OLD NAVY MK 370. [Pick the date] By: Fouskas, Brittany Goldman, Andrew Keil, Kendall Kenney, Jessica Lombardi, William

Transcription

1 1 MK 370 OLD NAVY [Pick the date] By: Fouskas, Brittany Goldman, Andrew Keil, Kendall Kenney, Jessica Lombardi, William

2 Contents Executive Summary... 3 Company and Industry Analysis... 4 Situation Analysis... 5 Perceptual Map... 6 Hypotheses... 7 Exploratory Studies... 7 Depth Interview Data... 8 Cognitive Map... 9 Data Analysis: Exploratory Research... 9 Experimental Design & Sampling Methods Data Coding and Data Entry Data Cleaning Open Ended Question Responses Data Analysis: Frequencies Data Analysis: T Tests Data Analysis: Correlation Tests Data Analysis: ANOVA Implications Recommendations Works Cited..18 Appendix A.19 Appendix B.28 2

3 Executive Summary Throughout the semester we have analyzed the Old Navy brand, its current situation, and their possible exclusion of potential consumers. In the following the report we discuss our process of formulating a hypothesis through market research. Our research consisted of exploratory studies a traditional focus group and in depth interviews. After the completion of these initial studies, we revised our hypothesis and conducted an experiment to test the validity of our hypothesis. Finally, we analyzed the data we collected, using Qualtrics and SPSS, to form our implications and recommendations for the Old Navy brand and our future research endeavors. 3

4 Our group decided to work on Old Navy, a company who has seen some decline in sales over the past couple of years and whose stores do not see a lot of customers on a daily basis. When we were told our objective to find a brand in some trouble and research why they have been experiencing difficulty, we bounced around ideas but a common consensus was that Old Navy was in trouble. We remembered their advertisements and were personally bothered by them and reflected on them with a groan. Therefore, we wanted to identify an appropriate target market for the brand, see what the commonly held opinions of the brand were, and base a hypothesis around our findings. Company and Industry Analysis In 1994 the president of The Gap felt his brand was being threatened by cheaper clothing stores, and opened Old Navy. During its first few years Old Navy s growth was exponential, and had record sales. However, growth slowed in Two years after recording a $1.1 billion revenue they lost $7.7 million saw the opening of Old Navy s first international store in Canada. In 2005 Old Navy took the brand in a new direction to compete with boutique brands, which did not fare well with customers and saw another hit to Old Navy s revenue. In 2008 Old Navy switched back to their family oriented image, though they still have a long way to come in fixing their image. Old Navy Brand is held under the Gap Inc. Company. Gap Inc. is part of the apparel and accessories retail industry. The Industry is comprised of about 100,000 stores and has combined revenues of $150 Billion a year. Industry Leaders include TJX Companies, Ross, Abercrombie & Fitch, Limited Brands, and Gap. The market is very saturated with the 50 largest brands making up 65% of the total industry revenue. 4

5 Situation Analysis Strengths: Where Old Navy has strength in its brand is areas like price, reliability, publicity, advertising, and target market. For price, Old Navy keeps it price to consumers relatively low vs. the competition. This is a strength for the brand since there are a lot of consumers who are price sensitive especially given the recent downturn in the economy. When customers go into Old Navy stores they know what to expect and they get a sense of reliability as well as consistency when it comes to the type of clothing they expect. Old Navy has little to no negative publicity, which is definitely a positive thing for the brand s success. Last, Old Navy has a very large variety or demographics that its clothes appeal to. This makes for an enormous target market. Weaknesses: The different weaknesses that Old Navy has include, they do not have a full understanding of who exactly their target market is. Since the company is widely popular across a very broad range of demographics, the company gets confused as to who exactly they should be directing their products and advertising towards. The Gap Inc. Company and Old Navy included have recently lost market share and market awareness no longer making them a very strong powerhouse in the apparel industry. The quality of the clothing that Old Navy carries is not as high as some of Old Navy s competitors. The market of young adults (18 25yr.) tends to avoid or have a negative attitude towards Old Navy. Opportunities: Old Navy also has a number of different opportunities that it can use to its advantage. Each year, Old Navy releases a new product. This allows the company to be always interesting and exude a new image each year. Old Navy is the cheaper and the more fashionable option to the competition for the 5

