Internship in Public Relations Department of an Advertising Agency Essay

Section I Introduction 1.1 Background Internship is one of the essential parts required for the completion of MBA program. It is to provide first hand exposure to the students about the real work scenarios in business organizations. It allows students to imply their theoretical knowledge in the real workplace by enhancing their ability and confidence level in the dynamic business world. Besides, one of the objectives of this program is to enhance student’s interpersonal, communication, report writing skills as well as presentation skills and to understand different viewpoint of the staff and the customer of the organization. 1.2 Objective of the internship The objectives of my internship at Prisma Advertising agency are: To fulfill the requirement of MBA program of Pokhara University. To understand importance Public Relations in corporate world. To understand how public relations enhances brand image. To comprehend successful events. 1.3 Placement For the purpose of internship, the trainee was allowed to perform internship in the organization where she was actively working for past two years. The organization is an advertising agency named Prisma Advertising located in Kalikastha, Kathmandu. The internee had been working in Public Relations Department (PR) as an Executive. 1.4 Expected Learning Experiencing the real life working environment Expand the boundaries of theoretical learning Develop better public relation skills with media as well as in corporate sector Section II Industry and Organization Profile 2.1 Industry Profile There are no records of any kind that tell us about the origin and history of Nepali advertisements. The earliest form of advertising may thus be taken as the trumpet blowing tradition of kings and maharajas to disperse royal messages. The advent of Mass Communication in Nepal can be said to have been through such official proclamations, which were usually accompanied by the use of musical instruments like drums or trumpets. The age-old oral tradition of promotion by vendors selling their wares in the market can also be taken as another early form of advertising. With the national daily  Gorkhapatra churning out advertisements on a regular basis, the advertising sector caught momentum, and the next major development came in the form of an advertising agency, Laxman Upadhaya’s Nepal Advertisers. The main objective of the agency was to publish flashy and attractive advertisements in the print media. Three years later, following in the footsteps of Upadhaya, Keshav Lamichane started Nepal Printing and Advertising Agency owned by Keshav Lamichane. This agency held the accounts of prime clients like Janakpur Cigarette Factory, Royal Nepal Airlines Corporation and Nepal Bank Limited. 2.2 Prisma Advertising Profile Prisma Advertising is the franchisee of Mathew and Ogilvy in Nepal. It is one of the most creative agencies which established in 1991. It is a full service office with team of 47 people which has been growing as creative leader and 360 degree brand stewardship. It provides wide range of services from media, branding, and sales promotion to advertisement. They continuously thrive to provide creative products by giving a consumer touch to what they deliver, also offer fully integrated marketing communication solutions as well as focus on building brand relationship with the consumers. It has been awarded as The Best Agency of the Year 2004-05, 2005-06, 2006-07 & 2007-2008 (four years in a row). In addition to it also has won the only international advertising award for Nepal – â€Å"Bell Ringer 2000† from Johnson &Johnson, USA. Prisma approach to communication: These activities are part of the prisma advertisement agency which is provided to the clients according to the promotion they required for their products and services. 2.3 Importance of Public Relation Department Why does Brand or an Organization need a Public Relation Department? Unless one is a celebrity, good public relation just does not happen on its own. It takes lots of skill and consistent hard work, over a period of time. It’s part art, part science and when practiced correctly the results can be very rewarding. Here are few reasons why Public Relations is important: Media coverage increases credibility Paid advertising increases name recognition; media relations increases credibility. When people read a story about the excellence of a particular organization in a newspaper or see a story praising the company on television, they are much more likely to have a favorable opinion of that particular organization. Media coverage helps to attract â€Å"quality† prospects  Because a public relations increases credibility, it helps to attract those who want the best. When people have heard of the organization or brand and have a favorable impression of it, it is easier to attract and hold their attention while the organization or the brand tell their story. Media coverage makes you a player  Coverage in important publications or on TV can make the organization or brand look much larger than it is. Public relations help to avoid price competition  If people believe that the particular brand is the best, they will understand why it is worth paying the price. A public relations program stretches the marketing budget  Because the media does not charge for news coverage, the relative cost of a good program is a lot less than for paid media or a direct mail campaign. Best way to launch a brand  Public relations are also considered by many as the best way to launch a brand or new product. When something is new the media often will write about it because of its news value. Section III Critical Analysis of Job Performed 3.1 Function of Public Relation Department PR Department functions to maintain and enhance mutual understanding/relationship between its clients and public. The core responsibility of the PR Department is to build and protect the brand. PR communicates client’s views, objectives and purposes to the general mass and at the same time monitors feedback and correcting the public attitudes/ reactions. For this, department focuses on major areas: Crisis Management: To avoid any crisis and its adverse effects to its clients, the PR Department prepares press releases and makes them public through media vehicle. Corporate Social Responsibility (CSR): Also known as corporate responsibility, corporate citizenship, responsible business and corporate social performance that forms of corporate self-regulation integrated into a business model. To fulfill these responsibilities the company’s want to conduct events, and any such social events are organized for the client by this department. For example: charity program. Further, they also create social awareness for NGOs and INGOs and other organizations working for the welfare of the society at discount rates. Event Management: Various events such as press conference, product launching events etc. are organized either to provide new information or introduce a new product. In such events, various media houses, guests are invited and are provide with the press release which gives details about the event. Monitoring and tracking current scenario: Either it be country’s current happenings or competitor’s activities, PR Department tracks the entire essential data with the help of media and reports to the internal staff members as well as the client in daily basis as well as a monthly reports. 3.2 Activities Performed The internee was part of a PR Team and there were five members in this team. Public Relation Head, Senior Public Relation Supervisor, Copy Writer and PR Executives are the designations of this team. The internee was working under direct assistance of Senior Public Relation Supervisor. Each team members  had their specific task that they were assigned to and those were mentioned in their job description. Following were the job assigned to the intern. 1. Everyday internee had to make a daily update on country’s news update regarding political, business and social happenings and send it to the clients. 2. Track on competitor’s activities like press ad, news and send it to respective clients. 3. Make Share of Expense (SOE) respective to the competitor’s and send it to clients on monthly basis. 4. Make regular interactions with media as well as clients to enhance better public relation. 5. Make press releases, news articles on client’s activities and send it to media for the coverage. 6. Organized events like Press Conferences, Formal meetings with government bodies, and Cocktail parties as per the clients need. 7. Crisis management of the clients. Bajaj Pulsar 200 NS Launch, Coca-Cola Inter-School National Football Tournament, Coca-Cola ‘Live Positively ‘and Western Union’s collaboration with Mercy Corps to empower 1200 women to be financially literate were some of the major events organized as an internee under PR Department. The major task of the PR Department during these events was to highlight the program as much as possible with the help of media as well as word of mouth publicity. Few of the coverage of these events are attached below. Coverage of the Events Bajaj Pulsar 200 NS launch Coca-Cola Inter-School National Football Tournament Coca-Cola ‘Live Positively’ Western Union’s collaboration with Mercy Corps Activities Performed Working as an intern in PR Department, internee had to face several crisis situations where various brand reputation damaging news were covered by  newspapers and television. To tackle with those situations, crisis management was done. Few examples of Crisis Management are as follows: Nepal Samachar Patra and Sagarmatha Television were continuously showcasing various news regarding faulty products of Bottler’s Nepal Limited. To surpass those negative news, internee with the PR team had undergone the crisis management by flowing the positive news of the company in The Kathmandu Post. This is a technique where PR people do not counter the negative news directly but highlights the positive aspect of the company, person or the brand to put the positive news in the top of the publics mind. Negative News covered by Nepal Samachar Patra Positive News published in The Kathmandu Post 3.3 Public Relation Department Analysis As an internee under PR Department of an advertising agency, 3.4 Problem Identification and Solution Alternatives As every best effort does have a loop hole, PR Department also has to face certain problems at times.

