Chapter 8 Information Gathering And Processing In Retailing PDF

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Chapter 8 Information Gathering And Processing InRetailingFigure 8 How Information Flows in a Retail Distribution Channel- Effective retail distribution channel,information flows freely and efficiently among: o Supplier (manufacturer and/or wholesaler)  From retailer , supplier needs estimates  Ca...

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Chapter 8 Information Gathering And Processing In Retailing Figure 8.2 How Information Flows in a Retail Distribution Channel -

Effective retail distribution channel, information flows freely and efficiently among: o Supplier (manufacturer and/or wholesaler)  From retailer, supplier needs estimates  Category sales  Inventory turnover rates  Feedback on competitors  Level of customer returns…  From consumer, retailer needs to know about  Attitudes toward given styles and models  Extent of brand loyalty  Willingness to pay a premium for superior quality, and the like. o Retailer  From supplier, retailer needs  Advance notice of new models and model changes  Training materials for complex products  Sales forecasts  Justification for price hikes, and so on.  From consumer, retailer wants to know  Why people shop with the retailer  What they like and dislike about the retailer  Where else people shop, and so on. o Consumer: Enables parties to better anticipate and address each other’s performance expectations.  From supplier, consumer needs  Assembly and operating instructions  Extent of warranty coverage  Where to send a complaint, and so forth.  From retailer, consumer needs to know  How various alternatives compare  Where specific merchandise is stocked in the store  Methods of payment accepted  Rain check policy when a sale item is out of stock, and so on.

Retail Information System (RIS)

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Anticipates the information needs of retail managers Collects, organizes, and stores relevant data on a continuous basis Directs the flow of information to the proper decision makers

Marketing research in retailing - Collection and analysis of information relating to specific issues or problems facing a retailer. At farsighted firms, marketing research is just one element in a retail information system. At others, marketing research may be the only type of data gathering and processing.

Data-Base Management -

A major element in an RIS System gathers, integrates, applies, and stores information in related subject areas Used for o Loyalty program management  Customer analysis  Promotion evaluation  Inventory planning  Trading area analysis

How Stores Track Your Shopping Behavior Please click URL to view: https://youtu.be/jeQ7C4JLpug

Data Mining Example -

Traditional statistical methods: “Are higher-income people prone to be more loyal to a warehouse club than those with lower income levels?” Data mining o Could potentially provide more insight by pointing out other factors contributing to store loyalty o Might group customers who have a warehouse club’s credit cards, who live within 10 miles of the club, who own more than one car, and who have a separate freezer.

Figure 8.7 The Marketing Research Process in Retailing

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Marketing research process is not a single act; rather, it is a systematic process.

o Each activity is done sequentially. o Dashed line around the primary data stage means these data are generated only if secondary data do not yield actionable information. -

Issue (problem) definition o Clear statement of the topic to be studied.  What information does the retailer want to obtain to make a decision?  “Of three potential new store locations, which should we choose?”  “How can we improve the sales of our men’s shoes?”

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Secondary data o Retailer looks at data that have been gathered for purposes other than addressing the issue or problem currently under study. o May be internal (such as company records) or external (such as government reports and trade publications).

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Primary data o Retailer looks at data that are collected to address the specific issue or problem under study. o May be generated via survey, observation, experiment, and simulation.

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Secondary data are sometimes relied on; other times, primary data are crucial. o In some cases, both are gathered. o It is important that retailers keep these points in mind:  (1) Great diversity in the possible types of data collection (and in the costs).  (2) Only data relevant to the issue being studied should be collected.  (3) Primary data are usually acquired only if secondary data are inadequate.

Last, but not least, the recommended strategy is implemented. If research is to replace intuition in strategic retailing, a decision maker must follow the recommendations from research studies, even if those results seem to contradict his or her own ideas.

Secondary Data -

Advantages Disadvantages 1. Data assembly is inexpensive: records, trade journals, and government publications 2. Data can be gathered quickly: records, library sources, Web accessed immediately

3. May be several sources of secondary data: Many perspectives. 4. SD may possess information that would otherwise be unavailable to the retailer. o Government publications often have statistics no private firm could acquire. 5. Source such as Progressive Grocer, Stores, or government: usually quite credible. 6. Help define issues more specifically. Background information before undertaking a primary study. -

Disadvantages: 1. Available data may not suit the purposes of the current study because they have been collected for other reasons. Neighborhood statistics may not be found in secondary sources 2. Data may be incomplete 3. Information may be dated. Statistics gathered every 2 to 5 years may not be valid today. Often a time delay between the completion of a census and the release of information. 4. The accuracy of secondary data must be carefully reviewed. The purpose of the research, the data collection tools, and the method of analysis should each be examined—if they are available for review. o SD known for poor data collection methods; they should be avoided. When data conflict, the source with the best reputation for accuracy should be used

Whether secondary data resolve an issue or not, their low cost and availability require that primary data not be amassed until after studying secondary data. Only if secondary data are not actionable should primary data be collected. We now cite secondary data sources for retailers. -

