Chapter 3 The Impact of Databases

What is a database? Flat file – Access is slow – Most older legacy systems Relational – Files are linked by a duplicate variable in each table (customer or ID #)

Types of Data Internal – Purchases – Customer Transactions – Amount Spent – Transaction dates – Promotion history – Customer services – Profitability – Lifetime value Expternal – Address – Houshold – Demographics – Socioeconomic data – Lifestyle psychographics – Firmographics – Geo-demographics

Database Marketing and Customer Relationships CRM – The processes a company uses to track and organize its contacts with its current and prospective customers. It can be analyzed in order to plan target-marketing campaigns, conceive business strategies etc.

Lifetime Value (LTV) Loyal Customers Repeat purchasers One-time-only triers Well-defined market segments

Data Warehouse Good storage and reporting system Decision Support Systems and Executive Information Systems EIS Can Feed a Data Mart

Data Mining Process of discovering patterns or trends Cluster Analysis Market Basket Analysis Neural Networks

Cluster Analysis Cluster analysis is a data reduction technique that group variables based on similar data characteristics Segmenting customers

Market Basket Analysis Lets us look at what customers typically buy together Product placement Product suggestions – Online – McDonalds

Neural Networks Discover and predict relationships in data Black box Complex formulas

International Databases Postal address coding Name characteristics - fields Requires flexibility

Privacy HIPPA Financial Security US and EU rules