CHAPTER 4

EXPLORATORY RESEARCH DESIGN: SECONDARY DATA

OPENING QUESTIONS1. Why are secondary data important? How do we distinguish secondary data from primary

data? 2. What are the advantages and disadvantages of secondary data?3. How should secondary data be evaluated to determine their usefulness?4. What are the different sources of secondary data, including internal sources and external

sources?5. What is database marketing? How does it make use of secondary data?6. How can published secondary data be classified?7. How can computerized databases be classified? 8. How do we identify and classify the sources of secondary data useful in international

marketing research?9. How can technology and what ethical issues are involved in the use of secondary data?

AUTHOR'S NOTES: CHAPTER FOCUS

This chapter provides an overview of secondary data. Secondary data are defined and their advantages, disadvantages, and evaluations discussed. A classification of secondary data is presented. Internal sources, published external sources, and computerized databases are discussed. Applications of secondary data in the context of a buying power index and computer mapping are provided. The several classifications of secondary data, presented in Figures 4.3 through 4.6, are unique to this book. In addition, a focus on international marketing research, technology, and ethics is placed at the end of this chapter.

This chapter could be taught by focusing on the opening questions sequentially. Greater emphasis could be placed on the nature of secondary data (Opening Questions 1 and 2), criteria for the evaluation of secondary data (Opening Question 3), internal data and database marketing (Opening Question 5), published external sources, and computerized databases (Opening Questions 6 and 7). The material on international marketing research (Opening Question 8), and ethics in marketing research (Opening Question 9) can be discussed as well.

CHAPTER OUTLINE

1. Overview 2. Primary Versus Secondary Data 3. Advantages and Uses of Secondary Data 4. Disadvantages of Secondary Data 5. Criteria for Evaluating Secondary Data

i. Specifications: Methodology Used to Collect the Dataii. Error: Accuracy of the Dataiii. Currency: When the Data Were Collectediv. Objective(s): The Purpose for the Studyv. Nature: The Content of the Datavi. Dependability: Overall, How Dependable Are the Data

6. Classification of Secondary Data

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7. Internal Secondary Data and Database Marketing 8. External Secondary Data: Published Sources

i. General Business Dataa. Guidesb. Indexes and Bibliographies c. Directoriesd. Nongovernmental Statistical Data

ii. Government Sourcesa. Census Datab. Other Government Publications

9. Computerized Databasesi. Classification of Computerized Databasesii. On-line Databasesiii. Internet Databasesiv. Offline Databases

a. Bibliographic Databasesb. Numeric Databasesc. Full-text Databasesd. Directory Databasese. Special Purpose Databases

v. Directories of Databases10. Combining Internal and External Secondary Data

i. Geo-Demographic Codingii. Geo-Visual Databases

11. Summary Illustration Using the Opening Vignette12. International Marketing Research13. Technology and Marketing Research14. Ethics in Marketing Research15. Summary16. Key Terms and Concepts17. Acronyms

TEACHING SUGGESTIONS

Opening Question 1

* Discuss the nature of secondary data.

Begin by defining secondary data as data, which have already been collected for purposes other than the problem at hand. The data are often found internally and also externally from published materials, computerized databases, or from syndicated services. Finally, note that secondary data are characterized as easily available and relatively inexpensive to obtain.Figure 4.2 provides a framework for discussing the types of secondary data.

* Describe the scope of secondary data.

Note that secondary data can cover a broad range of factors that affect the problem at hand. It does not always fit the specific problem at hand, but can be useful in developing an

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approach to the problem and providing a comprehensive understanding of the problem environment.

Begin the class by having students suggest sources of secondary data with which they are familiar and keep a list on the board. Then proceed to discuss the sources outlined in the text and see how many sources they overlooked

Opening Question 2

* Identify the Advantages of secondary data.

Secondary data can help you:1. Identify the problem.2. Better define the problem.3. Develop an approach to the problem.4. Formulate an appropriate research design (for example, by identifying the key variables).5. Answer certain research questions and test some hypotheses.6. Interpret primary data more insightfully.

Examination of available secondary data is a prerequisite to the collection of primary data. Proceed to primary data only when the secondary data sources have been exhausted or yield marginal returns.

* Identify the disadvantages of Secondary data.

Because secondary data have been collected for purposes other than the problem at hand, their usefulness to the current problem may be limited in several important ways, including relevance and accuracy.

• The objectives, nature, and methods used to collect the secondary data may not be appropriate to the present situation.

