1. Optimal Database Marketing Drozdenko & Drake, 2002 1

2. 2 Marketing Databases and the Internet Chapter 15

3. Optimal Database Marketing Drozdenko & Drake, 2002 3 Objectives Examine basic Internet Strategy. Examine database integration access DM media. Review growth patterns for Internet marketing. Examine basic advantages and disadvantages of Internet Marketing. Examine communication options with e-mail.

4. Optimal Database Marketing Drozdenko & Drake, 2002 4 Internet Marketing Strategy Developing a strategy for Internet database marketing is fundamentally similar to developing strategies for other direct marketing media. Focusing on customer relationships and repeat business will be more profitable over the long term versus focusing on single transactions. Cross selling is also an important strategic option that applies to all direct marketing channels.

5. Optimal Database Marketing Drozdenko & Drake, 2002 5 Database Integration An integrated database allows multiple communications and transactions to be tracked, regardless of whether by phone, mail, Internet, wireless devices (m-commerce, or mobile commerce), or at a physical retail location. Indeed, the integrated clicks and mortar (aka clicks and bricks) approach is more common than single-channel marketing on the Internet. A study by the Boston Consulting Group of 400 online retailers showed that the clicks and mortar retailers accounted for 62% of online revenues, whereas pure online retailers accounted for 38%. The multichannel retailers have an advantage over the single-channel Internet marketers. They spend less to acquire customers, have lower marketing expenses, and have more repeat business.

6. Optimal Database Marketing Drozdenko & Drake, 2002 6 E-Mail Traditiona l Mail Internet Wireless Telephon e Physical Location Integrated Database System Customer Record Updating Data Analysis and Data Mining Systems Strategy and Program Develop- ment Exhibit 15.1 Possible Inputs Into the Database for a Multichannel Marketer

7. Optimal Database Marketing Drozdenko & Drake, 2002 7 Growth in Internet Commerce Internet commerce is experiencing a dynamic growth at this time. While the predictions vary widely, there is consensus that both consumer and b-to-b Internet marketing will continue to grow over the next several years. Service seems to be an important aspect of Internet commerce and Internet marketers will have to develop effective and efficient methods of interacting with customers.

8. Optimal Database Marketing Drozdenko & Drake, 2002 8 The Internet Versus Other Database Marketing Media The Internet has potential cost savings in the following areas: Postal expenses Paper Transaction Service (possibly)

9. Optimal Database Marketing Drozdenko & Drake, 2002 9 The Internet Has the Following Potential Advantages Over Other Database Marketing Media Larger display of products 3-D representation More Frequent Catalog and Product Updates More Technical Information Speed Testing Offers Customer service Contact Initiation Real-time analysis

10. Optimal Database Marketing Drozdenko & Drake, 2002 10 Benefits of Online Ordering In the B-to-B Market It improves your company’s productivity by have customers order products and service online anytime It knows where a customer’s order is in the manufacturing and shipment process and how soon to expect delivery. It provides up-to-date product quotes to your company’s clients by accessing the most current price lists. It stays current with your company’s accounts payable and measures how expenses are tracking to your budgets. It reduces the time it takes from submitting an order to receiving the product

11. Optimal Database Marketing Drozdenko & Drake, 2002 11 Limitations of Internet Marketing Control of offers and promotions on the Internet Pictures and graphics- load time, resolution Customer concerns about privacy and security Target group access Driving traffic to a site Poor Reputation relative to brick and mortar

12. Optimal Database Marketing Drozdenko & Drake, 2002 12 Personalization: The Great Promise of the Internet Customers can receive personalized information on the Internet in several ways: Tailored e-mail Personalized Web pages Cookies Personalized Wireless Communications

13. Optimal Database Marketing Drozdenko & Drake, 2002 13 E-Mail Marketing Because of cost sayings and other benefits, E- mail marketing is predicted to increase in the next several years. Although growing, e-mail lists are currently relatively small compared to paper mail and telemarketing lists.

14. Optimal Database Marketing Drozdenko & Drake, 2002 14 E-Mail Applications Informing customers of new products Offering incentives (e.g., discounts, special offers) to customers Contact a targeted group of non-customers that have some similar characteristics to current customers Provide periodic (daily, weekly, monthly, etc.) information to customers in the form of newsletters, news briefs or other relevant information Follow-up contacts to people who have visited your website, trade show booth, etc. Update customers on order status

15. Optimal Database Marketing Drozdenko & Drake, 2002 15 E-Mail and Permission It is important to differentiate between opt-in lists and lists that do not have the permission of the e-mail recipient to receive messages from list users. Verified opt-in requires an e-mail response after a person registers on a site and gives permission. “Non-permission” e-mail lists can also be acquired. Some e-mail list providers use computer programs that “harvest” e-mail addresses from websites. The term “spamming” refers to e-mail campaigns that are sent to recipients who did not specifically give permission for commercial e-mail of a specific type to be sent to them.

16. Optimal Database Marketing Drozdenko & Drake, 2002 16 E-Mail Formats A number of formats have been used for e-mail marketing. At a basic level, the same e-mail message can be sent to all recipients. This is the cheapest and quickest method. However, because of the lack of personalization, software filters set up by the recipient or the ISP may screen out this type of message Personalized messages are also possible. Information from a database, such as first name, product ordered, inquire date, etc., can be inserted into the message to make it more relevant to the recipient.

17. Optimal Database Marketing Drozdenko & Drake, 2002 17 E-Mail Formats… Additionally, e-mail messages can contain attachments such as document, picture or sound files and links to websites that the recipient can use to place an order or obtain more information. E-mail marketing can also be in the form of an individual offer, newsletters or periodic interest pieces. Daily e-mails are sent to customers on a topic of interest.

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20. Optimal Database Marketing Drozdenko & Drake, 2002 20 Review Questions 1. Discuss the advantages and limitations of Internet marketing. 2. Explain the concept of integrating databases across direct marketing channels. 3. What are the customer service possibilities on the Internet? 4. What methods are used to personalize communications on the Internet? 5. What are some of the customer variables that are collected on the Internet? 6. What are the differences between traditional print and e-mail lists?