sales promotion effectiveness: the impact of … sales promotion effectiveness: the impact of...

Sales Promotion Effectiveness:The Impact of Culture at an Ethnic-Group Level

Simon Kwok & Mark Uncles

School of MarketingUniversity of New South Wales

Sydney NSW 2052Australia

School of Marketing Working Paper 02/42002

Address for correspondence:

Professor Mark Uncles, School of Marketing, University of New South Wales, Sydney 2052,New South Wales, Australia; Telephone: +61-2-9385-3510; Fax: +61-2-9663-1985; Email:[email protected]

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Sales Promotion Effectiveness: The Impact of Culture at an Ethnic-Group Level

AbstractThere is considerable interest and debate over the effectiveness of sales promotion. Previousstudies have shown that sales promotions are more effective when they provide benefits thatare congruent with those of the promoted product. This study explores and extends thecongruency framework by analysing the impact of culture at an ethnic group level. Thepurpose is to investigate the popular assumption that cultural differences exist at this leveland to see whether these differences have an impact on sales promotion effectiveness. Aquasi-experimental design is used to test a series of hypotheses based on a sample of Anglo-Australians and Chinese-Australians. It is found that despite the existence of culturaldifferences at an ethnic level, culture does not appear to have a significant impact onconsumer responses to sales promotion. It is also found that the congruency effects betweenproduct and promotion type are weak and may be non-existent in some cases. Finally, thestudy also provides evidence that further validates a scale used for the measurement ofculture.

Keywords: Culture, Ethnicity, Sales Promotions, Congruency Theory

1. IntroductionThe widespread use of consumer sales promotions has sparked considerable interest anddebate over their effectiveness. Critics argue that sales promotions are ineffective as theymake consumers more promotion prone, resulting in market share losses in the long run(Ehrenberg, Hammond and Goodhardt, 1994; Totten and Block, 1987). However, otherresearchers have shown that sales promotions lead to real increases in sales and profits (Dharand Hoch, 1996; Hoch, Dreze and Purk, 1994). This discrepancy suggests that there areconditions and factors that can influence the effectiveness of sales promotions. For instance,it has been shown that sales promotions are more effective when they provide benefits thatare congruent with those of the promoted product (Chandon, Wansink and Laurent, 2000).This paper explores and extends the congruency framework by incorporating the impact ofculture.

Culture has an impact on many aspects of consumer behavior, from service expectations toconsumer innovativeness. It also has been suggested that an understanding of culture canassist in making marketing decisions, such as whether to pursue standardised or localisedstrategies – something that has been discussed recently in the context of retailing strategies(Mooij and Hofstede, 2002). However, many cross-cultural studies in consumer marketinghave only examined the impact of culture across nations. It has been argued that culturaldifferences may also exist at an ethnic level, for instance among Caucasian-Americans,Hispanic-Americans, African-Americans, North African-French, Italian-Australians, etc.(Tan and McCullough, 1985; Donthu and Yoo 1998). This is reflected in the growth ofinterest in ethnic marketing by both researchers (Lee, Fairhurst and Dillard, 2002) andpractitioners (Jarvis, 2002). However, there is limited empirical research focusing on cultureat an ethnic-group level and its impact on consumer behaviour.

The purpose of this study is to investigate cultural differences at this level and to gauge theimpact on the congruency framework of sales promotion effectiveness. The study wasundertaken in Australia. As in many nations, increasing use is being made of consumer salespromotions by a diverse ethnic mix of consumers (Lyons, 2002; Millett, 2002).

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This study makes several important contributions to both marketing theory and practice.Firstly, although Chandon, Wansink and Laurent (2000) attempted a cross-nationalreplication, their analysis did not specifically explore the impact of culture. Thus, byincorporating culture, this study redresses one of the limitations of the earlier study and helpsextend the congruency framework of sales promotion effectiveness. Secondly, this study isone of the few pieces of research in marketing that empirically measures culture at an ethnic-group level. It provides evidence to examine the popular assumption that cultural differencesexist at this level. Thirdly, the study also contributes to theory development by providingfurther validation of a new scale for measuring culture in a consumer context, namely theCVSCALE (Yoo, Donthu and Lenartowicz, 2001). Finally, the study provides insights tomarketing practitioners in the design of sales promotion strategies. It addresses the issue ofwhether to standardise or localise sales promotions between targeted ethnic markets. It shouldbe noted that the focus of this study is on consumer sales promotions for packaged goods

The paper is organised as follows. The next section provides a review of the sales promotionsliterature and considers the potential impact of culture. Hypotheses are presented in sectionthree. Key measures and stimuli are discussed next. In sections five and six, the methodologyand results of the study are described. A discussion of the findings is presented in sectionseven. The paper concludes by highlighting the limitations and opportunities for futureresearch..

2. Sales Promotion and the Potential Impact of Culture2.1 Types of Sales PromotionThe majority of past studies on the effectiveness of consumer sales promotion have focusedon monetary sales promotions (Dickson and Sawyer, 1990; Dhar and Hoch, 1996; Hoch,Dreze and Purk, 1994). However, in practice, a range of both monetary and non-monetarysales promotions are used (Campbell and Diamond, 1990; Tellis 1998), and there areimportant differences between them. Monetary promotions (e.g., shelf-price discounts,coupons, rebates and price packs) tend to provide fairly immediate rewards to the consumerand they are transactional in character; non-monetary promotions (e.g., sweepstakes, freegifts and loyalty programs) tend to involve delayed rewards and are more relationship-based.In assessing the effectiveness of sales promotions, it is necessary to examine both types.

2.2 Benefits of Sales PromotionSales promotions can offer many consumer benefits. Past studies have concentrated onmonetary saving as the primary consumer benefit (Blattberg and Neslin, 1993). However,there is evidence to suggest consumers are motivated by several other benefits, including thedesire for: savings, quality, convenience, value expression, exploration and entertainment.These benefits are further classified as either utilitarian or hedonic (Babin, Darden andGriffin, 1994; Hirschman and Holbrook, 1982). Utilitarian benefits are primarily functionaland relatively tangible. They enable consumers to maximise their shopping utility, efficiencyand economy. In general, the benefits of savings, quality and convenience can be classified asutilitarian benefits. By contrast, hedonic benefits are more experiential and relativelyintangible. They can provide consumers with intrinsic stimulation, fun and pleasure.Consistent with this definition, the benefits of value expression, exploration andentertainment can be classified as hedonic benefits.

2.3 Promotion Types and Promotion Benefits

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Based on the distinction between the types of sales promotions and promotion benefits,Chandon Wansink and Laurent (2000) showed that monetary promotions provide moreutilitarian benefits whilst non-monetary promotions provide more hedonic benefits. Theserelationships are a matter of degree rather than absolutes; for example, coupon promotions(i.e., a monetary promotion) may still provide some hedonic benefits such as the enjoymentin redemption, although its main benefit of saving is utilitarian (Mittal, 1994).

2.4 Congruency Theory and Sales PromotionThe basic principle of congruity states that changes in evaluation are always in the directionthat increases congruity with the existing frame of reference (Osgood and Tannenbaum,1955). In other words, people have a natural preference for consistent information. Theprinciple has been examined in many marketing contexts, including studies of brandextensions and advertising appeals. Applying the congruity principle to sales promotions, it isexpected that sales promotions will be more effective when they provide benefits that arecompatible with the benefits sought from the promoted product. The relevance of thisprinciple is evident from some past studies of sales promotions. For example, Roehm, Pullinsand Roehm Jr (2002) showed that loyalty programs are more successful if they provideincentives that are compatible, rather than incompatible, with the brand. Likewise, Dowlingand Uncles (1997) suggest the effectiveness of loyalty programs is enhanced if programbenefits directly support the target product’s value proposition.

Congruency effects for sales promotions were directly tested and confirmed by Chandon,Wansink and Laurent (2000), who showed that: (a) monetary promotions are more effectivefor utilitarian products as they provide more utilitarian benefits, which are compatible tothose sought from utilitarian products; and (b) non-monetary promotions are more effectivefor hedonic products as they provide more hedonic benefits, which are compatible to thosesought from hedonic products. For example, price cuts are more effective than free gifts forinfluencing brand choice of laundry detergent (i.e., a utilitarian product), whereassweepstakes are more effective than price cuts for influencing brand choice of chocolates(i.e., a hedonic product). However, it is noted that there are other factors that may impact onthe congruency effects, including the product life cycle, purchases situations and consumerdemographics. Another possible factor is culture, which is the focus of this study.

2.5 Culture and Ethnic GroupsCulture is difficult to define, but typically it is seen as a set of norms and beliefs that areshared amongst a group of people and that provide the guiding principles of one’s life(Goodenough, 1971; Kroeber and Kluckholn, 1952; Schwartz and Bilsky, 1987 and 1990).Here, culture is defined as the way of life of people grouped by ethnicity, including sharednorms and beliefs that can impact on behavior. This definition is appropriate for severalreasons. Firstly, it implies that culture encompasses all the norms and beliefs of a society – itis the total way of life in a society. As Triandis (1989) suggests, these societal norms andbeliefs will ultimately have an impact upon the dispositions and behaviours of societymembers. Thus, the definition allows for the possibility of culture to have an impact onconsumer behaviour.

Secondly, the definition is flexible in allowing for different levels of culture. This is evidentby the notion of “society” within the definition, which means culture is not necessarilyrestricted to a country basis. This is important given the focus of this study is not on nationalculture. Furthermore, it has been suggested that equating culture with nations can beinappropriate (Lenartowicz and Roth 1999; Usunier, 2000). Instead, culture can be

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conceptualised at different levels and in a variety of contexts (Dawar and Parker 1994;Hofstede, 1991) For instance, culture defined by age or music, as in youth or jazz culture.

