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A Marketing Research Proposal: Strategic Positioning for Kmart !!!!!CONFIDENTIAL !!!!!!!!!Prepared for: Kmart Prepared by: Jamie Huggins Class: IMC 611 !Kmart Marketing Research Proposal

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Table of Contents !I. Introduction………………………………………………………………………….3 II. Background……………………….…………………………………………………3 III. Positioning Issue & Research Objectives…..….………………..…………………3 IV. Methodology………………………………..……………………………………….4

Study Design & Data Collection Methods……………………………….4 Sample Plan……….……………………………………………………….4 Areas of Questioning………………………………………………………5 Focus Group Facility………………………………………………………5 Data Analysis………………………………………………………………5

V. Deliverables……………………………………………………………………….…6 VI. References…………………………………………………………………………..7

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Introduction !Sebastian S. Kresge, founder of Kmart, developed their early business model by offering consumers the low prices they sought after and giving them lifelong relationships that were built on trust. Consumers trusted that Kresge was listening to their concerns and meeting their evolving needs. Today, over 115 years later, Kmart has grown from a small “five and dime store” in Detroit to a massive global retailer (About Kmart, 2014). Kmart’s corporate mission still seeks to improve the lives of their customers “by providing quality services, products and solutions that earn their trust and build lifetime relationships" (Fairfan, 2014). However, as of late, Kmart has struggled greatly with fulfilling it. This is due to a variety of serious issues facing the company. The proposed research in this document seeks create strategic positioning for Kmart, while analyzing results in order to gather data to generate recommendations for marketing. !Background !Kmart is a global retailer with approximately 1,221 store locations across the United States, Guam, Puerto Rico, and the U.S. Virgin Islands, which bring in about $15 billion in revenue (Davies, 2014). They carry a variety of merchandise such as: electronics, seasonal merchandise, outdoor living, toys, lawn and garden, food, apparel, Kenmore products, and certain Sears brand products (About Kmart, 2014). Kmart is also known for its exclusive brands such as: Joe Boxer, Kardashian Kollection, Sandra by Sandra Lee, Land’s End, Jaclyn Smith, Sofia by Sofia Vergara, and Country Living (Our Brands, 2014). !Unfortunately, Kmart is also known for having problems. For example, for over a decade now, Kmart has suffered from financial difficulties. In 2002, Kmart filed for Chapter 11 Bankruptcy and had to close 283 of its stores, but it reemerged from bankruptcy in 2003 (Corporate History, 2014). In 2011, Sears Holdings announced that 100-120 of its stores would be closing (Schultz, 2012). The very next year, Kmart lost $132 million in its July quarter, resulting in the largest quarterly loss for the company in 9 years (Farzad, 2012). Last year brought even more financial loss to the company when Sears Holdings reported an expected annual loss of $914 million in 2013. In addition, Kmart’s current prices are not reflective of its bargain beginnings. In fact, its prices rank excessively higher than its competitors of Walmart and Target. For example, Kmart has been reported with having the highest prices, most limited store-wide selection, most empty shelves, and most disgruntled and unavailable employees (Conover, 2012). Finally, the perception is that Kmart has become lost in the “big box” retail market dominated by Target and Walmart. The company has a suffered greatly from a lack of clear target market and brand positioning (Schultz, 2012). !If Kmart seeks to achieve its mission, it must begin creating a strategic position for itself. It is imperative that Kmart defines its target market and defines its itself among the competition. Moreover, Kmart stores may have to be updated and the company may have to be rebranded. If these steps are not taken, or at least considered, Kmart will fail to meet ever growing demands from consumers, and ultimately, may fail as a company. !Positioning Issue & Research Objectives !The overall positioning issue of this study seeks to discover how Kmart should change and/or adapt its current marketing strategy to create a more defined competitive strategic position. !Key objectives include: !• Over the course of 6 months, define Kmart’s target market by determining if the company could improve its

market position by targeting a broad, multicultural, minority market made up of Hispanics, African Americans, and Asians/Pacific Islanders. This can be accomplished by assessing Kmart’s current

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customer base for common characteristics and interests and analyzing current products and brands for additional target market opportunities. !

• Over the course of 6 months, define Kmart's competitive identity among Walmart and Target to increase revenue and traffic by distinguishing its brand pricing position to consumers' whose income falls between $30,000 and $50,000. !

