Database Marketing

Discussion Topics

• What is Database Marketing?

• Why Database Marketing?
• Basics of Database Marketing (DBM)
• Applications of DBM
What is Database Marketing?

Compare and Contrast

• Traditional Data Analysis

• Data Mining
• Database Marketing
 Similarities and Differences
Traditional Data Database
Criteria Analysis* Data Mining* Marketing
Data analysis generally clearly not clearly may or may not
objectives stated stated be clearly
stated
Size of typical small-moderate large typically large
database
Analytical tools relatively less advanced advanced
advanced (newer)
(traditional)
CRM orientation not necessary high generally high
but 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
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
Based on “Transaction” Data
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 Database

Data Analytic Marketing
Data Warehousing Tools/Software Decisions

Transaction
Data
Customer Activity Database
Data Techniques Output/Application

Demographics
Direct marketing

Subscription Frequency, Cross-Tab

Data Correlation
Logistic regression Prospecting
Activity Data Decision Tree
Survival/Churn Analysis
Customer retention
Exit Data

Promotions Customer loyalty

Data
Customer Activity Database
Data Techniques Output/Application

Demographics
Segmentation

Subscription Frequency, Cross-Tab

Data Correlation
Algorithms for minimizing Store Location
Activity Data distance traveled /
maximizing sales potential
Store Promotion
Location data

Distance Data
 Geodemographic Database

Data Techniques Clusters Output/Application

Zip codes
Segmentation

Demographics
Cluster Distinct
Targeting
Analysis Clusters
Purchase
used for
Advertising/Promotion
Reading habits

Vacationing
Supermarket Database

Data Techniques Output/Application

Demographics Stocking/Inventory
control
Logistic regression
Aggregate
Purchase Data Simultaneous system
Advertising
Cluster analysis
Panel Market basket analysis
Purchase Data Shelf placement
Querying

Retail Pricing/coupons
Environment