Chapter 4 Secondary Data - Rohan

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Chapter Four

Secondary Data

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Chapter Objectives


Compare the advantages of secondary data
and primary data


Identify the limitations of secondary data in
terms of their relevance and accuracy


Distinguish between (1) original and second
-
hand sources of secondary data and (2)
internal and external sources of secondary
data


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Chapter Objectives
(Cont’d)


Explain why secondary data management is
increasingly important


Define marketing information system and
describe its basic components

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Pure and Persil detergent

Cadbury Chocolates

Huggies Diapers

Birds Eye Fish Sticks



Different products, different companies, one
common database

What Do These Companies

Have in Common ?

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Secondary Data


Data collected for a purpose other than the
research situation at hand


Advantages


Cost and time


Availability


Less expensive


Less time intensive


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Using Secondary Data: Advantages


Readily available


Whirlpool warranty card


Nielsen/Net Ratings


U.S. Census Bureau



Statistics

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Disadvantages of Secondary Data


Relevance: may not match the data needs of
a given project.


Measurement units


Differences in category definitions


Time Period



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Secondary Data:

Small Business Application


Market Research for a small business: You
want to start a pool and spa cleaning and
repair service


How do you find out about market size and
competition?

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Secondary Data Relevance:

Measurement Units


Carpets Unlimited manufactures a variety of
carpets


Sentinel Corporation produces a line of
smoke detectors


U.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


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Secondary Data Relevance:

Measurement Units
(Cont’d)


Carpets Unlimited requires size data
expressed in square feet


Sentinel Corporation requires size data
expressed in number of rooms per household


U.S. Census of Population and Housing data


Useful to Sentinel Corporation but not useful
for Carpets Unlimited


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Digital BabySitter.com

website

Digital BabySitter

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Digital BabySitter
(Cont’d)


Specializes in making digital baby monitor
devices


Wants to expand beyond the United States


Based on birthrates provided by the United
Nations (
www.un.org
), the company decided
to target China and India


Obtained information on computer penetration
in urban areas and chose urban populations
as its target market

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Digital BabySitter
(Cont’d)


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 alone


Secondary data is not always relevant!!!



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Secondary Data Is Not Always Reliable


GOJO launched Purell as an "instant hand sanitizer"


Walgreen’s 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 location


Is it a liquid soap or hand sanitizer? What is it?


Category mismatches make the secondary data not
always reliable

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Problems with Census Data


Category mismatch


Changes in category definition


The time period during which secondary data
were collected


Using data that are too old


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The Numbers Game


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

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2002

2004

Message Labs

19%

84%

Brightmail

39

65

Postini

60

78

Frontbridge

40

82

Many accept the
above projections
without questioning
their validity, even
when the
projections differ
by billions of
dollars across the
competing studies


Spam Projections Which Numbers to Use?

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Secondary Data Limitations


Accuracy


Who collected the data?


Why was the data collected?


How was the data collected?

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Types and Sources of Secondary Data


Internal Sources


Company held information


External Sources


Government


Syndicated Sources


Trade Associations


Miscellaneous Sources


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Exhibit 4.1 Flow Diagram
for Conducting a

Data Search

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Secondary Data: Internal vs. External


Manager of McDonald's wants to know the
effect of the company's tie
-
in with movies like
Shark Tales


Should the manager purchase this syndicated
service from the marketing research firm?


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Internal Data


Internal data can often be obtained with less time,
effort, and expense than external secondary data


May have relevance to the research being conducted


Examples include


A firm’s historical record of sales


A public service association’s list of donors


Public opinion polls conducted in the past by a political
candidate’s campaign office

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External Data: Government Sources


Collects extensive data about people, firms, markets,
and foreign countries; more than any other secondary
data source


Data collected is readily available on Internet sites


Documents published are in the form of summary
reports based on the raw data collected


The raw data is often available for a fee


Public
-
Use Microdata files

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Syndicated Sources


Syndicated services offered by marketing
research firms


Nielsen Retail Index


Fees are required but they are more cost
effective than collecting primary data


Focus directly on the needs of decision
makers


Updated more frequently than government
data

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Syndicated Sources
(Cont’d)


Often allows for customization


Roper reports


Supermarkets are also a valuable source for
secondary data


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Trade Associations


Very numerous and diverse


Many collect data relevant to and about their
members


Also collect competitively sensitive data about
members that may not be available to
industry outsiders

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Competitive Intelligence:

FIND/SVP Helps Clients


Industrial products and services company facing a
worldwide market decline


Approached FIND/SVP (a leading knowledge
services company) to compare its plant
manufacturing strategy and costs with those of
competitors


FIND/SVP


Undertook a market scan of published information on
competitors’ plants


Obtained Environmental Protection Agency (EPA)
documents

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Competitive Intelligence:

