The Data’s Getting Smarter…

Glen Darroch | Student ID: 900067683

The term market research conjures up images of that infuriating phone call you get just as you take your first bite of dinner.  A brief pause on the end of the line, followed by a well-scripted introduction from an enthusiastic call centre worker advising you that you have been selected for a very important “survey”.

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However, we are all participants in a more subtle, albeit just as invasive, form of market research each and every time we scan that loyalty card and pay for our groceries at the local supermarket…

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“Small Data”

This is not new news.  Retailers have been collecting scanner data for inventory management purposes since bar codes and check out scanners were introduced in the 1980’s.  The subsequent introduction of customer loyalty programs provided retailers with information about their customers that could be linked to the purchasing data being collected at the checkout.  However as recently as 2000 experts and academics were lamenting the fact that “the promise of detailed scanner data had gone unfulfilled”, due to the lack of statistical tools available to conduct meaningful analysis.

Therefore, while retailers were successfully implementing the first four steps of the marketing research process (Iacobucci 2013), the lack of analysis was preventing them from capitalising on this powerful data collection tool. In addition to the lack of analytical capability, the data sets being collected were almost entirely internal.  The data met several key criteria of research, in that it was objective, relevant and continuously being updated, however it remained incomplete.

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Two recent developments in this space have changed the game for retailers and market research. Retailers have realised that “the ability to (i) triangulate multiple data sources and (ii) perform analyses of these massive data sets” (Nunan and Domenico, 2013) is the key to gaining real insight into customers and maximising the returns on marketing spend. The recent announcements by US-based retailer Kroger, and local supermarket chain Woolworths of deals with third party data analytics firms illustrates the developments in data collection and data analysis, the most important, and often most difficult step in the market research process.

For both Kroger and Woolworths the data collected by these third parties from a wide variety of sources will provide the basis for the retailer to work closely with suppliers to boost sales in individual stores or to specific, targeted segments of the market. The impacts of marketing campaigns and pricing decisions can also be accurately evaluated, and sales of particular products tracked in comparison to sales at other stores across the country.  These leading edge analytics firms also provide the retailer with the type of statistical analysis required to tailor marketing efforts and product offerings for individual stores and customers.

These collaborations and the extent of the data analysis is now being taken even a step further, with Woolworths’ partner Quantium recently announcing partnerships with social media companies such as Ooh!Media, Facebook and Social Soup.  Social media has become a huge player in the marketing space, and these partnerships will allow Quantium to measure the impact that these “social influencers” can have on sales using data sets such as that provided by Woolworths. This provides Woolworths with valuable information regarding the returns on these forms of advertising while also providing the social media companies with validation of their techniques.

So what does this all mean for the retailer and the consumer?

For the retailer, the collection, analysis and interpretation of “Big Data” is now a key plank in its attempts to monitor for changes in customer preferences and competitor offerings and identify specific segments of the market that should be targeted.  Store layouts, discounts, product ranges and the “shopping experience” can all be tailored at the store level, based on reliable data and advanced statistical analysis.  Retailers can also gain reliable insight into the measured impact of the various advertising mediums, and monitor social media for discussion regarding products and promotions. Ultimately it should result in improved margins and increased profitability!

Product Placement in the Wild...

Product Placement in the Wild…

Meanwhile for the consumer, these broad data sets and in-depth analysis should result in an improved shopping experience, where your local store carries the products you need at the prices you want! Of course a sceptic might suggest that it could also result in more effective in-store marketing techniques and your Facebook and Twitter feeds becoming revolving bill boards for products that you have previously purchased, or even discussed with your friends via social media.  And let’s not get started on the privacy concerns….

REFERENCES

Iacobucci, D. (2014) Marketing Management (MM), 4th Edition, South-Western, Cenage Learning, Mason, Chapter 15, Marketing Research Tools.

Nunan, D. and Di Domenico (2013) Market research and the ethics of big data International Journal of Market Research, 55 (4), 2-13.

Fitzsimmons, C (2013) Big data? Big deal BRW, October 10.

Reinartz, W (2012) Using market research just for marketing is a missed opportunity HBR Blog, August 30.

Rossi, P. DeLurgio, P. and Kantor, D. (2000) Making Sense of Scanner Data HBR, March April 2000.

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