6 fashion conscious consumer. The Brand can expand into different countries to increase their market reach. Last, their new advertising targets a different consumer allowing for more reach. Threats: The competition is one of Old Navy s biggest threats; competitors like Kohl s, Department stores, and Target are often used by the same consumers who shop at Old Navy. Another threat against Old Navy is the trend clothes they make such as the Old Navy fleece. Products like these produce niche markets that are mainly taken over by other, higher quality clothing brands such as The North Face. Other threats that Old Navy faces are buying power, something that Old Navy isn t keeping up with, the entry of new competitors to the industry, and the fact that people are simply hesitant to freely express they shop at Old Navy. Perceptual Map In order to determine how Old Navy compares to its competitors, we created a perceptual map using our knowledge, research, and information gathered during our focus group. The two attributes used to distinguish between brands are quality and price. It is evident that Old Navy is moderately priced in the mid to low price range. Additionally, it has a slightly above average quality; however, still on the low side compared to some of its competitors. We were able to establish that Old Navy fell between TJ Maxx and Kohl s as shown in the diagram. It was determined that Old Navy s primary competitors are TJ 6

7 Maxx, American Eagle, GAP, and Banana Republic on the higher price and quality scale; and Kohl s Target, and Wal Mart on the lower price and quality scale. Hypotheses Before beginning our primary research, we established a hypothesis (H1) based on our secondary research and our own personal observations and assumptions, which included experiences at an Old Navy outlet or our familiarity with current and past advertising campaigns. Various trade articles and sales reports indicated a decline in sales, which was a symptom of the problem. To determine the cause of this symptom, we hypothesized that Sales are declining because our target market is not clearly defined. After conducting our focus group, however, we came to believe that the opposite problem existed. Our respondents led us to believe that the target market was actually too specific, rather than too broad. This forced us to revise our H1 to state that Sales are declining because the current target market is too specific to female consumers and children, thereby alienating other potential markets such as consumers Exploratory Studies We held two different research exploratory studies in order to interview the target market for Old Navy. The first exploratory study we used was a traditional focus group. In our focus group were four females and three males in the age bracket who all attend Quinnipiac University and who have all had shopping experience at Old Navy. The second exploratory study we used was moderating in depth interviews. For those, we interviewed 5 males and 5 females who were also in the age bracket who all attend Quinnipiac University and who have all had shopping experience at Old Navy. 7

8 For our focus group, the seven participants all sat across from the moderator, Jessica Kenney while Brittany Fouskas, Andrew Goldman, Kendall Keil and William Lombardi sat on the side, two to each table, taking notes. We recorded each answer and studied the words that were spoken the most during the study. Following the study, we created a word cloud which highlighted the words that were said the most. Some words that were large in size, representing the words that were said in high frequency were change, commercial, younger, ads and obnoxious. Depth Interview Data After the focus group, we had a large amount of data describing both the positives and negatives of the Old Navy brand. Some of the positives included quality clothing, good summer clothing, and they enjoyed that Old Navy wasn t a big name store who might ignore some of the smaller customers. One of the more significant points that related to our hypothesis was that Old Navy knew their target market. They also brought up several negatives for the brand. Several referenced that Old Navy clothes were boring, not good for social wear, and more about comfort than style. Many also felt the brand was stagnant, relating it to the mannequin ads that had been shown for so long. The participants felt the Old Navy brand is mainly focused on comfort and price, and not style. They felt their target market is mostly moms and kids, and those who are price conscious. 8

9 Cognitive Map Through our focus group we were able to create a cognitive map regarding how the focus group attendees felt about the Old Navy brand. As illustrated in the cognitive map below, when respondents talked about Old Navy s sales, they focused on the company s specific sales on Performance Fleeces, winter clothing, and sweaters. Attendees also related Old Navy to summer, focusing on their shorts, swim trucks, skirts, and flip flops. These products also made the focus group think about the 4 th of July. In addition, one interesting aspect that came out was that much of the focus group felt Old Navy had very plain clothing which lead them to think of one of Old Navy s competitors, Target. Data Analysis: Exploratory Research After conducting our exploratory research, we have concluded that there are three aspects of the Old Navy brand that are affecting the decline in sales over the past few years. We first looked at target market and whom Old Navy was really directing their products towards. After reviewing our results of both the in depth interviews and the traditional focus group, we have concluded that consumers 18 24yr old feel alienated by old navy s advertising. We also found that this range of people feel that Old Navy clothing is specifically associated with moms and kids. The next aspect of the brand that we considered was the style of the clothing at Old Navy. We found from our results that style is very important to consumers and if the style doesn t fit their personality they won t shop there. We 9

