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 Presentation

Text of Overview of Database Marketing

  • Overview of Database Marketing

  • Historical PerspectiveMass Production, Mass Media and Mass Mkt now replaced by-a one-to-one economic systemThe one-to-one future represents- Customized production- Individually addressable media- 1:1 marketingPrimary premise: retaining a customer is easier than acquiring a new oneGoal is Customer Share not Market share.

  • 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

  • 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

  • What is Database Marketing?An information driven marketing process made possible by database technology that enables marketers to develop, test, implement, measure and modifycustomized marketing programs and strategies

  • What is required for Database Marketing?Relevant data about customers and prospectDatabase tech to transform raw data into powerful and accessible mkt infoStatistical techniques to rank customers in terms of their likeliness to- respond to mkt communication- buy products- return products- pay for products- stay or leave

  • What is required for Database MarketingKnowledge of economics of gathering, manipulating, and analyzing dataCreativity to capitalize on mkt opportunities that emerge from above process to develop- individual customer relationships- build business

  • Premise of Database MarketingNot all customers are alikeGathering, 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

  • How is it different than Direct Marketing?Is broader than traditional Direct MktDirect mkt communication is through one channel- mailDatabase mkt uses different channels of communication such as TV, print etc to- make a sale- develop relationships with customers

  • Example: Health and Beauty AidsDatabase analysis reveals that- best converters (people who repurchase)are above certain age and income level- basically middle aged affluent householdsHow will you improve their mkt communication based on this result?

  • Example: Health and Beauty AidsSome suggestions- mail promotions to only middle age, people living in affluent neighborhoodsThis could increase profits because it reduces cost of mailing while improving sales

  • Example: Package GoodsDatabase 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 lifestylesHow will you customize their mkt communication based on this result?

  • Example: Package GoodsSome 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

  • What do these examples tell us?Info about customer purchases is as imp as dollars obtained from selling goodsDevelop ongoing dialogues with customers thru- In-package surveys- Opinion polls- Tracking studies- Point of Sale (POS) programsThese dialogues should reward customers for- Repurchasing- Referring new customers

  • How do customers benefit?Enables customers to- register their preferences- form perceptions about companys brands (both old and new)- leverage more value for what they pay

  • Some representative strategies-Lead GradingGrade prospects by- willingness to buy- ability to buy- readiness to buyWhen combined with data about previous customers, this helps in recommending the right match

  • Some representative strategies: Customized TargetingReach customers with right product and right offer at the right time (eg Music clubs like BMG or Columbia)Customize offers based on members previous selections, demographic and lifestyle informationReduces attrition, improves salesDevelops loyalty

  • Some representative strategies: Foster New ServicesHelp make it easy for customers to buy more, and more oftenUse unique customer IDs to avoid redundant questions whenever customer places and orderUse customer purchase history to make offers about related products

  • Some representative strategies: Increase Customer LoyaltyEstablish two-way communications between customers and companyMajority 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 againExample: Continental One Pass, American Advantage, MCI-Blockbuster

  • Some representative strategies: Increase Customer LoyaltyTransaction 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