CHAPTER 8:

INFORMATION
GATHERING AND
PROCESSING IN
RETAILING

1
 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

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 Information Information Information
and the and the and the
Supplier Retailer Consumer

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

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 Retailers Need To Know
From the Supplier From the Customer
Advance notice of
Why people shop
new models and
there
model changes
Customers likes
Training materials

Sales forecasts and dislikes

Justifications for price Where else people
changes shop

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 Consumers Need To Know

From the Supplier From the Retailer

Assembly and Where specific

operating merchandise is
instructions stocked in the store
Extent of warranty Methods of payment
coverage acceptable
Where to send a Rain check and other
complaint policies

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 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

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 Figure 8-3: A Retail Information System

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

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

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 Figure 8-5: Data-Base Management
in Action

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 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

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 Data Mining and Micromarketing
Data mining is the in-depth analysis of
information to gain specific insights about
customers, product categories, vendors, etc.
Micromarketing 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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 Data Mining Example:
Using traditional statistical methods, an retail analyst
would ask Are higher-income people prone to be more
loyal to a warehouse club than those with lower income
levels?
Data mining, on the other hand, could potentially provide
more insight by pointing out other factors contributing to
store loyalty.
Data mining might group customers who have a
warehouse clubs credit cards, who live within 10 miles of
the club, who own more than one car, and who have a
separate freezer.

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 Figure 8-6: Applying UPC Technology
to Gain Better Information

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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 Data
Advantages Disadvantages
May not suit current study
Inexpensive
May be incomplete
Fast May be dated

Several sources and May not be accurate or credible

May suffer from poor collection

perspectives
techniques
Generally credible

Provides background
information

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 Secondary Data Sources
Internal External
Data bases
Sales reports
Academic Search Premier
Billing reports Government
U.S. Census of Retail Trade
Inventory records
Statistical Abstract of the
Performance U.S.
reports Public records

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

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 Primary Data Decisions
o In-house or outsource?
o Sampling method?
Probability
Non-probability
o Data collection method?
Survey
Observation
Experiment
Simulation

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 Survey Methods

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

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 Figure 8-9: A Semantic Differential
for Two Furniture Stores

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 Mystery Shoppers

Retailers hire people to pose as

customers in order to evaluate aspects
of the store environment (e.g. sales
presentations, display maintenance,
and service calls)
Often sales encounter based.

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 Experiments
An experiment is a research method in
which one or more elements of a retail
strategy mix are manipulated under
controlled conditions.
An element may be a price, a shelf display,
store hours, etc.
If a retailer wants to find out the effects of a
price change on a brands sales, only the
price of that brand is varied.

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 Simulation
A simulation is a type of 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: those based on
mathematical models and those involving
virtual reality.

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