In this study, culture is examined at the ethnic-group level within the domestic Australiancontext. Ethnic groups can be considered as subcultures within a country. They preserve themain characteristics of the national culture from which they originate but also develop theirown unique norms and beliefs (Steenkamp, Hofstede and Wedel, 1999; Usunier 2000).Indeed, “central to any ethnic group is a set of cultural values, attitudes and norms” (Tan andMcCullough, 1985). Each ethnic group constitutes a unique “community because of commonculture” (Lee, Fairhurst and Dillard 2002). Thus, the study of culture by ethnicity within adomestic context is feasible and appropriate since each ethnic group will have its own uniqueset of cultural values. In fact, it has been suggested that intra-country variations of culture canbe as large as the variation across countries (Au, 1999). This is particularly the case in theAustralian context given its increasingly diverse ethnic mix (Millett, 2002). In effect, a singlenational culture to represent Australia is likely to be inappropriate (Bochner and Hesketh,1994).

2.6 Culture, Ethnic Groups and Sales PromotionAs Nakata and Sivakumar (2001) noted, the impact of culture has been well documented inmany areas of marketing, including consumer responses to sales promotion. For example,Bridges, Florsheim and Claudette (1996) argued that “there is a need for research directed atunderstanding culturally-driven responses of consumers to promotional activities”. Theyshowed that in the service context, cultural values affect the effectiveness of promotionstrategies. This is supported by McCort and Malhotra (1993) who claim that “as culturesdiffer in their value systems, evaluations of marketing communications will differ”. However,most of these assessments have been conducted at a national level, whereas there is also aneed for research to examine the effects of promotional activities on cultural groups withincountries (Albaum and Peterson, 1984). There has been some consideration of this inprevious studies. For example, it has been argued that “various cultural sub-groups shouldreact differently to different promotion strategies” (Laroche, Pons and Turnel, 2002) andGreen (1995) found that coupons are relatively less effective for African-Americans thanAnglo-Americans. Nevertheless, evidence at an ethnic-group level remains limited.

2.8 Cultural DimensionsGiven the potential relevance of culture, a basis is required for assessing its impact. Here useis made of the five cultural dimensions popularised by Hofstede (1991): power distance,uncertainty avoidance, individualism-collectivism, masculinity-femininity and the Confuciandynamism. Alternative dimensions have been suggested by other researchers (Clark, 1990),but Hofstede’s dimensions are by far the most widely accepted (Sondergaard, 1994) and havebeen applied in many cross-cultural studies (Steenkamp, Hofstede and Wedel, 1999; Lynn,Zinkhan and Harris, 1993; Roth, 1995). Admittedly, there are several poignant criticisms ofHofstede’s dimensions. Firstly, his original study is relatively old and may be outdated.Secondly, the dimensions were developed from work-related values and thus, they may notfully apply to a consumer context. However, despite these limitations, Hofstede’s dimensionsremain conceptually valid for explaining cultural differences.

The appropriateness of these dimensions for this study is supported by the suggestion that“there are specific relationships between (Hofstede’s) cultural dimensions and the appropriatepromotional policy” (Kale and McIntyre, 1991). Indeed, one of the aims of this study is toverify whether there are any relationships between the cultural dimensions and consumer

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responses to sales promotion. Furthermore, although developed for cross-countrycomparisons, Hosfstede’s dimensions are believed to be capable of explaining intra-countryvariations (Au, 1999), including at an ethnic-group level.

3. HypothesesIn general, it is hypothesised that differences based on Hofstede’s (1991) five culturaldimensions can lead to relative differences between ethnic groups in their preference forpromotion types. In effect, within the congruency relationships established between productand promotion types, ethnic groups may differ in their relative choices of monetary and non-monetary promotions. For example, whilst monetary promotions might be more effective forutilitarian products, the choice share of monetary promotions may be higher for one ethnicgroup than another due to cultural differences.

In the following, the hypotheses are detailed based around the five cultural dimensions. It isshould be kept in mind that the theoretical strength of the hypotheses is not equal across thefive dimensions. For example, hypotheses regarding collectivism have a stronger theoreticalbasis than hypotheses regarding power distance. Also, as is in the nature of any testing of thiskind, it is possible to conceive of alternative arguments. However, all five dimensions havebeen included to ensure the study is comprehensive.

3.1 Power DistancePower distance deals with the acceptability of social inequalities, such as in power, wealthand status (Nakata and Sivakumar 2001). In high power distance cultures, inequality isprevalent and accepted. Indeed, “privileges and status symbols are both expected anddesired” (Hofstede, 1991). Consumers in such cultures are thus likely to be more responsiveto sales promotions that contain differential treatment. These mainly involve non-monetarypromotions, in which differential treatment may occur by purchase value (e.g., free gifts andreward programs) or by chance (e.g., sweepstakes). In contrast, cultures with lower powerdistance are less tolerant of inequalities and special privileges (Hofstede, 1991). Consumersin such a culture would have a relatively higher preference for sales promotions that offerequal rewards for everyone. These mainly involve monetary promotions, such as pricediscounts and coupons, as they are generally available with the same level of benefit offeredto everyone.

Hypotheses 1A: Monetary promotions are more effective for low power distance culturesrelative to high distance power cultures.

Hypotheses 1B: Non-monetary promotions are more effective for high power distance culturesrelative to low distance power cultures.

3.2 Uncertainty AvoidanceUncertainty avoidance deals with the level of discomfort regarding future uncertainties(Nakata and Sivakumar 2001). Although not equivalent, it is closely related to risk aversion.In high uncertainty avoidance cultures, there is a tendency to “prefer stable situations andavoid risk” (Usunier, 2000). Thus, to the extent that uncertainty avoidance is related to riskaversion, such cultures would prefer promotions that offer more tangible and immediaterewards (e.g., price discounts). This is expected since such rewards are more certain andinvolve minimal amounts of risk. On the other hand, cultures with low uncertainty avoidanceare more risk tolerant and see opportunities within future uncertainties (Nakata andSivakumar 2001). In fact, they may even be considered as risk seeking given that cultures

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with low uncertainty avoidance have been shown to exhibit higher levels of innovativeness(Steenkamp, Hofstede and Wedel, 1999). Thus, consumers of such a culture will be moreaccepting of promotions that offer relatively less tangible and long-term rewards (e.g.,sweepstakes and loyalty programs).

Hypotheses 2A: Monetary promotions are more effective for high uncertainty avoidancecultures relative to low uncertainty avoidance cultures.

Hypotheses 2B: Non-monetary promotions are more effective for low uncertainty avoidancecultures relative to high uncertainty avoidance cultures.

3.3 Individualism/CollectivismIndividualism refers to the degree of distance in social relationships (Nakata and Sivakumar2001). It has been suggested that relationships “play an important role in the search andchoice processes” of consumers (Doran, 1994). Thus, the extent of individualism may affectconsumer choices between different types of promotions. Individualistic cultures have distantsocial relationships, in which personal goals are favoured over group needs (Watkins and Liu,1996). Value is placed on self-interest and independence (Gurhan-Canli and Maheswaran,2000), as well as pleasure (Triandis and Hui, 1990). In addition, individualistic culturesemphasise differentiation (Aaker and Maheswaran, 1997) and the ability to express one’suniqueness (Watkins and Liu, 1996). Given these characteristics, individualistic culturesmight be more receptive to non-monetary promotions since the associated hedonic benefitsare entertaining and more experiential. Furthermore, hedonic benefits can provide intrinsicvalue to individuals and provide an opportunity for self-expression.

In contrast, less individualistic (or more collectivistic) cultures are characterised by closerelationships and interdependence (Fletcher and Brown, 1999). There is strong emphasis onconforming to in-groups, which are typically close social groups such as family and friends(Hofstede, 1991). At the same time, entry and exit to other groups is difficult and rare(Watkins and Liu, 1996). Thus, collectivistic cultures can be expected to be less responsive torelationship building promotions (e.g., free gifts and reward programs) since they will bereluctant to forge a relationship with an out-group. Instead, collectivistic cultures may bemore likely to respond to monetary promotions since the benefits provided are more common(e.g., conform to group norms) and are more readily shared amongst the in-group (e.g.,savings and quality).

Hypotheses 3A: Monetary promotions are more effective for collectivistic cultures relative toindividualistic cultures.

Hypotheses 3B: Non-monetary promotions are more effective for individualistic culturesrelative to collectivistic cultures.

3.4 Masculinity/FemininityMasculinity refers to the tendency to strive for personal achievement and performance(Cutler, Erdem and Javalgi, 1997; Nakata and Sivakumar, 2001). In more masculine cultures,strong values are placed on “materialistic success and assertiveness” (Fletcher and Brown,1999). It can be argued that consumers in masculine cultures are more likely to respond tomonetary promotions, since the more tangible and transactional-based benefits can satisfytheir need for personal and materialistic success. At the other end of the spectrum, lessmasculine (or more feminine) cultures emphasise the values of nurturing, caring for others

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and the quality of life (Nakata and Sivakumar 2001). There is relatively less emphasis onpersonal and materialistic gains. Instead, “people and relationships are important” (Hosfstede,1991) and “group oriented harmony” is preferred (Cutler, Erdem and Javalgi, 1997). Thus,feminine cultures are expected to be more responsive to non-monetary promotions since thebenefits offered are more relationship focused.

