Database Research in Integrated Marketing Communication

1. Database Research in Integrated Marketing Communication COMM 3710 April 17, 2002 Tim Larson

2. The State of Quantitative Marketing Research • Media research • Broadcasting- ratings used by the largest few • PR - counting news clips & broadcast placements • Advertising - 50% does some good • Personal selling - in the head of the sales person • Internet - hits, not conversions • Mostly qualitative • Research is used like the drunkard uses the lamppost, for support rather that illumination. David Olgilvy

3. The new marketing silver bullets…all integrated • One-to-One Marketing • Hybrid Marketing • Reputation Management • Interactive Marketing • Integrated Marketing • Integrated Brand Communications • Integrated Communications • Relationship Marketing or Management • CRM (Customer Relationship Management) • CEM Customer Experience Management • Integrated Marketing Communications • Integrated Marketing Communication

4. What do we integrate? • Departments within the organization • Customers and other stakeholders • Organizational and societal values • Behavior and emotion • Marketing communications functions (advertising) PR, direct, promotions, sales) • Content and style to achieve one look-one feel • Too often, it is still about logos and simple messages, not synergy.

5. IMC is data-driven marketing • The database, with supporting technology, is the basic element that allows the development of a behavioral approach to marketing. • Database analysis is the process that differentiates IMC from traditional MC • IMC starts at the end of the measurement process, with an outside-inside view, with consumer behavior, and then works back to explain why it exists.

6. Behavior Defined in IMC Terms • Any measurable activity by the customer or prospect that either (a) moves that person closer to a purchase decision in favor of the intended brand or (b) reinforces the presently favorable buying patterns that already exist.

7. Database Marketing • Marcom that is technologically and directly facilitated by a large database containing relevant information about customers & prospects. (Sirgy)

8. Through database marketing, you have… • The ability to target marketing efforts only to those people likely to be interested. • The ability to create long-term relationships with customers • The ability to offer varied messages to different consumers and other stakeholders • An advantage in distributing products • Increased knowledge about customers

9. Database technology allows… • The capability to address customers not as aggregate statistic but as flesh-and-blood. • Get to know customers at a personal level. • Track customers as individuals even if they number 50,000 000. ….all at an affordable cost.

10. Our Objective: • Use an integrated strategy, quantitative research methods, and new technologies to strengthen the marcom (marketing communication) function and show how database analyses reveals customer profitability and helps decision making that leads to maximization of return on investment (ROI) and customer loyalty .

11. Quantitative Database Measures • Examples of Studies 1. Customer profitability 2. Slogan research as a data point in branding 3. Consumer contact management 4. Source credibility 5. Concentration of customer profitability

12. Study #1. Customer profitability... • The net dollar contribution made by individual customers to an organization • Also known as lifetime value, customer valuation, customer lifetime value, customer relationship value, and customer equity.

13. Customer profitability... • Most studies in profitability have measured profits at the level of the firm, business unit, product, or brand. • Customer profitability has drawn little attention, not because it lacks importance but because it is difficult to get individual customer information. • Customer profitability measurement requires data on individual customers. • Now possible because of large scale, technically manipulated customer databases containing a history of individual purchase transaction, at the very least. • Treats customer as an asset analogous to other economic units. • Marketing efforts are best directed at the most profitable customers. DUH!

14. Customer profitability... • One-on-One IMC database examples…. • Fresh Value type cards • Running shoes • Car sales & service • Others? • Has important implications for marketing decision-making. It helps organizations segment markets, allocate marketing resources and specify marketing mix elements.

15. Customer Profitability… • Two Structural Probability Models • Standard lifetime customer value approach • Future purchases are forecasted and profitability is estimated by discounting future cash flows and variable costs to a present value. • Historical profitability analysis • Used where lifetime value is not relevant or when accurate projections of purchases cannot be made.

16. Study #2. Slogan research as a data point of branding… • Do you “know” this slogan? • If “yes” then what company is it associated? • Caywood & Gronstedt 2000 in USA Today

17. Top 10 Slogan Study • You’re in Good Hands • Allstate 81.7% • Please don’t squeeze the… • Charmin 80.4 • Snap, Crackle, Pop • Rice Krispies 80.2 • The Breakfast of Champions • Wheaties 72.5 • The Other White Meat • Pork 69.0

18. Top 10 Slogans , continued • No more tears • Johnson Baby Shampoo 67.5% • Double Your Pleasure, Double Your Fun • Doublemint 65.5 • The King of Beers • Budweiser 62.8 • The Un-Cola • 7-Up 59.2 • Like a Good Neighbor • State Farm 57.2 • We bring good things to life • GE 40.0 • Think Different • Apple 6.0

19. Study #3. Consumer Brand Contact Exercise Important to customer negative positive Less important to customer

20. Consumer Brand Contact Exercise Important to customer Disgusters Delighters negativepositive Niceties Annoyances Less important to customer

21. Tourism Brand Contact Exercise Important to tourism “stakeholder –travel press” “Canada has no comment, won’t return calls, never available” “They are expert industry sources. knowledgeable” negative positive “Doing some things right, lots of print and web stuff” “Hard to deal with…not meet deadlines” Less important to expert tourism stakeholder

22. Study #4. Source credibility • With whom do people consult to make purchasing decisions?

23. Example Question “Suppose that you had to make an investment decision about a business or company, for example, investing in stock. Where would you go to get information about this business or company?” (38 sources)

24. Sources of Information: Group 1 • Relevant, hands-on, objectivity? • Business or industry expert 78.8 • Professional advisor 78.7 • Stock broker known 76.7 • Consumer protection advocate 71.7 • Advisory from large inv. Instit. 71.1 • Professor at B-school 70.6

25. Group 2 • Relevant expertise (less hands-on) with journalistic objectivity • Story in financial or business newspaper • Story in financial or business magazine • Story in specialty investment magazine

26. Next Groups • Less than 70 • Expert but biased • CFO • CEO • President of Corporation • Less Expert but Personal • Friend in business • Family member • Stockholder

27. At the bottom • Impersonal, inexpert, subjective, unsolicited: • Labor union member • Direct mail prospectus • Ad. In newspaper or magazine • Internet ad • Mail video • Solicitation from unknown broker (cold call) • TV ad • Infomercial • Internet chat room

28. Recommendations • Maintain credible sources of experts, media and known industry representatives • Make annual report more available; use CFO vs. CEO • Educate CFO and CEO to speak to media • Use print media, not TV. • Advertising and other media integration

29. Study #5. Concentration of customer profitability ….80/20 Rule • Usually 20% of your customers provide 80% of your profit. • Are some of the 80% not profitable? • AT&T loses money on 25 million of its 70 million residential customers • Do 20% of my students take 80% of my time • Do I need to better allocate my time to better serve the 80%? • How much of all my time do I allocate to students? • Does 20% of what I do give me 80% of my reward? • How do I need to spend 80% of my time

30. Your Future in data-drivenIntegrated Marketing Communication as a University of Utah graduate... That is… If you have career expertise based upon database knowledge of customers and stakeholders plus skills of integrated communication and marketing…

31. They can’t have a meeting without you. …they can’t have the meeting, launch the new program, product, website or add value (profit) without you!

32. Assignment 4.1: Quantitative Database Analysis • Great database marketing paradox • Database that meets initial expectations and needs • Neglect to factor in continuing cost of maintenance • “Know thy customer and communicate with • him or her based on what you know.”