Executive Summary

HCL Infosystems Ltd is one of the pioneers in the Indian IT market, with
its origins in 1976. For over quarter of a century, the company have developed and
implemented solutions for multiple market segments, across a range of
technologies in India.
With sound macro economic condition and buoyant buying sentiment in the
market, the desktop PC market grossed 23.4lc units, registering a growth of 36%
over the same period last year. The notebook PC segment was the star performer,
showing massive growth, 60% sequentially and 138% year-on-year and crossing
the one lakh barrier.
This can be attributed to strong domestic growth in requirements and
aggressive sales promotion offers by the players like HP, Lenovo, and HCL among
others. Again brand recognition and image play a very important role in purchase
decisions. Brand managers of IT products, to increase the short-term gains and
keep the cash registers ticking have started using aggressive sales promotion
offers.
The objective of the project was to find out whether people actually buy
because of the sales offers incentives and whether they actually feel that sales
promotions are an effective brand-building tool also. Also some of the insights on
how to best place an effective Sales promotion program have been unleashed.
The research brings out the fact that people do buy because of the sales
promotion offers, but the impact promotional offers have on the Brand Image of
the company offering such promotions is negligible. Thus sales promotion offers
are a definite incentive to buy for a customer but they do not guarantee a long-
term relationship with the customer and hence a Brand Manager must use such
offers with a pinch of salt.

1
 CHAPTER 1

THEORETICAL

BACKGROUND

OF

THE STUDY

2
Sales Promotion
Sales promotion, a key ingredient in marketing campaigns, consists of a
diverse collection of incentive tools, mostly short term, designed to stimulate
quicker or greater purchase of particular products or services by consumers or the
trade.1
Whereas advertising offers a reason to buy, sales promotion offers an
incentive to buy. Sales promotion includes tools for consumer promotion
(samples, coupons, cash refund offers, process off, premiums, prizes, patronage
rewards, free trials, warranties, tie-in promotions, cross-promotions, point-of-
purchase displays, and demonstrations); trade promotion (prices off, advertising
and display allowances, and free goods); and sales force promotions (trade shows
and conventions, contest for sales reps, and specialty advertising). These tools are
used by most organizations, including non-profit organizations. Churches, for
example, often sponsor bingo games, theatre parties, testimonial dinners and
raffles.
A decade ago, the advertising to sales-promotion ratio was about 60:40.
Today, in many consumer packaged-good companies, sales promotion accounts
for 65 to 75 percent of the combined budged. Sales promotion expenditures have
been increasing as a percentage of combined budget expenditure annually for the
last two decades. Several factors contribute to this rapid growth, particularly in the
consumer markets.2 Promotion is now more accepted by the top management as an
effective sales tool; more product managers are qualified to use sales-promotion
tools; and product managers are under pressure to increase current sales. In
addition, the number of brands has increased; competitors use promotions
frequently; many brands are seen as similar; consumers are more price-oriented;
the trade has demanded more deals from the manufacturers; and the advertising
efficiency has declined because of rising costs, media clutter, and legal restraints.
The rapid growth of sales-promotion media has created clutter similar to
the advertising clutter. Manufacturers have to find ways to rise above the clutter-

3
for instance, by offering larger coupon-redemption values or using more dramatic
point-of purchase displays and demonstrations.
Purposes of Sales promotion
Sales-promotion tools vary in their specific objectives. A free sample
stimulates consumer trial, whereas a free management-advisory service aims at
cementing long-term relationship with a retailer.
Sellers use incentive-type promotion to attract new triers, to reward loyal
customers, and to increase the repurchase rates of the occasional users. Sales
promotion often attracts brand switchers, who are primarily looking for low price,
good value, or premiums. Sales promotions are unlikely to turn them into loyal
users. Sales promotions used in markets of high brand similarity produce a high
sales response in the short term but little permanent gain in the market share. In
markets of high dissimilarity, sales promotion can alter market shares
permanently.
Farris and Quelch cite a number of sales promotion benefits flowing to
manufacturers and consumers.3 Sales promotion enable manufacturers to adjust to
short-term variations in supply and demand. They enable manufacturers to test
how high a list price they can charge, because they can always discount it. They
induce the customers to try new products instead of never straying from current
ones. They lead to more varied retail formats, such as every-day-low-price store
and the promotional-pricing store. They promote greater consumer awareness of
prices. They permit manufacturers to sell more than they would sell at list price.
They help the manufacturer adapt programs to different consumer segments.
Consumer themselves enjoy some satisfaction from being smart shoppers when
they take advantage of price specials.
Today many marketing managers first estimate what they need to spend in
trade promotion, then what they need to spend in consumer promotion. Whatever
is left they will budget for advertising. There is danger, however, in letting
advertising take a back seat, because advertising typically acts to build brand

4
loyalty. The question of whether or not sales promotion weakens brand loyalty is
subject to different interpretations. Sales promotion, with its incessant prices off,
coupons, deals and premiums, may devalue the product offering in the buyers’
minds. Buyers learn that the list price is largely a fiction. However, before
jumping to any conclusion, we need to distinguish between price promotions and
added-value promotions.
However, usually, when a brand is price promoted too often, the consumer
begins to devalue it and buy it mainly when it goes on sale. So there is risk in
putting a well-known brand leader on promotion over 30 percent of time.()
Dominant brands offer deals frequently, because most deals only subsidize current
users. Brown’s study of 2,500 instant-coffee buyers concluded that:
 Sales promotions yield faster and more measurable responses in sales
than advertising does.
 Sales promotions do not tend to yield new, long term buyers in mature
markets because they attract mainly deal-prone consumers who switch
among brands as deals become available.
 Loyal brand buyers tend not to change their buying patterns as a result of
competitive promotion.
 Advertising appears to be capable of deepening brand loyalty.4

There is also evidence that price promotions do not build permanent total
category volume. Small share competitors find it advantageous to use sales
promotion, because they cannot afford to match the market leaders’ large
advertising budgets; nor can they obtain shelf-space without offering trade
allowances or stimulate consumer trials without offering incentives. Price
competition is used by small brand seeking to enlarge its share, but it is less
effective for category leader whose growth lies in expanding the entire category.5
The upshot is that many consumer packaged goods companies feels that they are
forced to use more sales promotions than they wish. They blame the heavy use of

5
sales promotion for decreasing brand loyalty; increasing consumer price-
sensitivity; brand quality image dilution, and a focus on short-run-marketing
planning.

