E-Marketing, 3rd edition
Judy Strauss, Adel I. El-Ansary, and Raymond Frost
Chapter 6: Marketing Knowledge
© Prentice Hall 2003
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
Data Drives Strategy


Current problem for marketing decision makers
= Information overload.
Origin of data:


Survey results, product sales information, secondary
data about competitors, and much more,
Automated data gathering at Web sites, brick-andmortar points of purchase, and all other customer touch
points.
Data Drives Strategy

What to do with all the data?

Purina marketers built a roadmap for their Internet
advertising strategy:
1.
Data are collected from a myriad of sources,
2.
Filtered into databases,
3.
Turned into marketing knowledge,
4.
Used to create marketing strategy.
S
D
Internal Data
Secondary Data
Primary Data
Information: consumer behavior, competitive intelligence
Product
Database
Customer/
Prospect Base
Other Data/
Information
*Marketing Knowledge*
S
Tier 1
Segmentation
Targeting
Differentiation
Positioning
Tier 2
Marketing
Mix
CRM
From Sources to Databases to Strategy (SDS Model)
Performance
Metrics
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
The Learning Organization

Uses internal and external data to:



Quickly adapt to its changing environment,
Creating organizational change to improve competitive
position + employee satisfaction.
Recognizes the importance of:



Employee empowerment and development,
Cross-functional teams for brainstorming,
Risk-taking for breakthrough ideas.
The Learning Organization

Benefits from:






Improved product quality and innovation,
Better customer relations,
Shared visioning,
Process breakthrough improvements,
Stronger competitiveness through team effort.
Is a key concept in an organization because of information
technology advances and the rapid growth of the Internet.
The Learning Organization



One of the most important areas in marketing learning
= the learning relationship.
The more marketers can learn about their customers, the better they
can serve them with appropriate marketing mixes needs.
Example:
 An American Airlines frequent flier can receive a short text
message on her cell phone two hours before a flight with all flight
information.
 A step further = Would you like us to notify you this way for each
flight you book with us?

American would be learning what the customer wants, confirming
it, and then delivering it automatically.
1) Customer orders 10
new co mputers.
3) database trends
Sales rep
Where is the
%@#& “on”
switch?
Hmmm, 21% of
customers can’t
find “on” switch.
Customer
Database
4) Redesign computer
switch
2) Customer calls
co mpany
Customer service rep
A hypothetical scenario for a computer company that is learning from its
customers as a whole and using the information to improve products.
E-Marketers Learn From Customers
Source: Adaptation of ideas from Brian Caulfield (2001), “Facing up to CRM” at www.business2.com
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
From Data to Knowledge



Data is the lubricant for a learning organization, and
organizations are drowning in it.
This is an information technology manager’s problem, and
e-marketers must determine how to glean insights from
these billions of bytes.
Marketing insight occurs somewhere between information
and knowledge:


Knowledge is more than a collection of information, but resides in
the user,
People, not the Internet or computers, create knowledge;
computers are simply learning enablers.
Data growth rates = 80% a year
= need an increasing amount of storage space
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
1999
2000
2001
Terabytes of Corporate Data: Growth Rate from 1999 to 2003
Source: Data from International Data Corp (www.idc.com)
2002
2003
Decision
Let’s put banner ads on about.com
Knowledge
Dog owners who see ads online are likely to
buy Purina ONE. We know the sites they
visit: about.com, www.petsmart.com.
Information
1. Purina buyers are 20% more likely to visit
about.com
2. 36% of dog owners who see Purina ads would
buy the brand.
Data
016030102
(Buyer 1 bought Purina puppy chow on March 1)
From Data to Decision at Nestlé Purina PetCare Company
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
Marketing Knowledge Management

Knowledge management = Process of managing the
creation, use, and dissemination of knowledge.




Data, information, and knowledge are shared with
internal marketing decision makers, partners, distribution
channel members, and sometimes customers,
When other stakeholders can access selected knowledge,
The firm becomes a learning organization,
The firm is better able to reach desired ROI and other
performance goals.
Marketing Knowledge Management

Marketing knowledge
= the digitized “group mind”
= “collective memory” of the marketing personnel and
sometimes of consultants, partners, and former employees.

