International Journal of Marketing and Business Communication

10 (1) 2021, 35-47

http://publishingindia.com/ijmbc/

The Effect of Sales Promotion on Brand Awareness

and Brand Loyalty: Assessment of Walia Beer
Brand Management Practices
Fikirte Belachew Tufa*, Mesfin Workineh Melese**

Abstract
Sales promotions have become one of the preferred methods of marketing communication. However, there is a debate on whether
sales promotion has a positive effect on brand awareness and brand loyalty. So, the purpose of this study was to examine the
effect of sales promotion on brand awareness and brand loyalty; and the relationship between brand awareness and brand loyalty.
The research employed explanatory research design to identify any causal links between sales promotion, and brand awareness
and brand loyalty. Primary data were collected from a sample of 389 Walia beer consumers using convenient sampling technique;
and data were collected using a five-point Likert-type scale, ranging from ‘strongly disagree’ (1) to ‘strongly agree’ (5). Data were
entered into SPSS 20, and analysis of the measurement and structural models were made using AMOS 20. The findings revealed
that sales promotion has a positive and significant effect on brand awareness and brand loyalty; and awareness has a positive
effect on brand loyalty. This indicates that beyond its usual immediate impact on sales volume, sales promotion has an effect on
branding.
Keywords: Brand Awareness, Brand Loyalty, Sales Promotional Activities

Introduction awareness (Aaker, 1991). Moreover, brand awareness

is linked to the strength of the brand in the minds of
In today’s market atmosphere, there are various ways consumers which provides firms with a value that can
to influence the creation and enhancement of brand be used in the future to attract and promote products or
services (Kim & Kim, 2005).
equity through marketing programmes and efforts of the
organisations (Valette-Florence et al., 2011; Huang & On the other hand, brand loyalty is different from the other
Sarigöllü, 2014). Among the marketing efforts, promotion major dimensions of brand equity as it is tied more closely
has a significant effect on brand equity through creating to the user experience. Brand loyalty cannot exist prior
awareness, association, and loyalty (Datta, Ailawadi & to purchase and user experience. In contrast, awareness,
van Heerde, 2017). Sales promotion, though commonly association, and perceived quality are characteristics of
associated with short-term sales goals, has an effect on many brands, which exist prior to purchase (Aaker, 1991).
enhancing brand equity; it is recognised as most effective Brand loyalty has been considered the core dimension of
tool by companies (Joseph, Sivakumaran & Mathew, brand equity by Aaker (1991) mainly because the value of
2020). a brand to an organisation depends on the loyalty of the
customers which in turn can generate profit.
Keller (1993) noted that building and properly managing
brand equity has become a priority for companies of all Brand awareness affects customers’ attitudes towards
sizes, in all types of industries, in all types of markets. brand loyalty. Thus, brand awareness is related to brand
The first step in building brand equity is to create brand loyalty in making decisions as it is related to customers’
*
Marketing Expert and Instructor, Research and Consultancy Office, Catering and Tourism Training Institute, Ministry of
Culture and Tourism, Addis Ababa, Ethiopia. Email: [email protected]
**
Assistant Professor of Business Leadership, Department of Marketing Management, College of Business and Economics
School of Commerce, Addis Ababa University, Addis Ababa, Ethiopia.
Email: [email protected]; [email protected]
 36 International Journal of Marketing and Business Communication Volume 10 Issue 1 February 2021