• Over the course of 6 months, determine if Kmart stores need to be updated to increase revenue by using different forms of market research and analysis to discover if the majority of consumers avoid shopping at Kmart stores because they are outdated and not adequately stocked. !

• Over the course of 6 months, determine if the name “Kmart” needs to be rebranded in order to increase positive brand awareness and revenue by analyzing how consumers would respond to a new name change through the use of focus groups. !

Methodology !Study Design & Data Collection Methods !Qualitative !Focus groups will be used to gather qualitative data. Focus group moderators will lead group sessions made up of 8 to 12 members that will last around anywhere from 60 to 120 minutes. Focus groups will continue to be conduction until the point of saturation, or there is no repetition of themes and no new information is shared (Barnet, 2002). Respondents will be screened based on age, ethnicity, income, and location. !• Ethnic Minorities: Hispanics, African Americans, Asians/Pacific Islanders • Age: 21-45 (Millennials and Generation Xers) • Income: $30,000-$55,000 • Locations: New York City, Los Angeles, and Chicago !Quantitative !A questionnaire would be used to gather quantitative data. It will be conducted using a non-blind Internet survey among 900 respondents across 3 multicultural metropolitan areas in the United States. Respondents also will be screened based on age, ethnicity, income, and location. !• Ethnic Minorities: Hispanics, African Americans, Asians/Pacific Islanders • Age: 21-45 (Millennials and Generation Xers) • Income: $30,000-$55,000 • Locations: New York City, Los Angeles, and Chicago !Sample Plan !• Sample Units: Individual Consumers • Sampling Frame: Kmart Intranet Customer Bases and Experian Insight Data • Sampling Method: Stratified Random Sampling • Sample Size and Sample Error:

• Confidence Level: 95% • Population Size: 900 (total quota for all 3 cities) • Proportion: 0.5

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• Confidence Interval: 0.04630 (Upper: 0.54630; Lower: 0.45370) • Standard Error: 0.02362 • Relative Standard Error: 4.72 • Sample Size: 300 !

Areas of Questioning !Qualitative !Tentative topics for Kmart’s focus groups could include the following: !• Attitudes towards a possible re-branding • General attitudes towards Kmart and its competition • Attitudes towards Kmart stores - future and current concepts Quantitative !Tentative survey topics for Kmart’s questionnaire could include the following: !• Previous and current Kmart shopping history • Overall rating and ranking of Kmart store facilities • Design of current Kmart store layouts: ease of movement, visual appeal, convenience, etc. • Quality and appeal of Kmart merchandise !Focus Group Facility !Delve Focus Group Facility• Delve Focus Group facility will conduct Kmart’s focus groups. Kmart will have the use of various locations

near its headquarters and abroad near its focus group studies in New York City, Chicago, and Los Angeles. These strategic locations will offer Kmart both the geographic and demographic diversity it needs to help combat and help solve it research objectives. Since Delve was recently ranked as one of the best market research data companies in America, it will have the proven resources to give Kmart the concrete focus group results it needs to move forward. !

Data Analysis !Qualitative!Concept testing • Concept testing will be implemented in order to measure the future results of rebranding, store layouts

updates, and Kmart’s identity placement. The overall reaction of the respondents’, their likes & dislikes, and each concept’s believability will be looked at. !

Instant Analysis• Instant analysis (or a moderator debriefing) will take place after the final focus group session is completed.

This will give Kmart an opportunity “to hear and react to the moderator’s initial perceptions, and it harnesses the heightened awareness and excitement of the moment to generate new ideas and implications in a brainstorming environment” (McDaniel & Gates, 2013, p.89). !

Focus Group Report • A formal focus group report will also be created. It will be given in the form of a Powerpoint presentation.

The written report will be a copy of the Powerpoint slides (McDaniel & Gates, 2013, p.89).

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!Quantitative!Inferential Analysis - ANOVA• Kmart will use ANOVA for inferential analysis to look at if store perceptions differ based on ethnicity.

“Fundamentally, ANOVA (analysis of variance) is an investigation of the differences between the group means to ascertain whether sampling errors or true population differences explain their failure to be equal” (Burns & Bush, 2013, p.17). This is important for Kmart because, perhaps, Asian/Pacific Islanders are unhappy with the current store layout, but maybe African Americans and Hispanics are happy with it. Asian/Pacific Islanders only make up 4.8% of Kmart’s customer base, while Hispanics make up 15.2% and African Americans make up 15.4% (Multicultural Intiatives, 2014). Changing the store layout just to appease Asian/Pacific Islanders would not be necessary, because they do not make up the majority of Kmart multicultural shoppers. !

