The Sale Effect

Final Project

Consumer Behavior

Fall Quarter 2011

Candice Alvarado, Ericka Smith, Kaitlin Andreas,

Kristine Mileson & Mariel Alvarez

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Table of Contents

Observation……………………………………………………………………………….3

Hypothesis……………………………………………………………………………......7

Experimental Design……………………………………………………………………10

Field Data………………………………………………………………………………..12

Analysis………………………………………………………………………………..…17

Infographic………………………………………………………………………………19

Appendix…………………………………………………………………………………21

Rough Field Data…………………………………………………………………22

Experiment Photos………………………..………………………………………26

Works Cited………………………………………………………………………29

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Observation

The verb ‘Sell’ defined by The Merriam-Webster dictionary as: A. To cause or

promote the sale of. B. To make or attempt to make sales to. C. To influence or induce to

make a purchase. This definition tells us everything we need to know about retail sales,

especially sales promotion through advertising. Retailers operate with a single goal in mind:

To Sell. This concept of selling merchandise has been using promotion and persuasion to

influence consumers to make a purchase for hundreds of years. From buy one get one, two

for the price of one, to percentages off, retailers are constantly striving to give the consumer

incentive. And it works, consumers are constantly searching for the lowest price and retailers

are working hard to offer those low prices that people expect. Nearly every retailer uses sales

to motivate consumers to make a purchase and we have come to love them for that. From

weekly sales, to holiday sales, to the infamous Black Friday madness we as consumers strive

to buy at the lowest price possible. Do consumers use this knowledge to their advantage? Do

sales really have an influence on consumer purchases?

We plan to observe three similar stores, in a mall setting at Bellevue Square in order

to understand the effect sales have on the consumer and if these advertised sales influence

consumers to buy or not to buy.

By identifying the consumers of Bellevue, we can make an educated decision to

conduct our experiment at Bellevue Square where these affluent consumers shop and live.

Knowing the type of customer and who they are will benefit us in a way in which it helps us

prove that they will be influenced to make a purchase based on sales on signage, and are

guided by similar interests. These consumers are a very affluent type, they value quality in

products and in services. When observing these consumers most are very aware of their

buying power and therefore will make purchases based on their knowledge that they have

the extra money to spend. Thus, providing that Bellevue was the right location to conduct

our experiment at.

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Movers & Shakers

Wealthy, Middle Age w/o Kids

Movers & Shakers is home to America's up-and-coming business class: a wealthy

suburban world of dual-income couples who are highly educated, typically between

the ages of 35 and 54. Given its high percentage of executives and white-collar

professionals, there's a decided business bent to this segment: members of Movers &

Shakers rank near the top for owning a small business and having a home office.

Social Group: Elite Suburbs

Lifestage Group: Midlife Success

The Movers & Shakers is the home of the up and coming business class. They are

educated and have the income to afford their lavish lifestyle. This class is an

ethnically diverse group with no children. This bracket is a good addition to our type

of consumers since they are educated and have well-paying jobs. This proves why

are types of consumer shop at the savvy stores like Banana Republic, J. Crew, and

Ann Taylor.1

1 http://www.claritas.com/MyBestSegments/Content/tabs/filterMenuFrameWork.jsp?page=../Segments/snapshot.jsp&menuid=91&submenuid=911

2009 Statistics: US Households: 1,853,105 (1.61%) Median HH Income: $107,108

Demographics Traits:

Urbanicity: Suburban

Income: Wealthy

Income Producing Assets:

High

Age Ranges: 35-54

Presence of Kids: HH w/o Kids

Homeownership: Mostly Owners

Ethnic Diversity: White, Asian, Mix

Lifestyle Traits • Order from J. Crew • Go downhill skiing • Read Inc. • Watch Saturday Night

