Concept of Database Marketing

There is a quote by "Thomas Prendergast"
"The Big guys know database and if you don't your lost!"

Database Marketing is a powerful and competitive weapon - especially on the Internet. The growth of database marketing is rooted in the small business philosophy of staying close to the customers, under-standing and meeting their needs and treating them well after the sale.

Corporate marketing is tied to BIG, general marketing or advertising campaigns with a single untargeted message. This message may be based on the companies Unique Selling Proposition (USP). However, customers have different needs and a single USP spelt out to the whole market is no longer enough.

Messages must be tailored to specific segments of the market and ultimately to the market segment of one, the individual customer. Computerizing the customer database makes it possible to address messages more specifically and market additional products to each customer.

The characteristics of fully fledged database marketing are ....

1. Each customer and prospect is identified as a record on the marketing database; markets and market segments are groups of individual customers.
2. Each customer and prospect record contains not only identification and access information but also a range of marketing information. It also includes information about past transactions and about campaign communications.
3. This information is accessible before, during and after the process of each interaction with the customer/prospect, to enable "you" to decide how to respond to the customer/prospect's needs.
4. The database is used to record customer/prospects responses to campaigns.
5. The information is available to marketing policy makers to enable them to decide such things as which target markets/segments are appropriate for each product/service etc.
6. Selling many products to each customer, the database is used to ensure that the approach to the customer is co-ordinated; and a consistent approach developed.
7. The database eventually replaces market research. Marketing campaigns are devised such that the response of customers to the campaign provides information, which the company is looking for.
8. Marketing Management automation is developed to handle the vast amount of information generated by DBM. This identifies opportunities and threats more or less automatically! This is fully fledged marketing automation. Very few companies have succeeded in doing this; but many have it as their goal.

DBM presents many challenges to management. It requires careful maintenance of great volumes of detailed customer data. Accessing the data, interpreting it, and using it to drive or support the marketing function requires a long-term marketing systems development policy.
It also requires computing and marketing people to work together, often educating each other. And, it may well require most people in the company to forget their traditional way of doing business.

DBM will only work if dealing with customers is viewed as an on-going process (Customer Contact Process).

The ladder of loyalty is a key concept in DBM.
1) No awareness of business or product/service.
2) Awareness of business
3) Awareness of product/service
4) Positive perception
5) Reognition of personal benefit
6) Enquiry
7) Objections overcome
8) Sale of product or service
9) Entry into continued relationship.

DBM is used to move customers up the ladder.

The essence of database marketing is communicating directly with the customers and asking them to respond in a tangible way. It provides the means for the customer or prospect to respond and is set up to measure and fulfill the response.

It sets up or reinforces a relationship with the customer, which is "fulfilled" when we follow up a customer's response to our communication. Fulfillment may be in many ways; a personalized email, a telephone conversation, sending literature (pdf), a sales visit, attendance at a web seminar, exhibition or store, or sending products to the customer.

So DBM is a broad discipline, not a separate marketing communications medium, but a way of using any medium to elicit the desired response.

Source :- Veretekk