CHAPTER 8 SECONDARY DATA RESEARCH INA DIGITAL AGE After studying this chapter, you should be able to 1. Discuss the advantages and disadvantages of secondary data 2. Define types of secondary data analysis conducted by business research managers 13. Identify various internal and proprietary sources of secondary data 4. Give examples of various external sources of secondary data '5. Describe the impact of single-source data and globaliza- tion on secondary data research Chapter Vignette: Business Facts on a Grand Scale ‘Akey problem that faces any business research manager is the need to constantly capture relevant data about customers, competitors, and/or market characteristics. The use of secondary data (Le, data that has been collected previously for other purposes) has exploded with the advent of large-scale ¢lectronic information sources and the Web. One company that has taken full advantage of integrat- ing various business related information sources is Nielsen Claritas. Prior to its merge with the Nielsen Company, Claritas (which in Latin means "brightness") had a 40-year history of collecting and integrating business-related data from difference sources. ts products include (1) PRIZM, which provides market segmentation information based upon consumer behavior and geographic loca- ‘ion; (2) Consumer Point, a target marketing analysis solution for different industry spaces; and (3) Business-Facts, which provides accurate business data for market support and strategic planning, Business-Facts holds great promise as a secondaty data source for existing companies. Using Standard Industral Classification (SIC) and North American Industry Classification (NAICS) codes developed through the Census Bureau, characteristics on business ownership, location, employment, and sales are available for 10 major industrial ‘groupings. Data and employee counts within the Business-Facts sys- {em represent over 13 milion businesses, Examples ofthese industry ‘groups include construction, manufacturing, and retal sales establish- ments across the United States. Since business information can ecome quickly obsolete, Nielsen Claritas spends millions of dollars each year to verify business information on a quarterly basis. The advantages of knowing broadly both the characteristics and location of major customer _groups (or potential competitors) are very rea, Using a sophisticated statistical modeling approach, The Nielsen Claritas company can link your customers to your existing or proposed locations, in a fashion such that the information is as timely and applicable as possible Allof the information sources within Nielsen Claritas add value to business users by satisfying two very critical needs. First, Nielsen Claritas has expertise in linking different data streams into a cohesive system. This allows users to answer through secondary data sources critical existing business ques~ tions, Secondly, their information systems are geographically based, so that businesses can query data toa common point on the globe. Truly, the integration and utilization of secondary data sources by the Nielsen Claritas Company has put business research “on the map"—both literally and figuratively! 160‘Chapter 8: Secondary Data Research in a Digital Age 161 Introduction << Research proje: vith secondary data, which are gathered and recorded by someone secondary data else prior co (and for purposes the current project. Secondary data usu and already assembled. They require no access to resp are historical Dota hat hve been previous indents of subjects callected for some purpose o than the one at hand, Advantages of Secondary Data [To Poinr| ‘The primary advantage of secondary data is their availability. Obtaining secondary data is almost If I hiave seen fa always faster and less expensive than acquiring primary data. This is particularly rue when research {/iayt xs use electronic retrieval to access data stored digitally. In many situations, collecting secondary data is instantaneous. Consider the money and time saved by researchers who obtained updated popalation esti- mates for a town during the interim between the 2000 and 2010 censuses. Instead of doing the sae Newton fieldwork themselves, researchers could acquite estimates from a firm dealing in demographic information oF fom sources such as Claritas or PCensus, As in this example, the use of secondary data climinates many of the activities normally asociated with p sampling and data processing, Secondary data are essential in instances when data cannot be obtained using primary data collection procedures. For example, a manufacturer of farm implements could nat duplicate the information in the Census of Agriculture because much of the information there (for example, amount of taxes paid) might not be accessible to a private firm. ¢ Ihave stood on the shoulders of giants data collection, such at Disadvantages of Secondary Data An inherent disadvantage of secondary data is that they were not designed specifically to meet the researchers’ needs. Thus, researchers must ask how pertinent the data are to their particular proj- ect. To evaluate secondagy data, xesearchers should ask questions such as these + Isthe subject matter consistent with our problem definition? + Do the data apply to the population of interest? + Do the data apply to the time period of interest? c secondary data appear in the correct units of measurement? cover the subject of interest in adequate detail? Even when secondary information is available, it can be inadequate. Consider the following typi- cal situations + A researcher interested in forklidt trucks finds that the secondary data on the subject are included in a broader, less pertinent category encompassing all industrial trucks and tractors. Furthermore, the data were collected five years easier + Aninvestigator who wishes to study individuals earning more than $100,000 per year finds the top category in a secondary study reported at $75,000 or more per year + A brewery that wishes to compare its per-barrel advertising expenditures with those of com- ppetitors finds that the units of measurement differ because some report point-of-purchase expenditures with advertising and other do not, + Data fiom a previous warranty card study chow where consumers prefer to purchase the prod uct but provide no reasons why. ‘The most common reasons why secondary data do not adequately satisfy (1) outdated information, (2) variation in definition of term and (4) lack of information to verify the data's accuracy. Furthermore, in our rapidly changing information quickly becomes outdated. Because the purpose of most studies is to predict the future, secondas Every primary researcher has the right co define the terms or concepts under investigation to satisfy the purpose of his or her primary investigation. This practice provides litle solace, however, research needs are (3) different units of measurement, data must be timely to be useful‘The data in the online survey provide qualitative and quantita- While some of these data are centered on uni- tive data based upon responses from students around the world, versity experiences and attitudes, several data variables are similar to the kinds of data gathered from public opinion research. For example, take a look at some basic results (such as how many people strongly agree) on a few of the items in the online survey related to how a person's job affects them outside of work. Then, do a Google search on terms lke “work tension opinions" and “work stress study” Look at the linked docu- ments, Do the results obtained from the online survey appear consistent with other opinion study results? 