Johnson and Johnson

TERM PAPER For STRATEGIC OPERATION MANAGEMENT Submitted by: ANALIZA T. CEDILLO BSBA 4-1 (OM) Submitted To: Prof Avila JOHNSON & JOHNSON COMPANY INTRODUCTION * The Company supports the United Nations’ Millennium Development Goals to improve the health of mothers and children in developing countries. As a founding sponsor, Johnson & Johnson helps launch the United States’ first free mobile health service, providing health information via text messages for Pregnant women and new mothers. * They are the world’s sixth-largest consumer health company There are the world’s largest and most diverse medical devices and Diagnostics Company. * They are the world’s fifth-largest biologics company. * And the world’s eighth-largest pharmaceuticals company * Johnson & Johnson was a biggest company that caring the world and enduring strength they consistent approaching and to managing  they Business. * They have more than 250 operating companies in 60 coun tries employing approximately 129,000 people. Our worldwide. * Johnson  &  Johnson Family of Companies work with partners in health care to touch the lives of over a billion people every day, throughout the world.HISTORY: Johnson & Johnson,126 years more than a century caring. Its start on 1886 with the three brothers, Robert Wood Johnson, James Wood Johnson and Edward Mead Johnson, found Johnson  &  Johnson in New Brunswick, New Jersey, U. S. 1901, is a Part of its commitment to first aid, Johnson  &  Johnson publishes the first Aid Manuals, using proven best practices from leading physicians. 1910, James Wood Johnson takes over the leadership of Johnson  &  Johnson until 1932. The first overseas operating company opens in the United Kingdom was on 1924. And they expand to Mexico and South Africa.On 1932, Robert Wood Johnson II. He begins leadership of Johnson  &  Johnson. Known as General Johnson, he transforms the Company into a global decentralized Family of Companies. 1963-1973, Under Chairman and CEO Philip B. Hofmann's leadership, operating companies launch new treatments for schizophrenia, family planning and personal care. Also, 1963 marks the last year that JOHNSON'S ® Baby Powder is sold in tins. They announce plans to build our new World Headquarters in New Brunswick, New Jersey, and form a public-private partnership to revitalize the city. 2002, William C.Weldon becomes Chairman and CEO of Johnson  &  Johnson, only the eighth person to lead the Company since its founding. Under his leadership, the Company enters new therapeutic areas such as HIV/AIDS, and health and wellness. 2011, They celebrates 125 years of caring and looks to the next 125 years of transforming care for patients, consumers and communities around the world. In the year of 2012, Alex Gorsky is appointed Chief Executive Officer of Johnson  &  Johnson. As only the seventh CEO in our history, he continues a legacy of leadership. Company OverviewJohnson & Johnson's commitment to innovative health care products has resulted in consistent financial performance. The Company has 29 consecutive years of adjusted earnings increases and 50 consecutive years of dividend increases. Johnson ; Johnson, through its family of companies, employs approximately 129,000 people worldwide and is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. Johnson ; Johnson's primary interest, both historically and currently, has been in products related to health and well-being.Johnson & Johnson was organized in the State of New Jersey in 1886. Johnson & Johnson is organized on the principles of decentralized management. The Executive Committee of Johnson & Johnson is the principal management group responsible for the strategic operations and allocation of resources of the Johnson & Johnson family of companies. Johnson & Johnson's operating companies are organized into three business segmen ts: Consumer, Pharmaceutical and Medical Devices and Diagnostics.A Group Operating Committee, composed of managers who represent key operations within the segment, as well as management in specialized functional departments, oversees and coordinates the activities of domestic and international companies related to each of the business segments. However, in line with the principle of decentralized management, senior management groups at U. S. and international operating companies are each responsible for their own strategic plans, as well as the day-to-day operations of those companies, and each international company is, with some exceptions, managed by citizens of the country where it is located.HR/MANAGEMENT Johnson ; Johnson Strategic Framework They believe that in serving. those who sell their product, they serve himself. Foundation The Strategic Framework starts with Credo, the guide to help navigate way through challenges and opportunities. From Credo, there Aspiration emerges – by caring, one person at a time; they are help billions of people around the world live longer, healthier and happier lives. Strategic Planning/Principles From the foundation they build a unique kind of a set.They based on a health care, First they focus on managing for the long term. Second they operate under a decentralized management approach. And then do all this through a unique culture that values and fosters the development of people. Executive management of Johnson ; Johnson, with the support and approval of the Board of Directors, has set the fundamental strategic direction of the Company to remain a broadly-based human health care company for the consumer, pharmaceutical and medical device and diagnostics markets.Strategic planning is guided by the ethical principles embodied in Our Credo, unifying our people worldwide behind a set of common values and providing a constant reminder of the Company's responsibilities to all of its constituents. With over 250 operati ng companies located in 60 countries throughout the world, Johnson & Johnson is organized on the principle of decentralized management. Each international company is, with some exceptions, managed by citizens of the country where it is located. Senior management groups at U. S. nd international operating companies are each responsible for their own strategic plans. On an on-going basis throughout the year, at meetings of the Board and Committees of the Board, management of the Company and Board members discuss the strategic direction and major developments of the Company's various businesses. The process is an interactive/on-going dialogue which provides the Directors with insight into the activities and direction of the Company's businesses. Accounting/Finance Department Corporate Governance The values embodied in the Credo guide the actions of the people of theJohnson & Johnson Family of Companies at all levels and in all parts of the world. They have done so for more than 60 year s. These Credo values extend to our accounting and financial reporting responsibilities. Management is responsible for timely, accurate, reliable and objective financial statements and related information. Such as: * Maintain a well-designed system of internal accounting controls. * Encourage strong and effective corporate governance from our Board of Directors. * Continuously review our business results and strategic choices. Focus on financial stewardship. Accounting Controls The professionally trained internal auditors travel worldwide to monitor system of internal accounting controls. This system is designed to provide reasonable assurance that assets are safeguarded and that transactions and events are recorded properly. The internal controls include self-assessments and internal and external audit reviews of operating companies, which concludes â€Å"Management's Report on Internal Control over Financial Reporting,† printed in Annual Report.Johnson  &  Johnson is gu ided by the values set forth in Credo, created by General Robert Wood Johnson in 1943. Credo and the principles have been woven into the fabric of the Company. The values articulated of Credo extend to accounting and financial responsibilities to Johnson  &  Johnson shareholders and investors. The Johnson & Johnson SWOT: Strengths * Worldwide sales have grown 14% indicating a strong position for the global group. * The business model adapted by Johnson and Johnson fundamentally uses the adaptation of entrepreneurial values in order to retain an edge within the market place. Working with intensive scientific notions Johnson and Johnson utilize a varied expanse of problem solving techniques in order to challenge the standard practice and capitalize on growth through emerging markets which enables associated growth. * The use of independent offices working as standalone units provides the opportunity to develop concepts with cultural considerations which can prove important when ta king a product to global markets. Weaknesses There is increasing pressure within pharmaceutical markets to reduce prices in line with medical budgets and maintain patent expirations to ensure generic programmers are updated within critical path movements. * Challenges have been faced within Johnson and Johnson where a reduction in the market demand for key products has been identified; some of these products were branded and have been replaced by generic programmers at the end of patent time lines. * Internal weakness across the industry and not isolated to Johnson and Johnson would be the level of theft and counterfeiting of drugs managed through internal personnel.Opportunity * Whilst the recent acquisition of Pfizer Consumer Healthcare will act as an opportunity in its own right to promote growth for the organization through alternative routes there is the added value capitalized through the return on investment which will be realized 12 months before plan releasing funds back in to the bottom line. * Johnson and Johnson have highlighted new developments in pharmacy products with five undergoing regulatory review which provides the opportunity to grow the existing product portfolio. Development into new functions of medical devices and diagnostics will provide new markets to entry which will result in business growth. * With the development of WTO rules to prevent the availability of cheap generic drugs there is the opportunity to reduce the level of lost profit due to generic introduction as patents run out. Whilst this will aid Johnson and Johnson where they own the brand where they are looking to capitalize on introducing generic drugs to market this ruling will become a hindrance. Threats Generally within the main pharmaceutical companies there is a high level of competition for the generics markets where patents finish and it is the first to entry where success will generally be determined. * Technological developments with bio-tech concepts will potent ially move the traditional pharmaceutical methods out of the market place in the long term although there is an economical argument that this form of development can be segregated to run alongside traditional methods and complement as opposed to replace.

