Victoria Station, a San Francisco based restaurant chain that focused on the use of a theme environment (railroads cars) and the serving of a limited menu (prime rib) has used marketing research in a variety of ways since its founding in the early 1970s. Indeed, corporate executives viewed the marketing function as essentially the development of information that would enhance the firm’s market position.
In deciding upon location for its restaurants, management required that the area contain a certain amount of restaurant dollars to provide a sufficient demand for their prime rib specialty. Location decisions relied heavily on updated census demographic data as well as information from a variety of local sources.
Prior to the opening of a new restaurant, management purchased mailing lists from American Express and undertook a direct mailing campaign featuring the restaurant’s menu, prices, and atmosphere. These mailing lists were supplemented by lists obtained elsewhere (e.g. area banks and country clubs). Samples were drawn from these listings and telephone interviews conducted to determine the effectiveness of this type promotion, including the listings.
Later on the company used local radio commercials to develop awareness of its restaurants. In order to better target its advertising, the company interviewed customers in their restaurants to establish a Victoria Station consumer profile as well as market target areas. Telephone interview provided quantitative awareness and trial levels and consumers’ perceptions of Victoria Station.
Company management made extensive use of accounting information to track the success if individual restaurants. Such data as the number of customers processed weekly, the average size check, the amount spent on liquor versus food, and advertising and selling costs were monitored carefully. When the chain experimented with new menu entrees and price changes as it frequently did before/after data showing the number of customers ordering specific menu items and the average size check were particularly important.
The above example illustrates the kinds of information needed to help a company make better management decisions pertaining to what customers types to target, what benefits to offer these customers in the form of product characteristics, what prices to charge, and how best to communicates with the target group. In addition, information is needed to determine how well the company is carrying out its plan of action. The data needed by management to help make such decisions can be broadly classed as derived from either primary or secondary sources.
Data being used by manager are defined as secondary data if they were not collected specifically for that manager for solving the problem currently being investigated. Such data can be obtained internally (e.g. from accounting records) or externally (e.g. the Census of Population, trade association reports, industry publication, and syndicated commercial services). Primary data, on the other hand, are generated by a study specifically designed to accommodate the data needs of the problem on hand. If, for example, a machine tool manufacturer gathered data from its prospective customers about what features were most wanted in a given machine tool, the resulting statistics would be primary data.
As the majority of marketing research concerns either individual brands or change in company marketing activities, much primary data must be gathered. The needed information is specific to a particular company and, hence is not available from secondary sources. Nevertheless, the researcher should not assume that primary data are the only answer. When sufficient secondary data are available considerable time and money may be saved. The researcher however, needs to know how to evaluate such data.