Internal o Available within the company  Before searching for external secondary data or primary data o At beginning of the year, most retailers forecast and develop budgets for the next 12 months.  Prior budget and its success in reaching budgetary goals are good sources of secondary data in forming a new budget.  Sales and profit-and-loss reports to judge performance.  Data from electronic registers that can be studied by store, department, item.  Prior periods, a firm gets a sense of growth or contraction. o Customer billing reports: learns about inventory movement, sales by different personnel, and sales volume.  For credit customers, sales by location, repayment time, and types of purchases can be reviewed.  Purchase invoices show the retailer’s own buying history and enables the retailer to evaluate itself against budgetary goals. o Inventory records indicate the merchandise carried throughout the year and the turnover of these items.  Knowing the lead time to place and receive orders from suppliers, as well as the extra inventory kept on hand to prevent running out at different times over

the year, aids planning. o If a firm does primary research, the resultant report should be kept for future use (hopefully in the retail information system). When used initially, a report involves primary data. Later reference to it is secondary in nature since the report is no longer used for its primary purpose o Written reports on performance are another source of internal secondary data.  They may be prepared and filed by senior executives, buyers, sales personnel, or others. All phases of retail management can be improved through formal report procedures. o Information need to be analyze together -

External secondary data o Available from sources outside the firm. o Consulted if internal information is insufficient o Government and nongovernment categories. o All kinds of written materials, usually by subject or topic heading, for specified time. o Several databases:  Academic Search Premier/EBSCOhos  Business Source Premier/EBSCOhost  Dow Jones Factiva  Gale’s Business & Company Resource Center  Gale Virtual Reference Library  Ingenta Connect  LexisNexis Academic Universe  Mergent Online  Plunkett Research Online  Standard & Poor’s NetAdvantage

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Primary Data o After exhausting available secondary data, a defined issue may still be unresolved.  Primary data: collected to resolve a specific topic at hand) are needed. o When secondary data are sufficient, primary data are not collected. o Advantages: 1. Collected to fit the retailer’s specific purpose 2. Information is current. 3. Units of measure and data categories are designed for the issue 4. Source is known and controlled, and the methodology for specific study. 5. There are no conflicting data from different sources. 6. When secondary data do not resolve an issue, primary data are the only alternative o Disadvantages often associated with primary data: 1. More expensive than secondary data. 2. Information gathering tends to be more time-consuming. 3. Some types of information cannot be acquired by an individual firm.

4. If only primary data are collected, the perspective may be limited 5. Irrelevant information may be collected if the issue is not stated clearly

Primary Data Decisions -

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Determine who collects the data. o Retailer can do this itself (internal)  Quicker and cheaper o Hire a research firm (external).  More objective and formal Sampling method o Probability (random) sample: every store, product, or customer has an equal or known chance of being chosen for study. Gathering data from all stores, all products, and all customers  More accurate but more costly and complex o Nonprobability sample: Stores, products, or customers are chosen by the researches  Based on judgment or convenience.  Saves time and money o Methods of data collection:  Survey  In person  Over the telephone  By mail  Online  Disguised  Non-disguised  Observation: present behavior or the results of past behavior are noted and recorded  Because people are not questioned, observation may not require respondent cooperation, and survey biases are minimized.  May be used in real situations.  Disadvantage: Attitudes are not elicited.  Use observation to o Determine the quality of sales presentations (by having researchers pose as shoppers) o Monitor related-item buying o Determine store activity by time and day o Make pedestrian and vehicular traffic counts (to measure the potential of new locations) o Determine the proportion of patrons using mass transit.  May be: o Disguised observation: Shopper or company employee is not aware he or she is being watched by a two-way mirror or hidden camera o Nondisguised observation: Participant knows he or she is being

o o o o o

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observed—such as a department manager watching a cashier’s behavior Structured observation: Observer to note specific behavior. Unstructured observation: Observer to note all of the activities of the person being studied. Direct observation: Observer watches people’s present behavior Indirect observation: Observer examines evidence of past behavior, such as food products in consumer pantries. Human observation: Carried out by people. It may be disguised, but the observer may enter biased notations and overlook behavior. Mechanical observation: (camera filming in-store shopping) eliminates viewer bias and does not miss behavior.

Experiment  Research method in which one or more elements of a retail strategy mix are manipulated under controlled conditions. o An element may be a price, a shelf display, store hours, etc. o If a retailer wants to find out the effects of a price change on a brand’s sales, only the price of that brand is varied. Simulation  Experiment whereby a computer program is used to manipulate the elements of a retail strategy mix rather than test them in a real-life setting.  Two simulation types are now being applied in retail settings: o Based on mathematical models o Involving “virtual reality.”

Mystery Shoppers -

Mystery shoppers: retailers or their market research partners hire people to pose as customers and observe a service or a brand through visits, telephone calls, or Web site interactions. o May evaluate operations, customer service experience, compliance with service standards, product availability, price, service calls, sales presentations, and how well store environments and displays are maintained o Some firms prefer video mystery shopping to address complex and challenging aspects of a service business....