Live • Land Rover Range

Rover

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Executive Suites

Upper-Mid, Middle Age w/o Kids

Executive Suites consists of upper-middle-class singles and couples typically living

just beyond the nation's beltways. Filled with significant numbers of Asian-

Americans and college graduates--both groups are represented at more than twice

the national average--this segment is a haven for white-collar professionals drawn to

comfortable homes and apartments within a manageable commute to downtown

jobs, restaurants, and entertainment

Social Group: The Affluentials

Lifestage Group: Midlife Success 2009 Statistics: US Households: 1,047,515 (0.91%) Median HH Income: $76,334

The Executive Suites category consists of upper middle class educated individuals

with no children. They are drawn to the comfortable lifestyle with their jobs being

close to where they live. They enjoy many activities that help keep them active. This

category is full of ethnically diverse consumers that values customer service. For this

reason we are able to stand behind our conclusion that many of these types of

consumers shop at the same store for example Banana Republic, J. Crew, and Ann

Taylor 2

2http://www.claritas.com/MyBestSegments/Content/tabs/filterMenuFrameWork.jsp?page=../Segments/snapshot.jsp&menuid=91&submenuid=911

Demographics Traits:

Urbanicity: Suburban

Income: Upper-Mid

Income Producing Assets:

Above Avg.

Age Ranges: <55 Presence of Kids: HH w/o Kids

Homeownership: Mostly Owners

Employment Levels: Management Education Levels: College Grad

Ethnic Diversity: White, Asian, Mix

Lifestyle Traits • Shop at IKEA • Play racquetball • Read Wired • Watch The Office • Acura TSX

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Ann Taylor

Ann Taylor is a chic women’s clothing store that offers everything from pretty

feminine pieces to bold, modern sportswear for sophisticated adult women from the ages of

18 to 50 an up. Although the store only offers women’s merchandise they have expanded

their brand to a lower price point through The Loft and have recently released a modern,

sophisticated and professional maternity line. According to quantcast.com, the Ann Taylor

customer is predominately female, Asian or Caucasian, and do not have children as most are

well-educated and professional working women. These working women have an overall

more affluent income, making more than sixty-thousand dollars a year up to more than one-

hundred thousand dollars a year. The demographic of the Ann Taylor consumer is broken

down further in the charts below.

www.Quantcast.com

7

Banana Republic

Banana Republic, part of Gap Inc. offers modern, refined clothing for men and

women plus shoes and accessories. According to Quantcast.com Banana Republic’s target

consumers are within the age range of 18 to 49 years old with a stable disposable income.

These consumers are very affluent in addition to being savvy educated individuals. While our

group observed Banana Republic we notice that our assumption with the demographics

range was true when a consumer walked in the store they were at times carrying an Ann

Taylor or J. Crew shopping bag.

www.Quantcast.com

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J. Crew

J. Crew is a specialty retail store that offers clothing with class and sophistication.

Providing women’s, men’s and children’s clothing and accessories, J. Crew’s range is

extensive. Although the store offers a wide selection of their products all over the gamut,

women are the most dominant consumer. According to quantcast.com, the J. Crew premiere

customer falls in the 18-34-age range, although the older age bracket from 35-49 follows

close behind. The majority of the consumers are Caucasian and the ethnic base is of Asian

decent. Other characteristics of the J. Crew consumer base are that they tend to not have

children, have the means to shop precariously and have a graduate or post graduate

education level. The demographic characteristics below show the breakdown of each

category more extensively.

www.Quantcast.com

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Hypothesis

Question

How many consumers will make a purchase if there is an advertised sale that is

communicated through signage in the store window?

We applied the above question throughout the processes of the scientific method in

order to determine our hypothesis for this experiment. Our independent variable will be the

whether or not the store is promoting a sale, while our dependent variable will be the

amount of “purchases” made, observed by counting the number of customers exiting the

store with a bag in hand as well as those who exit without one.

Hypothesis

If a store is promoting a sale through advertisements and signage (windows), then a

consumer is more likely to make a purchase.

The above hypothesis clearly states the independent and dependent variables as well

as our predicted result that will be observed through this experiment.