Hypotheses 4A: Monetary promotions are more effective for masculine cultures relative tofeminine cultures.

Hypotheses 4B: Non-monetary promotions are more effective for feminine cultures thanmasculine cultures.

3.5 Confucian DynamismThe final dimension of Confucian dynamism concerns time orientation and is bipolar.It has been suggested that the way consumers “understand and allocate time may help explaindifferences in consumer behaviour across cultures” (Brodowsky and Anderson, 2000). Thehigher or positive end is related to a future oriented perspective with values placed onpersistence and loyalty (Fletcher and Brown, 1999). Consumers in such cultures are morewilling to make short-term sacrifices or investments for long term gains (Nakata andSivakumar 2001). This is supported by research studies which have shown that people with afuture orientation have a preference for delayed rewards (Klineberg, 1968). In effect,consumers in cultures high on Confucian dynamism are expected to be more responsive tonon-monetary promotions such as sweepstakes and loyalty programs, since many of therewards are long term and loyalty-based (Foxman, Tansuhaj and Wong, 1988).

In contrast, the lower or negative end is characterised by a past oriented perspective, with anemphasis on traditions (Fletcher and Brown, 1999). People in such cultures favour “short-term planning and more immediate financial gains” (Nakata and Sivakumar, 2001). This issupported by the fact that people with a past orientation are less likely to save money for thefuture (Spears, Lin and Mowen, 2001). Thus, consumers of cultures low on Confuciandynamism are expected to react relatively poorly towards non-monetary promotions due tothe delayed gratification involved (Foxman, Tansuhaj and Wong, 1988). Instead, they areexpected to favour monetary promotions given the benefits are more immediate andtransactional.

Hypotheses 5A: Monetary promotions are more effective for cultures low on the Confuciandynamism relative to cultures high on the Confucian dynamism.

Hypotheses 5B: Non-monetary promotions are more effective for cultures high on theConfucian dynamism relative to cultures low on the Confucian dynamism.The ten hypotheses associated with the five cultural dimensions are summarised in Figure 1.Each cultural dimension is considered one-by-one.

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Figure 1: Summary of Hypotheses

CulturalDimensions(consideredindividually)

SalesPromotionsand Benefits

CongruencyEffects

4. MeasurementTo test the hypotheses, there are two pretests and one main experiment. However, it is firstnecessary to discuss the stimuli and measurement scales. This is summarized in Table 1 anddetailed below.

Table 1: Summary of Measures

Item Measures/Source Area of ApplicationSales promotion benefits • 18-item benefit scale

• 3-item overall evaluation scale(Chandon, Wansink and Laurent, 2000)

• pretest one

Product category stimuli • 4-item utilitarian index score(Batra and Ahtola, 1990)

• pretest two• main experiment

Brand stimuli • Secondary research(Burton, 2001)

• pretest two• main experiment

Promotion stimuli • Secondary research • pretest one• main experiment

Culture • 26-item CVSCALE(Yoo, Donthu and Lenartowicz, 2001)

• main experiment

Sales promotioneffectiveness

• Brand choice(market shares)

• main experiment

Monetary Promotions(with utilitarian benefits)

Utilitarian Products Hedonic Products

Non-monetary Promotions(with hedonic benefits)

• Low Confucian

• Masculine

• Collectivistic

• High uncertainty avoidance

• Low power distance

• High Confucian

• Feminine

• Individualistic

• Low uncertainty avoidance

• High power distance

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4.1 Sales Promotion BenefitsSales promotion benefits are defined and classified in this study according to the scaledeveloped by Chandon, Wansink and Laurent (2000). The scale indicates six main benefits,which can be classified as either utilitarian or hedonic. Specifically, the benefits of savings,quality and convenience are classified as utilitarian, whilst the benefits of value expression,exploration and entertainment are hedonic. A direct replication of these classifications isappropriate as the scale has been shown to be valid and maintaining scale consistency canenhance the comparability of final results with the original research (Churchill, 1979). Apretest is conducted to confirm the classification of benefits in the Australian context. Themeasures for the pretest are the same 18-item agree/disagree scales used in the original study.

4.2 Product Category and Brand StimuliUtilitarian and hedonic products are used as stimuli in the main experiment. In the past,researchers have used a variety of products to represent these two categories. For example,Hirschman and Holbrook (1982) suggested that washing machines and other durables areutilitarian products, whereas movies and fashion items are hedonic.

The product categories used in this study are mostly derived from those used by Chandon,Wansink and Laurent (2000). Specifically, laundry detergent, AA batteries and film areselected as utilitarian products, whilst chocolates, ice-cream and biscuits1 are selected ashedonic products. This degree of replication helps to ensure consistency. A pretest describedlater is used to verify the utilitarian and hedonic nature of the pre-selected product categories.In measuring the degree of utilitarianism and hedonism of a product, an adaptation of thescale by Batra and Ahtola (1990) is used. Specifically, products are classified as eitherutilitarian or hedonic based on a utilitarian index score. The index consists of 9-pointsemantic differential scales on two hedonic items of “fun/not fun” and “pleasant/unpleasant”,and two utilitarian items of “useful/useless” and “wise/foolish”.

Within each of these product categories, brands of relevance to Australian consumers areselected. Furthermore, only brands with a high level of customer-based brand equity are usedas the congruency effects are expected to be strongest for high equity brands2. High equitybrands tend to be well-known national brands with high market shares. These were identifiedfrom pretests based on the brands with the highest market shares in Australia for each productcategory, as reported by Retail World (Burton, 2001).

4.3 Promotion StimuliExamples of monetary and non-monetary promotions are used as stimuli for both the pretestsand the main experiment. The stimuli for monetary promotions are shelf-price discounts andprice packs3, and for non-monetary promotions they are sweepstakes and free gifts. Thesepromotion techniques are appropriate for several reasons. Firstly, they correspond to thoseused in earlier research and thus, consistency can again be maintained (e.g., Dickson andSawyer, 1990; Dhar and Hoch, 1996; Huff and Alden, 1998). The techniques are alsoappropriate as they are commonly used in Australia and are also common for the pre-selectedproduct categories. In contrast, alternatives such as coupons are inappropriate since coupon

1 Biscuits did not form part of the earlier study but are included as an appropriate example of a hedonic productin Australia.2 This decision was made because the focus of this study is the impact of culture and not the effect of brandequity per se.3 Price packs, as defined by Tellis (1998), are monetary promotions that offers savings through multiple packs(e.g., two for the price of one) or enlarged packs (e.g., contains 50% more).

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usage is relatively low in Australia. Loyalty programs are also unsuitable given that there arefew loyalty programs for the product categories selected for this study. The nature of the pre-selected promotion techniques (i.e., monetary or non-monetary) is verified in a pretest.

Specific examples of the four promotion techniques are used in the main experiment. Theyare drawn from currently offered promotions in the product categories to ensure realism. Thisinvolved the use of a combination of secondary data and judgement. Specifically, theexamples are derived from reviews of weekly supermarket catalogues and from directobservations in supermarkets. Judgment is then applied to determine the most typicalexamples representing each promotion technique. Consideration is also given to the fact thatmonetary promotions will be preferred over non-monetary promotions of the same nominalvalue (Campbell and Diamond, 1990). This is due to the time value of money and therelatively higher effort required for non-monetary promotions (Soman, 1998). Thus, anothercriterion for identifying the examples of each promotion technique is that in general, thenominal value of non-monetary promotions will need to be greater than monetarypromotions.

4.4 CultureCulture is measured using a personality-centered approach based on direct value inference(Lenartowicz and Roth, 1999). In particular, use is made of the CVSCALE proposed by Yoo,Donthu and Lenartowicz (2001). This is an adaptation of Hofstede’s scale; it consists of 26-items, measured by 5-point Likert scales, relating to Hofstede’s five cultural dimensions (seeAppendix A). It allows culture to be measured at the individual level and then aggregated toform groups at a chosen level for comparison. This is appropriate as it recognises thatmembers of a society may not share the same cultural values (Au, 1999) and it also allowsdifferent ethnic groups within one country to be analysed. As suggested by Yoo, Donthu andLenartowicz (2001), the CVSCALE is useful for analysing cultural values in a heterogeneouscountry and thus, the scale is particularly relevant for this study. Furthermore, the items of thescale have been adapted to suit the consumer context. This reduces the negative impact ofusing Hofstede’s measures, which were based on work-related values. Finally, the reliabilityand validity of the CVSCALE have been shown to be robust in multiple studies acrossdifferent samples, including validation studies involving both student and non-studentrespondents from across America, Korea, Brazil and Poland (Yoo, Donthu and Lenartowicz,2001). The CVSCALE has also been applied in cross-cultural research (Yoo and Donthu,2002). Thus, there is strong evidence to support the use of this scale. Its reliability andvalidity is further tested in this study.

4.5 Sales Promotion EffectivenessThere are various ways to define and measure the effectiveness of sales promotions. Themeasures typically used are short-term measures, as sales promotions are mostly used toproduce short-term effects. This includes measuring the effectiveness of sales promotions bysales volume (Dhar and Hoch, 1996), profits (Hoch, Dreze and Purk, 1994) and consumerusage of the promotion (Babaku, Tat and Cunningham, 1988). However, it has been notedthat a “brand’s sales volume is by far the best measure of the performance of a salespromotion” (Totten and Block, 1987). For the purposes of this study, the effectiveness ofsales promotions is measured by market share, which is a proxy for sales volume. Marketshares are calculated based on choices for promotion types, made under the conditions of thequasi-experiment. The effectiveness of sales promotions is then determined by a comparisonbetween the choice shares of promotion types across different products. This is consistentwith Chandon, Wansink and Laurent (2000).

