Scenario 2
March 6, 2012
Emily Andrade & Mireya Romero
Introduction
According to Miriam Webster Social media can be defined as, “forms of electronic communication (as Web
sites for social networking and micro-blogging) through which users create online communities to share
information, ideas, personal messages, and other content (as videos).” ("Social media,") “Social media is the
fastest growing type of media in the history of the world.” (Orsbum, 2011) It is no wonder that companies are
tapping into social media sites to promote their brand image and company. With the ever increasing prices of
print ads and television commercials social media platforms have been utilized as an alternative method to
getting their point across to a larger audience. “Social media professionals are really just communication
professionals who leverage the power of social media so they can talk with thousands of people at a time
instead of only one person at a time.” (Orsbum, 2011) Social media allows companies to capture their target
market; gives the company primary information of what their target market wants and allows a business to stay
connected with their customers and make new ones as well.
Research Issue
We were asked by a retailer that caters to young women between the ages of 15 – 30, who feel that their current
advertising strategy is not effectively capturing the changing interests of their target customers. We compiled a
list of twenty four retailers that catered to a similar consumer and analyzed the most important social media
platforms. By properly identifying the patterns that other competitive companies are using with their social
media platforms we will present our findings and recommendations to our retailer on how they can effectively
utilize social media to capture the changing interests of their target customers and maximize sales and brand
awareness.
Aims and Objectives
The overall objective of this paper is to determine whether a significant correlation exists between using social
media sites and an increase in sales, and determining whether social media is worth investing in? We will be
using secondary data in our report, and using these sub-objectives to answer our problem statement:
a) Identify any patterns for each social media platform, and identify any opportunities that each of these
social media platforms would offer our retailer in order to effectively capture their target customer.
b) Analyze the financial data (net sales and advertising spent) and identify if there is a significant
correlation between advertisements spent and net sales.
c) Analyze the financial data (net sales and advertising spent) before the adoption of social media and after
and determine whether there is a significant correlation between the adoption of social media platforms
and an increase in sales.
Method

Sample:
o Social Media: Facebook, YouTube, Twitter, and Mobile Apps
o Companies: Gap, Express, Aeropostale, Urban Outfitters, H & M, New York & Company,
Delia’s, Abercrombie, American Eagle, Bebe, Ralph Lauren, Wet Seal, Juicy Couture, J. Crew,
Charlotte Russe, Windsor, The Limited, and Foreign Exchange.

Measure: The measurement helps us to get into the social media community and harness the power of
these insights to provide apparel brand advertisement. By creating a graphic table, we can compare the
sales in dollars five years prior to the inception of social media to the most recent year of being used, to
find out what is the most useful social media platform to use for our apparel company to increase our
sales. The common platforms: Facebook – likes, postings, check-in, events. Twitter – followers, twits,
years. YouTube – view time, followers, posting date. Mobile Apps –purchases and reviews. The overall
objective of this research study analyze the impact of social media on our target market, we will
investigate their buyer behavior, and determine whether investing in social media will improve the sales
of this retailer.

Data Collection Plan: We collected data from secondary research such as “Mergent Online” for
companies’ advertisement expense. Then, check on actual retailers websites to see what kind of social
media they are using such as Facebook, Twitter, Blog, YouTube and Mobile Apps.

Analysis Plan: Determine if there is a positive or negative correlation between using social media sites
and an increase in company sales and if there is a correlation between advertising spending and sales in
dollars. Using secondary data in our analysis from 24 different companies. Also, look at companies’
financial records and determine if there is a correlation between an increase in sales and using social
media sites. Later, with the data collection we will be looking back five years prior (Starting at 2000) to
the emergence of social media and see how it is effective and determine if social media is worth
investing in.
Analysis
We analyzed the company financials and analyzed the information and identified if there are any significant
correlations between advertisement spending and total sales. Figure 1.1 demonstrates our sample group of
twenty four company’s correlations between sales and advertising (see appendix). Sixteen out of the twentyfour companies had a correlation that was over a .5, which made them significant to our study. Finally we
analyzed the correlations for before and after social media platforms were adopted and came to our conclusion.
The overall trend for all twenty-four companies was that there was an increase in sales when a company
invested more in their advertisement budget. Our findings for the majority of the companies support our
hypothesis. However, after analyzing the correlations of the fourteen companies before and after the adoption of
social medias the correlations for only three of the fourteen companies proved to be significant.
Graph 1.1 represents the net sales and advertising dollars between the years 2000 – 2011 for Urban Outfitters.
