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Download Welcome to Database Marketing Course MKTG 6229
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Database Marketing Course – Professor Raj Sethuraman Discussion Topics for First Session • What is Database Marketing? • Why Database Marketing? • Basics of Database Marketing (DBM) • Applications of DBM • Syllabus What is Database Marketing? Compare and Contrast • Traditional Data Analysis • Data Mining • Database Marketing Similarities and Differences Criteria Traditional Data Analysis* Data Mining* Database Marketing Data analysis objectives generally clearly not clearly stated stated may or may not be clearly stated Apriori Theory often exists usually not there may exist Size of typical database small-moderate large typically large Analytical tools relatively less advanced (traditional) advanced (newer) advanced high generally high but not necessary CRM orientation not necessary *as viewed by marketers Some Definitions of Database Marketing AMA definition: An approach by which computer database technologies are harnessed to design, create, and manage customer data lists containing information about each customer's characteristics and history of interactions with the company. The lists are used as needed for locating, selecting, targeting, servicing, and establishing relationships with customers in order to enhance the long-term value of these customers to the company. Another definition Database marketing is a systematic approach to the gathering, consolidation, and processing of consumer data (both for customers and potential customers) that is maintained in a company's databases. Although databases have been used for customer data in traditional marketing for a long time, the database marketing approach is differentiated by the fact that much more consumer data is maintained, and that the data is processed and used in new and more sophisticated ways. Some Definitions of Database Marketing Third definition: Database marketing is a way of organizing a company’s customer and prospect data so that it can be used more effectively in a direct marketing effort. It is a way of organizing the whole marketing process. Database marketing allows you to choose what to market to whom and when based on the sum total of your knowledge and experience with a customer or prospect. Fourth definition Database marketing is the technique of gathering all the information available about your customer, leads, and prospects into a central database and using that information to drive all your marketing efforts. The information is stored in a marketing database and can be used at both the strategic and tactical levels to drive targeted marketing efforts. Why Database Marketing? Informational Reasons • Availability of abundance data • Permission to collect them Technological Reasons • Technology to collect and warehouse data • Technology and computing power available to analyze them • Availability of commercial software, some of which are even “user friendly” (e.g. XL miner, SAS enterprise miner) Commercial Reason • Interest in generating intelligence to remain competitive main market share • Drive to be efficient How Database Marketing (DBM) and Customer Relationship Management (CRM) In order to form a learning relationship with its customers, an enterprise (firm) must be able to: 1. Notice – what its customers are doing 2. Remember – what it and its customers have done over time 3. Learn – from what it has remembered 4. Act On – what it has learned to make customers more profitable How Based on “Transaction” Data How Customer Relationship Management (CRM) A More Inclusive Definition of Database Marketing Database marketing is a systematic approach to the gathering, consolidation, and processing of marketing databases to learn more about customers and competitors, select target markets, compare customers' value to the company, provide more specialized offerings, as well as make other marketing and strategic decisions. Database Marketing System Memory Intelligence Output Data Other Data Customer Data Transaction Data Data Warehousing Database Data Analytic Tools/Software Marketing Decisions Customer Activity Database Data Techniques Output/Application Demographics Direct marketing Subscription Data Activity Data Exit Data Promotions Data Frequency, Cross-Tab Correlation Logistic regression Decision Tree Survival/Churn Analysis Prospecting Customer retention Customer loyalty Customer Activity Database - 2 Data Techniques Output/Application Demographics Segmentation Subscription Data Activity Data Location data Distance Data Frequency, Cross-Tab Correlation Algorithms for minimizing distance traveled / maximizing sales potential Store Location Store Promotion Geodemographic Database Data Techniques Clusters Zip codes Demographics Purchase Output/Application Segmentation Cluster Distinct Analysis Clusters Targeting used for Advertising/Promotion Reading habits Vacationing Supermarket Database Data Techniques Demographics Output/Application Stocking/Inventory control Logistic regression Aggregate Purchase Data Simultaneous system Advertising Cluster analysis Panel Purchase Data Retail Environment Market basket analysis Shelf placement Querying Pricing/coupons Database Marketing Industry (CRM only) (Based on Forrester Report) • Total DBM spending estimated at $2.5 Billion • Expected growth rate, next three years: 10%25% • Major players and market share: Acxiom (about 30%), Harte-Hanks (10%), Experian and Epsilon (over 5%), Merkle (under 5%), All others (40%) Objectives of the DBM Course To enable students to • Appreciate and understand the scope of database marketing • Learn some common data mining techniques • Implement some of those techniques using commercially available software such as SAS • Interpret the output from the analysis • Apply those techniques to some real-world marketing situations and facilitate marketing decisions.