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Marketing Research. Aaker, Kumar, Day and Leone Tenth Edition Instructor’s Presentation Slides. Chapter Twenty-six. Emerging Applications of Marketing Intelligence: Database Marketing and Relationship Marketing. To test a program prior to rolling it out: Define your target group
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Marketing Research Aaker, Kumar, Day and Leone Tenth Edition Instructor’s Presentation Slides
Chapter Twenty-six Emerging Applications of Marketing Intelligence: Database Marketing and Relationship Marketing
To test a program prior to rolling it out: • Define your target group • Go into your database • Create a matched set • Expose the test variable • Minimize other marketing efforts while the test is going on • Allow test program enough time to work • Measure results by comparing the two groups’ sales • Take action. If test results warrant going ahead, then • Implement it The Need for Databases
Active customers • Inactive customers • Inquiries Modeling customers serves to: • Identify most typical customers and so become more effective in prospecting. • Identify best customers to prospect • Identify niche markets to add to the marketing universe. • Develop more effective marketing tools (materials and media). Types of Databases
Rebate Cards Suggestion Cards Warranty Registration Cards Free Subscription Offer Cards Directly Ask Consumers Ways to Gather Consumer Data
Guerilla Tactics Get the product right Use low-tech targeting and creative thinking Use other people’s data (OPD) first Buy new media Ways to Gather Consumer Data (Cont.)
Customers are easier to retain than acquire • Determine their “lifetime value” to decide whether or not to encourage greater lifetime duration • Develop relationships with customers across a family of related products and services Benefits of Database Marketing
E-commerce influence • The impact of the net on purchases made entirely off-line • E-commerce ordering • Captures the orders that are placed on-line but paid for later via telephone or in-store • E-commerce buying • Combines ordering and paying on-line E-Commerce
Retailer responses to e-commerce are: • Selective price discounts • Concentrating attention on late adopters of technology • Creating and staging experiences • Partially adapting the Internet into a hybrid system E-Commerce (Contd.)
Shopping on the Internet Online Sales ($ billions) * Excludes Online auction and travel sales Source: Quarterly Retail E-Commerce Sales, 1st Quarter 2005, U.S. Census Bureau, May 2005
E-Commerce Survey Source: clickz.com
Keys to Relationship Marketing: Identify and build marketing databases of present and potential purchasers. Deliver differentiated messages to targeted households. Track the relationship to make media expenditures more effective and more measurable. Relationship Marketing
Customer acquisition Customer cross-sell Customer up-sell Customer retention Customer Analysis
Customer DNA Model Reporting & KPIs Customer Contact Management Customer DNA Modeling & Analysis Capability Single Customer View Legacy Systems & External Data
Customer lifetime value (CLV) • Calculated as the sum of cumulated cash flows —discounted using the Weighted Average Cost of Capital (WACC) or discount rate — of a customer over his or her entire lifetime with the company • Customer equity (CE) • The total of the discounted lifetime values summed over all of firm’s current and potential customers Developments in Relationship Marketing
Aggregate-level approach • CE framework can be used to: • Formulate firm/segment level strategies concerning investments in acquisition, retention, and add-on selling. • As a surrogate measure of the market worth of most firms and for comparing competing firms. • Disaggregate-level approach • CLVs of each customer can help to formulate customer-specific marketing strategies for: • Customer selection • Customer segmentation • Optimal resource allocation • Purchase sequence analysis • Targeting profitable prospects based on CLV Developments in Relationship Marketing (Contd.)