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Databases and Marketing Customer databases Data Warehouses Database Mining

Databases and Marketing Customer databases Data Warehouses Database Mining

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Page 1: Databases and Marketing Customer databases Data Warehouses Database Mining

Databases and Marketing

Customer databases

Data Warehouses

Database Mining

Page 2: Databases and Marketing Customer databases Data Warehouses Database Mining

Customer experience management (CEM) is the collection of processes a company uses to track, oversee and organize every interaction between a customer and the organization throughout the customer lifecycle. The goal of CEM is to optimize interactions from the customer's perspective and, as a result, foster customer loyalty.

Why Customer Experience Management Is ImportantStrengthen brand preference.

• Boost revenue.• Improve customer loyalty.• Lower costs by reducing customer churn.

Challenges• Creating consistent brand experiences across channels. • Consolidating data into a single view of the customer• Create and maintain complete customer profiles.• Personalize all customer interactions. • Get the right information to the right place at the right time – every

time

Page 3: Databases and Marketing Customer databases Data Warehouses Database Mining

Data Marts and Data Warehouse

Page 4: Databases and Marketing Customer databases Data Warehouses Database Mining
Page 5: Databases and Marketing Customer databases Data Warehouses Database Mining
Page 6: Databases and Marketing Customer databases Data Warehouses Database Mining

Data Mining

Page 7: Databases and Marketing Customer databases Data Warehouses Database Mining

What is data mining?– Methods for finding interesting structure in

large databases• E.g. patterns, prediction rules, unusual cases

– Focus on efficient, scalable algorithms• Contrasts with emphasis on correct inference in

statistics

– Related to data warehousing, machine learning

Page 8: Databases and Marketing Customer databases Data Warehouses Database Mining

DM Process Model

Page 9: Databases and Marketing Customer databases Data Warehouses Database Mining

9

Where Does Data Mining Fit In?

Hindsight

Foresight

Insight

Analysis andReporting (OLAP)

StatisticalModeling

DataMining

Page 10: Databases and Marketing Customer databases Data Warehouses Database Mining

Common Data Mining Techniques

• Predictive modeling– Classification

• Derive classification rules• Decision trees

– Numeric prediction• Regression trees, model trees

• Association rules• Meta-learning methods

– Cross-validation, bagging, boosting

• Other data mining methods include:– artificial neural networks, genetic algorithms, density estimation,

clustering, abstraction, discretisation, visualisation, detecting changes in data or models

Page 11: Databases and Marketing Customer databases Data Warehouses Database Mining

Overview of Database Marketing

Page 12: Databases and Marketing Customer databases Data Warehouses Database Mining

What is Database Marketing?

• An information driven marketing process made possible by database technology that enables marketers to

develop, test, implement, measure and modify

customized marketing programs and strategies

Page 13: Databases and Marketing Customer databases Data Warehouses Database Mining

Premise of Database Marketing

• Not all customers are alike (20-80-30 rule)• Gathering, maintaining, and analyzing customer

and prospect info allows marketers to

- identify key mkt segments

- optimize planning, pricing and promoting

- close deals satisfying both buyers and sellers

Page 14: Databases and Marketing Customer databases Data Warehouses Database Mining

What is required for Database Marketing?

• Relevant data about customers and prospect• Database tech to transform raw data into powerful

and accessible mkt info• Statistical techniques to rank customers in terms

of their likeliness to- respond to mkt communication- buy products- return products- pay for products- stay or leave

Page 15: Databases and Marketing Customer databases Data Warehouses Database Mining

Uses of Database Marketing?

Page 16: Databases and Marketing Customer databases Data Warehouses Database Mining

Strategic Marketing Planning & Marketing Process

Page 17: Databases and Marketing Customer databases Data Warehouses Database Mining

What is Strategic Planning?

• It is the managerial process that helps to develop a strategic and viable fit between the firm’s objectives, skills, resources with the market opportunities available. It helps the firm deliver its targeted profits and growth through its businesses and products.

Page 18: Databases and Marketing Customer databases Data Warehouses Database Mining

Organizational Levels

The Corporate Level is the

highest level in any organization.

The Functional Level includes all the various functional areas within a business unit.

The Business Level consists of units within the overall organization that are generally managed

as self-contained businesses.

Page 19: Databases and Marketing Customer databases Data Warehouses Database Mining

Corporate Mission

• This seeks to embody the entire goals of the organization and the objective of its existence.

• It seeks to provide a sense of purpose, direction and opportunity

Page 20: Databases and Marketing Customer databases Data Warehouses Database Mining

Types of Strategic Plans

Page 21: Databases and Marketing Customer databases Data Warehouses Database Mining

Business-Unit Composition

• Companies often organize around competency-based SBUs to establish Sustained Competitive Advantage.

• Companies often organize around competency-based SBUs to establish Sustained Competitive Advantage.