Sometimes the knowledge management technology even
allows marketing staff to chat in real time for problem
solving, which is why the system also includes contact
information.
Use in the Telecom Industry
Representative Firm
Scanner Check-Out Data Analysis
Call Volume Analysis
Equipment Sales Analysis
Customer Profitability Analysis
Cost and Inventory Analysis
Purchasing Leverage with Suppliers
Frequent-Buyer Program Management
AT&T
Ameritech
Belgacom
British Telecom
Telestra Australia
Telecom Ireland
Telecom Italia
Use in the Retail Industry
Representative Firm
Scanner Check-Out Data Analysis
Sales Promotion Tracking
Inventory Analysis and Deployment
Price Reduction Modeling
Negotiating Leverage with Suppliers
Frequent-Buyer Program Management.
Profitability Analysis
Product Selection for Markets
Wal-Mart
Kmart
Sears
Osco/Savon Drugs
Casino Supermarkets
W. H. Smith Books
Otto Versand Mail Order
Amazon.com
Uses of Knowledge Management in Two Industries Source: Adapted from Kalakota and Robinson (1999)
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
The Electronic Marketing Information System

A marketing information system (MIS)



The process by which marketers manage knowledge,
A system of assessing information needs, gathering information,
analyzing it, and disseminating it to marketing decision makers.
The process:



Marketing managers have a problem that requires data to solve,
Gather the data from internal sources, from secondary sources, or
by conducting primary marketing research,
These managers receive the needed information in a timely and
usable form.
The Electronic Marketing Information System


1.
Electronic marketing data are stored in databases and data
warehouses.
Marketers can obtain valuable, appropriate, and tailored
information anytime day or night.
Marketers can receive database information in Web pages
and e-mail on a number of appliances in addition to the
desktop computer: pagers, FAX machines, and even cellular
phones.
The Electronic Marketing Information System
2.
3.

Customers also have access to portions of the database
= Consumers can query the product databases.
Firms recognize that data and information are useless
unless turned into knowledge to increase profits.
Firms make project reports, proposals, and data analyses
available to other stakeholders in the MIS network.
The Electronic Marketing Information System

The Internet and other technologies have greatly facilitated
marketing data collection.

Internal records give marketing planners excellent insights
about sales and inventory movement.

Secondary data help marketers understand:






Competitors,
Consumers,
The economic environment,
Political and legal factors,
Technological forces,
Other factors in the macro-environment affecting an
organization.
The Electronic Marketing Information System


Marketing planners use the Net, the telephone, product
bar code scanners, and other technologies to collect
primary data about consumers.
Through:





Online e-mail and Web surveys,
Online experiments,
Focus groups,
Observation of Net user discussions,
Marketers learn about both current and prospective
customers.
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
Source 1: Internal Records



One important source of marketing knowledge is internal
records.
Accounting, finance, and production personnel collect and
analyze data that provide valuable information for
marketing planning.
The marketing department itself collects and maintains
much relevant information about customer characteristics
and activities.
Source 1: Internal Records

Non-marketing Data:


The accounting department generates data about sales,
cash flow, marketing expenses, and profitability that emarketers can use to evaluate marketing effectiveness,
A firm introducing a new product on its Web site wants
immediate feedback on its sales.
Source 1: Internal Records

Sales Force Data:


Sales information systems, using sales force automation
software, allow representatives to input results of sales
calls to both prospects and current customers into the
MIS,
Sales reps access the product and customer databases
both for input and review of customer records while on
the road from their laptop computers.
Customer Characteristics and Behavior


Most important internal marketing data = individual
customer activity.
New storage + retrieval technologies + the availability of
large amounts of electronic information = growth of
database entries:


Addresses, phone numbers, and purchase behavior.
E-mail addresses, customer characteristics, and surfing
and purchase behavior.
Customer Characteristics and Behavior



A record of calls made to customer service reps, product
service records, specific problems or questions related to
various products.
Data on in-store behavior is gathered through scanning
universal product codes (bar code) on products.
Data in customer databases improve sales rep
effectiveness, refine the product mix, identify optimum
pricing for individual products, assess promotion
effectiveness, and signal distribution opportunities.
Customer Characteristics and Behavior



Firms with Web sites track user movement through the
pages and use these data to improve site effectiveness.
http://stats.nd.edu:1099/remote_login.pl?
By knowing:




How long users spend on each page,
How long they are at the site,
What path they take through the site.
Web developers can reorganize pages and content
frequently and in a timely manner.
Customer Characteristics and Behavior



Firms can identify the Web site users visited immediately
before and after the firm’s site.
Provides competitive insights, especially if a user is
reviewing particular products.
These data are all generated automatically in the Web site
logs and can be part of a firm’s marketing databases.
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
Source 2: Secondary Data

When are they used?