thoughts. In addition, the degree of brand loyalty becomes Keller (2003) expressed that familiarity with a brand plays
stronger and firmer when customers are more aware of the an important role in the consumers’ purchasing decision
brand (Keller, 2003). So, it is interesting to look at whether and comes with the advantage of learning, attention, and
brand awareness positively affects brand loyalty. As a selection. According to Macdonald and Sharp (2000),
result, this study investigates the effect of sales promotion awareness of a brand is one of the major parts in the
on brand awareness and brand loyalty dimensions, and well-known techniques in the advertisement influence
also examines the relationship between the two brand hierarchy; one significant objective of communicative
equity dimensions, using Walia beer, in Addis Ababa. activities of marketing managers is that they use this
concept as an instrument to measure the effectiveness
A number of studies have been carried out concerning the of marketing and advertising activities (Burmann et al.,
effect of sales promotion on brand awareness and loyalty 2009).
in developed nations, like Europe and America. However,
few such studies have been conducted in developing The type of sales promotion used may have a different
countries like Ethiopia; therefore, this study is designed effect on brand knowledge. Chandon and Laurent (1999)
to fill this obvious gap in literature. and Chandon (2000) stress the need to distinguish between
two types: monetary (e.g. free product, coupons), which
The organisation in question, Walia brewery factory, was are related to utilitarian benefits and help consumers
launched in 2014. Currently, Walia is the main beer brew increase the acquisition utility of their purchase and
in Kilinto, and has proved to be very successful since enhance the efficiency of their shopping experience; and
its launch. It complements the established Bedele and non-monetary promotions (e.g. contests, sweepstakes, free
Harar breweries which were acquired from the Ethiopian gifts, loyalty programmes), which are related to hedonic
government in 2011 (Arthur, 2016). benefits. And they are intrinsically rewarding and related
to experiential emotions, pleasure, and self-esteem.
Objectives of the Study
Studies by Chandon (2000) and Montaner (2008) show
●● To determine the effect of sales promotion on brand that high quality brands with high, medium, or low
awareness. awareness have different results because of the different
●● To determine the effect of sales promotion on brand levels of sales promotion. In addition, Low (2000) shows
loyalty. that consumers prefer monetary promotions like price
●● To determine the effect of brand awareness on brand discount with low brand awareness product, and prefer
loyalty. non-monetary promotions like extra free product with high
brand awareness. Chandon (2000) concluded that non-
monetary promotions are more effective than monetary
Literature Review
promotions at high level of brand equity. This shows that
sales promotion tool is likely to depend on the brand used
Awareness is a key determinant identified in almost all
(e.g. whether high or low brand equity). Positive result
brand equity models (Aaker, 1991; Kapferer, 1991;
from a price promotion may perhaps occur if a promotion
Keller 1992; Agarwal & Rao, 1996; Krishnan, 1996
and Na, Marshall & Keller, 1999). Keller (2003, p. 76) attracted some new users who repeatedly buy later.
defines awareness as “the customers’ ability to recall and However, in researches done by Ehrenberg et al. (1994),
recognise the brand as reflected by their ability to identify Pauwels et al. (2002), and Peckham (1981), the evidence
the brand under different conditions and to link the brand suggests no long-term favourable effects for established
name, logo, symbol, and so forth to certain associations brands. This is because price promotions attract mostly
in memory”. Aaker (1996) identifies other higher levels existing, albeit infrequent buyers, and the small quantity
of awareness, besides recognition and recall (Aaker, of attracted new buyers have a low propensity to re-buy
1991). He includes top-of-mind, brand dominance, brand (Ehrenberg et al., 1994). Furthermore, other studies also
knowledge, and brand opinion. Brand knowledge is the pointed to a negative after-effect of sales promotion.
full set of brand associations linked to the brand (Keller, Joseph, Sivakumaran and Mathew (2020) show that sales
1993). promotion related to price has more effect.
 The Effect of Sales Promotion on Brand Awareness and Brand Loyalty: Assessment of Walia Beer Brand ... 37
It is argued that sales promotion can enhance the product’s Some of the potential negative effects of sales promotions
exposure effect. The exposure effect occurs when stimuli that have been mentioned are an increase in price
are repeatedly presented, and as a result, the product will sensitivity, a decrease in brand loyalty, and brand equity
be increasingly better liked and accepted. Study done erosion. Hunt and Keaveney (1994) suggested that not all
by Lidwell (2003) suggests that the exposure effect will price promotion activities are viewed positively: “price
be appropriate to stimuli that are perceived as natural or promotion satisfaction or dissatisfaction will become
positive. Furthermore, sales promotion can attract the associated with brand image, if the consumer attributes
consumer’s attention, and the sales promotion can be the cause of the satisfaction or dissatisfaction to the brand”
better memorised. (p. 16). Yoo, Donthu and Lee (2000) argued that frequent
use of price promotions causes consumers to infer lower
Brand loyalty can be defined as an extension of the product quality. Hence, frequent use of price promotions,
customer’s positive attitude towards a particular brand such as price deals, is related to low brand equity. The
and it makes an obligation for further purchases (van Riel reason for low brand equity is that price promotions lead
et al., 2005; Morrison & Eastburn, 2006). The effect of consumers to think primarily about the deals and not
loyalty to the brand is more than other variables (Gil et about the utility provided by the brand.
al., 2007). Atilgan et al. (2005) supported this finding
and stated that loyalty is the only factor that influences According to Palazón-Vidal and Delgado Ballester
brand equity directly. According to Aaker’s model of (2005), non-monetary promotions, such as premiums,
brand equity, loyalty has been recalled as a financial lever take the focus away from the price. “When promotion
for increasing marketing expenses, and attracting new experience is linked to enjoyment, kind of feelings,
customers by giving them information, awareness, and thoughts and benefits, more favourable and positive brand
reassurance, besides time to answer competitive threats. associations are linked to the brand” (Palazón-Vidal &
He also has defined the index of loyalty to the brand in Delgado Ballester, 2005, p. 184). This idea is consistent
two ways: 1) an amount paid by the customer for a brand with Yoo et al.’s (2000) findings about brand associations
compared to other brands with similar advantages and being positively related to brand loyalty.
2) direct measuring of the customer’s satisfaction and
his intention to purchase more or ordering product or a This study clarifies the disagreement about the potential
service (Aaker, 1996). impact of sales promotion on brand loyalty and brand
awareness in the literature. As such, on brand loyalty,
Alvárez-Alvárez and Vázquez-Casielles’s (2005) literature done by Papatla and Krishnamurthi’s (1996)
analysed a series of fundamental variables on the brand analysis proposed that promotions could have both
choice process: price, reference price, losses and gains, a negative and positive dynamic effect. Similarly,
loyalty, and promotions. Special attention was given to DelVecchio’s (2006) findings concluded that depending
the influence sales promotions had on this process. Results upon characteristics of the sales promotions and the
suggested that consumers will take into account whether promoted product, promotions could either increase or
or not a promotion exists, as well as price information, decrease preference for a brand. If the debate whether
prior to making a purchase decision. sales promotions can positively influence brand loyalty
or not is to be moved forward, a better understanding of
On the other hand, promotion enhancement indicates the impact of monetary and non-monetary promotions on
that promotions reduce subsequent brand loyalty due to brand loyalty needs to be developed. On the other hand,
the increased sensitivity to marketing mix activities for several studies have shown a negative or neutral impact on
all brands in the category. In other words, promotion brand loyalty (Blattberg & Neslin, 1989; Bridges, Briesch
enhancement implies a reduced likelihood of buying & Yin, 2006). Bridges, Briesch and Yin (2006) argued
previously purchased brands, with a simultaneous increase that promotion enhancement reduces brand loyalty due to
in the impact of promotional activities for all brands in the the increased sensitivity to marketing mix activities for
category (Bridges, Briesch & Yin, 2006).
 38 International Journal of Marketing and Business Communication Volume 10 Issue 1 February 2021

