1. Information Gathering and Processing in Retailing
Chapter 8
Information Gathering and Processing in Retailing
Dr. Pointer’s Notes

2. Chapter Objectives
To discuss how information flows in a retail distribution channel
To show why retailers should avoid strategies based on inadequate information
To look at the retail information system, its components, and recent advances
To describe the marketing research process

3. Information Flows in a Retail Distribution Channel
For channel of distribution to work effectively, there should be a free flow of information from the main parties – suppliers(wholesalers and manufacturers), retailer and consumer.
Collaboration and cooperation is necessary

4. Figure 8.1 How Information Flows in a Retail Distribution Channel
and the
Supplier
Information
and the
Consumer
Information
and the
Retailer

5. Suppliers Need To Know From the Retailer Estimates of category sales
Inventory turnover rates
Feedback on competitors
Level of customer returns
From the Customer
Attitudes toward styles and models
Extent of brand loyalty
Willingness to pay a premium for superior quality

6. Retailers Need To Know From the Supplier
Advance notice of new models and model changes
Training materials
Sales forecasts
Justifications for price changes
From the Customer
Why people shop there
What they like and dislike
Where else people shop

7. Consumers Need To Know From the Supplier
Assembly and operating instructions
Extent of warranty coverage
Where to send a complaint
From the Retailer
Where specific merchandise is stocked in the store
Methods of payment acceptable
Rain check and other policies

8. Purpose of Retail Information Systems
Develop and maintain a system that will provide good information for retailers to make better decisions
Data gathering is useful and should not be viewed as a one-shot resolution of a single issue.
A retail information system needs to be utilized

9. Retail Information System (RIS)
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

10. Poor Retail Strategy Decision based on inadequate Information
Inadequate information can cause a firm to enact bad strategies
Examples illustrated in text
a. poor intuition (movies theater)
b. continuing what was done before (toy store
c. not reading customers perceptions (florist)

11. Advantages of RIS Information is organized and company focused
Opportunities and threats may be discovered earlier
Strategic elements can be coordinated
New strategies can be developed quicker
Quantitative data results are accessible and cost benefit analysis done easier.

12. Figure 8.2 A Retail Information System
Strategic plans
Environment
Retailer’s
philosophy
Data Collection
Information Control Center
b. Data Storage and retrieval c. updating of files
Retail
Operations
Implementation
Feedback

13. Database Management A major element in a RIS
System gathers, integrates, applies, and stores information in related subject areas
Used for
Frequent shopper programs
Customer analysis
Promotion evaluation
Inventory planning
Trading area analysis

14. Five Steps to Approaching Database Management
Plan the particular database and its components and determine information needs
Acquire the necessary information
Retain the information in a usable and accessible format
Update the database regularly to reflect changing demographics, recent purchases, etc.
Analyze the database to determine strengths and weaknesses

15. Figure 8.4 Retail Database Management in Action
Data Warehouse
Executive
&
other company
employees
Customers
Channel
Partners
Data
mining
micromarketing

16. Data Warehousing
Data warehousing is where copies of all the data bases in a firm are maintained in one location and accessible to employees at any locale.
Advantages
Employees can quickly access information for decision making
New data is make available company wide sooner
Data inconsistencies are reduced
Better data analysis and manipulation are possible

17. Components of a Data Warehouse
Physical storage location for data – the warehouse
Software to copy original databases and transfer them to warehouse
Interactive software to allow processing of inquiries
A directory for the categories of information kept in the warehouse

18. Data Mining and Micromarketing
Data mining is the in-depth analysis of information to gain specific insights about customers, product categories, vendors, and so forth
Micromarketing is an application of data mining, whereby retailers use differentiated marketing and develop focused retail strategy mixes for specific customer segments

19. Figure 8.6 Applying UPC Technology to Gain Better Information
Scanning price at cash register – Give information which can used for inventory management.
Universal Product Codes (UPC)– marking products with a series of thick and thin vertical lines to give them unique ID codes.
Scanning products on shelf/racks provides information to verify inventory and indicate time for price decreases (mark downs)
Electronic Data Interchange (EDI)- retailers and suppliers regular exchange information through computers regarding inventory levels, delivery times, units and etc.

20. Marketing Research Process in Retailing
Marketing research in retailing entails the collection and analysis of information relating to specific issues or problems facing a retailer.
Marketing research process – embodies a series of activities:
It is systematic process as outlined on next slide

21. Figure 8.7 The Marketing Research Process
Generate
primary data
Define
problem
Examine
secondary
data
Implement
findings
Make
Recommend.
Analyze
Data

22. Marketing Research in Retailing
Issues (problem) definition involves a clear statement of the topic to be studied. Can use both secondary and primary data
Marketing Research in Retailing

23. Secondary Data Advantages Inexpensive Fast
Several sources and perspectives
Generally credible
Provides background information
Disadvantages
May not suit current study
May be incomplete
May be dated
May not be accurate or credible
May suffer from poor data collection techniques

24. Secondary Data Sources
Internal
Sales reports
Billing reports
Inventory records
Performance reports
External
Databases
ABI/Inform, Business Periodicals Index, etc.
Government
U.S. Census of Retail Trade
Statistical Abstract of the U.S.
Public records

25. Primary Data Advantages Collected for specific purpose Current
Relevant
Known and controlled source
Disadvantages
May be more expensive
Tends to be more time consuming
Information may not be acquirable
Limited perspectives

26. Primary Decisions In-house or outsource? Sampling method?
Probability (each person has a known and equal chance of being selected)
Nonprobability
Data collection method?
Survey
Observation
Experiment
Simulation

27. Data collection method
Survey- information is systematically gathered from respondents by communicating with them and using a questionnaire
Observations- present ant past behavior of customers are noted and recorded
Experiment- one or more elements of a retail strategy mix are manipulated under controlled conditions to determine its effect on sales or etc.
Simulation-computer program is used to manipulate the elements of a retail strategy mix rather than test in a real setting.

28. Survey Methods In-person Over the telephone By mail Online Disguised
Non-disguised

29. Mystery Shoppers
Retailers hire people to pose as customers and observe operations from sales presentations to how well displays are maintained to service calls
Observations may be disguised or nondisguised, structured or unstructured, direct or indirect, and human or mechanical.

30. Questions