Frederick Douglass’ Paper Essay

This map portrays a mass exodus into the Northern states as well as Canada. The trip from Louisiana to Indian was an arduous expedition taking several weeks or months to transverse. In this trek African Americans prove their stalwart bravado in the face of danger and prove that their freedom is worth the trail . Frederick Douglass With the idea African American influence in the Civil War, the name of Frederick Douglass is synonymous with freedom, or free blacks. His belief in an unshackled African American race led him to be the spokesman of abolishing slavery. His importance in shaping the fate of the Civil War is found in his being a voice for the freed slave, the oppressed slave, and the sympathizers of abolition. He changed the course of the war simply by speaking out and demanding to be heard, as well as his actions against oppression. His advocacy in abolition changed the tide of not just the war, but also the mentality of many whites to the capabilities of blacks, their intellect, as well as their strength and ingenuity in battle. Douglass was not only a lecturer on anti-slavery but he was a journalist and writer as well. Douglass was invited to join the Anti-Slavery Society and journeyed on a circuit across the Northern states to speak out against slavery by using his own life as a basis for others to become abolitionists. During one of Douglass’ speeches in Pendleton Indiana he is accosted by a mob and has his right hand broken, only a friend and fellow abolitionist stopped the mob from murdering Douglass; in this story and many others, Frederick proves to be a guiding light for other African Americans to unite and be free. Along with these feats of bravery, Frederick Douglass has a magazine entitled Frederick Douglass’ Paper, and subsequently has another paper entitled, Douglass Monthly in which he speaks of the horrendous nature of slavery, its disgrace to humanity and ways in which free blacks are regaining their lives in this country. (Tracy O. 2005). Bordewich describes Frederick Douglass as such, Douglass was one of the most charismatic members of an emerging generation of black intellectuals who were beginning to give African Americans a national voice through antislavery lecturing, journalism, and the ministry. More than anything else, however, it was the steady growth of independent black churches that provided the African American with what John Mercer Langston, the found of the Ohio State Anti-Slavery Society, a black organization called the ‘opportunity to be himself, to test his own powers. ’ (226) The bases of Douglass’ speeches were to encourage abolitionists’ fight in freedom of the African Americans. Many parts of the Northern states were still segregated, especially in areas that could prove to encourage African Americans to learn and be educated. In a Philadelphia, Robert Purvis instituted a black library . In New York, David Ruggles instituted a similar library. Blacks were rising up; they were speaking their minds about suffrage, about oppression, discrimination on public transportation, and schools. Frederick Douglass aided in the movement of a race to define themselves as free to a forming nation, and with the idea of personal liberty laws helping to protect fugitives once they entered the North, this movement quickly became a staple in Douglass’ speeches as well as becoming a changing force in the course of the Civil War. (Bordewich, 226). In striking contrast to white abolitionists, black abolitionists incited their own personal struggles with slavery to get their point across that humans do not belong in bondage. In extreme cases of rebellion groups, some believed in the taking up of arms against their former masters and in the issue of slavery using the events happening on the Amistad d as a vehicle to incite further rebellion and to stoke the fires of freedom and to attest that the supposed supremacy of white slave owners could be overthrown (Bordewich, 227). The antislavery movement, with the help of Frederick Douglass, became one which, though devastated the South’s economy, defined the history of a nation during the Civil War. During his speech with the Anti-Slavery Society, Douglass met with many other like-minded abolitionists, and the lectures proved to be indispensable in allowing the general public to know what abolition was and why it was so integral in the Civil War. As Bordewich describes of Douglass’ life during these lectures. The antislavery movement provided Douglass and a host of his fellow speakers with a forum for their views and life experience that African Americans had never enjoyed before. The stories that they told of floggings, sadistic overseers, shattered families, and prostituted mothers and sisters overwhelmed skeptical Yankees for whom slavery was an unpleasant but abstract national problem, and turned thousands of them into active abolitionists. Douglass soon became one of the movement’s most popular lecturers. ‘All the other speakers seemed tame after Frederick Douglass,’ Elizabeth Cady Stanton wrote, after a convention at Boston’s Faneuil Hall. His immensely popular autobiography, first published n 18445, made his name close to a household word (227) Douglass was so adamant about his views of abolition that once during a train ride where he paid for his first class ticket he refused to leave his seat despite the insistence of the conductor. When his refusal couldn’t be tolerated any longer, the conductor had six men physically lift him from his seat to try and remove him due to the enforcement of Jim Crow laws. (Bordewich, 228). The Anti-Slavery Society offered Douglass the opportunity to lecture in New England in the spring of 1843. The lectures began in Vermont and New Hampshire and they ended in Ohio and Indiana. As Bordewich states of this event, Douglass was selected as one of the corps of traveling speakers who would cross the country. He was thrilled. This was his breakthrough, his opportunity to carry his message to a national audience. ‘I never entered upon any work with more heart and hope,’ Douglass wrote. ‘All that the American people needed, I thought was light. Could they know slavery as I knew it, they would hasten to the work of its extinction. ’ 228. Among some of the other noted lecturers there were Charles L. Remond, Henry Highland Gernet, Amos Beaman, and Charles M. Ray. During this period, Frederick Douglass found within himself the ability to offer to an audience the reality of slavery through his own tale of it, and his eventual fugitive state and then freedom. The Church In times of crises, faith is tested, and through this testing there is a revelation of belief and a growing of churches. During the Civil War, both the enslaved blacks and the freed blacks depended on a source of stability and in no other place was this found more strongly than in the church. The church provided a meetinghouse for abolition events (lectures, etc. ), it gave the black community not only a place in which to worship but also a place in which to become united as a people. Not only were many Northern abolitionists found within the sight of the church and religion but also many blacks found within the church a place of sanctuary. As Bordewich states on the subject of black revival religion. Between 1863 and 1846, African Methodist Episcopal congregations grew from eighty-six to nearly three hundred, and spread from the churche’s orginal base in Philadephia as faw wast as Indiana. Black Baptist churches, meanwile, had grown from just ten in 1830 to thirty-four in 1844. Not surprisingly, black churches were usually outspoken in their denunciation of slavery, and many of them were woeven into the web of the abolitionist underground, like the Bethel AME church in Indianapolis, a key station on the Underground Railroad, and Cincinnati’s Zion Baptist Church, which regularysheltered fugitives in its basement (226). Religion was also a source by which the African Americans could be educated. In this turn of events it is not necessarily the African Americans who were a great influence on the Civil War but the war gave them an opportunity to become educated and this happened mainly through studying the bible and learning to read it and become familiar with its morality. In the South, the general opinion was that education for blacks was not stunted through un-exposure to education, but the North held a very different idea ; being removed from the obstacle of slavery allowed freeman to discover their propensity for learning. It is through religion that this education was made possible, as Glatthaar states, â€Å"The more Southern black soldiers studied the Bible, and the better they learned to read and write, the sooner proper character, represented by morality, thrift, industry, and striving for perfection, would take shape among these new freedmen. In turn, this would help to uplift the entire South† (225). The view taken by the abolitionist movement in regards to religion and education was that in the reconstruction it was essential for African Americans to be able to read, write and do arithmetic. One of the overwhelming sentiments that came out of the Civil War was the engrossment of religion to the newly freed blacks. Their strength now came form a religious source and this source gave them the means by which to discover for themselves the true meaning of freedom and gratitude for that freedom. This can best be described through McPherson’s quoting of Susie King Taylor , There are good friends to the negro. Why, there are still thousands that have not bowed to Baal†¦Man thinks two hundred years is a long time, and it is, too; but it is only as a week to God, and in his own time-I know I shall not live to see the day, but it will come-the South will be like the North, and when it comes it will be prized higher than we prize the North to-day. God is just; when he created man he made him in his image, and never intended on should misuse the other. All men are born free and equal in his sight (314). McPherson goes on to give detail about sentiment in the church, and Rev. J. Sella Martin a former slave became pastor of the Joy Street Baptist Church in Boston and wrote this note to Frederick Douglass, Just think of Dimmick and Slemmer (Union Officers) sending back the fugitives that sought protection of them. They refuse to let white men sell the Southerners food, and yet they return slaves to work on the plantation to raise all the food that the Southerners want. They arrest traitors, and yet make enemies of the colored people, North and South; and if they do force the slave to fight for his master, as the only hope of being benefited by the war, they may thank their own cowardice and prejudice for the revenge of the negro’s aid and the retribution of his bullet while fighting against hem in the Southern States. I received a letter form Mobile, in which the writer states that the returning of those slaves by Slemmer has made the slaves determined to fight for the South, in the hope that their masters may set them free after the war, an when remonstrated with, they say that hey North will not let them fight for them (23). The influence that can be seen today with religion and African Americans is the vastness of churches rising across America, and the gospel hymns inspired by wanting to break free of slavery.