Major decisions in Sales Promotions

In using sales promotion, a company must establish its objectives, select
the tools, develop the program, pretest the program, implement and control it, and
evaluate the results.

Establishing the objectives

Sales promotion objectives are derived from broader promotion objectives,
which are derived from more basic marketing objectives developed for the
product. For consumers, objectives include encouraging purchase of larger-sized
units, building trial among non-users, and attracting switchers away from
competitors’ brands. For retailers, objectives include persuading retailers to carry
new items and higher levels of inventory, encouraging stocking of related items,
offsetting competitive promotions, building brand loyalty, and gaining entry into
new retail outlets. For the sales force, objectives include encouraging support of a
new product or model, encouraging more prospecting, and stimulating off-season
sales. 6 See “Marketing Memo: Sales Promotions as brand builders.”)

6
Mar keting Memo: S ales Pr omotions as br and builder s

Building brand awareness is a long-term process. What a brand does today

predicts what it will do tomorrow. Sales promotions are short term and
temporary. Here are some of the tips on how to make a sale promotion an
effective brand-building tool.
 Make sure the promotion is justified: A new store opening, a
company anniversary, and other kinds of celebrations are all good
reasons for running a promotion
 Tie the promotion to brand’s image: Birth dates and anniversaries
are good
 Look at every both for the sales job it can do and as a
communication tool: A promotion is one of a brand’s many voices; it
can help build brand awareness if it says the right things

Source: Adapted from Jacques Chevron, “Branding and Promotion: Uneasy

combination.” Brand week, September 14, 1998, p.24

Selecting Consumer-promotion tools

The promotion planner should take into account the type of the market,
sales promotion objectives, competitive conditions, and each tool’s cost
effectiveness.
The main consumer promotion tools are summarized in the following table.
We can distinguish between manufacturer promotions and retailer promotions.
Sales promotions are most effective when used together with advertising. In one
study, a price promotion alone produced 15 percent increase in sales volume.
When combined with feature advertising, sales volume increased 19 percent;
when combined with feature advertising and a point-of-purchase display, sales
volume increased 24 percent.7

7
Major Consumer promotion tools:

Samples: Offer of a free amount of a product or service delivered door to door, sent in the
mail, picked up in a store, attached to another product, or featured in an advertising offer.

Coupons: Certificates entitling the bearer to a stated saving on the purchase of a specific
product; mailed, enclosed in other products or attached to them, or inserted in the magazine
and newspaper ads.

Cash Refund Offers (rebates): Provide a price reduction after purchase rather than at retail
shop; consumer sends a specified “proof of purchase” to the manufacturer who “refunds”
part of the purchase price by mail.

Price Packs (cents-off deals): Offers to consumer savings off the regular price of a product,
flagged on the label or package. A reduce price pack is a single package sold at the reduce
price (such as two for the price of one). A banded pack is two related products banded
together (such as a toothbrush and toothpaste)

Premiums (gifts): Merchandise offered at a relatively low cost or free as an incentive to

purchase a particular product. A with-pack premium accompanies the product inside or on
the package. A free in-the-mail premium is mailed to the consumers who send a proof of
purchase. A self-liquidating premium is sold below its normal retail price to consumers who
request it.

Frequency Programs: Programs rewarding the consumers whose frequency and intensity in
purchasing the company’s products and services is higher.

Prizes (Contests, sweepstakes, games): Prizes are offers of the chance to win cash, trips,
or merchandise as a result of purchasing something. A contest calls consumers to submit an
entry to be examined by panel of judges who will select the best entries. A sweepstake asks
consumers to submit their names in a drawing. A game presents the consumers with
something every time they buy to help them win prizes.

Patronage awards: Values in cash or in other forms that are proportional to patronage of a
certain vendor or group of vendors.

Free Trials: Inviting prospective purchasers to try the product without cost in the hope that
they will buy.

Product Warranties: Explicit or implicit promises by sellers that the product will perform as
specified or that the seller will fix it or refund the customer’s money during a specified
period.

Tie-in promotions: Two or more brands or companies team up on coupons, refunds, and
contests to increase the pulling power

Cross-promotions: Using one brand to advertise another noncompeting brand.

Point-of-purchase (POP) Displays and Demonstrations: POP displays and demonstrations

take place at the point-of-purchase or sale

8
Selecting trade-promotion tools
Manufacturers use a number of trade promotion tools. Surprisingly a higher
percentage of promotion pie is devoted to trade promotion tools (46.9 percent)
than to consumer promotion (27.9 percent), with media advertising capturing
remaining 25.2 percent. Manufacturers use award money to the trade
1. To persuade the wholesaler or retailer to carry the brand;
2. Persuade the retailer or wholesaler to carry more units than the normal
amount;
3. To induce the retailers to promote the brand by featuring, display, and price
reductions and;
4. To stimulate retailers and their sales clerks to push the product.
The growing power of large retailers has increased their ability to demand trade
promotion at the cost of consumer promotion and advertising. 8 The different trade
promotions are

Price off (off-invoice or off list): A straight discount off the list price on each
case purchased during a stated time period.