Associative Analysis - Cross Tabulations• Kmart will use cross tabulations to see if age is related to store perception. “Cross tabulations are

examination of the responses to one question relative to the responses to one or more other questions” (McDaniel & Gates, 2013, p. 337). For example, Kmart can look at responses to age-related questions on the questionnaire and compare those to store layout and store facilities questions. They should be able to see a positive or negative relationship emerge - i.e. older consumers are satisfied with the current store layout. !

Predictive Analysis - Multiple Regression• Kmart will use multiple regression to help predict consumers’ purchase intent at their stores. “Multiple

regression is a type of analysis that allows researchers to develop predictive models to explain some behavior, or dependent variable.” Kmart can develop an “interval level scale that measures intent to purchase on a 10-point scale.” In addition, Kmart has already measured other variables such as: income, age, etc. “The independent variables would be used to try and predict purchase intent” - i.e. purchase intent based on income” (Holt, 2014). !

Deliverables !The following services would be provided to Kmart: • In conjunction with Kmart management and Delve Focus Group Facility, develop focus group topics and

administer focus groups sessions • In conjunction with Kmart management, develop the questionnaire • Generate samples within the target locations of: New York City, Chicago, and Los Angeles • Program the survey • Manage and administer the survey • Monitor and oversee all online surveys and focus group sessions • Process qualitative data, hold instant analysis, and create a focus group report • Process quantitative data and administer ANOVA, cross-tabulations, and multiple regression • Prepare a presentation style report - if desired (McDaniel & Gates, 2012, p.60)

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References !About Kmart. (2014). Sears Holdings Newsroom - About Kmart. Retrieved May 7, 2014, from http:// ! searsmedia.com/kmart/kmart.htm !Barnet, J. (2002). Focus Group Tips for Beginners. TCALL. Retrieved May 9, 2014, from http://www- ! tcall.tamu.edu/orp/orp1.htm !Burns, A. C., & Bush, R. F. (2003). Marketing Research: Online Research Applications (4th ed., p.17). Upper ! Saddle River, N.J.: Prentice Hall. !Conover, R. (2012, November 8). Walmart, Target, Kmart: Who's Cheapest? Yahoo Shine. Retrieved ! May 7, 2014, from http://shine.yahoo.com/work-money/target-walmart-kmart-50-one-aged- ! best-161700313.html !Corporate History. (2014). Sears Holdings. Retrieved May 7, 2014, from http://www.searsholdings.com/ ! about/kmart/history.htm !Fairfan, B. (2014). Kmart Mission Statement - Unique In Its Own Vision, Aligned With Its Parent. ! About.com Retail Industry. Retrieved May 7, 2014, from http:retailindustry.about.com/od/ ! retailbestpractices/ig/Company-Mission-Statements/Kmart-Mission-Statement.htm !Farzad, R. (2012, November 14). Attention, Kmart Shoppers: Flat-Line Special. Bloomberg Businessweek. ! Retrieved May 7, 2014, from http://www.businessweek.com/articles/2012-11-14/attention- ! kmart-shoppers-flatline-special !Holt, J. (2014, March 10). Lesson 8: Data Processing & Statistical Analysis. IMC 611. Retrieved April 30, 2014, from https://ecampus.wvu.edu/ !McDaniel, C. D., & Gates, R. H. (2013). The Role of Marketing Research in Management Decision ! Making. Marketing Research Essentials (8th ed., p. 60; 89; 337). Hoboken, N.J.: Wiley !Multicultural Initiatives. (2014). Sears Holdings. Retrieved April 5, 2014, from http://www.searsholdings.com/ ! about/kmart/multicultural.htm !Our Brands. (2014). Sears Holdings. Retrieved May 7, 2014, from http://www.searsholdings.com/about/

brands.htm

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Schultz, E.J. (2012, March 19). Why Kmart Lost the Attention of Discount Shoppers. Advertising Age.

Retrieved May 7, 2014, from http://adage.com/article/news/kmart-lost-attention-discount-shoppers/

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Kmart Marketing Research Proposal