18 data conversion The process of wengng the conga form ofthe data co a format suitable to achieve tne research objective asa called ot formation to the investigator of the Afiican-American market who finds secondary data reported as “per- cent nonwhite.” Variances in terms or variable clasifications should be serutinized to determine whether differences are important. ‘The populations of interest must be described in comparable terms. Researchers frequently encounter secondary data that report on a population ofiinterest that is similar but not directly comparable to their population of interest. For example, Arbitron reports its television audience estimates by geographical areas known as ADIs (Areas of Dominant Infla- cence). An ADI is a geographic area consisting of all counties in which the home market commer- ial television stations receive a preponderance of total viewing hours. This unique population of interest is used exclusively to report television audiences. The geographic areas used in the census ‘of population, such as Metropolitan Statistical Areas, are not comparable to ADI. Units of measurement may cause problems if they do not conform exactly to a researcher's needs as well, For example, lumber shipments in millions of board feet are quite different from billions of ton miles of lumber shipped on freight cars. Head-of-houschold income is not the same unit of measure 2s total fimily income. Often the objective of the original primary study aay dictate that the data be summarized, rounded, or reported. When that happens, even ifthe original units of measurement were comparable, aggregated or adjusted units of measurement are not suitable in the secondary study. ‘When secondary data are reported in a format that does not exactly meet the researcher's needs, lata conversion may be necessary. Data conversion (aso called date transformation) is the process of changing the original form of data to a format more suitable for achieving a stated research objective. For example, sales for food products may be reported in pounds, eases, or dollars. An estimate of dollars per pound may be used to convert dollar volume data to pounds or another suitable format. ‘Another disadvantage of secondary data is that the user has no control over their accuracy. Although timely and pertinent secondary data may ft the researcher's requirements, the data could be inaccurate, Research conducted by other persons may be biased to support the vested interest ofthe source. For example, media often publish data from surveys to identify the characteristics of their subscribers or viewers, but they will most likely exclude derogatory data from their reports [the possibility of bias exists, the secondary data should not be used, Investigators are naturally more prone to accept data from reliable sources such as the US. government, Nevertheless the researcher must assess the reputation of the organization that gath~ cers the data and critically assess the research design to determine whether the research was cor- rectly implemented. Unfortunately, such evaluation may be impossible without fall information that explains how the original research was conducted,‘Chapter 8: Secondary Data Research in a Digital Age Researchers should verify the accuracy of the data whenever possible, Cross-checks of data from multiple sources, similar to what Nielsen Claritas does with its Business-Facts database, should be made to determine the similarity of independent projects, When the data are not con sistent, researchers should attempt to identify reasons for the differences or to determine which data are most likely to be correct. Ifthe accuracy of the data cannot be established, the researcher ‘must determine whether using the data is worth the risk. Exhibit 8.1 illustrates a series of questions that should be asked to evaluate secondary data before they are used Dothe data help to answer |, questions se out inthe problem dst? vv Yes Do the data appy tothe time period of interes? Nom ves Applicability tothe cunt Do the data app tothe |, project Population of interest? Canthe data be reworked? ve te or QD Do oer terms and variable cor clisiicaton presented |, ‘apolytothecurent | No project y Yes ‘rete unit of measurement compaabie? | N° Yes Yes Nop a) Yves Y No Nom (inaccurate ‘or unsure) ‘Accuracy of the dala No, 1 Yes (accurate) Isusing Yes the data worth b> ‘hersk? No “Source: The des for Ehime fom Rober sly, Designing the Marketing Research Projet (New Yorke PevroeliChatr 1977), 163 eross-checks he compison of data fom ene source with data from anather source to cetermine the silty of independent projects Evaluating Secondary Data168 Part2: Beginning Stages ofthe Research Process —> It would be impossible to identify all the purposes of research using secondary data, However, some common business and marketing problems that can be addressed with secondary retearch designs are usefl. Exhibit 8.2 shows three general categories of research objectives: fact-finding, ‘model building, and database marketing, exnierrs.2 ‘Common Research Objectives for Secondary Data Studies Facefinding Identifying consumption patterns Tracking tends Mode! building Estimating market potential Forecasting sles Selecting trade areas and sites Database marketing Enhancing customer databases Developing prospec ists ‘The simplest form of secondary-data research is fact-finding. A restaurant serving breakfist might be interested in knowing what new products are likely to entice consumers. Secondary data avail- Secondary-data research able from National Eating Trends, a service of the NPD Group, show that the most potential may supporsthefact that breakfast be in menu items customers can eat on the go.