Marketing research methods and applications

Market Research Final

Assuming that a personal interview is being conducted, what is the target population for this study? What sampling frame can you use? What sampling technique do you recommend for this study? Why? What nonresponse issues must be considered and how can they be overcome?

The primary respondent base of the survey needs to be existing Gucci customers first, and higher-end luxury goods purchasers second. The strategic goal of increasing Gucci loyalty by providing them with catalogs as a means to shop and buy more conveniently is the intent of the investment in this new marketing and selling channel. Secondly, purchasers of luxury goods from Burberry, LVMH (Louis Vutton), and Harrods' also need to form the basis of the stratified sampling frame. Instead of just focusing on Gucci customers, the catalogs need to be also aimed at competitor's customers as well. Segmenting the sampling frame by customers by competitor would also create the opportunity of understanding what about the Gucci brand, products, services or retail purchasing experience did or did not appeal to them. Using competitor's customers as the basis of each sampling frame, the sampling technique used would be simple random sampling (SRS) to ensure a high level of representativeness of the population. This would also provide for complete anonymity of the respondents by competitor's customer base.

Nonresponse issues could be overcome through the use of small cash incentives ($25) or gift cards of the store of the respondent's choice. It is imperative that the interviewing company be seen as highly credible by the respondent, not associated with Gucci so as to alleviate sampling error.

2. Run descriptive statistics and obtain frequency distributions for all variables. Interpret the results.

Interpreting the results of frequency distribution analysis delivers several significant insights into why Gucci catalogs have not been as successful as hoped. First, and most seriously, respondents see the Gucci brand is being borderline mediocre based on the results of the attitudinal questions asked. Most indicative of this perception is the response to the question; Gucci is Top Quality which on a seven point Likert scale scored just median value of 3, which would equate with "OK." Additional analysis of the frequency distributions of attitudinal variables also shows that Gucci actually has a much larger and potentially serious problem on their hands. Their brand is being seen as increasingly not as premium as intended. These findings point to the need for more thorough brand research to understand why the Gucci brand is degrading in terms of its perceived importance and value to this population of respondents.

Paradoxically however the respondent population is perfectly aligned with Gucci's core branding strategies. The majority earn over $100,000 per year with one third (29.6% having a college degree or higher with the majority living in the Midwest U.S. (54%) where costs of living are significantly below either coast. The majority are female (81%) and the median age of the respondents is 52 yet 32% of all respondents are in the 25-40 age group. These older, predominantly women respondents only see the catalog aligning with the Gucci image 52% of the time. 58% have never purchased from a Gucci catalog yet 25% receive catalogs from Gucci competitors as well. In addition to the broader branding challenge mentioned earlier in this analysis, Gucci's catalog is seen more as entertainment or wish-list shopping and less for actual purchasing. This attitude on the part of respondents is also reflected in how they perceive the value of games. The bottom line is that the majority of respondents (58%) strongly agree with the statement that they buy from a catalog with a game, and further state that 76% of catalogs received have games associated with them. While 40% see games as fashionable and adding to the image of the magazine (38%), the majority of respondents (55.2%) say games should offer savings. Just as with the broader brand issues however, Gucci has yet to make the games exciting enough, as 35% of respondents see games as primarily dull. Catalog shoppers are looking for exciting games that save them significant amount of money, with 30% of respondents strongly agreeing with this value statement. In summary, Gucci has a deteriorating brand, and while the catalogs are read by women the majority of the time from upper income brackets, in areas of the country where disposal incomes tend to be higher, they have yet to be successful with this strategy. Factors include the lack of excitement, lack of savings online or in the catalog, and the perception of the catalog as a means of entertainment rather than shopping and buying.

3. Determine if the catalogs received (q1, q2), have promotional games (q3), playing promotional games (q4), awareness of Gucci (q8), receiving Gucci catalogs (q9), looking through Gucci catalogs (q10), and purchasing from a Gucci catalog (q11) are related to any of the demographic variables (q20 to q26). Interpret the results, provide marketing implications. Please note that you may have to recode the variables in order to obtain interpretable results.