But:




Need specific information not available in company or partner
databases,
Need information that can be collected more quickly and less
expensively than primary data.
They may not meet the e-marketer’s information needs, because they
were gathered for a different purpose,
The quality of secondary data need to be checked,
They are often out of date.
Internet easy access to secondary data about environmental
factors and trends.
Source 2: Secondary Data


Marketing intelligence = Marketers continually scan the
firm’s macro-environment for threats and opportunities.
What type of information do marketing managers need?
 Demographic trends,
 Competitors,
 Technological forces,
 Natural resources,
 Social and cultural trends,
 World and local economies,
 Legal and political environments.
Publicly Generated Data

Most U.S. agencies provide online information in their respective areas.

Many global organizations, such as the International Monetary Fund
(www.imf.org) are also good sources of data.

Most universities provide extensive information through their libraries,
and many faculty post their research results online.


Industry- or profession-specific information is available at the sites of
professional associations such as the American Marketing Association
(www.ama.org).
Most of this information is free and available to all Internet users.
Web site
Information
Stat-USA
www.stat-usa.gov
U.S. Department of Commerce source of
international trade data.
U.S. Patent Office www.uspto.gov
Provides Trademark and Patent Data for Businesses.
World Trade Organization
www.wto.org
World Trade Data.
International Monetary Fund
www.imf.org
Provides information on many social issues and
projects.
Securities and Exchange
Commission www.sec.gov
Edgar database provides financial data on U.S.
public corporations.
Small Business Administration
www.sbaonline.gov
Features information and links for small business
owners.
University of Texas at Austin
advweb.cocomm.utexas.edu/world
Ad World with lots of links in the ad industry.
Federal Trade Commission
www.ftc.gov
Shows regulations and decisions related to consumer
protection and anti-trust laws.
U.S. Census
www.census.gov
Provides statistics and trends about the U.S.
population.
Public Sources of Data in the U.S.
Privately Generated Data





Many firms and individuals put timely information on Web sites.
Company Web sites provide a great overview of the firm’s mission,
products, partners, and current events.
Individuals often maintain sites with useful information about
companies as well.
Large research firms put sample statistics and press releases on their
sites or offer e-mail newsletters.
Infomediaries: News aggregators are firms that monitor a number of
media sources, presenting selected stories to users either by “pushing”
stories to the user’s desktop via e-mail, or by allowing users to “pull” it
from a specially tailored Web site.
Web site
Information
AC Nielsen Corporation
www.acnielsen.com
Television audience, supermarket scanner data and more.
The Gartner Group
www.gartnergroup.com
Specializes in e-business and usually presents highlights of its
latest findings on the Web site.
Information Resources, Inc.
www.infores.com
Supermarket scanner data and new product purchasing data.
Arbitron www.arbitron.com
Local-market and Internet radio audience data.
The Commerce Business Daily
www.cbd.savvy.com
Lists of government requests for proposals online.
Simmons Market Research Bureau
www.smrb.com
Media and ad spending data.
Dun & Bradstreet
www.dnb.com
Database on more than 50 million companies worldwide.
Dialog
library.dialog.com
Access to ABI/INFORM, a database of articles from 800+
publications.
Hoovers Online
www.hoovers.com
Business descriptions, financial overviews, and news about
major companies worldwide.
Sampling of Sources of Privately Generated Data in the U.S.
Online Databases


Commercial online databases contain publicly available
information that can be accessed via the Internet.
Thousands of databases are available online:






News,
Industry data,
Encyclopedias,
Airline routes and fares,
Yellow Page directories, etc.
Instead of going to the library, marketers can simply
download the electronic versions of articles.
Competitive Intelligence

Competitive intelligence (CI) = analyzing the industries in
which a firm operates as input to the firm’s strategic
positioning and to understand competitor vulnerabilities.