Use of Scientific Management in the 21st Century

Use of Scientific Management in the 21st Century Roberta Larkins Jones International University April 14, 2010 Abstract The 19th and 20th Century gives the foundation of the shift in management modeling. Frederick Taylor, Henry Gantt, and Lillian Gilbreth gave great insight into the need for a paradigm shift in business. The elements of this shift form the basis of the four principles of Scientific Management. The principles of Scientific Management and their use in the 21st Century are the elements of this paper. Use of Scientific Management in the 21st Century The management of an organization that has a structural system which clearly defines the functions of the departments, groups, and individuals can be defined by the term Scientific Management originated by Frederick Taylor. (Nelson, 2003, p. 1) The Encyclopedia for Business (n. d. ) defines Scientific Management as â€Å"methods aimed at determining the best way for a job to be done. (n. d. , pg 6). While the initial use of Scientific Management in dealing with issues of efficiency and productivity is rooted in the history of management theory during the 19th Century and early in the 20th Century, the same organizational needs are evident in business today and the usage of the fundamentals of Scientific Management can be used to effectively increase both efficiency and productivity in a 21st Century organization. The Pioneers Frederick Taylor, known as ‘the most in? ential business guru of the 20th century’ (154), began his journey into business in an apprenticeship to a patternmaker for a pump manufacturing company in Philadelphia. (Wren, 2004, 121) It is here Taylor has the opportunity to see firsthand what the employees are experiencing and make note of the elements of discourse. Wren describes the conditions as â€Å"worker restriction of output, poor management, and lack of harmony between labor and management† (2004, p. 122). As Taylor continued to adva nce in his career, he stood witness to instances of these same conditions in the employees at Midvale Steel Company. It is during this time in his career along with his desire to change those working conditions that he began the work in Scientific Management that allows him to make his mark in managerial history. Henry Gantt, also a mechanical engineer, worked with Taylor for many years and both were partners in the development the concept of scientific management, although Taylor is more widely recognized for the model. Gant’s influence provided fuel for a better understanding of human nature in the workforce by improving employee representation plans , improving the practices of human-resources, and cooperation by labor-management,. Wren, 2004, p. 165) The human side of management is also the focus of works by Lillian Gilbreth, who is often called the first lady of management. (Pioneers of Management, n. d. , p7). Together they were the driving force in the use of Scientific Management and the creation of human resource principles within an organization. The Fundamentals Taylor viewed busi ness as â€Å"a system of human cooperation that will be successful only if all concerned work toward a common goal† (Wren, 2004, p. 125). The four principles of Scientific Management address the initial concerns that Taylor witnessed. Hodgetts and Greenwood (1995) share the four fundamentals as (1) Develop a science for each element of the person’s work, thus replacing the old rule of thumb, (2) Scientifically select, and then train, teach, and develop the worker, (3) Heartily cooperate with the personnel so as to insure that all of the work is done in accordance with the principles of the science that it has been developed, and (4) Management should take over all the work for which it is best fitted than the workers, and allow the latter to handle the rest. (1995, p. 18-221) These fundamentals can also transfer into the resolution of the original conditions by increasing worker productivity, effective management, and creating a harmonious relationship between management and worker. Increasing Worker Productivity Embedded into principles one and two, are considerations for sound human-resource management today. Taylor anticipated the concept of matching the abilities of a worker to an assigned job. (Wren, 2 004, p. 129) Instead of developing their own approach to a job through experience, the employee will learn to do it the right way. Hodgetts & Greenwood, 1995, p. 218) plus trained in newer techniques which will allow the employee to be more productive in their output. Taylor’s belief in productivity was grounded in the idea â€Å"the real potential for increased output was not ‘working harder’ but ‘working smarter. ’† (Wren, 2009, p. 128). Hodgetts and Greenwood (1995) describe the ability to increase productivity â€Å"by training, teaching, and developing their personnel, this quality-driven organization was able to achieve substantial increases in efficiency and cost savings. † (1995, p. 220). Effective training assesses the training need within an organization, trains the employee with advanced or more efficient tools and techniques, then allows the employee to return to the organization and utilize their new skills thereby increasing the productivity of the employee. Effective Management The third principle in scientific management is presented by the utilization of effective management in an organization. According to Taylor, the principle object of management is to secure the maximum level or prosperity for both employer and each employee. (Wren, 2009, p. 48). Whether this is done by 21st Century talent management programs including bonuses and promotions, or 19th Century reward and recognition system, the inclusion of something that demonstrates to the employee that he or she is valued is essential. Harmonious Relationship The fourth principle of scientific management is to enforce the theory of workers and management coming together in order to run a successful organ ization. Part of this effort is in allowing the workers to become part of the solutions needed achieve higher levels of efficiency and productivity. Darmody (2007) shares that management now realizes that when workers are given the opportunity to suggest ideas, they will work harder in the implementation of and assurance in the success of them. (2007, p. 23). Taylor’s view of this is continuous improvement effort. Conclusion The four principles of scientific management were important in the 19th century and continue to be important in the 21st Century in business. An organization that has a goal to remain successful and competitive must incorporate all four components into the strategic plan. As the mindset of management shifts to deal with the internal and external forces of business in moving forward, a look back at the vision of Taylor, Gantt, and Gilbreth will assist the organization to succeed. References Darmody, P. (2007). Henry L. Gantt and Frederick Taylor: The Pioneers of Scientific Management. AACE International Transactions, 15. 1-15. 3. Retrieved from Business Source Premier Database. Hodgetts, R. , & Greenwood, R. (1995). Frederick Taylor: Alive and Well and Ready for the 21st Century. Academy of Management Best Papers Proceedings, 218-222. Retrieved from Business Source Premier Database. Nelson, D. , (2003, Jan) Scientific Management, Dictionary of American History, Retrieved from http://www. highbeam. com/doc/1G2-3401803768. html Pioneers of Management. (n. d. ). In Encyclopedia of Business (2nd ed. ). Retrieved from http://www. referenceforbusiness. com/management/Or-Pr/Pioneers-of-management. html Wren, D. , (2009) the evolution of management thought (6th Ed). Hoboken, NJ: John Wiley & Sons

Factory Outlet vs Departmental Outlets

CUSTOMER PERCEPTIONS OF FACTORY OUTLET STORES VERSUS TRADITIONAL DEPARTMENT STORES Dr. G. S. Shergill* Department of Commerce, Massey University, Albany Campus, Private Bag 102 904 NSMC, Auckland, NEW ZEALAND Ph: 0064 9 414 0800 x9466, Email: G. S. [email  protected] ac. nz & Y. Chen Department of Commerce, Massey University, Auckland, NEW ZEALAND, Email: [email  protected] com CUSTOMER PERCEPTIONS OF FACTORY OUTLET STORES VERSUS TRADITIONAL DEPARTMENT STORES Abstract This paper examines customers’ perceptions of two different types of retail stores; factory outlet stores and traditional department stores; as well as their purchasing preferences. In addition, the paper compares these preferences across demographics. It explores four critical factors which significantly influence customers’ perceptions of both types of retail store. Findings are base on a mall intercept survey with 205 respondents across a range of demographics. The results indicate that factory outlet stores are perceived as having comparatively lower prices and attractive promotions in comparison to traditional department stores, while traditional department stores have competitive advantages in terms of the other three factors. Also it is found that different demographic characteristics play an important role in influencing differences in customer perceptions regarding the different types of stores. The main implication of these findings is that factory outlet stores are perceived favourably and that they need to build more positive marketing strategies accordingly. Keywords- Factory outlet stores, Traditional department stores, Customer preferences. Nowadays, an increasing number of customers choose factory outlet stores as their alternative shopping places, rather than continuing to shop at traditional department stores. Since customer loyalty is becoming more important for marketers in achieving sales performance goals (Kulpa, 1998), this increase in the use of factory outlet stores as an alternative choice poses a significant challenge to traditional department stores. This circumstance means that the competition between these different retail channels has become extremely intense. A factory outlet store is owned and operated directly by a manufacturer to sell only its brand of merchandise, whereas a traditional department store does not manufacture products itself but instead sells a variety of products manufactured by independent firms (Meyers, 1995). In a factory outlet store, the manufacturer has full control over the product offering, in-store customer service and the quality and price of the product sold, as well as the physical attributes of the store. Traditional department stores are owned 1 and operated independent of manufacturers. Manufacturers of the products sold at these stores have limited control over in-store customer service, prices of the products sold and the physical attributes of the stores. Initially factory outlet stores were established to offer end-of-line goods and seconds at the lowest possible prices (Lombart, 2004). As a result it was mainly customers in lower socio-economic groups who were willing to buy through this channel. These outlets have begun, however, to be gradually accepted by more customers, in part due to special annual sale promotions