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Chapter 20 Version 6e 1©2002 South-Western
chapter
One-to-One MarketingOne-to-One Marketing
2020
Prepared byPrepared byDeborah BakerDeborah Baker
Texas Christian UniversityTexas Christian University
Chapter 20 Version 6e 2©2002 South-Western
chapter
Learning ObjectivesLearning Objectives
2020
1.1. Define one-to-one marketing and discuss Define one-to-one marketing and discuss its dependence on database technology.its dependence on database technology.
2. Discuss the forces that have influenced the 2. Discuss the forces that have influenced the emergence of one-to-one marketing.emergence of one-to-one marketing.
3. Compare the one-to-one marketing 3. Compare the one-to-one marketing communications process with the communications process with the traditional mass marketing traditional mass marketing communications process.communications process.
Chapter 20 Version 6e 3©2002 South-Western
chapter
Learning Objectives (continued)Learning Objectives (continued)
2020
4. List eight common one-to-one 4. List eight common one-to-one marketing applications.marketing applications.
5. Discuss the basics of one-to-one 5. Discuss the basics of one-to-one marketing database technology.marketing database technology.
6. Describe one-to-one marketing using the 6. Describe one-to-one marketing using the Internet.Internet.
7.7. Discuss privacy issues related to Discuss privacy issues related to one-to-one marketing.one-to-one marketing.
Chapter 20 Version 6e 4©2002 South-Western
Learning Objective Learning Objective 11
Define one-to-one marketing Define one-to-one marketing and discuss its dependence and discuss its dependence
on database technology.on database technology.
Chapter 20 Version 6e 5©2002 South-Western
One-to-One MarketingOne-to-One Marketing
An individualized marketing
method that utilizes
customer information to
build long-term,
personalized, and
profitable relationships
with each customer.
11
Chapter 20 Version 6e 6©2002 South-Western
What is One-to-One Marketing?What is One-to-One Marketing?
IndividualizedIndividualized
Information-IntensiveInformation-Intensive
Customer-BasedCustomer-Based
Long-Term OrientedLong-Term Oriented
Share of Share of CustomerCustomerShare of Share of CustomerCustomer
With a With a FocusFocuson...on...
DatabaseDatabaseTechnologyTechnologyDatabaseDatabase
TechnologyTechnology
One-to-OneOne-to-OneMarketing is...Marketing is...One-to-OneOne-to-One
Marketing is...Marketing is...
Through Through Use of...Use of...
Through Through Use of...Use of...
11
Chapter 20 Version 6e 7©2002 South-Western
One-to-One MarketingOne-to-One Marketing11
One-to-One Marketing
One-to-One Marketing
Focuses on Share of CustomerFocuses on Share of Customer
Develops CustomersDevelops Customers
Finds Products for CustomersFinds Products for Customers
Mass Marketing
Mass Marketing
Focuses on Share of MarketFocuses on Share of Market
Develops ProductsDevelops Products
Finds Customers for ProductsFinds Customers for Products
Chapter 20 Version 6e 8©2002 South-Western
Mas
s M
ass
Pro
du
ctio
nP
rod
uct
ion
““One-to-One”One-to-One”
Benefit of Benefit of
TechnologyTechnology
““One-to-O
ne”
One-to-O
ne”
Before Industrial
Before Industrial
Revolution
Revolution
The Evolution of The Evolution of One-to-One MarketingOne-to-One Marketing
11
Chapter 20 Version 6e 9©2002 South-Western
Learning Objective Learning Objective 22
Discuss the forces that have Discuss the forces that have influenced the emergence of influenced the emergence of
one-to-one marketing.one-to-one marketing.
