Chapter 8 Information Gathering and Processing in Retailing

Chapter 8 Information Gathering and Processing in Retailing RETAIL MANAGEMENT: A STRATEGIC APPROACH, 10 th Edition BERMAN EVANS

Chapter Objectives þ To discuss how information flows in a retail distribution channel þ To show why retailers should avoid strategies based on inadequate information þ To look at the retail information system, its components, and recent advances þ To describe the marketing research process 8 -2

Figure 8 -1: How Information Flows in a Retail Distribution Channel Information and the Supplier 8 -3 Information and the Retailer Information and the Consumer

Suppliers Need To Know From the Retailer v Estimates of category sales v Inventory turnover rates v Feedback on competitors v Level of customer returns 8 -4 From the Customer v Attitudes toward styles and models v Extent of brand loyalty v Willingness to pay a premium for superior quality

Retailers Need To Know From the Supplier v Advance notice of new models and model changes v Training materials v Sales forecasts v Justifications for price changes 8 -5 From the Customer v Why people shop there v What they like and dislike v Where else people shop

Consumers Need To Know From the Supplier v Assembly and operating instructions v Extent of warranty coverage v Where to send a complaint 8 -6 From the Retailer v Where specific merchandise is stocked in the store v Methods of payment acceptable v Rain check and other policies

Retail Information System (RIS) v Anticipates the information needs of retail managers v Collects, organizes, and stores relevant data on a continuous basis v Directs the flow of information to the proper decision makers 8 -7

Figure 8 -2: A Retail Information System 8 -8

Data-Base Management v System gathers, integrates, applies, and stores information in related subject areas v Its a major element in an RIS v Customer, vendor, product category data base v Used for – – – 8 -9 Frequent shopper programs Customer analysis Promotion evaluation Inventory planning Trading area analysis

Five Steps to Approaching Data. Base Management v Plan the particular data base and its components and determine information needs v Acquire the necessary information v Retain the information in a usable and accessible format v Update the data base regularly to reflect changing demographics, recent purchases, etc. v Analyze the data base to determine strengths and weaknesses v E. g. By customer; purchase frequency, items bought, average purchase 8 -10

Figure 8 -4: Retail Data-Base Management in Action 8 -11

Components of a Data Warehouse v Physical storage location for data – the warehouse v Software to copy original databases and transfer them to warehouse v Interactive software to allow processing of inquiries v A directory for the categories of information kept in the warehouse 8 -12

Data Mining and Micromarketing v Data mining is the in-depth analysis of information to gain specific insights about customers, product categories, vendors, and so forth v Micromarketing is an application of data mining, whereby retailers use differentiated marketing and develop focused retail strategy mixes for specific customer segments 8 -13

Figure 8 -6: Applying UPC Technology to Gain Better Information 8 -14

Figure 8 -7: The Marketing Research Process 8 -15

Marketing Research in Retailing The collection and analysis of information relating to specific issues or problems facing a retailer 8 -16

Secondary Data Advantages v Inexpensive v Fast v Several sources and perspectives v Generally credible v Provides background information 8 -17 Disadvantages v May not suit current study v May be incomplete v May be dated v May not be accurate or credible v May suffer from poor collection techniques

Secondary Data Sources Internal v Sales reports v Billing reports v Inventory records v Performance reports 8 -18 External v Government – Retail Trade – Statistical Abstract of the – Public records

Primary Data Advantages v Collected for specific purpose v Current v Relevant v Known and controlled source 8 -19 Disadvantages v May be more expensive v Tends to be more time consuming v Information may not be acquirable

Primary Data Decisions • In-house or outsource? • Sampling method? – Probability – Nonprobability • Data collection method? – – 8 -20 Survey Observation Experiment Simulation

Survey Methods v In-person v Over the telephone v By mail v Online 8 -21

Mystery Shoppers v Retailers hire people to pose as customers and observe operations from sales presentations to how well displays are maintained to service calls 8 -22