978-1111826925 Chapter 8 Lecture Note

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Chapter 8

Secondary Data Research in a Digital Age

AT-A-GLANCE

I. Introduction

A. Advantages of secondary data

B. Disadvantages of secondary data

II. Typical Objectives for Secondary-Data Research Designs

A. Fact-finding

Identification of consumer behavior for a product category

Trend analysis

oEnvironmental scanning

B. Model building

Estimating market potential for geographic areas

Forecasting sales

Analysis of trade areas and sites

C. Data mining

D. Database marketing and customer relationship management

III. Sources of Secondary Data

A. Sources of internal and proprietary data

B. External data: The distribution system

C. Information as a product and its distribution channels

Libraries

The Internet

Vendors

Producers

Books and periodicals

Government sources

Media sources

Trade association sources

Commercial sources

Market share data

Demographic and census updates

Consumer attitude and public opinion research

Consumption and purchase behavior data

Advertising research

IV. Single-Source Data – Integrated Information

V. Sources for Global Research

LEARNING OUTCOMES

1. Discuss the advantages and disadvantages of secondary data

2. Define types of secondary data analysis conducted by business research managers

3. Identify various internal and proprietary sources of secondary data

4. Give examples of various external sources of secondary data

5. Describe the impact of single-source data and globalization on secondary data research

CHAPTER VIGNETTE: Business Facts on a Grand Scale

The use of secondary data (i.e., data that has been collected previously for other purposes) has exploded

with the advent of large-scale electronic information sources and the Web. One company that has taken

full advantage of integrating various business related information sources is Nielsen Claritas (a merger of

the Nielsen Company and Claritas). Claritas is known for (1) PRIZM, which provides market

segmentation information; (2) Consumer Point, a target marketing analysis solution for different industry

spaces; and (3) Business-Facts, which provides accurate business data for market support and strategic

planning and holds great promise as a secondary data source for existing companies. All of the

information sources within Nielsen Claritas add value to business users by satisfying two very critical

needs: expertise in linking different data streams into a cohesive system and geographically-based

information systems.

SURVEY THIS!

The data in the online survey provide qualitative and quantitative data based upon responses from

students around the world. Some of the data variables are similar to the kinds of data gathered from

public opinion research, such as how a person’s job affects them outside of work. Students are asked to

do a Google search on terms like “work tension opinions” and “work stress study” and asked if the results

obtained from the online survey appear consistent with other opinion study results.

RESEARCH SNAPSHOTS

Does It Matter?

With secondary data, researchers can test research questions that would be difficult to examine

any other way. For example, what matters when it comes to firm performance? Secondary data

sources such as the Nielsen database, Compustat, and the American Consumer Satisfaction Index

(ASCI) can be useful. What should companies emphasize? It seems like firms should allocate

scarce resources toward increasing services and deliver greater value.

Mining Data from Blogs

With tens of millions of blogs available on the Internet, there is no way to read them all to learn

what people are thinking. One solution is data-mining software designed for the Blogosphere.

Umbria Communications offers a program called Buzz Report, which searches 13 million blogs.

Marketers can buy the service to find out what people are saying about their products or to

explore unmet needs. The program can identify positive and negative messages, estimate the

writer’s age range and sex, and recognize sarcasm.

What’s That Buzzing Sound?

For large companies, companies like Buzzmetrics, a part of Nielsen online, monitor thousands of

websites for brand mentions and whether those mentions are positive or negative.

Around the World of Data

With the Internet, we can quickly go around the world and find data. Several Web sites are

provided for countries around the world.

OUTLINE

I. INTRODUCTION

Secondary data – data gathered and recorded by someone else prior to (and for purposes

other than) the current project.

Require no access to respondents or subjects.

Advantages of Secondary Data

Primary advantage is their availability.

Essential in instances when data cannot be obtained using primary data collection

procedures.

Disadvantages of Secondary Data

Data not designed specifically to meet the researchers’ needs.

