Gathering of Information
Category: Marketing
In order to meet the manager’s information needs, the researcher can gather secondary data, primary data, or both. Secondary data consist of information that already exists somewhere, having been collected for another purpose. Primary data consist of information collected for the specific purpose at hand.
Types and Sources of Information
| Primary Information
(Information which is gathered and treated for a specific purpose) |
Continuous Analysis (repeated periodically) | e.g. monthly Profit & Loss Account and Balance Sheet |
| Ad hoc Analysis — Market Research
(worked out for specific needs) |
e.g. prices on raw materials and services in order to make a price quotation for a customer | |
| Secondary Information
(Information is gathered and treated without covering a concrete information need, but will be used at a later time) |
Internal Information — Records
(information within the company) |
e.g. information about competitors and customers |
| External Information -marketing intelligence (public and semi-public information outside the company) | e.g. information about import and export from official statistic bureaus |
The information needed by marketing managers can be obtained from internal company records, marketing intelligence, and marketing research.
Secondary Information
Secondary information could either be internal information (records), i.e. collected within the company or external information (marketing intelligence) which is gathered by organisations and the public sector. In the following table is shown examples on such information sources.
Internal Records (secondary data). Most marketing managers use internal records information and reports regularly, especially for making day-to-day planning, implementation, and control decisions. The company’s accounting department prepares financial statements and keeps detailed records of sales and orders, costs, and cash flows. Manufacturing reports on production schedules, shipments and inventories. The sales force reports on re-seller reactions, competitor activities, and on customer satisfaction or service problems.
Information from internal records can usually be obtained more quickly and cheaply than information from other sources, but it also presents some problems. Because it was collected for other purposes, the information may be incomplete or in the wrong form for making marketing decisions.
Marketing Intelligence (external — secondary). Marketing intelligence is everyday information about developments in the marketing environment helping managers prepare and adjust marketing plans. The marketing intelligence system determines the intelligence needed, collects it by searching the environment, and delivers it to the marketing managers who need it.
Marketing intelligence can be gathered from many sources. Much intelligence can be collected from the company’s own personnel — executives, engineers and scientists, purchasing agents, and the sales force. But company people are often busy and fail to pass on important information. The company must «sell» its people according to their importance as intelligence gatherers, train them to spot new developments, and urge them to report intelligence back to the company. The company must also get suppliers, re-sellers, and customers to pass along important intelligence.
Companies also buy intelligence information from outside suppliers. The A.C. Nielsen Company sells data on brand shares, retail prices, and percentages of stores stocking different brands.
Small organizations can obtain most of the secondary data available to large businesses. In addition, many associations, local media, chambers of commerce, and government agencies provide special help to small organizations. Local newspapers often provide information on local shoppers and their buying patterns.
Sometimes volunteers and colleges are willing to help carry out research. Non-profit organisations can often use volunteers such as students from business schools. Many colleges are seeking small businesses and non-profit organisations to serve as cases for projects in marketing research classes. Thus, secondary data collection, observation, surveys, and experiments can all be used effectively by small organisations with small budgets.
Although such informal research is less complex and costly, it must still be conducted carefully. Managers must carefully think through the objectives of the research, formulate questions in advance, recognise the biases introduced by smaller samples and less-skilled researchers, and conduct the research systematically. If carefully planned and implemented, such low-cost research can provide reliable information for improving marketing decision making.
Sources for Secondary Marketing Analyses
External (Marketing Intelligence) | Internal Records
Statistical material (government, branches, financial institutes) Financial bank data
Research work Professional magazines Daily press Annual reports
Folders, prospectuses, booklets, catalogues Commercial and industrial chambers Chamber of Foreign Trade Publications of centres for marketing research Publications of centres for marketing research
Accounting reports Client card indices Client correspondence Company representatives/agent reports Client service reports Supply reports Sales force reports
Secondary data provide a good starting point for research and often help to define problems and research objectives. In most cases, however, secondary sources cannot provide all the needed information, and the company must collect primary data.
