Page 167 - Marketing Management

144 PART 3 CONNECTING WITH CUSTOMERS

These data are collected by the company’s contact center and organized into a data warehouse
where marketers can capture, query, and analyze them to draw inferences about an individual cus-
tomer’s needs and responses. Telemarketers can respond to customer inquiries based on a com-
plete picture of the customer relationship, and customized marketing activities can be directed to
individual customers.

dunnhumby dunnhumby British research firm dunnhumby has increased the profitability of
struggling retailers by gleaning insights from their loyalty program data and credit card trans-
actions. The firm helped British supermarket giant Tesco tailor coupons and special discounts to
its loyalty card shoppers. Tesco decided against dropping a poor-selling type of bread after
dunnhumby’s analysis revealed it was a “destination product” for a loyal cohort that would shop
elsewhere if it disappeared. Other U.S. clients have included Kroger, Macy’s, and Home Depot. For a major
European catalog company, dunnhumby found that not only did shoppers with different body types prefer dif-
ferent clothing styles,they also shopped at different times of the year:Slimmer consumers tended to buy early
in a new season, whereas larger folks tended to take fewer risks and wait until later in the season to see what
would be popular. 94

Through data mining, marketing statisticians can extract from the mass of data useful informa-
tion about individuals, trends, and segments. Data mining uses sophisticated statistical and mathe-
matical techniques such as cluster analysis, automatic interaction detection, predictive modeling,
and neural networking. Some observers believe a proprietary database can provide a company with
95
a significant competitive advantage. See Figure 5.6 for some examples.
In general, companies can use their databases in five ways:
1. To identify prospects—Many companies generate sales leads by advertising their product or
service. The ads generally contain a response feature, such as a business reply card or toll-free
phone number, and the company builds its database from customer responses. It sorts
through the database to identify the best prospects, then contacts them by mail or phone to try
to convert them into customers.

|Fig. 5.6|
Qwest Twice a year Qwest sifts through its customer list looking for customers that have the potential to be
Examples of Database more profitable. The company’s database contains as many as 200 observations about each customer’s calling
Marketing patterns. By looking at demographic profiles, plus the mix of local versus long-distance calls or whether a con-
sumer has voice mail, Qwest can estimate potential spending. Next, the company determines how much of the
customer’s likely telecom budget is already coming its way. Armed with that knowledge, Qwest sets a cutoff
point for how much to spend on marketing to this customer.
Royal Caribbean Royal Caribbean uses its database to offer spur-of-the-moment cruise packages to fill all
the berths on its ships. It focuses on retired people and single people because they are more able to make
quick commitments. Fewer empty berths mean maximized profits for the cruise line.
Fingerhut The skillful use of database marketing and relationship building has made catalog house Fingerhut
one of the nation’s largest direct-mail marketers. Not only is its database full of demographic details such as
age, marital status, and number of children, but it also tracks customers’ hobbies, interests, and birthdays.
Fingerhut tailors mail offers based on what each customer is likely to buy. Fingerhut stays in continuous touch
with customers through regular and special promotions, such as annual sweepstakes, free gifts, and deferred
billing. Now the company has applied its database marketing to its Web sites.
Mars Mars is a market leader not only in candy, but also in pet food. In Germany, Mars has compiled the
names of virtually every cat-owning family by contacting veterinarians and by advertising a free booklet titled
“How to Take Care of Your Cat.” Those who request the booklet fill out a questionnaire, so Mars knows the
cat’s name, age, and birthday. Mars now sends a birthday card to each cat each year, along with a new
catfood sample or money-saving coupons for Mars brands.
American Express It is no wonder that, at its secret location in Phoenix, security guards watch over American
Express’s 500 billion bytes of data on how its customers have used the company’s 35 million green, gold, and
platinum charge cards. Amex uses the database to include precisely targeted offers in its monthly mailing of
millions of customer bills.