Rumstad Decorating Centres

Rumstad Decorating Centers was an old-line Rockford, Illinois, business. The company was originally founded as a small paint and wallpaper supply store in 1929 by Joseph Rumstad, who managed the store until his retirement in 1970, at which time Jack Rumstad, his son, took over. In 1974, the original downtown store was closed and a new outlet was opened on the city’s rapidly expanding west side. In 1996, a second store was opened on the east side of the city and the name of the business was changed to Rumstad Decorating Centers. Jack Rumstad’s review of 1997 operations proved disconcerting. Both stores had suffered losses for the rear (see Case 2.1, Rumstad Decorating Centers [A]). The picture was far more dismal at the west-side store. Losses at the east-side store were 80 percent less than the previous year’s, which was partially due to some major organizational changes. Further the east-side store had experienced a 25 percent increase in net sates and a 25 percent increase in gross profits over 1996. The west-side store, in contrast, had shown a 21 percent decrease in net sales and a 31 percent decrease in gross profit.

Some preliminary research by Rumstad suggested that the problem at the west-side store might be traced to the store’s location or its advertising. Was the location perceived as convenient? Were potential customers aware of Rumstad Decorating Centers, the products they carried, and where they were located? Did people have favorable impressions of Rumstad? How did attitudes toward Rumstad compare with those toward Rumstad’s major competitors? Rumstad realized that he did not have the expertise to answer these questions. Consequently, he called in Sandra Parrett, who owned and managed her own marketing research service in the Rockford area. Parrett handled all liaison work with the client and assisted in the research design. In addition to Parrett, Lisa Parrett, her daughter, supervised the field staff of four, analyzed data, and prepared research reports. Although the company was small, it had an excellent reputation within the business community.

Research Design
Rumstad agreed with Sandra Parrett’s suggestion that the best way to investigate Rumstad’s concerns would be to use a structured, somewhat disguised questionnaire (see Figure 3.4.1). The sponsor of the research was to he hidden from the respondents to prevent them from answering “correctly” instead of honestly, so questions about two of Rumstad’s main competitors, the Nina Emerson Decorating Center and the Wallpaper Shop, were introduced. Both of these stores offered products and services similar to those carried by Rumstad, and they were located in the same area as Rumstad’s west-side store. The study was to be confined to the west-side store because of cost; loss of profits for the last several years had severely constrained Rumstad’s ability to engage in research of this sort. However, the west-side stove was so critical to the very survival of Rumstad Decorating Centers that Rumstad was willing to commit funds to this investigation, although he repeatedly stressed to Parrett the need to keep the cost as low as possible. Even though the Emerson Decorating Center and the Wallpaper Shop were similar to

Rumstad, there were differences in their marketing strategies. Both stores seemed to advertise more than Rumstad, for example, although the exact amounts of their advertising budgets were not available. Emerson advertised in the Shopper’s World (a weekly paper distributed free that is devoted exclusively to advertising), ran ads four times a year in the Rockford Morning Star and did a small amount of radio and outdoor advertising. The Wallpaper Shop also advertised regularly in the Shopper’s World but ran small ads daily in the Morning Star and had daily radio commercials as well. Rumstad had formerly advertised in the Morning Star but now relied exclusively on the Shopper’s World

Sample
Because of the financial constraints imposed on the study by Jack Rumstad, it was decided to limit the study to households within a two-mile radius of Rumstad, Emerson, and the Wallpaper Shop. Aldermanic districts within the two-mile radius were identified; there were four in all, and the wards within each district were listed. Two of the 12 wards were then excluded because they were outside the specified area. Blocks within each of the 10 remaining wards were enumerated, and five blocks were randomly selected from each ward. An initial starting point for each block was determined, and the questionnaires were then administered by the Parrett field staff at every sixth house on the block. All interviews were conducted on Saturday and Sunday. If no one was at home or if the respondent refused to cooperate, the next house on the block was substituted; no one was at home at 39 households, and 18 others refused to participate. The field work was completed within one weekend and produced a total sample of 123 responses.

Questions
1. Evaluate the questionnaire. Do you think the questionnaire adequately addresses the concerns raised by Rumstad? 2. How would you suggest the data collected be analyzed to best solve Rumstad’s problem? 3. Do you think personal administration of the questionnaires was called for in this study, or would you suggest an alternative scheme? Why or why not?