Dupont Case - edited 2023 (1)

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Excel Case: DuPont Has Designs On Fashion DuPont is a science company that delivers science-based solutions in food and nutrition, health care, and apparel; as well as home and construction, electronics, and transportation. The company was founded in 1802 and operates in more than 70 countries as of 2003. DuPont’s core values for more than 200 years have remained constant: commitment to safety, health, and the environment; integrity and high ethical standards; and treating people with fairness and respect. DuPont Fibers Division was wondering—could carpets move “uptown” into the fashion-oriented world typically associated with clothing and furniture? The longtime market-share leader in the carpet industry, DuPont, was searching for new ways to expand in a slow growth market. This market had been growing at approximately 5 percent per annum during the 1990s and was predicted to remain level or even decline in following years. Revenues were up 5 percent in 2002 for DuPont’s fiber operations. In addition, in the residential segment of the market, DuPont needed a way to differentiate its nylon fiber carpets from increased competition, including the strong challenge of Amoco’s new polypropylene fiber carpets. The carpet industry can be divided into three end-use segments: commercial carpets for offices, hospitals, hotels, schools, government facilities, and industrial sites; contract residential carpets for large residential purposes like apartment complexes or subdivisions; and residential carpets for homes. DuPont estimated that 30 percent of carpet sales were from new residential construction, and the other 70 percent was from replacement purchases. In addition to different end-use segments, each segment’s consumers were quite different from the other segment’s consumers and each segment was serviced through different channels. Commercial carpets were typically bought by interior designers, architects, or specifiers for their clients. They had to be durable and, especially for some end users like hotels, fashionable. Contract residential carpets were bought by designers or by the contractor who typically focused on price and durability. The residential segment differed from the other two because the purchaser was also the end user. Typically, the lady of the house purchased carpeting from a retail outlet to create the atmosphere she wanted in her home. In a recent trade journal article, carpet industry experts stated that retail stores are an important and effective component of the retail environment. Ninety-seven percent of all carpeting is produced from man-made fibers derived from petroleum. The leading fiber in the industry has been nylon, which was invented by DuPont in the 1930s. Though the leader in the industry, DuPont was challenged by other high-quality nylon producers —such as Monsanto, Allied, and BASF—and a host of generic low-end fiber producers. DuPont has 27 percent of the global nylon market and 58 percent of the nylon-6/6 market (the most advanced nylon fiber). Fiber producers sell their output to carpet mills who then produce the carpeting. Until the 1980s, competition in the residential segment was based on the technical qualities of the fibers, mill price of fiber, and reliability in shipping—none of which directly affected the consumer. As such, the industry tended to be very production oriented. In the early 1980s, a giant breakthrough benefiting the consumer emerged—stain-resistant carpets. By applying a chemical coating to the carpet fiber during production, the carpet was protected from permanent staining arising from most household soiling agents. Stains could be wiped off the carpet, thus alleviating the concern many people had about entertaining or “living”

