Database Marketing using the Internet

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Database Marketing using the Internet

• Miklos A. Vasarhelyi

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Appetizers

• happy birthday
• what time is it now in the US?
• what's mum cooking today?
• at ATT we know how you feel and understand your
  need to talk to whom you want when you want
• as a participant of our last years' football card
  competition we want to give you the opportunity
  to be the first to order this year's luxury
  limited edition

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Appetizers (II)

• as a person interested in museums (having visited
  the Louvre Web) we would like to offer you a
  special collection of silver coins
• we are offering you the Visa platinum card with a
  very low interest rate (because your credit is
  excellent)
• we are offering you the Visa with no credit
  verification (at an exorbitant interest rate - as
  your credit stinks)

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Stages of Marketing

• mass marketing
• market segmentation
• consumers or businesses, still not individually
  identified, segmented based on their demographics
  or psychographics
• Relationship Marketing or Database Marketing
• focusing small groups or the individual

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Examples

• in 1992 General Motors joined Master Card to
  offer the GM card. Consequently today GM has a
  database with 12 million cards where it can
  analyze what car the holders drive, when they
  intend to change car, what car they would like to
  purchase, and what type of car they would like to
  get information about. This information is passed
  to GM's divisions, companies that sell
  complementary products, this information may be
  sold, etc.

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Examples (II)

• Blockbuster uses its database with 36 million
  residences and 2 million daily transactions to
  help their clients choose videos and to guide
  them to other products of subsidiary
  organizations.
• what else can they do with this data?
• what other characteristics may have this data?
• how does it compare with "cookies" data

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Examples (III)

• Harley Davidson distributes a free magazine every
  two monthshow could they improve this process
  with e-media?
• 'Wired' magazine has most of its content free on
  the WEB, for obtaining access it is necessary to
  send them e-mail and then you receive an access
  code to "hot wired
• why?
• what are the advantages and disadvantages?

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Examples (III)

• Kraft General Foods has more than 30 million
  names of consumers obtained from coupons or in
  response to promotions
• they frequently correspond with buyers concerning
  nutrition, exercise, recipes, etc.
• how can this process be improved?
• can e-media add to this process?
• could you use
• e-mail
• listserv
• discussion groups
• Web sites
• other?

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How it works

• 1. there is a productbitable or not
• 2. data for the database
• 3. digesting the data
• 4. an ideal consumer
• 5. using the knowledge
• 6. sharing the data with wholesalers
• 7. refining the database

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The product

• any product
• large volume makes is more interesting
• associated products decrease the costs
• international markets make the Internet
  particularly interesting
• legal restrictions make the Internet sometime the
  only viable channel

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data for the database

• sources
• product warranties
• entering a drawing
• magazine subscriptions
• information about products
• information on the moment of sale
• centralized databases
• driving licenses, car licenses, real estate
  registry, etc.
• legal and ethical limitations

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data (cont.)

• obtain consumer's data at the moment of access
  (free access analogous to TV)
• obtain consumer data when giving information -
  free services
• use 'cookies' to draw a map of client's surfing
• ethical and reputation problems
• pay the client to be able to monitor her behavior

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Fact

• American Express Decisions Sciences database in
  Phoenix Arizona is a distributed database,
  contained in 70 'workstations' and has data
  about millions of cardholders, the stores they
  used, the places they travel to, the restaurants
  they sponsor, the weather conditions of where
  they live
• to these they could add a profile of their
  family's surfing habits

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Fact (American Express - cont.)

• a trip to London using BA may trigger a special
  offer of a weekend in London
• a purchase at Harrods triggered a series of
  special offers at the storepassing the on-line
• aspect to the offer you can provide alternative
  offers (e.g. renting video-cassettes)
• the multiple parties affected
• what are the issues?

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digesting the data

• relational databases
• linking files
• consolidating information
• keeping data updated
• important but costly

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the ideal consumer

• the computer identifies the characteristics of
  the consumer based on the profile of the high
  volume consumers of a product
• then it groups the consumer that share these
  characteristics, interests, income, ethnic group,
  product preference, product loyalty
• these are then identified as the target group

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using the knowledge

• targeted campaigns
• understanding what you do know /not know of the
  market
• segmenting products
• creating a tailored image
• and now with the Internet
• real-time messages
• messages based on distance
• opportunities for immediate answer

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sharing with distributors

• scanner data informs what the consumer is buying
• attaching manufacturer data helps to prepare
  promotions
• well used help choose where and how to place a
  product on the shelves
• using the Internet allows immediate promotions,
  in multimedia, responding directly the consumer
  requirements

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refining the database

• managing addresses
• understanding family changes
• understanding the moment of the move
• or other critical events
• E-Mail addresses may follow the consumer
• 'bundling' traditional and electronic offers