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Marketing Research is increasingly becoming a key area businesses are using to get the edge of their competitors. In a nutshell, Marketing Research is a process used to gather facts, often through primary and secondary data sources to better-enable marketing decisions. The Key criteria for marketing research is for the information to be Systematic, Analysed, Relevant, Objective and Distributed all of which, it could be argued Coles and Woolworths (C&W) are at the forefront of. This blog will focus on how C&W are using Secondary Data, through their customer loyalty programs; Fly Buys and Everyday Rewards, in particular; its advantages, disadvantages and new frontiers, where our personal information can be used for their advantage.
Bringing you back by offering what you want – Scanner Data
I like many of you have joined the Coles Fly Buy Rewards Program, after initially seeing this as a way to add value to my purchases. I quickly learned how scanning my rewards card, has created a database on me, highlighting; what I eat, what brands I buy & how much I’m willing to pay. From starting my account, I noticed a re-occurring emails from Fly Buy’s titled; “Weekly Specials”, conveniently the items highlighted to me, were items that I frequently purchased, now be warned, I have given you a window into my soul here, and yes! Despite the negative effects of Coke Zero, it’s my guilty pleasure! as well as other goods as be seen in in Fig. 2.1 At first, I was shocked, it’s like I received my own personal catalogue. This made me question. What risk did such information present?
Nunan and Di Domenico (2013, p22), explains, Big Data is considered from 3 perspectives 1) technological, 2) commercial-value 3) privacy issues. In particular, Threats to consumer privacy, data ownership, and information persistence challenge ethical guidelines and trust in marketing research. Nunan and Di Domenico (2013, p22), concludes, for data to be used for marketing research ethical practices are recommended; The right to be forgotten & data expiry.
What’s the Big Deal? Disadvantages
Consumer Affairs.com (2013), writes, 36 percent of Australian shoppers use some form of store card or discount card, Figure1.1 “and the majority of them say the benefits of the card are worth giving up some privacy.” This presents a substantial portion of information and how this personal information can be used is highlighted part of Safeway’s Rewards Program Disclaimer, “loyalty cards can be used to trading or sharing data with preferred partners, leaving a feeling of open-endedness. Roy Morgan Research (2016), using Secondary Data Theory suggests, Analysts consider secondary data essential, it is otherwise impossible to conduct surveys, collate databases and monitor changes on such a significant scale. However, secondary data has been criticized as being less intimate as primary data due to its short-term shelf-life, ‘The further we move away from the data point being captured the less reliable that information seems.’
Secondary Data –Coles and Woolworths to join The Banking Sector?
Sean Rubinstein-Dunlop from the ABC (2014) reports, Coles are keeping coy, denying consistent rumours that they are applying for a full banking license. (W&C) have been working with the banks highlighting, These Grocery Giants have a competitive edge over the banks; in their treasure-trove lies information gathered from 14.5 million members based on purchases to credit cards and various loyalty reward programs, information that can clearly be used to target, focus specific Bank Product-Offerings via complex algorithms.
Sean Rubinsztein (2014), quotes Woolworths marketing director “Customers who drink lots of milk and eat lots of red meat are very good car insurance risks versus those who eat lots of pasta and rice, fill up their petrol at night and drink spirits, we’re able to tailor an insurance offer that targets those really good insurance risk customers”
To conclude, the use on secondary data has been somewhat questioned however, there is no doubt that this information can be used to shape product offerings. Rubinsztein-Dunlop’s appropriately surmises his concerns quoting Troy Hunt, IT Security Expert from Consumer Choice, “For marketers, it’s the wet dream of data. For privacy advocates, it’s a bit of a nightmare.”
- ABC News (Australian Broadcasting Corporation). 2016. Coles, Woolworths accumulating consumer data as they prepare to compete with banks on home loans – ABC News (Australian Broadcasting Corporation). [ONLINE] Available at: http://www.abc.net.au/news/2014-08-06/coles-woolworths-preparing-to-enter-home-loans-market/5653288. [Accessed 15 April 2016].
- Loyalty Cards: Reward or Threat? 2016. Loyalty Cards: Reward or Threat? [ONLINE] Available at: https://www.consumeraffairs.com/news04/2005/loyalty_cards.html. [Accessed 15 April 2016].
- Big data gets bigger: Supermarkets approaching 10 million FlyBuys or Everyday Rewards cardholders – Roy Morgan Research. 2016. Big data gets bigger: Supermarkets approaching 10 million FlyBuys or Everyday Rewards cardholders – Roy Morgan Research. [ONLINE] Available at: http://www.roymorgan.com/findings/5277-big-data-at-supermarkets-flybuys-vs-everyday-rewards-june-2013-201311032158. [Accessed 15 April 2016].
- Nunan, D. and Di Domenico (2013) Market research and the ethics of big data (PDF)International Journal of Market Research, 55 (4), 2-13. [Accessed 17th April 2016.]