all brands in the category; therefore, it implies a reduced Study Participants

likelihood of consumers to buy previously purchased
brands on promotions. The population of the study consists of all men and women
Salelaw and Amanpreet’s (2016) study indicated that in Addis Ababa who consume Walia beer. Thus, the sample
monetary and non-monetary sales promotion have a frame designed was made from hotels, bars, and restaurants.
synergetic effect and sales promotion is the driver/ Cluster sampling, therefore, was used for our large sample
antecedent on the creation of brand equity. Specifically, surveys. The researchers used ten sub-cities of Addis Ababa
consumers’ perceptions of a beer brand’s monetary sales as a cluster unit with a heterogeneous population within,
promotion has a positive effect on brand awareness, and but a homogenous population in other sub-cities. Using a
consumer’s perception of non-monetary sales promotion simple random sample: Three clusters were selected from
has a positive effect on the creation of a good brand name the above ten sub-cities, which are Bole, Addis Ketema and
(brand awareness) and a negative effect on the formulation Kirkos. Since convenience sampling was employed, the
of brand perceived quality. In addition, Bahram and Ali researchers selected beer consumers from different areas of
(2016) reviewed the effect of monetary and non-monetary the city with varying backgrounds.
promotions on brand awareness, something which was
accepted regarding the amount of regression coefficient Study Design and Approach
and significance, and supported by Gil et al. (2007),
which reached similar findings. In this study, the available numeric data calls for a
quantitative research method. So, regarding this particular
Hypotheses research, quantitative research approach was employed.
This research employs explanatory research design using
Based on the above statements, the research tests the cross-sectional survey. Explanatory is sometimes referred
following hypotheses. to as analytical study. Some of the examples could be case-
H1: Sales promotion has a significant positive effect on control study, cohort study (follow-up), and intervention
brand awareness in Walia beer. trial (Mohammed, Denu & Ensermu, 2014).

