Project related mailbag - resurrected questions happening

Got this email just now:

Dear Professor

I do not understand why you are asking us to construct a demand function totally based on secondary data? Why did we do the survey and ask questions like will you buy in the next 12 months, what type of car will you buy etc?

We spent two whole days trying to make sense of the primary data – which seems quite random. We were able to get R2 of no more than .3 (mostly .1) with all kinds of combinations of parameters from the primary data.

I am not sure what the takeaway from the project is – if we are going to primarily rely on secondary data.
K

My response:

"Sigh."

and then

Hi K,

I’ve talked about this at length already. Let me repeat the story so far.

There are 2 questions to be answered.

Q1 relies on secondary data based demand estimation. Q2 relies on primary data based segmentation of the target population using car attribute preferences as segmenting (or clustering) variables.

Why do Q1?
Because demand modeling estimation is fundamental to your role as managers of firm resources. As students of economics and mgmt, you can’t but know how to build and estimate demand models. Regardless of what industry you go to, your understanding of the broad characteristics of the demand for that industry’s offerings is fundamental to your success.

OK, but why do Q1 in MKTR?
Because it is a natural corollary to and easily the most powerful, practical and useful application of your newly burnished model building skills. Capisch?

OK, why collect primary data and all then?
Because it’s complementary to (and *not*, as you imply, a substitute to) secondary data. There are actionable, practical things the client wants to know which simply won’t be available from secondary data analysis at an aggregate level, period. And these ‘things’ relate primarily to the distribution of attribute level preferences over the population, and an actionable segmentation based on these preferences. (Try getting that from secondary data!)

In Q2, you tease out answers to questions like “What are the attractive customer segments out there (based on attribute preferences)? What is the size of these target segments? Which is the most attractive? Which others could be similarly considered for targeting? How can these segments be reached? What should be stressed in the communications to these segments? Etc etc.”

Hope that helped.
But really, I have spoken and written about the above points multiple times. How come there is still so much confusion and the same questions resurrecting every time?

>> We spent two whole days trying to make sense of the primary data – which seems quite random. We were able to get R2 of no more than .3 (mostly .1) with all kinds of combinations of parameters from the primary data.

Welcome to the real world. These things happen. Empirical research can be frustrating indeed. If the data are totally random and senseless, then kindly build your case and say so. That would be a valid result if you can show sound evidence for the same.

P.S. to janta in general,
I am available to answer your questions. Make no mistake about that.
But I'd like to see some new questions too, once in a while.

Sudhir