Allowance: An amount offered in return for the retailer’s agreeing to feature

the manufacturer’s products in some way. An advertising allowance
compensates the retailers for advertising the manufacturer’s product. A display
allowance compensates them for carrying a special product display

Free Goods: Offers of extra cases of merchandise to intermediaries who buy a

certain quantity or who feature a certain flavor or size

Source: For more information, see Betsy Spethman, Trade Promotion Redefined,
Brandweek, March 13, 1995, pp. 25-32
Selecting Business- and sales-force-promotion tools
Companies spend billions of dollars on business-and sales-force-promotion tools
as shown in the table. These tools are used to gather business leads, impress and
reward customers, and motivate the sales force to greater effort. Companies

9
typically develop budgets for each business-promotion tool that remain fairly
constant from year to year.

Trade Shows and Conventions: Industry associations organize annual trade

sows and conventions. Business marketers may spend as much as 35 percent of
their annual promotion budget on trade shows

Sales Contests: A sales contest aims at including the sales force or dealers to
increase their sales over a stated period, with prizes (money, trips, gifts or
points) going to those who succeed

Specialty Advertising: Specialty advertising consists of useful, low cost items

bearing the company’s name and address, and sometimes an advertising
message that salespeople give to prospects and customers. Common items are
ballpoint pens, key chains, flashlights, tote bags, and memo pads.

10
 CHAPTER 2

RESEARCH

METHODOLOGY

11
Objectives of the survey

The main objective of the survey was to determine the impact of the sales
promotion offers on the buying behaviour of consumers of IT products on the
following factors:

 The effect on their purchase decision (whether or not the consumers are
buying on the basis of promotional offers)
 The brand image of the brand offering the sales promotion (does it increase
or decrease)

There were also a few secondary objectives of the survey, which included

 What are the sales promotion tools that are most likely to spur a purchase
decision
 Whether enlarging the existing customer segments is possible through sales
promotions
 What is the media that is most suitable to communicate the sales promotion
offers to the consumers

The hypotheses for the survey were:

 People who have bought the computers/notebooks have done so mainly

during sales promotion offers
 Majority of the buyers who bought during sales offers got the information
regarding the same from either a newspaper or a magazine

12
Research Design:
The study used an exploratory research design and was conducted for the
period of 14th November 2005 to 21st January 2006

Data Collection
a) Primary Data: Through survey using structured questionnaire.
b) Secondary Data: Company resources

Area of Study: Meerut City in the state of Uttar Pradesh, which is the education
hub of Western Uttar Pradesh
Period of Study: 60 days.
Sampling Plan
Sample Design
The sample was selected on the basis of pre-qualifying question as to whether the
respondent is an existing PC/notebook user or whether he is planning to buy one
in future so that the respondents can be grouped into two categories (whose
opinion was vital for the survey):
 Users (73 percent) and
 Perspective buyers (27 percent)

13
 80

73

Percent 60

40

27
20

0
User Pers. Buyer

User/Perspective Buyer

Sampling Technique
The formulae used for calculating sample size was:
Π (1- Π) x Z 2
n = __________________

D2
Where,
n = the sample size selected for the study
Π = the proportion of the total population that is expected to have the required
characteristics (i.e. The proportion of the total population that either uses a
computer/notebook or is planning to buy one soon)
Z = the amount of accuracy that is allowable (95 percent accuracy)
D = the amount of deviation from standard that can be allowed (1.96 standard
deviations)

On the basis of the demographic data available for Meerut city the value of
“Π” was ascertained at 0.010 that is 10 percent of the total population of Meerut
has either bought or is planning to buy computers/notebooks.

14
 The values of “Z” and “D” are ascertained by statisticians and are a
standard. The value of “n” was ascertained as 150 (approximately) for the study.

In order to have a representative sample for the survey, using techniques

such as mall intercepts random sampling was done.

Data Analysis:
The data analysis was done using SPSS software; the data was analyzed using
the following statistical methods:
1) Factor Analysis
2) Discriminant Analysis
3) Perceptual Mapping
4) Regression Analysis

Limitations of the study:

There are a few limitations to the study that may arise due to the following
reasons:
1) Sampling plan: The sampling is done through random sampling; generally
through mall intercept interviews, which might distort the results but not to
a very great extent.
2) The Area of study: Meerut city might not hold good as a representative for
the whole of India and hence the survey is location specific.

15
 CHAPTER 3

INDUSTRY
AND
COMPANY
PROFILE
16
INDUSTRY PROFILE:
The PC industry has been a leading driver of economic growth in the past
three decades. The explosion in the use of computers in businesses has been
driven by the need to modernize work processes and boost productivity, while the
Internet, entertainment and other digital applications were among the primary
drivers of PC adoption in the consumer market.
In India, the home PC market segment is supplied by three distinct kinds
of manufacturers. One; you have global companies like HP and Compaq along
with many players. Two; there are the Indian brands like Wipro and HCL. And
three; is the sea of kitchen tabletop PC assemblers who sell their unbranded
machines at super-low prices. This last category of unbranded machines is often
referred to as the 'gray market' and it has the majority share of the home PC
market. It is followed by Indian brands and lastly by the multinational brands.
The Indian personal computer industry witnessed a year-on-year growth of
32 per cent to 12-lakh units in the July-September quarter of 2005, an 11-per cent
increase over the previous quarter AMJ (17th November 05).
In the consumer desktop category HCL led over HP, with LG following the
market leaders at the third slot. In the overall client PC (notebooks and desktops)
market, HP retained its top slot with a sequential increase of 19% and a year-on-
year 45% growth. HCL continued to stay at second position, with a 40% year-on-
year growth, while Lenovo occupied the third position.

