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

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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
as viewed by marketers
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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.
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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 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.
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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) andCustomer
Relationship Management (CRM)
How
In order to form a learning relationship with its
customers, an enterprise (firm) must be able to

• Notice what its customers are doing
• Remember what it and its customers have done
  over time
• Learn from what it has remembered
• Act On what it has learned to make customers
  more profitable

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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 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.
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Database Marketing System
Memory
Intelligence
Output
Data
Other Data
Data Warehousing
Data Analytic Tools/Software
Marketing Decisions
Customer Data
Database
Transaction Data
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Customer Activity Database
Data
Techniques
Output/Application
Demographics
Direct marketing
Frequency, Cross-Tab Correlation Logistic
regression Decision Tree Survival/Churn Analysis
Subscription Data
Prospecting
Activity Data
Customer retention
Exit Data
Customer loyalty
Promotions Data
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Customer Activity Database - 2
Data
Techniques
Output/Application
Demographics
Segmentation
Frequency, Cross-Tab Correlation Algorithms for
minimizing distance traveled / maximizing sales
potential
Subscription Data
Store Location
Activity Data
Store Promotion
Location data
Distance Data
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Geodemographic Database
Clusters
Data
Techniques
Output/Application
Zip codes
Segmentation
Demographics
Cluster Analysis
Distinct Clusters used for
Targeting
Purchase
Advertising/Promotion
Reading habits
Vacationing
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Supermarket Database
Data
Techniques
Output/Application
Stocking/Inventory control
Demographics
Logistic regression Simultaneous system Cluster
analysis Market basket analysis Querying
Aggregate Purchase Data
Advertising
Panel Purchase Data
Shelf placement
Retail Environment
Pricing/coupons
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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
  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.