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Chapter 3 The 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