The Buyer Behavior Research Project - Assignment Example

The Buyer Behavior Research Project The Buyer Behavior Research Project Market segmentation is coming of age in business marketing. Different businesses cater for different niches in the market doing a thorough segmentation analysis of these markets enables these businesses not only to increase profit margins but also offer unique products to meet the unique needs of the consumer population. This paper explores segmentation research, delving into the different market niches that Nordstrom and Bloomingdale’s occupy, the methods of conducting this kind of research- a pragmatic approach-, the reasons for this kind of approach and a cost-benefit analysis of why segmentation is crucial in today’s business environment. It was found that segmentation depends on a number of factors ranging from age, sexual orientation, education to even age. The benefits also spread far and wide from helping in identification of the most and least profitable customers, enabling grouping of consumers by factors like type and size of organization, category and lifestyle of consumers, geographical location, attitudes and behavior, enhancing customer service, helping a business build loyal relationships and so forth. Successful segmentation research, it was found, minimizes the number of segments only giving rise to a small number of big segments. Good research will enable classification of these groups through economic data and other essential information on how these segments change and develop over time. Both Bloomindale and Nordstrom offer high quality products and services though Nordstrom also serves customers of more modest means. Part 1: Segmentation Research: Background Nordstrom Inc. is an upmarket American fashion department store, founded by Carl F. Wallin and John W. Nordstrom currently having its headquarters in Washington’s Seattle. Shoe retail was the company’s beginning and has since grown their catalog to incorporate cosmetics, clothing fragrances, accessories, jewelry and handbags. Some select Nordstrom stores also stock home furnishing and wedding sections. Asof March 16, 2012 it had 225 stores in the United States stores situated in 30 states. There about 245 stores effective in 35 states, which include about 140 Nordstrom Racks and approximately117 Full-Line stores. As of the year 2012, it is the 5th largest department store company in the U.S. by retail sales and the thirty-fourth largest Store in the US in 2013 in terms of revenue. Presently, Nordstrom has distribution centers in, Maryland, California, Oregon, Gainesville, Iowa, Ontario, Upper Marlboro, Dubuque, Florida and Portland (Businessweek.com. 2013). Bloomingdales is also an upmarket American chain of department stores presently owned by Macys, Inc. it was founded in 1861when brothers Lyman and Joseph G. Bloomingdale started retailing hoop-skirts in their Ladies Notions Shop on Lower East Side of Manhattan. They were both sons of Benjamin Bloomingdale, a Bavarian-native salesman who had inhabited Kansas and North Carolina before settling in New York City. The Bloomingdale brothers opened their first store in 1872 at 938 Third Avenue, New York City. Today, it has stores in Dubai, Los Angeles, Minnesota, California, Florida, Maryland, Georgia, Illinois, Massachusetts, Nevada and New Jersey, Pennsylvania and Virginia (Mystore411.com 2014). In comparing the two, Nordstrom has both the largest geographic footprint as well as and the largest number of store locations. Its stores also anchor many upmarket shopping malls all over the United States. Both department stores have extensive e-commerce websites which offer broad selections of goods along with online exclusives and products available in-store. Both sites are easy to navigate with posts ranging from their products about their products, current deals they are running to consumer complaints and search engines for their products. In summation, both Bloomingdale’s and Nordstrom are good stores just with certain differences between the two. One would be Bloomingdales deep involvement in social media such as pinterest, Instagram, and even twitter. Part 2: analysis The kind of products offered in the departmental stores affect an equal proportion of male and female hence gender is not an appropriate consideration in segmenting the market. The blue portion represents the proportion of consumers between the age of 16-21 buying from the departmental stores, light green portion represents the proportion of consumers between the age of 22-49, while the dark red proportion represents the percentage of consumers in the age bracket 50-65 years. The above chart designates that most of the customers who buy from the departmental stores have a 4th year degree while only a small proportion of the customers are in the high school level. Moreover, people with a 2nd degree moderately purchase from the stores. Evidently, in the prevailing scenario, level of education is an important demographic that determines an individual’s preference. Apparently, a great number of consumers who procure from the departmental stores are low income earners of upto $ 30000 annually and high income earners ($50000+). The middle class shoppers rarely purchase from the stores. Noteworthy, the buyers purchasing power is determined by their level of income coupled with preference and products at their disposal. Creation of hypotheses Hypothesis 1: There is no relationship between customer reliability and customer responsiveness. Hypothesis 2: There is a relationship between customer reliability and responsiveness. Assurance has a mean of 4.7323 showing a strong disagreement. Empathy mean is 5.170 showing a strong disagreement. Reliability mean is 4.96 a strongly disagree. Responsiveness has a mean of 4.48 a strongly disagree. Assurance factor has a mode of 4.9 showing a strong disagree, empathy has 4.7 responding to disagreement, reliability has 5.6 strong disagree and responsiveness has 4.2 measuring strongly disagree. Regression analysis Coefficient σx = sqrt [Σ (xi - x) 2 / N] Sqrt {(11.7556)/10} = 1.17556 σy = sqrt [ Σ ( yi - y )2 / N ] (4.46/10) = 0.446 R2 = {(1 / N ) * Σ [ (xi - x) * (yi - y) ] / (σx * σy ) }2 {1/10)*sum {0*0}/ (1.175556*0.446)} = 0 Since correlation is zero, reliability and responsiveness are independent variables and therefore there is no correlation. From a regression analysis, the resultant value is zero, implying that there is no relationship between customer reliability and customer responsiveness. Therefore, hypothesis 2 is rejected and becomes the null hypothesis while hypothesis 1 becomes the alternative hypothesis. Marketers should segment their markets with this ostensible fact in mind. Part 3: Initial Research Design - Pragmatic Approach to Research (Mixed Methods) The pragmatic approach to research entails using the method which appears to best suit the research problem and not getting involved in philosophical debates about which is the best method. Pragmatic research therefore grants itself the liberty of using any of the techniques, procedures and methods normally associated with qualitative or quantitative research. It recognizes that each method has its limitations and also that the different approaches can be complementary (Alzheimer Europe.org 2009). For segmentation research I recommend pragmatic approach incorporating different techniques at the same time. For starters, we start with face-to-face interviews with several focus groups and then use the conclusions to come up with a number of questionnaires to weigh the attitudes in a large scale sample with an eventual aim of conducting a statistical analysis. The data can nonetheless, be transformed from qualitative to quantitative data or vice versa. Being able to combine different approaches has the advantages of allowing triangulation. Triangulation is a common characteristic of mixed methods research. It entails for instance, data triangulation that is the use of a variety of data sources, investigator triangulation - the use of several different researchers-, theory triangulation - the use of multiple perspectives to interpret the results- and finally methodological triangulation - the use of multiple methods to study a research problem. Managers should demographically segment their markets while taking the demographic factors that affects consumption and purchasing power into consideration to increase the demand for products. References Alzheimer Europe.org. (August 2009). The Four Main Approaches. Web. Berghoffet. al. (2012). The Rise of Marketing and Market Research. New York: Palgrave Macmillan. Bradley, Nigel. (2007). Marketing Research.Tools and Techniques.Oxford University Press, Oxford Businessweek.com. (Jul 2013). Nordstrom fsb: Private Company Information. Web. Forbes.com. (May 2013). Nordstrom. Web Gov.uk/ business. (2009) Segment your customers. Web. Mystore411.com (2014).All Bloomingdale’s Locations. Web Read More