Even when available, it can be inadequate because:

1. variation in definition of terms

2. different units of measurement

3. lack of information to verify the data’s validity

4. outdated information

Data conversion (a.k.a. data transformation) is the process of changing the original form

of the data to a format suitable to achieve the research objective.

User has no control over their validity.

Data can be biased.

Cross-checks of data from multiple sources (i.e., comparison of the data from one source

with data from another) should be made to determine the similarity of independent

projects.

Exhibit 8.1 illustrates a series of questions that should be asked to evaluate secondary

data.

II. TYPICAL OBJECTIVES FOR SECONDARY-DATA RESEARCH DESIGNS

Exhibit 8.2 shows three general categories of research objectives: fact-finding, model

building, and database marketing.

Fact-Finding

The simplest form of secondary data research.

Identification of Consumer Behavior for a Product Category

A typical objective for a secondary research study might be to uncover all available

information about consumption patterns for a particular product category or to

identify demographic trends that affect an industry.

Trend Analysis

Market tracking is the observation and analysis of trends in industry volume and

brand share over time.

Scanner research services and other organizations provide facts about sales volume.

Most large consumer goods companies routinely investigate brand and product

category sales volume using secondary data.

Environmental Scanning

Entails information gathering and fact-finding designed to detect indications of

environmental changes in their initial stages of development.

Push technology is an Internet information technology that automatically delivers

content to the researcher’s or manager’s computer.

Model Building

More complicated than simple fact-finding.

Model building involves specifying relationships between two or more variables.

Need not include complicated mathematics, though.

Estimating Market Potential for Geographic Areas

Business researchers often estimate market potential using secondary data.

Exact figures may be published by a trade association or another source.

Researcher may estimate market potential by transforming secondary data from two

or more sources.

Forecasting Sales

Sales forecasting is the process of predicting sales totals over a specific time period.

Accurate sales forecasts, especially when products are in mature, stable markets,

frequently are the result of secondary data research that identify trends and

extrapolates past performance into the future.

A rudimentary model would multiply past sales volume by an expected growth rate.

Exhibit 8.5 illustrates a trend projection using a moving average projection of growth

rates.

Moving average forecasting is best suited to a static competitive

environment.

Analysis of Trade Areas and Sites

Managers examine trade areas and use site analysis techniques to select the best

locations for retail or wholesale operations.

Secondary data research helps managers make the site selection decision.

The index of retail saturation offers one way to investigate retail sites and to

describe the relationship between retail demand and supply.

It describes the relationship between retail demand and retail supply.

Index of retail saturation = Local market potential  Local marketing

retailing space.

Can compare this index figure with those of other areas to determine

which sites have the greatest market potential with the least amount of

retail competition.

Data Mining

The term data mining refers to the use of powerful computers to dig through volumes of

data to discover patterns about an organization’s customers and products.

Neural networks are a form of artificial intelligence in which a computer is programmed

to mimic the way that human brains process information.

Market-basket analysis is a form of data mining that analyzes anonymous point-of-sale

transaction databases to identify coinciding purchases and relationships between products

purchased and other retail shopping information.

Customer discovery involves mining data to look for patterns that identify who is likely

to be a valuable customer.

The use of data mining to detect sequence patterns is a popular application among direct

marketers (i.e., catalog retailers).

Data mining requires sophisticated computer resources, and it is expensive.

Companies (e.g., DataMind, IBM, Oracle) offer data-mining services – they do

the “number crunching.”

Database Marketing and Customer Relationship Management

CRM (customer relationship management) systems are a decision support system that

manages the interactions between and organization and its customers.

A CRM maintains customer databases containing names, addresses, phone numbers, past

purchases, responses to promotional efforts, and other relevant data (i.e., demographic,

financial).

Database marketing is the practice of using CRM databases to develop one-to-one

relationships and precisely targeted promotional efforts with individual customers.

Secondary data are often acquired for developing or enhancing databases.

III. SOURCES OF SECONDARY DATA

Secondary data can be classified as either internal to the organization or external.