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Experimental Design

We conducted an experiment that tested consumer behavior through observing the

effectiveness of advertised ‘sales’ and signage on mall shoppers. We visited Bellevue Square

and observed the behaviors of consumers & their purchasing decisions while they were

shopping at the mall. We observed three specific stores that target the same demographic

and offer their merchandise at a similar price point; J. Crew, Ann Taylor and Banana

Republic. We made our observations by viewing the store’s entrance and counting the

number of customers who walked out of the store with a shopping bag in hand (from that

store) as well as those who did not. By using this observation technique, we are able to draw

a conclusion on the effect that sales and signage have on consumer purchases. We expected

that the consumers will be more likely to make a purchase in the event of an advertised sale

through signage.

Independent Variables

• The store

• The day & time

• The sales being offered by the store

Dependent Variables

• Purchase or no purchase (bag or no bag)

Controlled Variables

• Location of stores (Bellevue Square)

• Days & times of observations

• 50 customers visit (100 customers total)

Uncontrolled Variables

• Service received in the store

• Assortment of merchandise

• Sale prices

• Percentage of discount (sale)

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Method

Participants - Due to the nature of the experiment, we were unable to select participants as

mall shoppers as to keep it unknown that we were conducting a social experiment on their

behavior as a consumer. We obtained our field data through random convenience sampling,

using a total of five observers.

Procedure – We conducted this experiment over a two-week period, at Bellevue Square Mall,

on Thursday November 10th & Thursday November 17th. We collected the field data by

observing the entrance to each store (Ann Taylor, Banana Republic and J. Crew) and

counting the number of customers that exit with a shopping bag (from that store) in hand as

well as the number of customers that exit without one. We observed a total of 100

customers for each store to ensure that our experiment collects adequate and measureable

data for each location.

Our measure for this experiment will be whether or not signage and advertisement

of a sale influences a customer to not only enter the store but make a purchase. We know

that there could be systematic differences given that we have no control over the consumer’s

behavior, shopping preferences, income, and agenda. Another systematic difference that

could occur is the difference between merchandise offerings and the nature of the sale,

including the percentage discount & prices of the merchandise that is included in the sale.

We also take into account that consumers purchase decisions are influenced by their

experience in store including customer service, organization and merchandise presentation.

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Field Data The field data that was collected throughout this experiment can be found in the

tables below, beginning with day one, to the final day of the experiment. The data found on

the tables is further explained through observations that we made throughout the duration

of the experiment.

Day 1: Thursday, November 10th at 1:00pm

Day 2: Thursday, November 17th at 1:00pm

Number of Purchases per 100 Customers

Ann Taylor Banana Republic

J. Crew

Day 1 14 9 10 Day 2 21 4 15 Totals 35 13 25

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Ann Taylor

Ann Taylor Number of Purchases (Bags) per 100 Customers

Bag No Bag Total Day 1 18 32 50 Day 2 21 29 50 Total 35 65 100

Ann Taylor Day One

On the first day we observed Ann Taylor, the store had a sale sign “new reductions

up to 70% off original prices”. We observed shoppers doing numerous things that showed

they were drawn to the sign. After observing the stores windows and the reduction sign,

shoppers often did a double take when they saw the sign and quite a few decided to enter

the store. The consumers’ behavior in these instances seemed to show that they were

affected by the sale and that it prompted people to enter the store. On this day there was a

36% purchase rate.

Ann Taylor Day Two

The second day that we observed Ann Taylor, the store had a sale for “30% Off of

Your Entire Purchase”. This sale seemed to get even more attention than the first. We were

surprised to see that the sign that was 30% off

received more interest than the 70% off sign.

Although the 30% off was a better offer storewide,

we expected that people would focus more on the

percentage off than reading the wording of the

sign. We saw shoppers stop and glance at the Ann

Taylor window and could clearly see that they were

reading the sale signage. Another influencing factor

is that on this day there were new holiday window

displays that could have attracted more customers

that had noticed the change. On the second day of

the experiment there was a 42% purchase rate.

