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CASE STUDY. Read the scenario below and then answer each of the questions that follow.
INTS FOR DOING THIS CASE
1) Be thorough in your answers. Make sure you are fully explaining what you mean to say.
2) Don’t try to pad your answers with ideas copied from the textbook or the web. Please use original thinking on this case study, not what textbook authors said or think. Please no internet sources.
3) Double-check your terminology. If you’re not sure you’re using the right term for something, take the time to look it up and ensure that you are.
4) Proofread your answers. Every answer should reflect a professional quality of care.
1) Be thorough in your answers. Make sure you are fully explaining what you mean to say.
2) Don’t try to pad your answers with ideas copied from the textbook or the web. Please use original thinking on this case study, not what textbook authors said or think. Please no internet sources.
3) Double-check your terminology. If you’re not sure you’re using the right term for something, take the time to look it up and ensure that you are.
4) Proofread your answers. Every answer should reflect a professional quality of care.
BACKGROUND: La Mer Stores, Inc. is a retail organization that operates La Mer department stores across the United States. Much like Macy’s, JC Penney, Sears and Dillard’s, La Mer stores tend to be found as “anchors” in malls, offering a product mix that is approximately 45% clothing and shoes, 10% health and beauty items, 10% household appliances, 30% household goods and 5% miscellany (such as jewelry, watches and gift items as well as an optical department for eyeglasses).
La Mer was founded in the 1960s in Corpus Christi, Texas and spread rapidly throughout the South and Midwest during the 1970s and 80s. In the 1990s, La Mer acquired several smaller rivals to establish itself on the East Coast and the Pacific Northwest. Currently, it has stores in 36 states, with an employee base of around 25,000 retail employees and around 3,000 support staff at its Central Headquarters in Texas and its various regional offices throughout the United States.
La Mer offers a mixture of private label brands and national brands in its stores, and it is best known for its Lone Star State line of blue jeans and apparel, which feature an iconic star logo with red, white and blue bars going through it. La Mer also hosts frequent “Midnight Madness” sales and other events where its customers can shop for deep discounts throughout the year. All of its sales are aggressively marketed through several media channels,, and registered customers are frequently mailed coupons and fliers to ensure they’re aware of these events.
La Mer was founded in the 1960s in Corpus Christi, Texas and spread rapidly throughout the South and Midwest during the 1970s and 80s. In the 1990s, La Mer acquired several smaller rivals to establish itself on the East Coast and the Pacific Northwest. Currently, it has stores in 36 states, with an employee base of around 25,000 retail employees and around 3,000 support staff at its Central Headquarters in Texas and its various regional offices throughout the United States.
La Mer offers a mixture of private label brands and national brands in its stores, and it is best known for its Lone Star State line of blue jeans and apparel, which feature an iconic star logo with red, white and blue bars going through it. La Mer also hosts frequent “Midnight Madness” sales and other events where its customers can shop for deep discounts throughout the year. All of its sales are aggressively marketed through several media channels,, and registered customers are frequently mailed coupons and fliers to ensure they’re aware of these events.
La Mer also offers a store-branded American Express credit card that doubles as a customer loyalty card. Whenever a customer makes a purchase, she or he earns points towards gift cards that are mailed out once they’re earned. Typically, once a customer charges $2,500 on the card at any retailer, or $1,000 at La Mer, he or she is mailed a $25 gift card once the billing cycle ends. This provides a powerful incentive to customers to take advantage of sales since they can earn La Mer gift cards so easily for their purchases.
One other area where La Mer stands out is in its strong commitment to family values. Up until 1983, the store was closed on Sundays so that employees could spend time with their families, and even 30 years later, the store is only open from 12:00 PM – 6:00 PM on Sundays and ensures that all of its sale events are held on other days. La Mer has a number of employee programs and benefits to provide full-time employees with health care, retirement savings plans, continuing adult education credits and tuition assistance for their children. La Mer has also always been committed to being closed on Thanksgiving and Christmas Day.