Urban Outfitters
$2,500,000.00
$2,000,000.00
$1,500,000.00
sales
$1,000,000.00
Adverstisting
$500,000.00
$0.00
2000 2001 20022003 2004 2005 2006 2007 2008 2009 2010 2011
Graph 1.1 demonstrates the financial data for Urban Outfitters. In 2005, which is when social media platforms
were introduced the amount of sales steadily increased.
Figure 1.2 (see appendix) represents the correlation between sales and advertising before and after the adoption
of social media platforms. The correlation after the adoption of social media was higher, which means that
introducing social media sites helped increase sales.
1.2 represents the net sales and advertising dollars between the years 2000 – 2011 for Ann Inc.
Ann Inc.
$1,500,000.00
$1,000,000.00
sales
$500,000.00
Adverstisting
$0.00
1
2
3
4
5
6
7
8
9
10
11
12
Graph 1.2 represents the financial data for Ann Inc. The graph illustrates a steady growth in sales and a peak in
2010 where advertising spent also shows an increased dollar amount spent.
Figure 1.3 (see appendix) demonstrates the correlation of sales and advertising for Ann Inc. before and after the
adoption of social media. The figure shows that before social media platform the correlation between
advertising spent and sales is just above a 0.5 and after adapting social media platforms the correlation between
the two variables increased well above a 0.5 to 0.99
Graph 1.3 represents the net sales and advertising dollars between the years 2000 – 2011 for French
Connection.
$200,000.00
French Connection
$150,000.00
$100,000.00
sales
$50,000.00
Adverstisting
$0.00
2001 2002 2003 2004 2005 2007 2008 2009 2010 2011
Graph 1.3 represents the financial data for French Connection shows a steady correlation in sales when
increasing money spends in advertising.
Figure 1.4 (see appendix) demonstrates the correlation of sales and advertising for French
Connection before and after the adoption of social media. French Connection showed a significant correlation
between advertising and sales before adapting social media platforms and shows an even higher correlation
after adapting social media platforms.
Graph 1.4 represents the net sales and advertising dollars between the years 2000 – 2011 for J Crew.
J Crew
$2,000,000.00
$1,500,000.00
sales
$1,000,000.00
Adverstisting
$500,000.00
$0.00
2004
2005
2006
2007
2008
2009
2010
2011
Graph 1.4 demonstrates the financial data for J Crew. The graph shows a steady increase in both sales and
advertising.
Figure 1.5 (see appendix) demonstrates the correlation between advertising spent and an increase sales before
social media platforms, the correlation was lower after the adoption of social media.
Graph 1.5 presents the net sales and advertising dollars between the years 2000 – 2011 for Abercrombie.
Abercrombie
$4,000,000.00
$3,000,000.00
$2,000,000.00
sales
$1,000,000.00
Adverstisting
$0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Graph 1.5: Abercrombie has increased their advertisement spending over the years, and their sales reflect that.
The correlation between advertising spending and sales was 0.464, which is under 0.5 that makes the correlation
insignificant.
In Figure 1.6 (see appendix) Abercrombie & Fitch has a positive correlation before and after social media
platforms. After social media platforms where introduced in to the company it increased into a positive
correlation. Therefore Social media did help this particular company to increase sales.
Graph 1.6 represents the net sales and advertising dollars between the years 2000 – 2011 for Candie’s.
Candie's
$250,000,000.00
$200,000,000.00
$150,000,000.00
sales
$100,000,000.00
Adverstisting
$50,000,000.00
$0.00
200020012002200320042005200620072008200920102011
Graph 1.6 represents the financial data for Candie’s. Candie’s had an insignificant correlation of 0.371 between
adverting budget and sales. This upcoming store spends more money in advertising and in the hope to increase
sales in their stores. However at the end of the year they have not managed to boost their profit.
Figure 1.7 (see appendix) demonstrates the correlation of sales and advertising for Candie’s before and after the
adoption of social media. Candie’s went from a negative correlation to a significant correlation after using
social media platforms. Although their sales and advertising budget has not been constant, their profits have
been.
Graph 1.7 represents the net sales and advertising dollars between the years 2000 – 2011 for H&M.
H&M
$80,000,000.00
$60,000,000.00
$40,000,000.00
sales
$20,000,000.00
Adverstisting
$0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Graph 1.7 represents the financial data for H&M. The findings on this company were quite interesting since as
seen on the graph in 2005 there is an enormous drop in earnings, which can be attributed to them closing their
U.S. stores and only focusing on their European doors. However, the correlation in advertisement spent and
total sales were the highest 0.999
Figure 1.8 (see appendix) represents the correlation for H&M before the adoption of social media and after. The
correlations were equal .999, which means that there is not a significant correlation between an increase in sales
by adopting social media.
Graph 1.8 presents the net sales and advertising dollars between the years 2000 – 2011 for Aeropostale.
