Structure Of The Chapter
The nature of secondary sources of information
The problems of secondary sources
Sources of information
Internal sources of secondary information
External sources of secondary information
The information super-highway
Marketing information must be timely, organised, useful and in a simple form if it is to ease decision making. It should also be easily manipulated to satisfy the changing and ad hoc requirements of management for information. There is more to marketing information than marketing research. Indeed, marketing research is a subsystem of the marketing information system. A Marketing Information System (MIS) is a structure within an organisation designed to gather, process and store data from the organisation's external and internal environment and to disseminate this in the form of information to the organisation's marketing decision makers. The activities performed by an MIS and its subsystems include information discovery, collection, interpretation (which may involve validation and filtering), analysis, and intra-company dissemination (storage, transmission, and/or dumping).
The objectives of this chapter are:
· To convince the reader of the benefits of beginning any marketing research with a thorough search of secondary sources of data
· To articulate the advantages of secondary data
· To highlight the potential errors which can be hidden within secondary data
· To outline some of the main internal and external sources of data available to commercial enterprises, and
· To help the reader to recognise the transition, in marketing research, from a dependence upon published sources of secondary data to electronically stored secondary data.
At the outset of the chapter a strong case is made for studying secondary data before engaging in primary research. The potential benefits of beginning any study with secondary data are outlined, including the prospect that in some cases possession of relevant secondary data may obviate the need for primary research to be undertaken at all. This discussion is followed by an overview of the questions that should be asked when evaluating secondary sources and data in terms of their validity and accuracy. Thereafter, the principal internal and external sources of secondary data are described. The final section of this chapter briefly points towards future developments in the storage and retrieval of secondary data. Mention is made of electronic systems like the Internet and CD-ROMs.
Secondary data is data which has been collected by individuals or agencies for purposes other than those of our particular research study. For example, if a government department has conducted a survey of, say, family food expenditures, then a food manufacturer might use this data in the organisation's evaluations of the total potential market for a new product. Similarly, statistics prepared by a ministry on agricultural production will prove useful to a whole host of people and organisations, including those marketing agricultural supplies.
No marketing research study should be undertaken without a prior search of secondary sources (also termed desk research). There are several grounds for making such a bold statement.
· Secondary data may be available which is entirely appropriate and wholly adequate to draw conclusions and answer the question or solve the problem. Sometimes primary data collection simply is not necessary.
· It is far cheaper to collect secondary data than to obtain primary data. For the same level of research budget a thorough examination of secondary sources can yield a great deal more information than can be had through a primary data collection exercise.
· The time involved in searching secondary sources is much less than that needed to complete primary data collection.
· Secondary sources of information can yield more accurate data than that obtained through primary research. This is not always true but where a government or international agency has undertaken a large scale survey, or even a census, this is likely to yield far more accurate results than custom designed and executed surveys when these are based on relatively small sample sizes.
· It should not be forgotten that secondary data can play a substantial role in the exploratory phase of the research when the task at hand is to define the research problem and to generate hypotheses. The assembly and analysis of secondary data almost invariably improves the researcher's understanding of the marketing problem, the various lines of inquiry that could or should be followed and the alternative courses of action which might be pursued.
· Secondary sources help define the population. Secondary data can be extremely useful both in defining the population and in structuring the sample to be taken. For instance, government statistics on a country's agriculture will help decide how to stratify a sample and, once sample estimates have been calculated, these can be used to project those estimates to the population.
Whilst the benefits of secondary sources are considerable, their shortcomings have to be acknowledged. There is a need to evaluate the quality of both the source of the data and the data itself. The main problems may be categorised as follows:
The researcher has to be careful, when making use of secondary data, of the definitions used by those responsible for its preparation. Suppose, for example, researchers are interested in rural communities and their average family size. If published statistics are consulted then a check must be done on how terms such as "family size" have been defined. They may refer only to the nucleus family or include the extended family. Even apparently simple terms such as 'farm size' need careful handling. Such figures may refer to any one of the following: the land an individual owns, the land an individual owns plus any additional land he/she rents, the land an individual owns minus any land he/she rents out, all of his land or only that part of it which he actually cultivates. It should be noted that definitions may change over time and where this is not recognised erroneous conclusions may be drawn. Geographical areas may have their boundaries redefined, units of measurement and grades may change and imported goods can be reclassified from time to time for purposes of levying customs and excise duties.