on their carpet. The four major fiber producers quickly announced their versions of the stain- resistant carpet in an effort to remain competitive. Amoco also got into the game when it announced a “new revolution in carpeting”—carpets made from polypropylene (PP) fibers rather than nylon. As a fiber, PP is inherently stain resistant. Thus it offered the best overall protection from stains and it costs less to produce than nylon. It did not as readily accept dyes as nylon, however, nor was it as soft to the touch, thus making it less fashionable. As such, PP initially had difficulty entering the residential segment but was well received by the commercial segment. Approximately 24 percent of the total U.S. carpet-fiber market is PP. In the mid 1980s, technical advancements in dyeing allowed Amoco to seriously compete in the residential segment. Their objective was to lead the introduction of PP fibers to the residential market. DuPont, desiring to be the unquestionable leading fiber producer to the residential segment, relied more on marketing than other companies. It seemed to sense the threat of PP toward nylon fibers when it purchased Hercules Fibers, a large PP extruder. DuPont believed that nylon was still the fiber for residential carpets, however, and was bent on letting the consumer cast the deciding vote. DuPont believed it could use its well-respected company name to attract consumers. As such, DuPont created the first fiber-producer backed carpets—DuPont Stainmaster carpets. This new carpet, which carried a guarantee backed by DuPont on stain resistance, wear, and anti-static, was branded as a DuPont carpet. The results of the program were highly successful, with DuPont creating high brand recognition among consumers—the first time this had ever been achieved by a fiber company—thus differentiating it from the other fiber producers. DuPont took its Stainmaster carpet business and converted it to a premium carpet brand by increasing prices and reducing its distribution channels. DuPont spent more than $10 million on television advertising beginning in 1995. A survey conducted by Video Storyboard Tests, Inc. rated the DuPont Stainmaster television commercial the fourth “most popular television commercial.” Based on its success with DuPont Stainmaster, the industry leader decided to forge new ground. For most of its history, the residential segment had typically been the most blasé segment of the carpet market. Styles tended to be simple, colors passive, and features uniform across all competitors in the industry. Technically, industry players maintained that differences did indeed exist, but in the words of one industry analyst, “The differences were there in style and fiber quality, but the housewife out shopping for carpet didn’t really know or care—she only liked what she could see and feel.” As such, DuPont wondered if the styles and designs so popular in the commercial segment could be transferred to the residential segment. Was the average household willing to make carpeting more than just a backdrop for other furnishings? If the program were to be successful, it would mean several things: further differentiation from other nylon fiber producers by creating a new segment based on fashion and status for residential carpets; increasing brand awareness among consumers for DuPont (resulting in increased demand for DuPont fibers); and bringing in a new dimension to residential sales that would be difficult for PP carpets to duplicate and would solidify DuPont as the leader in the residential segment. It would be an expensive undertaking, however, involving a significant amount of publicity and risking its reputation with its major fiber clients.

In addition, if DuPont were to proceed with the Designer Collection, it would have to move fast. The largest trade show in the industry—where companies announce their major designs and programs for the coming year—was coming up in three months. If DuPont wanted the Designer Collection to have a maximal impact, it would need carpet samples and promotional materials ready for distribution at the show and their marketing program in line to begin shortly thereafter. As such, the go-no-go decision would have to be made within six weeks. Overall, for the full year of 2000, consolidated sales totaled $28.3 billion compared to $26.9 billion in 1999. Dupont’s revenues slipped to $24.52 billion in 2002, however, because of the overall slowdown in the U.S. economy. In 2003, DuPont emphasized an integrated marketing campaign to promote its Tactesse nylon carpet fiber. The fiber features two new deniers, 995 and 2,250, which DuPont engineers developed for added flexibility in loop constructions. The promotion included placing ads in several trade publications and a direct-mail piece to more than 5,000 carpet retailers. The mailer contained samples of carpet with Tactesse in loop and cutpile configurations. They provided carpet retailers an opportunity to test the fiber’s “You have to feel it to believe it” theme. References 1. Gregory Morris, “DuPont Canada Brings On Nylon-6/6 Expansion,” Chemical Week (April 29, 1998): 19. 2. Marc Reisch, “New Texture in Carpet Fibers,” Chemical & Engineering News 76(4) (January 26, 1998): 20-21. 3. Andrew Wood, “DuPont Wants to Hitch Up Nylon’s Performance,” Chemical Week (October 29, 1997): 42. 4. Elaine Gross , “Dupont Shows New Tactesse Nylon Fiber for Carpets,” Textile World 150 (6) (June 2000): 6. 5. www.dupont.com Suppose you administered the survey below and collected data from 240 respondents (see Dupont Excel File). Run the following analyses on the data and draw conclusions from the results obtained (write the conclusions in statement form). Use a α = 5% level of significance which is the probability of a Type 1 Error – i.e. the probability of rejecting the null hypothesis when it is in fact true. 1. Run descriptive statistics on all variables that make sense (i.e. Q3,4,5,6,7,8,9,10,13,15). Obtain percentages for Q1, Q2, 9e, 14, 16 ,17, 18, 19, 20, 21. The descriptive statistics give us an indication of the underlying distributions of the variables and give us an initial indication to the attitudes and impressions the respondents have toward carpeting. Thus, they are useful for suggesting further, more detailed analyses to be conducted. Remember to highlight interesting (meaningful) information derived from the data analysis. In other words, don’t just give me the Excel data output without discussing some useful results such as the percentage of people who own various carpet styles etc. Marks: /25

