What is the difference between?

• Mass Market• Target Market• Database Market

Customer Database &

Database Marketing

Session Coverage

• Customer Databases

• Data Warehouses

• Data Mining

DATABASE MARKETING• Companies treat all customers as one body, one

intellect or one segment• Communication campaign (in most cases) send

the same message or make same offer to all the customers

• This is against the strategic goal of database marketing

• “It involves use of computers to capture transaction information and track customer profiles”

NEED FOR DATABASE MARKETING

So Many Changes in MarketingRetail / Banking

• Kariana Shops(merchants)

• 18 Million in India• Know you & family• One to one relation• Personal Service• Recognize you, your

needs and want• “Your Loyalty must for

their business”

• Retail Store Chains• Impossible for them to

know each customer in individualized fashion

• Only with sophisticated marketing database technology, we can capture, analyze and act on same interpersonal marketing opportunities

Target Marketing SegmentationTwo Approaches

• Cognitive• (look Like)• Demographic

– Age, Income, Edu

• Psychographic– VALS

“Very logical approach to refine suspect to more likely prospect”

• Behavioral• How they act?• Requires base info• Requires all transaction

information electronically– Date of last to most recent

purchase– Frequency of purchase– Av amount spent per

order

BUT..THIS IS ONLY THE ENTRY POINT INTO THEPRACTICE OF INTELLIGENT MARKETING

Analysis can now begin

• RFM MODEL• Sort customers by purchase date• Divide customers list into 5 equal

segments• Next sort customers by no of orders and

monetary value• RFM Score-Best Customer Segment-111• Worst Customer Segment-555

RFM Model

Results

• It answers-What %age of your sales has come from which segment (80 / 20 rule)

• Implement new marketing campaign on certain %ages of each segment

• Test their response• Benefits:• Easy and cost effective• Increased response rates• Greater Profit

Profit and Loss from RFM Cells

HP on Customer Loyalty

• A very satisfied customer is 6x more likely to repurchase than a satisfied one

• The average customer with a problem eventually tells 9 other people

• Acquiring a new customer costs 5-7x more than retaining one

• An increase in customer retention of 5% can boost profits 25-85%

Database Marketing System-Model

Memory Intelligence Output

Data AnalyticTools/Software

MarketingDecisions

Data

TransactionData

CustomerData

Other Data

DataWarehouse

Database

Geo-demographic Database

Data Techniques Output/Application

Segmentation

Targeting

Advertising/Promotion

Clusters

Demographics

Purchase

Different habits

Pin codes

Cluster

Analysis

Distinct

Clusters

used for

Different Trends in terms of Clusters

Customers Same Preferences, Existing Brands would be Similar

Preferences-Scattered throughout,1st brand to position in center

Firms develop many brands

Classification of Data

Classification

Internal Data External Data

Internal Data• Generated within the organization.• May be readily available or may require

considerable processing before marketer can use it.

• Sales and Cost data compiled in regular accounting process.

• Importance:• Reebok: Analyzed internal sales data and found

that internet sales was only 0.7% and retailers had bad feelings about it. STOPPED