40% of all firms regularly conduct CI activities

Intelligence cycle:
1.
2.
3.
4.
5.
Define intelligence requirements.
Collect and organize information.
Analyze by applying information to the specific purpose and
recommending action.
Report and inform others of the findings.
Evaluate the impact of intelligence use and suggest process
improvements.
Competitive Intelligence

Sources of CI:

Competitor press releases,
New products,
Alliances and co-brands,
Trade show activity,

Advertising strategies.



Competitive Intelligence

The Internet simplified CI:

Competitive marketing strategies: observed on competitors’ Web sites

Web sites linked to competitors’ pages: type companyname.com in search
tools. And then wonder why are these sites linking to the competitor?

Analyze a firm’s Web site log to see what Web page users visited immediately
prior to and after the site.


Third-party, industry-specific sites can also provide information about
competitive activities. Company profiles for public firms are available in the
SEC’s online EDGAR database + investment firm sites.
User conversation: e-mail lists on every imaginable topic. Most of the list
members are professionals in their industries and combing through the many
e-mail queries and responses can yield insights.
Information Quality



Caution: Secondary and primary data are subject to many
limitations.
Be objective + skeptical when reviewing and using
Internet-based information.
Why?
 Because anyone can easily publish on the Web without
being reviewed or screened for accuracy or
appropriateness.
 Don’t be seduced by good design: The best-designed
sites may not be the most accurate or credible, and vice
versa.
Fake Web page created to show just how easy it is to get fooled.
A Real Web Page?
Source: Laura B. Cohen and Trudi E. Jacobson, http://library.albany.edu/briggs/addiction.html
Evaluate the quality of secondary data
collected online:

Author. A site published by a government agency or well-known corporation
has more credibility than one by an unknown author.

Is the site author is an authority on the Web site topic?

When the site was last updated?

How comprehensive is the site? Does it cover only one aspect of a topic, or
does it consider the broader context?

Validate the research data by finding similar information at other sources on
the Internet or in hard copy at the library. If the same statistics are not
available elsewhere, look for other ways to validate the data.

Compare sites that cover the same topic.

Check the site content for accuracy.
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
Source 3: Primary Data

Primary data = information gathered for the first time to solve a
particular problem.





When secondary data are not available managers may decide to collect
their own information.
They are more expensive and time-consuming to gather than secondary
data.
They are current and more relevant to the marketer’s specific problem.
They are proprietary = unavailable to competitors.
Each primary data collection method can provide important information,
as long as e-marketers understand the limitations. Remember that
Internet research can only collect information from people who use the
Internet, which leaves out a huge portion of the population.
Source 3: Primary Data
Electronic sources of primary data collection:







The Internet:
Focus groups, observation, in-depth interviews (IDI), and survey
research.
Online panels: popular survey research method _ single-source
research.
Real-time profiling at Web sites and computer client-side or
server-side automated data collection.
The real-space
Refers to technology-enabled approaches to gather information
offline that is subsequently stored and used in marketing databases.
Techniques = bar code scanners and credit card terminals at brickand-mortar retail stores, computer entry by customer service reps
while talking on the telephone with customers.
Primary Research Steps
1.
Research problem. Specificity is vital.
2.
Research plan.




Research approach. Choose from experiments, focus groups,
observation techniques, in-depth interviews, and survey research,
or nontraditional real-time and real-space techniques.
Sample design. Select the sample source and number of desired
respondents.
Contact method. Telephone, mail, in person, via the Internet.
Instrument design. For survey = a questionnaire. For other
methods = a protocol to guide the data collection.
Primary Research Steps
3.
Data collection. Gather the information according to plan.
4.
Data analysis: Analyze the results in light of the original problem.
5.
Distribute finding / add to the MIS. Research data might be
Use statistical software packages for traditional survey data analysis
or data mining to find patterns and other information in databases.
placed in the MIS database and be presented in written or oral form
to marketing managers.
5 Steps for Primary Research
Research
Problem
Primary Research Steps
Research
Plan
Data
Collection
Data
Analysis
Distribute
Results
Some typical e-marketing research problems
that electronic data can help solve.
Online Retailers
Web Sites
Improve online merchandising
Forecast product demand
Test new products
Test various price points
Test co-brand and partnership
effectiveness
Measure affiliate program effectiveness
Pages viewed most often
Increase site “stickiness” (stay longer)
Test site icons and organization
Path users take through the site—is it
efficient?
Site visit overall satisfaction
Customers and Prospects
Promotions
Identify new market segments
Test shopping satisfaction
Profile current customers
Test site customization techniques
Test advertising copy
Test new promotions
Check coupon effectiveness
Measure banner ad click-through
Typical Research Problems for E-Marketers
Internet-Based Research Approaches