Aeropostale
$3,000,000.00
$2,000,000.00
sales
$1,000,000.00
Adverstisting
$0.00
2000 2001 2004 2005 2006 2007 2008 2009 2010 2011
Graph 1.8 represents the financial information for Aeropostale, which experienced a boom in sales increase
beginning in 2001, but the correlation between advertisement spending and sales has steadily increased, which
makes these findings significant.
Figure 1.9 (see appendix) demonstrates the correlation of sales and advertising for Aeropostale before and after
the adoption of social media. In the case of Aeropostale the correlation before the adoption of social media was
.999, which is higher than the correlation after the company adopted social media. This means that for
Aeropostale the introduction of social media did not affect their net sales.
Graph 1.9 represents the net sales and advertising dollars between the years 2000 – 2011 for American Eagle.
American Eagle
$4,000,000.00
$3,000,000.00
$2,000,000.00
sales
$1,000,000.00
Adverstisting
$0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Graph 1.9 represents the financial data for American Eagle. The graph illustrates a steady increase in
advertising spending over the years, and their sales reflect that.
Figure 1.10 (see appendix) demonstrates the correlation of sales and advertising for American Eagle before and
after the adoption of social media. The correlation between advertising spending and sales was 0.996, which
makes the correlation significant.
Graph 1.10 represents the net sales and advertising dollars between the years 2000 – 2011 for Bebe.
Bebe
$800,000.00
$600,000.00
$400,000.00
sales
$200,000.00
Adverstisting
$0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Graph 1.10 represents the financial data for Bebe. The graph shows a steady increase in advertisement spending
over the years and now decreased, and their sales reflect that. The correlation between advertising spending and
sales was 0.952, which makes the correlation significant.
Figure 1.11 (see appendix) demonstrates the correlation of sales and advertising for Bebe before and after the
adoption of social media. Bebe has a positive correlation before and after social media platforms. It is
significant, but the social media did not help this particular company to increase sales since the correlation
dropped.
Graph 1.11 represents the net sales and advertising dollars between the years 2000 – 2011 for Quicksilver.
Quicksilver
$3,000,000.00
$2,000,000.00
sales
$1,000,000.00
Adverstisting
$0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Graph 1.11 demonstrates the financial data for Quicksilver. The graph showed no increased dollars spent in
advertising and a decline in sales. Quicksilver has a significant correlation of 0.983 between advertising budget
and sales. The more they spend in advertising and social media, the more they become seen with new stylish
trends, making an outcome of a huge profit for their company.
Figure 1.12 (see appendix) represents the correlation between sales and advertising before and after the
adoption of social media platforms. The correlation was higher before social media was adopted. After using
social media platforms in 2006 Quicksilver dropped from a 0.999 to a 0.845. Even though the correlation
decreased Quicksilver still has consumer brand loyalty, making them constant in keeping a profit for their
company.
Graph 1.12 represents the net sales and advertising dollars between the years 2000 – 2011 for Juicy Couture.
Juicy Couture
$6,000,000.00
$4,000,000.00
sales
$2,000,000.00
Adverstisting
$0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Graph 1.12 demonstrates the financial data for Juicy Couture. The graph showed no increased dollars spent in
advertising and a decline in sales.
Figure 1.13 (see appendix) represents the correlation between sales and advertising before and after the
adoption of social media platforms. The correlation after the adoption of social media sites was lower than
before, which means that there was no evidence that proves that utilizing social media sites will improve net
sales.
Graph 1.13 represents the net sales and advertising dollars between the years 2000 – 2011 for New York &
Company.
New York & Company
$1,500,000.00
$1,000,000.00
sales
$500,000.00
Adverstisting
$0.00
1
2
3
4
5
6
7
8
9
10
11
Graph 1.3 demonstrates the financial data for New York & Company. The company experienced a dramatic
drop in 2003 in advertising spent and the total sales. Beginning in 2004 the amount of advertisement spending
has become steady and their sales have increased. Towards the end of the graph beginning in 2008 their sales
have slowly been dropping. This can be attributed to outside factors such as failing to cater to their target
market or closing of doors.
Figure 1.14 (see appendix) demonstrates the correlation of sales and advertising for New York & Company
before and after the adoption of social media.
Graph 1.14 presents the net sales and advertising dollars between the years 2000 – 2011 for American Apparel.
American Apparel
600,000,000
400,000,000
sales
200,000,000
Adverstisting
0
2004
2005
2006
2007
2008
2009
2010
Graph 1.14 represents the financial data for American Apparel, the graph demonstrates that the correlation
between advertising and sales was insignificant with a correlation of 0.398. American Apparel spends more
money in advertising then producing sales, however, in the last four years they have doubled their advertising
budget and sales have remained constant.