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5. Methodology and PretestsThe sample is described, followed by a summary of the pretests. Then the main experiment isintroduced.

5.1 SamplesThe two ethnic groups of Anglo-Australians and Chinese-Australians are selected forinvestigation. The source countries of these groups differ markedly in terms of Hofstede’s(1991) cultural dimensions. Relatively, China is seen as: high power distance, low onuncertainty avoidance, collectivistic, feminine and high on the Confucian dynamism, whereasAustralia is: low power distance, high on uncertainty avoidance, individualistic, masculineand low on the Confucian dynamism.

Whilst these differences are found at a very broad national level, it is expected that the maindifferences will also be evident at an ethnic level and hence facilitate the testing of thehypotheses. Previous studies of Anglo-Australians and Chinese-Australians, and North-Americans and Canadian-Chinese, support this belief (Bochner and Hesketh, 1994; Doran,1994). However, rather than merely rely on previous studies, the differences between the twoethnic groups are derived empirically in the present study (see section 6.2).

The ethnic samples used for both pretests and the main experiment are drawn fromundergraduate students. Although there are criticisms over the validity and generalisability ofstudent samples (Peterson, 2001), the main purpose of this study is theory testing and noteffects application. Thus, the use of a homogeneous sample such as students is acceptable andindeed appropriate, as it reduces variability and the impact of irrelevant factors (Calder,Phillips and Tybout, 1981). Furthermore, the use of students is only inappropriate if there aretheoretical reasons to suggest that they will systematically respond differently than others tosales promotions. However, there does not appear to be any major theoretical evidence forthis, and students are consumers of all the products studied here.

The samples are controlled for non-cultural confounding factors. As Foxman, Tansuhaj andWong (1988) pointed out, both macroeconomic and sociodemographic factors can affectconsumers of different cultures in their responses to sales promotions. Macroeconomicfactors, such as the level of national economic activity, are effectively controlled byexamining only one country and thus, these factors can be treated as constants. In regard tosociodemographic factors, common characteristics considered in cross-cultural studies onsales promotion include age, gender, income and the level of education. These have eitherbeen treated as covariates (Steenkamp, Hofstede and Wedel, 1999) or controlled via matchedsampling (Bond, 1988; Green, 1995). However, it has also been argued that consumerdemographics “do not explain any differential effectiveness of a promotion” (Totten andBlock, 1987).

Given these varied findings, in this study a mixed approach to the treatment of confoundingsociodemographic factors is adopted. Firstly, the level of education is matched. The samplesare restricted to undergraduate students, but of any discipline. This is designed to ensure acommon level of education and, at the same time, reduce any bias from knowledge of aparticular field. Secondly, the factors of gender, age and income are treated as covariates.Although gender and age were not found to be a significant factor by Chandon, Wansink andLaurent (2000), they remain important to examine as gender and age differences in consumerbehaviour are possible, particularly across different cultures (Usunier, 2000). Income is also

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considered a covariate although students tend to be relatively homogeneous in this respect,and any potential impact is expected to be minimal (Durvalsula et al, 1993).

In terms of recruitment, a self-identification process is used to determine the ethnicity ofrespondents. This involves asking respondents to self-identify their ethnicity based onprompts such as “Anglo-Australians, including Anglo-Saxons and Anglo-Celtics”4.Respondents that identify themselves as neither Anglo-Australian nor Chinese-Australian areexcluded from analysis. Self-identification is believed to be more relevant for selectingsubcultures within a country than other popular measures, such as the country of citizenship(Bochner and Hesketh, 1994). Self-identification represents a person’s internal beliefs andhence is said to reflect a person’s cultural reality (Hirschman,1981).

However, despite the validity of self-identification, it may be confounded with the effect ofacculturation (i.e., the extent of assimilation of a new culture by an ethnic minority). It hasbeen suggested that the level of acculturation can largely determine an individual’scommitment to the cultural norms of his or her ethnic group (Hirschman, 1981). Thus,acculturation is another confounding factor that is controlled. Based on an adaptation of theacculturation scale suggested by Quester, Karunaratna and Chong (2001), acculturation inthis study is analysed using a person’s country of birth and the time they have spent living inAustralia.

5.2 PretestsTwo pretests were completed (see Appendix B for details). The first pretest was designed toconfirm the nature of the promotion techniques, and verify the relationships betweenmonetary and non-monetary promotions with utilitarian and hedonic benefits respectively.Short self-administered questionnaires were completed by a random sample of 15 Anglo-Australian and 15 Chinese-Australian students. Results confirmed that shelf-price discountsand price packs can be classified as monetary promotions, with sweepstakes and free gifts asnon-monetary promotions. They also showed that positive relationships exist betweenmonetary and non-monetary promotions with utilitarian and hedonic benefits respectively.These results largely replicated the findings of Chandon, Wansink and Laurent (2000).

The second pretest was designed to verify the utilitarian and hedonic nature of the pre-selected product categories that are used for the main experiment. It also sought to identifyspecific brands that are representative of high equity brands in each of the product categories.Using a new random sample of 15 Anglo-Australians and 15 Chinese-Australian, batteriesand film were shown to be utilitarian products and chocolates and ice-cream as hedonicproducts. Brands with which respondents had most experience, in terms of frequency ofpurchase, were Energiser (batteries), Kodak (film), M&Ms (chocolates) and Peters (ice-cream).

5.3 Main ExperimentThe main experiment consists of a self-administered questionnaire, which is designed to testthe validity of the CVSCALE and test the five pairs of hypotheses listed in section 3. Thequestionnaire was pilot tested. In the main experiment, two versions were used to test forordering effects. Questionnaires were only distributed in undergraduate classes, therebyeliminating the need to screen for education level. After a brief introduction, withoutdisclosing the purpose of the questionnaire, participation was sought on a voluntary basis.

4 However, this is merely a screening exercise. Respondents do not self-select into treatment conditions.

13

Screening for ethnicity did not occur at this stage. Instead all students were invited toparticipate. The questionnaire took about 10-15 minutes to complete and almost all studentschoose to participate across all classes. No incentives were offered – it was felt that in a studyabout sales promotion the offer of incentives might bias results.

Respondents were randomly assigned one of the two versions of the questionnaire. For bothversions, respondents were asked to: i) choose between options A and B for two utilitarianand two hedonic products (Option A was a brand associated with a monetary promotionwhilst option B was the same brand but associated with a non-monetary promotion); ii)provide past purchase information for the products and brands involved; iii) complete theCVSCALE items; and iv) complete demographic questions including gender, age, income,ethnicity and acculturation.

It should be noted that Chandon, Wansink and Laurent (2000) differed slightly in theirresearch design as they asked respondents to evaluate two different brands within eachproduct category. However, only one brand is used for this study so as to strengthen thepromotion manipulations; by asking respondents to choose between two types of promotionsfor the same brand, any branding effects are eliminated and the focus is on pure-promotionaleffects. Price was omitted from the earlier study, whereas here it is included to give addedrealism to the scenarios, but it was held constant and therefore not manipulated.

6. AnalysisIn this section, a descriptive analysis is first presented. This is followed by an analysis of theCVSCALE and then the presentation of the main results.

6.2 Descriptive AnalysisA total of 815 questionnaires were completed, 250 of which were for either Anglo-Australians or Chinese-Australians (with an equal split between the two groups). Almost halfof the sample was born overseas with Hong Kong (16%), China (8%) and Indonesia (5%)being the most common countries of birth. However, on average respondents have lived inAustralia for 15 years (an average of 19 years among Anglo-Australians and 11 years amongChinese-Australians). Demographically the two groups are matched, although Anglo-Australians are somewhat older on average and have a slightly higher level of income.

With regard to past purchasing behaviour, most respondents have bought the four productcategories examined in the past 12 months (batteries-80%, film-81%, chocolate-98% and ice-cream 95%). Past purchases were also relatively high at the brand level (Energiser-64%,Kodak-77%, M&Ms-78% and Peters’-58%). Whilst there are some differences between thetwo ethnic groups (ice-cream, M&Ms and Peters’; p< 0.05), the percentages of past purchasesremain relatively high across all products and brands for each ethnic group. This suggests thatrespondents have sufficient knowledge and purchase experience of the products and brandsinvolved, and it is reasonable to assume they are able to make informed evaluations of thedifferent promotional options presented.

6.2 CVSCALE AnalysisResponses to the CVSCALE are used to determine the relative cultural values of both ethnicgroups on the five cultural dimensions. However, first the reliability and validity of theCVSCALE is tested. For the whole sample, the reliability alpha of the cultural dimensionsranged from 0.60 to 0.69 (Table 2). Although these results are modest, they are comparable tothose reported by Yoo, Donthu and Lenartowicz (2001) and they all satisfy the reliability

14

threshold of 0.6 that is commonly accepted for new scales (Hair et al, 1998). Furthermore, nosignificant differences were found in the responses between the two versions of thequestionnaire. Thus, there appear to be no ordering effects.

It should be that reliability levels varied slightly between the ethnic groups. However, thevariations are similar to those reported by Yoo, Donthu and Lenartowicz (2001) and in onlyone case did the reliability alpha fall below 0.6 (0.54 for masculinity among Anglo-Australians) (Table 2).

