Chapter Two: Harnessing Big Data into Better Decisions
Chapter 2
Harnessing Big Data into Better Decisions
AT-A-GLANCE
I. Introduction
II. Data, Information, and Intelligence Equal Value
III. The Characteristics of Valuable Information
A. Relevance
B. Completeness
C. Quality
D. Timeliness
E. Global Marketplace
IV. Decision Support Systems
A. Databases and data warehousing
B. Input management
2. Proprietary marketing research
4. Behavioral tracking
5. Web tracking
C. Networks and Electronic Data Interchange
V. Database Sources and Vendors
A. Data archives
2. Financial databases
3. Video databases
B. The Internet and research
1. Navigating the Internet
2. Environmental scanning
C. Information technology
1. Push or pull
3. Cookies
4. Intranets
VI. Marketing Analytics
VII. Data Technology and Ethics
Chapter Two: Harnessing Big Data into Better Decisions
LEARNING OUTCOMES
2. Understand the four characteristics that describe data.
4. Recognize some of the major databases and how they are accessed.
6. Be sensitive to the potential ethical issues of tracking consumers’ behavior electronically.
CHAPTER VIGNETTE: Is Marketing Research Good for You?
Marketing has changed significantly as more and more firms have access to “big data” that allow
researchers to predict individual consumer’s behavior based on Internet usage, social networking,
and other aspects of media consumption. Blue-Chip Marketing is a company that specializes in
SURVEY THIS!
Students are asked to review the questionnaire they responded to last chapter and to consider the
how the data gathered could help the decision making process at an educational institution or
RESEARCH SNAPSHOTS
➢ Bringing Home the Bacon!
The use of big data can increase a firm’s return on investment (ROI) by 15 to 20 percent. As
a result, more and more firms are looking for marketing researchers who know how to
➢ Big Data Gives and Takes Away
Big data can be used to both bring in more customers, and to turn potential customers away.
A coffee shop may want to take advantage of GPS in smart phones to lure customers into the
store to buy coffee. On the other hand, gambling casinos may want to use data to drive away
Chapter Two: Harnessing Big Data into Better Decisions
➢ Can They Read My Mind?
What if a retail outlet could make a purchase for you, before you even placed an order? More
and more firms are using predictive technology to anticipate what a customer may buy, based
TIPS OF THE TRADE
➢ Researchers should focus on relevance as the key characteristic of useful data.
➢ Do so by asking, “Will knowledge of some fact change some important outcome?”
OUTLINE
I. INTRODUCTION
Marketing research plays an important role in making sense out of the glut of data now
available. Today, technology allows businesses to more easily integrate research findings
II. DATA, INFORMATION, AND INTELLIGENCE EQUAL VALUE
A. Marketing managers make decisions based on the input received from research that
B. Data are simply facts or recorded measures of certain phenomena (things or events).
C. Information is data formatted (structured) to support decision-making or define the
D. Market intelligence is the subset of data and information that actually has some
III. THE CHARACTERISTICS OF VALUABLE INFORMATION
A. Relevance
1. Relevance reflects how pertinent these particular facts are to the situation at
hand.
3. Relevant data are facts about things that can be changed, and if they are changed,
it will materially change the situation.
B. Completeness
1. Information completeness refers to having the right amount of information.
Chapter Two: Harnessing Big Data into Better Decisions
2. Often incomplete information leads decision makers to conduct marketing
research.
C. Quality
2. High quality data are accurate, valid, and reliable, and they represent reality
faithfully.
4. Critical issue in marketing research
D. Timeliness
2. Computer technology has redefined standards for timely information.
E. Global Marketplace
2. Large companies use a plethora of technology ranging from handheld tablets to
satellites to gather and exchange data in an effort to keep track of business details
globally.
IV. DECISION SUPPORT SYSTEMS
A. Marketing research can be categorized on the four possible functions it serves in
business:
1. Foundational – answers basic questions such as what consumer segments should
be served and with what types of products
3. Issues – examines how specific issues impact the firm
4. Performance – monitors specific metrics including financial statistics like
profitability and delivery times; this category is of most interest to decision
support systems
B. A marketing decision support system (DSS) is a system that helps decision makers
confront problems through direct interaction with computerized databases and
analytical software programs.
C. The purpose is to store data and transform them into organized information that is
easily accessible to marketing managers, enabling decisions to be made in minutes
rather than days or weeks.
D. Modern decision support systems greatly facilitate customer relationship
management (CRM).
1. A CRM system brings together lots of pieces of information about customers
E. Database and Data Warehousing
2. Data warehousing is the process allowing important day-to-day operational data
to be stored and organized for simplified access.
4. Cloud storage is data that is stored on devices that make the files directly
Chapter Two: Harnessing Big Data into Better Decisions
F. Input Management
1. Input includes all the numerical, text, voice, and image data that enter the
decision support system.
3. Input data can also come from external sources.
4. Six major sources of data input:
a. Internal Records – accounting reports of sales and inventory figures
b. Proprietary Marketing Research is the gathering of new data to investigate
c. Salesperson Input – can alert managers to changes in competitors’ prices
and new-product offerings as well as customer complaints
d. Behavioral Tracking – modern technology provides new ways of tracking
human behavior
ii. Tracking can log actual customer behavior on the Internet.
iii. Scanner data refers to the accumulated records resulting from point of
iv. Universal product codes, which are the bar codes that stores use to scan
e. Web Tracking – performed by marketing researchers to monitor trends and
information posted by consumers that pertains to the company’s brand or
products
ii. Electronic data interchange (EDI) systems integrate one company’s
computer system directly with another company’s system.