H2: Sales promotion has a significant positive effect on

brand loyalty in Walia beer. Sampling and Sampling Size Determination
H3: Brand awareness has a significant positive effect
The population size of this research is an unknown
on brand loyalty in Walia beer.
population. In such cases, for a population that is large, as
per Corbetta (2003), to yield a representative sample for
Study Methodology proportions, the formula is:

Description of the Study Area Necessary sample size = (Z-score)2* StdDev*(1−StdDev)/

(margin of error)2
In cross-sectional field surveys, independent and Then, by inserting the values of each variable, the sample
dependent variables are measured at the same point in size is identified.
time using a single questionnaire (Bhattacherjee, 2012).
So, a cross-sectional field survey was conducted to ((1.96)2×.5(.5)) / (.15)2
assess the effect of sales promotion on brand awareness (3.8416×.25)/.00225
and brand loyalty in the city of Addis Ababa, where
9604/00225 = 427; the sample size for this study is 427.
the Walia brewery factory distributes its beer widely to
different hotels, bars, and restaurants that offer beer to its Based on the above related information, the sample size
consumers. used in this research is appropriate or representative to
 The Effect of Sales Promotion on Brand Awareness and Brand Loyalty: Assessment of Walia Beer Brand ... 39
make the response large; we change the margin of error Table 1: Skewness and Kurtosis
to +/− 15% and modify the sample size from 384 to 427.
Constructs Skewness Kurtosis
Brand awareness −.61 −.31
Data Collection Procedure Brand loyalty .37 −.69
Sales promotion −.13 2
This research used both primary and secondary source
Source: SPSS Data Output.
of information. In addition, the study used a survey
questionnaire to gather data. For this study, a structured
questionnaire was used as the data collection method. Reliability
The structured questionnaire consisted of Likert-type
statements. Reliability refers to the internal consistency exhibited
by the manifest indicators of each construct in Structural
Data Analysis Equation Modelling. Barclay and his colleagues (1994)
recommend that a measurement of the internal consistency
of the construct Cronbach’s alpha was calculated for all
All collected data were analysed and summarised in order
factors. Calculating the Cronbach’s alpha coefficients
to achieve the aim or objective of this thesis. Mainly SPSS
helps to know the internal consistency of items; it is
20.0 and AMOS 20.0 Graphics (SEM package) were used
done through IBM SPSS version 20. Almost all of the
first to prepare the data for analysis; secondly, to check
constructs produced a result between 0.74 and 0.90.
reliability/validity of measurement and to assess the
measurement model; and thirdly, to analyse the structural
model. Finally, using SEM the three proposed research Table 2: Cronbach’s Alpha of Constructs
hypotheses were tested according to the results from the
Constructs Number of Items Cronbach’s Alpha
structure equation model. Findings are described for each
Brand awareness 4 0.81
hypothesis.
Brand loyalty 4 0.90
Sales promotion 4 0.74
Results
Source: SPSS Data Output.

Normality, Reliability, and Validity Tests

Validity Test
Normality Test
Construct validity is used to ensure that the measure
A common rule-of-thumb test for normality is to run actually calculates what it is intended to measure (i.e., the
descriptive statistics to get skewness and kurtosis. Skew construct), and no other variables. Convergent validity,
should be within the +2 to −2 range when the data are according to Campbell and Fiske (1995), is when, in the
normally distributed. Kurtosis also should be within the presence of other scale items for other constructs, the scale
+2 to −2 range when the data are normally distributed items in a given construct move in the same direction (for
(Hair et al., 1998). reflective measures), and thus are highly correlated. This
differs from reliability in that tests of reliability include
Normality analysis for variables was conducted with only the scale items for a single construct and are not
SPSS 20.0. As a result, all three variables in this study compared to other constructs. The thresholds given by
were within +2 to −2 range. This means that they are Hair et al. (2010) are as follows: for reliability, composite
normally distributed. reliability (CR) > 0.7; for convergent validity, CR > AVE
 40 International Journal of Marketing and Business Communication Volume 10 Issue 1 February 2021

(average variance extracted) and AVE > 0.5. As a result, conducted using the most widely used estimation method,
all three variable constructs in this study show a good that is, “Maximum Likelihood Estimation Method”
level of convergent validity and composite reliability. (Anderson & Gerbing, 1988).