Table 2: Reliability Analysis Results

Dimension WholeSample

Anglo-Australians

Chinese-Australians

Yoo, Donthu andLenartowicz

Power Distance 0.65 0.69 0.62 0.61Uncertainty Avoidance 0.64 0.67 0.61 0.71Collectivism 0.67 0.61 0.70 0.76Masculinity 0.60 0.54 0.67 0.67Confucian Dynamism 0.69 0.68 0.69 0.69

After reliability testing, factor analysis was used to ascertain the validity of the items (Table3). Under the specification of 5 factors, the results of exploratory factor analysis providepreliminary support for the CVSCALE’s validity. With one exception (D3-personalsteadiness and stability), all the items loaded highly on the appropriate factors and no itemloaded on more than one factor. Overall, therefore, the results support the independence ofthe constructs. Furthermore, the five factors explained 45% of the total variance, whichexactly matches the figure reported by Yoo, Donthu and Lenartowicz (2001).

Table 3: Exploratory Factor Analysis Results

CVSCALEItem No.

PowerDistance

UncertaintyAvoidance

Collectivism Masculinity ConfucianDynamism

P2 0.69 0.12 0.15 -0.08 -0.08P1 0.66 0.09 -0.04 0.11 -0.16P4 0.60 -0.10 0.13 0.13 0.07P5 0.58 0.18 0.06 0.02 -0.02P3 0.49 -0.26 -0.02 0.05 0.11U3 0.04 0.78 0.05 0.09 0.03U5 -0.05 0.64 0.06 0.17 0.17U2 0.12 0.53 0.11 -0.19 0.26D3 -0.08 0.45 -0.04 -0.09 0.44U4 -0.01 0.45 0.12 0.23 0.09U1 0.12 0.44 -0.01 0.17 0.28C3 0.01 0.03 0.67 0.16 0.19C4 0.21 0.03 0.67 -0.05 0.21C6 0.11 0.00 0.67 0.27 -0.07C2 -0.20 0.19 0.54 -0.09 -0.14C5 0.18 0.20 0.51 0.25 -0.17C1 0.07 -0.02 0.50 0.02 0.16M2 -0.06 0.09 0.01 0.76 0.15M1 0.37 -0.14 0.17 0.66 0.15

15

M3 0.10 0.15 0.11 0.64 -0.01D4 -0.05 0.29 0.07 0.07 0.70D5 0.09 0.00 0.08 0.03 0.68D6 -0.08 0.27 0.15 -0.10 0.67D1 0.02 0.28 -0.05 0.09 0.58D2 -0.20 -0.23 0.22 -0.03 0.35

Extraction Method Principal ComponentsRotation Method Varimax

Kaiser-Meyer-Olkin Measure of Sampling Adequacy 0.731Bartlett's Test of Sphericity 0.000

Confirmatory factor analysis was then employed to validate the scale in regard to specificconstructs. The measurement model is based on the same specifications as Yoo, Donthu andLenartowicz (2001), with 5 factors and 26 items, where each item loaded on only one factorand the factors are uncorrelated.

Using AMOS 4.0, the key results of the standardised solution are shown in Table 4.The overall fit of the measurement model was excellent: χ2 (d.f. = 299) = 543.32; root meansquare error of approximation (RMSEA) = 0.06; normed fit index (NFI) = 0.97; comparativefit index (CFI) = 0.99; and incremental fit index (IFI) = 0.99. These results provide strongconfirmatory support for the CVSCALE and its use in studying the hypothesised constructs.

With regard to composite reliability, all the estimates were above the recommended level of0.70 (Hair et al, 1998), ranging from 0.79 to 0.85 (Table 4). These results are evidence of thescale’s convergent validity. In addition, whilst the average variance extracted for eachdimension was only moderate at 0.50, they do satisfy the minimum acceptable level (Hair etal, 1998). Thus, the results provide support for the independence of the dimensions (Fornelland Larker 1981).

Table 4: Confirmatory Factor Analysis Results

Standardised Factor LoadingsCVSCALEItem No.

PowerDistance



P1P2P3P4P5

0.610.530.410.520.47

U1U2U3U4U5

0.460.460.750.370.62

C1C2C3C4C5C6

0.390.290.660.610.480.59

16

M1M2M3M4

0.610.570.600.36

D1D2D3D4D5D6

0.580.230.490.730.480.69

CompositeReliability

0.83 0.82 0.85 0.79 0.85

VarianceExtracted

0.50 0.50 0.50 0.50 0.50

χ2 d.f. RMSEA NFI CFI IFIModel 543.32 299 0.06 0.97 0.99 0.99

Having confirmed the reliability and validity of the CVSCALE, responses to the scale arethen aggregated for analysis. For the whole sample, an average score for each culturaldimension is computed for both ethnic groups. The score is calculated as the average of theindividual items of each cultural dimension answered by the respondents of each ethnicgroup5. This approach reflects the flexibility of the CVSCALE in that it allows culture to bemeasured at the individual level but analysed at an appropriate aggregate level. Thus,individual respondents may differ from the average of their group but will remain appropriatefor analysis. The average scores are then compared to classify the relative cultural values ofthe two ethnic groups on each dimension (Table 5).

Table 5: Average Cultural Scores

PowerDistance



Anglo-Australians

4.05Low

2.16Low

2.99Individualistic

3.28Feminine

2.11Low

Chinese-Australians

3.88High

2.07High

2.78Collectivistic

3.03Masculine

1.91High

T-value 2.49 1.40 2.96 3.16 3.22Sig. P-value

0.01 0.16 0.00 0.00 0.00

Although the absolute difference appears small, based on conventional statistical standardsthere are significant differences between the two ethnic groups on all of the culturaldimensions (p < 0.05), except for uncertainty avoidance. Using the relative averages, Anglo-Australians can be classified as relatively low power distance, low on uncertainty avoidance,individualistic, feminine and low on Confucian dynamism, and vice-versa for Chinese-Australians. The classifications largely conform to Hofstede’s (1991) results. The exceptionsare the contrary results on uncertainty avoidance and masculinity. However, some

5 For example, if there are 5 items for the power distance dimension and 25 respondents for each ethnic group.The average for each ethnic group is equal to: Σ (25 x 5 items scores) / 25

17

inconsistency is acceptable given the distinctiveness of the CVSCALE and the limitations ofHofstede’s empirical data. Indeed, as explained in section 4, the purpose of using theCVSCALE is to provide a direct measure of culture and to avoid the limitations of inferringthis from past studies such as Hofstede’s.

It should also be noted that despite the slight inconsistency, the hypotheses can still be tested.This is because the hypotheses involve a comparison of cultures defined only by culturaldimensions. There are no restrictions regarding how Anglo-Australians or Chinese-Australians should score on each dimension. For example, the hypotheses involvingmasculinity can still be tested by using Anglo-Australians as the feminine culture andChinese-Australians as the masculine culture.

6.3 Analysis ProceduresIn order to examine each hypothesis, the results of the experiment are analyzed using twomain procedures. Firstly, logistic regression is used to test for the congruency relationshipsbetween product and promotion types. The dependent variable is the choice betweenpromotion type (monetary or non-monetary) and the independent variables are product type(i.e., utilitarian or hedonic) and the covariates of gender, age and income. Secondly, choiceshares of promotion types are analysed to identify any differences in the choices betweenethnic groups. Analysis is undertaken at an ethnic-group level and an individual level, andacross different acculturation groupings

6.4 Main Results at an Ethnic LevelIn testing the hypotheses, the data were analysed at an ethnic level. The ethnic groups arealready classified on each cultural dimension as shown in Table 5. For the purposes ofanalysis, the upper median splits within each ethnic group on each cultural dimension areused. This results in greater variance between the two groups on the dimensions of interest.

Logistic regression analysis is performed on each ethnic group for each dimension. Thus, atotal of 10 regressions were conducted (Table 6). Results show that the regression modelsgenerally have a poor fit since the reduction in the –2 log likelihood values and the R2 valuesare relatively low. However, the omnibus test of model coefficients indicates that coefficientswere significant for 5 of the models (p < 0.05). Within the significant models, product typewas consistently shown to have a significant and negative relationship with promotion type:high power distance (B = -1.60, p = 0.00), high uncertainty avoidance (B = -1.33, p = 0.00),collectivist (B = -0.96, p = 0.00), masculine (B = -1.38, p = 0.00) and high ConfucianDynamism (B = -1.06, p = 0.00). These results indicate that for each significant dimension,hedonic products are associated with the choice of monetary promotions and utilitarianproducts are associated with the choice of non-monetary promotions. The covariates ofgender, age and income were generally found to be insignificant. The only exception is thathigher income was found to be associated with the choice of non-monetary promotions underthe collectivist dimension (B = 1.29, p = 0.04).