which began during the 1980s (Lombart, 2004). Additionally, customers’ increasing value-consciousness has stimulated the development of factory outlet stores. This has especially been the case in the United States, where there are over 10,000 factory outlet stores now in operation (Meyers, 1995). Nowadays, factory outlet stores which provide the same range of brand name merchandise attract more and more customers, and have developed into showcases in much the same form as that of traditional department stores (Fernie and Fernie, 1997). It is unclear, however, whether customer perceptions of factory outlet stores versus traditional department stores may differ in general and across demographics, as well as how such differences may be seen. The findings will assist marketers, particularly those employed by manufacturers, in understanding the ways in which customers view both traditional department stores and factory outlet stores. This insight will allow such marketers to set more suitable customer-oriented marketing strategies and business objectives, achieve superior financial performance and develop their marketing performance in the retail industry. The main objective of this paper is to explore customers’ perceptions of these different types of retail stores, as well as their purchasing preferences. In addition, the paper examines customer preferences across demographics regarding customers’ perceptions of factory outlet stores and traditional department stores. The paper contains five sections. Following the introduction is an overview of literature, summarising previous studies, and sets the hypotheses to be tested. The next two 2 sections deal with research methodology, data analysis and findings. Conclusions and implications are discussed in the last section. LITERATURE REVIEW Factory outlet stores vs. Traditional department stores Factory outlet stores An increasing number of factory outlet stores have been built for various reasons. Some of these stores have been created to deal with seconds’ products, some are presented as discount stores associated with new distribution channels, and some have been designed by manufacturers in order to reduce the price of their products through savings on overhead costs (Parker et al. , 2002). This last reason has been pursued in order to attract more current and potential customers in price-oriented and price-sensitive markets and satisfy customers’ varying needs and wants (Parker et al. , 2002). Initially, the factory outlet store was identified and established as an off-price retailer (Joshi, 2003). Internationally, especially in Europe, factory outlet stores were built and developed for four basic reasons: to sell discounted products; to reduce overhead costs and carry out sales promotions; to create flexibility of stock running; and to achieve brand promotion (Joshi, 2003). The roles and functions of factory outlet stores have changed significantly over the past few decades. They are no longer designed only as low price stores, but are also used for branded product promotions, especially in Europe and the US. For example, manufacturers of the Reebok, Levi, Gap and Warnaco brands regard their brand promotion to be one of the key functions of their factory outlet stores (Joshi, 2003). Factory outlet stores have also been designed as specific seconds stores and discount stores, and are located in many of Japan’s major cities (Joshi, 2003). There has been a 62% increase in factory outlet stores since 1990 and the trend is for this increase to continue (Rudnitsky, 1994). Factory outlet stores have been developed using original styles by including some specific characteristics of conventional shopping centres in order to provide products with attractive prices and a leisurely shopping environment for most price-oriented customers (Golub and Winston, 1983). 3 Nowadays, the factory outlet stores are normally recognised as â€Å"†¦ gaining a larger market share through price reductions, which are aimed at capturing the mass market† (Hellofs and Jacobson, 1999, p. 3). Therefore, the factory outlet stores need to develop their level of customer satisfaction and ensure that the products sold in these stores are of a reasonable quality in comparison to the previously built brand images (Parker et al. , 2002). Overall, the trend in factory outlet store development is quite satisfactory. For example, according to a sur vey discussed in Happy Campers at Outlets (Rauch, 2005), around 84% of respondents agreed that the prices in these stores met, and even exceeded, their expectations. Also, nearly 93% of the respondents indicated their intention of making a return visit (Rauch, 2005). In summary, the development of factory outlet stores is rapid. They are seen as offering reasonable and lower prices than traditional department stores, and a much better shopping environment and atmosphere than ever before. Therefore, the sales performances achieved by factory outlet stores are satisfactory, tending towards positive maintenance and a continuous increase in this type of store. Traditional Department Stores Nowadays, traditional department stores are facing a significant threat because the number of consumers who shop at traditional department stores is decreasing, although the sales of these stores have increased (Nasri, 1999). The number of customers who shop at traditional department stores has dropped sharply (Li, 2003). This means that department stores are in an endangered situation, and are receiving a lessening portion of the total retail sales. This situation has led to a significant decrease in the number of department stores (Li, 2003). Traditional department stores are perceived by customers as playing a distinctive fashion role and offering a range of up-to-date fashion merchandise with reasonable prices, high levels of customer service and a comfortable shopping atmosphere 4 (Johnson, 1994). Customers are more willing to enter into, and purchase products in, traditional department stores, which offer more excitement and emotional attachment than do outlet stores. As a result traditional department stores tend to be developed to create and satisfy various demands of customers of different ages and with differing perceptions of fashion trends (Facenda, 2005). This could be a competitive advantage which traditional department stores can utilise to attract and maintain customers, as well as increase market share as an effective defence against the threat presented by factory outlet stores. In summary, unlike discount stores, traditional department stores tend to be challenged into finding and creating a winning combination of a diverse customer and merchandise mix, along with service and price expectations, rather than addressing and focusing on attracting bargain-seeking customers through niche target marketing (Coward, 2003). Therefore, the first hypothesis to be tested in the research can be stated as follows: H1: There is a significant difference in customers’ store preferences (traditional department stores, or factory outlet stores) across their demographics. Product Brand Image Loyal customers may hold strong and positive images of a brand which are hard to change and lead to long-term sales revenue (Wyner, 2003). A well-known brand as one important extrinsic factor can significantly affect customer perceptions (Ailawadi and Keller, 2004). Retailers have an obvious opportunity, and are in an ideal position to build these kinds of positive experiences for customers (Schmitt, 2003). Brookman (2004) noted that brand images should be used to link merchandise ranges and store design. Parker et al. (2002) also recommended that good brand imagery leads to good sales revenues. Ailawadi and Keller (2004) pointed out that there was a direct relevance between branding and customer perceptions of retailer imagery, which has been confirmed by a large number of researches in this topic area. Inman et al. 2004) pointed out that customers associate different branded product ranges with different types of retail stores. Accordingly, store image is impacted significantly by customer perceptions 5 of the different branded products and services offered by retailers (Ailawadi and Keller, 2004). The greater the breadth of different products and services offered by a retail store, the greater the number of customers who will frequently patro nage the store, as the variety of product categories provided in the same store provides a much more convenient shopping experience for customers (Messinger and Narasimhan, 1997). Furthermore, the depth of within-category brand products is another very important factor in influencing store image in customer perceptions, and could be a main stimulator in the customer store choice decision (Ailawadi and Keller, 2004). Developing a selection, a range of styles, and favourable categories of branded products are the most important keys to increasing customer perceptions of store image and, as a consequence, achieving higher sales (Dreze et al. , 1994). Therefore, the design of brand-name products can be a comparable factor in creating images for factory outlet stores and traditional department stores. The customer image of retail stores is highly and positively influenced by the quality of the manufactured product brands (Ailawadi and Keller, 2004). Accordingly, Jacoby and Mazursky (1984) noted that carrying strong positive images of brands could improve the positive image of retail stores. Furthermore, they noted that it was much easier to increase sales and achieve market share by increasing both the images of the brands and of the retail stores in the current saturated retail environment (Jacoby and Mazursky, 1984). Nevertheless, Jacoby and Mazursky (1984) also mentioned that a good product brand image would be damaged if it was associated with a retail store which had a poor image. Therefore, brand products sold in either type of retail store should be designed and managed to create and improve relevant customer perceptions. In summary, customers having good brand image tend to be much more loyal in their shopping patterns, whether at traditional department stores, or factory outlet stores. Also, customers who wish to purchase high quality branded products would consider whether the quality and value of the brand products sold in traditional retail stores is higher than those products sold in factory outlet stores (Parker et al. , 2002). So, the second hypothesis to be tested in the research could be stated as follows: 6 H2: The brand images of those products sold in traditional department stores are higher than for those products sold in factory outlet stores. Retail Store Image The store image plays a very important role in creating profit and maintaining customer loyalty. Therefore, it could be a determining factor in customer perceptions (Parker et al. , 2002). A high quality store image implies the possibility of differentiation, loyalty and profitability, while a low-quality store image paves the way for price wars by emphasising and intensifying