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SUBMITTED BY: SUBMITTED TO:
(09) Amit Gusain Ms. Shevta Mahajan
(19) Bharti Rathi Faculty: Sales Management
(20) C. Kriti Nagpal (Department of Retail)
(29) Lalit Mohan Pathak
(37) Nutan Rani
ACKNOWLEDGEMENT
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CONTENT
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TOPIC PAGE NO.
1. Scope ... 3
2. Limitation 4
3. Objectives 5
4. Research Methodology 5
5. Introduction 6
6. United colors of Benetton 9
7. Comparative study of brands 18
8. Inference 20
9. Analysis 21
10. Recommendation . 32
11. Conclusion 33
12. References . 34
13. Annexure. 35
SCOPE
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While working on this project we come to know about the effect of
discount as the promotional tool on the store visibility.
The results on sales during end of season sale
The consumer behavior on the good offers.
The tendency of consumers on interesting promotional offers.
The purchase decision of consumers while and after viewing sale\
clearance and store displays.
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OBJECTIVES
i) To compare usage across exclusive and multi brand outlets.
ii) To explore rationale behind such activities by examining consumer behavior.
iii) To pose challenges ahead.
RESEARCH METHODOLOGY
Type of Research Technique
Exploratory research :
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Experience surveys: We will be asking knowledgeable individuals about the effect of discounts
and other promotional activities on consumer buying behavior.
Secondary data analysis : We will also be using secondary data to gain some background
information and analyze it in our research.
Descriptive research: Through this research design, we can further go deep, detail into our
study, and find the effect of promotional activities on consumer purchasing behavior.
Cross sectional research: In this research we would be putting questionnaires to a particular
sample which will help us to infer our hypothesis relating to effect of discounts and other promotional activities on consumer buying behavior.
INTRODUCTION
In India, clothing retail accounts for 36% of organized retail business. It is the largest sector.
Ready-made apparel accounted for an estimated 20% of domestic clothing sales in 2005.
Indian organized retail industry is poised for growth. Apparel sector in particular has a great
opportunity with alignment of Indian economy to globalised markets. With the widespread use of
sales promotions- short term activities which provide material inducements to consumers and
trade it becomes imperative for managers to understand such practices and understand
challenges.
As apparel retail is led by fashion, a player needs to keep a close watch on fashion amongst
teenagers as they are the trend setters. Role of Bollywood in spreading fashion needs to be
understood. Seasonal variations on stocking pattern and need to clear inventory at the end of
season should be understood by apparel retailer. Typically once an item is sold from the outlet,
retailer ensures that there is no repetition of same. It gets replaced by different design, style,
color. Importance of store layout, dcor is very critical. A browser visiting the store frequently
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likes to see changes in the layout otherwise he may carry the impression that stocks are not
moving out of the store. Category management becomes very crucial function as transformation
of design into production and delivery has to be completed before fashion or fad changes in the
market. With the advent of modern format retailers and the growth of plastic cards, affluent
urban Indian are shopping like never before. They spend mornings browsing in stores looking for
deals or latest styles.
This highlights the importance of sales promotions- short term activities which induces trade or
consumer to buy now rather than in future as the value of apparel after the season, goes down
substantially and inventory carrying burden turns out to be very high. Apparel retailer needs to
understand critical role of sales promotions. Attractive promotions induces purchase
acceleration, stock piling and brand switching on the part of a consumer which substantiallyreduces retailers financial and inventory risk and consumers financial risk and psychological
risk.
Literature review
Liu, Yuping, (2007) found out t he Long-Term Impact of Loyalty Programs on
Consumer Purchase Behavior and Loyalty . Using longitudinal data from a
convenience store franchise, the study found out that consumers who wereheavy buyers at the beginning of a loyalty program were most likely to claim
their qualified rewards, but the program did not prompt them to change their
purchase behavior. In contrast, consumers whose initial patronage levels were
low or moderate gradually purchased more and became more loyal to the firm.
For light buyers, the loyalty program broadened their relationship with the firm
into other business areas. Thus there is a need to consider patronage to decide
rewards for loyalty programmes.
Rationale for sales promotion activities
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United Colors of Benetton.
OVERVIEW
A global brand, and one of the most well known in the world, United Colors of Benetton has aninternational style that combines color, quality and fashion. Each season the womenswear,menswear, childrenswear and underwear collections offer a total look for everyday, for work andfor leisure, in the city and outdoors. The Benetton Baby label is a new product line dedicated to
the prenatal and the under-fives world.
