CASE 3.4
Rumstad Decorating Centers (B)
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