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Banana Republic

Banana Republic Number of Purchases per 100 Customers

Bag No Bag Total Day 1 9 41 50 Day 2 4 46 50 Total 13 87 100

Banana Republic Day One

The atmosphere surrounding Banana Republic the first day we did our experiment

was rather calm and quiet. There wasn’t much happening at the

store sales wise other than a ‘new arrivals’ sign that was displayed

outside the store. The windows were decorated for the holidays,

which we can assume the new merchandise was their holiday &

winter collections. Most shoppers either just passed the store

without a second glance or quietly went inside to look around.

We did notice a couple shoppers leave and return to the store

later and couple who would come out one side and enter

through the other. There was an 18% purchase rate on this day.

Banana Republic Day Two

The second day of observing Banana Republic was much like the first, slow and a

low number of purchases. The window displays were the same as the previous week, along

with the ‘new arrivals’ sign. There was little incentive to draw mall shoppers into the store,

however people did enter the store but did not necessarily find anything worth purchasing.

We noticed many shoppers with bags from other store in hand which tells us they have the

disposable income to be shopping at a prestigious mall such as Bellevue Square, however

were not persuaded by Banana Republic’s offerings on this day. Over the long period of time

we observed the store, there were only four purchases made out of fifty shoppers that

entered and exited the store. There was an 8% purchase rate on the second day at Banana

Republic.

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J. Crew

J. Crew Number of Purchases per 100 Customers

Bag No Bag Total Day 1 10 40 50 Day 2 15 35 50 Total 25 75 100

J. Crew Day One

The first day of our observation, J. Crew had its window’s displayed with bright

coats, winter sweaters, classic trousers and complimentary shoes to match each styled look.

The theme was called “Button Up” and it definitely created a holiday mood by constructing

snowflakes made out of different buttons. While watching consumers that went into J. Crew,

a few observations were made. First, the demographic was spot on to the Quantcast.com

research. Shoppers were female dominant and all of the other characteristics previously

stated visually fit the individuals. Secondly, the consumers that went into J. Crew had a 25

percent purchase rate (which came from the raw field data. Although there were no sales

broadcasted in the windows, consumers still gravitated towards J. Crew and it was noticed

that the consumers who meandered into J. Crew also had bags from the other stores that

were observed, Banana Republic and Ann Taylor.

J. Crew Day Two

The second day was relatively the same as day one. The consumers were mostly

female, dressed classy with a certain level of sophistication

in their strut. The windows were in a transformation, or

‘work in progress’ phase. J. Crew was in the middle of

changing the visual presentation so the front of the store

looked a bit disheveled. Although the windows were in the

midst of a facelift, the purchase percent rate increased to an

average 43 percent. This was a rather substantial growth

from the week earlier 25-percentage rate. The observation

that was noticed that changed from the previous week was

that J. Crew introduced the holiday seasonal emerald bag.

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By adding in the introduction of the Christmas bag could have altered the purchase decision.

This concluded that while shopping at J. Crew, the window display had little to do with

consumer purchasing.

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Analysis Results

After gathering all of our raw data and analyzing the outcomes from each visit at

each store we have proven our hypothesis to be true that advertised sales have an influence

on consumer purchasing. We chose to observe Ann Taylor, J. Crew, and Banana Republic at

Bellevue Square because they all have similar target audiences & equal foot traffic, so our

experiment would have set variables and our findings would be more accurate. Of the three

stores, Ann Taylor was the only one with sales during both visits. Banana Republic had new

arrivals during both visits and J. Crew didn’t have any advertised sales going on during either

of our visits.

During the first visit Ann Taylor was having a sale for 70% off already reduced

prices. This day we counted 18 shoppers exit the store with purchases out of 50 total

shoppers. The second visit Ann Taylor was having a sale for 30% off all merchandise. On

this day 21 of 50 shoppers left with purchases.