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2. Crosstabulate and conduct Chi-Square Test for Q3 (Is carpeting important?) with the demographic variables: Age, Marital Status, Income, and Education. If you get too few responses in a given cell you may need to combine responses. This could be done for the row or column data. For examples, you could combine college and some college responses into one cell or combine Strongly Agree and Agree into one cell and put 3,4,5 in a Neutral cell, and Disagree, Strongly disagreed into another cell. 1,2. State the hypotheses for each. Marks: /20 3. Conduct an independent sample means t-test for each of the seven attributes listed in Q7 (Importance ratings of attributes) by owners of multi-color, traditional style carpet (see Q2 What carpet do you own?). (There will be 7 t-tests run.) State the hypotheses. Here we will determine if respondents grouped by their ownership of style of carpets (i.e. Q2: owning multicolor, traditional carpet style, and NOT owning multicolor, traditional carpet style) differ on their ratings of carpets attributes such as Importance of Stain Resistance (Q7). Marks: /25 Hint: Example: Using the original data, you need to first sort by Multicolour, Traditional Style (MC/TS) (i.e. Column C) then set the range for each attribute in the t-test for each after sorting. Since non-owners are designated as ‘0’ and owners as ‘1’ the range is: (Non- owners of MC/TS response to Stain Importance (cell range K3:K79; Owners cell range K80:K211). Do not use labels. 4. Conduct two paired t-tests to determine if respondents differ in level of importance attached to “stain resistance” and “long life” as well as “fashionable” and “price”. State the hypotheses. Marks: /10 5. Do males care more about a carpet’s “price” than females? Conduct a two independent samples test to find out. State the hypotheses. Marks: /10 6. Conduct two ANOVA tests to determine if the population of people who own a “one colour traditional carpet” (2a) versus people who own “a multicolor traditional carpet” (2b) differ in how important they feel “Carpeting is an important part of my home” (Q3) and “Carpeting is a fashion item for the home” (Q4). Marks: /15

CASE - DUPONT QUESTIONNAIRE Please answer ALL the questions whether or not your household currently has carpeting. PART I 1) Does your household currently own carpeting? a. Yes______ b. No______ (IF YES GO TO QUESTION 2; IF NO GO TO QUESTION 7) 2) Which of the following styles of carpeting do you have in your home? Please check as many as apply. a. _____One Color; Traditional Style b. _____Multicolor; Traditional Style c. _____One Color; Fashion Style d. _____Multicolor; Fashion Style Please indicate your agreement with each of the following statements (3 to 6). 3) Carpeting is an important part of my home. Strongly Disagree Neutral Strongly Agree 1 2 3 4 5 6 7 4) Carpeting is a fashion item for the home. Strongly Disagree Neutral Strongly Agree 1 2 3 4 5 6 7 5) Carpeting is a central item in my interior design for my home. Strongly Disagree Neutral Strongly Agree 1 2 3 4 5 6 7 6) It is more important for a carpet to last long than look pretty. Strongly Disagree Neutral Strongly Agree 1 2 3 4 5 6 7

7) Suppose your household were to purchase new carpeting, please rate the relative importance of the factors you would consider in selecting carpeting on a 1 to 7 scale where 1 means “Not so Important” and 7 means “Very Important”. Not so Important Very Important a. Stain resistance 1 2 3 4 5 6 7 b. Long life 1 2 3 4 5 6 7 c. Fashionable 1 2 3 4 5 6 7 d. Matches my furniture 1 2 3 4 5 6 7 e. Price 1 2 3 4 5 6 7 f. Made by a well-known company 1 2 3 4 5 6 7 g. Warranty 1 2 3 4 5 6 7 8) How likely is your household to buy carpeting in the next three months? Not so Likely Maybe/Maybe Not Very Likely 1 2 3 4 5 6 7 PART II (Show the respondent the samples of designer carpets). 9) Please rate the attractiveness of the designer styles you have seen on a 1 to 7 scale where 1 means “Definitely Not My Style” and 7 means “Definitely My Style.” Definitely Not Definitely My Style My Style a. Style A 1 2 3 4 5 6 7 b. Style B 1 2 3 4 5 6 7 c. Style C 1 2 3 4 5 6 7 d. Style D 1 2 3 4 5 6 7 9e) Of the Designer Collection carpets you have just seen, which one would you most prefer to have in your home? (Check only one) a. Style A _____________ b. Style B _____________ c. Style C _____________ d. Style D _____________