Table 3: Validity of Construct (CR, AVE) Confirmatory Factor Analysis (Measurement

Model Testing)
Constructs Composite Average Variance
Reliability (CR) Extracted (AVE)
Brand awareness 0.82 0.54
CFA is particularly useful for testing a measurement model
as it allows for correlated error of measurement (Hair et al.,
Brand loyalty 0.85 0.60
1998). AMOS 20.0 maximum likelihood method was used
Sales promotion 0.88 0.66
to examine each construct and its standardised loadings.
Source: SPSS Data Output.
Bollen (1989) suggested that standard loading and squared
multiple correlations between items and constructs should
Structural Equation Model (SEM) be used for measurement model testing. The analysis result
for this study indicated that all items, except awareness 1,
The study used structure equation modelling (SEM) to were loading highly on their corresponding constructs (p
validate the measurement model and to analyse the data. ≥ 0.05 in all cases), and the t-value of those items were
It consists of two models: “a measurement model greater than 2.0 (Segars & Grover, 1993). The analysis
(sometimes known as confirmatory factor analysis)”, of the squared multiple correlations demonstrated that
which specifies how latent variables or theoretical most of the items met the recommended criteria of 0.40
constructs are measured in terms of observed variables, (Taylor & Todd, 1995), except one item, which belongs
and “a structure model, which determines the direct and to the awareness construct with low individual standard
indirect associations among latent variables” (Hughes, loading; this was eliminated to improve the loadings of the
Price & Marrs, 1986; Schumaker & Lomaz, 1996; rest of the items. This means, overall, that the items
Hair, Anderson, Tatham & Black, 2010). Furthermore, shared substantial variance with their hypothesised
the proposed model analysis in the present study was constructs.
Table 4: Selected Fit Measures and Established Criteria

Type Name of GOF Abbrev. Acceptable Level Reference

Statistics
Chi-square Chi-square (with df, p) x2 (df, p*) p-value can be less than .05 (Hair et al., 2010, 666; Holmes-Smith 2010, 5, 7)
Absolute fit Normed chi-square x2/df Value between 1 and 5 (Bagozzi et al., 1991, as cited in Lewis et al.,
indices 2005; Hair et al. 2010, 668)
Root mean-square error of RMSEA Values < .08/.10 (Lewis et al. 2005; Hair et al. 2006, 748; Hair et
approximation al., 2010, 672)
Root mean-square re- RMR Values < .09 (Hair et al. 2010, 672)
sidual
Incremental CFI, Tucker Lewis index, CFI, TLI, IFI Values >= .92 (Hair et al. 2010, 672)
fit indices Incremental fit index

The Fit the Measurement Model.

Reported Value of Model Fit for the Measurement 0.90. We can see that except for Chi-square, RMSEA, and
Model for Sales Promotion, Brand Awareness, and TLC in awareness and loyalty, all other criteria met the
Brand Loyalty recommended values suggested. However, it was accepted
that x2 is not an appropriate criterion for a study that has a
Incremental fit indices which contain CFI, NFI, TLC, and large sample size (Browne, Cudeck & Marsh, 1994). This
IFI meet the recommended value which is greater than study had a large sample size (389 valid respondents). In
 The Effect of Sales Promotion on Brand Awareness and Brand Loyalty: Assessment of Walia Beer Brand ... 41
addition, AW1 shows a lower than accepted value (that is, suggested identifying such a variable as confounding,
below .5), relative to all others. In such circumstances, the and considered it for removal from the measurement
literature (Brown, 2006 and Hair, Black & Babin, 2010) model.
Table 5: Reported Value of Model Fit for the Measurement Model for Sales Promotion, Brand Awareness, and
Brand Loyalty

Chi-Square Absolute Fit Indices Incremental Fit Indices Goodness of Fit (GFI)
X2 (p-value) 4 (***) RMSEA .024 CFI .99 .994 Sales promotion
NFI .998
DF 2 RMR .01 IFI .99
X2/DF 2 TLI .992
X2 (p-value) 21(***) RMSEA . 10 CFI .94 .97 Brand awareness
NFI .94
DF 2 .029 IFI .94
X2/DF 10 RMR TLI .84
X2 (p-value) 36 RMSEA .024 CFI .951 .952 Brand loyalty
NFI .948
DF 2 IFI .951
X2/DF 18 RMR .046 TLI .852

Source: SPSS AMOS 20.0 Output.