SCENARIO: Every year, there is more and more competitive pressure for La Mer to open as early as possible on the day after Thanksgiving, which is often known as “Black Friday,” one of the busiest shopping days of the year in the United States. The day is referred to as “Black Friday” because it is often when retailers find themselves transitioning from being in “the red” to “the black” on their balance sheets due to the high volume of sales and the high sell-through of aging inventory. Black Friday is thus considered to be one of the most important milestones in the retail calendar during the fiscal year.
Over the last 20 years, La Mer has set its opening time at 6:00 AM. In 1993 when this policy began, La Mer was at the forefront of the early bird sales. Now, it is lagging behind as many retailers have begun opening as early as midnight, and La Mer has seen its Black Friday early bird traffic decline as a result. From 2010-2012, La Mer has seen same store comparable sales for Black Friday drop consistently year-to-year in most of its locations.
Recent studies from the National Retail Federation have also shown that an increasing proportion of consumers are starting their Black Friday shopping during the Doorbuster and Early Bird events that often begin at midnight. Those who start early on Black Friday tend to end early as well – consumers who begin shopping at midnight are often ready to head home between 3 and 5 AM. This means that these consumers are unlikely to head to stores that open at 6 AM unless they are specifically interested in that store’s sales.
To further complicate matters, Macy’s, which is one of La Mer’s largest and best-known competitors, has just announced that it will be opening at 8:00 PM on Thanksgiving Day this year – a move that other competitors are likely to replicate. La Mer’s management is concerned that if La Mer does not follow suit by either opening at midnight on Black Friday or at 8 PM on Thanksgiving Day, it will see a further decline in sales.
La Mer doesn’t have much time to make a decision – management must have a decision made as soon as possible to ensure that stores will be properly staffed for an early opening. The decision must also be approved by the Board of Directors (who meet on November 11th) since full-time employees will expect extra compensation if they are required to work on a national holiday, which could require an additional $1-3 million in payroll for what amounts to a few hours’ extra work.
Paul Clark, the Chief Marketing Officer (CMO) for La Mer, knows that the La Mer Board of Directors will need more than a fear appeal or the promise of an opportunity to act – they will want to see research conducted with La Mer’s customers demanding that the store open earlier. Much of the board is made up of former employees who worked for the company during a different time and who are under the delusion that La Mer’s customers in 2013 are as brand loyal as those who shopped at La Mer in the 1970s and 80s. Paul Clark knows that consumer research has shown quite the opposite (the average consumer in 2013 is much more likely to go to the retailer offering the lowest prices), and he is certain that if marketing research can show that there is sufficient demand to open the store at either 8 PM on Thanksgiving Day or at midnight on Black Friday, the board will have no choice but to go along with management’s recommendation to open early.
One other area where La Mer stands out is in its strong commitment to family values. Up until 1983, the store was closed on Sundays so that employees could spend time with their families, and even 30 years later, the store is only open from 12:00 PM – 6:00 PM on Sundays and ensures that all of its sale events are held on other days. La Mer has a number of employee programs and benefits to provide full-time employees with health care, retirement savings plans, continuing adult education credits and tuition assistance for their children. La Mer has also always been committed to being closed on Thanksgiving and Christmas Day.
SCENARIO: Every year, there is more and more competitive pressure for La Mer to open as early as possible on the day after Thanksgiving, which is often known as “Black Friday,” one of the busiest shopping days of the year in the United States. The day is referred to as “Black Friday” because it is often when retailers find themselves transitioning from being in “the red” to “the black” on their balance sheets due to the high volume of sales and the high sell-through of aging inventory. Black Friday is thus considered to be one of the most important milestones in the retail calendar during the fiscal year.
Over the last 20 years, La Mer has set its opening time at 6:00 AM. In 1993 when this policy began, La Mer was at the forefront of the early bird sales. Now, it is lagging behind as many retailers have begun opening as early as midnight, and La Mer has seen its Black Friday early bird traffic decline as a result. From 2010-2012, La Mer has seen same store comparable sales for Black Friday drop consistently year-to-year in most of its locations.
