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1. Relate the information flows in Figure 8-1 to a bakery near your college or university.
A bakery gathers information from both consumers and suppliers. Consumers provide information through price levels from competing retailers, surveys, complaints, data on purchases, etc. Suppliers provide information to bakeries based on surveys of preferences of consumers, data on seasonality, reports on what types of breads and pastries sell best at competing outlets, etc. The supplier can also provide information to consumers in informative brochures and on a well-integrated Web site. The retailer provides information to his suppliers (based on what sells best, consumer complaints) and to his customers (through advertising, personal selling, an informative Web site).
The bakery agency can also use the Web to determine featured selections from competing retailers, the competitors' price levels, existence of loyalty programs, etc.
2. What would you recommend to guard against this comment? “Traditionally, retailers and suppliers just don’t like to share supply-chain information with each other.”
This comment refers to friction and a lack of trust among channel members. This can be overcome through relationship retailing, increasing awareness that information benefits all parties (through fewer markdowns, less returned merchandise, lower necessary inventory, fewer stockouts, and early awareness of problems and opportunities), and through assuring retailers and suppliers that the information will not be shared with competitors.
3. Can a retailer ever have too much information? Explain your answer.
As long as the retailer has the capability to understand and process all of the information, there would be no limit to its value. The information should be accurate, relevant, and timely. The retailer should understand how it can be used in relation to the retailer’s overall strategy.
4. How could a small retailer devise a retail information system?
A small retailer could invest in a personal computer and store information about purchases, sales, customers, etc. If the resources are available, the retailer could invest in a point-of-sale system. A small retailer could also collect, store, and retrieve important data manually or through many programs designed to operate on personal computers.
Chapter 8 Information Gathering and Processing in Retailing
Data that could be easily maintained on a personal computer system include customer data (purchases, address, credit card number), suppliers (past purchases, address, terms), inventory data, and retail planning information.
5. Explain the relationship among the terms data warehouse, data mining, and micromarketing. How can f.y.e. (for your entertainment, www.fye.com) apply these concepts?
Data warehouses are the electronic storage facilities that contain copies of a firm’s databases. This information is accessible to employees at any location. Data mining is a marketing research tool that involves the in-depth analysis of information to gain specific insights about customers, product categories, vendors, and so forth. Micromarketing is an application of data mining, whereby the retailer uses differentiated marketing and develops focused retail strategy mixes for specific customer segments, sometimes finetuned for the individual shopper and specific retail location.
F.y.e.com can use data warehousing to enable multiple employees to search through its database for important marketing information on past purchases, prices paid, and the popularity of specific DVDs, music, and games. Data mining can generate suggestions for cross-selling or for special promotions to selected customers. Micromarketing can look at marketing opportunities in small geographic areas where residents have interest in specific types of games or prefer for new versus used games.
6. What are the opportunities and potential problems with electronic data interchange (EDI) for a drugstore chain?
Through EDI, retailers and their suppliers exchange information concerning inventory levels, delivery times, unit sales, etc. This leads to enhanced decision-making capabilities, better inventory control, and greater responsiveness to consumer demand trends.
Potential problems associated with EDI are lack of trust among channel partners and technological difficulties in fully implementing EDI (such as difficulties in scanning and scanning errors).
7. Cite the major advantages and disadvantages of secondary data.
The major advantages of secondary data are that they are inexpensive (there are no data collection costs), data can be collected quickly, several sources are available, there is better access to information, and it is helpful in problem definition. The major disadvantages are lack of fit, lack of currency, level of accuracy, objectivity of source, conflicting results, and unknown methodology.
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8. As a fitness club owner, what kinds of secondary data would you use to learn more about your industry and consumer trends in leisure activities?
Secondary data that is important for the fitness owner would include seasonality, the popularity of discount plans, different facilities (pool, spa), and equipment (treadmills, stair masters, elliptical).
The secondary data can include industry-based magazines, articles in mass media, and government data.
9. Cite the benefit of each primary data method: survey, observation, experiment, and simulation.
Survey Quantitative data can be subject to statistical analysis, large sample size. Observation Subjects do not knowing they are being studied. Experiment Cause and effect can be determined. Simulation Mathematical models developed. Ease of manipulating models is based on different data
10. Develop a 10-item semantic differential for a local furniture store to judge its image. Who should be surveyed? Why?
mixture of current customers and noncustomers (including former customers) should be surveyed to determine the perceived image by both segments. Important factors in sample choice should include location (e.g., neighborhood shopping center, freestanding) and season.
11. Why would a retailer use mystery shoppers rather than other forms of observation? Are there any instances when you would not recommend their use? Why or why not?
Retail Management: A Strategic Approach, 13e (Berman/Evans/Chatterjee)
Chapter 8 Information Gathering and Processing in Retailing
Through the use of mystery shoppers, retailers can obtain a detailed description of the level of customer service and salesperson knowledge. This method is preferred to other forms of observation because using mystery shoppers do not require the use of hidden cameras or two-way mirrors that might promote concern for privacy.
The use of mystery shoppers can be very beneficial to a retailer. However, a retailer should be very cautious of the findings. A retailer should evaluate a mystery shopper’s training, impartiality, the checklists used to assess a salesperson’s performance, etc.
12. Why do you think that “virtual shopping” has not taken off faster as a research tool for retailers?
Virtual shopping can be used to simulate behavior that is close to reality. With this advanced technology, retailers can engage in simulated studies where they determine the effect of pricing, packaging, shelf location, assortment, and availability of substitutes on purchase behavior. Virtual shopping provides a realistic projection of what it is like to shop in a retail establishment with a large variety of products.
The use of virtual shopping is limited due to the need for sophisticated training for research personnel, as well as the limited availability of virtual shopping software.
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