10 found that most of the respondents concluded that Old Navy s clothing was too generic, basic, and bland to be representative of their personal style. Lastly we noticed Old Navy s advertising was not favored by many of our participants. After looking at the results from the participants, we found that the current advertising, the mannequin ads, elicit negative emotions in consumers minds as opposed to good feelings towards the brand. Based on our results and findings from both the in depth interviews and the traditional focus group, we have concluded that consumers year old are not willing to shop at Old Navy recreationally. This means that Old Navy will need to change their marketing campaign so that this consumer can feel as though this clothing can be part of their identity. Experimental Design & Sampling Methods In order to determine the truth behind our revised H1, we designed our survey to consist of one control group and two experimental groups. All three groups were given the same questionnaire, which asked of their general shopping habits as well as their attitudes towards Old Navy and its advertisements. However, each group was given the questionnaire under different conditions. The control group (C 1 ) was given no treatment and simply asked to fill out the questionnaire. Experimental group one (E 1 ) was shown an advertisement from the familiar Mannequin ad campaign before being asked any questions directly relative to Old Navy. Experimental group two (E 2 ) was shown Old Navy s newest advertisement, Super C U T E, before answering any questions directly relative to Old Navy. The purpose of this design was to determine if the advertisements had an effect on the consumer s attitude towards the brand. Our questionnaire design most resembled that of a diamond, with mostly closed ended questions at the beginning and end, and a few open ended questions present in the middle of the 10

11 survey. These open ended questions, for the most part, were conditional questions, meaning that respondents were only prompted with certain open ended questions depending on their answer to some of our closed ended questions. This allowed us to supplement our quantitative data with specific, targeted qualitative data that gave us a deeper insight into why some of those answers were chosen. Our sampling method was a non probability sample using a convenience and quota technique; essentially, this was due to limited resources, time constraints, and the overall difficulty of finding respondents who were willing to complete our survey among busy college students. Because of our limited sampling abilities, all of our respondents fell between the ages of and are currently enrolled in college. We were able to gather ten responses in group C 1, twelve responses in group E 1, and eleven responses in group E 2. Data Coding and Data Entry Completing our surveys in Qualtrics, we were easily able to export our results into SPSS. SPSS automatically coded our data. Our data coding was split into scaled and non scaled. One example of the scaled coding would be the question, How likely would you be to shop at Old Navy in the future? Our respondents answered based on a 1 7 point scale, with 1 being highly unlikely and 7 being highly likely. One non scaled question was gender, since it is either male or female with no opinion given. Data Cleaning In order to make the data we collected from the surveys usable for our hypotheses, it had to be cleaned. Data cleaning involves three steps. The first step is to look for entry errors, of which we found none: n=33. The second step is to look for outliers in the data. We found four outliers in the data (see Appendix A Section I), and removed them from the list: n=29. Finally we replaced all the missing values: n=29. We also looked at the normal curves of the questions to ensure that the data was properly 11

12 cleaned. After the data had been cleaned, we were left with 10 participants in the control group, 10 participants in the first experimental group, and 9 in the second experimental group. Open Ended Question Responses Prior to reviewing our data, we had expected answers to our open ended questions to vary across the three groups. However, while reviewing these questions, we found that the answers in all three groups were more similar than we had anticipated. Though the first and second experimental group were shown different Old Navy ads from different campaigns, we found hat ad did not influence their answers. For example, we expected the new Super C U T E ad to garner more receptive responses; however, our respondents did not seem to be receptive of the new ad. Some referenced the old mannequin ads, despite not having seen them during the survey. These people associated mannequins with the brand, and had a negative view of the company because of it. Overall the open ended responses harbored mostly negative attitudes despite any presence of an ad. Data Analysis: Frequencies Using SPSS, one of the ways we analyzed our data was by using frequencies to see how much an option was chosen in our online Qualtrics survey. Four questions that we chose to analyze by frequency were Who do you think shops at Old Navy? To what extent do you feel Old Navy s advertisements relate to you? How often do you shop at Old Navy? Do you enjoy Old Navy s advertisements? For the question, Who do you think shops at Old Navy, the demographics that were chosen in order of frequency were Teenage Girls at 62.1%, Mothers at 48.3%, Young Women at 44.8% and Children at 41.4%. Those who took the online survey were able to give multiple answers to this question. This shows that mothers and children are thought to shop at Old Navy more frequently, 12