• Secondary data may be lacking in accuracy, or they may not be completely current or dependable.

Tables 4.1 and 4.2 will be useful when covering this information.

Opening Question 3

* Explain the criteria for evaluating the quality of secondary data with an example.

Review the following criteria when evaluating the suitability and reliability of secondary data. Your example should allow the students to address the six criteria below.1. The purpose for which data were collected2. The content of the data3. Methodology used to collect the data4. When the data were collected5. Accuracy of data6. The overall dependability of the data

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Opening Question 4

* List the various internal sources of secondary data and explain their benefits to the researcher.

Begin by noting that internal sources can supply some of the most vital data for research. The information generated by the corporation’s daily business operations can represent a wealth of data useful to the researcher and should be the starting point of a project. It offers the advantages of being proprietary to the company and is available at a low cost relative to outside suppliers.

As an example, discuss sales data. Sales data are valuable information for any marketing project because they show the exact results of a program, salesperson, or sales region. Actual costs allow the researcher to estimate costs for a research study or project costs for a marketing program. Detailed information can be gathered on precise questions, for example, the percentage of sales to industry verses government or sales broken out by company accounts. With planning, sales data can be recorded in the company’s management information system to allow for optimal use by analysts.

* Describe the importance of the government census data as a major source of secondary data.

Note that the U.S. Bureau of the Census is the world’s largest source of statistics. Census data can provide important information on demographics, manufacturers, retail trade agriculture, transportation and so on. Moreover, stress that the quality of census data is very high, making it a very reliable and useful source.

If students filled out the 2000 Census, ask them to relate their impressions of the form and the information it sought. If you have a copy of the long form, review it with students and speculate how different information sought in the form could be useful to a marketing researcher.

Opening Question 5

* Comment on the growing use of computer databases in marketing research.

As an introduction, mention that the use of databases has increased phenomenally due to the rocketing sales of PCs and due to the increase in the number of vendors providing such databases. Both on-line and off-line databases are available consisting of bibliographic, numeric, full-text, directory and specialized databases. In addition, directories of databases exist to aid in locating the proper information. See if the students can find two databases of secondary data other than the ones listed in the book.

Figure 4.5 classifies the types of computer databases.

Opening Question 6

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* Discuss the chore of locating published secondary data that is appropriate for a researcher.

It should be easy to convince students that published data abound but that the key is knowing where to look for it. Both government and non-government published sources exist, as well as guides, directories, and indexes to help locate the necessary information. The difficulty is either locating the right directory or index to guide you or understanding the classification system used. A good librarian is a real advantage and can cut the search time remarkably. You may want to bring a copy of a directory or index to show how complicated they can be to use.

Figure 4.5 may be used here as a framework for your discussion on this topic.

Opening Question 7

* Explain how computerized databases can be classified.

Knowing how computerized databases are classified can help the researcher narrow the search. Computerized databases are classified in terms of how they are distributed as on-line, Internet, or off-line, as shown in Figure 4.5.

As a further classification, databases, whether they are on-line, Internet, or off-line, can vary in terms of nature and content. As shown in Figure 4.5, there are five major types of databases: bibliographic numeric, full-text, directory, or special-purpose databases.

Opening Question 8

* Examine the sources of international market information.

Important government sources are:• the Department of Commerce• the Agency for International Development• the Small Business Administration• the Export-Import Bank of the United States• the Department of Agriculture• the Department of State• the Department of Labor• the Port Authority of New York and New Jersey

The Department of Commerce offers not only a number of publications but also a variety of other services, such as the foreign buyer program, matchmaker events, trade missions, export contact list service, the foreign commercial service, and custom statistical service for exporters.

Nongovernmental organizations: • the United Nations• the Organization for Economic Cooperation and Development (OECD)• the International Monetary Fund (IMF)• the World Bank, International Chambers of Commerce• the Commission of the European Community to the United States• the Japanese External Trade Organization (JETRO)

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Figure 4.6 provides a classification of international information sources.

Opening Question 9

* Discuss the role of new information technologies in collecting secondary data.

New information technologies have begun and will continue to revolutionize the ways in which marketing research is undertaken. Innovations will change the way in which both secondary and primary research is conducted. Technological advances have not only facilitated the establishment of sophisticated internal databases, but have enabled firms to collect primary data using creative promotions and automated systems. The Pepsi Cola example can be used here.

* Discuss the ethical situations pertaining to secondary data.