Current Market Trends

17
 With sound macro economic condition and buoyant buying sentiment in the
market, PC sales in India are expected to touch 47 lakh units in Fiscal 2005-2006,
according to MAIT’s Industry performance review for the first half of the FY
2005-06.
The desktop PC market grossed 23.4lc units, registering a growth of 36%
over the same period last year.
The MAIT-IMRB review reveals that PC sales to the business segment
improved by 55% accounting for 78% of the total PC consumption. In the
households, while the sales were 5.10 lac units, the sector witnessed a decrease of
5% over the same period last year. Assembled PCs witnessed decline in market
share, accounting for 34% of the PC sales in H1/2005-06. The share of the Indian
brands grew to account for 31% of the market while the MNC brands accounted
for the rest at 35%.
The notebook PC segment was the star performer, showing massive
growth, 60% sequentially and 138% year-on-year and crossing the one lakh
barrier. Centrino-based notebooks constituted two-thirds of the total shipments. In
terms of market rankings, HP stayed at the top, followed by Lenovo and Acer
(IDC report). In H1/2005-06, about 16,000 notebooks were sold to the households
segment accounting for 13% of the total market (MAIT report).
The server market registered a growth of 56% over the first half of the
fiscal riding on high consumption in the medium establishments where sales
increased by 258%. Overall Printer sales grew by 43% over that in H1 2004-05 on
YoY basis. The UPS market grew by 16% over H1 of 2004-05.
The growth in the industry can be summarized in the following table:

18
 The market was fueled by a strong demand from the notebook and
consumer desktop markets. Consistent fall in notebook prices led to a growth in
this market. In this situation Brand Image/brand perception plays a major role
in purchase of the products. There were massive investments in the private
educational sector that provided the momentum for growth in this market. Notable
among these were various management institutes and technical institutions.

COMPANY PROFILE
HCL's history goes to 1975 when six entrepreneurs-Shiv Nadar and five of
his associates-decided to create a computer systems and services business in India.
They faced many initial challenges and despite the lack of venture capital
available in India at that time, they opened their first office in the suburbs of New
Delhi, naming their business “Hindustan Computers Ltd” in 1976. After eight
years, HCL became the largest computer systems and services company in India.
HCL under its Umbrella has four strategic Business units HCL
technologies, Info systems, Comnet and HCL Infinity. An HCL Infosystem is
mainly into systems marketing.
Financial Overview
The company has reported consolidated revenue of Rs 2284.5 crores (USD
523.7 Mn) during the quarter ended September 30, 2005 as against Rs 1579.5
crores (USD 362.1 Mn) in the corresponding quarter of the previous year, a
growth of 45%.
HCL Infosystems
HCL Infosystems Ltd is one of the pioneers in the Indian IT market, with
its origins in 1976. For over quarter of a century, the company have developed and
implemented solutions for multiple market segments, across a range of
technologies in India. The company has been in the forefront in introducing new
technologies and solutions for wide range of markets. HCL is the pioneer of low

19
cost systems. The advantage of supplying customized products makes company
scale new heights.
HCL Infosystems (HCLI) draws it's strength from 29 years of experience in
handling the ever changing IT scenario, strong customer relationships, ability to
provide the cutting edge technology at best-value-for-money and on top of it, an
excellent service & support infrastructure. Today HCL is country's premier
information enabling company. It offers one-stop-shop convenience to its diverse
customers having an equally diverse set of requirements. Be it a large multi-
location enterprise, or a small/medium enterprise, or a small office or a home,
HCLI has a product range, sales & support capability to serve.
Last 29 years apart from knowledge & experience have also given HCLI
continuity in relationship with the customers, thereby increasing the customer
confidence.
Companies’ strengths can be summarized as:
 Ability to understand customer's business and offer right technology
 Long-standing relationship with customers
 Pan India support & service infrastructure
 Best-vale-for-money offerings
Alliances & Partnerships:
To provide world-class solutions and services to all our customers, we have
formed Alliances and Partnerships with leading IT companies worldwide.
HCL Infosystems has alliances with global technology leaders like Intel, AMD,
Toshiba, Ericsson, Microsoft, Nokia and Sun Microsystems, SAP, Scansoft, SCO,
EMC, Veritas, Citrix, CISCO, Oracle, Computer Associates, RedHat, Infocus,
Duplo, Samsung, Novell.
These alliances on one hand give them access to best technology & products as
well enhancing their understanding of the latest in technology. On the other hand

20
they enhance company’s product portfolio, and enable HCLI to be one stop shop
for its customers.
Core Values:
The company shall uphold the dignity of the individual,
It shall honor all commitments,
It shall be committed to Quality, Innovation and Growth in every endeavor,
It shall be responsible corporate citizens.

Products and solutions

HCL Infosystems' portfolio of products covers the entire spectrum of the
information technology needs of its customers. By virtue of the immense diversity
of markets and customers that it addresses, HCL Infosystems' products offerings
include everything from high-end enterprise level servers for mission critical
applications to multimedia home computers.
The product portfolio consists of:
 Business
 PCs Home PCs
 Infiniti Powerlite Notebooks
HCLI has 6 manufacturing facilities with an annual capacity of over
300,000 PCs, plus production of Servers, Color monitors, Terminals, Keyboards,
racks and cabinets. Some of these facilities enjoy tax benefits for another 2-3
years. The company augments this backward integration with India’s largest
network of sales and service locations – more than 5 times its nearest MNC
competition. With basic customs duty down to zero on microprocessors, hard
disks etc., the price gap between organized and unorganized segments has shrunk,
benefiting HCLI. 59% of the commercial market is still gray, and hence there
remains immense potential for growth.
PC Manufacturing:

