Chapter 8Information Gathering and Processing in RetailingMuhammad SalmanBERMAN EVANS

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Chapter ObjectivesTo discuss how information flows in a retail distribution channelTo show why retailers should avoid strategies based on inadequate informationTo look at the retail information system, its components, and recent advancesTo describe the marketing research process

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Figure 8.1 How Information Flows in a Retail Distribution ChannelInformationand theSupplierInformationand theRetailerInformationand theConsumer

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Suppliers Need To KnowFrom the RetailerEstimates of category salesInventory turnover ratesFeedback on competitorsLevel of customer returns

From the CustomerAttitudes toward styles and modelsExtent of brand loyaltyWillingness to pay a premium for superior quality

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Retailers Need To KnowFrom the SupplierAdvance notice of new models and model changesTraining materialsSales forecastsJustifications for price changesFrom the CustomerWhy people shop thereWhat they like and dislikeWhere else people shop

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Consumers Need To KnowFrom the SupplierAssembly and operating instructionsExtent of warranty coverageWhere to send a complaintFrom the RetailerWhere specific merchandise is stocked in the storeMethods of payment acceptableRain check and other policies

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Retail Information System (RIS)Anticipates the information needs of retail managersCollects, organizes, and stores relevant data on a continuous basisDirects the flow of information to the proper decision makers

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Figure 8.2 A Retail Information System

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Database ManagementA major element in an RISSystem gathers, integrates, applies, and stores information in related subject areasUsed forFrequent shopper programsCustomer analysisPromotion evaluationInventory planningTrading area analysis

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Five Steps to Approaching Database ManagementPlan the particular database and its components and determine information needsAcquire the necessary informationRetain the information in a usable and accessible formatUpdate the database regularly to reflect changing demographics, recent purchases, etc.Analyze the database to determine strengths and weaknesses

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Figure 8.4 Retail Database Management in Action

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Figure 8.5 Data Warehousing

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Components of a Data WarehousePhysical storage location for data the warehouseSoftware to copy original databases and transfer them to warehouseInteractive software to allow processing of inquiriesA directory for the categories of information kept in the warehouse

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

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Figure 8.7 The Marketing Research Process

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Marketing Research in Retailing

The collection and analysis of information relating to specific issues or problems facing a retailer

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Secondary DataAdvantagesInexpensiveFastSeveral sources and perspectivesGenerally credibleProvides background informationDisadvantagesMay not suit current studyMay be incompleteMay be datedMay not be accurate or credibleMay suffer from poor data collection techniques

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Secondary Data SourcesInternalSales reportsBilling reportsInventory recordsPerformance reportsExternalDatabasesABI/Inform, Business Periodicals Index, etc.GovernmentU.S. Census of Retail TradeStatistical Abstract of the U.S.Public records

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Primary DataAdvantagesCollected for specific purposeCurrentRelevantKnown and controlled sourceDisadvantagesMay be more expensiveTends to be more time consumingInformation may not be acquirableLimited perspectives

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Primary DecisionsIn-house or outsource?Sampling method?ProbabilityNonprobabilityData collection method?SurveyObservationExperimentSimulation

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Survey MethodsIn-personOver the telephoneBy mailOnlineDisguisedNon-disguised

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Figure 8.9 A Semantic Differential for Two Furniture Stores

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

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Figure 8.10 Visionary Shopper

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Figure 8.10b Visionary Shopper