Description
Based on the chapter 6 and chapter 7, do the chapter 6 homework and also the chapter 7 excise. Chapter 6 exercise is more experience with the test-analyze-market cycle. not hard.Chapter 7. First read EXERCISES Ch 7.
Then see the other 3 Excel documents starting with “Exercise 7” for data files and ideas how to work. Please work all sections and give ideas why the answers came out – this is a little like a Chemistry lab – it challenges you to be creative and ask questions – “Why is this happening?”
Remember to submit for each case an Excel sheet with calculations your work, and one Word doc explaining what you have done and the conclusions for all the 3 Excel files..
Remember I am human and try to understand what you have done, but I need you to give an explanation. Include the questions with each answer, each file should have your name in the filename and also in the file.
Thank You!
Also the SAS file is for a demo. I will do it 15 before class time for those interested.
Note you can resubmit part of this HW at a time up to 4 times.
Start here
Small Sample
other excel
txt doc
Unformatted Attachment Preview
Optimal Database
Marketing: Strategy,
Development, and
Data Mining
Ronald Drozdenko
Drozdenko-FM 2/26/02 6:02 PM Page i
“Destined to be the definitive guide to database marketing applications, analytical
strategies and test design.”
—Brian Kurtz, Executive Vice President, Boardroom Inc., 2000 DMA List
Leader of the Year and DMA Circulation Hall of Fame Inductee
“This book is well written with interesting examples and case studies that both
illustrate complex techniques and tie the chapters together. The level of detail and
treatment of statistical tools and methods provides both understanding and enough
detail to begin to use them immediately to target marketing efforts efficiently and
effectively. It is perfect for a course in database marketing or as a handy reference
for those in the industry.”
—C. Samuel Craig, New York University, Stern School of Business
“This book should be studied by all who aspire to have a career in direct
marketing. It provides a thorough overview of all essential aspects of using
customer databases to improve direct marketing results. The material is presented
in a style that renders even the technical subjects understandable to the novice
direct marketer.”
—Kari Regan, Vice President, Database Marketing Services,
The Reader’s Digest Association
“Finally, practical information on database marketing that tackles this complex
subject but makes it clear enough for the novice to understand. This book serves as
more than a primer for any senior manager who needs to know the whole story. As
one who has spent over 20 years of his career involved in publishing and database
marketing, I have a real appreciation for how difficult it is to explain the finer
points of this discipline, while keeping it understandable. This book does that
admirably. Well done!”
—Patrick E. Kenny, Executive Vice President, Qiosk.com
“This book is especially effective in describing the breadth and impact of the database marketing field. I highly recommend this book to anyone who has anything to
do with database marketing!
—Naomi Bernstein, Vice President, BMG Direct
“Ron Drozdenko and Perry Drake have written a guide to database marketing that
is thorough and that covers the subject in considerable depth. It presents both the
concepts underlying database marketing efforts and the all-important quantitative
reasoning behind it. The material is accessible to students and practitioners alike
and will be an important contribution to improved understanding of this important
marketing discipline.”
—Mary Lou Roberts, Boston University and
author of Direct Marketing Management
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“I think it is a terrific database marketing book, it’s got it all in clear and logical
steps. The benefit to the marketing student and professional is that complex database concepts are carefully developed and thoroughly explained. This book is a
must for all marketing managers in understanding database issues to successfully
manage and structure marketing programs and achieve maximum results.”
—Dante Cirilli, DMEF Board Member and
Retired President, Grolier Direct Marketing
“An excellent book on the principles of Direct Marketing and utilization of the customer database to maximize profits. It is one of the best direct marketing books I
have seen in years in that it is broad with specific examples. I am going to require
new hires to read this (book) to get a better understanding of the techniques used in
Database Marketing.”
—Peter Mueller, Assistant Vice President of Analysis,
Scholastic, Grolier Division
“This is an amazingly useful book for direct marketers on how to organize and analyze database information. It’s full of practical examples that make the technical
material easy to understand and apply by yourself. I strongly recommend this book
to direct and interactive marketers who want to be able to perform professional
database analyses themselves, or be better equipped to review the work of analysts.”