21
PC manufacturing plants are located at Pondicherry, which gives following
strategic advantages:
• Proximity to Chennai port and proximity to vendors
• Tax benefits
• Established outward transport network
• Economical & skilled labour
Having an annual capacity of over 300,000 units, it is more than geared up
to meet the company’s current & future demand for Desktop PCs & Servers. Its
manufacturing facilities are versatile & adaptable, and can very quickly scale up
the production or shift the emphasis from one model to another.
The manufacturing facilities were first in India to get ISO 9001-2000
certification, validating the excellent quality processes that go in the design &
manufacturing of its Desktop PCs & Servers. Relationships & Base of Executed
projects Strong relationships with customers, principals and associates have
helped HCLI attain the leadership status that it enjoys today. The company gets
access to global best practices and a head start in technology due to strong
relationships with its principals. They use this strategic edge to launch new
technology ahead of competition in India. Some recent examples are – Pentium 4
based Desktop PC at sub Rs.40, 000 price, Media Center PC in partnership with
Microsoft and currently Rs.10000 Pc.
HCLI enjoy considerable market share in segments like Government,
Banking & Finance and Education & Research. It has created credibility with its
customers that have consistently resulted in repeat business. It has rate contracts
with– NIC, Punjab National Bank, DGS & D, NICSI, ONGC, Punjab & Sind
Bank. Some recent large orders bagged by us on the enterprise front are from
Canara Bank, Asian Paints, Andhra Bank, South Central Railways, BSNL, ITC
and Assam Electronics Development Corporation LTD (AMTRON), Dept. of
Posts - DGS & D, SBI, Corporation Bank, Syndicate Bank, State Bank of
Maharashtra, Indian Overseas bank, High Court (Madras), Sahara India Parivar,

22
Asian Paints, Hindustan Aeronautics LTD, Institute of Chartered Accountants of
India and Andhra Bank.
Distribution Network:
HCLI recognized early the advantages of having a distribution network.
Their channel is a balanced mix of retail outlets, resellers & distributors.
.

CHAPTER 4

ANALYSIS

AND

23
 INTERPRETATION

Profile of the Respondents:

The pie charts and bar graphs below indicates the profile of the 150
respondents that were surveyed:

Age wise profile of the respondents

40-60 Years

20.0%

18-25 Years

33.3%

25-40 Years
46.7%

Gender wise profile of the customers

24
 Female

33.3%

Male
66.7%

Income profile of the respondents

70

60
60

50

40
40

30
30

20
20

10
8K-10K 10K-20K 20K-40K 40K and Above

Family Income

Occupation profile of the respondents

25
 70

60
60

50
50

40

30

20
20 20

10
Government Job Ow n Business
Working in Pvt Sec Student

Occupation

Total market share of different PC/Laptop brands

26
 Others/Assembled

9.1%

HP

45.5%
HCL

36.4%

IBM/Lenovo
9.1%

From the pie chart it is very clear that majority (45.5 percent) of the total
respondents own a computer from Hewlett Packard, followed closely by HCL
Infosystems (36.4 percent). Thus, HP was found to be a leader in consolidated
market share of PC and Laptops in Meerut city.

Satisfaction level of the customers of different brands:

27
 100
20 100 75 100
90

80
80
70
Count

60

50

40

30
Satisfied
20 25
No
10
0 Yes
HP IBM/Lenovo HCL Others/Assembled

Satisfaction level of Customers

As is evident from the graph HP and IBM top the charts in terms of
customer satisfaction. IBM leads the market in terms of customer satisfaction with
100 percent, followed by HP, which had 80 percent satisfied customers.

Major reason of dissatisfaction

28
 70

60
60

50

40
Percent

40

30

20

10

0
Poor Service Poor performance

Reason for Dissatisfaction

The major reason for dissatisfaction is as shown in the graph above. The
major reason for dissatisfaction is poor service (60 percent) and poor performance
(40 percent).

Company offering best sales promotion offer

29
 100
36 25
90

80

70 25

60 18

50 HCL
50
40 9
Acer
30 36
IBM/Lenovo
20
Zenith
10
0 HP
User Non User

User/Non User

From the bar chart it can be ascertained that majority of the users believe
that HCL gives best offers (36 percent) whereas majority of non-users believe that
IBM offers best sales offers. This can be attributed to the aggressive sales
promotion strategies adopted by HCL in the PC segment and in laptop and server
segment by IBM.

Sales promotion offers best communicated through

30
 100
36 50
90

80

70

60 64

50
25
40

30
Television
20 25
Magazine
10
0 New spaper
User Non user

User/Non User

As is evident from the graph majority of users (100 percent) and non-users
seek Magazines and Newspapers for getting information about latest sales
promotion offers. This gives an insight that the media that can be effective in
conveying sales promotion offers is print media (magazines and newspapers). If
we look at another feature that has been brought out by the survey is the fact that
majority of people buy by looking at a feature in newspaper. This can be
concluded from the fact that 64 percent of the buyers are those who seek
information from Newspaper while purchasing a PC/Laptop.

Test of Hypotheses

31
 For the first hypothesis it is very evident from the graph that majority of
those who bought did so during a sales promotion offer
80

73

60
Percent

40

27
20

0
Yes No

Prompted By Offer

100
38 67
90

80

70

60 63
50

40 Awareness gained thr

30 33
Television
20
Magazine
10
0 New spaper
Yes No

Prompted By Offer

Majority of those who were prompted by the sales offers did were either
prompted by a Newspaper ad (63 percent) or an ad in the magazine (38 percent).