* According to data from the survey of eating trends, sandwiches are at the topofthe take-out breakfasts have doubled over the past few years, and they have continued to surpass dine- menu. in breakfast sales for over a decade. These trends make smoothies and breakfast sandwiches sound like a good bet for a breakfast menu, Also, NPD found that 41 percent ofbreaklist sandwiches are consumed by people in their cars and 24 percent of people polled take them to work, These findings suggest that the sand- wiches should be easy to handle But what to put on the biscuit or bbun? Another research firm, Mar= ket Facts, says almost half of con- sumers say they would pay extra for cheese. ‘These simple facts would interest a researcher who was investigating the market for take-out breakfasts. Fact-finding can serve more complex purposes as well. In the digital age we live in, the use of music as a means to notify users of a call is common- place, The Research Snapshot on the next page gives some of the amazing growth facts predicted in this industryNew Trends—Music for Mobile Phones Until a few years ago, selling music involved recordings on CDs, but marketing researchers have lately been tracking the newer practice of selling tunes to serve as ringtones. According to ‘Nielsen, consumers spent nearly $600 milion dollars on ring- tones in 2007. Strategy Analytics, a marketing research fir, forecasted that mobile music would generate $9 billion in sales by 2010 and much of that will be generated by ringtone sales. So far, the most popular song category is hip-hop, but videogame themes and movie themes also sell well. Ringtones are profitable for music seller. Today, almost all ringtones sold are song clips known as mastertones or true tones, ‘and consumers are sometimes paying mote for ringtones ($2.49) than for an entire song downloaded to an MP3 player. The music ‘ompanies, such as Sony and EMI, get royalties of up to 50 per- cent for mastertones. In this environment, Sony BMG skipped = the traditional approach of CD singles and MTV videos when Cassidy released an aloum in 2005; instead, the company made a 25-second sample of Cassidy's song "Im a Hustla" and released it {asa ringtone. Coldplay's song “Speed of Sound’ was available as a ringtone from Cingular before the album went on sale. Secondary data from Nielsen reveals that these are among the most purchased ringtones for 2007: 1. Shop Boyz, "Party Like @ Rockstar” 2. Mims, This Is Why '™m Hot” 3. Soulja Boy, Crank That (Soulja Boy)” 4. Nickelback, "Rockstar" 5. Akon, "Don't Matter" 6. T-Pain, ‘Buy You A Drank (Shawty Snappin)” 7. Hurricane Chris, “A Bay Bay" 8. Sean Kingston, “Beautiful Girls” 9. Huey, “Pop, Lock & Drop It" 10, Fergie, “Big Gitls Don't Cry” Sources: Based on Maer, Matthew, igtal Entrainment: Can Cel Phones Save at tp galenet.com, Marek Sue, Ringng inthe New eat,” Wieess, ‘eek Uanuary 1, 2006, p/w gslenet com Musk Marketing Get Digtl Tune lp” Financial Expres uanuaty 28, 2008), itp wee glenet com, "Nlelen Muri 2007 Yeor-Ene Music Industry Report Growth In Over Music Purchates Exceeds 4" Wireless New, (ana 10,2008, hepa tmenet. secessed August 6 2008 IDENTIFICATION OF CONSUMER BEHAVIOR FOR A PRODUCT CATEGORY typical ob consumption pattems for a particular product category tive fora secondary research study might be to uncover all availble information about or to identify demographic tends tat affect an industry, For example, a company called Servigistics offers software that willscan a company's own parts, inventory data and compare it with marketing objectives and competitom’ prices to evaluate whether the company should adjust prices for its parts. Kia Motors tried using thie service in place of the usual method of marking up cost by a set tory data and external data about competitors segment of is business." This example illustrates the wealth riction, By considering secondary data including internal inven= ices, it was able to make service parts amore profitable ictal information about consumption and beavior patterns that can be obtained by carefully collecting and analyzing secondary data TREND ANALYSIS Business researchers are challenged to constantly watch for trends in the marketplace and the envi- ronment, Market tracking is to support this work. Almost every large consumer goods company routinely investigates brand and product cat= This type of analysis typically involves comparisons with egory sales volume using secondary dat: he observation and analysis of trends in indust share over time. Scanner research services and other organizations provide facts about sales volume volume and brand market tracking The ebservation and analsie of twends in industy volume and brand share over me competitor’ sales or with the company's own sales in comparable time periods. It azo involves industry comparisons among different geographic areas. Exhibit 8.3 on the next page shows the tend in cola market shave relative to the total carbonat Environmental Scanning soft-drink industyy. In many instances, the purpose of fact-finding is simply to stady the environment to identify trends. Environmental scanning entails information gathering and fact-finding designed to detect indications of environmental changes in their initial tages of development, ‘The Inte sans, sich as periodic review of contemporary publications tal scanning; however, there ate other mi ‘can be used for environmen- 16s166 exnisrr ss Cola's Share of the Carbonated Soft-Drink Market model building re ure ofseconday data toh specty relationships between or mote vonables; con nuole the development of descnpive or Part2: Beginning Stages ofthe Research Process Year 1995, 62.4% 1996 61.8% 1997 60.2% 1998 59.7% 1999) SBa% 2000 8% o mM 4 6 8% 0 Prost of Market Source: Howard Theresa, *Coea-Cola Hopes Taking Nev Path Leads to Succes USAToday, March 6 200, p 6b From USA Today. advision of Gannett Go, Ine Reprinted with Permission and reports, For example, environmental scanning has shown many researchers that consumer demand in China is skyrocketing, In the case of beauty products such as cosmetics, Chinese authorities in che carly 1990s stopped discouraging the use of makeup, and sales of these products took offhiting $524 million in 2005—and were expected to grow by over one-third, reaching $705 million by 2009. Com- panies including Procter & Gamble, L’Oréal, and Shiseido have captured a sizable share of this market by realizing the potential and developing products to get into the Chinese market Annumber of online information services, such as Factiva and LexisNexis, routinely collect news stories about industies, product lines, and other topics of interest that have been specified by the researcher, In addition, push technology is an Intemet information technology that automatically delivers content to the researcher's or manager's desktop. Push technology uses “electronic smart agents,” custom software that filters, sors, prioitizes, and stores informat service fives the researcher from doing the searching. The true value of push technology i that the researcher who is scanning the environment can specify the kinds of news and information he or she ‘wants, have it delivered to his or her computer quickly, and view it at leisure. later viewing ® This Model Building ‘The second general objective for secondary research, model building, is more complicated than simple fact-finding, Model building involves specifying relationships between two or more variables, pethaps extending to the development of deseriptive or predictive equations, a technique that is used by the Nielsen Claritas Company routinely to add value to their secondary data. Models need not include complicated mathematics, though. In fact, decision makers often prefer simple models that everyone can readily understand over complex models that are difficult to