When a researcher conducts fieldwork she/he is possibly able to estimate inaccuracies in measurement through the standard deviation and standard error, but these are sometimes not published in secondary sources. The only solution is to try to speak to the individuals involved in the collection of the data to obtain some guidance on the level of accuracy of the data. The problem is sometimes not so much 'error' but differences in levels of accuracy required by decision makers. When the research has to do with large investments in, say, food manufacturing, management will want to set very tight margins of error in making market demand estimates. In other cases, having a high level of accuracy is not so critical. For instance, if a food manufacturer is merely assessing the prospects for one more flavour for a snack food already produced by the company then there is no need for highly accurate estimates in order to make the investment decision.
Researchers have to be aware of vested interests when they consult secondary sources. Those responsible for their compilation may have reasons for wishing to present a more optimistic or pessimistic set of results for their organisation. It is not unknown, for example, for officials responsible for estimating food shortages to exaggerate figures before sending aid requests to potential donors. Similarly, and with equal frequency, commercial organisations have been known to inflate estimates of their market shares.
The reliability of published statistics may vary over time. It is not uncommon, for example, for the systems of collecting data to have changed over time but without any indication of this to the reader of published statistics. Geographical or administrative boundaries may be changed by government, or the basis for stratifying a sample may have altered. Other aspects of research methodology that affect the reliability of secondary data is the sample size, response rate, questionnaire design and modes of analysis.
Most censuses take place at 10 year intervals, so data from this and other published sources may be out-of-date at the time the researcher wants to make use of the statistics.
Whenever possible, marketing researchers ought to use multiple sources of secondary data. In this way, these different sources can be cross-checked as confirmation of one another. Where differences occur an explanation for these must be found or the data should be set aside.
Figure 2.1 presents a flowchart depicting the decision path that should be followed when using secondary data. As can be seen, the flowchart divides into two phases. The early stages of the flowchart relate to the relevance of the data to the research objectives. The later stages of the flowchart are concerned with questions about the accuracy of secondary data.
Figure 2.1 Evaluating secondary data
Secondary sources of information may be divided into two categories: internal sources and external sources.
Sales data : All organisations collect information in the course of their everyday operations. Orders are received and delivered, costs are recorded, sales personnel submit visit reports, invoices are sent out, returned goods are recorded and so on. Much of this information is of potential use in marketing research but a surprising amount of it is actually used. Organisations frequently overlook this valuable resource by not beginning their search of secondary sources with an internal audit of sales invoices, orders, inquiries about products not stocked, returns from customers and sales force customer calling sheets. For example, consider how much information can be obtained from sales orders and invoices:
· Sales by territory
· Sales by customer type
· Prices and discounts
· Average size of order by customer, customer type, geographical area
· Average sales by sales person and
· Sales by pack size and pack type, etc.
This type of data is useful for identifying an organisation's most profitable product and customers. It can also serve to track trends within the enterprise's existing customer group.
Financial data: An organisation has a great deal of data within its files on the cost of producing, storing, transporting and marketing each of its products and product lines. Such data has many uses in marketing research including allowing measurement of the efficiency of marketing operations. It can also be used to estimate the costs attached to new products under consideration, of particular utilisation (in production, storage and transportation) at which an organisation's unit costs begin to fall.
Transport data: Companies that keep good records relating to their transport operations are well placed to establish which are the most profitable routes, and loads, as well as the most cost effective routing patterns. Good data on transport operations enables the enterprise to perform trade-off analysis and thereby establish whether it makes economic sense to own or hire vehicles, or the point at which a balance of the two gives the best financial outcome.
Storage data: The rate of stockturn, stockhandling costs, assessing the efficiency of certain marketing operations and the efficiency of the marketing system as a whole. More sophisticated accounting systems assign costs to the cubic space occupied by individual products and the time period over which the product occupies the space. These systems can be further refined so that the profitability per unit, and rate of sale, are added. In this way, the direct product profitability can be calculated.