The brand is present in many other sectors, from the elegant accessories to the eyewear lines and perfumes, from the home collection to baby products. The above products are available inselected specialized shops worldwide.
Today, the Benetton Group is present in 120 countries around the world. Its core business is
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fashion apparel: a group with a strong Italian character whose style, quality and passion areclearly seen in its brands, the casual United Colors of Benetton , the glamour oriented Sisley ,
Playlife American college style and Killer Loop street wear. The Group produces about 160million garments every year. Its network of more than 5,500 contemporary stores around theworld, offers high quality customer services and generates a total turnover of over 2 billion euro.
FOUNDERS
Luciano, Giuliana, Gilberto and Carlo Benetton, launched the activities of the BenettonGroup in 1965. The company is today present in 120 countries around the world. Its core
business is fashion apparel with the casual United Colors of Benetton , the glamour orientedSisley, Playlife American college style and Killer Loop streetwear brands. Benetton Group islisted on the stock exchange of Milan.
LucianoBenettonBorn in 1935, Luciano Benetton is Chairman of the Benetton Group. He is also on the Board of Directors of Edizione Holding, the family-owned financial holding company and was a Senator of the Italian Republic from 1992 to 1994.
HEADQUATER
VillaMinelliBenetton Group's Corporate headquarters is located at Villa Minelli in Ponzano, about 30 kmfrom Venice. Villa Minelli is a complex of sixteenth century buildings of great historical andcultural interest.
The villa was acquired by Benetton in 1969 and the task of restoring and remodernising thecomplex, entrusted to architects Afra and Tobia Scarpa, took over fifteen years. From the mid1980s Villa Minelli became the headquarters of the Group and home to all its strategic functions.
STORES OF UNITED COLORS OF BENETTON
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HISTORY
1960s The idea of color.
1965 The Benetton Group is established.
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AUSTRIA - Vienna HONG KONG - Hong Kong FRANCE - Paris
PORTUGAL - Lisbon FRANCE - Paris UK - London
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1970s A business model making thedifference: unique, flexible andinnovative.
1980sBenetton communicationcampaigns: known all over theworld.
1990sA global company present in 120countries.
2000s
Benetton grows with the market:about 160 million garments soldannually in more than 5,500contemporary stores.
BRANDS OF BENETTON
Undercolors of Benetton is an extension of the Benetton brand,featuring underwear, beachwear and sleepwear collections, as wellas accessories for women, men and children. A wide selection of recurring basic colors is enriched every season with the latesttrends. Undercolors is available in its own chain of stores which
now has more than 500 locations in thirty countries and in selectedBenetton Shops.
Sisley
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This is the Group's most fashion forward brand. Sisley presentselegant and seductive collections, with special attention given to thechoice of design, fabrics and new shapes. Its creative artists andindependent sales teams concentrate their efforts on its image andon strong-impact advertising campaigns. The brand has created thevery fashionable Sisley Young line for children from 8 to 12 yearsold.
Playlife is the Benetton sportswear brand that redefines a style. Itsclean and elegant collections display a blend of the Americancollege, exclusive sports clubs and a strong sense of individuality.The brand's new store concept reflects the same values andhighlights their emotional content.
An expression of our time
"Communication should never be commissioned from outside the company, but conceived from within its heart".
Luciano Benetton
Benetton Group's advertising campaigns are not only a means of communication but an
expression of our time. Through their universal impact, they have succeeded in attracting the
attention of the public and in standing out amid the current clutter of images.
The campaigns have gathered awards and acclaim worldwide; by the same token, they have
aroused strong reactions - at times ferocious, at times simply curious, confirming once again that
they are always a focal point of discussion and of confrontation of ideas.
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Several of the communication projects created by Fabrica, Benettons research center have also
been developed in cooperation with prestigious associations (including FAO, UNV, WFP)
obtaining important acknowledgements at an international level.
Benetton was well known for its colorful and provocative advertisements (Benetton termed its
advertising and marketing activities as Communication Strategy). The company employed
unusual, controversial advertising techniques and themes that used shock value and the power
of photography to grab viewers attention. Unlike most advertisements which centered around a
companys product or image, Benettons advertising campaigns focused on social and political
issues like racial integration, AIDS awareness, war, poverty, child labor, death, pollution etc. The
advertisements initially succeeded in raising the brand's profile, but eventually began to cause
dissatisfaction among customers, retailers, government bodies and various international non-
profit organizations.
