Marketing Research

Marketing ResearchAaker, Kumar, Day and LeoneTenth EditionInstructor’s Presentation Slides

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Marketing Research 10th Edition http://www.drvkumar.com/mr10/

Chapter Twenty-six

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Emerging Applications of Marketing Intelligence: Database Marketing

and Relationship Marketing


The Need for DatabasesTo 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

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Elements of a Database

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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).

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Ways to Gather Consumer Data• Rebate Cards

• Suggestion Cards

• Warranty Registration Cards

• Free Subscription Offer Cards

• Directly Ask Consumers

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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

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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

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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

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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

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Shopping on the Internet

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Online Sales ($ billions)Quarter 2004 2003 % Change

Q1 $15.99 $12.61 26.9%

Q2 $16.76 $13.50 24.2%

Q3 $17.63 $14.42 22.2%

Q4 $18.61 $15.01 24.0%

Holiday* $17.29 $11.24 53.8%

Full Year $68.99 $55.54 24.2%

* Excludes Online auction and travel salesSource: Quarterly Retail E-Commerce Sales, 1st Quarter 2005, U.S. Census Bureau, May 2005


E-Commerce Survey

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Reasons for shopping online Percent

Saves time 78%

Better prices 51%

More selection 43%

Easier shipping 40%

Ability to find a more personalized gift 28%

More information available about the products 20%

Other 8%

Source: clickz.com


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.

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Customer Analysis

•Customer acquisition

•Customer cross-sell

•Customer up-sell

•Customer retention

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Customer DNA Model

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Legacy Systems & External Data

Reporting & KPIs

Single Customer View

Modeling & Analysis Capability

Customer Contact Management

Customer DNA


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

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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

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Marketing Research

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