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

©2013 Pearson Education 8-2

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

8-3
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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
rates loyalty
• Feedback on • Willingness to pay a
competitors premium for superior
• Level of customer quality
returns

©2013 Pearson Education 8-4

 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
and dislikes
• Sales forecasts
• Where else people
• Justifications for
price 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

©2013 Pearson Education 8-6

 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 club’s 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
• Inventory records
Trade
• Performance • Statistical Abstract of the
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 brand’s 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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