ghana, it is not just enough rely on a brand name but rather make sure the quality of the brand is compromise in order to dazzle the consumer. This will ensure repeated transaction which will eventually affect the much needed philosophy of business – profit. This could be achieved through ascertaining the effects that brands have on performance of fast moving consumer goods.

The findings of the study it is hoped will help policy makers in the consumer goods market to improve their brands and formulate policy interventions that will relate brand features to easy sale of such consumer goods.

1.7 Methodology

1.7.1 Research sitesThe research will be carried out in Accra central market (Makola), Accra Shopping Mall and 37 Bus Terminal. The study areas cover high-density areas, where various consumer goods are mainly sold. These sites were chosen since they constitute the main market areas and retail outlets. Fast moving consumer goods are widely available in various retail outlets making it possible to assess this market.

1.7.2 Sampling frameThe sampling frame consists of all members or elements of a given population (Higson-Smith, 1995). In this analysis, the sampling frame consisted of all consumers in the Greater Accra Metropolis since they represent the target market for fast moving consumer goods.

1.7.3 Sample size Generally, the larger the sample size the more likely the responses will reflect the true picture of the population under study according to the Central Limit Theorem. A small sample, however, can often provide highly reliable findings depending on the sampling procedures adopted (Schiffman and Kanuk, 2000). A sample size of 40 individual consumers in Makola, and 30 each in Accra Shopping Mall and 37 Bus Terminal Area is anticipated to form a total of 100 respondents for this study. This sample size was reached regarding the existing resources for the exercise.

1.7.4 Sampling techniqueA combination of Purposive and Simple Random Sampling techniques will be employed. Forty respondents will purposely be selected from Makola market on random basis for the interview since the area has 200,000 floating shoppers and sellers each single day (AMA Annual Report 2006) At the Accra Shopping Mall, mall intercept interviewing will be used to garner data from 30 shoppers as they move out of the mall. The same technique will be applied in the 37 Bus Terminal for another 30 respondents.

1.7.5 Data collection

1.7.5.1 Primary data and research instrumentThe primary instrument for data collection in this research will be a semi-structured questionnaire, which will contain a mixture of closed ended and open-ended questions. According Boyd et al. (2004) the questionnaire method has advantages in terms of versatility of the method as well as speed and cost. However, it may have disadvantages as a result of unwillingness of respondents to provide information, inability of respondents to provide information and influence of the questioning process.

A Likert scale is a common type of attitude scale that will be used in this research. Respondents will be presented with a list of brands or attributes for which they will be asked to indicate their relative feelings or evaluations. The researchers will employ a four-point Likert scale ranging from 1-extremely important, 2-important, 3-slightly important and 4-not important. Pre-testing of the questionnaires will be done by conducting a small pilot survey in Tema Evergreen Shopping Mall to pick any questionnaire administration problems using 25% of the target main survey sample size.

The questionnaire will be completed with the help of all the group members within one week period with the intention of gathering detailed information which will help contribute to the successful outcome of the research study. The items on the questionnaire will be compiled from each section and sub-section of the literature.

1.7.5.2 Secondary dataSecondary data will be obtained through extensive review of written documents, which will include but not limited to articles in newspapers, textbooks, articles on the internet and publications.

1.7.6 Data analysisPrimary data (mainly quantitative) generated by the study will be cleaned to ensure consistency and transcribed in coded form (pre and post-coded) into the computer using the Statistical Package for Social Scientists (SPSS). The statistical software package SPSS Version 11.5 as well as Microsoft Excel will be used to analyze the data to obtain descriptive statistics mainly in the form of frequencies and percentages. For the statistical analysis, cross tabulation will used.

Quantitative and qualitative data from semi-structured will be analyzed within the framework of the objectives and hypotheses. For discussion of results, tables and graphs will be used to present the data. The study will also use bi-variate technique to test the hypotheses. This technique will be employed to examine variables considered to be of relevance. This will be made with 99% level of confidence i.e., p= 0.01. The discussion of the major findings will be done according to the objectives of the study.

1.8 Organization of the study

The study will be structured into five main chapters. Chapter one will focus on the general introduction, giving background to the study, the research problem, the objectives, research hypotheses and significance of the study.

Chapter two will represent a review of literature on the subject matter and explanations of the various concepts and theories involved in the study.

Chapter three mainly will feature methodology that will be used for the study and the various statistical tools and techniques used.

Chapter four takes up analysis of field data in matrix and descriptive forms and the various analytical tools that were used in the analysis.

Finally, chapter five gives a summary of the study, conclusion and recommendations

References

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