Question

Describe the key concepts related to database marketing and review the strengths and opportunities as to the use of database marketing.

Answer 1

Database marketing is the process of identifying, collecting and analyzing information about a company’s customers.

It is a three stage process.

• Data Collection: Data is collected from various sources like sales information, email address list, promotions etc.
• Converting data into useful information: Data is converted into useful information by using the Segmentation and Targeting Approach, first potential customers are found out then target customers are found out.
• Devising business plans and strategy on the basis of the information: It deals with Positioning of the product/service to the existing customer to retain then as well as to acquire new customers.

Strengths:

• It aids in direct marketing as it provides a list of target customers and potential customers.
• It makes easier for the marketing consultant to position the product/service according to the grouping of the customers.
• It aids in identifying the touch points of customer and firm, if any improvement is needed.
• It aids in identifying the pattern of consumer behavior so as the products,services can be improved according to the demand.

Opportunities:

• It gives the opportunity of improving customer satisfaction.
• It helps in providing after-sales service.
• It gives the opportunity to reduce the cost of field visit to find the pattern as historical records can be used.
• It gives the opportunity to identify any new trend in the market.