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1. 18 chapter ONE-TO-ONE MARKETING Prepared by Angela Zigras, Seneca College Deborah Baker, Texas Christian University Chapter 18

2. You Will Learn To ... 1. Define one-to-one marketing and discuss its relationship to database technology. 2. Discuss the forces that have influenced the emergence of one-to-one marketing. 3. Describe the one-to-one marketing communications process. Chapter 18

3. You Will Learn To ... 4. List the advantages and disadvantages of one-to-one marketing. 5. List eight common one-to-one marketing applications. 6. Discuss the basics of one-to-one marketing database technology. 7. Discuss privacy issues related to one-to-one marketing. Chapter 18

4. One-to-One Marketing A customer-based, information-intensive, long-term-oriented, and individualized marketing method that focuses on share of customer rather than share of market. Chapter 18

5. With a Focuson... What is One-to-One Marketing? One-to-One Marketing is... Share of Customer Customer-Based Information-Intensive Database Technology Long-Term Oriented Through Use of... Individualized Chapter 18

6. Focuses on Share of Customer Focuses on Share of Market One-to-One Marketing Mass Marketing Develops Customers Develops Products Finds Products for Customers Finds Customers for Products One-to-One Marketing Chapter 18

7. “One-to-One” Before Industrial Revolution Mass Production “One-to-One” Benefit of Technology The Evolution of One-to-One Marketing Chapter 18

8. Forces InfluencingOne-to-One Marketing Increasing Diversity More Demanding, Time-Poor Consumers Decreasing Brand Loyalty Emergence of New Media Alternatives Demand for Accountability Chapter 18

9. Consumer recognition as unique individuals Marketing Impact of Trends More direct and personal marketing efforts Rewards for loyalty Increased importance of One-to-One Marketing Marketing Impact of Trends Chapter 18

10. The New Commandment of Marketing’s Future Know thy customer and communicate with him or her based on what you know. Chapter 18

11. Sender Encoder One-to-One Message Channel Decoding Receiver The One-to-One MarketingCommunications Process Capture of response shapes futures message Receiver Response Chapter 18

12. Message is Personalized Channel is Direct Noise is not present Individual Responseis captured Communications Process Differences Chapter 18

13. Advantages of One-to-one Marketing • The ability to identify the most profitable customer. • The ability to create long-term relationships with customers. • The ability to target marketing efforts only to those people most likely to be interested. • The ability to offer varied messages to different consumers. • Increased knowledge about the customer. Chapter 18

14. Disadvantages of One-to-one Marketing • Marketing databases can be costly and time consuming. • Databases need to be carefully planned. • Consumer privacy issues. Chapter 18

15. 1. Identify the best customers 2. Retain loyal customers 3. Cross-sell other products or services 4. Design targeted marketing communications 5. Reinforce consumer purchase decisions 6. Induce product trial by new customers 7. Increase the effectiveness of distribution channel marketing 8. Improve customer service Eight Common One-to-One Marketing Applications Chapter 18

16. Identifying the Best Customers • 20% Of Customers • Account for 80% of Sales 80/20 RULE APPLIES Chapter 18

17. Retaining Loyal Customers Retaining an additional 5% of customers each year increases profits by 25% Improving customer retention by 2% can decrease costs by 10% Chapter 18

18. Other Marketing Applications through Databases • Match profiles to cross-sell other products to customers • Modify marketing messages based on customer profiles • Reach out to customers to reinforce the purchase decision Chapter 18

19. Other Marketing Applications through Databases • Find new customers • Gain insight into who is purchasing products • Improve customer service Chapter 18

20. Customer Relationship Marketing The process of gathering, maintaining, and analyzing information about customers and prospects to implement more efficient and effective marketing communications. Chapter 18

21. Marketing Database The compilation of names, addresses, and other pieces of pertinent information about individual customers and prospects that affects what and how marketers sell to them. Chapter 18

22. Basic Consumer and Business-to-Business Data Chapter 18

23. Analyze information to find answers Enhance customer data Collect the right data Building a Marketing Database Chapter 18

24. Enhance Customer Data Database Enhancement involves: The collection of detailed information about the consumer. • Demographic • Lifestyle • Behavioural Chapter 18

25. Database Enhancement The overlay of information to customer or prospect records for the purpose of better describing or better determining the responsiveness of customers or prospects. Chapter 18

26. Demographics Customer Segmentation Bases Geographics Purchase Behaviour Psychographics Customer Segmentation Chapter 18

27. Recency-Frequency-MonetaryAnalysis A data manipulation technique that determines the firm’s best customers by identifying those customers who have purchased most recently, most frequently, and who have spent the most money. RFM Chapter 18

28. Lifetime Value Analysis A data manipulation technique that projects the future value of the customer over a period of years using the assumption that marketing to repeat customers is more profitable than to first-time buyers. LTV Chapter 18

29. Show expense to acquire a new customer Provides level of spending to retain a customer Provides a basis for targeting new customers Uses of Customer Lifetime Value Chapter 18

30. Data Mining The process of using statistical analysis to detect relevant purchasing behaviour patterns in a database. Chapter 18

31. Create customer profiles Uses of Data Mining Determine the reason for customer loyalty Analyze the potential return for strategies Help forecast sales Data Mining Chapter 18

32. Create a Multimedia Marketing Initiative Deliver Personalized Messages Establish Enduring Customer Relationships .com One-to-One Marketingand the Internet Chapter 18

33. Unawareness of information collected Invasion of Privacy Misunderstanding about privacy laws and regulations Popularity of Internet for data collection Privacy Concerns withOne-to-One Marketing Chapter 18