The marketing researcher who seriously seeks after useful secondary data is more often surprised by its abundance than by its scarcity. Too often, the researcher has secretly (sometimes subconsciously) concluded from the outset that his/her topic of study is so unique or specialised that a research of secondary sources is futile. Consequently, only a specified search is made with no real expectation of sources. Cursory researches become a self-fulfilling prophecy. Dillon et. al3 give the following advice:
"You should never begin a half-hearted search with the assumption that what is being sought is so unique that no one else has ever bothered to collect it and publish it. On the contrary, assume there are scrolling secondary data that should help provide definition and scope for the primary research effort."
The same authors support their advice by citing the large numbers of organisations that provide marketing information including national and local government agencies, quasi-government agencies, trade associations, universities, research institutes, financial institutions, specialist suppliers of secondary marketing data and professional marketing research enterprises. Dillon et al further advise that searches of printed sources of secondary data begin with referral texts such as directories, indexes, handbooks and guides. These sorts of publications rarely provide the data in which the researcher is interested but serve in helping him/her locate potentially useful data sources.
The main sources of external secondary sources are (1) government (federal, state and local) (2) trade associations (3) commercial services (4) national and international institutions.
These may include all or some of the following:
Trade associations differ widely in the extent of their data collection and information dissemination activities. However, it is worth checking with them to determine what they do publish. At the very least one would normally expect that they would produce a trade directory and, perhaps, a yearbook.
Published market research reports and other publications are available from a wide range of organisations which charge for their information. Typically, marketing people are interested in media statistics and consumer information which has been obtained from large scale consumer or farmer panels. The commercial organisation funds the collection of the data, which is wide ranging in its content, and hopes to make its money from selling this data to interested parties.
National and international institutions
Bank economic reviews, university research reports, journals and articles are all useful sources to contact. International agencies such as World Bank, IMF, IFAD, UNDP, ITC, FAO and ILO produce a plethora of secondary data which can prove extremely useful to the marketing researcher.
Advances in computers and telecommunications technology have combined to allow people around the world to exchange information quickly and inexpensively. The computers of organisations, governments and even individuals can be linked to transmit and receive information through an international network of telephone lines, fibre optic cables and satellites. This international network is commonly known as the Internet.
A search of secondary data sources should precede any primary research activity. Secondary data may be sufficient to solve the problem, or at least it helps the reader better understand the problem under study. Secondary data is cheaper and quicker to collect than primary data and can be more accurate.
Before making use of secondary data there is need to evaluate both the data itself and its source. Particular attention should be paid to definitions used, measurement error, source bias, reliability and the time span of the secondary data. Where possible, multiple data sources should be used so that one source can be cross-checked for consistency with another.
A great deal of potentially useful secondary information already exists within enterprises. Typically useful information would be that relating to sales, finance, production, storage and transportation.
Where a serious search of secondary sources is undertaken then the marketing researcher often finds an abundance of relevant material. Searches of printed secondary data should begin with a consultation of referral sources such as directories, handbooks, indexes, and the like.
It will almost certainly become the case, in all parts of the world, that electronic information sources will eventually supersede traditional printed sources. With the advent of Internet and CD-ROM, searches of secondary sources are becoming more efficient and more effective. Computer-based information systems give access to four different types of database bibliographic, numeric, directories and full-text.
Direct product profitability
From your knowledge of the material in this chapter, give brief answers to the following questions:
1. How do Dillon et al. advise researchers to begin their search for secondary data?
2. Name the four types of on-line database mentioned in the textbook.
3. Briefly list the main advantages of secondary data given in the textbook.
4. Why should the reliability of published statistics vary over time?
5. What sort of information would a full-text database contain?
6. Give the full meaning of the abbreviation CD-ROM.
1. Green, P.E. Tull, D.S. and Albaum G (1993) Research methods for marketing decisions, 5th edition, Prentice Hall, p.136.
2. Joselyn, R. W. (1977) Designing the marketing research, Petrocellis/Charter, New York, p.15.
3. Dillon, W.R., Madden, T.. and Firtle, N. H., (1994) Marketing Research in a Research Environment, 3rd edition, Irwin.