The Internet is fertile ground for primary data collection.
Why? Declining cooperation from consumers using
traditional research approaches. Telephone survey refusal
rates = 40- 60%.
Increasing number of consumers online:
Appropriate to conduce research using this inexpensive and
quick method makes sense.
In North America, 71% of all research firms use various
online methodologies.
Proportion Using
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Online
surveys
E-mail
surveys
Online
focus
groups
Bulletin
Web site
board focus
use
groups
measures
Proportion of 200 Firms Using Online Primary Research Source: “Big Bytes” (2001)
Internet-Based Research Approaches

Marketers are learning how to combine online and offline
data effectively and efficiently.

This involves merging data from:




Older legacy systems,
Incoming call centers,
Retailer bar code scanners,
Government statistics, and many other places.
Internet-Based Research Approaches



Web data = exposure to ads, sites visited, and surfing and
purchasing frequency and patterns.
TO COMBINE WITH: Offline panel data
= Actual packaged goods purchased at brick-and-mortar
grocery stores, as well as volume purchased, timing of
purchases, promotional effectiveness, and brand loyalty.
Primary data are collected online using experiments, focus
groups, observations, in-depth interviews, and survey
research, as discussed in the following sections.
Online Experiments

Experimental research attempts to test cause-and-effect
relationships:







A researcher will select subjects,
Randomly put them into two or more groups,
Expose each group to different stimuli.
Measures responses to the stimuli = a questionnaire, to
determine if differences exist among the groups.
If the experiment has been carefully controlled, group
differences can be attributed to the stimuli.
These effects must be tested in other situations and with
other subjects to determine their degree of generalizability.
Marketers can easily test alternative Web pages, banner ads,
and promotional offers online.
Online Focus Groups

Focus group research:


A qualitative methodology that attempts to collect indepth information from a small number of participants.
Used to help marketers understand important feelings
and behaviors prior to designing survey research. 1530% of advertising agencies and market research firms
use the Internet to conduct online focus groups.
Online Focus Groups

Advantages over traditional focus groups:

The Internet can bring together people who do not live in the same
geographic area.

Because participants type their answers at the same time, they are
not influenced as much by what others say.


Researchers can show participants animated ads, demonstrate
software, or use other multimedia stimuli to prompt group
discussion.
Quicker and less expensive to operate than offline versions.
Online Focus Groups

Disadvantages:

Can accommodate only four to eight participants at a time
(traditional groups 10 – 12).

Nonverbal communication is lost online.

The authenticity problem = Without seeing people in person, it is
difficult to be sure they are who they say they are (need to verify
respondent authenticity).

Technical problems can also stall an online group.

Subjects use stronger positive and negative words online than in
other modalities.
Online Focus Groups

Procedure for online focus groups:
1.
2.
3.
4.
Contact potential participants via e-mail, asking them to go to a Web site
and answer screening questions.
Send e-mail messages to qualified users, offering them money to
participate in the group.
Have clients and four to eight participants appear at an online site at the
appointed time and day, and have all greeted electronically by the
moderator.
Split the screen into two vertical portions: On the right, the moderator
types questions and the participants type responses. Multimedia can also
be presented on the right side. The left side is a “back room” where clients
can communicate with each other and the moderator through their
keyboards as the group progresses.
Online Observation

Observation research monitors people’s behavior by watching them in
relevant situations.

BUT observations of a small number of people cannot be used to
describe how all people might act.


Important form of observational research = monitoring consumer
chatting and e-mail posting through chat rooms, bulletin boards, or
mailing lists.
The Usenet = 35,000 newsgroups, each a forum for public discussion
on a specific topic.



