What is Database Marketing??

IN DATABASE MARKETING ...THE DATABASE IS THE ENGINE, INFORMATION IS THE FUEL


Database marketing is a customer based, information intensive and long-term oriented marketing method. A database can be used to link and guide current marketing efforts as well as to build an overall body of information to direct future efforts.


Databases link information related to the customer including purchase transactions, products purchased, promotions, media, geodemographics, lifestyles, demographics, and financial characteristics.


The most accurate, and therefore most effective databases are those that are constantly updated with new information. Marketing databases are a powerful tool for measuring which promotional tactics are working and which are not.


One of the key goals of database marketing is to enhance the relevance and effectiveness of future marketing activities.


A database is more than a mailing list. It is a strategic tool that helps determine business strategy and communication plans. Effective database marketing is based on six assumptions:

1. Past behavior is the best predictor of future behavior


2. A purchase is one event in a customer's life, to figure true worth we need to calculate long-term lifetime value of a customer.


3. Customers are more important than non-customers


4. Certain customers are more valuable than other customers


5. Customers are likely to share characteristics


6. Prospective customers are most likely to look like profile characteristics of current customers.


The Internet as database marketing medium

The Internet was originally designed by the US Defense department during the cold war and has been used until the beginning of the nineties almost exclusively by governmental and educational/research institutions. It is a loose worldwide network of computers using a common interface language and this network is not owned by any particular institution or company - what it distinguishes from commercial networks such as CompuServe or AOL. The most important development of the Internet from a marketing point of view was the emergence of the World Wide Web, offering tens of thousands of pages with easy instant access scattered through the system and all linked through a cross referencing system called hypertext.


Today, many companies use the WWW for marketing purposes. There are essentially three kinds of advertisers on "the Web":


- those selling a product or a catalogue of products directly


- those seeking to build a brand


- those that combine the two functions


The Internet is estimated at approx. 30 million users worldwide. Currently more than 200 countries are connected. Although it is hard to establish a user profile or to predict the growth rate of the net because the Internet does not register new users the way commercial on-line services do, experts nevertheless believe that the Internet is adding more than 1 million new users each month(!) A main reason for the enormous success may be the possibility connect or to write to people (or institutions) on the other site of the Globe without occurring any long distance phone charges. That means for companies that advertising and direct mail costs on the Internet are extremely low.


To summarize, the Internet as a medium for database marketing has the following advantages: - it reaches a great amount of individuals with a fairly small amount of money - interactivity - global impact - advertising accountability Back to home page