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In the lesson, Market Information Management, you'll learn about:

Market segmenting.

Market research, data storage, and data mining.

Primary and secondary data.

Ethics of market information management.

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A market segment is a group of people or companies that have a shared set of characteristics and needs or desires.

A market segment has similarities between individuals in the segment and clear differences from other segments.

Your target market is the particular segment your company is trying to sell your products to.

Market segmenting is separating people into defined groups based on their characteristics, problems, needs, and desires.

Market segmenting helps you define different parts of the market so you can choose which segment or segments you will target with your marketing.

Market identification is the process of identifying your target market.

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Geographic location includes things like the size of the area, the number of people living in the area, and the climate of the area.

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Demographic factors describe the population, such as age, gender, income, employment, education, family size, religion, race, ethnicity, and language.

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Behavior and beliefs include things like lifestyle, values, beliefs, attitude, personality, how the product is used, and how often it is used.

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Market information is information about a market segment. In order to learn about your target market, you will need to collect market information.

Market information management is the process of gathering, organizing, and analyzing market information.

Let us learn more about market information management.

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Market research is the process of gathering market information. The market information you gather from your market research is very important.

It will help you define your target market, figure out what marketing message is likely to appeal to your target market, and decide how to get that message across to them.

Your marketing message and the strategies you use will depend a lot on the marketing information you collect and what you learn from it.

Data is another word for factual information. There are two main types of data that your company can use: primary data and secondary data.

Primary data is data that a researcher or company gathers from customers or potential customers for a specific purpose.

Secondary data is data that was gathered by another person or organization.

Using secondary data usually saves time and money by providing fast access to more data than one person or company could realistically collect on its own.

Because secondary data comes from an outside source, it's important to make sure the data is accurate, reliable, and relevant to what you want to know.

Before starting a research process to gather primary data, it's usually best to look around and find out what secondary data is available, in case there is data already available that will serve your purpose.

You'll learn more about collecting primary and secondary data soon.

After you collect information, you will need to store and organize it so that you can then analyze it to identify patterns and shared characteristics in the market.

You'll learn more about storing data next.

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After you collect data, you need to store it somewhere. A database is a collection of data.

There are many database software programs that can store and organize data for you.

You can use a database to look up and sort information. You can run searches and reports on the information in the database.

EXAMPLE  You might perform a search to find all records that share certain features, such as all customers in a certain state or city.

Database software also usually can produce reports using your data, so you can easily get information about all of your data or about certain groups of data.

Many database software programs can even help you analyze data. You'll learn more about that next.

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Data mining is the process of analyzing data to detect patterns of shared characteristics. These patterns can help you make many important business decisions.

Data mining can help you decide what products to offer and what marketing message to use. It can help you figure out what marketing strategy will work best for reaching your target market.

Data mining can even help you predict which products certain people will be interested in.

Many companies use database software programs to help them with the data mining process. These programs can automatically sort data and create reports for you.

Businesses often use data mining to analyze potential customers and figure out which people are most likely to be interested in a particular product or offer.

Data mining makes it possible for your company to make predictions about what people are likely to buy, based on information you have about them.

This is how companies are able to recommend other products a customer is likely to be interested in.

EXAMPLE  Many online shopping Web sites use data mining in this way. When a customer buys a product or adds it to a cart, the site suggests other items the customer might like. The site suggests items based on the analysis of data from purchases made by other customers.

The more data the company has, the better the predictions usually are.

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Primary data is data that a researcher or company gathers for a specific purpose, such as to achieve a goal or answer a question.

Most companies collect data from their customers or potential customers. This is primary data.

You might collect data directly, by asking the person to provide it. Or you might collect data indirectly, by observing people and their behavior.

Let us learn about some common ways that companies collect primary data.

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Your company will probably collect some customer data when customers buy your product.

If the customer pays in cash, it's possible that you might not collect personal information about that person.

If the customer uses a check, debit card, or credit card, you will have the person's name and some other personal information, such as an address and possibly a phone number.

When customers buy products online, you might also collect e-mail addresses so you can e-mail receipts to them.

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You might collect data directly from customers or potential customers by offering them something they want in exchange for personal information about them.

EXAMPLE  You might offer a newsletter with helpful information in exchange for customer e-mail addresses. Or you might offer special coupons for customers who give you their home addresses.

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A survey is a list of questions that people answer about themselves. You can use a survey to collect data from customers, potential customers, employees, or other groups of people.

A customer profile survey is a list of questions that your customers answer about themselves. It allows you to learn more about the kinds of people your company has attracted so far.

Below are some questions that are sometimes included on a customer profile survey.

The questions you use depend on which information is important to you. Choose questions that you think most people won't mind answering.

Where did you hear about this product?

What is your gender?

Where are you located? OR What is your zip code?

How old are you?

What is your highest level of education?

What is your income level?

What type of career do you have?

Do you own a home?

How many people live in your home?

Are you married?

Do you have children?

What is the best way to inform you about new products?

How satisfied are you with the product?

What are the most important things you considered when choosing this product?

How often do you buy this product?

Would you recommend this product to others?

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Observing people and their behavior is another way to gather information about them.

This is an indirect method of collecting data, because you aren't asking them to provide it.

Many companies collect data indirectly through their Web sites.

There are many tools that can track a person's behavior on the Web, such as the links they click, the amount of time they spend on each page, and the words they type into search boxes.

