Transcript Chapter 3 The Impact of Databases

Chapter 3
The Impact of Databases
What is a database?
• Flat file
– Access is slow
– Most older legacy systems
• Relational
– Files are linked by a duplicate variable in
each table (customer or ID #)
Types of Data
• Internal
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Purchases
Customer Transactions
Amount Spent
Transaction dates
Promotion history
Customer services
Profitability
Lifetime value
• Expternal
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Address
Houshold
Demographics
Socioeconomic data
Lifestyle
psychographics
– Firmographics
– Geo-demographics
Database Marketing and
Customer Relationships
• CRM
– The processes a company uses to track and
organize its contacts with its current and
prospective customers. It can be analyzed in
order to plan target-marketing campaigns,
conceive business strategies etc.
Lifetime Value (LTV)
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Loyal Customers
Repeat purchasers
One-time-only triers
Well-defined market segments
Data Warehouse
• Good storage and reporting system
• Decision Support Systems and Executive
Information Systems EIS
• Can Feed a Data Mart
Data Mining
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Process of discovering patterns or trends
Cluster Analysis
Market Basket Analysis
Neural Networks
Cluster Analysis
• Cluster analysis is a data reduction technique
that group variables based on similar data
characteristics
• Segmenting customers
Market Basket Analysis
• Lets us look at what customers typically buy together
• Product placement
• Product suggestions
– Online
– McDonalds
Neural Networks
• Discover and predict relationships in data
• Black box
• Complex formulas
International Databases
• Postal address coding
• Name characteristics - fields
• Requires flexibility
Privacy
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HIPPA
Financial
Security
US and EU rules