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10) Please rate the Designer Collection carpets you have just seen on the following attributes. Use a 1 to 7 scale where 1 means Very Poor and 7 means Excellent. Very Poor Excellent a. Stain resistance 1 2 3 4 5 6 7 b. Long life 1 2 3 4 5 6 7 c. Fashionable 1 2 3 4 5 6 7 d. Matches my furniture 1 2 3 4 5 6 7 e. Price 1 2 3 4 5 6 7 f. Made by a well-known company 1 2 3 4 5 6 7 g. Warranty 1 2 3 4 5 6 7 11) Do you think it is desirable to have a designer carpet? Yes _______ No _______ Please explain? _____________________________________________________________ _____________________________________________________________ 12) After viewing Designer Carpets, do you think you would purchase them for your home? Yes __________ No __________ Why or why not? ________________________________________________________________________ ________________________________________________________________________

PART III 13) The following statements describe different opinions about carpeting. Please indicate how strongly you agree or disagree with each statement by using the following scale: 1 = Strongly Disagree 2 = Generally Disagree 3 = Somewhat Disagree 4 = Neither Agree nor Disagree 5 = Somewhat Agree 6 = Generally Agree 7 = Strongly Agree Strongly Neither Strongly Disagree Agree nor Agree Disagree a. Carpeting is primarily a functional item 1 2 3 4 5 6 7 b. I like to be associated with 1 2 3 4 5 6 7 the latest styles c. It is important to buy the 1 2 3 4 5 6 7 best quality d. I am fashionable 1 2 3 4 5 6 7 14) Please rank the following colors of carpets in your order of preference when buying a residential carpet. Assign a rank of 1 to the most preferred color, 2 to the second most preferred color, and so on, with a rank of 6 to the least preferred color. Color Rank Order a. Beige __________ b. Gold __________ c. Blue __________ d. Crimson __________ e. Green __________ f. Brown __________

15) In this section, there are several statements about interests and opinions. For each statement, indicate if you agree or disagree with the statement based on a 7-point scale where 1 means Definitely Disagree and 7 means Definitely Agree. a. Magazines are more interesting than television. 1 2 3 4 5 6 7 b. All men should be clean shaven every day. 1 2 3 4 5 6 7 c. When I must choose between the two, I usually dress for fashion, not comfort. 1 2 3 4 5 6 7 d. I am a homebody. 1 2 3 4 5 6 7 e. A subcompact car can meet my needs. 1 2 3 4 5 6 7 f. Friends come to me more than I go to them for advice on clothes. 1 2 3 4 5 6 7 g. I like to buy new and different things. 1 2 3 4 5 6 7 h. I often wish for the good old days. 1 2 3 4 5 6 7 i. It is important to me to feel. attractive to others 1 2 3 4 5 6 7 j. I don’t like to take chances. 1 2 3 4 5 6 7 k. I get personal satisfaction from using cosmetics. 1 2 3 4 5 6 7

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PART IV: Classification Questions 16) Your gender: a._____ Female b._____ Male 17) Marital status: a._____Married b._____Never Married c._____Divorced/Separated/Widowed 18) Your age: a._____18–24 b._____25–40 c._____41–60 d._____60+ 19) Your formal education a. Less than High School _____ b. High School Graduate _____ c. Some College _____ d. College Graduate _____ 20) Which one of the following is your principal dwelling? a. House __________ b. Condominium __________ c. Apartment __________ d. Trailer __________ 21) What is the approximate combined annual income of your household before taxes? a. $10,000 or less _____ b. $10,001 to 20,000 _____ c. $20,001 to 30,000 _____ d. $30,001 to 40,000 _____ e. $40,001 to 60,000 _____ f. $60,001 and over _____ Thank you for your participation. __________________________________________________________

