overview of database marketing
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Overview of Database Marketing. Historical Perspective. Mass Production, Mass Media and Mass Mkt now replaced by -a one-to-one economic system The one-to-one future represents - Customized production - Individually addressable media - 1:1 marketing - PowerPoint PPT PresentationTRANSCRIPT
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Overview of Database Marketing
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Historical Perspective• Mass Production, Mass Media and Mass Mkt
now replaced by-a one-to-one economic system
The one-to-one future represents- Customized production- Individually addressable media- 1:1 marketing
Primary premise: retaining a customer is easier than acquiring a new one
Goal is Customer Share not Market share.
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Acquisition vs Retention
• $100 spent on acquisition brings $50 in profits
• $100 spent on retention brings $150 in profits
(Paul Wang, Dbase Mkt expert)
• Most companies are spending 90% of mkt dollars on acquisition
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Acquisition vs Retention (contd)
• Why do companies spend more on acquisition- Acquisition easier to measure- Acquisition is easier to carry out- Acquisition involves product managers, retention involves segment managers- Retention involves maintaining a database- To measure retention, you must have a test and control groups
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What is Database Marketing?
• An information driven marketing process made possible by database technology that enables marketers to
develop, test, implement, measure and modify
customized marketing programs and strategies
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What is required for Database Marketing?
• Relevant data about customers and prospect• Database tech to transform raw data into powerful and
accessible mkt info• Statistical techniques to rank customers in terms of
their likeliness to- respond to mkt communication- buy products- return products- pay for products- stay or leave
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What is required for Database Marketing
• Knowledge of economics of gathering, manipulating, and analyzing data
• Creativity to capitalize on mkt opportunities that emerge from above process to develop
- individual customer relationships
- build business
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Premise of Database Marketing
• Not all customers are alike
• Gathering, maintaining, and analyzing customer and prospect info allows marketers to
- identify key mkt segments
- optimize planning, pricing and promoting
- close deals satisfying both buyers and sellers
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How is it different than Direct Marketing?
• Is broader than traditional Direct Mkt
• Direct mkt communication is through one channel- mail
• Database mkt uses different channels of communication such as TV, print etc to
- make a sale
- develop relationships with customers
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Example: Health and Beauty Aids
• Database analysis reveals that
- best converters (people who repurchase)are above certain age and income level
- basically middle aged affluent households
• How will you improve their mkt communication based on this result?
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Example: Health and Beauty Aids
• Some suggestions
- mail promotions to only middle age, people living in affluent
neighborhoods
• This could increase profits because it reduces cost of mailing while improving sales
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Example: Package Goods
• Database analysis (segmentation) reveals that
- Purchase patterns and amount purchased differ between clusters of consumers
- It relates to the attitudes the brand represents and the customers’ lifestyles
• How will you customize their mkt communication based on this result?
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Example: Package Goods
• Some suggestions
- Combine your data with secondary data like Nielsen Brand Development Index (BDI)
- In loyal mkts co-promote other products that you manufacture with the primary brand
- In non-loyal mkts drop coupons or run promotions to bring in new customers
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What do these examples tell us?• Info about customer purchases is as imp as
dollars obtained from selling goods
• Develop ongoing dialogues with customers thru
- In-package surveys
- Opinion polls
- Tracking studies
- Point of Sale (POS) programs
• These dialogues should reward customers for
- Repurchasing
- Referring new customers
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How do customers benefit?
• Enables customers to
- register their preferences
- form perceptions about company’s brands (both old and new)
- leverage more value for what they pay
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Some representative strategies-Lead Grading
• Grade prospects by
- willingness to buy
- ability to buy
- readiness to buy
• When combined with data about previous customers, this helps in recommending the right match
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Some representative strategies: Customized Targeting
• Reach customers with right product and right offer at the right time (eg Music clubs like BMG or Columbia)
• Customize offers based on member’s previous selections, demographic and lifestyle information
• Reduces attrition, improves sales• Develops loyalty
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Some representative strategies: Foster New Services
• Help make it easy for customers to buy more, and more often
• Use unique customer ID’s to avoid redundant questions whenever customer places and order
• Use customer purchase history to make offers about related products
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Some representative strategies: Increase Customer Loyalty
• Establish two-way communications between customers and company
• Majority of repeat business comes from a small percentage of customers (called Relationship Buyers as opposed to Transaction Buyers)
• Reward customers for purchasing from you again and again
• Example: Continental One Pass, American Advantage, MCI-Blockbuster
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Some representative strategies: Increase Customer Loyalty
• Transaction buyers/Disloyal customers could be
- Transient individuals
- Young people, rather than older people
- Single people, rather than married people
- Renters, rather than home owners
- People who respond to low-ball discount offers
- People who respond to temporary sales
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