Table 6: Logistic Regression Results at an Ethnic Level

Model Summary Independent Variables-2 Log

LikelihoodR2

ValueOmnibus Test

of ModelCoefficients

ProductType

Gender Age Income

18

Low PD-Anglo

223a

(226)b0.03c 0.43 -0.23

(0.50)d0.64

(0.08)0.15

(0.69)-0.31(0.46)

High PD-Chinese

218(242)

0.15 0.00 -1.60(0.00)

0.39(0.27)

-0.17(0.66)

0.58(0.18)

Low UA-Anglo

238(242)

0.03 0.42 -0.48(0.15)

0.55(0.88)

0.09(0.79)

0.47(0.18)

High UA-Chinese

241(261)

0.12 0.00 -1.33(0.00)

-0.15(0.65)

-0.16(0.64)

0.64(0.10)

Individualist-Anglo

261(266)

0.03 0.28 -0.28(0.36)

0.30(0.36)

-0.22(0.50)

0.61(0.07)

Collectivist-Chinese

244(258)

0.09 0.00 -0.96(0.00)

0.30(0.35)

-0.07(0.85)

1.29(0.04)

Feminine-Anglo

241(242)

0.01 0.95 -0.16(0.63)

0.16(0.67)

-0.05(0.88)

0.14(0.71)

Masculine-Chinese

216(236)

0.12 0.00 -1.38(0.00)

0.41(0.25)

-0.15(0.70)

0.78(0.09)

Low CD-Anglo

255(261)

0.03 0.25 -0.39(0.22)

0.59(0.07)

-0.07(0.85)

0.23(0.50)

High CD-Chinese

236(250)

0.09 0.00 -1.06(0.00)

0.35(0.30)

-0.26(0.46)

0.61(0.10)

aModel –2 Log Likelihood bInitial –2 Log Likelihood cNagelkerke R2 dSignificant value

The choice share results for each ethnic group on each dimension are shown in Table 7. Theresults are reflective of the regression findings, in that hedonic products have a relativelyhigher choice share of monetary promotions than utilitarian products. Another key result isthat for each ethnic split, monetary promotions are preferred over non-monetary promotionsacross all products and for each product type.

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Table 7: Choice Shares for Monetary Promotions at an Ethnic Level

AllProducts

UtilitarianProducts

HedonicProducts

Power DistanceLow-AngloHigh-Chinese(sig. p-value)

83%a

81%(0.56)

81%70%(0.03)

85%92%(0.07)

Uncertainty AvoidanceLow-AngloHigh-Chinese(sig. p-value)

79%78%(0.44)

76%66%(0.10)

82%89%(0.33)

CollectivismIndividualist-AngloCollectivist-Chinese(sig. p-value)

78%79%(0.75)

75%71%(0.52)

80%86%(0.16)

MasculinityFeminine-AngloMasculine-Chinese(sig. p-value)

81%82%(0.82)

80%73%(0.16)

82%91%(0.04)

Confucian DynamismLow-AngloHigh-Chinese(sig. p-value)

78%80%(0.67)

75%72%(0.52)

82%88%(0.15)

aChoice share for non-monetary promotions is the complement to 100%

The choice share results also provide a basis to evaluate the hypotheses. As is evident inTable 7, there was no significant difference in the choice shares between ethnic groups acrossall products. Within product types, differences were found in only 2 out of the possible 10cases. Firstly, in the case of utilitarian products, low power distance Anglo-Australians werefound to have a higher preference for monetary promotions than high power distanceChinese-Australians (81% vs 70%; p < 0.05). This is in line with the prediction of hypothesesH1A and H1B. Secondly, in the case of hedonic products, feminine Anglo-Australians werefound to have a lower preference for monetary promotions than masculine Chinese-Australians (82% vs 91%; p < 0.05). This is consistent with hypotheses H4A and H4B.

However, these were the only two instances where differences were found. It is evident that,in general, there was no difference in the choice shares between the two ethnic groups acrossall products and product types, despite differences in cultural values. Thus, there isinsufficient evidence to support the hypotheses of this study. The results were confirmedwhen the same analyses were performed with a quartile-split sample. Although there wasgreater variance in the cultural values between ethnic groups, no significant difference inchoice shares was observed for any of the cases.

6.5 Main Results at an Individual LevelIn order to provide further understanding, the data was also analysed at an individual level.Specifically, median splits were conducted on each dimension based on the scores of allindividuals, regardless of their ethnic background.

20

The two groups on each dimension were analysed using the same logistic regression model asspecified earlier. From Table 8 it is evident that the results generally reflect those found at theethnic level. Firstly, the reduction in the –2 log likelihood values and the R2 values for eachregression are again relatively low, suggesting a poor fit for all the models. However, withthe exception of the collectivist dimension, model coefficients were found to be significantfor the same dimensions identified at the ethnic level (p< 0.05). Similarly, product type wasconsistently shown to have a significant and negative relationship with promotion type: highpower distance (B= -0.85, p= 0.00), high uncertainty avoidance (B= -0.81, p= 0.00),masculine (B= -0.89, p= 0.00) and high Confucian Dynamism (B= -0.68, p= 0.00). Theseresults confirm the findings at the ethnic level that hedonic products are associated with thechoice for monetary promotions. In regard to the covariates, they were generally again foundto be insignificant. However, there are some results that differed from the ethnic level.Firstly, the model coefficients for low uncertainty avoidance, individualist and low ConfucianDynamism were also found to be significant (p< 0.05). Product type was again negativelyrelated to promotion type. In addition, under the low Confucian Dynamism dimension femaleresponses were positively related with the choice of non-monetary promotions (B= 0.47, p=0.05).

21

Table 8: Logistic Regression Results at an Individual Level


LikelihoodR2

ValueOmnibus Test


ProductType

Gender Age Income

LowPowerdistance

474a

(483)b0.03c 0.06 -0.54

(0.02)d0.48

(0.06)0.17

(0.50)-0.02(0.93)

HighPowerdistance

509(524)

0.05 0.01 -0.85(0.00)

0.03(0.91)

-0.15(0.53)

0.03(0.89)

LowUncertaintyAvoidance

479(489)

0.03 0.05 -0.58(0.01)

0.40(0.10)

0.24(0.33)

-0.09(0.71)

HighUncertaintyAvoidance

505(519)

0.04 0.01 -0.81(0.00)

0.09(0.69)

-0.23(0.32)

0.15(0.52)

Individualist491

(503)0.04 0.01 -0.74

(0.00)0.33

(0.18)0.02

(0.93)0.11

(0.65)

Collectivist497

(506)0.03 0.06 -0.65

(0.00)0.18

(0.43)-0.03(0.88)

-0.04(0.88)

Feminine484

(492)0.03 0.10 -0.50

(0.03)0.41

(0.14)0.16

(0.49)0.15

(0.54)

Masculine500

(517)0.05 0.00 -0.89

(0.00)0.10

(0.67)-0.19(0.45)

-0.09(0.72)

LowConfucianDynamism

497(506)

0.04 0.01 -0.71(0.00)

0.47(0.05)

0.12(0.63)

0.08(0.74)

HighConfucianDynamism

494(503)

0.03 0.05 -0.68(0.00)

0.07(0.75)

-0.11(0.65)

0.10(0.66)


Choice share results for each dimension at an individual level are shown in Table 9. It isagain evident that hedonic products are associated with a higher choice share of monetarypromotions. The preference for monetary promotions also dominates across all products andfor each product type. In addition, across all products and for each product type, nosignificant difference was found in the choice shares between the groups on each dimension.In fact, there are many cases with virtually no difference in the choice shares between thegroups.

22

Table 9: Choice Shares for Monetary Promotions at an Individual Level

AllProducts

UtilitarianProducts

HedonicProducts

Power DistanceLowHigh(sig. p-value)

81%a

78%(0.24)

77%71%(0.13)

85%85%(1.00)

Uncertainty AvoidanceLowHigh(sig. p-value)

81%79%(0.39)

76%72%(0.26)

85%85%(1.00)

CollectivismIndividualistCollectivist(sig. p-value)

80%80%(0.94)

74%74%(0.92)

86%85%(0.80)

MasculinityFeminineMasculine(sig. p-value)

81%79%(0.48)

77%72%(0.19)

84%86%(0.62)

Confucian DynamismLowHigh(sig. p-value)

80%80%(0.94)

74%74%(0.92)

85%85%(1.00)


6.6 Acculturation AnalysisThe effects of acculturation are explored by dividing the sample of Chinese-Australianrespondents using a median split based on the number of years that respondents have lived inAustralia and, in a separate analysis, based on whether the respondent was born in Australiaor overseas. These two splits are seen as different ways to examine the same underlyingdimension of acculturation (Quester, Karunaratna and Chong, 2001).

The four groups were analysed using logistic regression (Table 10). The results are fairlyconsistent across all groups. Firstly, all the models had relatively poor fit, as shown by thelow reductions in the –2 log likelihood value and the low R2 values. Secondly, with theexception of the Australia born group, the model coefficients were found to be significant forall groups (p< 0.05) and the only significant variable was product type, which had a negativerelationship with promotion type.

23

Table 10: Logistic Regression Results using Acculturation Splits


LikelihoodR2

ValueOmnibus Test


ProductType

Gender Age Income

Years InAustralia-Low

219a

(230)b0.07c 0.03 -1.01

(0.01)d0.44

(0.21)-0.02(0.92)

0.44(0.32)

Years InAustralia-High

236(258)

0.13 0.00 -1.53(0.00)

0.05(0.89)

0.10(0.79)

0.35(0.33)

OverseasBorn

342(368)

0.10 0.00 -1.31(0.00)

0.39(0.17)

0.03(0.92)

0.35(0.28)

AustraliaBorn

113(121)

0.10 0.10 -1.20(0.01)

-0.44(0.45)

-0.47(0.43)

0.47(0.36)


The choice share results for the four groups are shown in Table 11. The results are consistentwith those reported for Chinese-Australians in the earlier analyses (Tables 7 and 9). Firstly,the choice for monetary promotions was found to dominate non-monetary promotions.Secondly, hedonic products were found to be associated with monetary promotions. Theresults were consistent across all groups, and no significant difference in choice shares wasobserved. Thus, the results suggest that acculturation does not have an impact on the findingsof this study.

