1. Database Marketing Course – Professor Raj Sethuraman Discussion Topics for First Session What is Database Marketing? Why Database Marketing? Basics of Database Marketing (DBM) Applications of DBM Syllabus

2. What is Database Marketing? Compare and Contrast Traditional Data Analysis Data Mining Database Marketing

3. Similarities and Differences Criteria Traditional Data Analysis* Data Mining* Database Marketing Data analysis objectives generally clearly stated not clearly stated may or may not be clearly stated Apriori Theoryoften existsusually not there may exist Size of typical database small-moderatelargetypically large Analytical toolsrelatively less advanced (traditional) advanced (newer) advanced CRM orientationnot necessaryhighgenerally high but not necessary *as viewed by marketers

4. Some Definitions of Database Marketing AMA definition: An approach by which computer database technologies are harnessed to design, create, and manage customer data lists containing information about each customer's characteristics and history of interactions with the company. The lists are used as needed for locating, selecting, targeting, servicing, and establishing relationships with customers in order to enhance the long-term value of these customers to the company. Another definition Database marketing is a systematic approach to the gathering, consolidation, and processing of consumer data (both for customers and potential customers) that is maintained in a company's databases. Although databases have been used for customer data in traditional marketing for a long time, the database marketing approach is differentiated by the fact that much more consumer data is maintained, and that the data is processed and used in new and more sophisticated ways.

5. Some Definitions of Database Marketing Third definition: Database marketing is a way of organizing a company’s customer and prospect data so that it can be used more effectively in a direct marketing effort. It is a way of organizing the whole marketing process. Database marketing allows you to choose what to market to whom and when based on the sum total of your knowledge and experience with a customer or prospect. Fourth definition Database marketing is the technique of gathering all the information available about your customer, leads, and prospects into a central database and using that information to drive all your marketing efforts. The information is stored in a marketing database and can be used at both the strategic and tactical levels to drive targeted marketing efforts.

6. Why Database Marketing? Informational Reasons Availability of abundance data Permission to collect them Technological Reasons Technology to collect and warehouse data Technology and computing power available to analyze them Availability of commercial software, some of which are even “user friendly” (e.g. XL miner, SAS enterprise miner) Commercial Reason Interest in generating intelligence to remain competitive main market share Drive to be efficient

7. Database Marketing (DBM) and Customer Relationship Management (CRM) 1. Notice – what its customers are doing 2. Remember – what it and its customers have done over time 3. Learn – from what it has remembered 4. Act On – what it has learned to make customers more profitable How In order to form a learning relationship with its customers, an enterprise (firm) must be able to:

8. Based on “Transaction” Data How

9. Customer Relationship Management (CRM) How

10. A More Inclusive Definition of Database Marketing Database marketing is a systematic approach to the gathering, consolidation, and processing of marketing databases to learn more about customers and competitors, select target markets, compare customers' value to the company, provide more specialized offerings, as well as make other marketing and strategic decisions.

11. Database Marketing System MemoryIntelligenceOutput Data Analytic Tools/Software Marketing Decisions Data Transaction Data Customer Data Other Data Warehousing Database

12. Customer Activity Database DataTechniquesOutput/Application Frequency, Cross-Tab Correlation Logistic regression Decision Tree Survival/Churn Analysis Demographics Subscription Data Direct marketing Prospecting Customer retention Customer loyalty Exit Data Promotions Data Activity Data

13. Customer Activity Database - 2 DataTechniquesOutput/Application Frequency, Cross-Tab Correlation Algorithms for minimizing distance traveled / maximizing sales potential Demographics Subscription Data Segmentation Store Location Store Promotion Location data Distance Data Activity Data

14. Geodemographic Database DataTechniquesOutput/Application Segmentation Targeting Advertising/Promotion Clusters Demographics Purchase Reading habits Vacationing Zip codes Cluster Analysis Distinct Clusters used for

15. Supermarket Database DataTechniquesOutput/Application Logistic regression Simultaneous system Cluster analysis Market basket analysis Querying Stocking/Inventory control Advertising Shelf placement Pricing/coupons Retail Environment Panel Purchase Data Aggregate Purchase Data Demographics

16. Database Marketing Industry (CRM only) (Based on Forrester Report) Total DBM spending estimated at $2.5 Billion Expected growth rate, next three years: 10%- 25% Major players and market share: Acxiom (about 30%), Harte-Hanks (10%), Experian and Epsilon (over 5%), Merkle (under 5%), All others (40%)

17. Objectives of the DBM Course To enable students to Appreciate and understand the scope of database marketing Learn some common data mining techniques Implement some of those techniques using commercially available software such as SAS Interpret the output from the analysis Apply those techniques to some real-world marketing situations and facilitate marketing decisions.