equitec case - consumer behavior
DESCRIPTION
Consumer Behavior project. Examine and define best ways for Consumer Research Company (Equitec) to target and reach new customers, along with suggesting new ways for the company to market itself.TRANSCRIPT
Equitec
Group 6:
Imran Ahmed, Brian Dorne, Todd Hadley, Cheryl McIntosh, Desiree Sheikholeslami and Julio Velo
Problem Statement
• Here are some of the questions that many businesses find themselves seeking answers for:– How to deliver results that meet high level of financial
expectations?• To increase market share with a shrinking consumer
population• To boost operational effectiveness while cutting overhead
expenses• To bring the greatest value to consumers at the lowest cost• To engage customers who have a plethora of purchasing
options
Marketing Research Industry
• Database Marketing is more efficient than previous methods such as mass marketing– Widely used method for gathering marketing data in
retail industry– Can be useful to any size company if the database is
built according to needs
• Database Marketing leaders include:– Acxiom, Experian, EMC Corp., Merkle, Targetbase,
Knowledgebase Marketing, Allant Group, Epsilon, Equifax Database Services, Harte-Hanks, TNS North America
Types of Marketing Research
• Database Marketing includes multiple types of Market Research– Business to Consumer (B2C)
• Companies try to gather as much data as they can about potential customers through just about any method
– Includes, advertisement tracking, customer satisfaction research, brand equity research, concept testing, etc
– Business to Business (B2B)• Much more limited than B2C, but it can be easier to obtain.
Business can easily gather information about other businesses by simple contact or research of public information
• Difficult to build a target market plan because B2B research usually contains limited data, as compared to the millions of data points obtained in B2C
Introducing Equitec
• Equitec aims to answer some of the important questions listed in the problem statement
• Founded in 1995, with a mission to optimize client growth and productivity
• Equitec merged with OPUS Interactive, a multichannel consortia database company, in 2003
• As of early 2007, Equitec was acquired by Acxiom, a global leader in customer information management and technology
Equitec’s Business Model
• Unlike many other marketing research firms, Equitec mainly operated within a “niche”
• Equitec focused on the “Retail Industry” for marketing and merchandising optimization
• Equitec solutions offered intelligence for retailers in, but not limited to the following areas:– Supply chain efficiencies– Revenue growth while curtailing operational costs– Improving incremental sales, profits and ROI– Target marketing at the household or business level
• Equitec focused on “Individual Determinants” of consumer behavior (Demographics, Psychographics, Personality etc)
• Consumer Dynamics is Equitec’s proprietary information platform
Data Mining
• Data mining is the process of finding hidden patterns in large amounts of information
• It relays in a pattern recognition algorithm, mathematical and statistical models, to find correlations between different sources of data
• In the case of Consumer Dynamics, consumer information and data from Point of sale (POS) is processed by a Statistical Analysis System (SAS) to generate strategic business intelligence for Equitec’s clients
Data Mining – General Process
Logistics
Purchasing
Shipping
Inventory
Selection Transformation Data Mining Evaluation
PatternsBusiness
KnowledgeData
WarehouseDatabases Target Data
Data Mining-Consumer Dynamics
Str
ateg
ic
New Potential Market
locations
Sta
tistic
alA
naly
sis
Sys
tem
Prospect Opportunities
MerchandizingTrends
Actionable Market
Segments
Optimal Marketing
Consumer Dynamics Platform
Consumer Dynamics Database (CDD)
• Consumer Dynamics is Equitec’s proprietary information platform – data mining software
• It integrates point-of-sale (POS) and other sales data with external consumer information
• It identifies clients’ most responsive consumer segments and creates strategies targeted at these segments
• Consumer Dynamics delivers efficiency to its clients due to the information harnessed through its predictive data mining capability
Consumer DynamicsDatabase Structure
In
Market
Behaviors
Propensities
Attitudes
Lifestyles
Clustering/segmentation
Demographics
Name, postal or email addressWhere
Who
Why
How
What
When Ready to act
Purchase response
Optimism about the futureSocial interactions
Interest, habits
Household level
Age, occupation
Contact pointsAble
Willing
Ready
Case Questions
1. Which variables in the Consumer Decision Process (CDP) model are captured in the Consumer Dynamics Database (CDD) model?
2. How should a firm use this information to improve
a) Targeted promotions
b) Store locations
c) Store inventories and supply chain management and
d) Return on marketing investments
3. Which retailers (or organizations) would be the best target clients for Equitec?
Question 1: Consumer Decision Process (CDP) model vs. Consumer Dynamics Database (CDD) model?
