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Case Study. Macy’s Problem. The problem is to be found in New York City, where the market shares have dropped 9\% over the last three years. Your Mission.

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macy s problem
Macy’s Problem

The problem is to be found in New York City, where the market shares have dropped 9% over the last three years.

your mission
Your Mission

You are Macy's marketing specialist. Your assignment is to assist the marketing manager of New York, Kevin Smith, with a market - and competition analysis.

identifying market segments
Identifying Market Segments

Mr. Smith wants to know which of the following options seems the most sensible to you.

  • Products: apparel, house wares, jewelry
  • Geographical market segmentation: downtown, outskirts
  • Types of customers: businessmen, families, tourists

Task 1.1

finding out market shares of important offerers
Finding Out Market Shares of Important Offerers

Mr. Smith has asked you to go through the documents and pick out the information regarding the present market shares for the most important department stores of New York.

  • Macy‘s
  • Abraham & Straus
  • Gimbel’s
  • Bloomingdale’s
  • Others

Task 1.2

establishing market size
Establishing Market Size

Mr. Smith has asked you to define the size of the department store market in New York as precisely as possible. Information in the folder therefore serve as a basis.

Task 1.3

describing customers
Describing Customers

When describing customers, separate the essential from the less relevant questions.

  • How many customers visit Macy’s in New York each day?
  • Which division of Macy’s has the most customers?
  • What income do Macy’s customers have?
  • How often do Macy’s customers shop at the competition?
  • What market share equals one thousand customers?
  • How much price reduction should loyal customers be given?
  • How far away do Macy’s customers live from the location of the store?

Task 2.1a

After separating the essential questions, please help Mr. Smith to answer them, by using the information folder and making estimations.
  • Less than 5'000
  • Between 5'000 and 50'000
  • More than 50'000

customers visit Macy's each day.

The income of most customers is

  • high.
  • medium.
  • low.
  • up to 5 km
  • between 5 and 20 km
  • more than 20 km

The majority of Macy's clientele live

from the location of the store.

  • never
  • seldom
  • often

shop at the competition.

Macy's customers

Task 2.1b

studying the act of purchase
Studying the Act of Purchase

Put together a rough profile for how purchases are made at Macy’s.

  • Number of customers per day
  • Ration of purchases taken by the customer vs. delivered purchases
  • How many products that were bought were ordered in advance

Task 2.2

analyzing the purchase decision
Analyzing the Purchase Decision

Put the following deciding factors in order of priority.

High Priority

  • Deciding factors:
  • delivery time
  • price
  • breadth of the assortment
  • quality
  • service
  • availability
  • payment methods

Medium Priority

Low Priority

Task 2.3

capturing the scope of services
Capturing the Scope of Services

For capturing the scope of services, separate the following questions into important and irrelevant / wrong questions.

  • What is the average time a customer waits in line at the register?
  • Is there a return or exchange policy?
  • Does Macy’s offer sufficient parking in the city center?
  • Is a contact person to help with problems or questions available to customers at all times (consultation, customer service, a service hotline)?
  • What kind of guarantee from the manufacturer can the customer expect?

Task 4.1a

What kind of guarantee from the manufacturer can the customer expect?
  • Does Macy’s fashion department follow the newest trends?
  • How do customers react to Macy’s Logo?
  • Does Macy’s offer customers an advantage for loyalty?
  • Is it possible to deposit umbrellas at the entrance?
  • Are there options to eat at Macy’s?
  • Are there enough restrooms?

Task 4.1b

pricing policy
Pricing Policy

What is the predominant and also Macy’s current pricing policy?

Pricing policy with orientation according to

  • cost
  • demand
  • competition
  • use

Task 4.2a

determining pricing conditions
Determining Pricing Conditions

Following is a list of campaigns for discounts, various payment conditions and other measures of pricing differentiation as undertaken by Macy’s competitors.

According to which of the following criteria do they differentiate their prices?

Pricing differentiation according to

  • region
  • marketing instruments
  • type of customer
  • line of a product
  • times

• To stimulate the holiday business Gimbel’s has a “sale” in December.

