Chapter FourSecondary Data

Chapter ObjectivesCompare the advantages of secondary data and primary dataIdentify the limitations of secondary data in terms of their relevance and accuracyDistinguish between (1) original and second-hand sources of secondary data and (2) internal and external sources of secondary data

Chapter Objectives (Contd)Explain why secondary data management is increasingly importantDefine marketing information system and describe its basic components

Pure and Persil detergentCadbury ChocolatesHuggies DiapersBirds Eye Fish Sticks Different products, different companies, one common databaseWhat Do These Companies Have in Common ?

Secondary DataData collected for a purpose other than the research situation at handAdvantagesCost and timeAvailabilityLess expensiveLess time intensive

Using Secondary Data: AdvantagesReadily availableWhirlpool warranty card Nielsen/Net RatingsU.S. Census Bureau Statistics

Disadvantages of Secondary DataRelevance: may not match the data needs of a given project.Measurement unitsDifferences in category definitionsTime Period

Secondary Data: Small Business ApplicationMarket Research for a small business: You want to start a pool and spa cleaning and repair serviceHow do you find out about market size and competition?

Secondary Data Relevance: Measurement UnitsCarpets Unlimited manufactures a variety of carpetsSentinel Corporation produces a line of smoke detectorsU.S. Census of Population and Housing Data can be used to estimate the total residential market potential for their products in different sections of the country

Secondary Data Relevance: Measurement Units (Contd)Carpets Unlimited requires size data expressed in square feetSentinel Corporation requires size data expressed in number of rooms per householdU.S. Census of Population and Housing data Useful to Sentinel Corporation but not useful for Carpets Unlimited

Digital BabySitter

Digital BabySitter (Contd)Specializes in making digital baby monitor devices Wants to expand beyond the United StatesBased on birthrates provided by the United Nations (www.un.org), the company decided to target China and IndiaObtained information on computer penetration in urban areas and chose urban populations as its target market

Digital BabySitter (Contd)Secondary Data Analysis is not meaningful in China and India because children are either with their extended families or at school Children are almost never aloneSecondary data is not always relevant!!!

Secondary Data Is Not Always ReliableGOJO launched Purell as an "instant hand sanitizer" Walgreens positioned it as a skin care/first aid product (cleans without water)Nielsen and Information Resources Inc. (IRI) categorized it as liquid soap Sales varied by locationIs it a liquid soap or hand sanitizer? What is it?Category mismatches make the secondary data not always reliable

Problems with Census DataCategory mismatchChanges in category definition The time period during which secondary data were collected Using data that are too old

The Numbers GameTHE SHOCKING TRUTH IS THAT STATISTICS ARE ONLY AS CREDIBLE AS THE SOURCES THAT PRODUCE THEM!

Spam Projections Which Numbers to Use?Many accept the above projections without questioning their validity, even when the projections differ by billions of dollars across the competing studies

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Secondary Data LimitationsAccuracyWho collected the data?Why was the data collected?How was the data collected?

Types and Sources of Secondary DataInternal SourcesCompany held informationExternal SourcesGovernmentSyndicated SourcesTrade AssociationsMiscellaneous Sources

Exhibit 4.1 Flow Diagram for Conducting a Data Search

Secondary Data: Internal vs. ExternalManager of McDonald's wants to know the effect of the company's tie-in with movies like Shark TalesShould the manager purchase this syndicated service from the marketing research firm?

Internal DataInternal data can often be obtained with less time, effort, and expense than external secondary dataMay have relevance to the research being conductedExamples includeA firms historical record of salesA public service associations list of donorsPublic opinion polls conducted in the past by a political candidates campaign office

External Data: Government SourcesCollects extensive data about people, firms, markets, and foreign countries; more than any other secondary data sourceData collected is readily available on Internet sitesDocuments published are in the form of summary reports based on the raw data collectedThe raw data is often available for a feePublic-Use Microdata files

Syndicated SourcesSyndicated services offered by marketing research firmsNielsen Retail IndexFees are required but they are more cost effective than collecting primary dataFocus directly on the needs of decision makersUpdated more frequently than government data

Syndicated Sources (Contd)Often allows for customizationRoper reportsSupermarkets are also a valuable source for secondary data

Trade AssociationsVery numerous and diverseMany collect data relevant to and about their membersAlso collect competitively sensitive data about members that may not be available to industry outsiders

Competitive Intelligence: FIND/SVP Helps ClientsIndustrial products and services company facing a worldwide market declineApproached FIND/SVP (a leading knowledge services company) to compare its plant manufacturing strategy and costs with those of competitorsFIND/SVPUndertook a market scan of published information on competitors plantsObtained Environmental Protection Agency (EPA) documents

Competitive Intelligence: FIND/SVP Helps Clients (Contd)Based on FIND/SVP's analysis, the industrial products and services company was able to assess cost structures of its competitors and develop benchmarks for quality, employee performance, and utility costs