From the SPSS analysis completed using cross-tabulation and grouping of variables it's evident that there is significant room for improvement in the execution of the catalog game strategy. First, Gucci is not supporting the purchasing process it hopes to nurture through the use of its online catalogs. The execution of the purchasing process it is attempting to nurture and foster is in fact highly sporadic. To begin with, while there is high brand awareness, yet Gucci has been unsuccessful translating this awareness to action and purchasing. There are many reasons for this yet the analysis points to the fact that Gucci is missing wide segments of potential catalog customers by a lack of consistent execution across the U.S. While Gucci catalogs generate awareness and are often used as a form of entertainment, they rarely lead to sales.

The lack of closure in the execution strategy is only partially explained by the lack of exciting games. it's the fact that Gucci has fallen into the perceptual trap of sending catalogs to one of the most aspirational of demographic segments, 25- to 40-year-old women with high school educations, many of them with two or more children at home (family size median value is 4) predominantly in the Midwest U.S.. Gucci then has become an aspirational brand for them.

The lack of strategy execution consistency is also seen in the geographic and income-based analysis of actual purchasers from Gucci catalogs. With just over 80% of purchasing customers from the Midwest U.S., Gucci had only 10% of their catalog sales from the Western U.S. And 11% from the Southeastern U.S.. There wasn't a single Northeast U.S. customer or Non-U.S. customer in the sample. Not addressing one of the large segments of the U.S. population, and not selling into non-U.S. markets including Asia, where Harrods' has made significant e-commerce investments including an Asian-dedicated site hosted from London, illustrates how much room there is for improvement in the execution of the Gucci catalog strategy. When compared to income by region, there is not a single customer in the sample who earned $150,000 or more across all regions. Instead Gucci is excelling as an aspirational brand for working women with small families with combined incomes in the $30,000 - $50,000 and $50,000 to $90,000 income brackets. Taking into account the factors Gucci relies on to further support its purchasing process, the entire series of actions they intend for customers to take is significantly breaking down even with the use of promotional games. Based on this analysis it is clear that using the 900 number-based approach will drive away many of the lower-end of the aspirational shopper segment, as the $5 for the catalog is defensible in a dual income family. Paying for 900 number calls is not however. Clearly with the majority of its catalog readership being aspirational, the 900 number strategies are not going to further drive the purchasing process. Offering a percentage off the price of merchandise for finding lucky numbers in the catalog is not enough either; there needs to be the opportunity to win actual merchandise. The majority of the aspirational segment looks at the Gucci catalog as entertainment yet few purchase. To drive up the profitability of the catalog, Gucci marketing must induce customers to actually buy something through the use of more innovative give-aways and the change to win a shopping spree online. The fact that the majority of this aspirational segment (26-40) grew up text messaging and using the Internet also shows how far afield Gucci is in its execution. The catalog needs to be integrated to all their e-commerce initiatives and strengthened with the opportunity to win actual merchandise. In addition, the lack of e-commerce integration is a contributing factor to the weakness of catalog subscriptions in non-Us areas as well. To alleviate this aspect of their lack of execution, Gucci needs to define a more effective multi-channel approach that incorporates their website and the catalog together. Finally there is the systemic issue of how Gucci is lacking the ability to sell into the highest income segment globally. This is where the fundamental disconnect is in the purchasing process and why despite the heavy investments in catalogs and games the company is still struggling. It is not reaching the most profitable customers on a consistent basis.

4. Using the appropriate t-test, determine if those who purchased from Gucci and those who did not (q11), are different in terms of a. Their evaluations of catalogs (q7_a - q7_f), b. Their perceptions of Gucci (q12_a - q12_d), and c. Their evaluations of the demonstration catalog (q13_a - q13_f)?

Interpret the results, provide marketing implications.