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Group 2C - Marshalls DMD Assignment

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Group 2C - Marshalls DMD Assignment Powered By Docstoc
					    F.W. OLIN GRADUATE SCHOOL OF BUSINESS




MARKET SEGMENTATION
     EXCERCISE
                  DMD
             PROF. DAVE KOPCSO




                                              Kelly Lannan

                                                    Tam Le

                                             Raghav Gupta

                                             Philip Scuderi

                                               Kylie Tjoeng

                                            Carlos Yoshikay




             SECTION 2 GROUP C

                    2011
                                MARKET SEGMENTATION EXCERCISE


                                             MARSHALLS


QUESTION 1

Given the initial variables, the following hypotheses were formed with relation to customer shopping
frequency at Marshalls:



                    Variable                            Hypothesis and Rationale
                    Sale_Con             People who shop for products on sale will be frequent
                                          shoppers due to the discounted products on offer at
                                                                 Marshalls
                    Privat_L             People who are looking for private (store’s own brand)
                                     labels, will be less frequent Marshalls shoppers as the store
                                                       does not stock its own brand
                   One_Qual          People who are looking to purchase one quality item rather
                                     than several of lower price and quality, will be less frequent
                                            shoppers as the store promotes discounted prices
                    Life_Fsh              People who value fashion highly will be less frequent
                                          shoppers because store stock is typically the result of
                                      retailers over-ordering or designers over-producing, rather
                                                  than buying based on fashion trends*
                    Sls_Knlg               People who value good customer service and sales
                                       knowledge will be less frequent shoppers at Marshalls, as
                                       their strategy is to promote discounted prices rather than
                                                        good customer experience
                    Size_Ang          People who are looking for a specific size, are less frequent
                                         shoppers as store stock is determined by making “last-
                                        minute deals” with vendors rather than buying based on
                                                          customer preferences*
                       Age           Older women will be less frequent shoppers, as the range of
                                        products Marshalls offers may not suit their preferences
                     M_Stat           Marital status will not be an indicator for frequency, as the
                                     products offered by Marshalls are not determined according
                                                           to relationship status
                     Income                People with lower household incomes will be more
                                     frequent shoppers Marshalls due to the large discount they
                                                          offer on their products




SECTION 2 GROUP C                                                                                 Page 1
*http://www1.marshallsonline.com/tjx/about-us.asp
                                 MARKET SEGMENTATION EXCERCISE

QUESTION 2

Our analysis revealed the variables On Sale, Quality, Fashion, Sales Knowledge and Size were
significantly related to customer frequency of shopping at Marshalls. These variables demonstrated a p-
value less than our 5% significance level (α). An interpretation of the results with comparison to our
predictions is provided:



On Sale Variable Analysis:

                             “Almost everything I buy for myself, I buy on sale”

   Original Counts                  1               2             3                4      Total
   Disagree                       157              59           29                 24      269
   Agree                          320              189          94                 128     731
   Total                          477              248          123                152    1000

                                    Chi-Square Statistic
                                    Chi-Square                35.9108
                                    p-Value                    0.0018

The Chi-Square analysis revealed:

    1. The p-value is lower than the significance level (5%), therefore indicating that there is a
       significant relationship between the on sale status of a product and the customer frequency at
       Marshalls
    2. There are more women who agree with the statement (731) than those who disagree with the
       statement (269)
    3. Of the women who agree, 320 hardly ever shop at Marshalls. This is in comparison to 128 who
       agree and are frequent shoppers, i.e. the majority of women agree with the statement and
       hardly shop at Marshalls
    4. A similar trend is illustrated for women who disagree, however there are fewer women in total
       (157 non-frequent and 24 frequent disagreeing customers)
    5. Our hypothesis is not supported because although at each frequency level, there are more
       women who agree with the statement than disagree, there are more women who agree with
       the statement, hardly ever shop at Marshalls


Quality Variable Analysis:

   “For the same amount of money, I will generally buy one good item than several of lower price and
                                               quality”




SECTION 2 GROUP C                                                                                 Page 2
*http://www1.marshallsonline.com/tjx/about-us.asp
                                  MARKET SEGMENTATION EXCERCISE

   Original Counts                  1               2              3              4          Total
   Disagree                        151             78            43              29           301
   Agree                           326             170           80              123          699
   Total                           477             248           123             152         1000

                                    Chi-Square Statistic
                                    Chi-Square                 30.6309
                                    p-Value                     0.0098

Outcome of the analysis:

    1. The p-value of 0.9% infers there is a significant relationship between the customer frequency
       and buying one good quality item instead of several lower quality ones
    2. There are more women who want one quality item than several lower price and quality items
    3. Regardless of frequency, there are more women who prefer purchasing one quality item rather
       than several of lower price and quality
    4. Of the total number of frequent buyers, the women who disagree with the statement is less
       significant (19%), than those non-frequent women who disagree (31.7%)
    5. The hypothesis is supported because of the women who agree with the statement, there are
       more non-frequent customers than frequent customers


Fashion Variable:

                     “An important part of my life and activities is dressing fashionably”

   Original Counts                  1               2              3              4          Total
   Disagree                        243             126           64              51           484
   Agree                           234             122           59              101          516
   Total                           477             248           123             152         1000

                                    Chi-Square Statistic
                                    Chi-Square                 37.5672
                                    p-Value                     0.0010

The results demonstrate:

    1. There is a relationship between the customer frequency at Marshalls and women who value
       fashion, with a p-value of 0.1%
    2. Of the frequent shoppers, more women agree with the statement
    3. Of the non-frequent shoppers, the number of women who agree with the statement is similar to
       the number of women who disagree with the statement
    4. The hypothesis is supported because there are more non-frequent customers (234 women) that
       agree with the statement than frequent customers (101 women)




SECTION 2 GROUP C                                                                                    Page 3
*http://www1.marshallsonline.com/tjx/about-us.asp
                                 MARKET SEGMENTATION EXCERCISE

Sales Knowledge Variable Analysis

“It is very important to me that sales people have good knowledge about clothing styles, colors, fabrics,
                                                  etc.”



