Database marketing is the process of gathering, identifying, and analyzing significant consumer information (both for customers and potential customers) from all sources in order to drive strategic marketing and sales decisions. Information may include name, address, transaction history, and so forth which is stored in the company’s databases.
In the article ‘An Introduction to Database Marketing,’ it provides four reasons why a company should use database marketing.
- To improve profitability
- To increase sales
- To improve communication with your audience
- To improve product development
With databases you have the ability to learn many insights about your customers, which makes it possible to effectively select a target audience and allocate resources. Furthermore, you are able to compare customers’ value to the company and specialize offers for customers. Overall, databases are quite useful in improving efficiency. From predicting if a woman is pregnant to predicting the next big Hollywood blockbuster.
After reading a few articles about how companies are using their data to better their marketing strategies, I feel as if with enough analyzing that the possibilities are endless (of course, I’m sure there is some limitations).
Target. Andrew Pole was working as a statistician at Target when he created the pregnancy-prediction model. It is a model that is based upon the buying habits of woman that can determine if a woman is pregnant. With this information, Target can send those pregnant woman ads for baby supplies in the hopes to gain more loyal customers.
Orbitz. This online site has the ability to determine what type of computer operating system a customer is using and will display hotels based upon whether it is a PC or a Mac computer. Higher priced hotels are placed higher in the results for a Mac user because based on their data, Mac users typically spend 30% more a night on hotels.
Starbucks. Huge amounts of data are provided with their loyalty cards that they are still unsure exactly what to do with yet. Although, they do use card information to send out offers to their customers based on purchasing behavior.
Hollywood blockbusters. With databases, the movie industry is able to predict whether a movie would be profitable based on different variables including genre, rating, cast and release date. To do this, they are analyzing past data patterns and current data patterns that are readily available, and then improving the business performance based on those results.