People post articles to newsgroups for others to read.
Discussions range from the meaningful to the absurd, but marketing
planners can learn about products and industries by monitoring discussions.
To monitor customer chat are to provide space on the firm’s Web site or
to subscribe to e-mail lists on product-related topics.
Consumers Discussing Product in the Usenet Source: www.deja.com
Online In-Depth Interviews (IDIs)



Semi-structured conversation with a small number of subjects:
 The interviewer develops a set of questions
 Encourages the subject to speak at length on particular issues
through careful probing techniques.
Web site usability studies to watch users as they click through the
firm’s Web site:
 The subject and interviewer are in the same room while the
subject performs specified tasks on the computer.
IDIs are better conducted in person; BUT e-mail can facilitate
communication when subjects live far from the researcher.
Online Survey Research

E-marketers conduct surveys by:
 Sending questionnaires to individuals via e-mail,
 Posting a survey form on the Web or an electronic bulletin board.
E-Mail Surveys

To prepare an e-mail survey, an organization can:
 Draw a sample of e-mail addresses from its database,
 Purchase a list,
 Gather e-mail addresses from the Web or Usenet newsgroups.


Select a specialized + representative group to research to control
who gets the questionnaire.
After sending a questionnaire, the researcher can send e-mail
reminders to participants who have not yet responded: response
rates are just as high for e-mail surveys as for traditional contact
methods.
Online Survey Research
Problem with e-mail survey:
= Consumers do not type their answers in the appropriate places
= Increase the chance of error


E-mail survey research:


Is diminishing in use as a contact method in favor of Webbased surveys,
Is still preferable in countries where users pay by the hour for
Internet connection because e-mail may be answered offline
whereas a user must be online to complete a multipage Web
form survey.
Online Survey Research
Web Surveys

Many companies post questionnaires on their Web pages.

Purpose:



Gather statistics about a site’s visitors (e.g., Web site registration);
More formal survey research.
When not sampling Web site users, researchers:


Post a Web survey
Send e-mail and use other forms of publicity to direct respondents
to the Web site.
Online Survey Research
Web Surveys

The best response rates come from:




Members of e-mail lists = have a special interest in the topic.
Customers and prospects on e-mail lists.
Advertising on electronic bulletin boards or via banner ads
and links from other Web sites will drive a very small
amount of traffic to a Web survey.
Response rates to online surveys are as good as or better
than surveys using traditional approaches, sometimes
reaching as much as 40%.
An example of Web Survey
Open ended
Radio buttons: Choose one
Mitchell and Strauss Web Survey
Radio buttons:
Choose all
that apply
Mitchell and Strauss Web Survey
Online Survey Research Advantages



Fast and inexpensive:
 Instantaneously worldwide delivery of questionnaires,
 No cost for postage or an interviewer,
 No printing, collating, and mailing time,
 Those who complete the questionnaires = in the first three days,
 Easy to send multiple reminders if using e-mail invitations.
Web surveys reduce errors:
 Technique reduces the complexity and time involved for
respondents,
 Respondents enter their answers= eliminates data entry errors
found in traditional methods when converting answers from paper
questionnaires.
Respondents answer questions more honestly and openly on a
computer than when an interviewer is present.
Online Survey Research Disadvantages
Sample representativeness and measurement validity
= No ability to draw a random sample
= Researchers cannot generalize results to the entire
population being studied.


Online research entails several measurement issues:


Different browsers, computer screen sizes, and resolution settings
= researchers worry that colors will look different and measurement
scales will not display properly online.
A comparison study between telephone and online surveys found
that online users were less likely to use the two extreme scale points
on a five-point scale.
Online Survey Research Disadvantages





Researchers have not yet found proof to support the explanation of
differences among the various survey methodologies (demographic and
other differences between online and offline populations).
The firm has no control over who responds (for Web surveys and
questionnaires posted on bulletin boards).
Respondent authenticity: 20-50% of Web users have posed as the
opposite sex on the Internet, and children often pose as adults online.
Duplicate responses to online surveys.
Survey forms are not nearly as easy to create as most other types of
Web pages
Advantages
Disadvantages
Fast and inexpensive
Sample selection / generalizability
Diverse, large group of Net users
worldwide to small specialized niche
Measurement validity
Self-selection bias
Computer entry reduces researcher
data entry errors
Respondent authenticity uncertain
Honest responses to sensitive
questions
Frivolous or dishonest responses
Anyone-can-answer, invitation-only,
or password protected
Duplicate submissions
Electronic data are easy to tabulate
Steep learning curve
Less interviewer bias
Advantages and Disadvantages of Online Survey Research
Online Panels