Note: the four ethical issues that are the most pertinent are:1. the needless collection of primary data when the problem can be addressed based only on

secondary data2. limiting the research to only secondary data when primary data are needed to answer the

research question3. the use of secondary data that are not relevant or applicable to the research problem4. the use of secondary data that have been gathered through morally questionable means

Internet Emphasis

* Explain the World Wide Web as an on-line source of secondary data.

The search for secondary data is facilitated by some generalist search engines like Yahoo! or Alta Vista, which require only some key words to get hundreds of sites related to one subject. One can also go directly to the Web site of some traditional suppliers of secondary data. Large organizations have intranets, which greatly facilitate the search for access to internal secondary data. Organizations, like the New York Times, conducting business on the Internet have a natural advantage in building large customer databases and implementing database marketing programs.

American business information can be obtained by visiting various business related sites that provide sales leads and mailing lists, business profiles and credit ratings. Several US government sources can be reached from FedWorld (http://www.fedworld.gov). The US Department of commerce can be reached at http://www.doc.gov. The Bureau of Census information can be reached via the Department of Commerce (http://www.doc.gov), or directly at http://www.census.gov.

BE AN MR! AND BE A DM!It should be noted that a variety of answers are appropriate. The ones given here are merely illustrative.

Be an MR!: Nike

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A number of start-ups have jumped on the endorsement bandwagon, including Priceline.com with William Shatner, eStyle with Cindy Crawford and online gift currency company Flooz.com Inc. with Whoopi Goldberg. Flooz co-founder and CEO Robert Levitan says he's seen brand awareness jump from 7 to 64 percent since bringing Goldberg aboard a couple years ago.

- Time series data of sales before and after Nike started using NBA stars to endorse. Comparison of the Post-Jordan and the Pre-Jordan era.- Sales revenue versus percentage of the marketing budget spent on endorsement type advertising

Be a DM!: NikeIf the above secondary data reveals a strong positive correlation between endorsements and sales, I would continue such endorsements.

Be a DM!: Home Depot-Currently home depot operates under the assumption that men shop for home improvement products and services.-If it has to appeal to the women consumers it will have to reposition itself to appeal to that segment.-Home depot has to do market research to find out what the qualities valued by women customers in home improvement products and services.-Home Depot may have to redesign the layout of its stores to make them friendlier to women shoppers.

Be an MR!: Home DepotA detailed description given at www.gallup.com has been edited for the relevant details.

The Sampling Issue It is Gallup’s goal in selecting samples to allow every adult American an equal chance of falling into the sample. How that is done, of course, is the key to the success or failure of the process.

Selecting a Random Sample When setting out to conduct a national opinion poll, the first thing Gallup does is select a place where all or most Americans are equally likely to be found. That wouldn’t be a shopping mall, or a grocery store, an office building, a hotel, or a baseball game. The place nearly all adult Americans are most likely to be found is in their home, so, reaching people at home is the starting place for almost all national surveys. Gallup proceeds with several steps in putting together its poll with the objective of letting every American household, and every American adult, have an equal chance of falling into the sample. First we clearly identify and describe the population that a given poll is attempting to represent. Next, we choose or design a method which will enable us to sample our target population randomly.

The Number Of Interviews Or Sample Size Required The typical sample size for a Gallup poll which is designed to represent this general population is 1,000 national adults. This sample size is more than adequate to ensure that the error in percentage estimates is kept to no more than five percent.

The Interview Itself Once the computer has selected a phone number for inclusion into a sample, Gallup goes to extensive lengths to try to make contact with an adult American living in that household. In many instances, there

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is no answer or the number is busy on the first call. Instead of forgetting that number and going on to the next, Gallup typically stores the number in the computer where it comes back up to be recalled a few hours later, and then to be recalled again on subsequent nights of the survey period. This procedure corrects for a possible bias which could occur in if we included interviews only with people who answered the phone the first time we called their number.

Conducting the Interview Most Gallup interviews are conducted by telephone from Gallup’s regional interviewing centers around the country. Trained interviewers use computer assisted telephone interviewing (CATI) technology which brings the survey questions up on a computer monitor and allows questionnaires to be tailored to the specific responses given by the individual being interviewed. Once the data have been weighted, the results are tabulated by computer programs which not only show how the total sample responded to each question, but also break out the sample by relevant variables.

Interpreting the Results Gallup generally provides written analysis of our own polling data, and also provide ample opportunity for the press, other pollsters, students, professors and the general public to draw their own conclusions about what the data mean. The results to all Gallup surveys are in the ”public domain” once they have been publicly released.

