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Database Marketing CourseProfessor Raj Sethuraman

Discussion Topics for First Session

What is Database Marketing?

Why Database Marketing?

Basics of Database Marketing (DBM)

Applications of DBM

Syllabus

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What is Database Marketing?

Compare and Contrast

Traditional Data Analysis

Data Mining

Database Marketing

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Similarities and Differences

CriteriaTraditional Data

Analysis* Data Mining*DatabaseMarketing

Data analysisobjectives

generally clearlystated

not clearlystated

may or may notbe clearlystated

Apriori Theory often exists usually notthere

may exist

Size of typicaldatabase

small-moderate large typically large

Analytical tools relatively less

advanced(traditional)

advanced

(newer)

advanced

CRM orientation not necessary high generally highbut notnecessary

*as viewed by marketers

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Some Definitions of Database Marketing

AMA definition:An approach by which computer database technologies are harnessedto design, create, and manage customer data lists containing informationabout each customer's characteristics and history of interactions withthe 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 customersto the company.

Another definitionDatabase 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 traditionalmarketing for a long time, the database marketing approach isdifferentiated by the fact that much more consumer data is maintained,and that the data is processed and used in new and more

sophisticated ways.

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Some Definitions of Database Marketing

Third definition:Database marketing is a way of organizing a companys customer and

prospect data so that it can be used more effectively in a direct marketingeffort. 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 experiencewith a customer or prospect.

Fourth definitionDatabase marketing is the technique of gathering all the information

available about your customer, leads, and prospects into a centraldatabase and using that information to drive all your marketing efforts.The information is stored in a marketing database and can be usedat both the strategic and tactical levels to drive targeted marketing efforts.

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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

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Database Marketing (DBM) and

Customer Relationship Management (CRM)

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

In order to form a learning relationship with itscustomers, an enterprise (firm) must be able to:

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Based on Transaction Data

How

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Customer Relationship Management (CRM)

How

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A More Inclusive Definition of Database Marketing

Database marketing is a systematic approach to thegathering, consolidation, and processing ofmarketing databases to learn more about customersand competitors, select target markets, comparecustomers' value to the company, provide morespecialized offerings, as well as make othermarketing and strategic decisions.

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Database Marketing System

Memory Intelligence Output

Data AnalyticTools/Software

MarketingDecisions

Data

TransactionData

CustomerData

Other

Data

DataWarehousing

Database

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Customer Activity Database

Data Techniques Output/Application

Frequency, Cross-Tab

CorrelationLogistic regression

Decision Tree

Survival/Churn Analysis

Demographics

Subscription

Data

Direct marketing

Prospecting

Customer retention

Customer loyalty

Exit Data

PromotionsData

Activity Data

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Customer Activity Database - 2


Frequency, Cross-Tab

CorrelationAlgorithms for minimizing

distance traveled /

maximizing sales potential

Demographics

Subscription

Data

Segmentation

Store Location

Store PromotionLocation data

Distance Data

Activity Data

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Geodemographic Database


Segmentation

Targeting

Advertising/Promotion

Clusters

Demographics

Purchase

Reading habits

Vacationing

Zip codes

Cluster

Analysis

Distinct

Clusters

used for

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Supermarket Database


Logistic regression

Simultaneous system

Cluster analysis

Market basket analysis

Querying

Stocking/Inventorycontrol

Advertising

Shelf placement

Pricing/couponsRetailEnvironment

PanelPurchase Data

AggregatePurchase Data

Demographics

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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%)

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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 commerciallyavailable software such as SAS

Interpret the output from the analysis

Apply those techniques to some real-world marketing situations

and facilitate marketing decisions.

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Documents