J. Crew did not have any signs or sales happening at the store. During our first visit

10 of 50 shoppers made purchases and 15 of 50 made purchased during the second

observation day.

Banana Republic had “New Arrivals” signage placed outside the entrance of the

store on both days we did our experiment; however, there didn’t seem to be an influence on

the shopping statistics as both days had considerably lower purchases than the other two

businesses. During the first visit only 9 of 50 consumers made purchases and the second day

purchases dropped to 4 out of 50 shoppers.

We can conclude from these statistical findings that sales do influence consumers to

make a purchase. Banana Republic had a 13% purchase rate out of 100 customers while J.

Crew had a 25% purchase rate, both stores did not have sales advertised in their windows.

Ann Taylor was the only store with advertised sales in their windows during our visits and

had the highest number of total purchases between the three stores with a 35% purchase

rate per 100 customers. This confirms our hypothesis that if a store is promoting a sale

through advertisements and signage (windows), then a consumer is more likely to make a

purchase. Our hypothesis is not only confirmed by the data we conducted and illustrated

above, but it can also backed up by the estimated number of visits to each store’s online site

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found on Quantcast.com. We took the opportunity to compare the three stores internet

presence and found that while J. Crew had the highest number of visits, they sell to both

men and women while Ann Taylor had the second highest number of visits and they are

specifically a women’s only brand. Banana Republic’s Internet presence was significantly

lower during the past year, which correlates directly to the low numbers of purchases we

observed during our experiment.

www.Quantcast.com

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Infographic

The above illustration shows the process that was taken by our group in order to

observe and execute our study. First, our group, Candice, Kaitlin, Mariel, Ericka and Kristi

jumped in a car. As the group jammed to music and gossiped about boys, they took a

journey to the Eastside. After arriving at Bellevue Square, the group headed to Starbucks for

a jolt of energy and then they separated into pairs to go to each desired store. Once outside

of Banana Republic, J. Crew and Ann Taylor, each individual found a spot to settle in and

the consumer observation began. First, the group inspected the window displays. Banana

Republic had “New Arrivals” signage in the window, while J. Crew had no sale signage and

Ann Taylor had sale signage both days. After tallying up a total of fifty consumers for each

day, the group headed back to Seattle to start analyzing what they discovered. Each store’s

numbers were laid out, by the amount of bags a consumer had after they left the store, over

fifty. Then, the total numbers of both days with consumers with bags were divided into one

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hundred. It turned out that the store that had the most sale signage in the window ultimately

had the most purchases. Ann Taylor came in first with a 35 purchase percentage ratio,

followed by J. Crew with a 25 purchase percentage ratio and Banana Republic came in last

with only a 14 purchase percentage ratio.

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The Sale Effect

Appendix

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Rough Field Data

Ann Taylor Day One Observation

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Ann Taylor Day Two Observation

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Banana Republic Day One Observation

Banana Republic Day Two Observation

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J. Crew Day One Observation

J. Crew Day Two Observation

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The Sale Effect Experiment Photos Ann Taylor

Week 1 Right & Left Window Displays (Sale: 70% off New Reductions)

Week 2 Holiday Windows Right & Left Window Displays (Sale: 30% off Entire Store)

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Banana Republic

Left Entrance Window Display (Featuring a ‘New Arrivals’ sign)

Right Entrance Window Display

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J. Crew

J. Crew Left Side Window Display

Right Side Window Display (work in progress)

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Works Cited

"Anntaylor.com Traffic and Demographic Statistics by Quantcast." Home | Quantcast. Web.

28 Nov. 2011. <http://www.quantcast.com/anntaylor.com/demographics>.

"Bananarepublic.com Traffic and Demographic Statistics by Quantcast." Home | Quantcast.

Web. 28 Nov. 2011.

<http://www.quantcast.com/bananarepublic.com/demographics>.

"Jcrew.com Traffic and Demographic Statistics by Quantcast." Home | Quantcast. Web. 28

Nov. 2011. <http://www.quantcast.com/jcrew.com/demographics>.