comprehend. For exam= ple, market share is company sales divided by industry sales. Although some may not think of this simple calculation as a model, it represents a mathematical model of a basic relationship. ‘We will illustrate model building by discussing three common objectives that can be satisfied swith secondary research; estimating market potential, forecasting sales, and selecting potential facility or expansion sites. ESTIMATING MARKET POTENTIAL FOR GEOGRAPHIC AREAS Business researchers o! estimate their company’s market potential using secondary data. In many cases exact figures may be published by a trade association or another source. However, when the desired information is unavailable, the researcher may estimate market potential by uansforming secondary data ffom two or more sources. For example, managers may find second ary data about market potential for a country or other large geographic area, but this informatio may not be broken down into smaller geographical areas, such as by metropolitan area, or in terms ‘unique to the company, such as sales territory. In this type of situation, researchers often need to muake projections for the geographic area of interest.‘Chapter 8: Secondary Data Research in a Digital Age 167 ‘An extended example will help explain how secondary data can be used to calculate market potential. Suppose a brewing company is looking for opportunities to expand sales by exporting ‘or investing in other countries, Managers decide to begin by estimating market potential for the Ceech Republic, Germany, Japan, and Spain. Secondary research uncovered data for per capita beer consumption and popukition projections for the year 2010. ‘The data for the four counties appear in Exhibit 8.4 exnletr a4 Pee ee es Cl Market Potential for Four arr Porc ernoey Estimate Possible Beer Markets rd (thousands) (liters) Cues) ‘Ceech Republic 103175 17 1397475 Germany 82365 16 954,340 Japan s27,788 48 6132384 Spain 45,108, au 3.789072 Source: Population dats from Papulatin Dission ofthe Department of Economic and Soci Airs ofthe United Nations Secretariat, "World Population Prospects: The 2008 Revision and Worl Woanzation Prospects; The 2003 Revision hp ‘saunorgiinop,acessed Februar 9, 2006. Consumption data rom "US eer Consumption Reverses Decreases in 2007 esearch’ hp ust-rnks comartcleaspe- 95643, Noverbe 24, 2007, accessed Decembe 10,2008, tp! ‘silenetgolegroue com, and “Czechs Top World Cup er Consumption, ted wen morldcupblg or wo-cup- 2006) ‘rechtop-nord-beer-onsumption hm accessed December 10, 2008. ‘To calculate market potential for the Czech Republic in 2010, multiply chat country’s popula tion in the year 2010 by its per capita beer consumption: 10,175,000 people X 157 liters/person = 1,897,475, 000 liters In the Czech Republic, the market potential for beer is 1,597,475,000 liters. To get a sense of the expected sales volume, the researcher would have to multiply this amount by the price per liter at which beer typically sells in the Czech Republic. As Exhibit 8.4 reveals, Japan's population is much higher, so its market potential is greater, even though the average Czech drinks much more beer. Of course, the calculated market potential for each countey in Exhibit 8.4 is a rough esti- mate. One obvious problem is that not everyone in a country will be of beer-drinking age. IC the researcher can get statistics for each country’s projected adult population, the estimate will be closer. Also, you might want to consider whether each country is experiencing growth or decline in the demand for beer to estimate whether consumption habits arc likely to be different in 2010. For example, beer consumption is barely growing in Europe and Japan, but it is expanding in Latin America (at about 4 percent a year) and even faster in China (by at least 6 percent a yeas). Perhaps this information will cause you to investigate market potential in additional countries where more growth is expected ll FORECASTING SALES For any project, such as forecasting sales, you need information about the future. You will need. to know what company sales will be next year and in future time periods. Sales forecasting isthe process of predicting sales totals over a specific time period Accurate sales forecasts, especially for products in mature, stable markets, frequently come from secondary-data research that identifies trends and extrapolates past performance into the fature. Researchers often use internal company sales records to project sales. A rudimentary model ‘would multiply past sales volume by an expected growth rate. A researcher might investigate a secondary source and find that industry sales are expected to grow by 10 percent; multiplying ‘company sales volume by 10 percent would give a basic sales forecast. Exhibit 8.5 on the next page illustrates trend projection using a moving average projection lof growth rates. Average ticket prices for a major-league bascball game are secondary data from.168 exerres. Sales Forecast Using Secondary Data and Moving Averages site analysis techniques Techniques that use secondary data to select the best location forrerailor wholesale operations index of retail saturation ‘caution that describes the relationship cetween real ‘demand and spel Part2: Beginning Stages ofthe Research Process 7 Percentage Rate 3-Year Moving Tickat Pri Poy a) Average Rate of oy Costume Cot in) 1996 1120 52% 35% 1997 1236 104% sa 1998 1359 100% 85% 1959 1491 97% 100% 2000 1687 m1a% 105% 2001 1899 139% 18% 2002 1830 -36% 74% 2003 1801 39% an 2004 isa 43% 15% 2005 a7 52% 50% 2006 nn 49% sa 2007 nn 22% 45% 2008 2543 120% 64% ‘Team Marketing Report for each year of interest (sttp:l/www teammarketing comifancostintb/). The moving average is the sum of growth rates for the past three years divided by 3 (aumber of years) ‘The resulting number isa forecast of the percentage increase in ticket price for the coming year. Using the three-year average growth rate of 6.4 percent for the 2008, 2007, and 2006 sales peri- ‘ods, we can forecast the average ticket price for 2009 as follows: $25.43 + ($25.43 % ,064) = $27.05 ‘Using the same information, the projected price ofa beer ata ballgame in 2009 is $6.43. This lets the fan know how much to take out to the old ballgame. Moving average forecasting is best suited to a static competitive environment. More dynamic situations make other sales forecasting techniques more appropriate. Statistical trend analysis sing secondary data can be much more advanced than this simple exam- ple, Many statistical techniques build forecasting model using secondary data. ‘This chapter emph- sizes secondary-data research rath than statistical analysis, which is covered in Inter chapters. l@ ANALYSIS OF TRADE AREAS AND SITES ‘Managers routinely examine trade areas and use site analysis techniques to select the best locations for retail or wholesale operations. Secondary-data research helps managers make these site selec- tion decisions. Some organizations, especially fanchisers, have developed special computer soft- ware based on analytical models to select sites for retail outlets. The researcher must obtain the appropriate seconclary data for analysis with the computer software The index of retail saturation offers one way to investigate retail sites and to describe the rela- tionship berween retail demand and supply.’ It is easy to calculate once the appropriate secondary data are obtained: ‘Local market potential (demand) Tocal market retailing space Index of retal saturation For example, Exhibit 8.6 shows the relevant secondary data for shoe store sales in a five-mile radius surrounding a Florida shopping center. These types of data can be purchased from vendors‘Chapter 8: Secondary Data Research in a Digital Age of marker information such as Urban Decision Systems. First, to estimate local market potential (Gemand), we multiply population by annual per capita shoe sales. Ths estimate, line 3 in Exhibit 8.6, ‘goer in the numerator to calculate the index of retail saturation: Indo etsraon = 14248000 1 Popusten asus 2. Ann er capt soe ales osu 2: Localmaret pote ne 1 toe 2) s14a4e 00 4, Sauie fet of esac tet sl shes 4000 a 5: Inderal stron nen) 2 ‘The retailer ean compare this index figure with those of other areas to determine which sites hhave the greatest market potential with the least amount of retail competition, An index value above 200 is considered to indicate exceptional opportunities Data Mining Large corporations’ decision support systems often contain millions or even hundreds of millions of records of data, These complex data volumes ate too lage to be understood by managers. Con- sider, for example, Capital One, a consumer lending company with nearly 50 million customer accounts, including credit cards and auto loans, Suppose the company collects data on customer purchases, and each customer makes five transactions in a month, oF 60 per year. With 50 million customers and decades of data (the company was founded in 1988), it’s easy to see how record counts quickly grow beyond the comfort zone for most humans." ‘Two points about data volume are important to keep in mind. Firs, relevant data are often in independent and unrelated files Second, the number of distinct pieces of information each data record contains is offen laege. When the number of distinct pieces of information contained in ‘each data record and data volume grows too large, end users don't have the capacity to make sense of i all. Data mining helps clarify the underlying meaning, of the dta ‘The term data mining refers to the use of powerful compaters to dig through volumes of data to discover pattems about an organization’s customers and products. As seen in the Research Snapshot on the next page, ths can even apply to Internet content from blogs. Iti broad term that applies to many different forms of analysis. For example, neural networks are a form of artii- coal intelligence in which a computer is programmed to mimic the way that human brains process information, One computer expert put it this way A neural network leams prety much the way 4 human being does. Suppose you say “big” and show a child an elephant, and then you say “small” and show her a poodle. You repeat this process with a house and a giraffe as examples of “big” and then a grain of sand and an ant as examples of “small.” Pretty soan she will figure it out and tell you that a truck is “big” and a needle is “small.” Newral networks can sinnlarly generalize by looking at examples.” Market-basket analysis is a form of data mining that analyzes anonymous point-of-sale transac- tion databases to identify coinciding purchases or relationships between products purchased and ‘other retail shopping information."® Consider this example about patterns in customer purchases: Osco Drugs mined its databases provided by checkout scanners and found that when men go to its drugstores to buy diapers in the evening between 6:00 p.m. and 8:00 p.m., they sometimes walk out with a six-pack of beer as well. Knowing this behavioral pattem, supermarket managers ‘may consider laying out their stores so that these items are closer together." 169 Secondary Data for Calculating an index of Retail Saturation tog through volumes of data to discover pattems about an corganizason's customers and products applies to many ciferent forms af anal neural networks ’N orm of aficalinteligence a hich a computer's programmed tommimic the way that urna brains process information marke asket analy: 2 form oF data mini Iyzes anonyrnous poin-oFsale ‘ransaction databases to ier coinclding purchases o elation- ships between craduts pure chased ang other retal shopping InformationMining Data from Blogs positive and negative messages and analyze ‘One way to find out what people are thinking these days is to _ word choices and spelling to estimate the read what they are posting on their blogs. But with tens of mi _writer’s age range and sex. The company’s lions of blogs available on the Internet, there is no way toread CEO, Howard Kaushansky, says the program ‘them all. One solution: data-mining software designed forthe can even recognize sarcasm. blogosphere, ‘Most of Umbria's clients are large mak- ‘Umbria Communications, based in Boulder, Colorado, offers ers of consumer products, including Sprint and Electronic Arts. a program called Buzz Report, which searches 13 milion blogs, _U.S. Cellular used Buzz Report to learn that teenage users of looking for messages related to particular products and trends, _cell phones are particularly worried about using more than Marketers can buy the service to find out what people are say-_their allotted minutes, fearing that parents would take the extra ing about thelr new products, or they can explore unmet needs amount from their allowance. Such knowledge is useful for Jnareas they might consider developing new service plans and marketing messages. serving. Not only does Buzz... aasadon Finn Beg“ sources Sased on Finn, Bet, “Consumer Research: Mining Blogs fr Marketing Report identify relevant blogs, insight” Busiess20,7 (September, 2008), Nps/money nncomv/magaznes but it also has a language busines 2usiness2_athve20000801/8384325/ecesed 33009 Marin sth, processor that can klentfy _e9sng for Daas oare December 12203) tpt gene com i customer discovery A data-mining application of interest to some researchers is known as customer discovery, TWrokes mining data bok for Which involves mining data to look for patterns identifying who is likely to be a valuable cus- pattems iSens/ying who s Ikely tomer. For example, a larger provider of business services wanted to sell a new product to its valuable customer existing © new that only some of them would be interested. The company had to adapt each product offering to each customer's individual needs, so it wanted to save money by identifying the best prospects, It contracted with a research provider called DataMind to mine its data on sales, responses to marketing, and customer service to look for the customers most likely to be interested in the new product. DataMind assigned each of the company's customers an index number indicating