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Financial Highlights
Year 2007 (a) 2006 (a) 2005 (a) 2004 (a) 2003 (b)
Revenues (million euro) 2,085 1,911 1,765 1,704 1,859
Net Income (million euro) 145 125 112 109 108
(a) These figures are IAS/IFRS compliant and not comparable with the previous years(b) These figures are compliant with Italian accounting procedures
Sales by Region
Sales by Brands
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Benetton designs only two collections a year, expect one huge sale in the middle of each seasonrather than a rotating clearance rack.
DESIGN:
A staff of 300 designers from all over the world creates the collections for the casual United
Colors of Benetton , the glamour oriented Sisley , Playlife American college style and Killer Loop
streetwear brands.
The design team is also engaged in researching new materials and creating new lines for
different targets from children, men and women to expectant mothers, offering them not only practical and modern styles but also maximum comfort.
The result is the latest trends in design and a rich output of many models a year which are
realized with computer assisted design systems fully integrated with the rest of the company's
production phases.
PRODUCTION:
Consistently high quality is one of the fundamental characteristics of the Benetton production
process from the raw materials to the finished garment.
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A constant commitment to innovation, a crucial factor for development, has always characterized
the Groups business organization, from communication to IT, from research into new materials
to integrated logistics. Special attention is given to innovation in production, where all systems
and equipment are totally renewed every five years.
The Benetton production system, co-ordinated by a high-tech facility at Castrette (Treviso, Italy)
is capable of turning out about 160 million garments every year.
DyeingSince the beginning dyeing has always been a crucial phase in theBenetton production process. The dyeing vats are operational 24 hours a
day.
Computerized Knitting MachinesBenetton is the world's largest consumer of pure virgin wool andoperates with a structure of computerized machines that areprogrammed to operate all knitting phases.
Seamless Sweater
One of Benetton's innovations is the computerised knitting procedurecapable of producing a complete, seamless sweater in half an hourthanks to a software program conceived by Benetton specialists.
DISTRIBUTION
From the very beginning, Benetton decided to maintain direct control of the logistics phase and
has invested heavily in automating logistics processes in order to achieve total integration within
the production cycle, from customer orders to packing and delivery.
Automated Sorting SystemThese automated machines are capable of assembling individual ordersfor Benetton's more than 5,500 shops worldwide.
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About 160 million flat and hanging garments are automatically sortedevery year, packed into boxes and sent directly to the automateddistribution system through a tunnel of approximately one kilometer.
Automated ShippingThe Automated Distribution System covers an area of 20,000 squaremeters, with a total capacity of 400,000 boxes, and is able to handle40,000 incoming/outgoing boxes daily with a workforce of only 24,compared to the 400 people normally required in a traditionallyorganized operation.
The finished product is sent directly to the Group's more than 5,500
retail outlets in 120 countries worldwide.
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Comparative Study of Brands
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Store name Pantaloon Lifestyle Westside United colors of
benetton
Format Type Multibrand Multibrand Exclusive
Tata(Trent group
Exclusive
Positioning Family store Style &
affordability
Enjoying the
change
Style
Floor Size 28000 sq. ft 50,000 sq. ft 15000-30000sqft. 20000-
25000sqft
Categories Apparel&accessories for
men, women &
children
Menswear,women wear,
home furnishing
Apparel &accessories for
men, & children
women
Apparels andaccessories for
men,women and
children
Average
billing per customer
Rs.1800 NA Rs 800 Rs.1000
Average footfalls 1000on weekday& 1500 to 2000
on weekends,
holidays
100-120 onweekday & upto
250 on weekends
1200 in week days & 6000
during week end
100-150 onweekday and
upto 300 on
weekends
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SALES PROMOTION
INFERENCES FROM TABLE
21
1.End of season Yes No Yes Yes2.Festive Promotions
(Diwali,Christmas etc)
Yes Yes Yes Yes
Loyalty card
Programme
Yes Yes Yes Yes
Special Promotion
(event)
Yes (Exchange
offer)
Yes No No
Joint promotion No Yes No YesMedia used Hoardings,print,el
ectronic (SMS, E-
mail),POP
Hoardings, In
store
Print, electronic,
hoardings, In store
Print, hoardings
and instore
Promotion
type
Price off, free
gifts, exchange
offer
Lucky draw,
discounts,
contests, free gifts
Cause related, gift
vouchers,
discount,
contest,combo,
coupons
Price off,
discounts,
ticketsize offer or
coupons
Evaluation
of promotion
Sales, Quarterly
profit
Sales Sales,Quarterly
profit
Sales, profit
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From the above table which gives comparative picture of various sales promotion activities and
manner of announcement, evaluation etc., it is clear that three out of four stores engage in end of
season sale. This reinforces the fact that seasonality affects apparel sector and hence it becomes
critical for a retailer to clear off the stocks at the end of season otherwise he may have to incur
substantial inventory carrying costs, allocate scarce shelf space and out of fashion apparels
maybe worthless- may remain unsold forever. Thus stock clearance seems to be very important
objective for apparel retailer in using end of season sale twice in a year wherein discount given is
upto 50% of the MRP(Maximum retail price).