Recent studies from the National Retail Federation have also shown that an increasing proportion of consumers are starting their Black Friday shopping during the Doorbuster and Early Bird events that often begin at midnight. Those who start early on Black Friday tend to end early as well – consumers who begin shopping at midnight are often ready to head home between 3 and 5 AM. This means that these consumers are unlikely to head to stores that open at 6 AM unless they are specifically interested in that store’s sales.
To further complicate matters, Macy’s, which is one of La Mer’s largest and best-known competitors, has just announced that it will be opening at 8:00 PM on Thanksgiving Day this year – a move that other competitors are likely to replicate. La Mer’s management is concerned that if La Mer does not follow suit by either opening at midnight on Black Friday or at 8 PM on Thanksgiving Day, it will see a further decline in sales.
La Mer doesn’t have much time to make a decision – management must have a decision made as soon as possible to ensure that stores will be properly staffed for an early opening. The decision must also be approved by the Board of Directors (who meet on November 11th) since full-time employees will expect extra compensation if they are required to work on a national holiday, which could require an additional $1-3 million in payroll for what amounts to a few hours’ extra work.
Paul Clark, the Chief Marketing Officer (CMO) for La Mer, knows that the La Mer Board of Directors will need more than a fear appeal or the promise of an opportunity to act – they will want to see research conducted with La Mer’s customers demanding that the store open earlier. Much of the board is made up of former employees who worked for the company during a different time and who are under the delusion that La Mer’s customers in 2013 are as brand loyal as those who shopped at La Mer in the 1970s and 80s. Paul Clark knows that consumer research has shown quite the opposite (the average consumer in 2013 is much more likely to go to the retailer offering the lowest prices), and he is certain that if marketing research can show that there is sufficient demand to open the store at either 8 PM on Thanksgiving Day or at midnight on Black Friday, the board will have no choice but to go along with management’s recommendation to open early.
But Paul Clark also knows enough about marketing research to recognize that there is not much time to conduct a study. Between October 22 and November 9, the study needs to be designed, fielded and analyzed in time for the November 11 meeting. Paul Clark has also determined that these is no time for primary causal research, and he is concerned that any primary exploratory research (such as focus groups) could yield a false positive or other misleading information, particularly with such a short time frame in which to analyze data.
So, Paul has come to you to ask for some recommendations on how to conduct primary descriptive research in his time frame. Paul needs to have a complete understanding of the following:
• What survey method he should use
• What population he should sample
• What sample frame he should procure, either from La Mer’s internal data, by purchasing a general consumer list or by buying access to a consumer panel
• What size list he’ll need based on his estimated incidence rate and response rate.
• What sampling method he should use, and whether this method should be probability-based or not.
• What sample size he should consider, and what margin of error and confidence level he should consider.
• Whether or not you would recommend offering incentives to respondents to reduce nonresponse error (and how much you’d recommend)
• What the estimated cost of the field work will be and whether it will fit his budget
Paul Clark has sent you an email with the questions below. You will need to answer each of them to satisfy his requirements as a client.
SOME HELPFUL INFORMATION
So, Paul has come to you to ask for some recommendations on how to conduct primary descriptive research in his time frame. Paul needs to have a complete understanding of the following:
• What survey method he should use
• What population he should sample
• What sample frame he should procure, either from La Mer’s internal data, by purchasing a general consumer list or by buying access to a consumer panel
• What size list he’ll need based on his estimated incidence rate and response rate.
• What sampling method he should use, and whether this method should be probability-based or not.
• What sample size he should consider, and what margin of error and confidence level he should consider.
• Whether or not you would recommend offering incentives to respondents to reduce nonresponse error (and how much you’d recommend)
• What the estimated cost of the field work will be and whether it will fit his budget
Paul Clark has sent you an email with the questions below. You will need to answer each of them to satisfy his requirements as a client.