Page 22: Databases and Marketing Customer databases Data Warehouses Database Mining

Business Strategy Decisions

• Dimensions of Strategy:– Market scope.

– How broadly the business views its target market.

– Competitive advantage.

• Competitive Advantage:– The way a business

tries to get consumers to purchase its products over those offered by competitors.

Page 23: Databases and Marketing Customer databases Data Warehouses Database Mining

Marketing Strategy Decisions

A Marketing Strategy Addresses:

• Selection of a target market.

• Development of a marketing mix.

Functional strategiesare at the

business-unit level.

Operating strategies

are at the product level.

Page 24: Databases and Marketing Customer databases Data Warehouses Database Mining

Levels of a Marketing Plan

• Strategic– Target marketing

decisions– Value proposition– Analysis of

marketing opportunities

• Tactical– Product features– Promotion– Merchandising– Pricing– Sales channels– Service

Page 25: Databases and Marketing Customer databases Data Warehouses Database Mining

The Strategic Planning, Implementation, and Control Processes

Page 26: Databases and Marketing Customer databases Data Warehouses Database Mining

Porter’s Generic Strategies

Overall Cost Leadership

Differentiation

Focus

Page 27: Databases and Marketing Customer databases Data Warehouses Database Mining

Categories of Marketing Alliances

Product or Service AlliancesProduct or Service Alliances

Promotional AlliancesPromotional Alliances

Logistics AlliancesLogistics Alliances

Pricing CollaborationsPricing Collaborations

Page 28: Databases and Marketing Customer databases Data Warehouses Database Mining

Product/Market Opportunity Matrix

Market

Product

New

Present

Present New

MarketPenetration Strategy

MarketDevelopment Strategy

ProductDevelopment Strategy

Diversification Strategy

Page 29: Databases and Marketing Customer databases Data Warehouses Database Mining

How to Achieve aDifferentiation-Based Advantage

Incorporate product features/attributes that lower buyer’s overall costs of using product

Approach 1

Incorporate features/attributes that raise the performance a buyer gets out of the product

Approach 2

Incorporate features/attributes that enhance buyer satisfaction in non-economic or intangible ways

Approach 3

Compete on the basis of superior capabilities

Approach 4

Page 30: Databases and Marketing Customer databases Data Warehouses Database Mining

Competitive Advantage Cycle

Page 31: Databases and Marketing Customer databases Data Warehouses Database Mining

Integrated Marketing Communications

Challenges today:

Customer is changing.

Marketing strategies are changing.

Communication Technologies are changing.

Why does the need for an IMC arise???

Page 32: Databases and Marketing Customer databases Data Warehouses Database Mining

Effective marketing

• Target Audience• Communication Objective• Message Design- Content , Format and

Structure• Choosing Media - Personal and Non-Personal• Selecting Message Source• Collecting Feedback

Page 33: Databases and Marketing Customer databases Data Warehouses Database Mining

Promotion strategies

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Promotion mix

Advertising

Sales Promotion

Personal Selling

Public Relations

Direct Marketing

Page 35: Databases and Marketing Customer databases Data Warehouses Database Mining

Communication Process

Sender

Feedback

Response

Receiver

Decoding

Encoding

Message

Media

Page 36: Databases and Marketing Customer databases Data Warehouses Database Mining

SETTING TOTAL PROMOTION BUDGET AND MIX

4 METHODS OF SETTING UP PROMOTION MIX

AFFORDABLE METHOD- Promotion budget at the level company can afford.

PERCENTAGE OF SALES METHOD-Promotion budget at the certain percentage of current or forecasted sales.

COMPETITIVE PARITY METHOD-Promotion budget to match competitors outlay.

OBJECTIVE AND TASK METHOD-Promotion budget based on what it wants to accomplish with promotion.

Page 37: Databases and Marketing Customer databases Data Warehouses Database Mining

PROMOTION MIX STRATEGY

PUSH STRATEGY-Strategy that calls for using sales force and trade promotion to push product through channels.

PULL STRATEGY-Strategy that calls for spending a lot on advertising and consumer promotion to induce final consumers to buy product like creating demand vacuum.

Page 38: Databases and Marketing Customer databases Data Warehouses Database Mining

ADVERTISEMENT

Any paid form of non personal presentation and promotion of ideas, goods or services by an identified sponsor.

Page 39: Databases and Marketing Customer databases Data Warehouses Database Mining

MAJOR ADVERTISMENT DECISIONS

• SETTING ADVERTISEMENT OBJECTIVES

communication objectives

sales objectives• BUDGET DECISION

affordable approach

percent of sales

competitive parity

objective & task• ADVERTISMENT STRATEGY

MESSAGE DECISION

message strategy

message evaluation

MESSAGE DECISION

reach, frequency, impact

major media types

media timing• ADVERTISMENT EVALUATION

communication impact

sales & profit impact

return on advertisement

Page 40: Databases and Marketing Customer databases Data Warehouses Database Mining

PUBLIC RELATIONS

Building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image and handling or heading off unfavorable rumors, stories and events.