FIND/SVP Helps Clients
(Cont’d)


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

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Competitive Intelligence:

Burger King Corp


Burger King


Maintains a brand research library and subscribes to
analyst reports that provide a detailed view of
competitors' financial and long
-
term plans


Gathers syndicated reports that provide sales and cost
data and describe the competition's growth plans


Insights about the restaurant business can be flushed
out from interviews with restaurant business leaders,
published routinely in these trade journals


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Managing Secondary Data


Merely keeping abreast of all the available
data without being overwhelmed is a
challenge


Effective secondary
-
data management is
necessary in this "information explosion" age

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Ad Hoc Research Projects


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

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Ad Hoc
Marketing

Research

Stage 1

Marketing
Information System

Evolution of MkIS

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Full
-
fledged Marketing

Information Systems


Data warehouse information storage and
retrieval system


Marketing decision support systems



Data Mining



Data Modeling


Expert systems

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Exhibit 4.2 A Hotel
Chain’s Marketing
Information System

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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


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Data Warehousing


A 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


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Exhibit 4.4 A Typical Data

Warehouse Operation

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Exhibit 4.5 Database Model


(Dimensional Model)

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7
-
Eleven's Information System

Helps in Forecasting


7
-
Eleven Inc. installed an inventory
management/sales data system in all of its
5,600 franchisee and company
-
owned stores
nationwide


The system provides item
-
by
-
item sales data
allowing managers to determine which of the
2,500 products they carry are selling well


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7
-
Eleven's Information System

Helps in Forecasting
(Cont’d)


The system also alerts managers about
upcoming events and news that could affect
which items will be in demand


Information system thus helps 7
-
Eleven in
sales forecasting and in collaborative product
development with suppliers



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Cover Concepts: Database


A producer of book jackets with corporate
advertising on the cover


Cover 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


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Cover Concepts: Database
(Cont’d)


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 nationwide


Cover 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


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Evolution of MkIS

Ad Hoc
Marketing

Research

Stage 1

Marketing Information
System

Stage 2

Decision Support
System

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Marketing Decision Support System
(MDSS)


Definition: An MkIS that permits managers to
request special types of data analyses or
reports on an as
-
needed basis


Interactively generates “What if...” scenarios

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Data Mining


The process of digging deep into immense
amounts of data to extract valuable and
statistically valid information


IBM Intelligent Miner


Angoss Software’s Knowledge STUDIO

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Applications of Data Mining


Companies
-
Telecommunications


Benefits


Segmentation of prospective customers to
increase new customer accounts at the same
time reducing cost per account


Understanding individual customer
preferences and needs to deliver relevant long
distance products and services


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Applications of Data Mining
(Cont’d)


Companies
-

Insurance


Benefits


Improving profitability through timely valuation
of insurance products


Effective financial data management by
balancing market, regulatory, and insurance
pressures to provide superior customer/patient
care


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Applications of Data Mining
(Cont’d)


Company
-

High Tech Design


Benefits


Profitability analysis and product life cycle
planning leading to increased focus on non
traditional customer segments thereby
expanding the market

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Applications of Data Mining
(Cont’d)


Companies
-

Retail


Benefits


Demographic analysis, financial planning, and
forecasting, leading to precise buying, merchandising
and marketing


Improving profitability through optimal shelf space
allocation


Tighter end
-
to
-
end integration of internal as well as
vendor systems, leading to better inventory and
merchandise management


Reducing returns and thereby improving margins

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Applications of Data Mining
(Cont’d)


Companies
-

Banking


Benefits


Consumer intelligence helps create new
products and manage collections while
containing delinquency rates


Profitability analysis by customer segments


Market penetration through personalized
promotion strategies


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Marketing Decision Support Systems:
Models


A marketing response function is a mathematical
model that represents the relationship between
marketing input and output variables


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MDSSs: Retail Databases


Scanner
-
based databases allow retailers and
packaged goods manufacturers to monitor
and analyze sales trends:


Changes in brand shares


Shifts in consumer preferences


Information Resources, Inc.’s BehaviorScan
and Nielsen’s Scantrack capture scanner
data from many retailers

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Exhibit 4.7 Data Captured in a

Single Source Data Base

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Ad Hoc
Marketing

Research

Stage 1

Marketing Information
System

Stage 2

Decision Support
System

Stage 3

Expert System

Evolution of MkIS

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Expert System (ES)


An MDSS that proactively makes managers
aware of market situations warranting their
attention


An MDSS can recommend appropriate
courses of action


Artificial intelligence is utilized

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Expert System (ES)
(Cont’d)


7
-

Eleven Maximizes Space and Selection


Alerts store managers and suggests how to reallocate
shelf space to maximize profits from nutritional snack
bar sales


Uses its expert system to determine the best allocation
of shelf space among the various products it sells


Analyzing 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