Loyalty cards to reward loyal users and encourage them to visit the store often and buy more by
offering wide range for men, women and children. Some store also offer home furnishings,
accessories and footwear, thereby providing convenience for one stop shopping. Examining the
various terms and conditions of loyalty programme revealed that some rewards were quite
complex and confusing. e.g. lifestyles card- Inner circle. The conditions to be fulfilled is not
very clear to a card member. For example, if any other promotions are prevalent then purchase
made during those promotions would entitle for the card reward points or not was not very clear.
All the stores used in-store media to announce promotions. Use of only instore media would
restrict the announcement to those who walk into the store. It can be assumed that only loyal/
frequent visitor would know about the offers. Whereas variety of media used would enhance
footfalls to the store and trigger word of mouth.
Every retail outlet measures impact of sales promotion activities by looking at sales made during
the promotional period. Few others also look at the footfalls, conversion from footfall to buyers,
average bill size during promotions etc. Very few measure profits made during promotions by
relating revenues to costs of promotions.
PIE CHART ANALYSIS
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Q.1. I have difficulty controlling my urge to buy when I see a good offer.
35% of the sample are not affected by the offers followed by 23% those are neutral
Any such offer, followed by 21% which strongly agree that they are affected by the
Offers.
23
8%
21%
23%
35%
13%
Fig. 1strongly disagree Disagree neutral Agree strongly agree
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Q.2. When I see a good deal, I tend to buy more than that I intended to buy.
0%
16%
28%43%
13%
Fig. 2Strongly Disagree Disagree Neutral Agree Strongly Agree
43% of the samples agree that they are intended to buy when there is
any good scheme.
28% on the other hand are neutral to any such offer. 16% people disagree
, and only 13%
strongly agree.
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Q.3. I tend to choose which store to shop in depending on eye-catching window displays.
45% of the sample agree that interesting window displays catch their attention, 33%
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are neutral, 17% disagree that they are attracted by interesting windows.
Q.4. I get an idea of what I want to buy after looking I through in-store form/mannequin
displays.
33% of the sample agree that displays on mannequins give them an idea what to buy.
27% disagree on this, 11% strongly disagree and only 3% strongly agree with it.
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Q.5. When I see clothing featuring a new style or design on display, I tend to buy it.
35% of the sample agree that new style in displays do interest them. 25% and 22%
disagree and neutral respectively to this. 11% strongly agree and 7% strongly disagree
To it.
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Q.6. I tend to rely on store displays when I make a decision to purchase clothing.
35% and 37% agree and strongly agree respectively that their buying decisions are
strongly influence by the store displays. 25% are neutral and 5% strongly disagree.
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Q.7. When I see clothing that catches my eye I tend to try it on without looking through the
whole section.
35% agree that good appeal of merchandise makes them to buy impulsively without going
through whole section. 25% disagree to this. 18% are neutral to it. 14% strongly agree to
it. 85 strongly disagree to this.
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Q.8. When I walk along the aisle, I tend to look through the clothing close to me.
45% of the sample size agree they not go much deep in selecting , what isnear to them. 39% are
Neutral to it. 10% of the sample size disagree and only 65 strongly
disagree to it.
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Q.9. If I see an interesting promotional offer (reduced price, sales promotion, and etc.) on
instore signs, I tend to buy.
stronglydisagree
3% disagree6%
neutral28%
agree41%
strongly agree
22%
fig 9
41% of the sample size agree that discounts and promotional offers tend to attract their
attention and influence them to buy the product. 22% strongly agree and 28% are neutral
to such offers respectively.
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Q.10. Sale/ clearance signs entice me to look through the clothing.
59% of the sample size agree that they are sales and clearance signs entice them to select a
product. 24% are neutral, 16% disagree.
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Q.11. When I see a special promotion sign, I go to look at that clothing.
53% of
the sample size agree that good offer on a product makes them to look at it. 19% and 18%
respectively strongly agree and are neutral to such offers.
Q.12. I am more likely to make an unintended purchase if the clothing has a sale orclearance sign.
