MK453 Marketing Research & Information Systems, Unit 1: Idea Paper

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Chapter 2

Harnessing Big Data into

Better Decisions

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Know why concepts like data, big data, information, and intelligence represent value

Understand the four characteristics that describe data

Know what a decision support system is and the technology tools that help make it work

Recognize some of the major databases and how they are accessed

Understand the basic concept of marketing analytics and its potential to enhance decision-making

Be sensitive to the potential ethical issues of tracking consumers’ behavior electronically

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LEARNING OUTCOMES

After studying this chapter, you should

Introduction

Data

Facts or recorded measures of certain phenomena (things or events)

Big data

Large quantities of data taken from multiple, varied sources that:

Were not intended to be used together

Are available to be analytically applied to provide input to organizational decision making

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Data, Information, and Intelligence Equal Value

Information

Data formatted (structured) to support decision making or define the relationship between two or more data points

Market intelligence

The subset of data and information that actually has some explanatory power enabling effective decisions to be made

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Survey This!

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Source: www.Qualtrics.com

Review the questionnaire that you responded to last chapter. Later, you’ll be asked to analyze data with the hope of predicting and explaining some important outcomes with marketing implications. At this point, think about how any given section of the questionnaire might be used as input to decision making by an educational institution or a communications firm. To start to understand the data better, print the questionnaire and use the downloaded data to write the variable names beside each question. Save the questionnaire for later use in helping to identify items on the questionnaire.

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EXHIBIT 2.1 Characteristics of Valuable Data

The Characteristics of Valuable Information

Relevance

Reflects the pertinence of the particular facts

Completeness

Having the right amount of information

Data quality

Degree to which data represent the true situation

How to enhance data quality

Automate data collection and entry when feasible

Inspect the data and cleanse for obvious errors

Be mindful of the costs and benefits of efforts at improving data quality

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The Characteristics of Valuable Information (cont’d.)

Timeliness

Data are current enough to still be relevant

Market dynamism

Represents the rate of change in the environmental and competitive factors

Global marketplace

The potential marketplace is the entire world

Large companies use technology to keep track of business details globally

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Decision Support Systems

Marketing research serves four possible functions

Foundational—answers basic questions such as what consumer segments should be served and with what types of products

Testing—addresses items such as new product concepts or promotional ideas, and their effectiveness

Issues—examines how specific issues impact the firm, such as organizational structure

Performance—which metrics are critical in real-time management and what insights can be gained from “what-if” analyses of policy changes?

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Decision Support Systems (cont’d.)

Help decision makers confront problems through direct interaction with computerized databases and analytical software programs

Store data and transform them into organized information that is easily accessible to marketing managers

A customer relationship management (CRM) system is the part of the DSS that addresses exchanges between the firm and its customers

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EXHIBIT 2.2 Decision Support Systems Create Intelligence

Databases and Data Warehousing

Database

A collection of raw data arranged logically and organized in a form that can be stored and processed by a computer

Data warehousing

The process allowing important day-to-day operational data to be stored and organized for simplified access

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Databases and Data Warehousing (cont’d.)

Data warehouse

The multi-tiered computer storehouse of current and historical data

Cloud storage

Data files stored on devices that make them directly accessible via the internet

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Input Management

Input

All numerical, text, voice, behavioral, and image data entered into the decision support system

Major sources of input

Internal records

Proprietary marketing research

Salesperson input

Behavioral tracking

Web tracking

Outside vendors and external distributors of data

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EXHIBIT 2.3 Six Major Sources of Marketing Input for Decision Support Systems

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EXHIBIT 2.3 Six Major Sources of Marketing Input for DSSs (cont’d.)