Used to combat sampling and response problems.
Called opt-in communities = a panel of people who have
agreed to be the subject of marketing research (paid
+receive free products).
Panel participants complete extensive questionnaires to
have information about their characteristics and behavior.
When panel members are asked to test product, or are
given questionnaires to complete, researchers can correlate
results with already collected demographic data.
Online Panels

An advantage to large panels
= smaller groups of members can be targeted based on
behavior or demographics.

Disadvantage:


Panel is usually more expensive than traditional methods
of sample generation.
Sometime the generalizability of survey results is
questionable.
Ethics of Online Research
A “gift culture”
= give something to respondents as appreciation for
participating to increase the response rate:



Offer free products or cash.
Donate money to charities selected by respondents
Ethics of Online Research

Ethical concerns regarding survey research on the Internet:




Respondents are increasingly upset with unsolicited e-mail
requesting survey participation,
Some researchers “harvest” e-mail addresses from newsgroups
without permission,
Some companies conduct “surveys” for the purpose of building a
database for later solicitation (marketing research is different from
marketing promotion),
Privacy of user data is a huge issue in this medium, because it is
relatively easy and profitable to send electronic data to others via
the Internet.
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
Other Technology-Enabled
Approaches

The Internet is an excellent place to observe user behavior


The technology automatically records actions in a format that can be
easily, quickly, and mathematically manipulated for analysis.
Nontraditional technology-enabled approaches:


Client-side data collection
Server-side data collection:


Real-time profiling at Web sites
These techniques = interesting + unusual


They did not exist prior to the Internet.
They allow marketers to make quick and responsive changes in Web
pages, promotions, and pricing.
Client-Side Data Collection
= Collecting information about consumer surfing right at
the user’s PC.




Use cookies when a user visits a Web site.
They track user surfing.
They help marketers present appropriate promotions and
Web pages to individual users.
Measuring user surfing patterns by installing a PC Meter on
the computers of a panel of users and tracking the user
clickstream.
Server-Side Data Collection

Web site log software generates reports on:



Numbers of users who view each page,
Location of site visited prior to the firm’s site,
What users buy at a site.

Use = to make frequent changes in Web pages and promotional
offers.

Real-time profiling = when special software:




Tracks a user’s movements through a Web site,
Compiles and reports on the data at a moment’s notice.
Allows marketers to analyze consumer online behavior and make
instantaneous adjustments to site promotional offers and Web pages.
Real-time profiling is not cheap—one estimate puts the software at
$150,000 to start and $10,000 a month thereafter.
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
Real-Space Approaches

Real-space primary data collection occurs at offline points
of purchase with:



Smart card and credit card readers, interactive point of sale
machines (iPOS), and bar code scanners are mechanisms for
collecting real-space consumer data.
Offline data, when combined with online data, paint a
complete picture of consumer behavior for individual retail
firms.
UPC used primarily for inventory management to:


Reduce accounting inventory levels automatically
Send communication to suppliers for replenishment of physical
goods.
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
Marketing Databases and
Data Warehouses


Regardless of whether data are collected online or offline, they
are moved to various marketing databases.
 Product databases = product features, prices, and inventory
levels.
 Customer databases = customer characteristics and behavior.
 Transaction processing databases are important for
moving data from other databases into a data warehouse.
Data warehouses:
 Store entire organization’s historical data.
 Designed specifically to support analyses necessary for
decision making.
 The data in a warehouse are separated into more specific
subject areas (called data marts) and indexed for easy use.
Marketing Databases and
Data Warehouses

Web sites content management is a hot new area:


Web sites are complex, including tens of thousands of pages
from or for many different corporate departments.
Software vendors are attempting to solve the Web site
maintenance problem. These programs have features such as
press release databases that automatically put the newest
stories on a designated page and archive older stories,
deleting them on a specified date.
UPC Scanner
Product Database
Transaction Database
Data Warehouse
Customer Database
Real-Space Data Collection and Storage Example
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
Data Analysis and Distribution

