Direct and Database Marketing

7/31/2019 Direct and Database Marketing

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Introduction:

In the information-intensive marketplaces of the networked economy, database-related marketing

techniques have gained unprecedented popularity. Their development is based on the assumption that

greater capturing of customer information in digital databases leads to superior insights about the customer.

The proliferation of customer databases,

According to (Vagionis and Komilis, 1999), database is the collection and systematic organization and

classification of information. Database constitutes a collection of data which emanates from a careful choice

of elements that result from a suitable organization and management of information, with base program that

corresponds in concrete needs. More specifically, database marketing can be defined as gathering, saving

and using the maximum of useful knowledge for actual and prospective customers, including behavior and

their geo-demographic profile in order to enable marketers to make better decisions and accomplish the

organizations objectives (Jutkins, 1994).

With about 3,100 company-operated stores and about 200 franchise stores in 36 countries and online orders

shipped to over 90 countries, the company reaffirmed its goal of growing total sales outside of North

America and online to about 30 percent by the end of fiscal 2013. Sales outside North America sucha as in

Malaysia increased 16 percent in the first half of the year, while revenue from its e-commerce business

during this period increased 19 percent across its entire portfolio. (Gap.Inc, 2011).

Gap direct marketing is marketing where the marketer approaches the customer directly with some form of

communication in order to solicit a response. Moreover, Gap. Inc, direct marketing has one main

characteristic and that is it approaches the customer directly. The way in which the customer is approached

can vary from email marketing to telemarketing, direct mail or word-of-mouth advertising.

The main benefit that Gap. Inc like about direct marketing is that they can see exactly how many positive

responses they have obtained. They can track and measure the response to a particular piece of direct

garment brand marketing. By seeing which direct marketing efforts bring the best results they are then able

to improve on their marketing efforts and so get even better results.


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Gap Direct Marketing Strategy in Malaysia:

Direct marketing exposes customers to merchandise through an impersonal medium such as a catalog,

brochure, and telephone conversation. The inability to inspect tangible merchandise makes the buyers

decision more risky. This is a serious problem as Gap executive notes in Malaysia, since many customers in

Malaysia place great value on browsing through the merchandise they will buy and take home. To reduce

the Malaysian customers risk and to effectively compete against Gap Old Navy Jeans for example on

display, Gap offers generous return policies such as, For example, fig-1 L. L. Bean is famous for its early

introduction of an unconditional, no questions-asked warranty of its merchandise. Gap Inc. follows the suite

and they did the tried and tested direct market strategy, with variations in warranty policies. Such as

exchanging the Top Value merchandise, but not refund, charge restocking fees, or impose time limits on

returns.

Fig: 1 - L. L. Bean Return Policy: Source: L.L Bean. (2012).

It is reported that return rates at L.L. Bean which had historically been around 5% of sales jumped to 14%. :

(L.L Bean, 2012).Therefore, it is important for Gap. Inc, in Asian context, to create detailed statistical

models of their returns, and which Gap company, could learn from the market feedback they are getting to

apply the above model for example. Gap Inc, should also create the market database infrastructure to have

complete historical records for the customer behavior. Where by indexing the customer as a quick returner

or a late returner. Thus, retaining the customer in the computer generated rating system from 1-5, where by

#1 implies to quick returner and #5 scores as late returner. Moreover, major factor in scoring customers for

direct mailing e.t.c, because it will have a major effect on the customer lifetime value.

It is also important for Gap, Inc, to have a customized model that is sophisticated enough to judge subtle

differences in races in Malaysia, rather than solely relying on average return rates. Thus, intervention may


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be appropriate for a customer with a low overall average return rate if that customer buys primarily low-

return-rate merchandise but returns it at an unprofitably high rate for that class of merchandise. Likewise

intervention for example sending un-necessarily e-mail, direct sales postal mail, may be inappropriate for

the High end Malaysian customers who seems to have a high return rate. Understanding the pattern of a

customers returns also will help to flag customers who are making particularly late returns or simply to

better predict the operational flow of returns

Furthermore, company might also be interested in understanding returns to project operational staffing or

procurement demands or to develop operational standards. An early warning system could be developed that

would warn of problems with an item in time (JIT, Just in Time), Management, to adjust ongoing orders

from suppliers.

Social Media investments in Malaysian Market.:

Gap Inc, to hit $1.5 billion in revenue by the end of this year, on track to reach $2 billion in revenue and

operating income of $500 million by the end of fiscal 2014.(Gap, Inc, 2011). Furthermore, Top executive

said that his team will considerably expand its successful ship-from-store pilot program in Malaysia.

Which taps into store inventory to meet strong online demand in Malaysia.

Rock-solid, Banana Republic brand, and coming Athleta stores in Malaysia by the end of the fourth quarter

of fiscal gives the rise in shopping and the strength of the companys new mobile commerce platform,

conversion rates have tripled over the past year. The division also expects to test its ship-from-store concept

in Old Navy in Malaysia.

Moreover, to constantly, engaging with stakeholders, Gap, Inc creates dedicated Gap Malaysia Facebook

site: https://www.facebook.com/gapmalaysia, which has so far 139,510 likes so far. Gives great placement

for the company to react the market needs very quickly.