SOME HELPFUL INFORMATION
Budget: Up to $20,000 for descriptive quantitative research (includes all research costs).
Research Problem
La Mer Stores, Inc. would like to survey consumers to determine whether they would prefer for La Mer to be open at 8 PM on Thanksgiving Day, Midnight on Black Friday or 6 AM on Black Friday. La Mer would also like to gauge the proportion of consumers for whom this is an important issue to help decide which opening time is best.
The following table should also help you in recommending a sampling plan for survey research.
Type of Interview Cost Per Interview (CPI)
Telephone survey with consumers (5-10 minutes)
• Conducted with general consumers via telephone (either from purchased list or random digit dial)
• Sample determined by setting quota
• Response rate typically around 30%
• Incidence rate generally around 60% $15-20
(includes cost of non-response)
Research Problem
La Mer Stores, Inc. would like to survey consumers to determine whether they would prefer for La Mer to be open at 8 PM on Thanksgiving Day, Midnight on Black Friday or 6 AM on Black Friday. La Mer would also like to gauge the proportion of consumers for whom this is an important issue to help decide which opening time is best.
The following table should also help you in recommending a sampling plan for survey research.
Type of Interview Cost Per Interview (CPI)
Telephone survey with consumers (5-10 minutes)
• Conducted with general consumers via telephone (either from purchased list or random digit dial)
• Sample determined by setting quota
• Response rate typically around 30%
• Incidence rate generally around 60% $15-20
(includes cost of non-response)
Mail survey with consumers
• Conducted with general consumers via mail
• Sample determined by desired response number
• Response rate typically around 5-10%
• Incidence rate generally around 60% $2-6
(includes cost of mailing and non-response)
Online panel survey with consumers
• Panel includes consumers who have opted into research; panel approximates population representativeness
• Sample determined by setting quota
• Response rate typically around 90%
• Incidence rate generally around 80% $20-30
(includes cost of non-response)
Formulae and Variable Values
Confidence Level
95% z=1.96
99% z=2.58 Variability (p)
q =
(100-p)
Consumer studies tend to assume p = 50 Margin of Error (e) Sample Size (n)
=
• Conducted with general consumers via mail
• Sample determined by desired response number
• Response rate typically around 5-10%
• Incidence rate generally around 60% $2-6
(includes cost of mailing and non-response)
Online panel survey with consumers
• Panel includes consumers who have opted into research; panel approximates population representativeness
• Sample determined by setting quota
• Response rate typically around 90%
• Incidence rate generally around 80% $20-30
(includes cost of non-response)
Formulae and Variable Values
Confidence Level
95% z=1.96
99% z=2.58 Variability (p)
q =
(100-p)
Consumer studies tend to assume p = 50 Margin of Error (e) Sample Size (n)
=
z2*(p*q)
———————
e2
Remember that e, p and q are whole numbers, not decimals! List Size Needed
———————
e2
Remember that e, p and q are whole numbers, not decimals! List Size Needed
= Sample size /
(Incidence Rate * Response Rate) Maximum Cost
= (CPI x Sample Size)
(Incidence Rate * Response Rate) Maximum Cost
= (CPI x Sample Size)
From: Paul Clark [email protected]
Date: Tue, Oct 15, 2013 at 3:46 PM
Subject: RE: Research for La Mer
To: You
Hi there,
Now that you’ve got all the details on the research project, I need to get some quick information from you. I don’t have time for a formal proposal, but I do need these answers in writing so I can forward them on. Since time is of the essence, let’s assume I can free up around $20,000 for this entire project, incentives included. So whatever you recommend (including whatever fees you require for setup, analysis, reporting, presentation, travel, etc.) is going to have to fit within that budget.
I figured it would be best to just email you some questions and have you answer them. I’ll pass this on to my team and make sure they don’t have any objections. If everyone’s happy, we’ll get this approved before the end of the week so we can get started on deploying a survey.
