Marketing Research Aaker, Kumar, Day and Leone Tenth Edition Instructor’s Presentation Slides 1

Marketing Research 10th Edition Chapter Twenty-six 2 Emerging Applications of Marketing Intelligence: Database Marketing and Relationship Marketing

Marketing Research 10th Edition The Need for Databases To test a program prior to rolling it out: ▫Define your target group ▫Go into your database ▫Create a matched set ▫Expose the test variable ▫Minimize other marketing efforts while the test is going on ▫Allow test program enough time to work ▫Measure results by comparing the two groups’ sales ▫Take action. If test results warrant going ahead, then ▫Implement it 3

Marketing Research 10th Edition Elements of a Database 1 A unique identifier such as an ID or match code 2 Name and title of individual and/or organization 3 Mailing address, including ZIP Code 4 Telephone number 5 Source of order, inquiry, or referral 4 6 Date and Purchase details of first transaction 7 Recency/frequency/monetary transaction history 8 Relevant demographic data for consumer buyers 9 Credit history and rating 10 Relevant organizational data for industrial buyers

Marketing Research 10th Edition Types of Databases Active customers Inactive customers Inquiries Modeling customers serves to: ▫Identify most typical customers and so become more effective in prospecting. ▫Identify best customers to prospect ▫Identify niche markets to add to the marketing universe. ▫Develop more effective marketing tools (materials and media). 5

Marketing Research 10th Edition Ways to Gather Consumer Data Rebate Cards Suggestion Cards Warranty Registration Cards Free Subscription Offer Cards Directly Ask Consumers 6

Marketing Research 10th Edition Ways to Gather Consumer Data (Cont.) Guerilla Tactics Get the product right Use low-tech targeting and creative thinking Use other people’s data (OPD) first Buy new media 7

Marketing Research 10th Edition Benefits of Database Marketing ▫Customers are easier to retain than acquire ▫Determine their “lifetime value” to decide whether or not to encourage greater lifetime duration ▫Develop relationships with customers across a family of related products and services 8

Marketing Research 10th Edition E-Commerce E-commerce influence ▫The impact of the net on purchases made entirely off- line E-commerce ordering ▫Captures the orders that are placed on-line but paid for later via telephone or in-store E-commerce buying ▫Combines ordering and paying on-line 9

Marketing Research 10th Edition E-Commerce (Contd.) Retailer responses to e-commerce are: ▫ Selective price discounts ▫Concentrating attention on late adopters of technology ▫ Creating and staging experiences ▫ Partially adapting the Internet into a hybrid system 10

Marketing Research 10th Edition Shopping on the Internet 11 Online Sales ($ billions) Quarter % Change Q1$15.99$ % Q2$16.76$ % Q3$17.63$ % Q4$18.61$ % Holiday*$17.29$ % Full Year$68.99$ % * Excludes Online auction and travel sales Source: Quarterly Retail E-Commerce Sales, 1st Quarter 2005, U.S. Census Bureau, May 2005

Marketing Research 10th Edition E-Commerce Survey 12 Reasons for shopping onlinePercent Saves time78% Better prices51% More selection43% Easier shipping40% Ability to find a more personalized gift28% More information available about the products20% Other8% Source: clickz.com

Marketing Research 10th Edition Relationship Marketing Keys to Relationship Marketing: Identify and build marketing databases of present and potential purchasers. Deliver differentiated messages to targeted households. Track the relationship to make media expenditures more effective and more measurable. 13

Marketing Research 10th Edition Customer Analysis Customer acquisition Customer cross-sell Customer up-sell Customer retention 14

Marketing Research 10th Edition Customer DNA Model 15 Legacy Systems & External Data Reporting & KPIs Single Customer View Modeling & Analysis Capability Customer Contact Management Customer DNA

Marketing Research 10th Edition Developments in Relationship Marketing Customer lifetime value (CLV) ▫Calculated as the sum of cumulated cash flows — discounted using the Weighted Average Cost of Capital (WACC) or discount rate — of a customer over his or her entire lifetime with the company Customer equity (CE) ▫The total of the discounted lifetime values summed over all of firm’s current and potential customers 16

Marketing Research 10th Edition Developments in Relationship Marketing (Contd.) Aggregate-level approach ▫CE framework can be used to:  Formulate firm/segment level strategies concerning investments in acquisition, retention, and add-on selling.  As a surrogate measure of the market worth of most firms and for comparing competing firms. Disaggregate-level approach ▫CLVs of each customer can help to formulate customer-specific marketing strategies for:  Customer selection  Customer segmentation  Optimal resource allocation  Purchase sequence analysis  Targeting profitable prospects based on CLV 17