Retail MarketingNotes
(Databases and Marketing Research)


NOTE:  these outline notes will be supplemented by in-class discussion and web site demos

Using Marketing Research to match Retailers and Consumers
How can a retail information system be built and managed?
How should information be gathered and processed to take advantage of today’s database and e-commerce technologies?
What tools from Marketing Research enable retailers to stay competitive?

Building a Retail Information System
Anticipates the information needs of retail strategists and managers
Collects, organizes, analyzes, and stores relevant data
Data is directed periodically to appropriate retail decision makers
Signals successes, changes, information for new tactics

Issues that Retailers Need To Monitor
What info do I need to reach my goals?
What info do I need to carry out my mission?
What are the strengths and weaknesses of my competition?
How well have I covered the market? Is there potential that has been overlooked?

What Else?
What motivates my present customers to purchase from me?  From my store? From my web site? How do they buy?  What are their patterns?  How long do they stay in my store?  What do they do when they are here?
Why do other customers not choose me? Are they aware of my business? Are they aware of my merchandise? What is my store’s image? Whom do they see as competitors?
What changes are occurring in society that affect my business?
How can I gather this data or purchase this data on an ongoing basis?

Figure - How Information Flows in a Retail Distribution Channel Information needs to flow in multiple directions

Suppliers Need To Know
From the Retailer

From the Customer


Retailers Need To Know
From the Supplier

From the Customer

Consumers Need To Know
From the Supplier

From the Retailer


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
 

Figure - A Retail Information System
 

What is Data-Base Management?
The procedures that are use to gather, integrate, apply, and store information for particular areas of retail analysis
Customer research - e.g. habits, what is needed to build a relationship?
Vendor research - relationships
Evaluation of product sales
Evaluation of promotions and responses
Trade area analysis
 

Where Do Such Systems Come From?
Some are purchased - e.g. Retail Pro Management Software
Others are custom-developed
Some are contracted to research firms
Some data is provided by industry sources
Looking at examples generates insight
Wal-Mart achieved market leadership over Kmart by using its RIS to identify weaknesses in customer service, employee productivity, weak vs. strongly performing products, and areas where stockouts occurred.
 

Database Management
A major element in an 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
 

Building Skills in Database Management and Data Warehousing
These show how retail data gathering and use is moving to new levels of sophistication in design and utilization.  Your text is especially good in acquainting you with cutting edge retail analysis tools.
See the Customer Relations functions at the Retail Pro web site
The company can create specialized promos for your customers in order to build loyalty
http://www.retailpro.com
 

Figure - Retail Database Management in Action
 

Data Mining and Micromarketing

Another type of Retailer-Consumer Interface
Firms can be hired to design, implement and measure individualized marketing campaigns and customer communications that reflect each customer's past purchases and preferences
This integrates all your customer transaction and interaction data together across multiple channels for use throughout the enterprise.
http://www.nuedgesystems.com/prod_serv/archer/
 

Building and Using a Database
With built-in automatic triggers, you can tailor your communication program to meet your customer's wants and needs.
Send thank you cards within a day of purchase.
automatically produce a call list of non-respondents to a best-customer promotion
application automatically selects all of your customers that meet the criteria you've defined
 

Using a Database to Understand and Reinforce Customer Relationships
Detailed customer and transaction data is essential to successful relationship marketing
It's not enough to know that ten red shirts were purchased
You need to know exactly who purchased the shirts. You need this level of customer data to build the one-to-one relationships you desire.
Using MapInfo®, you can easily create maps of customers based on their spending, store loyalty, zip code, and/or other characteristics
 

Using Professional Software

http://www.spss.com/clementine/
Clementine combines two valuable assets - data and business knowledge - to create powerful predictive models which answer real business questions such as “What customers are in danger of leaving?” or “Who is a safe credit risk?”
Clementine’s many modeling techniques, such as prediction, classification, segmentation and association detection, lead to the most powerful, accurate model or combination of models, producing superior results.
 

How Does Data Mining Work?
http://www.spss.com/datamine/
E-businesses are bombarded daily with millions of pieces of information about visitors to their Web sites. Even with traditional data mining tools, deciphering this flood of data—and ultimately turning it into more profitable customer relationships—is a daunting task.
 

Marketing Research in Retailing
Problem Definition - clearly spell it out! Relate to planned data analysis
Examine Secondary data - note advantages and disadvantages - external and internal data - see text - identify primary data needs
Generate Primary data - sampling, formats, scales, mystery shoppers, experiments, simulations
Analyze data
Make recommendations
Implement Findings
??  Build in tracking??
 

Secondary Data
Advantages

Disadvantages May suffer from poor data collection techniques
 

Forecasting the Holiday Season!
What info do retailers collect that could be useful for the upcoming holiday season?
What should they have collected?
How relevant are past trends?
What are the latest fads?
Many industry groups provide data collected over several years
 

International Council of Shopping Centers Studies on Holiday Shopping
HOLIDAY PREPARATIONS - see handout
 

Many Familiar Methods Actually Collect Consumer Data – Internal Secondary Data
Membership programs - “Preferred Shoppers”
Frequent Fliers
Members on the web sites
UPC codes matched with your Preferred Shopper card
UPC codes track merchandise popularity to establish width and depth
EDI - data is constantly updated from each store’s computer
 

Planning for a Real Case
Company X wants to determine their optimal location from three different available spots
What data is available already?
What data is needed?
Other information:  redevelopment plans, competition, change in customer base
 

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
 

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

Focus Groups
Informal discussion with 8-12 people
Small group dynamics so people are comfortable sharing their opinions
Led by a moderator
Prepared script

Figure - A Semantic Differential for Two Furniture Stores
 

Mystery Shoppers
Retailers hire people to pose as customers and observe operations from sales presentations to how well displays are maintained to service calls