Internal data – data that originated in the organization, or data created, recorded, or generated

by the organization.

Internal and proprietary data is a more descriptive term.

Sources of Internal and Proprietary Data

Sources include:

organization’s accounting system

salespeoples’ call reports

customer complaints

service records

warranty card returns

Researchers frequently aggregate or disaggregate internal data.

Internet technology is making it easier to research this type of data.

External Data: The Distribution System

External data are generated or recorded by an entity other than the researcher’s

organization (e.g., government, newspapers and journals, trade associations, etc.).

Computerized data archives and electronic data interchange make this data as accessible

as internal data.

Information as a Product and Its Distribution Channels

Because secondary data have value, they can be bought and sold like other products.

Libraries

Traditionally, libraries’ vast storehouses of information have served as a

bridge between users and producers of secondary data.

Many major corporations and government agencies also have libraries.

The Internet

Exhibit 8.8 lists some of the more popular Internet addresses where

secondary data may be found.

Vendors

Intermediaries.

Some allow managers to access thousands of external databases via desktop

computers and telecommunications systems (e.g., Hoovers).

Producers

Classifying external secondary data by the nature of the producer of

information yields five basic sources:

1. Books and Periodicals – professional journals and commercial business

periodicals contain much useful information material.

2. Government Sources – most data published by the federal government

can be counted on for accuracy and quality.

3. Media Sources – frequently commission research studies about various

aspects of Americans’ lives (i.e., financial affairs) and make reports of

findings available to potential advertisers for free, often in the form of a

media kit.

4. Trade Association Sources – serve the information needs of a particular

industry (e.g., data on market size and trends).

5. Commercial Sources – numerous firms specialize in selling and/or

publishing information (e.g., Polk Company publishes information on the

automotive field).

Market-Share Data – wholesale or retail sales volume based on

product movement (e.g., INFOSCAN from Information Resources,

Inc, Nielsen’s ScanTrack, and Wal-Mart’s RetailLink).

Demographic and Census Updates – a number of firms (i.e., CACI

Marketing Systems) offer computerized U.S. census files and

updates of these data broken down by small geographic areas (i.e.,

zip codes).

Consumer Attitude and Public Opinion Research – firms offering

specialized syndicated services that report findings from attitude

research and opinion polls (e.g., Yankelovich and Harris Interactive).

Consumption and Purchase Behavior Data – diary panel data are

diaries kept by a group of households that have agreed to record their

consumption behavior over time (e.g., NPD’s National Eating

Trends).

Advertising Research – advertisers can purchase readership and

audience data from a number of firms (i.e., Simmons – magazines;

Arbitron – radio; Nielsen – TV). Other firms assess the impact of

advertising (e.g., Simmons – magazines; Burke – TV).

IV. SINGLE-SOURCE DATA – INTEGRATED INFORMATION

The data and information industry uses the term single-source data for diverse types of data

offered by a single company.

Syndicated databases report product purchase behavior, media usage, demographic

characteristics, lifestyle variables, and business activity by geographic area such as zip code

(e.g., PRIZM by Nielsen Claritas).

V. SOURCE FOR GLOBAL RESEARCH

As business has become more global, so has the secondary data industry (e.g., the Japan

Management Association Research Institute maintains an office in San Diego).

Secondary data compiled outside the U.S. have the same limitations as domestic secondary

data.

However, international researchers should watch for certain pitfalls that frequently are

associated with foreign data and cross-cultural research:

1. data may simply be unavailable in certain countries

2. accuracy of some data may be questionable

3. various countries use different definitions and accounting and recording practices for

many economic reports

The U.S. government and other organizations compile databases that may aid international

marketers:

The European Union in the US (http://www.eurunion.org/) reports on historical and

current activity in the EU providing a reference guide on laws and regulations.

The CIA’s World Factbook and the National Trade Data Bank (DTDB) is the U.S.

government’s most comprehensive source of world trade data.