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Source: Gap, Inc (2012). Gap Malaysia official Facebook Landing Page

https://www.facebook.com/gapmalaysia

Facebook Timeline posts:

Gap, Inc, Malaysia is pursuing aggressively in Social Media sites to get the feedback from customers,

tourists alike. The respond to so far satisfactory, said Executive in Gap Malaysia.
https://www.facebook.com/gapmalaysiahttps://www.facebook.com/gapmalaysiahttps://www.facebook.com/gapmalaysia


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Gap Inc, Systemic and Predictive Database Marketing Process Model

In the transformation of Gap Inc, data base marketing from being a mass marketing channel, Gap is

making frequent, highly targeted offers over a variety of marketing channels, including direct mail, call

centers, email and the world-wide web (Doyle, 2000). Consequently, the amount of data base marketing

activity is increasing within Gap, Inc, organization. Number of issues become paramount in importance:

once a marketing campaign has been designed and developed, execution of the campaign process must

require little or no human intervention (Levin and Zahavi, 1996), technology used must support

development and management of a large number of models, but in a way that supports analysts rather than

replacing them (Hand, 1998); the process of monitoring of the campaign and predictive model performance

must be automated; and there must be a capability to manage many campaigns concurrently in line with

business policy, and to plan customer-focused communications.

Presenting, figure 2 outlines the steps in the systemic process model. Each step takes place at one of the

three levels:

The program level, The campaign level and The treatment level.

The program level is the strategic level at which Gap campaign in Malaysia and customer communications

are coordinated. At the program level there can be a number of campaigns, such as above Friday Special,

and a campaign may consist of a number of treatments. At the campaign level, treatments are coordinated to

achieve a particular strategic or tactical objective. Predictive model development takes place at the treatment

level, identifying those customers most likely to respond to the treatment favorably. Models are refined as

responses to treatments are captured and feedback to the marketing database.

Experimental design principles SA8000, Gap CSR (Corporate Social Responsibility), are used at the

program and campaign design stages to test customers responses to varying marketing stimuli, and to

collect data for the measurement of campaign performance and the refinement of predictive models. The

prioritization stages manage multiple predictive models to ensure that optimized decisions for Gap, Inc are

made in terms of the allocations of customers to communications channels, campaigns and treatments.


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Fig-2: Systemic Database Marketing Process Model

The processes that surround the implementation of Gap, Inc data mining in Malaysian context, into the

operations of a marketing department can be complex. Some parts of the process can be automated, and

some are best left for human judgment (Levin and Zahavi, 1996).

An integral part of the overall success or otherwise of data base marketing is the fusion between the Gap

emerging retailing, technology and the human factor concerning innovation, assessments and judgments.


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Successful strategic assessment of the components of Gap data base marketing requires that a systemic view

be taken, that the program planning stage includes definition of metrics that programs and campaigns are

designed to evaluate the metrics along with model performance, treatment effectiveness and the impact on

customer value in Malaysia, and that responses are captured.

The ability to manipulate underlying variables and assess the effects over a period of time gives Gap, Inc.

the tools required to optimize the return on marketing programs. The systemic approach represents an

opportunity for organizations to improve their current data base marketing through Social Media. Increased

efficiency will be realized by the proper alignment of an organizations skills with the task at hand. The

ability of the organization to learn and to apply the learning to future activity will mean increased marketing

effectiveness.

We have identified a number of areas of opportunity for future research, including research on the process

models used in practice, the use of evolutionary operations techniques in Data base marketing, prioritization

decisions, and the factors that surround the uptake of sophisticated data base marketing

As we mentioned above, Gap Inc, integrated and systematic marketing model is here to stay, and data base

marketing remains an important part of successful integrated marketing campaigns. However, all the

management model assumes to customer would be focused on companys product. Thats not the case, in

todays digital age, your prospects are bombarded with email, web advertisements, mobile ads, texts, TV

and radio advertisements all day long. Studies have found that people have moved past their initial apathy to

direct mail and are tending to respond again to receiving a piece of physical mail. Research by Mail Print1

found that 85% of consumers sort through and read selected pieces of mail every day. 75% of consumers

are saying that they are examining their mail more closely in the recent months to search for coupons and

discounts. 40% of consumers say that they have tried a new business after receiving direct mail, and 70%

have renewed relationships with businesses that they had previously ceased using. (Print 1 Driect, 2012).

Its not just that people are receiving less physical direct mail, its also that Gap Company is being smart

about what they send and to whom they send it. Direct mail promotion offers is also changing through the

use of unique direct mail formats that include color, oversized formats, and interactive elements that make

the piece stand out from the rest of the mail.


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As mentioned in the section above on the importance of direct mail, one of the keys to the success of direct

mail is targeting and personalization. Targeting is the process of sending a marketing piece only to specific

people who are most relevant to the message you are sending. Personalization is the process of

individualizing the marketing process, so companys prospect is seeing content and offers that best match

their interests. As noted by Allison Schiff of the Direct Marketing News Blog3 , While a direct mail piece

addressed to dear resident might have been enough 30 years ago, people have come to expect

personalized communications that speak to them on a variety of levels., (News Blog3, 2012).