Thus the quality of data generated by Gallup is very high.

Be a DM!: AppleDatabase Marketing can be used to:

Segment customers Identify customer priorities, lifestyles and purchase characteristics Do targeted marketing Cross selling of products

Be an MR!: AppleApple’s marketing strategy:- Apple retail stores to reach out to household PC market- Attempt to penetrate the enterprise segment- Apple is showing a prudent strategy of picking fights in verticals and niches where it stands a good chance of success, such as film and television production industries.- Concentration in advertising, graphic design and apparel design industries- Focus on outer fringe of Windows users who are far more ambivalent about Windows and potentially more receptive to Apple's marketing messages.

The internally available data would include sales to households, type of outlets, products purchases, geographical region, and time period. Externally available data would include demographics and psychographics.

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Be an MR!: Subway Integrated online marketing campaign with Pepsi and yahoo Johnson Gross Field Inc.’s promotional business focuses on the kids marketing program of Subway

Restaurants. Subway website Sponsoring programs, events and causes like American Heart Association

PRIZM by Clarita’s (www.claritas.com) divides the U.S. consumer into 15 different groups and 62 different segments such as Midtown Mix, Urban Cores, and Elite Suburbs. These groups can be useful for segmentation and for identifying locations with a high concentration of potential Subway customers.

Be a DM!: SubwaySubway targets heath conscious customers.The Geo-Demographic information can be used to find out: Areas of higher concentration of target customer base Areas where the chain does not have a sizable presence Areas where company have registered fastest growth in recent past

EXPERIENTIAL LEARNINGU.S. Census Bureau

1. Find the population clocks on the home page for the U.S. Census Bureau. What is the current population estimate for the US?

294, 217, 612 for October 2004

For the World?

6, 391,481,204 for October 2004

2. Find the “state and county quick facts on the home page for the US Census Bureau. Compare your home state’s “population percentage change from 1990 to 2000” with that of the US.. Which grew faster?

Note: Answers will vary according to state of residence. The following answer is for Texas:

My home state is Texas and the population percentage from 1990 grew by 22.8%. The U.S. population grew 13.1% from 1990. Therefore, my home state grew faster than the U.S. population.

3. Review the table and add the numbers for “1-person households”, and “Nonfamily households” to compute the number of “singles without children.”

Note: Answers will vary according to zip code. The following answer is for the 76109 zip code in Fort Worth, Texas:

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(a) The number of 1-person households is 17,240 and Non-family households are 4,290. The sum of these two figures results in the total number of singles without children.

(b) There are currently more females in my zip code.

Quirk’s Marketing Research ReviewThis exercise is designed to give the students some hands-on experience with a popular source of secondary data: Quirk’s Marketing Research Review. It also gives them an appreciation of the complexities involved in conducting international marketing research. The specific answers will depend upon the article selected. However, the following general points should be reflected.

1. A variety of interests may be mentioned.2. Reliable international Secondary data are hard to get.3. The environmental context of the country in which the research is conducted should

be taken into account. This includes the social, cultural, economic, technological, legal, and marketing environment.

WHAT WOULD YOU DO?It should be noted that a variety of answers are appropriate. The ones given here are merely illustrative.

The Marketing Research Decision

1. A & B2. Census data is a trusted source of data for demographic patterns and details. It will give a

sense of the big picture of the total customer pool in terms of age, gender, ethnicity, etc. It will also give an idea about time series demographic trends, which is important to decisions like target segment, pricing, tastes etc. Apparel industry database will give an idea about changing trends and pulses within the specific industry.

The Marketing Management Decision

1. A, B, C & E2. Tommy Hilfiger has the image of a stylish trendy and expensive brand. The exclusivity

given by price is in part the reason why it attracts its present customer base, so lowering the price for existing lines might dilute the brand image. At the same time, the changing demographics and recession has brought into existence an ever growing cost conscious low income customer base. To appeal to this market the company should launch alternate brands through new channels. Mixing the channel for various brands might dilute the brand and at the same time might not reach out to the appropriate audience.

REVIEW QUESTIONS

1. The differences between primary and secondary data are that primary data are originated by the researcher for the specific purpose of addressing the problem at hand while

secondary data are data that have already been collected for purposes other than the problem at hand.2. It is important to obtain secondary data before primary data because secondary data, as

compared to primary data, are easily available, inexpensive, and retrieving secondary

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data requires a short amount of time. In addition, secondary data generally provide valuable insights for collecting primary data.