customer price sensitivity (Hallanan, 1994). The conclusion that retail stores should develop a positive, clear and favourable self-image to be an alternative choice in customers’ minds was drawn by Martineau (1958). Understanding the impact of product brand image, and how a retailer should be positioned, is extremely important in building the image of a retail store (Ailawadi et al. , 1995). Building the image of a retail store requires the identification of sufficiently different goods and services from those of their competitors, which tends to increase customers’ appreciation (Keller, 2003). There are lots of different attributes which significantly influence store image. These include the quality of merchandise and services, the tore appearance, the quality of the purchase service, the physical facilities, the behaviour and service of employees, the price levels, the depth and frequency of promotions and the store shopping atmosphere (Lindquist, 1974). Two basic dimensions can be used to analyse the store image. These dimensions are in-store atmosphere, and price and promotion (Ailawadi and Keller, 2004, p. 333). In-store atmosphere is one of the most important factors in the influenc e of customer perceptions of retail stores. Baker et al. 2002) pointed out that a store’s shopping environment plays an extremely important role in providing information and shopping guides to customers, and is the key attribute in building store image. The in-store environment; particularly physical features such as merchandise pricing, quality and store design and layout, as well as social service facilities such as employees’ service 7 and friendliness, as well as food-court service; can influence customers’ economic and psychological shopping behaviours (Baker et al. , 2002). Certainly, store environment plays a major role in providing informational cues and signals to customers about the type of merchandise and service they should expect (Parker et al. , 2002). Merchandise quality and service quality are key variables in influencing store image (Parker et al. , 2002). This indicates that service attributes might be some of the most important factors in store image brand building, and deeply influence consumer purchase behaviours (Hicks, 2000). This leads to the creation of long-term sales revenue and profitability (Hicks, 2000). Furthermore, when different retailers stock similar products and brands, an appealing in-store atmosphere can play a critical role in building retailer brand image (Ailawadi and Keller, 2004). In this research, the in-store atmospheres of factory outlet stores and traditional department stores are compared, especially in terms of the physical characteristics and social service features. Two further hypotheses need to be tested, as follow: H3: The physical features (such as lighting, air conditioning, washrooms, music, cleanliness, displays, etc. of traditional department stores are perceived to be better than those of factory outlet stores. H4: The in-store customer service features (such as friendliness, helpfulness of salespeople, etc. ) of traditional department stores are perceived to be better than those of factory outlet stores. Price and promotion is another factor which directly affects customer perceptions of different types of retail stores and their images. A store’ s image in terms of price and promotion will be influenced by average levels of prices, seasonal variations in prices, and the frequency and depth of promotions (Dickson and Sawyer, 1990). Different customers hold different perceptions of the store choice decision, according to the different images of stores. For example, large basket shoppers like every-day low price stores, while small basket shoppers prefer high-low promotional pricing stores (Bell and Lattin, 1998). Traditional department stores tend to create â€Å"†¦ a diverse customer and merchandise mix, service expectations and price point †¦Ã¢â‚¬  in order to design a desirable shopping experience (Coward, 2003, p. 27). For example, Coward (2003) suggested that 8 stores needed to rethink convenient designs, return policies and commission policies in order to make their service more flexible and satisfying for customers. Parker et al. (2002) pointed out that there is an incredible interaction between price levels and customer perceptions of product brand images and store images. In particular, comparatively lower price levels would lead to negative customer perceptions of the retail stores (Parker et al. , 2002). To identify the different price and promotion images of retail stores, the hypotheses formulated are: H5: The price and promotion features of products sold in traditional department stores are perceived as being higher than that of factory outlet stores. H6: There is a significant difference in customers’ store ratings (traditional department stores vs. factory outlet stores) across their demographics. RESEARCH METHODOLOGY The study was conducted in a mid-sized multicultural city with a range of local and international retailers, including a number of traditional department stores and factory outlet stores. Using Parker et al. ’s (2002) nineteen items developed for measuring store characteristics, a questionnaire was constructed which measured preferences for generic stores. A five point scale was used in the questionnaire, anchored by 1=very poor and 5=very good. In addition, four items designed to measure the demographic characteristics of the respondents were also included. The data was collected using intercept surveys. The respondents were selected equally at both types of retail outlets. The usable sample was 205 respondents. The sample profile is given in Table I. DATA ANALYSIS AND FINDINGS Sample Profile The sample profile of 205 respondents is summarised in Table I below. There are 107 female and 98 male respondents in the survey. The majority of the respondents are less than forty-five years of age (approximately 71% of the total sample). Furthermore, the majority of the respondents had completed secondary school and completed at least one trade diploma, or certificate degree. Additionally, around 78% of the respondents earned 9 a yearly gross income (before tax) of over NZ$20,000. Respondents with a yearly income over NZ$60,000 only comprised 9. % of the sample, with the majority having a yearly income of between NZ$20,000 and NZ$40,000. Table I: Gender Sample Profile (N=205) Percentage Female Male Total Under 25yr 52. 2 47. 8 100 15. 6 25. 9 29. 8 18. 5 7. 8 2. 4 100 16. 6 30. 2 38. 5 14. 6 100 21. 5 45. 4 23. 9 9. 3 100 Demographics Formatted: Swedish (Sweden) Age 25-34yr 35-44yr 45-54yr 55-64yr Over 64yr Total High School Degree Educati on Trade Diploma/Certificate Bachelor Degree Masters Degree Total Individual tax) yearly Less than NZ$20,000 NZ$20,001–$40,000 NZ$40,001–$60,000 Over NZ$60,000 Total ross income (before The reliability analysis was utilised to test whether the nineteen questions used in the questionnaire fit the factor analysis criteria. Using Cronbach alpha, we found that the nineteen items’ reliability for traditional department stores was . 889 and for factory outlet stores was . 880, both figures being at an acceptable level (Nunnally, 1978). Factors which Customers keep in mind while Shopping at Traditional Department Stores (TDS) and Factory Outlet Stores (FOS) Table II displays the factor analysis results for different scales of TDS in the questionnaire. Four factors were extracted through the factor analysis for TDS. Factor 1 concerns the in-store customer service characteristics of TDS. The variables relating to 10 customer service in the stores; such as friendly, helpful, familiar with merchandise, exchanges, salespeople’s’ pressure and enough salespeople; are loaded more highly than other variables contained in Factor 1. Customers are especially concerned with whether the salespeople in traditional department stores are helpful. Within Factor 2, higher loadings are given to quality, wide selection, newest styles and fully stocked in regards to the products sold in the stores. These loadings indicate that Factor 2 largely displays concerns about the brand images of products sold in TDS. Table II: Factor Analysis Results for Traditional Department Stores and Factory Outlet Stores Traditional Department Stores Factor 1: In-store customer service features Factor 1: In-store customer service features Factory Outlet Stores Variables Factor 2: Brand images of products Factor 2: Brand images of products Factor 4: Price & promotion features Salespeople are friendly Salespeople are helpful Salespeople are familiar with merchandise Exchanges happily Less pressure from salespeople Enough salespeople Quality is good Selection of products is wide Styles of products are newest Stock level Store is attractive Store is not crowded Store is clean Store is neat Store is bright .600 . 746 . 637 . 571 . 601 . 580 . 449 . 763 . 771 . 702 . 458 . 545 . 763 . 745 . 672 .628 . 717 . 652 . 590 . 640 . 639 . 471 . 694 . 779 . 740 . 556 . 697 . 822 . 677 . 160 Factor 4: Price & promotion features Factor 3: Physical features Factor 3: Physical features 11 Prices are good Value for price Markdowns are attractive Prices of products are marked clearly .655 . 810 . 468 . 360 .359 . 325 . 882 . 739 Customers shopping in TDS tend to pay more attention to whether products sold in the stores display a wide selection, with the newest styles and are fully stocked, rather than being concerned about their quality, as the loadings of these three variables are 0. 763, 0. 771 and 0. 702, respectively, while the loading of quality is only 0. 49. Furthermore, Factor 3 shows significant loadings on the variables of attractive, not crowded, clean, neat and bright, at 0. 458, 0. 545, 0. 763, 0. 745 and 0. 672, respectively. Therefore, Factor 3 can be identified as containing the physical features of TDS. Specifically, the variables of clean and neat have much higher loadings than the others. This implies that these two factors significantly influence customer perceptions of the physical features of TDS. Factor 4 shows customers’ considerations regarding the price and promotion features of products sold in TDS. Within the fourth factor, comparatively higher loadings are found for the variables of price, value for price, markdowns and clearly marked price. These loadings are 0. 655, 0. 810, 0. 468 and 0. 360, respectively. In particular, customers’ who preferred traditional department stores tended to give more consideration to whether they could gain reasonable value from their purchase. Table II also displays the factor analysis results for the different variables of the factory outlet stores (FOS) in the questionnaire. Again, a similar group of four factors is extracted through factor analysis. As in the TDS analysis, Factor 1 concerns the in-store customer service features of FOS. The variables regarding customer service have higher loadings than the other variables contained in Factor 1. Respondents were concerned as to whether the service offered by the salespeople is helpful or not, as it is given the highest loading, at 0. 