Gap promotions will become more targeted in Malaysia, ensuring that they speak directly to a brands

loyal base of customers, or a particular demographic that is poised for growth. This will not only protect the

brands reputation and value, but will foster more loyal customers. (Cot.R, 2012)

This includes personalization: using digital printing processes to create content on each direct mail piece

that is specifically relevant to the recipient. Personalization can include:

Using the prospects name prominently on the mail piece

Including offers for products or services that are complementary to the prospects previous purchases or

indicated preferences

Including a personalized URL (PURL) that provides the prospect with a web landing page full of

information tailored to them


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Gap, Inc Corporate Social Responsibility and Database market assessment:

With the advent of social media generations and as customers are literally has an awareness to the teeth,

people. Customers are more and more critical about their choices when they purchase and browse themarket. They will only buy the merchandise when they see if the company is treating their employees well

and humane. Gap has faced challenges in the process of growing from a single location retail store to a

multinational corporation with global sourcing. Most companies view a corporate and social responsibility

policy as nothing more than an expensive public relations project. Gap views Corporate Social

Responsibility as an important part of how to conduct business but also as a luxury though it has taken

many years for Gap to come to this viewpoint. Allegations abusive labor practices surfaced recently through

Facebook and Twitter, Gap took the opportunity to show the stake holders through direct marketing that

Gap is responsible employer to put the international labor standards to retain the customers.

Gap believes being socially and economically responsible is simply the right way to conduct business in

Malaysia. There is a definite profit potential in Gaps social responsibility. Many consumers have indicated

they are more likely to purchase products that give them a feeling of contributing to a worthy humanitarian

cause. Gaps selfimposed regulations and improved wages and factory conditions have created goodwill in

Malaysia, eventually, where it currently has a presence. As these economies emerge, Gap can expect

consumers acceptance and interest in retail locations.

SA8000 is a global, crossindustry standard that creates a level playing field for facilities regardless of

location. SA8000 requirements go beyond local laws and correspond with the ILO. SA8000 has a key focus

on worker interviews because it has found that interviewing workers instead of managers has been a more

credible source for indentifying problems. Many factories in several industries like apparel and electronics

have become SA8000 certification as their standard. The support of large corporate partners like Gap has

brought factories up to the SA8000 standards. In 1999 fewer than 50 factories passed the certificationprocess but in less than 6 years the number of factories with SA8000

certification has climbed to nearly.


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Source: Henkle, Dan, Gap Inc. Sees Supplier Ownership if Compliance with WorkplaceStandards as an Essential Element of Socially Responsible Sourcing,Journal of OrganizationalExcellence, Vol. 25, Winter 2005, p. 20

Gap place SA8000 certifications in every product as direct and data base marketing strategy and Gap place

corporate social responsibility very seriously. The CSR strategy was place is The campaign level,

Systemic and Predictive Database Marketing Process Model.

The El Salvador case in 1995 was a wakeup call to Gap Inc. What started as very negative publicity turnedinto an opportunity for Gap to show it anxious to correct problems. After thorough selfexamination Gap

has adopted a corporate social responsibility program that has affected every level of the corporation.

Factory workers now receive ethical treatment, facilities are held to a very specific standard, and retail

location employees receive training not only on folding sweaters but also on company values and history

before their first day on the sales floor. The sensitivity and direct and database marketing campaign of

human rights receives central emphasis among Gap employees and management in Gaps efforts to be a

model corporate citizen. In the words of John Ruggie, Special representative of the UN Secretary General

on Business and Human Rights, Gap believes that Companies have made our world a global village. Now

they must help keep it livable. Because if it cant be made to work for all, in the end it will work for none.


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Conclusion:

Gap Inc (Gap) ranks as number 52 of the worlds 100 most recognizable brands, and number 21 among the

top 100 retailers of the United States, and as such it has become the target of hundreds of these critical

investigations. Further, Gap Inc. is a leading global specialty retailer offering clothing, accessories, andpersonal care products for men, women, children, and babies under the Gap, banana republic, Old Navy,

Piperlime, and Athleta brands. Fiscal year 2011 net sales were $14.7 billion. Gap Inc. products are available

for purchase in

Direct marketing and Database marketing is a cost effective medium for Gap Inc. However, similar to any

other marketing plan, company must devote time and money in order to be successful. Organizations must

do a thorough job of research and distribution in target areas in order to achieve optimal results. Overall,

direct marketing can be an efficient and successful way of marketing if you plan your distribution in

advance and follow-up.

The role of database marketing and direct marketing has become increasingly important for organizations

that have large databases of information on customers with whom they deal directly or indirectly. At the

same time, database marketing models used in practice have increased in sophistication.

Please note: This paper was to show for future researcher to conduct their analysis with strong

organizational case historically and current trends of social media sites, which would be useful for marketers

as well as managers alike in any given organizations to step the fundamentals and significance of direct and

database marketing.


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Direct and Database Marketing