Table 13: Choice Shares for Monetary Promotions using Acculturation Splits

AllProducts

UtilitarianProducts

HedonicProducts

Years Lived in AustraliaLowHigh(sig. p-value)

83%a

79%(0.26)

76%67%(0.12)

90%90%(0.83)

Country of BirthOverseasAustralia(sig. p-value)

82%78%(0.46)

72%69%(0.61)

90%88%(0.55)


24

7. Summary and DiscussionThe key findings and contributions of the study can be summarized in three main areas: i)culture and ethnicity, ii) culture and sales promotion, iii) culture and the congruencyframework.

7.1 Culture and EthnicityClear cultural differences are found at an ethnic group level. With the exception ofuncertainty avoidance, the mean scores between Anglo-Australians and Chinese-Australiansare significantly different from each other across all cultural dimensions. This is an importantfinding as most cross-cultural studies only assume or suggest that cultural differences exist atan ethnic level, rather than measure and demonstrate these differences (Doran, 1996;Laroche, Pons and Turnel, 2002). By contrast, the current study provides empirical evidencethat confirms the popular assumption. It also further validates the CVSCALE established byYoo, Donthu and Lenartowicz (2001). The flexibility of the CVSCALE is demonstrated, inthat culture can be analyzed at both the ethnic and individual level. Thus, the study providesfurther evidence for the validity and usefulness of this scale.

7.2 Culture and Sales PromotionAnother key contribution of the study is that despite cultural differences between ethnicgroups, there is no significant difference in their preferences for sales promotion types. Withonly 2 exceptions, this result is found to be consistent at an ethnic-group level across allproducts and for each product type. The absence of cultural effects is also evident at anindividual level.

The implication of this finding is twofold. Firstly, although cultural differences may exist,these do not appear to affect consumer responses to sales promotion at an ethnic level. Thissuggests that managers can use standardized sales promotions when targeting different ethnicgroups and avoid the use of more costly differentiated strategies. Secondly, the findinghighlights the fact that cultural distinctions may be more relevant in some areas of marketingthan in others. For example, the distinction between collectivism and individualism wasfound to account for differences in consumer complaining behavior (Watkins and Liu, 1996)but not in advertising appeals (Cutler, Erdem and Javalgi, 1997). Thus, it would be a mistaketo assume that cultural differences will affect all areas of marketing. Hence, the relevance ofethnic marketing as suggested by researchers and practitioners (Jarvis, 2002; Lee, Fairhurstand Dillard, 2002; Quester, Karunaratna and Chong, 2001) needs to be considered within thespecific context in which it is applied.

7.3 Culture and the Congruency FrameworkThere are mixed findings in regard to the congruency framework of sales promotioneffectiveness. Firstly, the preference for monetary promotions was found to dominate overthe preference for non-monetary promotions across all product types. Furthermore, with onlya few exceptions, the covariates of gender, age and income were all insignificant inaccounting for the choice of promotions. All of these results are consistent with thosereported by Chandon Wansink and Laurent (2000). They were also evident across all culturalgroups at all levels of analysis and thus, the impact of culture on these results appears to beminimal.

However, the interesting finding is that the direction of congruency effects between productand promotion types was opposite to that described by Chandon Wansink and Laurent

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(2000). In the current study, it was generally found that hedonic products were associatedwith the choice of monetary promotions whilst utilitarian products were associated with non-monetary promotions. The contrasting relationships may be explained by the fact that thecongruency effects observed by the earlier researchers were only marginal (B = 0.32 for theUS sample and B = 0.022 for the French sample). Thus, other factors could have affected thedirection of the relationships. For example, the use of monetary incentives for recruitingrespondents may have biased their results (whereas incentives were not used in the presentstudy). Another possible explanation is that non-monetary promotions are preferred forutilitarian products because they provide consumers with the experiential benefits that are notprovided by the product itself. This is supported by the successful use of non-monetarypromotions for many utilitarian products, such as the loyalty program for Unilever’s Omolaundry detergent and online competitions for Kellogg’s Coco Pops. On the other hand,monetary promotions may be preferred for hedonic products because they can reduce theguilt associated with hedonic consumption. This is hinted at by the fact that promiseddonations to charity are more effective for promoting luxuries (i.e., hedonic products) thanfor necessities (Strahilevitz and Myers, 1998).

8. Limitations and Further ResearchThere are several limitations, relating to the focus of the study and the methodology used.Some of these highlight useful directions for future research.

One issue is that the cultural dimensions are examined separately. There is no examination ofany correlation effects between the dimensions and no assessment of the relative importanceof each dimension. Yet, ethnic groups are not expected to conform to any single culturaldimension as they involve a whole “set of cultural values” (Tan and McCullough, 1985).However, the focus on single cultural dimensions provides a clear conceptual distinction thatcan facilitate analysis and assist in the interpretation of results. Furthermore, the separateanalysis of dimensions is consistent with past studies (Brodowsky and Anderson, 2000;Steenkamp, Hofstede and Wedel, 1999; Watkins and Liu, 1996).

It is also noted that due to the many complexities involved in consumer responses to salespromotion, this study has necessarily been limited to a fairly narrow focus in order to isolatethe impact of culture. For example, the effects of branding and prices have been keptconstant. However, it has been suggested that consumer responses to brands (McCort andMalhotra, 1993) and prices (Laroche, Pons and Turnel, 2002) can differ across cultures. Thus,it would be worthwhile for future research to explore branding and pricing effects along withthe impact of culture on consumer sales promotions. The study is also limited by itsconsideration of culture. This study ignores the fact that people may perceive themselves tobelong to more than one ethnic culture and that the strength of identification with a particularethnic group may differ between its members (Tan and McCullough, 1985). These themesdeserve further consideration.

Apart from culture, there are also likely to be other factors that will impact on the congruencyframework and the effectiveness of sales promotions. For example, it has been shown that therole of guilt can affect the type of promotional benefits preferred (Kivetz and Simonson,2002) and the nature of the decision can influence the choice between utilitarian and hedonicproducts (Dhar and Wertenbroch, 2000). Furthermore, the current study only focused onconsumer promotions and consumer packaged goods. The congruency effects and the impactof culture may apply differently to business-to-business trade promotions and other types ofproducts (e.g., services and industrial products). Analysis of these conditions would mean

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going beyond student respondents; something that would increase variance in the data(particularly in the covariates). All of these areas represent opportunities for future researchthat can help extend our knowledge of sales promotion effectiveness.

In terms of the methodology for this study, a quasi-experimental design is adopted and dataare analyzed using inferential statistics. It is acknowledged, this is only one of the manypossible methodologies that might be used. An alternative would be to observe the choicebehavior of consumers at the point of purchase. This would accurately capture choicebehavior, although it might be difficult to assign ethnicity. Another alternative is to usescanner data to measure brand choice, as has been adopted in previous studies of consumerpromotion (Ehrenberg, Hammond and Goodhardt, 1994; Lemon and Nowlis, 2002; Mela,Gupta and Lehmann, 1997). Typically, this would be accompanied by a usage and attitudequestionnaire, which could provide demographic, ethnographic and acculturationinformation.

The study could be further extended by considering the use of alternative measures andstimuli. For example, culture may also be measured using Hofstede’s (1990) original scale, orone of the alternatives that has been proposed (e.g., Furrer, Liu and Sudharshan, 2000). Theresults may then be compared with the CVSCALE to provide a form of triangulation.Another possible extension is to present the promotion scenarios with pictorial aids. Thepictorial presentation of both the product and promotional offer may have an impact onconsumer responses to the sales promotion scenarios.

Finally, the generalizability of the results could be extended by considering other monetaryand non-monetary promotions (e.g., coupons, loyalty schemes), and by broadening the list ofutilitarian and hedonic products (e.g., other packaged goods or services). This is particularlyimportant given the variety of promotional types found in most supermarkets, across adiverse range of products categories. It would also be worthwhile to explore the responses ofother cultural groups within and across a variety of countries (e.g., Italian-Australians,Korean-Australians, North African-French, Hispanic-Americans, etc).

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Appendix A: The CVSCALE

CulturalDimension

Measurement Items 5-Point Scale

PowerDistanceValues

P1. People in higher positions should make mostdecisions without consulting people in lowerpositions.P2. People in higher positions should not ask theopinions of people in lower positions too frequently.P3. People in higher positions should avoid socialinteraction with people in lower positions.P4. People in lower positions should not disagreewith decisions by people in higher positions.P5. People in higher positions should not delegateimportant tasks to people in lower positions.

1 = Strongly agree2 = Agree3 = Neitheragree/disagree4 = Disagree5 = Strongly disagree

UncertaintyAvoidanceValues

U1. It is important to have instructions spelled out indetail so that I always know what I'm expected to do.U2. It is important to closely follow instructions andprocedures.U3. Rules and regulations are important because theyinform me of what is expected of me.U4. Standardised work procedures are helpful.U5. Instructions for operations are important.


CollectivismValues

Cl. Individuals should sacrifice self-interest for thegroup (either at school or the work place).C2. Individuals should stick with the group eventhrough difficulties.C3. Group welfare is more important than individualrewards.C4.Group success is more important than individualsuccess.C5.Individuals should only pursue their goals afterconsidering the welfare of the group.C6.Group loyalty should be encouraged even ifindividual goals suffer.


MasculinityValues

Ml. It is more important for men to have aprofessional career than it is for women.M2. Men usually solve problems with logicalanalysis; women usually solve problems withintuition.M3. Solving difficult problems usually requires anactive, forceful approach, which is typical of men.M4. There are some jobs that a man can always dobetter than a woman.


