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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
The Evolution of
One-to-One Marketing
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
 Identify the best customers
 Retain loyal customers
 Cross-sell other products or services
 Design targeted marketing communications
 Reinforce consumer purchase decisions
 Induce product trial by new customers
 Increase the effectiveness of distribution
channel marketing
 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
Geographics
Segmentation
Bases
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
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