Internal Records

Contain data that may become useful information for marketing managers

Accounting reports of sales and inventory figures

Costs, orders, shipments, inventory, sales, and other aspects of regular operations

Customer profiles

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Proprietary Marketing Research

Research projects conducted to study specific company problems generate data

Emphasizes the gathering of new data

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Salesperson Input

Sales representatives’ reports:

Can alert managers to changes in competitors’ prices and new product offerings

May involve the types of complaints salespeople are hearing from customers

As trends become evident, this data may become marketing intelligence

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Behavioral Tracking

Modern technology provides new ways of tracking human behavior

Global positioning satellite (GPS) systems

Scanner data—the accumulated records resulting from in-store point-of-sale data

Universal product code (UPC) —the bar-coded information that contains product information

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Web Tracking

Performed to monitor trends and information posted by consumers that pertains to the company’s brand or products

Google tracks the “click-through” sequence of customers

Alexa—provides information about which sites consumers visit

Chat rooms

Search-engine optimizer—mines Internet data to provide consulting to firms who wish to move up the listing of hits for their product-related terms

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Networks and Electronic Data Interchange

Electronic data interchange (EDI)

Type of exchange that occurs when one company’s computer system is integrated with another company’s computer system

Open source information

Structured data that is openly shared between companies

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Database Sources and Vendors

Data archives

Data wholesalers

Data retailers

Statistical databases

Financial databases

Video databases

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Database Sources and Vendors (cont’d.)

The Internet and research

Information technology

Push or pull?

Near field communication (NFC) devices

Intranets

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Data Archives

Data wholesalers

Companies that put together consortia of data sources into packages that are offered to municipal, corporate, and university libraries for a fee

Examples: Wilson Business Center, Hoovers, ProQuest, INFOTRAC, and LexisNexis

Data retailers

Companies that provide access to data directly to the end consumer for a fee

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Types of Databases

Statistical databases

Contain numerical data for market analysis and forecasting

Geographic information systems use geographical databases and powerful software to prepare computer maps of relevant variables

Scanner data are a common source

Financial databases

Include competitors’ and customers’ financial data, such as income statements and balance sheets

Example: CompuStat

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Types of Databases (cont’d.)

Video databases

Video databases and streaming media are having a major impact on the marketing of many goods and services

Example: movie studios provide clips of upcoming films

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EXHIBIT 2.4 Some Database Sources That Are Widely Available

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EXHIBIT 2.4 Some Database Sources That Are Widely Available (cont’d.)

The Internet and Research

Navigating the Internet

Content providers maintain websites that contain information as well as links to other sites

Uniform Resource Locator (URL)

A website address that Web browsers recognize

Keyword search

Takes place as the search engine searches through millions of Web pages for documents containing keywords

Environmental scanning

Entails all information gathering designed to detect changes in the external operating environment of the firm

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Information Technology

Smart agent software

Software capable of learning an Internet user’s preferences and automatically searching out information in selected Websites and then distributing it

Push or pull?

Pull technology—the consumer is essentially asking for the data

Push technology—sends data to a user without a request being made

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Information Technology (cont’d.)

Near field communication (NFC) devices

RFID (radio frequency identification)—a tiny chip that can be affixed to virtually any product

NFC technology—Wi-Fi-like systems communicating with specific devices within a defined space, e.g., inside of a retail unit or near a poster or billboard

Small data files that a content provider can save onto the computer of someone who visits its website

Intranets

A company’s private data network

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Marketing Analytics

Marketing analytics

A general term that refers to efforts to measure relevant data and apply analytical tools in an effort to better understand how a firm can enhance marketing performance

Predictive analytics

A system linking computerized data mined from multiple sources to statistical tools that can search for predictive relationships and trends

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Data Technology and Ethics

Is big brother watching?

Marketing and data privacy are current issues

Geolocation technologies

Allow whereabouts and/or movement of a consumer or object to be known through digital identification of some kind

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Ethics of Gathering Data by Digital Means

Four factors for consideration

Has the consumer implicitly or explicitly consented to being traced?

Does the tracking behavior violate any explicit or implicit contracts or agreements?

Can researchers enable users to know what information is available to data miners?

Open data partnership

Do the benefits to consumers from tracking their behavior balance out any potential invasion of their privacy?

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