717. The variables of quality, wide selection, newest styles and fully stocked, regarding the products sold in FOS are included in Factor 2. Their high loadings indicate that Factor 2 is related to measuring the brand images of the products 12 sold in the retail stores. The customers who shop in FOS tend to give more consideration as to whether the products sold in these stores are comparatively new styles and have satisfactory stock levels, as shown in the related high loadings of these two variables (0. 779 and 0. 740, respectively). These customers do not pay much attention to the quality of the products sold in FOS, however, as this variable’s loading is only 0. 471. Moreover, Factor 3’s variables of attractive, not crowded, cleanliness, neat and bright have loadings of 0. 556, 0. 697, 0. 822, 0. 677 and 0. 160, respectively. Thus, Factor 3 can be identified as concerning the physical features of FOS. More specifically, customers tend to be concerned about the cleanliness of FOS, but few of them indicate that store brightness is important. Lastly, Factor 4 concerns the price and promotion features of the products sold in FOS. Higher loadings are given to the price, reasonable price for value, markdowns and clearly marked price variables included in the fourth factor, at 0. 359, 0. 325, 0. 882 and 0. 739, respectively. Customers of factory outlet stores tend to be more concerned as to whether the markdowns of the products sold in the stores are attractive, and whether the prices of the products are clearly marked. Customer Store Preference across Demographics To know if there is a trend to shop at factory outlet stores, we asked respondents which store they normally prefer to shop. To control for any possible response bias, we selected respondents equally at both types of retail outlets. As shown in Table III, the number of respondents who prefer TDS as their shopping place is 113, compared to 92 respondents choosing FOS as their preferred shopping place. This implies that a sizable number of customers prefer and/or are shopping at factory outlet stores. Table III: Frequency analysis of store choice Frequency Traditional department stores Factory outlet stores 113 92 Percentage 55. 1 44. 9 13 Total 205 100. 0 Chi-square is next used in order to examine whether there are any significant effects from the different demographic characteristics on customer decision-making in regards to shopping choices. As shown in Table IV, significant differences exist in customers’ store choice as regards to their different genders, levels of education and gross yearly income, as the relative P-values for these variables are 0. 001, 0. 000 and 0. 003, respectively. Nevertheless, there are no significant differences between customers’ shopping preferences in regard to age, as the P-value is 0. 690. Table IV: Store choices and demographic characteristics Department Chi-squa re values 11. 343 Traditional Demographics Gender Female Male Total 47 66 113 19 28 36 18 8 4 113 13 24 56 20 113 60 32 92 13 25 25 20 8 1 92 21 38 23 10 92 107 98 205 32 53 61 38 16 5 205 34 62 79 30 205 20. 223 . 000 3. 065 . 690 . 001 P-values Factory Total Outlet Stores Stores Age Under 25yr 25-34yr 35-44yr 45-54yr 55-64yr Over 64yr Total Formatted: Swedish (Sweden) Education High School Grad. Trade Diploma/Certificate Bachelor Degree Master Degree Total Individual yearly tax) gross income (before Less than NZ$20,000 NZ$20,001–$40,000 NZ$40,001–$60,000 Over NZ$60,000 Total 18 46 33 16 113 26 47 16 3 92 44 93 49 19 205 14. 256 . 003 14 More specifically, female respondents tend to prefer shopping in factory outlet stores, while nearly two-thirds of the male respondents prefer to shop in traditional department stores. Furthermore, customers with higher levels of education are more likely to choose traditional department stores as their shopping preference. As shown in Table IV, the number of customers who possess degrees and prefer shopping at traditional department stores is much higher than the number of those customers who are willing to go to factory outlet stores. In addition, customers who earn a higher yearly income; particularly those whose gross yearly income is between NZ$40,001 and NZ$60,000, or over NZ $60,000; tend to choose traditional department stores over factory outlet stores. These statistics are summarised in Table IV above. Therefore, H1 is supported on gender, education and income, but not on the demographic of age. Customer Perceptions of Brand Images of Products Sold in Traditional Department Stores and Factory Outlet Stores Table V below provides a comparison of the brand images and T-test results of products sold in traditional department stores and factory outlet stores. According to these results, H2; which holds that the brand images of products sold in TDS are higher than those of products sold in FOS; is supported (see Table V). In other words, the overall mean rating of TDS branded products is significantly higher than that of FOS branded products, at 16. 02 and 9. 1, respectively. Specifically; according to the analysis of the individual items of product features; the respondents gave higher ratings for products sold in TDS (regarding their wide selection, newer styles and satisfactory stock levels), than for the products sold in FOS. There is a significant difference between the mean ratings of the branded products sold in TDS and FOS. Thus, the results from the data analysis show th at there is a significant difference in the brand images of the products sold in traditional department stores and factory outlet stores. Customers tend to have higher, and more positive, images of branded products sold in traditional department stores than they do for branded products sold in factory outlet stores. 15 16 Table V: Comparison of brand images of products sold in stores Factory Outlet Brand Images of Products Sold Traditional Stores in the stores Department Stores Mean SD Mean SD P-values Quality is good Selection of products is wide Styles of products are newest Stock level 3. 88 4. 05 4. 02 4. 07 16. 02 .70 . 81 . 93 . 88 2. 69 3. 11 2. 53 2. 16 1. 91 9. 71 .77 . 89 . 87 . 94 2. 73 .000 . 000 . 00 . 000 . 000 Overall Customer Perceptions of Store Images of Traditional Department Stores and Factory Outlet Stores Table VI below provides a comparison of the store images and T-Test results of both types of retail stores. As shown, the respondents’ overall mean ratings, as well as their item-wise mean ratings of TDS physical features are significantly higher than for FOS, at 19. 87 and 16. 13, respect ively. Therefore, H3 is accepted. That is, the physical features of traditional department stores are perceived as being better than those of the factory outlet stores. There is a significant difference between the mean ratings of the physical features of TDS and FOS. Thus, the respondents indicated that the physical characteristics of traditional department stores are more attractive than those of factory outlet stores. Further to this finding, the respondents’ overall mean ratings, as well as their item-wise mean ratings of TDS in-store customer service features are significantly higher than those for FOS, at 22. 18 and 20. 48, respectively. Therefore, H4 is accepted. That is, in-store customer service features of traditional department stores are perceived as being better than those of factory outlet stores in New Zealand Furthermore, H5; which holds that the price and promotion features of products sold in traditional department stores are perceived as being significantly higher than those of factory outlet stores; is accepted, as indicated in Table V. The applicable overall mean ratings of TDS and FOS are 12. 70 and 16. 11, respectively. Also, the individual scale 17 items of price and promotion features are much higher for the factory outlet stores. This finding indicates that respondents consider the prices of products sold in FOS to be comparative lower than those sold in TDS and that the promotions offered by FOS are more attractive and satisfactory. Table VI: Comparison of the features of traditional department stores (TDS) and factory outlet stores (FOS) Features Traditional Factory Outlet P-values Department Stores Stores SD Mean SD Physical Features: Mean Store is attractive . 000 . 94 3. 32 . 84 3. 63 Store is not crowded . 000 . 85 3. 25 . 81 3. 70 Store is clean . 000 . 83 3. 44 . 75 4. 10 Store is neat . 000 . 86 3. 49 . 73 4. 16 Store is bright . 00 . 70 2. 62 . 73 4. 28 Overall In-store Customer Service Features: Salespeople are friendly Salespeople are helpful Salespeople are familiar with merchandise Exchanges happily Less pressure from salespeople Enough salespeople 19. 87 Mean 3. 86 3. 76 3. 77 3. 39 3. 48 3. 91 22. 18 Mean 2. 88 2. 82 3. 38 3. 63 12. 70 2. 96 SD . 67 . 73 . 86 . 84 . 81 . 85 3. 45 SD . 83 . 88 . 91 . 88 2. 71 16. 13 Mean 3. 59 3. 52 3. 42 3. 07 3. 36 3. 51 20. 48 Mean 3. 99 3. 66 4. 22 4. 24 16. 11 3. 10 SD . 82 . 82 . 88 . 87 . 87 . 96 3. 95 SD . 65 . 76 . 79 . 84 2. 26 .000 . 000 . 000 . 000 . 000 . 000 . 000 . 000 Overall Price & Promotion Features of Products Sold in the stores: Prices are good Value for price Markdowns are attractive Prices of products are marked clearly .000 . 000 . 000 . 000 . 000 Overall Customer Perceptions of Traditional Department Stores and Factory Outlet Stores across Demographics To investigate Objective 4 (to evaluate whether demographic characteristics are related to customer perceptions of traditional department stores and factory outlet stores), the ANOVA and T-tests are used to determine whether there are significant relationships between customers’ store ratings and their demographic characteristics. Table VII 18 displays the customer perceptions of overall store ratings and their relevant four demographic characteristics. As shown in Table VII, only the income level shows significant mean differences in the ratings of TDS. In other words, customers’ concerns regarding the physical features and price and promotion features of TDS are highly influenced by their income level. More specifically, the higher the customer’s income is the more favourable will be the mean ratings for physical features and price and promotion of TDS. There is, however, no difference in the customer perceptions of TDS and FOS across gender, age groups and educational levels, as the respective P-values are all much higher than 0. 05. Therefore, H6 is supported only on income, but not on gender and education levels. Table VII: Store ratings and Demographic Characteristics Demographics Traditional Department Stores Physical Physical features features In-store customer service features In-store customer service features Mean SD Mean SD Mean SD Mean SD Price & promotion features Price & promotion features Product features Product features Factory Outlet Stores Traditional Department Stores Factory Outlet Stores Traditional Department Stores Factory Outlet Stores Traditional Department Stores Factory Outlet Stores Formatted Mean SD Mean SD Mean SD Mean SD Gender: Female Male P-value 3. 