Concentration and Competition in Information Supply Archival Data versus Syndicated Suppliers

Secondary Data Project What can I learn about a target segment via secondary data; Establish baseline expectations, or confirm your prior judgments about the relative importance of demographics associated with purchasing Become familiar with the relatives sizes of specific demographic characteristics overall. Gain experience with the discrepancies between different sources of data collection.

Census Downloading Demographics counts for geographic areas – MSAs – Zipcode data Sex and occupation Sex and education Age and income Family characteristics

Structure of Supply in Secondary Data Make or Buy Analysis “Make”—company does its own research “Buy”—uses an outside firm

Make or Buy Frequency: If information is needed frequently Specificity: If it is highly specific to the firm

Sensitivity Free of bias Concerns matters dealing with employee performance, highly personal Provides anonymity to respondent, confidentiality

Archival Data Data collected for a specific function other than marketing research – Marketing expenditures – Shipments, purchases – Amounts to customers – Transactions to consumers, scanner data – Customer demographics – Territory sales person evaluations Combined with dates, store locations, supplier identification

“Data Mining” Computer analysis of archival data bases, digging through a lot of “coal” to discover “golden nuggets” “Customer Relationship Management” (CRM) “Database marketing”—using analysis in a customer database to identify larger, less price sensitive customers, anniversaries, birthdays, loyalty card purchases.

Retail Link can allow his supplier... Retrieve the sales data of my items in Wal-Mart Retrieve the inventory data of my items in Wal-Mart Retrieve Wal-Mart information on its development Download purchase order in Retail Link Retail Link is... Retail Link is a decision support system Retail Link is a bridge between Wal-Mart and its suppliers Retail Link is an address you can visit via Internet The address is: Retail Link Connects WalMart and Suppliers via system built to track sales at stores, inventories at DC, through purchasing & replenishment data

Implications for Retail Link Store assortment “sets” determined based on locations Scanner data at stores monitors movement, initiates shipments from distribution centers Purchase orders written to maintain inventories, i.e., “vendor managed inventory” Unclear its importance to direct store delivery vendors (no distribution center) Scanner data no longer sold to A.C. Nielsen and IRI

SAP Retail SAP Retail is important because it will be designed to perform equivalent functions to Retail Link, or other specialized purchasing and inventory systems created by retailers. SAP was a leader in business-to-business software, sites used to “plants” and “warehouses” are now “stores” and “distribution centers.”

Retail Data is Marketing Data Consumer products Prices paid Quantity sold Store promotion, coupon use Store location, format Loyalty, credit card demographics Opportunities for students with an understanding of the purchasing software, they will know the “foundation”— connected with knowing what information has market value will succeed—shift in retailer influence.

How would you design a study that would provide purchasing indices from your customers? Demographics: Brands: Promotion: Gross margin:

Effects of Internal Marketing Databases for Marketing Research More direct communication on appropriate merchandising strategies between supplier and retailer. Importance of third-party, syndicated supplier is diminished with retailer Increased emphasis on syndicated suppliers to go direct to consumer for data, i.e., with Homescan and BehaviorScan

Example: “Incremental Sales Response from an Additional SKU” A.C. Nielsen & IRI use to offer a simulation to retailer which would permit estimation of the effect on sales with addition or removal of a single SKU, based on averages found across the country on item movement. A retailer with a sophisticated scanner-based information system can now determine this through experimentation Same for price changes and supplier promotions—this is a market that’s no longer there.

What is missing from Archival Data? Motivations --the “why?” question Supplier research will continue to lead with primary research for new product innovations. Secondary research tells us the size of the market and the demographics, the importance of price—guides primary researchers in asking the correct questions.