Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. CHAPTERCHAPTERCHAPTERCHAPTER Marketing Research and Database Development 6-2

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. The Value of Database Information  Categorizing customer data in a systematic, timely manner has become a critical function of marketing research.  Marketers can develop the ability to identify customers on an individual basis.  Marketers can rank a customer’s transactions over time.  Marketers can begin to access a “portal” where they can know what customers might or will purchase! 6-3

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. CRM and the Database Process  The foundation of a sound CRM process is an ability to provide shared information across an organization.  Marketing Research and Information Technology must “blend” together to build profiles of individual customers and react to their desires in a proactive way.  Databases, data warehouses, and data mining work in tandem using real-time data captured from customers to nurture and retain happy customers! 6-4

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. What is a Database? A database is a collection of information indicating what customers are buying, how often they buy, and the amount they’ve bought. 6-5

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. The Purpose of a Customer Database  Develop meaningful communication with customers.  Improve the efficiency of constructing market segments.  Increase the probability of repeat purchase behavior. 6-6

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Marketing Research & Data Enhancement Data enhancement allows a business enterprise to: Obtain more knowledge of customers. Increase the effectiveness of marketing programs. Predict responsiveness to changing marketing programs. 6-7

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. The Dimensions of a Typical Database 6-8 Source Data Geographic Market Residential Area Geodemographic Attitudinal Motivational Attribute Demographics Volume Usage Target Market

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. The Dynamics of Database Development The information generated for a database should possess the following four characteristics: 1)Affinity 2)Frequency 3)Recency 4)Amount 6-9

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Developing a Database: A Process 6-10 Determine Value of Information Identify Research Needs External Data on Behavior and Motivations Current Customer Status Database Processing System General Predictive Model Implement Marketing Action New Customer Status Target Market Characteristics Internal Data on Current Customer Profile

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Rules of Thumb in Database Development  Database development is a protracted process which requires commitment to a long-term vision for data acquisition.  Collect the data which will have the greatest impact for the future at the outset of the process.  View the database in terms of “depth” – the overall number of data fields and variables.  View the database in terms of “width” – the overall number of records. 6-11

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Database Systems Two types of database systems exist:  Sequential Systems  Relational Systems 6-12

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Data Warehousing Storing information in a data warehouse is an ongoing and iterative process, comprised of the following kinds of data:  Subject-Oriented Information  Integrated Information  Time-Variant Information  Nonvolatile Information 6-13

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Data Mining 6-14 The Marketing Research Question The Data Mining Approach The Data Mining Technique The Mining Implementation Process The Visual Mining Product

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Database Modeling Scoring Models rank customer segments based on the profit potential they have for the business enterprise. Lifetime Value Models use actual purchase behavior to predict future buying patterns. 6-15

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Summary of Learning Objectives  Illustrate and define a marketing research database.  Explain the interactive nature of marketing research and data enhancement.  Describe the dynamics of database development.  List the general rules of thumb in database development.  Demonstrate understanding of technology in a database context.  Illustrate the development and purpose of the data warehouse.  Explain the process of data mining as it relates to the data warehouse.  Understand the role of modeling in database analysis. 6-16