32
This is also the hypothesis of the study, which can be proved through the
following chi-square statistics.
Z0: Null Hypothesis: Majority of buyers, do not get information regarding
the sales promotion offers through newspapers or magazines
Za: Alternate Hypothesis: Majority of buyers, do get information regarding
the sales promotion offers through newspapers or magazines

Prompte d By Offe r * Aware ne ss gaine d through Crosstabulation

Count
Awareness gained through
1.00 2.00 3.00 Total
Prompted 1.00 50 30 80
By Offer 2.00 10 20 30
Total 60 30 20 110

Chi-Square Te sts

Asymp.
Sig.
Value df (2-sided)
Pearson a
67.986 2 .000
Chi-Square
Likelihood Ratio 74.842 2 .000
Linear-by-Linear
33.369 1 .000
Association
N of Valid Cases 110
a. 0 cells (.0%) have expected count less than 5.
The minimum expected count is 5.45.

From the statistics it is clear that the null hypothesis can be rejected and the
alternate hypothesis can be selected. This proves the hypothesis that majority of
buyers; do get information regarding the sales promotion offers through
newspapers or magazines. This is a true occurrence and not a chance occurrence.

33
The most successful offer
60

55
50

45
40
Percent

30

20

10

0
Price Discounts Freebies

Offers availed

From the bar chart we can ascertain that majority (55 percent) of those who
bought a computer/laptop when there was a sales promotion offer did so by
getting attracted to “Price Discounts”. Freebies or free gift offers were also quite
successful in raking in customers to buy. Thus it can be said that price discounts
are a hot favourite amongst buyers of IT products and services as an incentive to
buy.

34
The most effective sales promotion tool for potential customers
50

47

40

30

27

20

13 13
10
Percent

0
Alw ays Sometimes Can't Say Never

Price Discounts

74 percent of the respondents were positive about buying when there was a
price discount offer, whereas 72 percent were positive about buying when there
was a freebie attached to the offer.

35
 40

36 36

30
Percent

20

18

10
9

0
Alw ays Sometimes Can't Say Never

Freebies

Dealer Influence while buying computer/IT products

70

67
60

50
Percent

40

30

20
20

10 13

0
Alw ays Sometimes Never

Dealer Influence

From the graph we can interpret that 67 percent of the total respondents
feel that the dealer always influences them when they buy a computer or IT
product. Again from the next graph we can say that majority of those who bought

36
during sales offer (63 percent) believe that their purchase decision was influenced
by the dealer.

100
38 100
90

80
Count

70

60 63
50

40

30
Dealer Influence
20
Sometimes
10
0 Alw ays
Yes No

Prompted By Offer

Reason why computer/laptop/IT product is bought/upgraded

Change in Technology

37
 100
36 25
90

80

70 25
Count

60 36

50 Change In Technology
50
40
Disagree
30
Cant Say
27
20
Agree
10
0 Strongly Agree
Yes No

User/Non User

From the graph we can say that IT product users are divided over whether
Change in technology is a reason for them to upgrade their computers. On the
contrary, for the first time buyers, change in technology is a definite reason to buy
(50 percent strongly agree). This shows that change in technology is a factor
highly considered by non-users who are planning to buy soon.

On Requirement Basis

38
 100
45 25
90

80

70 50

60

On requirement basis
Count

50 27

40 Strongly Disagree

30 Disagree

9
20 25 Cant Say
18
10 Agree

0 Strongly Agree
Yes No

User/Non User

Majority of users and non-users (45 percent and 50 percent) disagree to the
fact that mandatory requirement is a reason to by or upgrade the PC/laptop. This
ascertains that mandatory requirements at workplace for upgrading or buying are
not a strong reason to buy/upgrading a PC/laptop at home.

Promotional offers an incentive to buy

39
 100
36 25
90

80

70 50
Count

60 64

50

40 Promotional Offers
30
Cant Say
20 25
Agree
10
0 Strongly Agree
Yes No

User/Non User

As evident from the graph both users and non-users find “Promotional
Offers” a strong reason to buy a computer/laptop. Thus it is quite clear that
promotional offers are a definite incentive to buy for the customers.

40
Discriminant Analysis for the most important attribute

Standardized Canonical Discriminant Function Coefficients Function 1

Importance of Good and Timely Service -1.035193899
Importance of Sales Offers and Discounts 1.680696063
Importance of Upgradability -0.185269039
Importance of Configuration 0.350950629
Importance of Ease of operation 1.513428467
Importance of low entry price -1.310721451

Functions at Group Centroids

User/Non user Function
1 -1.180252757
2 3.245695081

Perceptual Map for the most important attribute for a computer/laptop

41
 4

-1.180252757
3

2 1 Importance of
Sales Offers and Importance of
Discounts Ease of opertaion Series1
1
Importance of Series2

0 Configuration
Importance of
-2 -1 0 1 2 Upgradability
Importance of 3 4 5 6 7
-1 Good and Timely Importance of low
Service entry price
-2

From the Discriminant Analysis and Perceptual map we can say that for the
User group the most important attribute is “Good and timely service” and for the
non user group the most important attribute is “Sales offers and discounts”.

Discriminant analysis for Brand Image

Standardized Canonical Discriminant Function Coefficients Function

1
Increases Awareness About the Product -0.15095213
Increases Sales 0.880789241
Increases Visibility of the Brand -1.28495582
Makes it easier to choose one Brand from other 0.53772549
Increases Confidence -0.05717728

42
Makes you buy more 0.703468368

Functions at Group Centroids Function

User/Non User 1
1 -0.4800446
2 1.320122651
Unstandardized canonical Discriminant functions evaluated at group means

Perceptual Map for Brand Image

2.5

2 2

1.5
1.320122651
1
0.880789241
0.703468368 Series1
0.5 0.53772549
Series2
0 -0.057177278
-0.150952135
-1 0 1 2 3 4 5 6 7
-0.5

-1
-1.284955818
-1.5

From the Discriminant analysis and the subsequent perceptual map we can
say that Users attribute “Increase in sales” as the impact of the Sales Promotion
offers. Whereas the non-users attribute “Increase in the awareness of the Product
offerings” as the new impact of the Sales promotion offers from a company. This
makes it clear that none of the groups consider Sales promotion as a factor that
improves the brand image of a Brand.