their expected interest level, and the selling effort was much more efficient as a result. When a company knows the identity of the customer whe makes repeated purchases fom the same organization, an analysis can be made of sequences of purchases. The use of data min- ing to detect sequence patterns is a popular application among direct marketers, such as catalog retailers, A catalog merchant has information for each customer, revealing the sets of products that the customer buys in every purchase order. A sequence detection fimction can then be ased to discover the set of purchases that frequently precedes the purchase of, As another example, a sequence of insurance claims could lead to the identification of frequently sstomers, but ‘occurring medical procedures performed on patients, which in tam could be used to detect cases of medical fraud Data mining requires sophisticated computer resources, and it is expensive, ‘That's why companies like DataMind, ISM, Oracle, Information Builders, and Acxiom Corporation offer at send the databater they want analyzed and let the data-mining company do the “number crunching.” mining te Database Marketing and Customer Relationship Management CRM (customer relationship management) systems are a decision support system that manage the interactions between an organization and its customers. A CRM maintains customer databases containing customers’ names, addresses, phone numbers, past purchases, responses to past promo- tepomctesretoenertscs, Hoa offers, and other relevant data such as demographic and financial data. Database marketing Shes with customers ancereate is the practice of using CRM databases to develop one-to-one relationships and precisely targeted precisely targeted promotons promotional efforts with individual customers. For example, a fruit catalog company CRM contains database marketing The wse 0” customer databases v0‘Chapter 8: Secondary Data Research in a Digital Age m a database of previous customers, including what purchases they made during the Christmas holidays. Each year the company sends last year's git list to customers to help them send the same gifs to their friends and relatives. Because database marketing requires vast amounts of CRM data compiled fom numerous sources, secondary data are often acquired for the exclusive purpose of developing or enbanc~ ing databases, The transaction record, which often lists the item purchased, its value, customer name, address, and zip code, is the building block for many databases, Tihis may be supplemented with data customers provide directly, such as data on a warranty card, and by secondary data purchased from third parties. For example, credit services may sell databases about applications for loans, credit card payment history, and other Snancial data. Several companies, such as Don nelley Marketing (with its BusinessContentFile and ConsumerContentFile services) and Claritas (with PRIZM), collect primary data and then sell demographic data that can be related to small geographic areas, such as those with a certain zip cade, (Remember that when the vendor collects the data, they are primary data, but when the database marketer incorporates the data into his or hher database, they are secondary data.) Now that some of the purposes of secondary-data analysis have been addressed, we turn to @ discussion of the souzces of secondary data, Sources of Secondary Data —_—_ Secondary data can be classified as either internal to the organization or external. Modern infor mation technology makes this distinction seem somewhat simplistic, Some accounting documents are indisputably internal records of the organization, Researchers in another organization cannot hhave access to them. Clearly, a book published by the federal government and located at a public brary is external to the company. However, in today's world of electronic data interchange, the ddata that appear in a book published by the federal goverment may also be purchased from an online information vendor for instantaneous access and subsequently stored in a company’s deci- sion support system, Internal data should be defined as data that originated in the organization, or data created, recorded, of generated by the organization, Internal and proprietary data is pethaps a more descrip- internal and proprietary tive term, dat Secondary daa hat onainate Sources of Internal and Proprietary Data ‘Most organizations routinely gather, record, and store intemal data to help them solve fture problems. An organization's accounting system can usually provide a wealth of information, Rou- tine documents sich a¢ sales invoices allow extemal financial reporting, which in turn can be a source of data for further analysis. I'the data ate properly coded into a modular database in the accounting system, the researcher may be able to conduct more detailed analysis using the deci- sion support system. Sales information can be broken down by account or by product and region: information related to orders received, back orders, and unfilled orders can be identified; sales can be forecast on the basis of past data, Other useful sources of internal data include salespeople’s call reports, customer complaints, service records, warranty card retums, and other records. Researchers frequently aggregate or disaggregate internal data, For example, a computer ser~ vice firm used internal secondary data to analyze sales over the previous three years, categorizing Dusiness by industey, product, purchase level, and so on, The company discovezed that 60 percent of its customers represented only 2 percent of its business and that nearly all of these custom- ers came through telephone directory advertising, This simple investigation of internal records showed ¢ in effect, the firm was paying to attract customers it did not want. Internet technology is making it easier to research internal and proprietary data. Often com- panies set up intranets so that employees can use Web tools to store and share data within the organization. And just as Google's search software lets people search the entize World Wide Web, Google is offering the enterprise search, which is essentially the same technology in a version that searches a corporate intranet, The enterprise search considers not only how often a particularzy external data Data created recorded or gener= ated by an enti other than the researche’s exganization Part2: Beginning Stages ofthe Research Process document has been viewed but also the history of the user's past search patterns, such as how often that user has looked at particular documents and for how long. In addition, other companies have purchased specialized software, such as Autonomy, which searches intemal sources plus such external sources as news government Web sites." External Data: The Distribution System External data are generated or recorded by an entity other than the researcher's organization, The government, newspapers and journals, trade associations, and other organizations create or pro~ duce information. Traditionally, this information has