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DATABASE MARKETING ITS ADVANTAGES AND DISADVANTAGES

Written by Miles Media on . Posted in Small Business Marketing.

DATABASE MARKETING ITS ADVANTAGES

AND DISADVANTAGES

BY

Miss. P. PIRAKATHEESWARI, Lecturer in Commerce,

Sri Sarada College for Women (Autonomous), Salem – 16.

 “Knowledge is a process of pilling up facts; wisdom lies in their simplification”

–         Alexander Graham Bell

 Introduction

           The database Marketing is the process of building, maintaining and utilizing the databases (on the customer, products, suppliers and resellers) for the purpose of contacting, transacting and building relationships.  The database marketing is an interactive approach to marketing, which uses the individually addressable marketing media and channels such as mail, telephone and the sales force.

 Features

 The salient features of database marketing include:

ü      Extending help to a company to reach its target audience;

ü      Stimulating the customer demand; and

ü      Recording and maintaining an electronic database of the customer, and all commercial contacts, so that the business firm could improve their future contacts and devise a more realistic marketing strategy.

 Characteristics of Database Marketing 

  1. Each actual or potential customer is identified as a record on the marketing database.
  2. Each customer record contains information (used to identify the likely purchases of particular products and how they should be approached) on:
  • Identification and access (eg. Name, address, telephone No)
  • Customer needs & characteristics (demographic and psychographic information about customers, the industry type and decision making unit information for the industrial customers)
  • Campaign Communications (whether the customer has been exposed to particular marketing communication campaigns)
  • Customers past responses to communications done as a part of the campaigns
  • Past transactions of customers (with the company and possibly with the competitors).
  1. This enables the firm to decide on how to respond to the customer needs.
  2. The database is used to record the responses of the customer to the firm’s initiatives. (e.g. marketing communications or sales campaigns).
  3. The information is also made available to the company’s marketing policy makers which enables them to decide:
  • The target markets or segments appropriate for each product or service.
  • The marketing mix (price, marketing communications, distributions channel, etc) appropriate for each product in each target market.
  1. This step is vital in relationship marketing.
  2. The marketing campaigns are devised in such a manner to provide the most relevant information that the company is seeking.

 The growth of database marketing has been facilitated by:

  • The powerful processing capability and the immense storage capacity of state-of-the-art computers; and
  • The manner in which the telecommunication technology is harnessed to make the customer and market data available to the wide variety of staff involved in the marketing and sales offices.

 Advantages of Database Marketing

             The one-on-one marketing, which directs the customized offerings to individual customers, has provided an additional thrust to database marketing.  It has employed the database to capture the interactions between a firm and its customers at each point of time and utilizes the data analysis to search for patterns in these interactions.  These patterns provide the most attractive potential customers besides providing clues in customizing the products, pricing and promotions of a product.  When utilized in the proper manner, the database marketing could provide insights into the customer’s buying behavior across the product categories, so that the companies could devise their programmes and plans to the “whole customer”, then the customer seen only through the narrow view of their own products and brands.

 Disadvantages of Database Marketing 

  • The cost incurred in setting up the software and hardware requirements has made the database marketing expensive in its establishment.
  • The database often demands new skills and organizations from new analytical and decision-making skills in sales and marketing to a revamped information system organization that could support the entirely new class of users.
  • The database marketing depends on the data quality.  While the observational data is powerful, the corrupted observational data could be ‘powerful misleading’.  The quality also depends on the quality of analysis and the extent to which the databases are linked.
  • Till now, the database marketing has been primarily used as a tactical tool.

 Conclusion        

The application of technologies to great more customer added value and to facilitate the coordinating of networks is of particular importance for a modern organisation and its networks.  A well-integrated application of technology and staff along with experience that could respond to the customer needs, encourage the customers to use a whole range of products/services of firm rather than confine to just a few.

The new technologies have radically altered the ways in which many service organizations deal with their customers.  The most powerful force for change today comes from the integration of computers and telecommunications.  The digitization allows text, graphics, video and audio to be manipulated, stored and transmitted in the digital language of computers.  The faster and more powerful software enables firms to create relational databases that combine the information’s about customers with details of all their transactions.  The firms could utilize these databases for a) insights into new trends, b) new approaches to segmentation and c) new marketing opportunities.  The technological change affects many other types of services too from airfreight to hotels to the retail stores.

Source by P. Pirakatheeswari

marketing, small business marketing