Table 6: Parameter Estimate for the Measurement Model

Construct Items Standard Loadings Critical Ration Square Multiple Correlations

Brand Awareness Awareness 2 0.66 0.44
Awareness 3 0.90 10.24 0.82
Awareness 4 0.62 10.60 0.40
Brand Loyalty Loyalty 1 0.71 - 0.49
Loyalty 2 0.88 15.05 0.77
Loyalty 3 0.78 14.01 0.61
Loyalty 4 0.69 12.50 0.48
Sales Promotion Sales promotion 1 0.80 - 0.63
Sales promotion 2 0.90 19.58 0.81
Sales promotion 3 0.81 17.41 0.65
Sales promotion 4 0.73 15.39 0.54

Source: SPSS AMOS 20.0 Output.

Structural Model Testing The structural model of this study included all variables
from the measurement model since all of them had
Once the measurement model had been tested for significant factor loadings. It specified sales promotion
as an exogenous variable, and it was related to the
suitability, the estimation of the structural model
endogenous variables – brand awareness and brand loyalty.
followed. A measurement model is used for defining the
The construct and their hypothesised relations were tested
relationship between observed and unobserved variables, simultaneously. The model fit criteria used in testing the
whereas, a structure model is employed to examine the measurement model were employed to test the structural
relationship among latent variables in a proposed model model, and the goodness of its statistics indicated that the
(Byrne, 1998). structural model revealed a satisfactory fit.
 42 International Journal of Marketing and Business Communication Volume 10 Issue 1 February 2021

Fig.1:
Fig. 1: Proposed
Proposed Full
FullCFA
CFAMeasurement
MeasurementModel
Model

Reported Values of Model Fit for the Structural model which addresses the relationship between sales
Model promotion and the two brand dimensions, brand awareness
Reported values of Model Fit for the Structural and Model brand loyalty, and the relationship between brand
A chi-square(X2) 164 value with a degree of freedom of awareness and brand loyalty.
A chi-square(X2)
49 for the structure model was 164found
valueinwith
thisa degree of freedom of 49 for the structure model was found in
study. The The rule of 1.96 t-values was used as the critical value
P value of X2thiswas equal
study. The to 0.00, of
P value which
X2 wasdoes not to
equal meet
0.00, which does
(at the notsignificant
0.05 meet the criteria
levels).forAccording
a fit modelto this cutoff
the criteria for a fit model (p ≥ 0.05). However, this is value of thesize.
threeAll
hypothesis in this study,
(p ≥ 0.05). However, this is expected due to the large sample other fitness indices metall three were
expected due to the large sample size. All other fitness supported (p < 0.05) .The following section interprets the
the recommended
indices met the recommended values:
values: chi-square(X2)/DF
chi-square(X2)/DF= 3, NFI = 0.92, TLC = 0.92, CFI = 0.94, RMR =
results from the structural equation model and discusses
= 3, NFI = 0.92,
0.53, TLC = 0.92, CFI
and RMSEA = 0.94,
= 0.078. RMR = the
Therefore, 0.53,
structural model of this study showed an accepted
the hypotheses.
and RMSEAmodel = 0.078. Therefore, the structural model of
fitness level. The next step was to test the relationship between constructs included in the
this study showed an accepted model fitness level. The
next step wasstructural model.
to test the relationship between constructs Table 8: Relationship between Sales Promotion, and
included in the structural model. Brand Loyalty and Brand Awareness, and between
Table 7: Reported Values of Model Fit for the Structural
Brand Model
Awareness and Brand Loyalty