Data collected from all customer touch points are:



Stored in the data warehouse,
Available for analysis and distribution to marketing decision makers.
Analysis for marketing decision making:





Data mining = extraction of hidden predictive information in large
databases through statistical analysis. Here, marketers don’t need to
approach the database with any hypotheses other than an interest
in finding patterns among the data.
Patterns uncovered by marketers help them to:
Refine marketing mix strategies,
Identify new product opportunities,
Predict consumer behavior.
Data Analysis and Distribution








Customer profiling = uses data warehouse information to help
marketers understand the characteristics and behavior of specific
target groups.
Understand who buys particular products,
How customers react to promotional offers and pricing changes,
Select target groups for promotional appeals,
Find and keep customers with a higher lifetime value to the firm,
Understand the important characteristics of heavy product users,
Direct cross-selling activities to appropriate customers;
Reduce direct mailing costs by targeting high-response customers.
Data Analysis and Distribution








RFM analysis (recency, frequency, monetary) = scans the database
for three criteria.
When did the customer last purchase (recency)?
How often has the customer purchased products (frequency)?
How much has the customer spent on product purchases (monetary
value)?
=> Allows firms to target offers to the customers who are most
responsive, saving promotional costs and increasing sales.
Report generators:
= automatically create easy-to-read, high-quality reports from data
warehouse information on a regular basis.
Possible to specify information that should appear in these
automatic reports and the time intervals for distribution.
Overview
Data Drives Strategy
The Learning Organization
From Data to Knowledge
Marketing Knowledge Management
The Electronic Marketing Information System
Source 1: Internal Records
Source 2: Secondary Data
Source 3: Primary Data
Other Technology-Enabled Approaches
Real-Space Approaches
Marketing Databases and Data Warehouses
Data Analysis and Distribution
Knowledge Management Metrics
Knowledge Management Metrics

Marketing research is not cheap:



Need to weigh the cost of gaining additional information against the
value of potential opportunities or the risk of possible errors from
decisions made with incomplete information.
Storage cost of all those terabytes of data coming from the Web.
Two metrics are currently in widespread use:

ROI. Companies want to know:



Why they should save all those data.
How will they be used, and will the benefits in additional revenues or
lowered costs return an acceptable rate on the storage space
investment?
Total Cost of Ownership (TCO). Includes:


Cost of hardware, software, and labor for data storage.
Cost savings by reducing Web server downtime and reduced labor
requirements.
Key Terms
•Knowledge Management
(KM)
•Marketing Information
System (MIS)
•Data warehouse
•Product database
•Secondary data
•Bar code scanner
•Primary data
•Focus groups
•Universal Product Codes
(UPC)
•Marketing intelligence
•Real-space
•In-depth interviews
•Online panels
•Real-time profiling
•Client-side data collection
•Server-side data collection
•Respondent authenticity
•Usenet
•Opt-in
•Clickstream
•Transaction processing
databases
•Data mining
•Customer profiling
•RFM analysis
•Total Cost of Ownership
(TCO)
Review Questions
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
What are the three main sources of data for solving marketing
research problems?
Contrast primary with secondary data and explain the
advantages and disadvantages of each.
What is competitive intelligence and what are some sources of
online CI data?
Why and how do e-marketers evaluate the quality of information
on a Web site?
What are the strengths and weaknesses of the Internet for
primary and secondary data collection?
How do marketers turn marketing data into marketing
knowledge?
What is a learning organization?
What is real-space data collection? Why is it important?
Is data mining possible without a data warehouse? Why or why
not?
Give an example of how data mining uncovers new knowledge.
Identify the steps in a primary marketing research project.
Discussion Questions
1.
2.
3.
4.
5.
6.
What online research method(s) would you use to test a new
product concept? Why?
What online research method(s) would you use to test the brand
image of an existing product? Why?
Of the ethical issues mentioned in the chapter, which are you most
concerned about as a consumer? Why?
Can you think of a marketing research technique that could not be
supported online? Explain your answer.
What are the current limitations for undertaking market research on
the general population on the Net? How might these be overcome
now and in the future?
Given that the cost of sending an e-mail questionnaire to 10,000
people is no higher than the cost of sending it to 10 people, why
would market researchers bother devising samples if they were
planning to undertake some research online?