Task 4.2b1

• Bloomingdale’s grants customers with a preferred customer card a 5% discount for the entire assortment.

• Customers at Alexander’s profit from a 2% discount if the payment is made in cash.

• For purchases of more than $500 customers receive a $10 voucher at Arnold Constable.

• The in-store prices at Abraham & Straus are slightly higher in the city than in the suburbs.

• B. Altman’s gives customers a 20% discount on their entire jeans selection.

• There is a flat fee of $15 for home delivery of all purchases made at Alexander’s.

Task 4.2b2

identifying means of communication
Identifying Means of Communication

Which of the following questions are important to identify Macy’s means of communication and which aren’t?

  • What is the ratio of orders to offers?
  • What part of the turnover can be put down to visits from sales representatives?
  • Which means of communication does Macy’s use?
  • How many consumers watch Macy’s Thanksgiving-Parade?
  • What is the communication between management and personnel like?
  • What is the significance of the individual means of communication?
  • Does Macy’s also sell musical instruments?
  • In what type of media does Macy’s advertisement appear?
  • What does the ratio of cost to use of the individual means of communication look like?

Task 4.3

deriving of critical factors for success
Deriving of Critical Factors for Success

According to priority (1st and 2nd), assign the critical factors for success to the following three segments. Hurry up, Mr. Smith is waiting!

1st Priority



Individuals with a high income (more than $50'000 per year)

Individuals with a low income (less than $50‘000 per year)

  • price
  • breadth of the assortment
  • service
  • quality

Task 5

determining decisive competitors
Determining Decisive Competitors

Mr. Smith wants to know which competitors are especially threatening, and which are not?

Decisive Competitors

  • Gimbel’s
  • Lord & Taylor
  • Bloomingdale’s
  • B. Altman’s
  • J.C. Penney
  • Ohrbach’s
  • Alexander’s
  • Arnold Constable
  • Abraham & Straus

Task 6.1

visualizing main store locations
Visualizing Main Store Locations

Visualize the location of Macy’s, Bloomingdale’s and Gimbel’s main stores by drawing them in the street map of Manhattan attached to the folder.

Task 6.2

analyzing strengths weaknesses
Analyzing Strengths & Weaknesses



formal Product




Product range

extended Product


Sale on exchange

Payment conditions

Queue time at the register

Consumer needs


Abraham & Straus




Task 6.3a

Try to fill in the gap text with help of the preceding strengths / weaknesses-profiles
  • has the best price level.
  • Macy’s meets customers’ expectations the least in the area of .
  • Regarding service (extended product) is ahead by a nose.
  • Only the at Abraham & Straus ranked higher than at Gimble’s.
  • In general Macy’s covers the needs of the customers .

Task 6.3b

estimating future behavior
Estimating Future Behavior

With the aid of your information - folder and the findings you have obtained so far, try to make an estimate of the important competitors’ future behavior.

Gimbel’s, Bloomingdale’s, Abraham & Straus or Alexander’s

... will cut back a great number of jobs.

... wants to maintain price level and the market share, if possible.

... will attempt to keep prices below the price level of the competition.

... will launch innovative products.

... wants to become leader of the market.

... withdraws from the market.

... will invest more in research and development.

... orientates itself newly to the market.

Task 6.4


Mission accomplished

new york new york
New York, New York

Start spreading the news, I'm leaving today

I want to be a part of it - New York, New York

These vagabond shoes, are longing to stray

Right through the very heart of it - New York, New York

I want to wake up in a city, that doesn't sleep

And find I'm king of the hill - top of the heap

These little town blues, are melting away

I'm gonna make a brand new start of it - in old New York

If I can make it there, I'll make it anywhere

It's up to you - New York, New York

Task 7a

New York, New York

I want to wake up in a city, that never sleeps

To find I'm a number one, head of the list,

Cream of the crop at the top of the heap.

These little town blues, are melting away

I'm gonna make a brand new start of it - in old New York

If I can make it there, I'm gonna make it anywhere

It's up to you - New York, New York

Task 7b