3. The advantages of secondary data are that secondary data are easily accessible, less expensive, and less time consuming to obtain than primary data.

4. The disadvantages of secondary data are that their usefulness to the current problem may be limited in relevance and accuracy.

5. The criteria to be used when evaluating secondary data are: to examine the methodology used to collect the data to identify possible sources of bias in the data, to determine whether or not the information is accurate enough for the present purposes, to determine whether or not the data is current enough for the present purposes, to determine why the data was collected in the first place, to determine the nature of the data, and to determine the overall dependability of the data.

6. The difference between internal and external secondary data is that internal data are those available within the organization for which the research is being conducted while external data are those generated by sources outside the organization.

7. The various sources of published secondary data include business guides, directories, indexes, nongovernmental statistical data, government sources, computerized databases, and syndicated publications.

8. The different forms of computerized databases are Internet, on-line or off-line databases that can be further classified as bibliographic, numeric, full-text, directory, or specialized databases.

9. The advantages of computerized databases are that the data are current and up-to-date; the search process is more comprehensive, much quicker, and greatly simplified; the cost of accessing these databases is low; and it is convenient and easy to access this data with a personal computer fitted with an appropriate communication device such as a modem or a communication network.

10. The usefulness of secondary data can be greatly enhanced when internally generated data are merged with data obtained from external sources. By using both internal and external secondary sources, marketing researchers can overlay demographic, economic, or business statistics on proprietary customer files. These data can then be used to develop market assessments or profiles of various customer groups, or simply to educate the sales force. The combination of internal and external data results in inexpensive and valuable information that can be used for a variety of purposes, including database marketing.

11. Geo-demographic coding involves merging internal customer data with external geographic, demographic, and lifestyle data on the same customers. Consider a local cable television operator who maintains a computerized database of its cable subscribers. This internal database contains customer information on the number of cable services subscribed to, the length of time on service, the changes in subscribed services over time, and the billing history for the past three years. To expand the internal customer file, we can review several external sources of geographic, demographic, and lifestyle data and then select the Claritas Corporation.

12. Geo-visual databases are created by combining internal customer databases with geographic data from the Census Bureau and making use of appropriate computer mapping software. The Census Bureau has introduced a geo-visual product called TIGER (Topologically Integrated Geographic Encoding and Referencing), which provides a digital street map of the entire United States. These mapping files contain data on street locations, highways, railroads, pipeline, power lines, and airports.

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13. Database marketing involves using computers to capture and track customer profiles and purchase detail. For many companies, the first step in creating a database is to transfer raw sales information, such as that found on sales call reports or invoices, to a microcomputer. This is augmented with demographic and psychographic information about the customers obtained from secondary sources. Several companies in this business, including R. L. Polk, Donnelley, Metromail, Smart Names, Select & Save, and others, have compiled household lists, which include names, addresses, and a great deal of individual-specific data. This augmented information can then be analyzed in terms of a customer’s activity over the life of the business relationship.

PROBLEMS

1. Do not expect the two estimates to be identical. Research methods, databases and researcher judgments will all vary.

2. The e-commerce sales figures should be given in the aggregate for the USA and also broken down by major classifications. The four estimates do not agree because of differences in methodology used by each source.

3. Students should obtain the relevant information about the firm using both internal and external sources available on the Internet. The usefulness for targeting the household computer market should be discussed.

4. A lot of information is given on the NAICS Association Web site at www.naics.com. Students should be encouraged to summarize this information.

5. A variety of information about firms is available from D&B. This includes variables such as market share, corporate location, industry classification, and employment size.

6. A wide variety of information can be obtained. Students should show the relevance of each type of information to the formulation of domestic marketing strategy.

7. Students should first select appropriate criteria (e.g., population of elderly, amount of wealth of the elderly) and then rank the states on that basis. Top six States for marketing products to the elderly: Alabama, Alaska, Arizona, Arkansas, California, and Colorado.

GROUP DISCUSSIONS1. Census data is extremely useful to marketers since it provides a wide variety of data

available in many forms. The quality of the data is very high and it is often broken out in specific detail. Finally, because it is a census, as opposed to a sample, sampling error is minimal.The limitations of census data include the fact that the volume of data available makes finding the right information difficult. Much time may be spent just locating the figures needed. Furthermore, the data are of a general nature and may not provide the specific information needed.

2. Issues which students can address include the advantages of computerized databases: current and up to date information, efficiency of literature searches, low cost, and convenience and ease of use. Additionally, it underscores the need for businesspeople to be computer literate.

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