—Pierre A. Passavant, Professor of Direct Marketing, Mercy College and
Past Director, Center for Direct Marketing, New York University
“The most useful database marketing reference guide published today. The authors
do an excellent job of laying out all the steps required to plan and implement an
effective database marketing strategy in a clear and concise manner. A must have for
academics, marketing managers and business executives.”
—Dave Heneberry, Director, Direct Marketing Certificate programs,
Western Connecticut State University, and
Past Chair, Direct Marketing Association
“This book is essential for all direct marketers. It serves as a great introduction to
the technical and statistical side of database marketing. It provides the reader with
enough information on database marketing and statistics to effectively apply the
techniques discussed or manage others in the environment.”
—Richard Hochhauser, President, Harte-Hanks Direct Marketing
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Drozdenko-FM 2/26/02 6:02 PM Page v
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Copyright © 2002 by Sage Publications, Inc.
All rights reserved. No part of this book may be reproduced or utilized in any form
or by any means, electronic or mechanical, including photocopying, recording, or
by any information storage and retrieval system, without permission in writing from
the publisher.
For information:
Sage Publications, Inc.
2455 Teller Road
Thousand Oaks, California 91320
E-mail: [email protected]
Sage Publications Ltd.
6 Bonhill Street
London EC2A 4PU
United Kingdom
Sage Publications India Pvt. Ltd.
M-32 Market
Greater Kailash I
New Delhi 110 048 India
Printed in the United States of America
Library of Congress Cataloging-in-Publication Data
Drozdenko, Ronald G.
Optimal database maketing: strategy, development, and data mining/
by Ronald G. Drozdenko and Perry D. Drake.
p.
cm.
Includes bibliographical references and index.
ISBN 0-7619-2357-8
1. Database marketing. 2. Electronic commerce.
I. Drake, Perry D.
II. Title.
HF5415.126 .D76
2002
658.8’4-dc20
2001005596
This book is printed on acid-free paper.
02
03
04
05
Acquisitions Editor:
Editorial Assistant:
Production Editor:
Indexer:
Cover Designer:
10
9
8
7
6
Marquita Flemming
MaryAnn Vail
Claudia A. Hoffman
Molly Hall
Michelle Lee
5
4
3
2
1
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Contents
Preface
Supplemental Material
Acknowledgments
Foreword
xv
xvii
xix
xxi
1.
Introduction to Database Marketing Concepts
What Is a Marketing Database?
Trends Leading to the Use of Databases in Marketing
Market Segmentation
Emphasis on Service and CRM
Changes in Media
Changes in Distribution Structure and Power
Lifestyle and Demographic Trends
Accountability for Marketing Actions
Integration of Business Functions
Technological Advances
More Informed Customers
Database Marketing Versus Aggregate Marketing
Advantages of Database Marketing
Disadvantages of Database Marketing
Cost Issues
Global Markets
Competition From Traditional Retailer
Negative Perceptions
Framework for This Book
Chapter Summary
Review Questions
1
3
4
5
6
7
8
9
10
11
11
12
13
15
16
16
17
17
18
18
19
19
2.
Stategic Database Development in the Marketing
Planning Process
Computerized Databases
Customer Databases Versus Other Marketing Databases
The Need for Strategic Planning
Developing a Systematic Plan for Using Marketing
Databases
21
23
24
25
26
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The Marketing Planning Process and Database
Implementation
Situational Analysis
Establishing Marketing Objectives
Strategy Development
Strategy Development, Targeting, and Product
Positioning
Marketing Programs
Distribution
Promotion
Price
Product
Monitor and Control
Databases and the Planning Process
Chapter Summary
Review Questions
32
33
34
34
35
35
36
36
37
38
3.
Defining Customer Data Requirements
Data Needs Determination
Fulfillment, Marketing, and Prospecting Databases
Data Residing on the Marketing Database
Internal or House Data
Fulfillment Data
Marketing Data
Customer Contact Data
External or Enhancement Data
Compiled List Data
Census Data
Modeled Data
Lists Versus Data
Applying and Using Enhancement Data
Chapter Summary
Review Questions
39
40
41
41
41
43
43
44
45
45
47
49
49
51
53
53
4.