been in published form, perhaps available from a public hbrary, trade association, or government agency. Today, however, computenzed daca archives and clectronie data interchange make external data a8 accessible as internal data, Exhibit 8.7 illustrates some traditional and some modern ways of distributing information, Information as a Product and Its Distribution Channels Because secondary data have value, they can be bought and sold like other products. And just a bottles of perfume or plumbers’ wrenches may be distributed in many ways, secondary data also Dow through vatious channels of distribution, Many users, such as the Fortune 500 corpori- tions, purchase documents and computerized census data directly ffom the goverament. How- ‘ever, many small companies get census data from a library or another intermediary or vendor of secondary information, LIBRARIES ‘Traditionally, ibraries’ vast storchouses of information have served as a bridge between users and producers of secondary data, The library staf deals directly with the creators of information, sch as the federal goverament, and intermediate distributors of information, such as abstracting and indexing services. The user need only locate the appropriate secondary data on the library shelves, Libraries provide collections of books, journals, newspapers, and so on for reading and reference. ‘They also stock many bibliographies, abstracts, guides, directories, and indexes, as well ae offer access to basic databases ‘The word libnary typically connotes a public or university faeility. However, many major cor porations and government agencies also have libraries. A corporate libratian’s advice on sources of industry information or the United Nations librarian’s help in finding statistics about international markets can be invaluable, THE INTERNET Today, of course, much secondary data is conveniently available over the Internet. Its creation has added an international dimension to the acquisition of secondary data, For example, Library Spot, at hupslwwwrlbraryspotcom, provides links to online libraries, including law libraries, medical ibrar- ies, and music libraries, Its reference desk features links to calendars, dictionaries, encyclopedias, maps, and other sources typically found at a traditional library's reference desk, Exhibit 8.8 on page 174 lists some of the more popular Internet addresses where secondary data may be found, VENDORS ‘The information age offers many channels besides libraries through which to access data. Many «external producers make secondary data availabe directly from the organizations that produce the dda or through intermediaries, which are often called venders. Vendors such as Factiva now alow managers to access thousands of external databases via desktop computers and telecommunications systems. Hoovers (stps/winw hooverscom) specializes m providing information about thousands of ‘companies’ financial situations and operations‘Chapter 8: Secondary Data Research in a Digital Age ws ——— Using intermediary Direct Channel : Indirect Computerized Distribution Using an Intermediary v Direct, Computerized Distribution ™ PRODUCERS Classifying extemal secondary data by the nature of the producer of information yields five basic sources: publishers of books and periodicals, goveriment sources, media sources, imide atsociation sources, and commercial sources. The following section discusses excl type of secondary data source18 exes Selected Internet Sites for Secondary Data The man who does not read good books has no advantage over the man who cannot read them Mark Twain Part2: Beginning Stages ofthe Research Process roe ors Yahoo! Portal that serves asa gateway _hetpliwww.yahoo.com tall kinds of ites onthe Web. (CEoexpress “The 80/20 rule applied to epi ceoexpresscom the Internet. A series of inks designed by a busy executive for busy executives The New York Public Library brary resources andlinks hetputownypler Home Page avaiable onine. Consus Bureau ‘Demographic information epi censussov fom the US, Census Bureau Statistical Abstract ofthe Highlights from the ups census gov! United States primary reference book for atabiww ‘government statistics. STATUSAllaternet ‘comprehensive source of epi satura gow! US. government information that focuses on economic, financial, and trade data, Advertsing Age magazine Provides content on matketing _tplwww.adage.com ‘mea, advertising, and public ‘elations Inccom Inc. magazine's resources for bepuineine-com ‘growing a small busines. ‘The Wallstreet Journal Online Provides a continually updated —_huplnline ws}. com View of business news aroun the world CNN Money Provides business news, betpuimoney.enn.com Information on managing 3 business and managing ‘money, and other business data, NAICS—North American Describes the new Iupunww.census govleped! Industry Classification System _clasification systern that wena het replaced the Sic system MapQuest Allows users to enter an hetpunwwcanapquestcor address and zp code and seeamap. Brint com: The BizTech Business and technology Network portal and global network for e-business, information, technology, and knowledge management. Books and Periodicals Some researchers consider books and periodicals found in a library to be the quintessential sec- ondary data source. A researcher who finds books on a topic of interest obviously is off to a good start Professional journals, such as the Joumal of Markeing, Jounal of Management, Journal ofthe Acad- emy of Marketing Science, The Jounal of Business Research, Journal of Advertsing Research, American Demographics, and The Public Opinion Quarterly, as well as commercial business periodicals such as the Wall Seet Journal, Fortune, and BusinessWeek, contain much useful material Sales and Marketing ‘Management's Survey of Buying Power isa particularly useful source of information about markets. To locate data in periodicals, indexing services such 2s the ABL/INFORM and Business Periodicals‘Chapter 8: Secondary Data Research in a Digital Age Index and the Wall Street Journal Index are very useful. Guides to data sources also are helpful. For example, American Statistical Index and Business Information Sources is a very valuable source. Most ‘university libraries provide access to at least some of these databases. Government Sources Government agencies produce data prolifically. Most of the data published by the federal govern- ‘ment can be counted on for accuracy and quality of investigation, Most students are familiar with the U.S. Census of Population, which provides 2 wealth of data ‘The Census of Population is only one of many resources that the government provides. Banks and savings and loan companies rely heavily on the Federal Reserve Bulletin and the Ezonomic Report of the President for data relating to research on financial and economic conditions. Builders and contractors use the information in the Curent Housing Reports and American Housing Survey for their research. The Statistical Abstact ofthe United Stateis an extremely valuable source of informa- tion about the social, political, and