• The CDD model captures several variables of the CDP model, specifically those related to Environmental Influences and Individual differences
• The Consumer Dynamics Database (CDD) focuses on retail Point of Sale (POS) and customer information data. The intelligence gathered from CDD is most suitable for the Need Recognition stage. However, other stages of the CDP model are captured as well
• Equitec’s clients are able to utilize the strategic data provided by the CDD to lead customers through the early stages of the CDP model
Consumer Decision Process (CDP)
Post-consumption Evaluation
SatisfactionDissatisfaction
Divestment
Consumption
Purchase
Pre-consumption Evaluation
Search
Need RecognitionEnvironmental
Influences
IndividualDifferences
External Search
Stimuli
Exposure
Attention
Comprehension
Acceptance
Retention
Mem
ory
Internal Search
Variables from CPD modelcaptured by CDD
EnvironmentalInfluences
IndividualDifferences
Env
ironm
enta
lIn
fluen
ces
culture
situation
social class
personal influence
family
Indi
vidu
alD
iffer
ence
s
resources
personality
motivation
knowledge
attitudes
values
lifestyle
CDD CDP
Question 1: CDP vs. CDD Conclusion
• Equitec’s Consumer Dynamic Database captures several variables of the Consumer Decision Process, but not all
• Some variables are directly covered by Equitec’s Consumer Dynamics Database, e.g. attitude and lifestyle
• Other variables such as culture, social class, resources etc, can be inferred from the information provided by Equitec’s CDD
Question 2a: Improve Targeted Promotions
• Data generated by the CDD software could be analyzed to target consumer segments for future promotions
• Segmenting data could also direct the choice of appropriate media outlets for marketing
• Clients could later use the CDD to assess the effectiveness of promotions
• The CDD software increased clients’ marketing response rates by 562 times greater than a general mailing
Question 2a: Improve Targeted Promotions - Example
coupon
Before using CDD, coupons were sent to all market segments
TargetSegments
Based on POS data, CDD indicates which are the best market segmentsCoupons are then sent to these target segments, generating more revenue
CDDPOS
Question 2b: Improve Store Locations
• The CDD tool makes traffic data available to stores by tying zip codes to POS transactions.
• Retailers can analyze zip code data to see where customers live. The results can be used to determine if a company should open a new location. Conversely, it can also point out the need to close a location.
• Other demographics can be analyzed to match the store’s target demographics to an appropriate location or decide whether to focus on web sales
Question 2c: Improve Inventories & SCM
• The CDD can improve product line depth and breadth by identifying customer segments for each product or product line and using that information to guide purchasing decisions
• CDD not only helps to identify areas of inventory growth but can also assist in reduction of “unproductive inventory” (Per Acxiom Corp, approx. $280 billion worldwide for Retail)
• This, in turn, improves supply chain management, since the retailer has a better idea of what, how much and when to purchase (accelerated time-to-benefit)
• Analysis of buying preferences can also help retailers select items to cross-merchandise with products that customers are already buying
Question 2d: Improve Marketing ROI
• The CDD can be used to perform more accurate cost-benefit analyses of marketing efforts
• A retailer could compare response versus costs for various promotions to decide which promotions to repeat and which ones to stop using
• Data mined through retailers flow to the manufacturers so that product lines can be tweaked. Coupons and promotions driven by manufacturers can also be better targeted
Equitec Clients
Equitec’s clients include:• Home Depot
• Proctor & Gamble
• General Electric
• Sabre Systems
Question 3: Best Target Clients
• Equitec’s potential clients could include:– All national retailers, to better target promotions to
specific customer segments– Consulting firms, to help provide services for smaller
clients– Real estate agencies, to improve customer satisfaction
by providing customers a better match for their needs– Churches, to segment and target potential members
based on local demographics– Universities, to guide decisions about curriculum,
degree programs, extension of academic programs and locations according to the local market
Equitec Today
• January 5, 2007: Acxiom Corporation announced its acquisition of Equitec
• Equitec acquisition expanded and enhanced Acxiom’s retail business solution capabilities
• “This acquisition enables Acxiom to offer a unique combination of custom consulting and analysis, deep customer insight and standardized assessment that accelerates financial return for retailers,” said Acxiom Company Leader Charles D. Morgan
• The acquisition solidified a business relationship that dated to 1999 when the two companies initiated the Market Advantage joint venture
References
• James A. O'Brien, G. M. (2009). Management Information Systems (9th ed.). New York: McGraw-Hill
• Acxiom Press Release: Acxiom Extends Retail Solutions with Acquisition of Equitec
• DMNews Article: Equitec Buy Extends Acxiom's Retail Abilities