Database Maintenance and Coding
Standard Database Maintenance Routines
Deduping the Customer File
Householding the Customer File
Purging Old Customer Records
Changing Contact Information
Standardizing Addresses
Removing Names From Databases at Consumer Request
Identifying Customers With Match Coding
Merge/Purge Processing
Coding Source and Promotional Offers
Salting Files and Decoy Records
Identifying Credit Risks and Frauds
Field Updating Rules
55
56
57
58
59
59
61
61
62
64
65
66
67
67
27
28
29
30
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Reporting Summary/Aggregate-Level Information
Database Storage and Security
Database Maintenance Schedules
Some Technical Aspects of Database Maintenance
Chapter Summary
Review Questions
5.
Basic Database Technology, Organizational
Considerations, and Database Planning
Computer Hardware and Software
Database Hardware
Midrange Computers
PCs
Hardware Decision Factors
Database Software
Database System Organization
Structured Databases
Relational Databases
Comparison of Structured and Relational Databases
Structured Query Language (SQL) and Data Analysis
Organizational Considerations in Technical Database Design
Outsourcing: The Process to Select a Database Provider
Phases of Database Development
Comments on Technological Development of the
Database
Chapter Summary
Review Questions
68
70
72
73
73
73
75
77
78
79
79
80
80
83
83
85
85
85
86
88
91
92
93
93
6.
The Analysis Sample
How We Sample
Representative Samples
Random Samples
Sample Usage
Creation of the Analysis Sample
Methods of Saving Point-in-Time Sample Data
Analysis and Validation Samples
Application of Analysis Findings
Chapter Summary
Review Questions
95
96
96
97
97
98
100
101
101
101
102
7.
Analyzing and Manipulating Customer Data
Getting to Know Your Data
The Analysis
Univariate Tabulations
Cross-Tabulations
Logic Counter Variables
Ratio Variables
Longitudinal Variables
Time Alignment of Key Events
103
104
105
106
111
113
116
117
119
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Reducing the Amount of Customer Data to
a Manageable Set via Correlation Analysis
Statistical Background—Correlation Analysis
Chapter Summary
Review Questions
Notes
8.
120
123
127
128
128
Segmenting the Customer Database
Defining Your Segmentation Objective
Segmentation Schemes
Segmentation for Promotional Product Offerings
Corporate-Level Segmentation
Product Line-Specific Segmentation
Segmentation for Life-Stage Marketing and Research
Segmentation Techniques
Univariate and Cross-Tabulation Analysis
Formal RFM Analysis
CHAID Analysis
Factor and Cluster Analysis
Factor Analysis
Cluster Analysis
Issues to Consider Regarding Segmentation
Implementation
Promotional Intensity
Too Many Products
Cannibalism
Overgeneralization
Ethical and Public Policy Issues
Chapter Summary
Review Questions
Note
129
130
134
134
134
135
136
138
138
145
148
153
153
158
163
163
164
164
165
165
166
166
167
9.
An Introduction to Simple Linear Regression Modeling
The Simple Linear Regression Model
The Coefficient of Determination
Statistical Background—Simple Linear Regression Analysis
Chapter Summary
Review Questions
169
170
174
176
179
179
10.
Multiple Regression Modeling
Defining Your Marketing Objective
Preparing the Data to Build the Multiple
Regression Model
The Multiple Regression Model
Model Interpretation
Assumptions of the Model
Multicollinearity
Other Properties
A Note on Modeling Binary Response Data
181
182
184
187
187
192
192
193
193
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Regression Diagnostics
Examining the Model for Indications of
Multicollinearity
Examining the Model for Variable Significance
Multiple “Logistic” Regression Models
Sample Composition
Outside List Modeling Options
Response Models
Clone or Best Customer Models
Stepwise Regression Models
Neural Networks
Data Mining, Tools, and Software
Ensuring That Your Model Holds Up in Rollout
Chapter Summary
Review Questions
Notes
194
195
197
199
200
201
202
202
205
206
207
213
215
215
216
11.
Gains Charts and Expected Profit Calculations
The Response Gains Chart
Options When Lacking Validation Samples
Historical Gains Falloff Chart
Bootstrapping
Expected Profit Calculations
Reconciling Gains
Chapter Summary
Review Questions
217
218
223
223
225
226
231
233
233
12.