Table 7: ReportedChi-square
Values of Model Fit for theFit
Absolute Hypoth- FromFit ToGoodness
Incremental Standard Critical Results
Structural Model esis Coeffic- Ratio
Indices Indices of Fitient
Chi-Square Absolute Fit Incremental Goodness of H1 Sales Brand (GFI)
β = .109 CR = Accept the
Indices Fit Indices Fit (GFI) promo- aware- 2.51 alternative
X2 164 RMSEA .078 CFI .94 .93 tion ness hypothesis
(p-value)
X2 (p- 164 RMSEA .078 CFI
H2 Sales.94 Brand β = .303 CR = 5.9 Accept the
NFI .92
promo- loyalty alternative
DF 49 RMR value)
.053 IFI .94
NFI tion .92 .93 hypothesis
X2/DF 3 TLI .92
H3 Brand Brand β = .310 CR = Accept the
Source: SPSS AMOS 20.0 Output. aware- loyalty 4.64 alternative
ness hypothesis

Result of Hypothesis and Discussion Source: SPSS AMOS 20.0 Output.

This study examined three latent variables. The three H1: Sales promotion has a significant positive effect on
hypotheses of the study were tested by structural equation brand awareness in Walia beer.
 The Effect of Sales Promotion on Brand Awareness and Brand Loyalty: Assessment of Walia Beer Brand ... 43
Test of Hypothesis H1 relationships with customers. However, recent studies
indicated that sales promotion has an effect beyond
Hypothesis H1 was formulated to determine whether sales enhancing sales volume in the short run. In this study,
promotion has a significant effect on brand awareness we also confirmed that sales promotion has a positive
in Walia beer. As a result, in testing H1, the standard significant effect on awareness (S.C = .109 CR = 2.51)
coefficient estimate of brand awareness (S.C = .109 and and brand loyalty (S.C = .303, CR = 5.9). This is
C.R = 2.51) were positive. Brand awareness is significant consistent with the view that sales promotion can create
at p = 0.05. This finding is consistent with previous sufficient exposure to non-users and infrequent users of a
studies done by Lidwell (2003). As a result, hypothesis 1 product (Akhawalde et al., 2017). This exposure in turn
was supported. can create strong brand loyalty. In the brand resonance
model of Customer-Based Brand Equity (CBBE), the
H2: Sales promotion has a significant positive effect on foundation to create strong and active loyalty relationship
brand loyalty in Walia beer. with customers is awareness (Keller, 2001; Palazón-Vidal
and Delgado-Ballester, 2005; Raut, Brito & Pawar, 2020).
Test of Hypothesis H2 This study further confirmed the influence of brand
awareness on brand loyalty. Though awareness is central
Hypotheses H2 was formulated to determine whether to creating strong loyalty, practitioners and academia
sales promotion has a significant effect on brand loyalty did not recognise the awareness creation role of sales
in Walia beer. However, in this study, in testing H2, the promotion. Mass communication approach in general,
standard coefficient estimate of brand loyalty was S.C and advertising in particular, are widely recognised as
= .41 and C.R = 6.89. The significant level is in the a means of creating awareness (Clark, Doraszelski &
unacceptable range, that is, below 0.05. The result also Draganska, 2009). This study, therefore, sheds light on
showed that sales promotion was positively related to the positive contribution of sales promotion on brand
brand loyalty which is consistent with previous findings awareness.
(e.g. Palazón-Vidal and Delgado-Ballester, 2005). Hence,
the proposed relationships were supported. In addition to the benefits gained from sales promotion
programmes, consumers gain opportunities to investigate
H3: Brand awareness has a significant positive effect on new features and benefits within the product or services
brand loyalty. being promoted. This situation, on the other hand,
encourages repeat purchase and positive consumer
Test of Hypothesis H3 engagement, such as disseminating favourable word-
of-mouth (Westberg & Pope, 2012). The present study,
Hypothesis H3 was formulated to determine whether therefore, encourages future researchers to examine the
brand awareness has a significant effect on brand loyalty roles of sales promotion to build strong relationship with
in Walia beer. However, in this study, in testing H3, the customers and gain competitive advantage.
standard coefficient estimate of brand loyalty was S.C
= .310 and C.R = 4.64. The significant level is in the Conclusion and Recommendations
unacceptable range, that is, below 0.05. The result also
showed that brand awareness was positively related to As the analysis on structural model indicates, sales
brand loyalty. This finding is consistent with previous promotion has significantly affected brand awareness
studies done by (Akhawalde et al., 2017). As a result, and brand loyalty. Brand awareness is the first dimension
hypothesis 3 was supported. of brand equity, and in this study, Walia beer sales
promotion shows a positive relationship with brand
Discussion awareness. This shows that Walia beer sales promotion
attracts the consumer’s attention; Walia beer was retained
Sales promotion is widely recognised as a means of by consumers’ mind. Besides the sales promotion
generating immediate sales rather than creating lasting relationship with brand awareness, we also found out
 44 International Journal of Marketing and Business Communication Volume 10 Issue 1 February 2021