DUPONT CODING SHEET 1/2 (File - DPNEW.DAT) Note: Fill variable column(s) with “9” if no response marked on questionnaire. Question/Number Coding Column Code Name Variable Name Instructions 1-3 RESP respondent id 001-099 - add leading zeros 4 blank 5 Q1 carpet in house No = 0; Yes = l 6 Q2a single color - traditional " " 7 Q2b multi-color - traditional " " 8 Q2c single-color - designer " " 9 Q2d multi-color - designer " " 10 Q3 carpet importance code circled number 11 Q4 carpet as fashion item " 12 Q5 carpet central to interior design " 13 Q6 prefer durability to looks " 14 Q7a importance of stain resistance " 15 Q7b importance of long life " 16 Q7c importance of fashionableness " 17 Q7d importance of matches furniture " 18 Q7e importance of price " 19 Q7f importance of well-known maker " 20 Q7g importance of warranty " 21 Q8 likelihood of carpet buy in 3 months " 22 Q9a attractiveness of style A "

Question/Number Coding Column Code Name Variable Name Instructions 23 Q9b attractiveness of style B code circled number 24 Q9c attractiveness of style C " 25 Q9d attractiveness of style D " 26 Q9e preference for carpet style " 27 Q10a rating of stain resistance " 28 Q10b rating of long life " 29 Q10c rating of fashionableness " 30 Q10d rating of matches furniture " 31 Q10e rating of prices " 32 Q10f rating of well-known maker " 33 Q10g rating of warranty " 34 Q11 desirability of designer carpet No = 0, Yes = l 35 Q12 would purchase designer carpet " " 36 Q13a carpeting is functional code circled number 37 Q13b like for fashion " 38 Q13c importance of best quality " 39 Q13d I am fashionable " 40 Q14a ranked preferences for beige " 41 Q14b ranked preferences for gold " 42 Q14c ranked preference for blue " 43 Q14d ranked preference for crimson " 44 Q14e ranked preference for green " 45 Q14f ranked preference for brown " 46 Q15a magazines preferred over TV " 47 Q15b men should be clean shaven " 48 Q15c prefer fashion to comfort " 49 Q15d I am a homebody " 50 Q15e subcompact car meets my needs " 51 Q15f give advice more than seek it " 52 Q15g like to buy new things " 53 Q15h wish for good old days " 54 Q15i importance to fee attractive " 55 Q15j don’t like to take chances " 56 Q15k satisfaction from using cosmetics " 57 Q16 gender 0 = female; 1 = male 58 Q17 marital status 00 = married; 01 = never married; 10=other 59 Q18 age 105 = 18-24; 100 = 25-40; 10=41-60; 1=60+ 60 Q19 formal education 0=less than HS; 100 = HS grad; 010=some college; 1=college grad 61 Q20 primary dwelling 10 = apt.; 1 = trailer;0 = house; 100 = condo; 62 Q21 pre-tax household income 10000 = $10,001–20,000 1000=$20,001–30,000 100 = $30,001–40,00010 = $40,001–60,0001 = $60,001 or more Preface to Data File Extracts One page of each data file is included to show how the data would look to the data entry person. Checking variables’ column locations on these extracts must be done to ensure that data is not being misinterpreted during the analysis of computer runs. The data file must correspond with the coding sheet. DUPONT Case – data entry example for the first 9 respondents 1 11011745376127175671225253151114253254136224331142425554300001000100000010 2 10101757165137261761317175161107171162453117111161711352210000100101000010 3 10101645354246351642425253151114153362541224231133426655200010000100000001 4 09999999911573624215742522525002535163425552555425252134400010001000100100

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5 09999999932563531235641611615001717362541771777717173414411000001000100010 6 11010112532563736225642621524002435162534452564425242227200010000100000010 7 10110211732563731225642611616001717162354771777617171311400000000100000010 8 09999999911573625115642711616001626263514661666616262311310001001010000100 9 10111434311573527215742721616002617462531662665516164775200000001010001000

Dupont Case - edited 2023 (1)

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