93 4. 02 . 682 . 54 . 64 3. 32 3. 12 . 059 . 60 . 63 3. 66 3. 74 . 307 . 58 . 57 3. 43 3. 40 . 832 . 64 . 68 3. 14 3. 22 . 636 . 70 . 65 4. 02 4. 03 . 635 . 58 . 56 3. 97 4. 04 . 734 . 65 . 69 2. 48 2. 7 . 476 . 74 . 61 Age: Under 25yr 25-34yr 35-44yr 45-54yr 55-64yr Over 64yr 3. 88 3. 95 4. 05 3. 94 3. 86 4. 48 . 270 . 55 . 60 . 57 . 59 . 66 . 74 3. 23 3. 22 3. 20 3. 38 3. 14 2. 76 . 330 . 69 . 62 . 64 . 44 . 69 . 82 3. 82 3. 63 3. 71 3. 59 3. 85 3. 73 . 450 . 56 . 57 . 60 . 52 . 57 . 89 3. 47 3. 39 3. 38 3. 59 3. 28 2. 73 . 097 . 59 . 66 . 64 . 57 . 76 . 66 3. 24 2. 99 3. 31 3. 13 3. 27 3. 10 . 206 . 69 . 70 . 58 . 65 . 77 . 68 4. 09 3. 88 4. 05 4. 14 4. 09 3. 80 . 225 . 48 . 57 . 60 . 46 . 56 . 56 4. 13 3. 90 4. 09 3. 99 3. 86 3. 90 . 532 . 58 . 8 . 63 . 72 . 75 . 67 2. 54 2. 32 2. 44 2. 50 2. 44 2. 10 . 572 . 80 . 64 . 65 . 74 . 56 . 65 Formatted: Swedish (Sweden) P-value 19 Education: High School Grad. Diploma/Certificate Bachelor Degree Masters Degree 3. 96 3. 85 4. 02 4. 11 . 201 . 62 . 53 . 60 . 65 3. 38 3. 34 3. 11 3. 14 . 058 . 68 . 52 . 68 . 53 3. 59 3. 70 3. 76 3. 63 . 480 . 55 . 50 . 60 . 67 3. 51 3. 55 3. 26 3. 42 . 590 . 74 . 56 . 65 . 71 2. 94 3. 15 3. 31 3. 15 . 066 . 72 . 65 . 65 . 72 3. 99 4. 09 3. 97 4. 08 . 552 . 60 . 50 . 63 . 45 3. 83 3. 99 4. 10 4. 00 . 281 . 85 . 59 . 6 . 85 2. 57 2. 41 2. 30 2. 63 . 075 . 72 . 52 . 70 . 82 P-value Yearly gross income: Less than NZ$20,000 NZ$20,001–$40,000 NZ$40,001–$60,000 Over NZ$60,000 3. 90 3. 87 4. 11 4. 27 .64 . 54 . 58 . 62 3. 22 3. 28 3. 19 3. 06 . 524 .66 . 63 . 59 . 55 3. 67 3. 66 3. 78 3. 74 . 674 .56 . 59 . 56 . 58 3. 44 3. 48 3. 29 3. 34 . 413 .68 . 67 . 63 . 65 2. 88 3. 20 3. 30 3. 43 .71 . 67 . 59 . 68 4. 02 4. 05 4. 01 3. 99 . 960 .57 . 57 . 53 . 66 3. 85 3. 97 4. 12 4. 28 . 060 .76 . 65 . 62 . 58 2. 61 2. 38 2. 31 2. 55 . 130 .75 . 61 . 63 . 93 P-value .010 .005 CONCLUSIONS AND IMPLICATIONS The findings on customer store preference across demographics show that customers with different genders, levels of education and gross yearly incomes tend to make different store choices, however, they perceive traditional department stores and factory outlet stores similarly regardless of their age. More specifically, male customers regard traditional department stores offering famous branded products as their first choice, however, female customers are willing to shop at factory outlet stores in order to seek branded products with comparatively lower prices. Female customers tend to be more price oriented and price sensitive. Furthermore, the higher the level of education customers have the more likely they are to choose traditional department stores as their shopping preference. This finding indicates that more highly educated customers tend to have greater concerns in regards to the shopping environment and atmosphere offered by traditional department stores. In addition, customers earning higher yearly incomes are more willing to choose traditional department stores over factory outlet stores. In regards to customer perceptions of brand images of products sold in traditional department stores and factory outlet stores, there is a significant difference in the brand images of products sold across these stores. The brand images of products sold in traditional department stores are perceived more positively than are those of products 20 sold in factory outlet stores. Customers perceive traditional department stores as offering wider and more satisfactory selections of various types of merchandise in comparison to factory outlet stores. The stock levels in traditional department stores are also seen as being superior. Obviously, the wider selection and greater breadth of different branded products offered in the stores, the greater the number of customers who will be more attracted to TDS. In regard to customer perceptions of store images of traditional department stores and factory outlet stores, there is a significant difference between traditional department stores and factory outlet stores. Firstly, respondents feel that the physical features of traditional department stores are more satisfactory, comfortable and attractive than those of the factory outlet stores. Customers believe that they will enjoy shopping at traditional department stores, as they provide them with a more comfortable in-store shopping environment and atmosphere. Secondly, there are significant differences in the in-store customer service features of traditional department stores and factory outlet stores. Customers believe that traditional department stores provide a higher quality of in-store customer services. TDS are also seen as having better exchange policies and an adequate number of salespeople offering to meet customers’ different wants and needs. Therefore, traditional department stores do have distinctive advantages in terms of their in-store customer services, in comparison to those offered by factory outlet stores. Thirdly, traditional department stores have much higher prices when compared with factory outlet stores. This is due to their different marketing orientation and segmentation. Customers tend to be attracted by the prices and value of products sold in factory outlet stores. Schneiderman (1998) found in his research that customers believed that factory outlet stores could provide greater value for their money than did traditional department stores. Results on the examination of customer perceptions of traditional department stores and factory outlet stores across demographics indicate that only income levels have any significant effects on customers’ mean ratings of traditional department stores, but that 21 o significant differences exist across the variables of gender, age and education. This means that customer perceptions of physical features and price and promotion features of traditional department stores are highly influenced by their different income levels. Customers with higher incomes tend to be attracted to physical features and price and promotion features of traditional department stores. They are interested in shopping in a comfortable environment and seeking famous and fashionable branded products, rather than being price sensitive, bargain seeking customers. The implications of these research findings include the point that traditional department stores should maintain their competitive positions by continuing to offer good physical facilities and environments, satisfactory in-store customer services and famous branded products, in order to maintain and attract more customers. This will also help to maintain their market share and gain competitive advantage against the intense competition created by factory outlet stores. Customers perceive that the prices offered in traditional department stores are much higher than those of factory outlet stores. Therefore, department stores are facing a big challenge from factory outlet stores in terms of price and promotion strategies. As a result, they need to assess their value positions and adapt more reasonable prices to provide satisfactory value for customers. Clearly identifying and dividing their current and potential customers into different target segments is necessary for retailers in setting differing price strategies. During sales seasons, more attractive promotion of branded products could be undertaken in traditional department stores. Certainly, customers tend to purchase more when there are large sales and attractive promotions of branded products in traditional department stores. In order to target appropriate segments, traditional department stores need to identify what relevant level of branded products should be sold and assign these products reasonable prices in stores across different ages, genders, and levels of education and income. Traditional department retail stores also need to provide more selection characteristics (in terms of their branded products adapting to the newest styles frequently and maintain good stocks level), in order to 22 eep their competitive advantages through being perceived as offering more positive brand images of the products sold in their stores. Furthermore, strategic alliances between different traditional department stores and their distributors could also be developed. In such an alliance, competitive advantages (such as better offerings of quality in-store services and pro viding similar branded products with reasonable prices and promotions) could be shared by traditional department stores, , which should reduce costs for the alliance partners. Regarding implications for factory outlet stores, they need to learn from the comparative disadvantages of traditional department stores and engage in enhancing their current competitive positions on price and promotion offerings, in order to improve customer perceptions of their stores. Maintaining their comparatively lower prices and providing frequent promotions of branded products is one of the most useful price and promotion strategies for factory outlet stores in maintaining and enhancing their competitive positions in this area. Meanwhile, manufacturers which utilise factory outlet stores need to control the values of the products through assessments. As a result, customers who are not only price sensitive, but are also value seeking will be satisfied with the prices and promotion features of the products sold in the factory outlet stores. It is extremely important for manufacturers to immediately improve their products’ brand images. Widening the selection of characteristics, improving stock levels and offering positive branded products in the stores are ways which this could be achieved. Nowadays, factory outlet stores are no longer established for the sale of seconds or comparatively lower quality products with lower prices. Therefore, they need to build more positive brand images for the products sold in the stores instead of being perceived as discount stores. They need to invest more in the stores’ physical facilities to offer a better shopping environment and atmosphere. As a result, however, prices may increase significantly due to the costs of such upgrading, meaning that such a strategy might be risky (Parker et al. , 2002). Therefore, factory outlet stores need to evaluate their choices carefully in 23 rder to balance any price increases and distribution channel developments. REFERENCES Ailawadi, K. L. and Keller, K. L (2004). Understanding retail branding: conceptual insights and research priorities. Journal of Retailing, Vol. 80 (4), pp. 331-342. Ailawadi, K. L. , Borin, N. and Farris, P. (1995). Market power and performance: A cross-industry analys is of manufacturers and retailers. Journal of Retailing, Vol. 71 (3), pp. 211–248. Baker, J. , Parsuraman, A. , Grewal, D. and Glenn, B. (2002). The influence of multiple store environment cues on perceived merchandise value and patronage intentions. Journal of Marketing, Vol 66 (4), pp. 120–141. Bell, D. and Lattin, J. M. (1998). 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