Chapter 3The Impact of Databases

What is a database?

• Flat file–Access is slow–Most older legacy systems

• Relational–Files are linked by a duplicate variable in

each table (customer or ID #)

Types of Data

• Internal– Purchases– Customer Transactions– Amount Spent– Transaction dates– Promotion history– Customer services– Profitability– Lifetime value

• Expternal– Address– Houshold– Demographics– Socioeconomic data– Lifestyle

psychographics– Firmographics– Geo-demographics

Database Marketing and Customer Relationships

• CRM– The processes a company uses to track and

organize its contacts with its current and prospective customers. It can be analyzed in order to plan target-marketing campaigns, conceive business strategies etc.

Lifetime Value (LTV)

• Loyal Customers• Repeat purchasers• One-time-only triers• Well-defined market segments

Data Warehouse

• Good storage and reporting system• Decision Support Systems and Executive

Information Systems EIS• Can Feed a Data Mart

Data Mining

• Process of discovering patterns or trends• Cluster Analysis• Market Basket Analysis• Neural Networks

Cluster Analysis

• Cluster analysis is a data reduction technique that group variables based on similar data characteristics

• Segmenting customers

Market Basket Analysis

• Lets us look at what customers typically buy together• Product placement• Product suggestions– Online– McDonalds

Neural Networks

• Discover and predict relationships in data• Black box• Complex formulas

International Databases

• Postal address coding• Name characteristics - fields• Requires flexibility

Privacy

• HIPPA• Financial• Security• US and EU rules