ConfucianDynamismValues

Dl. Careful management of money (thrift)D2. Going on resolutely in spite of oppositionD3. Personal steadiness and stabilityD4. Long term planningD5. Giving up today's fun for success in the futureD6. Working hard for success in the future

1 = Very unimportant2 = Unimportant3 = Neitherimportant/unimportant4 = Important5 = Very important

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Appendix B: Pretests(To be deleted or printed in smaller type if there are constraints on journal space)

B.1 Pretest One: Design and ProcedureThe first pretest tests and confirms the nature of the promotion techniques. It also verifies therelationships between monetary and non-monetary promotions with utilitarian and hedonicbenefits respectively.

Short self-administered questionnaires were completed by a random sample of 15 Anglo-Australian and 15 Chinese-Australian students. Recruitment was by random interception andparticipation was voluntary6. Respondents were first screened for their education level andethnicity, and only those who passed both screening criteria were retained.

Respondents were randomly assigned a questionnaire consisting of either promotion stimuliset A or B. As shown in Table B1, each set includes an example of the four promotiontechniques described in section 4. However, the stimuli examples are not specific to anyproduct, as the purpose of the pretest is only to examine the nature of promotion techniquesand their relationships with promotional benefits.

Table B1: Promotion Stimuli used for Pretest One

Promotion Type Stimuli Set A Stimuli Set B1. Shelf-price discounts Special! Save 50 cents. Take 10% off the marked price.2. Price packs Get two for the price of one. Get 20% extra for free.3. Sweepstakes Scratch the panels inside and

win instantly!Win a trip to Hawaii! See detailsinside pack

4. Free gifts Free bag! Redeem by mailwith receipt.

Buy this product and receive afree toy.

Each respondent was asked to: i) classify each promotion stimuli as either a monetary or non-monetary promotion, and ii) evaluate each promotion stimuli based on the 18-item scale formeasuring promotion benefits.

B.2 Pretest One: ResultsFirstly, the results confirmed the nature of the four promotion techniques. Shelf-pricediscounts and price packs were correctly identified by the majority of respondents asmonetary promotions, and sweepstakes and free gifts were identified as non-monetarypromotions. Similar results were obtained between the two sets of stimuli and between thetwo ethnic groups (see Table B2).

Table B2: Nature of Promotion Techniques (% of correct identification)

Promotion Technique Overall Sample Anglo-Australians Chinese-Australians1. Shelf-price discounts 83% 93% 73%2. Price packs 63% 60% 67%3. Sweepstakes 93% 100% 87%4. Free gifts 87% 87% 87%

6 The total sample size of 30 is deemed sufficient for most statistical analysis (Hair et al, 1998).

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Secondly, congruency relationships between the promotional types and promotion benefitswere examined. Whilst Chandon, Wansink and Laurent (2000) analyzed their results withsecond-order confirmatory factor analysis, their purpose was scale and theory development.Here the only objective is to verify past findings. Thus, although confirmatory factor analysismay be employed, an alternative and a relatively more efficient set of analyses is used.

The utilitarian and hedonic nature of the six types of benefits was first confirmed viareliability analysis. The items for the benefits of savings, quality and convenience produced arelatively high reliability alpha of 0.79. This supports the theory that these are three relatedutilitarian benefits. Similarly, the items for the benefits of value expressive, exploratory andentertainment had a high reliability alpha of 0.71. This confirms the hedonic nature of thesethree benefits.

A utilitarian and hedonic factor score was then computed for each evaluation of a promotiontechnique. The scores represent the summated average of all the utilitarian and hedonic itemsrespectively, as classified by Chandon, Wansink and Laurent (2000) from the 18-item scalefor promotion benefits. Logistic regression was then applied in which the two factor scoresacted as the independent variables. The dependent variable is the classification of apromotion technique as either a monetary or non-monetary promotion. Results aresummarized in Table B3. The R2 value of 0.46 was relatively modest; however, the reductionin the -2LL value from an initial 163 to a final 113 suggests a good overall fit of the model.This is confirmed by the low significance values in the omnibus tests of model coefficients(0.00), which is another test of model fit.

Table B3: Model Summary Results

-2 Log likelihood(initial)

-2 Log likelihood(model)*

NagelkerkeR2

Summary 163 113 0.46Omnibus Tests Chi-Square Df Sig Model 50 2 0.00*Enter method after 4 iterations

From the regression results it is seen that both the utilitarian and hedonic factors weresignificant explanatory variables for the classification of promotion techniques. Specifically,the coefficient of the utilitarian factor is negative (e.g., B= -6.81, p = 0.00) whilst thecoefficient of hedonic factor is positive (e.g., B= 4.10, p= 0.00). These results indicate that asthe amount of utilitarian benefits decreases and the amount of hedonic benefits increases, themore likely that the sales promotion technique is a non-monetary promotion. Similarly, thehigher the amount of utilitarian benefits and the lower the amount of hedonic benefits, themore likely that the sales promotion technique is a monetary promotion. The samerelationships were observed between the two ethnic groups when analysed individually. Thekey regression results are summarised in Table B4.

Table B4: Regression Results

Variable B SE Wald Df Sig Exp (B)Utilitarian -6.81 1.24 30.04 1 0.00 0.00Hedonic 4.10 1.17 12.22 1 0.00 60.38Constant 0.76 0.44 2.92 1 0.09 2.13

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In summary, the results of pretest one largely replicated the findings of Chandon, Wansinkand Laurent (2000). In particular, the results confirmed that shelf-price discounts and pricepacks can be classified as monetary promotions, with sweepstakes and free gifts as non-monetary promotions. Furthermore, the results show that positive relationships exist betweenmonetary and non-monetary promotions with utilitarian and hedonic benefits respectively.

B.3 Pretest Two: Design and ProcedureThe second pretest verifies the utilitarian and hedonic nature of the pre-selected productcategories that are used for the main experiment. The pretest also seeks to identify specificbrands that are representative of high equity brands in each of the product categories.

Following the same recruitment procedure as pretest one, self-administered questionnaireswere completed by a new sample of 15 Anglo-Australian and 15 Chinese-Australian studentson a voluntary basis. Respondents that passed the same screening criteria as pretest one wereretained. Respondents were given short descriptions of the 6 pre-selected product categoriesand a list of high equity brands from each category. They were then asked to: i) evaluate eachproduct category based on the utilitarian index adapted from Batra and Ahtola (1990), and ii)for each product category, select the brands that they have purchased in the past 12 months.

B.4 Pretest Two: ResultsFirstly, the utilitarian index is calculated as the difference between two average 9-pointsemantic differential scores. Specifically, it is the difference between the average score of thetwo hedonic items of “fun/not fun” and “pleasant/unpleasant”, and the average score of thetwo utilitarian items of “wise/foolish” and useful/useless”. The index scores based onindividual responses are summated for each product category and then averaged to give asummary measure for the nature of each product. The utilitarian index ranges from –8 to 8,with a more positive number indicating a more utilitarian product.

The results confirmed the utilitarian and hedonic nature of each product category (Table B5).Specifically, relatively higher index scores were recorded for laundry detergent (2.70), AAbatteries (2.30) and film (1.38). This provides support for their utilitarian nature. On the otherhand, relatively lower index scores were evident for chocolates (-1.40), ice-cream (-1.52) andbiscuits (-0.77), which confirms their hedonic nature. The distinctions for each productcategory were also consistent across both ethnic groups.

Table B5: Utilitarian Index Scores

Product Utilitarian Index Anglo-Australians Chinese-Australians1. Laundry Detergent 2.70 3.37 2.032. AA Batteries 2.30 2.40 2.203. Film 1.38 1.47 1.304. Chocolates -1.40 -2.03 -0.775. Ice-Cream -1.52 -1.97 -1.076. Biscuits -0.77 -0.83 -0.70

With regard to identifying the specific brands to represent each product category, frequencytests were performed on the brands purchased by respondents in the last 12 months. Thebrands with the highest frequency were then selected to be representative of each category

31

and they include: Omo (laundry detergent), Energiser (AA batteries), Kodak (film), M&Ms(chocolates), Peters (ice-cream), and Arnotts (biscuits). Thesefindings were consistent across both ethnic groups (Table B6).

Table B6: Frequency Results

Product Highest 2nd Highest1. Laundry Detergent Omo (20)* Cold Power (13)2. AA Batteries Energiser (23) Everready (14)3. Film Kodak (29) Fuji (14)4. Chocolates M&Ms (20) Cadbury (19)5. Ice-Cream Peters (18) Cadbury (15)6. Biscuits Arnotts (29) Westons (11)* All frequencies are out of a total of 30 respondents

In summary, the results confirmed the utilitarian and hedonic nature of each productcategory. However, for the purposes of the main experiment, laundry detergent is excluded asanalysis of the results indicated that a relatively small number of respondents had purchasedbrands from this product category. This suggests that laundry detergent is an inappropriatestimulus since the sample appears to lack the purchase experience to form evaluations.Biscuits are also excluded to ensure an even distribution of product types, with 2 utilitarianand 2 hedonic product stimuli7. This is consistent with the research design of Chandon,Wansink and Laurent (2000). The final configuration is shown in Table B7.

Table B7: Product Stimuli

Product Nature Brand1. AA Batteries Utilitarian Energiser2. Film Utilitarian Kodak3. Chocolates Hedonic M&Ms4. Ice-Cream Hedonic Peters

7 Biscuits are selected for exclusion over the other two hedonic products, as it was the least hedonic of all thehedonic products.

32

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