Page 41: Databases and Marketing Customer databases Data Warehouses Database Mining

PR DEPARTMENT FUNCTIONS

• Press relations or press agency• Product publicity• Public affairs• Lobbying• Investor relations• Development

Page 42: Databases and Marketing Customer databases Data Warehouses Database Mining

ADVERTISING APPEALS

Page 43: Databases and Marketing Customer databases Data Warehouses Database Mining

ADVERTISING APPEAL

• Indispensable part of every advertisement.• Central idea of an ad that elicits the much

desired response.• 2 techniques that can be identified in advertising

response: ADVERTISING APPEAL & ADVERTISING EXECUTIONS.

• Every advertisement is an appeal to buy & use the product or the service supported by reasons to buy & use.

Page 44: Databases and Marketing Customer databases Data Warehouses Database Mining

ESSENTIALS OF GOOD APPEAL

• It should be thematic.• It should be communicative.• It should be interesting.• It should be believable.• It should be complete.

Page 45: Databases and Marketing Customer databases Data Warehouses Database Mining

ADVERTISING APPEALS & BUYING MOTIVES

• Advertising appeals are made to consumer motives.

• Buying motives are the consumer expectations or the buyer specifications. They tell us what each consumer wants to satisfy his needs.

• If the buying motives specify what consumer expect, the appeal speaks the degree to which such specifications are met.

Page 46: Databases and Marketing Customer databases Data Warehouses Database Mining

APPEALS & SELLING POINTS

• An advertising appeal is the basic use of service or satisfaction which the product or the service can render and which the advertisement represents.

• What we call as the TALKING POINTS for the salesman, are the SELLING POINTS for an advertiser.

• An appeal is convincing on the basis of product characteristics, merits, satisfaction which we call as selling points.

Page 47: Databases and Marketing Customer databases Data Warehouses Database Mining

CLASSIFICATION OF APPEALS

• Advertising appeals are broadly classified into 3 categories:

Product or Service related appealsConsumer related appealsNon-Consumer & Non-product Related

appeal.

Page 48: Databases and Marketing Customer databases Data Warehouses Database Mining

I.PRODUCT OR SERVICE RELATED APPEALS

This type of appeal focuses on the product or service features, where some of the aspects of product classification are described. Such appeals do not state openly the consumer benefits as they are implied.

Product feature appeal Product Competitive advantage appeal Product price appeal Product News appeal Product popularity appeal Product generic appeal

Page 49: Databases and Marketing Customer databases Data Warehouses Database Mining

II. CONSUMER RELATED APPEALS

• These ads harp on the direct consumer benefits.

• Emphasis is on what the product or service does for the consumer, i.e. consumer satisfaction.

Consumer service appeal Consumer savings appeal Consumer self-enhancement appeal Consumer fear appeal Consumer subsidized product trial appeal

Page 50: Databases and Marketing Customer databases Data Warehouses Database Mining

Measurement & Evaluation

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Reasons for Measuring Campaign Effectiveness

• To help all brand stakeholders understand the link between marketing investment and return on investment

• To evaluate alternative strategies

• To increase the efficiency and effectiveness of the IMC campaign– In the immediate short term or in the future

Page 52: Databases and Marketing Customer databases Data Warehouses Database Mining

Communication Evaluation Considerations

Questions that could be asked:

• Is the advertising working?• Is the message compelling given the

target audience we’re trying to reach?• Is the creative effective?• Is the media strategy effective?

Page 53: Databases and Marketing Customer databases Data Warehouses Database Mining

CONSUMER SUBSIDISED PRODUCT TRIAL APPEAL

• Whenever the advertiser is believing in generating initial or extra sales, he does it through the product trial strategy.

• The advertiser offers a free sample, a price reduction or some other purchase incentive to encourage consumer trial or use.

Page 54: Databases and Marketing Customer databases Data Warehouses Database Mining

III. NON CONSUMER & NON PRODUCT RELATED APPEALS

• They are founded on the fine works of the company- may be profit making or non profit making or on some sort of organized activity for which public support is desired & accepted.

Corporate citizenship appealsInvestor solicitation appeals

Page 55: Databases and Marketing Customer databases Data Warehouses Database Mining

CORPORATE CITIZENSHIP APPEALS

• They attempt to portray the company’s achievements or the contribution to the mankind or the society.

• It presents all that is done by the corporate house in the public interest- social, economic, philanthropic.

• It is used to create a favorable attitude towards the company.