43
CHAPTER 5

44
 FINDINGS

AND

CONCLUSION

From the Analysis of the results and based on the objectives of the study
the following findings can be ascertained:

Major Findings
Impact on purchase decision

45
  Majority of those who have bought a PC/laptop and are planning to buy
consider “Promotional offer” as a definite incentive to buy.
 People who have already bought a PC/laptop have done so during a
“Promotional Offer
 Non-users consider sales and promotion offer as the most important
attribute for buying a computer/laptop

Impact on Brand Image

 Majority of users believe that the only impact Promotional Offer has on the
Brand is “Increase its sales”
 Majority of the non-users believe that Promotional Offers increase the
“Awareness about the product offering” of the brand.
 The Brand Image is not enhanced by using “Promotional Offers” and they
only serve as a tool for increasing the awareness or sales of a brand as
ascertained from the survey

Minor Findings

 The market share of the Hewlett Packard (HP) brand of computers/laptops

is the highest in Meerut, followed closely by HCL Infosytems in retail
segment.

46
  IBM (International Business Machines) leads the pack in terms of customer
satisfaction followed by Hewlett-Packard (HP).
 Major reason for dissatisfaction among existing customers is “Poor
Service”.
 Majority believes that HCL Infosystems has the best “Promotional Offers”
among all the players existing in the market.
 The most successful offers are “Price discounts” and “Freebies”, thus
people look for monetary incentives are most sought after deals while
buying an IT product.
 Majority of those who buy in a sales promotion offer do so by looking at a
featured advertisement in a magazine or a newspaper.
 People look for information on what to buy (IT Products) from newspapers
and magazines the most

Conclusion

From these findings it can be ascertained that Sales promotion offers

provide a definite incentive to buy, but their impact on the Brand Image of an IT
product is still debatable. These findings give an indication that “Promotional

47
Offers” can be used for increasing the short-term gain but their application in
building brand image over a long term is limited.
Promotional tools that are most successful are hence those which
incentivise the customer immediately like price discounts. Again from the minor
findings we can ascertain that Print Media the best media for communicating
promotional offers, as this is the medium in which people seek information while
they are in the “Information Search” mode of the consumer buying process.
For the companies who seek to increase customer satisfaction can do so by
improving their “After Sales Service” or else there might be some amount of
dissonance in the mind of the customer.

48
 CHAPTER 6

SUGGESTIONS

AND

RECOMMENDATIONS

49
 From the survey many vital points were bought out in the forefront which if
implemented can help companies to improve their brand image. Many companies
have used promotional offers over the last decade and the proportion of
promotional offer budget as a percentage of the total combined budget has been
ever rising.
This can be attributed to the short-term performance pressure on the
product managers. But this tool should be used with caution as Promotional Offers
do little to build the brand image of the product or the company in the long term.
Thus, more long-term approach to marketing is Advertising and not Promotional
Offers.
Again as can be ascertained from the survey, most sought after promotional
offers are those in which the customer gets instant incentives like Price discounts
or Freebies. This can have its positives and negatives. This gives the manufacturer
the ability to experiment with different price bands to ascertain price flexibility of
the customers and also to deal with demand supply fluctuations effectively on the
positive side. But on the negative side of it the customer will start discounting the
product as inferior in quality, and also this increases the dissonance of the
customers who have already bought from the manufacturer.
Thus, price discounts can be effective tool for raking in the moolah but it
has to be used with a word of caution and not excessively as it has many a flip
sides attached to it.
Information search stage for a customer buying an IT product is very
extensive and serious search takes place before buying. The information regarding
such products should hence are better placed in media which has higher amount of
involvement. Thus print media is best suited for placing advertisements or features
for the products of this nature.

50
 CHAPTER 7

APPENDIX

51
 QUESTIONNAIRE

Dear Respondent,

We are conducting a survey on Sales Promotional Offers in IT

products. This survey would help us in serving you better. Please fill the
questionnaire with due care and attentiveness and to the best of your
knowledge to help us gauge your likes and dislikes. The questionnaire has
instructions to facilitate you while filling up the questionnaire. Please feel free
to ask though, wherever necessary.

1) Do you own a computer/notebook?

Yes [ ] No [ ]

If No then go to: Qn No 9

2) Which brand of computer/notebook do you own?

HP [ ] Zenith [ ] IBM/Lenovo [ ]
Acer [ ] HCL [ ]
Others [ ]

3) Was there any offer which prompted you to buy a computer?

Yes [ ] No [ ]

4) How did you know about the type of computer you are using right now?
Newspaper [ ] Magazine [ ]
Television [ ] Radio [ ]
Friends and Family [ ] Others [ ]

5) What was the offer that you got when you bought your computer?
Price discounts [ ] Extended Warranty [ ]
Freebies [ ] Others [ ]

6) Do you think that you get influenced by sales offers while buying
computers?
Always [ ] Sometimes [ ]
Never [ ] Can’t Say [ ]

7) Are you satisfied with the computer you are using right now?
Yes [ ] No [ ]

52
8) if not satisfied what is the cause of your dissatisfaction?
Poor service [ ]
High maintenance costs [ ]
Poor performance [ ]
Unwanted features [ ]
Other reasons [ ]

9) Are you planning to buy one?

Yes [ ] No [ ]

10) What according to you is most important attribute for a computer?