G. Networks and Electronic Data Interchange
company’s computer system is integrated with another company’s system
2. Many firms share information in an effort to encourage more innovation.
shared between companies
V. DATABASE SOURCES AND VENDORS
A. Some organizations specialize in recording certain marketing and consumer
B. Data Archives
1. Many government agencies around the world are important sources of data.
3. Data Wholesalers put together consortia of data sources into packages offered to
Chapter Two: Harnessing Big Data into Better Decisions
VI. MARKETING ANALYTICS
A. Marketing analytics is a general term that refers to efforts to measure relevant data
VII. DATA TECHNOLOGY AND ETHICS
A. Advances in data technology have in a way made privacy seem like a thing of the
past.
B. Geolocation technologies allow your whereabouts and/or movement to be known
C. Four factors relevant for considering the ethics of data gathered through digital
means:
1. Has the consumer implicitly or explicitly consented to being traced?
2. Does the tracking behavior violate any explicit or implicit contracts or
agreements?
3. Can researchers enable users to know what information is available to data
miners? Some companies, including a marketing data provider known as Turn,
participate in an open data partnership. This partnership seeks to allow
QUESTIONS FOR REVIEW AND CRITICAL THINKING/ANSWERS
1. Define big data. How has big data created greater demand for people with research skills?
2. What is the difference between data, information, and intelligence?
Chapter Two: Harnessing Big Data into Better Decisions
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, in whole or in
part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website for classroom use.
The occupancy-to-variable-labor ratio could be monitored to access productivity in specific areas.
Comparison of occupancy rates before and after advertising and promotional efforts (adjusted for
seasonal variations) could help measure the effectiveness of those expenditures. Finally,
information can be gathered on room supply, guest ratings, and customers’ preferences.
b. A Major University Athletic Department
c. ABInbev
ABInbev (Anheuser-Busch) would have information concerning all the different types of package
sizes, sales volume within regions, etc. Anheuser-Busch has a computerized shelf-space
d. Quibids (online auction web site)
Quibids would have internal databases that track each auction on its site, along with specific data
e. iTunes
The iTunes internal database likely consists of each customer’s purchase history, so that the
f. Facebook
Facebook is well known for tracking a tremendous amount of information from its users. It
8. What type of operational questions could a delivery firm like UPS expect to automate with
the company’s decision support system?
Chapter Two: Harnessing Big Data into Better Decisions
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, in whole or in
part, except for use as permitted in a license distributed with a certain product or service or otherwise on a
password-protected website for classroom use.
While marketing research can perform four possible functions (i.e., foundational, testing, issues,
and performance), the performance category is most likely of interest to UPS. Performance refers
to research that monitors specific metrics including financial statistics like profitability and
delivery times. The metrics that are monitored can be fed into automated decision making
systems, and they can trigger reports that are delivered to managers. In this case, UPS can
monitor its performance of on-time delivery, customer complaints, and profitability.
9. What makes a decision support system successful?
10. What is data warehousing?
11. What is web tracking? Visit http://www.kbb.com. While there, choose two cars that you
might consider buying and compare them. Which do you like the best? What would you do
now? What are at least three pieces of data that should be stored in a data warehouse
somewhere based on your interaction with Kelly Blue Book?
12. Give three examples of computerized databases that are available through your college or
university library.
13. Describe what smart agent software is and how it may affect you as a typical consumer.
Smart agent software is capable of learning an Internet user’s preferences and automatically
14. Describe marketing analytics role in assisting business decision making.
Marketing analytics is a general term that refers to efforts to measure relevant data and apply
Chapter Two: Harnessing Big Data into Better Decisions
The term has come to be used in different ways, with no real consensus on what it means. For the
2. Use the Internet to see if you can find information to answer the following questions:
1. What is the exchange rate between the $US and €Euro?
2. What are four restaurants in the French Quarter in New Orleans?
3. What is the most popular novel among teenage girls age 14-16?
4. Do more people visit the foxnews.com or cnn.com web sites?
3. Casually interview two consumers at least 20 years different in age. Describe to them a use of
big data such as the restaurant consumer who whose server knew she had worked out before
coming to the restaurant just by data produced by her smartphone. How do they react? Is either
concerned about the potential breech in privacy? Comment on your results.
CASE 2.1 Harvard Cooperative Society
Objective: To encourage students to appreciate the importance and usefulness of a decision support
system.
Summary: From his office window, Harvard Cooperative Society CEO, Jerry Murphy, can see
customers shopping. They make their way through the narrow aisles of the crowded department
store, picking up a sweatshirt here, trying on a baseball cap there, and checking out the endless
array of merchandise that bears the Harvard University insignia. Watching Murphy, you can well
Now, more than a hundred years later, Murphy can tell you, down to the last stock-keeping unit,
how he’s doing at any given moment. His window on the business is the PC that sits on his desk.
All day long it delivers up-to–the-minute, easy-to–read electronic reports on what’s selling and
Chapter Two: Harnessing Big Data into Better Decisions
Questions
1. What is a decision support system? What advantages does a decision support system have for a
small business like the Harvard Cooperative Society?
2. How would the decision support system of a small business like the Harvard Cooperative
Society differ from that of a major corporation?
3. Briefly outline the components of the Harvard Cooperative Society’s decision support system.