Page 56: Databases and Marketing Customer databases Data Warehouses Database Mining

INVESTOR SOLICITATION APPEALS

• This kind of appeal is addressed to the investment community, soliciting the benefits of investment in the company in question.

• Solicitation appeals say that the company is well managed, the line of activity undertaken is really profitable or makes widest range of products well known in the national or international markets.

Page 57: Databases and Marketing Customer databases Data Warehouses Database Mining

Sales Promotion

Why ? Types? How?

Page 58: Databases and Marketing Customer databases Data Warehouses Database Mining

Whereas advertising gives a reason to buy, SP gives an incentive to buy

It is part of the Marketing spend of all companies and these days SP spends in many companies exceed that of the

adspends

Page 59: Databases and Marketing Customer databases Data Warehouses Database Mining

SP is of two types

• Trade• Consumer

Page 60: Databases and Marketing Customer databases Data Warehouses Database Mining

Forms of trade promotion

• Bulk discounts• Free materials• Display windows• Shelf hiring• Lucky draws• ‘Mystery’ customer• Redistribution incentives• Shop salesmen incentives

Page 61: Databases and Marketing Customer databases Data Warehouses Database Mining

Forms of consumer promotion

• Free samples• Free gifts• Coupons• In-packs• Price packs• Price-offs• Sweepstakes• Bundling offers

Page 62: Databases and Marketing Customer databases Data Warehouses Database Mining

Promotion at different stages of the PLC

• Introduction – wise to use heavy promotion to induce trials and promote brand franchise

• Growth – promotion should be limited ,if any• Maturity – Higher promotions required since the

brand is under attack from competitors or product quality or advertising effectiveness is tapering off

• Decline – Heavy promotions. Used only to retain a set of loyal customers. Prior to withdrawal of the product, it could be used as a one time stock clearance from the trade

Page 63: Databases and Marketing Customer databases Data Warehouses Database Mining

Essential elements for an effective SP programme

• Significant value before promotion is effective• Promotions must be part of an overall plan• Every brand must have a promotion objective

and a strategy statement• A written tactical plan – time frame, costs,

evaluation yardsticks• Factual knowledge must be gathered to plan• Specialised professional skill and knowledge

must be applied to every promotion operations

Page 64: Databases and Marketing Customer databases Data Warehouses Database Mining

Final considerations• Don’t promote if the

product is not good• Promotions rarely stop a

declining sales curve• Must be effective in

retaining new customers. So the product has to speak for itself.

• The objective of the promotion is to wean away users from competition and create new users.

• Excessive promotions lead to diminishing returns and may devalue the brand

• Promotions may be used in conjunction with advertising and other marketing communication tools

• It should be novel and attractive• Ensure supply lines are good

and adequate stock is available right through the promotion

• Cater for contingencies. Have escape routes built into the plan

• Trade has to be handled tactfully

• Reimburse incentives/ rewards/ gifts promptly

• Must be within the legal boundaries

Page 65: Databases and Marketing Customer databases Data Warehouses Database Mining

Advtg v/s WOM

• Word-of-mouth is actually the center of the marketing universe

• Much of marketing actually centers around illusion-creation. Word-of-mouth offers an authenticity effective tool; and best of all, it is absolutely free.

• Word-of-mouth can take on a life of its own.• The most important way by which sales can

increase is by increasing the speed Simplicity, ease, and fun with which decisions are made.

Page 66: Databases and Marketing Customer databases Data Warehouses Database Mining

How to develop an effective WOM program

• Find some way to get the influencers to talk and get all fired up about your product.

• Create fun events to bring users together and invite non-users.

• Create a club with membership benefits.Pass out flyers. Tell friends. Offer special incentives and discounts for friends who tell their friends.

• Empower employees to go the extra mile.

Page 67: Databases and Marketing Customer databases Data Warehouses Database Mining

Managing Campaigns

Page 68: Databases and Marketing Customer databases Data Warehouses Database Mining

Advertising Planning Process

Advertising Objectives Advertising Objectives

Budget DecisionsBudget Decisions

Creative StrategyCreative Strategy

Campaign EvaluationCampaign Evaluation

Media StrategyMedia Strategy

Brand Positioning Target Market

Page 69: Databases and Marketing Customer databases Data Warehouses Database Mining

A Campaign Management Outline

i. Where are we?

ii. Why are we there?

iii. Where could we be?

iv. How could we get there?

v. Are we getting there?

i. Develop a situation analysis.

ii. Identify Problems.

iii. Identify Opportunities.

iv. Develop message, media, and marketing communications strategy and tactics.

v. Develop a plan to measure

(track) campaign effectiveness.

Page 70: Databases and Marketing Customer databases Data Warehouses Database Mining

Campaign Tasks include

• Identifying the problem• The budget• Target audience• Pretesting Message• The language• The visual and the copy• Media selection• Timing and duration• Post testing• Effect on sales