Figure 1.15 (see appendix) demonstrates the correlation of sales and advertising for American Apparel before
and after the adoption of social media. American Apparel has an insignificant correlation before and after social
media platforms. Even after social media platforms where introduced in to the company it still decreased down
into a negative correlation. Therefore, social media did not increase sales.
Figure 1.16 The chart represents the correlation between sales and advertising before and after social media was
adopted. The correlation was higher between sales and advertising after the companies adopted social media
sites.
Discussion:
The first objective was to be able to answer, “Do companies that invest more advertising money into
implementing social media platforms increase their sales by using social media sites”. To answer this question
we used quantitative data. We collected secondary data from fourteen companies similar to scenario 2 company
and researched each of the companies advertising dollars spent before adoption of social media platforms years
2001 to 2004, and after adoption of social media platforms years 2005 to 2011,to see if investing more money
in advertising dollars for social media platform implementation will result in increased sales. We plugged in the
information into an Excel spreadsheet, as well as using graphs, to identify if there was a significant correlation
between the two variables of an increase or decrease for each company before adoption of social media and
after adoption of social media platforms. A strong quantitative correlation between the two variables would be
the rule of thumb 0.5 or greater. After conducting this method, the results showed four out of fourteen
companies had a significant correlation to increased sales after adapting social media platforms and nineteen
showed no significant correlation between the two quantitative variables.
For our second objective we wanted to identify the different types of media retailers are using, see
how the retailers use social media platforms to promote their company, and identify the opportunities they offer
to retailers. To answer this question we researched primaryqualitative data for the top four social media
platforms that each of the nineteen companies are using. The top four social media platforms in usage between
the fourteen companies are Face Book, Twitter, You Tube, and Mobile Applications. We then compared
similarities, dissimilarities, out of the box ideas and infrastructure between the four social media platforms. We
found many similarities on Face Book in all of the fourteen companies we researched. The similarities we
discovered on Face Book were special discount promotions for online purchases for followers, product give
away contests with winner postings, limited time student discounts at their brick and mortar stores with valid
school ID, promotion for in store events such as “Fashion Night Out”, surveys, current collections, models
wearing company clothing, customer complaints or concerns such as shipping costs and delivery time, link to a
free playlist of music for their fashion shows, photographs of company fashion week and collections,
photographs of special occasion collections depending on holiday, links to their Look Book, “spotted” pictures
of celebrities wearing their merchandise, followers received a “All Access Pass” to pre-order styles from
upcoming seasons, and so much more for following the company on Face Book. In the Twitter platform we
discovered that it is used similarly to Face Book in that tweeters tweet about their opinions towards the
company’s merchandise, as well as what they see or what they think of in regard to the company’s merchandise.
They also tweet about special events they were at such a stores grand opening or fashion show. The similarities
in the You Tube platform were videos of photo shoots, fashion shows, style tips, interviews, music videos, live
shows from emerging brands, subscriber post their own videos, and company events and announcements. What
was surprising is that it is like having a T.V. channel for their own store and a couple of companies were
promoted the lifestyle over the product such as a surfer lifestyle.
After collecting and analyzing quantitative and qualitative data, we found that there is not a
significant correlation in advertising dollars spent to increase sales. However, we found that social media
platforms such as Face Book, Twitter, You Tube, and Mobile Applications facilitate companies gain insight to
this unique social shopping community as well as the culture associated with the different platforms.
Recommendation:
Social media platforms will increase brand loyalty, increase interaction between a retailer and a
consumer, increase a consumers time spent on a retailers site, and also creates a sense of community for a
consumer. The impact of social media is favorable to the buying behavior of target consumers towards apparel.
Based on the charts, we can easily see the relationship between advertising spent on social media platforms and
increase or decrease of sales before and after social media platform adaptation. Four out of the fourteen
companies we researched indicated a significant quantitative correlation between increase in sales by adopting
social media platforms. Thus, making the quantitative correlation between advertising dollars spent on adapting
social media platforms and the increase in dollar sales significant. The fourteen companies we researched (ex:
Urban Outfitters, BeBe, J Crew, American Eagle, etc.) did not show significant change in sales after adopting
social media platforms.
Based on our findings it is our recommendation that implementing social media platforms will not
increase sales dollars but will enable our company to capture the interests of our target market. We will increase
brand loyalty, increase conversation and interaction between a retailer and a consumer, increase a consumer’s
time on a retailer’s site, and creates a sense of community for the consumer. The impact of social media is
favorable to the buying behavior of our target consumers towards apparel. For this reason we recommend our
company to invest in adapting social media.