Strategic Reporting and Analysis
Key Active Customer Counts
List Vitality Customer Statistics
Key List Segment Counts and Statistics
Calculating LTV
LTV Methodologies
LTV Profiles
Actual and Aggregate LTV Calculations
Calculating the Discount Rate and NPV
Sample Types Used in LTV Calculations
Forecasting LTV
Impact Studies
Monitoring Promotional Intensity
Chapter Summary
Review Questions
235
236
238
238
239
240
241
243
244
247
248
248
249
250
250
13.
Assessing Marketing Test Results
Confidence Interval Calculations
Confidence Interval Estimation for a Sample Mean
Confidence Interval Estimation for a Sample Proportion
Confidence Interval Estimation for the Difference
Between Two Sample Means
251
252
253
256
258
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Confidence Interval Estimation for the Difference
Between Two Sample Proportions
Setting the Confidence Level
Single Sample Measures
Difference Between Two Sample Measures
Making a Business Decision Based on the
Confidence Interval
Single Sample Measures
Difference Between Two Sample Measures
Hypothesis Tests for Significance
Establishing the Hypothesis
Setting the Error Rate of the Hypothesis Test
Establishing the Direction of the Hypothesis Test
Hypothesis Test for the Difference Between
Two SampleMeans
Hypothesis Test for the Difference Between
Two Sample Proportions
Setting the Confidence Level of
Hypothesis Tests for Significance
Making a Business Decision Based on
Hypothesis Tests for Significance
P Value of the Hypothesis Test for Significance
Conducting Hypothesis Tests for Significance
Using Confidence Intervals
Gross Versus Net
Multiple Comparisons
Calculating Breakeven
Response Rate Required to Break Even
Increase in Response Rate Required to Break Even
Facts Regarding Confidence Intervals and
Hypothesis Test Results
Marketing Test Analysis Software
Chapter Summary
Review Questions
14.
Planning and Designing Marketing Tests
Marketing Test Design Considerations
Rule 1: For Mailers, Include the Control Package
in the Test Plan
Rule 2: Reverse Test Package Changes
Rule 3: Test One Change at a Time
Rule 4: Test for Only Meaningful
Package Element Interactions
Rule 5: Define the Universe for Testing Carefully
Outside List Test Design Considerations
Sample Size Considerations
Sample Size Determination for a Sample Mean
Sample Size Determination for a Sample Proportion
260
263
264
264
266
266
267
268
269
269
270
270
275
279
279
279
280
281
281
282
283
283
284
285
285
286
287
288
288
288
289
290
291
292
294
295
298
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Sample Size Determination for the
Difference Between Two Sample Proportions
Marketing Test Planning Software
Alternative Testing Approaches for
Small Direct Marketers
Chapter Summary
Review Questions
301
304
304
308
308
15.
Marketing Databases and the Internet
Database Integration
Growth in Internet Commerce
The Internet Versus Other Database Marketing Media
Limitations of Internet Marketing
Personalization: The Great Promise of the Internet
E-Mail Marketing
E-Mail Applications
E-Mail Formats
Chapter Summary
Review Questions
309
310
312
314
317
319
321
321
322
324
325
16.
Analyzing and Targeting Online Customers
Data Collected via the Internet
Registration Data
Behavior Data
Source Data
Understanding Internet Users and Online Buyers
Web Site Reporting
Driving Customers to Your Web Site
Targeting Online Customers
Conducting Marketing Tests in the
E-Commerce World
Banner Ads
E-Mail
Chapter Summary
Review Questions
327
327
328
330
332
332
334
337
341
345
345
347
348
348
Issues in the Marketing Environment and
Future Trends in Marketing Databases
The Global Business Environment
Social Concerns and Ethics in Database Marketing
Industry Organizations
Evolution and Trends in Database Marketing
Consumer Databases and the Internet
B-to-B Databases
Not-for-Profit Databases
Retailer Databases
Service Organization Databases
Chapter Summary
Review Questions
349
351
357
360
362
362
364
364
365
365
366
366
17.
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Glossary
Additional Readings in Database and Direct Marketing
References
Name Index
Subject Index
About the Authors
369
381
383
387
389
397
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Preface ___________________________________________
ontemporary direct marketing and e-commerce companies cannot exist
in today’s competitive environment without the use of marketing
databases. Databases allow marketers to reach customers and cultivate
relationships more effectively and efficiently. Although databases provide
a means to establish and enhance relationships, they can also be used
incorrectly, inefficiently, and unethically. Our goal in this book is to provide
the reader with a complete and solid understanding of how to properly
establish and use databases to help organizations maximize their relationships with customers. In fact, we have not found any other book on the
market today that contains the level of detail regarding database marketing
applications that this one has.