that brand loyalty has a positive relationship with sales model, the study confirmed the positive contribution
promotion. This indicates that sales promotion can create of awareness to brand loyalty. Hence, managers should
brand switching opportunity and active customer loyalty consider sales promotion as a means of providing rich
(Allender & Timothy, 2012). Brand loyalty has been customer experience and exposure in addition to the
considered the core dimension of brand equity because traditional mass communication approaches. Third,
the value of a brand to an organisation depends on the brand managers should exercise care in creating and
loyalty of customers which then can generate a profit. So, strengthening the link between sales promotion and brand
in creating brand loyalty, we can say that Walia beer sales equity through integrating sales promotion techniques
promotion is on a good path. with the effort of building a strong brand. In other words,
they should apply sales promotion such as extra products,
Based on the findings and the conclusion, the following premiums (t-shirts, caps, key holders, calendars, agendas,
recommendations were forwarded. and so on), and different contest prizes, towards creating
●● Walia brand management should concentrate their a strong brand through active consumer engagement and
efforts primarily on brand awareness and brand loy- exposure.
alty which if increased, will contribute positively to
Walia beer as is seen in the study. They have sev- Limitations of the Study
eral important strategic benefits to the firms such as
gaining high market share and new customers, sup- Although it is believed that this study will make several
porting brand extension, reducing marketing costs, significant and important contributions, its limitations
and strengthening the competitive threats. should be noted. Due to the problem statement, the thesis
●● Walia beer could do better to change the role of sales worked with only brand awareness and brand loyalty
promotion by reducing marketing costs (hanging on as a consumer-based brand equity, and therefore, only
to loyal customers is cheaper than charming poten- focusses on consumer-oriented sales promotion. The
tial new customers), trade leverage (loyal customers study only focusses on sales promotion; hence, other
represent a stable source of revenue for the distribu- promotional activities, like event sponsorship, public
tive trade), attracting new customers (current cus- relations and publicity, and word of mouth, which may
tomers can help boost name awareness and hence have a greater contribution, have not been considered. The
bring in new customers), and taking the time to re- questionnaires prepared are targeted only at consumers,
spond to competitive threats (loyal customers that which in the future can incorporate the organisation. The
are not quick to switch brands give a company more sample size could also be expanded to some other parts
time to respond to competitive threats). Thus, these of the country.
steps will help improve Walia’s existing and new
customers’ attitude towards sales promotion, and Areas for Future Research
finally contribute in creating strong brand loyalty.
●● This study only focusses on sales promotion, hence
Managerial Implication other promotional activities, like event sponsorship,
public relations and publicity, and word of mouth,
which may have a greater contribution, have not
The findings of this study have important implications.
been considered.
First, brand awareness and brand loyalty are significant
consumer-based equity dimensions. In this study, we have ●● This study used only one specific market, the beer
confirmed that sales promotion has a positive contribution market, to examine the theory; therefore, future
in creating awareness and loyalty. Hence, managers research has to make efforts to test the hypothesis
should design sales promotion programmes to strengthen using different and many product categories, which
awareness and brand loyalty beyond considering it as a represent a variety of markets.
means of generating immediate sales. Second, similar to ●● Given that Ethiopia is a country of many nation and
the argument of the Customer-Based Brand Equity (CBBE) nationalities with their own respective cultures, at-
 The Effect of Sales Promotion on Brand Awareness and Brand Loyalty: Assessment of Walia Beer Brand ... 45
titudes, and behaviour, the study focusses only on Bhattaherjee, A. (2012). Social science research:
the biggest and the capital city of Ethiopia, Addis Principle, methods, and practices. University of South
Ababa. This might not be enough to provide an in- Florida.
depth treatment of the research findings. Further Blattberg, R. C., & Neslin, S. A. (1989). Sales promotion:
studies may need to be conducted by incorporating The long and short of it. Marketing Letters, 1, 81-97.
different samples from the regional states. Bollen, K. A. (1989). Structure equations with latent
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