Primary Information
Good decisions require good data. Just as researchers must carefully evaluate the quality of the secondary information they obtain, they must also take great care in collecting primary data to assure that they provide marketing decision makers with relevant, accurate, current, and unbiased information. Information can be collected by mail, telephone, or personal interview.
Strengths and Weaknesses of the Three Contact Methods
| Telephone | Personal | ||
| Flexibility | Poor | Good | Excellent |
| Quantity of data that can be collected | Good | Fair | Excellent |
| Control of interviewer effects | Excellent | Fair | Poor |
| Control of sample collection | Fair | Excellent | Fair |
| Speed of data collection | Poor | Excellent | Good |
| Response rate | Poor | Good | Good |
| Cost | Good | Fair | Poor |
Source: Adapted with permission of Macmillan Publishing Company from Marketing Research: Measurement and Method, 4th ed., by Donald S. Tull and Del I. Hawkins. Copyright © 1987 by Macmillan Publishing Company
Sampling plan. Marketing researchers usually draw conclusions about large groups of consumers by studying a small sample of the total consumer population. A sample is a segment of the population selected to represent the population as a whole. Ideally, the sample should be representative so that the researcher can make accurate estimates of the thoughts and behaviours of the larger population.
Define the sample. Designing the sample requires three decisions. First, who is to be surveyed (sampling unit)? The answer to this question is not always obvious. For example, in order to study the decision making process for a family automobile purchase, should the researcher interview the husband, wife, other family members, dealership salespeople, or all of these? The researcher must determine what information is needed and who is most likely to have it.
Define the sample size. Secondly, how many people should be surveyed (sample size)? Large samples give more reliable results than small samples (if the sample is 100% of the entire market, the result will be 100% reliable — if the sample is only 25%. of the entire market, maybe the result will only be 40% reliable. How big should the sample size be? It depends on how big an accuracy we want of the result and the cost of collecting the data.
However, it is not necessary to sample the entire target market or even a large portion to get reliable results. If well-chosen, samples of less than one percent of a population can often give good reliability. If we know how much accuracy we want of the result, we can calculate the necessary sample size.
How to choose people in a sample? Thirdly, a sampling procedure much be chosen to obtain a representative sample, the following figure shows three types of probability samples (random, stratified, and cluster sample). But when the probability samples is too costly, time consuming, no probability samples are often used, even the sampling error cannot be measured: ‘select the easiest population members from which to obtain information’ (convenience sample), or ‘use your own judgment to select the population members’ (judgment sample), or ‘finds a prescribed number of people in each of several categories’ (quota sample).
Marketing Research (primary). Managers cannot always wait for information to arrive in bits and pieces from the marketing intelligence system. They often require formal studies of specific situations. The marketing intelligence system will not provide the detailed information needed, and managers do not normally have the skills or time to obtain the information on their own. They need formal marketing research.
We often speak of two types of market analyses; desk research (analysis carried out at the desk) — this is an analysis which the company itself can carry out, either because the information is within the company or because it is easily accessible, and field research (market analysis) which is resource demanding and complicated and therefore the information must be gathered externally. Often the company asks consultants to carry out the analysis. Public information is often inexpensive to obtain.
The ten most common activities of marketing research are measurement of market potentials, market-share analysis, the determination of market characteristics, sales analysis, studies of business trends, short-range forecasting, competitive product studies, long-range forecasting, marketing information system studies, and pricing studies.
Every marketer needs research. A company can carry out marketing research in its own research department or have some or all of it done outside. Whether a company uses outside firms depends on the skills and resources within the company.
Managers of small businesses and non-profit organisations often think that marketing research can be done only by experts in large companies with large research budgets. But many of the marketing research techniques can also be used less formally by smaller organisations — and at little or no expense.
Managers of small businesses and non-profit organisations can obtain good marketing information simply by observing things around them. For example, retailers can evaluate new locations by observing vehicle and pedestrian traffic. They can visit competing stores to check on facilities and prices. They can evaluate their customer mix by recording how many and what kinds of customers shop in the store at different times. Competitor advertising can be monitored by collecting advertisements from local media.