10.1 Low entry price

Not Important [ ] Less important [ ] Important [ ] Very Important [ ]

10.2 Good and timely service

Not Important [ ] Less important [ ] Important [ ] Very Important [ ]

10.3 Upgradation
Not Important [ ] Less important [ ] Important [ ] Very Important [ ]

10.4 Configuration
Not Important [ ] Less important [ ] Important [ ] Very Important [ ]

10.5 Ease of operation

Not Important [ ] Less important [ ] Important [ ] Very Important [ ]

10.6 Sales offers and discounts

Not Important [ ] Less important [ ] Important [ ] Very Important [ ]

11) What sort of sales offers would you generally go for?

11.1 Price Discounts

Always [ ] Sometimes [ ] Never [ ] Can’t Say [ ]

11.2 Freebies
Always [ ] Sometimes [ ] Never [ ] Can’t Say [ ]

11.3 Extended Warranty

Always [ ] Sometimes [ ] Never [ ] Can’t Say [ ]

53
11.4 Unrelated Offers
Always [ ] Sometimes [ ] Never [ ] Can’t Say [ ]

12) The basis of buying or upgrading your computer is

12.1 Change in Technology

Strongly agree [ ] Agree [ ] Can’t say [ ] Disagree [ ] Strongly disagree [ ]

12.2 On requirement basis

Strongly agree [ ] Agree [ ] Can’t say [ ] Disagree [ ] Strongly disagree [ ]

12.3 Sales and promotional offers

Strongly agree [ ] Agree [ ] Can’t say [ ] Disagree [ ] Strongly disagree [ ]

12.4 Predefined timeframes

Strongly agree [ ] Agree [ ] Can’t say [ ] Disagree [ ] Strongly disagree [ ]

13) Does this increase while there are offers?

Always [ ] Sometimes [ ] Never [ ] Can’t Say [ ]

14) Where do you get the information about the latest offers?
Newspaper [ ] Magazine [ ]
Television [ ] Radio [ ]
Friends and Family [ ] Others [ ]

15) Does the dealer have influence while buying any type of computer or IT
products?
Always [ ] Sometimes [ ] Never [ ] Can’t Say [ ]

16) Do you think that sales promotion offers has following impact on the
brand you use?

16.1 Increases awareness about the product

Strongly agree [ ] Agree [ ] Can’t say [ ] Disagree [ ] Strongly disagree [ ]

16.2 Increases its sales

Strongly agree [ ] Agree [ ] Can’t say [ ] Disagree [ ] Strongly disagree [ ]

16.3 Increases the visibility of the brand

Strongly agree [ ] Agree [ ] Can’t say [ ] Disagree [ ] Strongly disagree [ ]

54
16.4 Makes it easier to choose one brand from the other
Strongly agree [ ] Agree [ ] Can’t say [ ] Disagree [ ] Strongly disagree [ ]

16.5 Makes you more confident about selecting the brand

Strongly agree [ ] Agree [ ] Can’t say [ ] Disagree [ ] Strongly disagree [ ]

16.6 Makes you buy more than what you want

Strongly agree [ ] Agree [ ] Can’t say [ ] Disagree [ ] Strongly disagree [ ]

17) Which company do you think has the best sales offers?
HCL [ ] HP [ ] IBM/Lenovo [ ]
Acer [ ] Zenith [ ] Others [ ]

18) Personal Details

18.1 Age
18-25 [ ] 25-40 [ ]
40-60 [ ] 60 and above [ ]

18.2 Gender
Male [ ] Female [ ]

18.3 Family Income

8 K - 10 K [ ] 10K - 20 K[ ]
20K - 40K [ ] 40K and above [ ]

18.4 Occupation
Government Job [ ] Working in private sector [ ]
Own Business [ ] Retired [ ]
Student [ ]

Thanks for filling up the questionnaire and for your valuable time.

Have a great day!!!!

55
 BIBLIOGRAPHY

1. From Robert C Blattberg and Scott A. Neslin, Sales Promotion

Concepts and Methods, and Strategies, (Prentice Hall, 1990).

2. Roger A. Strang, Sales Promotion: Fast Growth: Faulty Management,

Harvard Business Review (July-August 1976) 116-19.

3. Paul W. Farris and John A. Quelch, In defense of Price Promotion,

Sloan Management Review (Fall 1987): 63-69.

4. Robert George Brown, Sales Response to Promotions and
Advertising, Journal of Advertising Research (August 1974) 36-37.
Also see Carl F. Mela, Sunil Gupta, and Donald R Lehmann, The
Long-Term Impact of Advertising and Consumer Brand Choice,
Journal Of Marketing Research (May 1997):248-61; Purushottam
Papatla and Lakshman Krishnamurti, Measuring the Dynamic effects
of Promotions on Brand Choice, Journal of Marketing Research
(February 1996); 20-35; Kandel Jedidi, Carl F. Mela, and Sunil Gupta,
Managing Advertising and Promotions for Long-Run Profitability,
Marketing Science, 18(1), (1999): 1-22.
5. F. Kent Mitchel, Advertising/Promotion Budgets: How did We get

Here, and What do We Do Now, Journal of Consumer Marketing (Fall

1985): 405-47.
6. David B. Jones, Setting Promotional Goals: A Communication
Relationship Model, Journal of Consumer Marketing 11, no.1 (1994):
38-49.
7. John C. Totten and Martin p. Block, Analyzing Sales Promotion: Text

and cases, 2nd Ed. (Chicago: Dartnell, 1994) pp. 69-70.

56
8. Paul W. Farris and Kusum L. Ailawadi, Retail Power: Monster or
Mouse, Journal Of Retailing (Winter 1992): 351-69.

57