We have been involved in the direct marketing industry and academia for
many years. Ron Drozdenko teaches Strategic Marketing Databases and
Interactive Marketing Management and has been a consultant to many firms
over the course of his career. He is currently the Chair of the Marketing
Department at Western Connecticut State University. Perry Drake is an independent database marketing consultant and adjunct faculty member of New
York University, where he teaches Statistics for Direct Marketers, Database
Modeling, and Advanced Database Modeling in the Direct Marketing
Master’s Degree program.
In teaching such topics to students, we both have found little material to
draw upon. As such, we were required to create our own content from our
industry experience, help from peers, and published case studies. Several
excellent books have been written on the topic of direct marketing.
However, many of those books delve only into areas such as copywriting
and media selection and place less emphasis on database marketing applications from a marketer’s perspective. Our intent with this book is to focus
on the marketing database and take readers systematically through the
process of database strategy, development, and analysis.
We originally met each other in the summer of 1997 when we were
approached by the Direct Marketing Educational Foundation (DMEF) to
develop a database marketing course. The database course is one of a series
C
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OPTIMAL DATABASE MARKETING
of undergraduate courses in direct marketing the DMEF developed in collaboration with the Marketing Department of the Ancell School of Business
at Western Connecticut State University. (You can contact the DMEF to
obtain more information about these courses.)
Our target audience for this book is both students and practitioners:
upper-level undergraduates, graduate students in an MBA program, and
entry- and middle-level direct marketers. In addition, database analysts and
statisticians fairly new to the field of direct marketing will find the book
useful. It will provide a complete overview of the analytical applications in
the field of direct marketing. Direct marketing executives will also find the
strategic elements of the book helpful for business planning.
Drozdenko-FM 2/26/02 6:02 PM Page xvii
Supplemental Material
cademic adopters of this book have access to the following support
material from the authors:
A
♦ A comprehensive collection of PowerPoint slides for each chapter
♦ Sample exercises and solutions for each chapter
♦ Sample syllabi and course organization
♦ Sample exams and quizzes
♦ Sample marketing databases for case study work given in various
formats (delimited text files, SAS, Excel, SPSS, etc.).
xvii
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Drozdenko-FM 2/26/02 6:02 PM Page xix
Acknowledgments
number of people contributed directly or indirectly to the development
of this book. Because the book evolved from an outline developed by
an advisory board established by the DMEF, the members of the board
deserve acknowledgment. In particular, Richard Montesi and Laurie Spar
were instrumental in establishing the board and organizing the meetings.
David Henneberry and Dante Cirilli worked with us to establish the original outline that served as the basis for the database marketing course and
eventually this book. The extensive backgrounds of Dave and Dan in the
direct marketing industry ensure that the book’s foundation is solid.
We also wish to acknowledge the indirect contributions of a number of
small and large professional associations in the direct marketing community
that allowed us to examine database marketing in application. In particular,
The Reader’s Digest Association and Grolier Direct Marketing influenced
our perspectives on database marketing.
One of our primary reasons for writing this book is to provide marketing students with a good foundation in database strategy, development, and
analysis. Therefore, the feedback we obtained from our students at the
Ancell School of Business at Western Connecticut State University and New
York University was especially valuable in translating course materials into
a coherent book. Students also read drafts of sections of the book and
offered several cogent suggestions. In particular, Perry gives special thanks
to some of his past students at NYU—Joe Bello, Janelle Bowleg, Eric
Chism, Dean Krispin, Steve LaScala, and Bob Wiener—for their tremendous efforts in ensuring that the book content was complete, consistent,
and understandable.
Industry reviewers of chapters of this book deserve our gratitude. In
particular, Perry personally thanks, first and foremost, Pierre Passavant,
the previous director of the NYU Direct Marketing Master’s Degree program, for his support and the many opportunities he provided. Secondly, we
thank Gary Coles for his significant review of Chapter 10, Rich Lawsky
for his significant review of Chapter 4, and Elizabeth Colquhoun for her
review of all the chapters for clarity. In addition, we thank Craig Ceire,
A
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OPTIMAL DATABASE MARKETING
Mary-Elizabeth Eddlestone, Mary Halloran, Patrick Hanrahan, Jim Tucker,
Henry Weinberger, and Pat Zamora for their individual contributions dealing with specific topics. We are also indebted to the following reviewers of
the completed manuscript. Their comments and suggestions have helped
improve the final version of the book.