13 probably leaving people to think that mothers would bring their children or teenage girls to shop for clothes at the store. For the question, To what extent do you feel Old Navy s advertisements relate to you? the choices were Not at all like me, with a frequency of 9, Not much like me, which a frequency of 13, Somewhat like me, with a frequency of 6, and Quite a lot like me, with a frequency of 1. Therefore, we were able to draw from this analysis that those who took the surveys did not feel that the advertisements related to them. For the question, How often do you shop at Old Navy? the choices were Rarely, with a frequency of 13, Sometimes, with a frequency of 15 and Often, with a frequency of 1, symbolizing the person who expressed that the advertisements related quite a lot like them in the earlier question. Therefore, we were able to draw that those who took the survey rarely to sometimes shop at Old Navy and did not feel that the advertisements related to them. The last question we analyzed was Do you enjoy Old Navy s advertisements? The choices for this question was Yes, with a frequency of 2, Somewhat, with a frequency of 10, No, with a frequency of 12, and Indifferent, with a frequency of 4. Again, only 2 participants expressed that they enjoyed the advertisements and out of that, 1 expressed that the advertisements related to them while most do not enjoy the advertisements, do not believe the advertisements relate to them and do not regularly shop at Old Navy. This is concerning for Old Navy, because the market that they are trying to reach is not receiving their advertising messages positively and the store is suffering by not having those customers. (See Appendix A Section II) 13

14 Data Analysis: T Tests We ran independent sample T tests on a number of different questions to find out further information on our results. We compared results across the three groups that we had, Control Group, Experimental Group 1, and Experimental Group 2. We first looked at Control Group Vs. Experimental Group 1 and found that there was a significant difference between the groups for the following questions. For How does informativeness appeal to you in a commercial? we had a result of t: and Sig: Since T > 1.96, and Sig <.05, there was a significant difference. We also had a significant difference in the question Emotional appeal is present in Old Navy s advertising. with a t: and a Sig: When comparing our Control Group to our Experimental Group 2, we found a significant difference between the two groups in the following questions. Humor is present in Old Navy s advertising. t: and Sig: 0.061, Sex appeal is present in Old Navy s advertising. t: and Sig: 0.017, Emotional appeal is present in Old Navy s advertising. t: and Sig: 0.024, Catchy music is present in Old Navy s advertising. t: and Sig: 0.016, Informativeness is present in Old Navy s advertising. t: and Sig: When comparing our Experimental Group 1 Vs. Experimental Group 2, we found that there was a significant difference between the two groups for the following questions. Humor is present in Old Navy s advertising. t: and Sig: Catchy music is present in Old Navy s advertising. t: and Sig: Informativeness is present in Old Navy s advertising. t: and Sig: Although we found numerous significance between the various groups we researched, we concluded that the questions, which we found significance between, didn t support our hypothesis 14

15 claims but also didn t disprove them. They were not helpful in telling us the information we wanted to see, the information that would help us prove our hypothesis. Data Analysis: Correlation Tests We next ran correlation test on questions that we thought would be useful in helping us prove our hypothesis. We first looked at all the questions we came up with and decided that we wanted to know if how often people shop at Old Navy had an effect on to what extent they felt Old Navy s advertisement related to them. We ran the correlation test for that question and found that there was no correlation between the two. This means that the extent to which people feel Old Navy ads relate to them is not affected by how often they shop at Old Navy. We next came up with the question, if how likely would you be to shop at Old Navy in the future had an effect on to what extent they felt that Old Navy s advertising relates to them. We ran the correlation test and again found that there was no correlation between the two. This means that the extent to which people feel that Old Navy s advertising relates to them is also not effected by how likely they would be to shop at Old Navy in the future. Since there was no correlation in either question, we were not prompted to run and regression tests. (See Appendix A Section III) Data Analysis: ANOVA While analyzing our data, we decided to run some ANOVAs to see the relationship between a non scaled independent variable and a scaled dependent variable. We hoped that we would find significance between the variables supporting our research hypothesis. We first used the independent variable of Do you enjoy Old Navy s advertisements? with the dependent variable If I don t like an ad campaign, I tend to avoid the brand. We thought the use of these two variable, if found significant, would show that there would be a relationship between those who responded that they did not like Old 15