33
0%
10%
18%
53%
19%
fig 11strongly disagree disagree neutral agree strongly agree
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promotions (promotions linked to festivals like Diwali) may result in coinciding purchase with
such promotions leading to loss of margin an opportunity loss to sell at full price.
Loyalty card programmes require good administrative support and good database records and data
mining abilities to exploit to the fullest. Also IT investments are required to keep records andevaluate the impact. Big players like Pantaloon have a policy to invest in IT. They have implemented
SAP so database is available. Such investments in decision support systems may give competitive
edge to retailers.
The retailer must understand critical role of integrated marketing communications which will signal
unified message and image about the brand/ store. To what extent promotional calendars need to be
unified across markets for the chain and to what extent local managers need to be given freedom to
plan their promotions in local areas is a constant struggle between head quarter and regional chain
stores.
CONCLUSION
Accordingly people have agreed that controlling their urge, when they see good deal, they
depend upon eye catching window displays. They get an idea of what they are looking for in the
store.
People agree that when they see interesting offers on in store signs they tend to buy. They are
neutral when it comes to buy to look through the clothing.
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The people are neutral in approach when it comes to unintended purchase of the clothing has a
sale or clearance.
REFERENCES
1. Hyllegard, Karen; Eckman, Molly; Descals, Alejandro Molla; Borja, Miguel Angel Gomez.,
Spanish consumers' perceptions of US apparel speciality retailers' products and servicesJournal of Consumer Behaviour, Sep2005, Vol. 4 Issue 5, p345-362, 18p, 7 charts.
2. Kincade, Doris H.; Woodard, Ginger A.; Park, Haesun,, International Journal of Consumer
Studies, Dec2002, Vol. 26 Issue 4, p294-302, 9p.
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3. Liu, Yuping, The Long-Term Impact of Loyalty Programs on Consumer Purchase Behavior
and Loyalty, Journal of Marketing, Oct2007, Vol. 71 Issue 4, p19-35, 17p.
4. Meyer-Waarden, Lars; Benavent, Christophe, The Impact of Loyalty Programmes on Repeat
Purchase Behaviour, Journal of MarketingManagement, Feb2006, Vol. 22 Issue 1/2, p61-
88, 28p.
5. Lara, Pedro Reinares., Exploring the Benefits Obtained in a Loyalty Programme applied to
Retailing, European Retail Digest, Winter2005 Issue 48, p48-52, 5p.
6. Deeter-Schmelz, Dawn R.; Moore, Jesse N.; Goebel, Daniel J., prestige clothing shopping by
consumers: a confirmatory assessment and refinement of the precon scale with managerial
implications, Journal of Marketing Theory & Practice, Fall2000, Vol. 8 Issue 4, p43, 16p.
7. Consumer Lifestyles in India Euromonitor, International Consumer Lifestyles
Database(2005)
8. Sales Promotion Practices in Apparel Retail Sector and Challenges Ahead by Dr. Preeta H.
Vyas Indian Institute of Management, Ahmedabad.
9. Rita Clifton and John Simmons ,Brands and Branding, , edition1st.
SAMPLE QUESTIONNAIRE
Do you agree with the following statements?
1. I have difficulty controlling my urge to 1 2 3 4 5
37
Stronglydisagree
disagree
neutral agree Stronglyagree
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buy when I see a good offer.
2. When I see a good deal, I tend to buy more 1 2 3 4 5
than that I intended to buy.
3. I tend to choose which store to shop in 1 2 3 4 5
depending on eye-catching window displays.
4. I get an idea of what I want to buy after looking 1 2 3 4 5
through in-store form/mannequin displays.
5. When I see clothing featuring a new style or 1 2 3 4 5design on display, I tend to buy it.
6. I tend to rely on store displays when I make a 1 2 3 4 5
decision to purchase clothing.
7. When I see clothing that catches my eye 1 2 3 4 5
I tend to try it on without looking through
the whole section.
8. When I walk along the aisle, I tend to look 1 2 3 4 5
Through the clothing close to me.
9. If I see an interesting promotional offer 1 2 3 4 5
(reduced price, sales promotion, and etc.) on in-
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store signs, I tend to buy.
10. Sale/clearance signs entice me to look
1 2 3 4 5
through the clothing.
11. When I see a special promotion sign, I go to 1 2 3 4 5
look at that clothing.
12. I am more likely to make an unintended 1 2 3 4 5
purchase if the clothing has a sale or
clearance sign.
Stronglydisagree
disagree
neutral Agree Stronglyagree