Competitive Intelligence: Burger King CorpBurger KingMaintains a brand research library and subscribes to analyst reports that provide a detailed view of competitors' financial and long-term plansGathers syndicated reports that provide sales and cost data and describe the competition's growth plansInsights about the restaurant business can be flushed out from interviews with restaurant business leaders, published routinely in these trade journals

Managing Secondary DataMerely keeping abreast of all the available data without being overwhelmed is a challengeEffective secondary-data management is necessary in this "information explosion" age

Ad Hoc Research ProjectsDiscrete, situation specific projects that are initiated and completed in response to a particular question, or set of related questions, raised by a decision maker

Evolution of MkIS

Full-fledged Marketing Information SystemsData warehouse information storage and retrieval system Marketing decision support systems Data Mining Data Modeling Expert systems

Exhibit 4.2 A Hotel Chains Marketing Information System

Marketing Information Systems (MkIS)A continuing and interacting structure of people, equipment, and procedures designed to gather, sort, analyze, evaluate, and distribute pertinent, timely, and accurate information to marketing decision makers

Data WarehousingA centralized database, which consolidates enterprise-wide data from a variety of internal and external sources An architecture, which allows individuals to query and generate ad hoc reports in order to perform an in depth analysis

Exhibit 4.4 A Typical Data Warehouse Operation

Exhibit 4.5 Database Model (Dimensional Model)

7-Eleven's Information System Helps in Forecasting7-Eleven Inc. installed an inventory management/sales data system in all of its 5,600 franchisee and company-owned stores nationwideThe system provides item-by-item sales data allowing managers to determine which of the 2,500 products they carry are selling well

7-Eleven's Information System Helps in Forecasting (Contd)The system also alerts managers about upcoming events and news that could affect which items will be in demandInformation system thus helps 7-Eleven in sales forecasting and in collaborative product development with suppliers

Cover Concepts: DatabaseA producer of book jackets with corporate advertising on the coverCover Concepts covered schools' books with free jackets carrying advertisements and interesting messages that appealed to kids, providing national advertisers with a cost- effective way to reach the 6-to-18-year-old market

Cover Concepts: Database (Contd)Company's database has grown from 55 Boston-area schools in 1989 to 31,000 schools (out of a total of 85,000) and more than 21 million kids nationwideCover Concepts gathers the database's extensive demographic information, which it updates yearly, from the elementary, junior high, and high schools themselves, as well as from the Census Bureau, private database companies, and other sources

Evolution of MkIS

Marketing Decision Support System (MDSS)Definition: An MkIS that permits managers to request special types of data analyses or reports on an as-needed basisInteractively generates What if... scenarios

Data MiningThe process of digging deep into immense amounts of data to extract valuable and statistically valid informationIBM Intelligent MinerAngoss Softwares Knowledge STUDIO

Applications of Data MiningCompanies -TelecommunicationsBenefitsSegmentation of prospective customers to increase new customer accounts at the same time reducing cost per accountUnderstanding individual customer preferences and needs to deliver relevant long distance products and services

Applications of Data Mining (Contd)Companies - InsuranceBenefitsImproving profitability through timely valuation of insurance productsEffective financial data management by balancing market, regulatory, and insurance pressures to provide superior customer/patient care

Applications of Data Mining (Contd)Company - High Tech DesignBenefitsProfitability analysis and product life cycle planning leading to increased focus on non traditional customer segments thereby expanding the market

Applications of Data Mining (Contd)Companies - RetailBenefitsDemographic analysis, financial planning, and forecasting, leading to precise buying, merchandising and marketingImproving profitability through optimal shelf space allocationTighter end-to-end integration of internal as well as vendor systems, leading to better inventory and merchandise managementReducing returns and thereby improving margins

Applications of Data Mining (Contd)Companies - BankingBenefitsConsumer intelligence helps create new products and manage collections while containing delinquency ratesProfitability analysis by customer segmentsMarket penetration through personalized promotion strategies

Marketing Decision Support Systems: ModelsA marketing response function is a mathematical model that represents the relationship between marketing input and output variables

MDSSs: Retail DatabasesScanner-based databases allow retailers and packaged goods manufacturers to monitor and analyze sales trends:Changes in brand shares Shifts in consumer preferencesInformation Resources, Inc.s BehaviorScan and Nielsens Scantrack capture scanner data from many retailers

Exhibit 4.7 Data Captured in a Single Source Data Base

Evolution of MkIS

Expert System (ES)An MDSS that proactively makes managers aware of market situations warranting their attention An MDSS can recommend appropriate courses of actionArtificial intelligence is utilized

Expert System (ES) (Contd)7 - Eleven Maximizes Space and SelectionAlerts store managers and suggests how to reallocate shelf space to maximize profits from nutritional snack bar salesUses its expert system to determine the best allocation of shelf space among the various products it sellsAnalyzing sales, cost, and promotional data, the system translates the results into Plan-a-Grams, printouts that show store managers, shelf by shelf, exactly where to place their stock to maximize profit