16 Navy s advertisements and those that tend to avoid the brand if they don t like their ad campaign. This information would have shown us that respondents didn t like Old Navy s ad campaign, resulting in them avoiding the brand. However, when we ran the ANOVA analysis, Sig:.657, therefore, there was no significance between the two variables. We than ran a second ANOVA with an independent variable of Do you enjoy Old Navy s advertisements? and a dependent variable of To what extent do you feel that Old Navy s advertisements relate to you? Similarly to the previous ANOVA, we were hoping to find a relationship between respondents not enjoying Old Navy s advertisements because they did not feel as though the ads related to them. This would help prove our hypothesis because it would show that consumers in our age range felt alienated by Old Navy s advertisements. Through the analysis we found that there was significance between the two variables. We determined this through the value of the Sig:.019 which is less than In order to then determine the specific relationships between the variables we had to run compare means because our non scaled independent variable had four choice options instead of two. Through the compare means analysis of those who responded yes versus those who responded no, we found that those respondents who enjoyed Old Navy s advertisements also felt that the ads related to them. The results showed that t: 3.055, Sig:.010, and yes mean: while no mean: Similarly, when comparing those who responded yes versus somewhat, we found that those who enjoyed Old Navy s advertisements also felt as though the ads related to them. The results showed that t: 3.460, Sig:.034, and yes mean: while somewhat mean: We also got the same result between yes and indifferent respondents. The results showed that t: 3.771, Sig:.020, yes mean: 3.500, indifferent mean: (See Appendix A Section IV) 16

17 Implications According to our research results, we found that respondents felt that year olds are one of the main consumer groups of Old Navy. This information was coming from respondent s who are years old, therefore disproving the hypothesis claim we made. Although we found significance for various t tests between different groups, none of the significant variables were those that supported our hypothesis claims. There were a few correlations that we felt would prove our hypothesis and after running those tests, we found that they did not show significance. This meant that there was no effect between the various variables like we would have hoped. After running the ANOVA, we found that those respondents that liked Old Navy s commercials also felt as though the commercials related to them so there was significance. However, only two respondents said that they actually like Old Navy s commercials. This means that even though there showed a significance, the results didn t have a big impact on it because of the small sample size that it was taken from. The last implication we had that we found was in our sample size and sampling method error. As a group we felt that had we used probability techniques to determine our sample population rather than non probability techniques, we could have had some sort of systemic, non judgmental, broader sample population. This would have given us a more accurate representation of our desired sample population and may have improved our results in a way that supports the hypothesis claims we made. Although most of our analysis appears to disprove our hypothesis, the frequencies did show some support. Most respondents felt that mothers and teenage grille most frequent shoppers of Old Navy, supporting our original thoughts. The majority of respondents did not feel as though the advertisements related to them. Lastly, the majority of respondents did not enjoy Old Navy advertisements. 17

18 Recommendations We have several recommendations for Old Navy. Our main focus is to remodel their brand image. As seen in the open ended responses, all respondents (regardless of their grouping, mentioned dislike for the mannequin campaign. After hearing about how much consumers dislike the commercials, we suggest going for a new style of commercials. This means abandoning the mannequins and going for a different technique such as slice of life or animation. We also suggest they bring in an established designer and create a line of clothes that will be sold exclusively at Old Navy, in the same manner as Claiborne or Arizona jeans. Old Navy seems to have found similar results as us, since they have released a new logo. We also thought of suggestions for our own research. Once the data was cleaned we only had 29 total participants, which is not a large number. Next time we could use a larger sample size to find a larger population s views of the brand. We also used probability sampling technique, which might not have given us the best results. Next time we should switch to non probability sampling technique. 18

19 WORKS CITED "Old Navy, Inc. Company Profile from Hoover's." Hoovers Business Solutions from Hoovers. Web. 04 May < 1.html>. "Old Navy, Inc. Company History." Find Funding with Banks, Investors, and Other Funding Sources FundingUniverse. Web. 04 May < Navy Inc Company History.html>. " N.p., n.d. Web. 4 May < 19

20 APPENDIX A I. Data Cleaning Mean+ 3 Std. Dev Mean Std. Min Max

21 II. FREQUENCIES Who do you think shops at Old Navy? 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Percentage To what extent do you feel Old Navy s advertisements relate to you? 21

22 Not at all like me Not much like me How often do you shop at Old Navy? 22

23 Rarely Somezmes O{en Do you enjoy Old Navy s advertisements? 23

24 III. CORRELATION How often do you shop at Old Navy? To what extent do you feel that Old Navy s advertisements relate to you? How likely would you be to shop at Old Navy in the future? To what extent do you feel that Old Navy s advertisements relate to you? 24

25 IV. ANOVA IV: Do you enjoy Old Navy s advertisements? DV: If I don t like an ad campaign, I tend to avoid the brand. IV: Do you enjoy Old Navy s advertisements? DV: To what extent do you feel that Old Navy s advertisements relate to you? 25

26 Compare Means 26

27 27

28 APPENDIX B I. SURVEY a. Control Group b. Experimental Group 1 28