Date: Tue, Oct 15, 2013 at 3:46 PM
Subject: RE: Research for La Mer
To: You
Hi there,
Now that you’ve got all the details on the research project, I need to get some quick information from you. I don’t have time for a formal proposal, but I do need these answers in writing so I can forward them on. Since time is of the essence, let’s assume I can free up around $20,000 for this entire project, incentives included. So whatever you recommend (including whatever fees you require for setup, analysis, reporting, presentation, travel, etc.) is going to have to fit within that budget.
I figured it would be best to just email you some questions and have you answer them. I’ll pass this on to my team and make sure they don’t have any objections. If everyone’s happy, we’ll get this approved before the end of the week so we can get started on deploying a survey.
Q1 [10 points]
First of all, walk me through the survey method you have in mind. Please be as detailed about the actual surveying process as possible – what method will you use, how long will it take, what types of data will you collect, and so forth?
Q2 [10 points]
Who do you envision we’d be surveying in this research process? Can you define the population for me, and explain what sort of list we’d be using as a sample frame to reach that population?
Q3 [10 points]
What sampling method would you recommend for this study, and how does it work? Would you say that this sample would be scientific (i.e. probability-based) or is it some form of a convenience sample (e.g. nonprobability)?
Q4 [10 points]
Why do you think that the sampling method you recommended would be best for this study?
Q5 [10 points]
What margin of error and confidence level would you suggest for the statistics we’re going to collect for this study? Can you explain to be what both of those will mean for our data?
Q6 [10 points]
What sample size would you recommend for this study? Can you explain to me how you arrived at that number?
Q7 [10 points]
How large of a sample frame list are we going to need for this study based on your estimated incidence rate and response rate? Can you explain to me how you arrived at that number?
Q8 [10 points]
Do you feel that incentives are necessary for this study to increase the participation rate? If so, what would you recommend that we offer, and how do you think that offering an incentive will impact the level of nonsampling error on the data?
Q9 [10 points]
What other measures can we put into place to reduce the level of nonsampling error on this study?
Q10 [10 points]
Are there any limitations we should be aware of in this surveying process that might prevent us from trusting this data completely?
Q11 [10 points ]
How much will this project cost? Given that this is an ideal, what measures could we take to reduce the cost of this study without drastically impacting the quality of the data?
First of all, walk me through the survey method you have in mind. Please be as detailed about the actual surveying process as possible – what method will you use, how long will it take, what types of data will you collect, and so forth?
Q2 [10 points]
Who do you envision we’d be surveying in this research process? Can you define the population for me, and explain what sort of list we’d be using as a sample frame to reach that population?
Q3 [10 points]
What sampling method would you recommend for this study, and how does it work? Would you say that this sample would be scientific (i.e. probability-based) or is it some form of a convenience sample (e.g. nonprobability)?
Q4 [10 points]
Why do you think that the sampling method you recommended would be best for this study?
Q5 [10 points]
What margin of error and confidence level would you suggest for the statistics we’re going to collect for this study? Can you explain to be what both of those will mean for our data?
Q6 [10 points]
What sample size would you recommend for this study? Can you explain to me how you arrived at that number?
Q7 [10 points]
How large of a sample frame list are we going to need for this study based on your estimated incidence rate and response rate? Can you explain to me how you arrived at that number?
Q8 [10 points]
Do you feel that incentives are necessary for this study to increase the participation rate? If so, what would you recommend that we offer, and how do you think that offering an incentive will impact the level of nonsampling error on the data?
Q9 [10 points]
What other measures can we put into place to reduce the level of nonsampling error on this study?
Q10 [10 points]
Are there any limitations we should be aware of in this surveying process that might prevent us from trusting this data completely?
Q11 [10 points ]
How much will this project cost? Given that this is an ideal, what measures could we take to reduce the cost of this study without drastically impacting the quality of the data?
