Chapter Four

Secondary Data

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 secondhand sources of secondary data and (2) internal and external sources of secondary data

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Chapter Objectives (Contd)

Explain why secondary data management is increasingly important Define marketing information system and describe its basic components

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What Do These Companies Have in Common ?

Pure and Persil detergent Cadbury Chocolates Huggies Diapers Birds Eye Fish Sticks

Different products, different companies, one common database

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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 (Contd)

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

Digital BabySitter.com website

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Digital BabySitter (Contd)

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 (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 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"
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 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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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

2002 Message Labs 19% 39 60 40

2004 84% 65 78 82

Brightmail
Postini Frontbridge

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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 firms historical record of sales A public service associations list of donors Public opinion polls conducted in the past by a political candidates 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 (Contd)

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 (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

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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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Evolution of MkIS

Ad Hoc Marketing Research

Stage 1
Marketing Information System

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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 Chains 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 (Contd)

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 costeffective way to reach the 6-to-18-year-old market

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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 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 Softwares 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 (Contd)

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 (Contd)

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 (Contd)

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 (Contd)

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 Nielsens 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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Evolution of MkIS
Ad Hoc Marketing Research Stage 1
Marketing Information System

Stage 2
Decision Support System

Stage 3
Expert System

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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) (Contd)

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

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