Chapter 20 OnetoOne Marketing What is OnetoOne Marketing

Chapter 20 One-to-One Marketing

What is One-to-One Marketing? One-to-One Marketing is. . . With a Focus on. . . Share of Customer Through Use of. . . Database Technology Customer-Based Information-Intensive Long-Term Oriented Individualized

One-to-One Marketing Focuses on Share of Customer One-to-One Marketing Develops Customers Finds Products for Customers Focuses on Share of Market Mass Marketing Develops Products Finds Customers for Products

” l ne ia -O str -to du n ne In utio “O re ol o f ev Be R Mass Prod uct io n The Evolution of One-to-One Marketing e” n O -to e n f “O o t i f Bene ology n h c e T

Forces influencing One-to-One Marketing Increasing Diversity More Demanding, Time-Poor Consumers Decreasing Brand Loyalty Emergence of New Media Alternatives Demand for Accountability

Marketing Impact of Trends Consumer recognition as unique individuals Marketing Impact of Trends More direct and personal marketing efforts Rewards for loyalty Increased importance of One-to-One Marketing

The One-to-One Marketing Communications Process Capture of response shapes futures message Sender Encoder One-to-One Message Channel Decoding Receiver Response Receiver

Communications Process Differences Message is Personalized Channel is Direct Noise is not present Individual Response is captured

One-to-One Marketing Applications u Identify the best customers u Retain loyal customers u Cross-sell other products or services u Design targeted marketing communications u Reinforce consumer purchase decisions u Induce product trial by new customers u Increase the effectiveness of distribution channel marketing u Improve customer service

Retaining Loyal Customers Retaining an additional 5% of customers each year increases profits by 25% Improving customer retention by 2% can decrease costs by 10%

Other Marketing Applications through Databases • Match profiles to cross-sell other products to customers • Modify marketing messages based on customer profiles • Reach out to customers to reinforce the purchase decision

Other Marketing Applications through Databases • Find new customers • Gain insight into who is purchasing products • Improve customer service

Data-Driven Marketing The process of gathering, maintaining, and analyzing information about customers and prospects to implement more efficient and effective marketing communications.

Marketing Database The compilation of names, addresses, and other pieces of pertinent information about individual customers and prospects that affects what and how marketers sell to them.

Data Warehouse A large corporate-wide database in which the data are culled from a number of legacy systems that are already in place within the organization.

Building a Marketing Database Analyze information to find answers Enhance customer data Collect the right data

Building a Marketing Database Response Lists Compiled Lists Collect the right data

Building a Marketing Database Compiled Data Modeled Data Enhance customer data Custom Data

Enhance Customer Data Modeled Data Information has been sorted into distinct groups or clusters of consumers or businesses based on census, household, or business-level data. Custom Data Enhancement information acquired by the marketer, including customer surveys, customer participation programs, product registration, warranty cards, or loyalty marketing programs.

Building a Marketing Database Analyze information to find answers Customer Segmentation Lifetime Value Analysis Predictive Modeling RFM Data Mining

Customer Segmentation Demographics Segmentation Bases Geographics Purchase Behavior Psychographics

Recency-Frequency-Monetary Analysis A data manipulation technique that determines the firm’s best customers by identifying those customers who have purchased most recently, most frequently, and who have spent the most money.

Lifetime Value Analysis A data manipulation technique that projects the future value of the customer over a period of years using the assumption that marketing to repeat customers is more profitable than to first-time buyers.

Uses of Customer Lifetime Value Show expense to acquire a new customer Provides level of spending to retain a customer Provides a basis for targeting new customers

Data Mining Create customer profiles Uses of Data Mining Determine the reason for customer loyalty Analyze the potential return for strategies Help forecast sales

One-to-One Marketing and the Internet Create a Multimedia Marketing Initiative Deliver Personalized Messages Establish Enduring Customer Relationships . com

Privacy Concerns with One-to-One Marketing Unawareness of information collected Invasion of Privacy Misunderstanding about privacy laws and regulations Popularity of Internet for data collection