Naomi Bernstein
Dante Cirilli
C. Samuel Craig
David Heneberry
Richard Hochhauser
Patrick E. Kenny
Brian Kurtz
Peter C. Mueller
Pierre Passavant
Kari Regan
Mary Lou Roberts
Thanks to the team at Sage Publications, including Marquita Flemming,
MaryAnn Vail, and our copy editor, Barbara Coster, for their support and
guidance.
Last, but certainly not least, our appreciation goes to our families. In
addition to lending moral support, some family members provided direct
contributions to the development of the book. Rita Drozdenko, Ron’s wife,
read several chapters and provided feedback from the perspective of a
novice to the field. Rhonda Knehans Drake, Perry’s wife and an accomplished database marketing consultant, made a significant contribution to
the book. Rhonda wrote Chapter 16, “Analyzing and Targeting Online
Customers,” and also provided professional critiques of other chapters.
Tarry Drake-Schaffner, Perry’s sister, an avid book reader and bookstore
owner, spent a tremendous amount of time editing and rewriting all the
technically oriented chapters. Words cannot express the thanks that Perry
has for her invaluable input in ensuring that complex topics could be understood by a beginner. As a novice to the field herself, this was not an easy
task for Tarry, especially given the tight deadlines. Thank you, Tarry, for
your tremendous efforts.
—Ronald G. Drozdenko
—Perry D. Drake
Drozdenko-FM 2/26/02 6:02 PM Page xxi
Foreword
ith about 70 years of management and teaching experience between
us, we know a superior training/reference book when we read it. This
is a great one. We aren’t surprised, because we both confer with the authors
about the database issues of our own seminars, classes, and clients.
If you have a database, chances are you have database questions and
issues: How good are the data? How complete? Are you capturing the right
data? Are you using the data to the maximum advantage? Will investments
in new system enhancements pay out? What steps must be followed when
considering to outsource your database? What issues must be considered
when examining data mining tools? How do you learn sound database
management practices? How do you teach them? How do you provide intelligent leadership to database management departments that report to you?
The answers require a thoughtful examination of what is needed, how to
capture it, at what cost—and some knowledge of statistics that most of us
don’t have. You won’t find a better resource than this book. It covers all
aspects of database marketing, including database design, maintenance,
data usage, test design, and data analysis. In all these areas, the focus is on
how to best utilize the database to optimize marketing efforts. Important
current issues such as e-commerce, ethics, privacy, and globalization are
also covered.
Coauthor Ronald G. Drozdenko, Ph.D., Professor and Chair of the
Marketing Department at the Ancell School of Business, Western
Connecticut State University, teaches Strategic Marketing Databases and
Interactive/Direct Marketing Management. He was a member of the advisory board established by the Direct Marketing Educational Foundation to
develop a model curriculum for direct/interactive marketing. This model
program is currently being offered at the Ancell School. In his role as faculty adviser for student interns, Ron uses company feedback to enrich the
program with continuing real-life applications. Ron has also accumulated
more than 20 years of applied marketing experience. Both his academic
and applied marketing backgrounds are reflected in the approach taken in
this book.
W
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OPTIMAL DATABASE MARKETING
Coauthor Perry D. Drake is currently a database marketing consultant
and faculty member in the Master’s of Science in Direct Marketing program
at New York University. Prior to this, Perry had spent over 10 years in various database marketing roles at The Reader’s Digest Association, most
recently as the director of a special division within the Marketing Services
group. During Perry’s first year at NYU, word got around that he had a
remarkable ability to make topics such as statistics and database modeling
and regression understandable and interesting. In recognition of his abilities, he won the first Outstanding Master’s Faculty Award. Perry’s exceptional teaching skills are very evident in the chapters of this book.
The book that Ron and Perry have written tracks a character, Keri Lee,
as she resolves data and database issues at every step in her advancement
through the ranks, first in a technology agency servicing clients and later as
a senior manager in a large publishing company. Her reasoning and her
solutions to data problems of increasing complexity demonstrate the
methodology of database management in all its statistics-driven splendor.