   Original Counts                1                 2           3              4            Total
   Disagree                      232             113          71              82             498
   Agree                         245             135          52              70             502
   Total                         477             248          123             152           1000

                                  Chi-Square Statistic
                                  Chi-Square                32.0333
                                  p-Value                    0.0064

The results indicate:

    1. There is a significant relationship between Sales Knowledge and customer frequency
    2. The number of women who never/hardly shop at Marshalls and agree with the statement (245
       women) is approximately the same as the women who do not agree with the statement (232
       women)
    3. A similar trend is observed for those frequent shoppers; however, there are fewer frequent
       shoppers than non-frequent shoppers
    4. Our hypothesis is not supported by the data because it shows that Sales Knowledge is valuable
       to both frequent and non-frequent customers


Size Variable Analysis

                  “What size range do you most often purchase in clothing for yourself?”

   Original Counts                1                 2           3              4            Total
   Petite                        64              30           25              20             139
   Junior                        31              15            8              14             68
   Misses size 8 or less         87              38           11              25             161
   Misses size 10 - 14           176             109          56              75             416
   Plus size or larger           119             56           23              18             216
   Total                         477             248          123             152           1000

                                  Chi-Square Statistic
                                  Chi-Square                26.6077
                                  p-Value                    0.0088




SECTION 2 GROUP C                                                                                   Page 4
*http://www1.marshallsonline.com/tjx/about-us.asp
                                MARKET SEGMENTATION EXCERCISE

It can be concluded that:

    1. The p-value is less than alpha (5%), therefore we reject the null hypothesis, and conclude that
       there is a relationship between the variables
    2. The largest market is Misses size 10 -14 (416 women)
    3. Non-frequent buyers in Marshalls look for Size 10-14 and Plus size or larger
    4. Frequent buyers’ predominant shopping size is “Misses size 8 or less” and “Misses size 10-14”
    5. Our hypothesis is supported because those customers looking for a specific size are less
       frequent shoppers



QUESTION 3

We determined our frequent shopper to be a woman who shops 5 or more times per year at Marshalls.
Our frequent customers could be described as women who value quality items and fashionable
products, but mostly value purchasing products on sale.

In order to attract these frequent buyers, we should adopt the following strategies:

       Given that our frequent customers are price sensitive (are attracted to items on sale) we should
        create a loyalty program giving them an extra discount for frequent purchases
       We will also implement a “Hold” program to guarantee our frequent customers that their size
        will be available when they come into the store – this can be done through an online program
       Since Marshalls is not perceived as a high quality store, we should try to promote quality of our
        products by advertising the brand-names we offer
       We should place more emphasis on buying and selling items that appeal specifically to customer
        preferences, in particular targeting those customers that value fashion
       We will create an advertising plan that will target the following points:
        o Change our current image/customer perception of Marshalls from a low quality discount
             store to a high quality store that delivers what the customer wants, promoting top
             customer service
        o Refurbish shops to create a new image, moving away from the “outlet” store appearance
        o Promote new programs for loyalty, especially for new customers
        o Customer Value Proposition – Provide top-quality customer service in store, offer products
             that suit the customer needs and preferences, and promote the bargains women get when
             they shop at Marshalls - “Never pay full price for fabulous”*




SECTION 2 GROUP C                                                                                Page 5
*http://www1.marshallsonline.com/tjx/about-us.asp
                                MARKET SEGMENTATION EXCERCISE

Non-Frequent Customers vs. Regular and Frequent Customers

The analysis revealed a general trend that the total number of non-frequent shoppers was greater than
the number of customers who shopped 1-2 times per year, 3-4 times per year and 5 times or more times
per year. This was seen with all of the variables - On Sale, Quality, Fashion, Sales Knowledge and Size.

For On Sale and Quality, the number of non-frequent shoppers who agreed with the relevant
statements was similar to the number who disagreed with the statement. However, for the frequent
customers, the number of women who agreed with the statement was greater than the number that
disagreed with the statement.

For Fashion and Sales Knowledge, the number of non-frequent shoppers who disagreed with the
statement was similar to those who agreed. As frequency increased, the number of women who agreed
and disagreed with the statement decreased.

Regardless of Size category, the majority of the women were non-frequent shoppers. Our frequent
shopper is the Misses size 10 -14. However, that is only 18% of the total in that size range.



Comparisons with Competitors

We also compared Kohl’s to Marshalls to gain additional insight from the data of our competitor. In
certain variables, a significant relationship exists between Marshalls and not in Kohl’s. There were also
significant relationships between variables and Kohl’s that were not found in Marshalls.

These variables were significant for frequency shopping at Marshalls, but not Kohl’s:

       Fashion
       Sales Knowledge

Based on the p-values, it was determined that these variables were significant for frequency shopping
at Kohl’s, but not for Marshalls:

       Age
       Marital Status
       Income

Based on these results, it may be inferred that because Kohl’s is slightly more ‘high-end’ than Marshalls,
level of household income affects shopping frequency at Kohl’s. However, as Marshalls is a highly-
discounted store (up to 60%)*, household income does not impact on the shopping frequency of
customers. Further investigation into the variables affecting shopper frequency at Kohl’s will provide
valuable insight into how to attract new customers at Marshalls.




SECTION 2 GROUP C                                                                                 Page 6
*http://www1.marshallsonline.com/tjx/about-us.asp

				
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