Web log data mining is the analysis of data that was gathered by observing behavior patterns on the Web.

It's easiest to gather this kind of data on your own Web site, because it's easiest to get permission for this on your own site.

If you are tracking the behavior of people outside of your own site, you may be invading their privacy.

You'll learn more about the ethics of market information management soon.

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Secondary data is data that was already gathered by another person or organization.

It is often faster and easier to use secondary data than to collect that data yourself.

Libraries and the Internet are helpful for identifying secondary data sources that could be useful for your specific purpose.

Let us learn about some useful sources of secondary data.

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Many countries perform a census on a regular basis. A census is a process of counting the number of people in an area and gathering information about them.

In the U.S., the Census Bureau performs a census every 10 years.

It is legally required that everyone fill out their forms accurately and submit them on time.

The government uses this information for many purposes, such as to decide the number of representatives each state gets in Congress, to decide the amount of funding for programs such as transportation projects, and so on.

The Census Bureau protects the privacy of individuals but makes the overall information available to the public.

It has many useful tools for sorting through its data: http://www.census.gov

A smaller group of people are randomly selected each year to complete a more detailed version of the census called the American Community Survey.

This survey collects information about people and housing every year, instead of every 10 years.

This survey provides even more information than the census, and it is updated more frequently. You can learn more about it here: http://www.census.gov/acs/www/

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Industry and trade publications are a common source of secondary data in market research.

These publications include magazines, newsletters, Web sites, and other publications focused on a specific industry or trade.

An industry publication is focused on an industry, such as the extractive or manufacturing industry.

An industry publication may be focused more specifically on a certain type of industry within a broader category, such as the clothing manufacturing industry or the cell phone manufacturing industry.

A trade publication is focused on a particular type of job, such as marketing, plumbing, carpentry, or accounting.

Your local library may be able to help you identify the industry and trade publications that will be most helpful for providing the information you want.

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There are also general research publications that provide data and analysis of populations and markets.

Nonprofit organizations, universities, libraries, and government agencies may make this information available for free.

The Pew Research Center is a useful source of general data about the population of the U.S. You can learn more about it here: http://pewresearch.org/

The Brookings Institute is another source of data about the U.S. population. You can learn more about it here: http://www.brookings.edu/
Your local library may be able to help you identify the research publications that will be most helpful for providing the information you want.

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Some companies specialize in market research.

You can pay a market research company to perform research to answer a specific question you have.

This may be expensive, depending on the type of research you want them to perform.

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Some companies and organizations offer data for sale.

Make sure the data is worth what you are paying for it. It should be accurate, reliable, and ethically gathered.

You'll learn more about the ethics of marketing information management soon.

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A database is a collection of data. A customer database is a database that contains data about your customers and potential customers.

Many companies use customer databases to track information about customers, suppliers, and other people and companies they are in contact with.

Some common types of data that companies collect include:

Name

Contact information (address, phone number, e-mail address)

What products the customer has purchased

What products the customer has expressed interest in

How the customer learned about the company or its products

Demographic information when appropriate (age, location, income, and so on)

Feedback the customer has expressed about the company or its products

It can be difficult to track and analyze customer information if it is recorded on paper, so many companies use database software programs to track customer data.

The more customers you have and the more information you want to track about them, the more likely it is that you will want to use computers to track your customer information.

Some companies use database software programs that aren't designed specifically for customer data. There are also many software programs designed to track customer data, such as Salesforce®, ACT!®, GoldMine®, and many others.

Customer relationship management software, also called CRM software, is software designed to track and manage relationships with customers.

CRM software can be helpful for many parts of a company, including marketing, sales, and customer service.

CRM software usually allows you to perform searches on data to find records that share certain features.

It also usually can produce reports using your customer data, so you can easily get information about all of your customers or about certain groups of them.

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Ethics is very important in marketing information management, because market information is data about real people.

Sometimes, the data your company receives can be very personal, such as a person's e-mail address or credit card number.

Other times, the data might be general or unconnected with specific individuals by the time it reaches your company, such as census data.

Data should be collected, organized, shared, and analyzed in a way that respects the privacy of the people who provided their personal information. It should be collected with permission from the people.

When your company collects personal data about people, you should let them know how that information will be used and how you will protect it. Otherwise, people may get upset with your company.

EXAMPLE  If you collect personal information about people by offering them a chance to win a prize, but you don't tell them how you will use their information, they may get upset if you use their information to try to sell them a product.

If you collect data on your Web site, you should make a page on your site that explains your policy for protecting the privacy of people's data.

EXAMPLE  If you collect credit card information from your customers online, they will want to know how you are protecting that information, so that it is unlikely to be stolen or misused.

If you let people know how their information will be used, they are less likely to get upset with your company.

EXAMPLE  If people give you their e-mail addresses in order to subscribe to your newsletter, you should only send them your newsletter, unless they also agreed to receive other mailings from you.

If your Web site tracks user behavior, you should have a page on your Web site that explains what information you are collecting and how that information is used, so that people can decide whether they want to use your site and let you have that information.

When you collect secondary data, ethics are also important. You should investigate how the data was collected to make sure it was done ethically, with customer permission and without violating privacy.

Customers who give information to one company usually don't expect that company to share their information with another company, unless they were told that this would happen when they provided their information.