Go as deeply as you need for your purpose. The practical wisdom and concrete examples make it an ideal resource for business managers, instructors,
trainers, and students.
If you are a business manager, this book will help you oversee the various specialists you must work with to implement a database marketing
strategy. If you are an instructor, trainer, or student, it will give you a clear
picture of what actually happens in the real world of business and specific
techniques used by business professionals. Keep the book at hand to resolve
your next database dilemma.
—David Heneberry
Director, Direct Marketing Certificate Programs,
Ancell School of Business, Western Connecticut State University
—Pierre Passavant
Professor of Direct Marketing, Mercy College, Westchester, New York
Drozdenko01 2/26/02 6:03 PM Page 1
1
Introduction to Database
Marketing Concepts
It’s 7:15 p.m., Keri Lee, a 29-year-old account executive for a technology
company, stops at a supermarket in Southbury, Connecticut, on her way
home from work. After picking up Diet Pepsi, a few tomatoes, lettuce, and
a package of Swiss cheese, she goes to the express checkout line. Keri hands
her store card to the clerk, who scans it prior to processing her order. Using
the store card allows her to get a discount on the cheese. With her sales
receipt, she also gets a $0.40 coupon for Ritz Crackers. The bill came to
$6.20. Keri paid with her VISA card.
Keri picks up her mail before going into the house. There are catalogs from
Bloomingdales, L. L. Bean, Macy’s, and Pottery Barn. She puts the Pottery
Barn catalog to the side. Her sister’s birthday is in two weeks and the items
in the catalog are consistent with her sister’s decorating style.
In addition to the electric and VISA bills, she has a letter from the
Volkswagen dealership thanking her for her recent purchase and a letter
from the American Red Cross. Remembering that the Red Cross recently
helped her friend who was caught in a flood, she makes a contribution by
checking a box and entering her VISA number.
Keri also got the new issues of Smart Business, Business Week, and Self
magazines. An ad in Business Week about a technology conference attracts
her attention, and she fills out an attached response card requesting more
information.
After dinner, she receives a phone call from an insurance company. At first,
she is irritated by the call. She then remembers that her car insurance rates
increased substantially since she leased her new Volkswagen and asks the
person on the phone for a quote. Later that evening, she goes on the Internet
to look for other insurance companies and requests three more quotes online.
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OPTIMAL DATABASE MARKETING
Browsing the Web, she remembers that she has almost finished the book
she has been reading and goes to Amazon.com. The Amazon page provides
her with suggestions based on her previous purchase, A Certain Justice, by
P. D. James. A new mystery by Elizabeth George is on the suggestion list.
It can be shipped within 24 hours. Keri places the book into the Shopping
Cart and uses 1-Click to check out.
Before leaving the Amazon site, she clicks on the Music tab and searches for
Sarah McLachlan. She heard a new single by McLachlan on the radio and
was curious about the other songs on the CD. Keri listens to five cuts from
McLachlan’s new CD but decides not to order yet.
At 10:00 p.m., she scans through the channels on TV and pauses at QVC
when a bracelet grabs her attention. Calling QVC, she gives her account
number that she used 2 months ago when she purchased a color printer. In
less than 1 minute, the bracelet is ordered and she returns to scanning the
channels.
eri’s daily routine is similar to the routines of millions of other people
in the United States and other countries. These transactions provide us
with the goods and services that are a part of our lives. In the scenario
above, databases underlie all the transactions that Keri made. They underlie
the purchases in the grocery store, catalogs, TV shopping, Internet, telemarketing, and the charitable contributions. Databases are a collection of
information related to a particular subject or purpose that are usually
maintained on a computer for easy search, retrieval, and analysis. Although
databases are not new, they are becoming an essential element of marketing.
Organizations in consumer products, business-to-business (b-to-b), charities, health care, politics, media, investments, government, insurance, and
so on are finding marketing databases essential to their survival and
success. In addition, because technology has become more accessible, small
businesses are finding the use of databases a cost-effective way to stay in
touch with their customers.
Several changes in the business, social, and technological environments
have led to the widespread use of databases in marketing. However, the
one underlying reason for the adopti