economic organizations of the United States. It abstracts data available in hundreds of other government publications and serves as a convenient reference to more specific statistical data ‘The federal government is a leader in making secondary data available on the Internet. Visit Fed World (htp:iww-fedworid. gov) for a central access point and links to many of these important documents, STAT-USA/Intemet is another authoritative and comprehensive source of U.S, gov- ‘emment information that focuses on economic, financial, and trade data, It contains the following. types of information + More than 18,000 market research reposts on individual counties and markets compiled by foreign experts at US. embsssies + Economic data series, current and historical, such as gross domestic product, balance of pay- ‘ment, and merchandise trade + Standacd reference works, such asthe Ezomic Report ofthe President, the Budget of the United States Federal Goverment, and the World Faabook + Worldwide listings of businewes interested in buying U.S. products ‘The STAT-USA/Intemet Web address is haputwwwstatusagev. However, only subscribers who pay a fee have access to this service State, county, and local government agencies can also be usefal sources of information, Many state governments publish sate economic models and forecasts, and many cities have metropolitan planning agencies that provide data about the population, economy, transportation system, and so on, These are similar to federal government data but are move current and ate structured to sit local needs Many cities and states publish information on the Intemet. Many search engines have direc- tory entries that allow easy navigation to a particular state's Web site, A researcher using Yahoo!, for example, needs only to click Regional Information to find numerous paths to information about states. Media Sources Information on a broad range of subjects is available from broadcast and print media, CNN Finan- cial News and. BusinessWeek are valuable sources for information on the economy and many indus- tries. Media frequently commission research studies about various aspects of Americans’ lives, such as financial airs, and make reports of survey findings available to potential advertisers free ‘of charge. Data about the readers of magazines and the audiences for broadcast media typically are profiled in media kits and advertisements. Information about special-interest topics may also be available, Hispanic Business reports that the number of Hispanic-owned companies in the United States is expected to grow ata rate of 55 percent between 2004 and 2010, reaching 3.2 million firms, with revenue growth for the period (0f 70 percent. According to the magazine, most of these firms are located in 20 states, with over half in California and Florida. For researchers willing to pay a modest $85, Hispanic Business offers amore detailed report about Hispanic-owned businesses.“ Data such as these are plentifl because the media like to show that their vehicles are viewed or heard by advertisers’ target markets, These types of data should be evaluated carefully, however, wsWater, Water Everywhere (in a bottle) Most people would consider water to be relatively free. The ever-present bottle of water that you see in people's hands is a common sight, yet tis @ relatively new trend in the bever- age industry. In some ways, it does not seem to make sense 1976, the average person drank 1. gallons of bottled water per year. Thirty years later, that average is 27.6 gallons per year. As a resul, researchers have begun to build data around this growing industry segment. Within this $83 billion industry, wholesale dollar sales and market share heavily favor familiar beverage brands such as Dasani (Coca-Cola) and Aquafina (PepsiCo), but the largest producer of bottled water is actually Nestlé Waters of North America, producer ‘of several brands such as Ozarka and Poland Springs. “These data are useful to other researchers who wish to ana- Iyze the traditional and non-traditional beverage industry. So, the next time you “grab your water,” you are contributing to a rela- tively new industry that has somehow made water even more a part of our lives that something available ‘everywhere can represent an industry, When asked why @ bottle of water which is typi- cally priced at over a dollar per bottle is the beverage of choice, consumers rou- tinely see it as a healthy and convenient “beverage” in today’s world ‘The trend for bottled water Source: Beverage Wel tpl 2006);Itetinal Botte Water asociton tp ‘consumption is exploding—in ‘won botedater or, because often they cover only limited aspects of a topic. Nevertheless, they can be quite valuable for research, and they are generally available free of charge Trade Association Sources Trade associations, such as the Food Marketing In serve the information needs of a particular industey. ‘The trade association collects data on a num- ber of tapics of specific interest to firms, especially daca on market size and market trends, Associa tion members have a source of information that is particularly germane to their industry questions, For example, the Newspaper Advertising Bureau (NAB) has catalogued and listed in its computer the specialized sections that are currently popular in newspapers. The NAB has surveyed all daly, Sunday, and weekend newspapers in the United States and Canada on their editorial content and has stored this information, along with data on rates, citculation, snd mechanical requizeme its computer for advertisers’ use, As seen in the Research Snapshot above, trade associations are valuable sources of interesting data tute or the American Petroleum Instt Commercial Sources Numerous firms specialize in selling and/os Jing information. For example, the Polk Com- pany publishes information on the automouve field, such as average car values and new-car pur- cchase rates by zip code, Many of these organizations offer information in published formats and as CD-ROM or Internet databases. The following discussion of several of these firms provides 2 sampling of the diverse data that are available of Market-Share Data. A numb radicated services supply either wholesale or retail sales volume data bated on product movement. Information Resources, Inc., collects market-share using Universal Product Codes (UPC) and optical scanning at retail store checkouts INFOSCAN is a syndicated store tracking service that collects scanner data weekly from more than 32,000 supermarket, drug, and mass merchandiser outlets across the United States, Sales in France, Germany, Greece, Italy, the Netherlands, Spain, and the United Kingdom also are tracked by INFOSCAN Although it is best known 1g operations, A based marketing and sales information service called ScanvTrack, This service gathers sales and marketing data fiom a sample of more than 4,800 stores representing more than 800 retailers 50 major U.S, markets. As part of Nielsen’s Retail Measurement Service, auditors visit the stores its television telsen also has a scanner- 6