Chapter 20 Version 6e 10©2002 South-Western
Forces influencingForces influencingOne-to-One MarketingOne-to-One Marketing
Demand for AccountabilityDemand for Accountability
Emergence of New Media Alternatives
Emergence of New Media Alternatives
Decreasing Brand LoyaltyDecreasing Brand Loyalty
More Demanding, Time-Poor Consumers
More Demanding, Time-Poor Consumers
Increasing DiversityIncreasing Diversity
22
Chapter 20 Version 6e 11©2002 South-Western
Marketing Impact of TrendsMarketing Impact of Trends
Consumer recognitionas unique individuals
Consumer recognitionas unique individuals
Marketing Impact of
Trends
Marketing Impact of
Trends
More direct and personal marketing efforts
More direct and personal marketing efforts
Rewards for loyaltyRewards for loyalty
Increased importance ofOne-to-One Marketing
Increased importance ofOne-to-One Marketing
22
Chapter 20 Version 6e 12©2002 South-Western
The New Commandment of The New Commandment of Marketing’s FutureMarketing’s Future
22
Know thy customer and Know thy customer and communicate with him or her communicate with him or her
based on what you know.based on what you know.
Know thy customer and Know thy customer and communicate with him or her communicate with him or her
based on what you know.based on what you know.
Chapter 20 Version 6e 13©2002 South-Western
Learning Objective Learning Objective
Compare the one-to-one marketing Compare the one-to-one marketing communications process with communications process with the traditional mass marketing the traditional mass marketing
communications process.communications process.
33
Chapter 20 Version 6e 14©2002 South-Western
The One-to-One MarketingThe One-to-One MarketingCommunications ProcessCommunications Process
Sender Encoder One-to-OneMessageChannel
Decoding Receiver
Receiver ResponseReceiver Response
Capture of responseCapture of responseshapes futures messageshapes futures message
33
Chapter 20 Version 6e 15©2002 South-Western
Communications Communications Process DifferencesProcess Differences
33
Message isPersonalizedPersonalized
Channel isDirectDirect
NoiseNoise is not present
Individual ResponseResponse is captured
Chapter 20 Version 6e 16©2002 South-Western
Learning Objective Learning Objective 44
List eight common one-to-one List eight common one-to-one marketing applications.marketing applications.
Chapter 20 Version 6e 17©2002 South-Western
One-to-One One-to-One Marketing ApplicationsMarketing Applications
Identify the best customers Identify the best customers
Retain loyal customers Retain loyal customers
Cross-sell other products or services Cross-sell other products or services
Design targeted marketing communications Design targeted marketing communications
Reinforce consumer purchase decisions Reinforce consumer purchase decisions
Induce product trial by new customers Induce product trial by new customers
Increase the effectiveness of distribution channel marketing
Increase the effectiveness of distribution channel marketing
Improve customer service Improve customer service
44
Chapter 20 Version 6e 18©2002 South-Western
Identifying the Best CustomersIdentifying the Best Customers44
Chapter 20 Version 6e 19©2002 South-Western
Retaining Loyal CustomersRetaining Loyal Customers44
Retaining an additional 5% of customers Retaining an additional 5% of customers each year increases profits by 25%each year increases profits by 25%
Retaining an additional 5% of customers Retaining an additional 5% of customers each year increases profits by 25%each year increases profits by 25%
Improving customer retention by 2% Improving customer retention by 2% can decrease costs by 10%can decrease costs by 10%
Improving customer retention by 2% Improving customer retention by 2% can decrease costs by 10%can decrease costs by 10%
Chapter 20 Version 6e 20©2002 South-Western
Other Marketing Applications Other Marketing Applications through Databases through Databases
44
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
Chapter 20 Version 6e 21©2002 South-Western
Find new customers
Gain insight into who is purchasing products
Improve customer service
Other Marketing Applications Other Marketing Applications through Databases through Databases
44
Chapter 20 Version 6e 22©2002 South-Western
Learning Objective Learning Objective
Discuss the basics of Discuss the basics of one-to-one marketing one-to-one marketing database technology.database technology.
55
Chapter 20 Version 6e 23©2002 South-Western
Data-Driven MarketingData-Driven Marketing
The process of gathering,
maintaining, and analyzing
information about
customers and prospects to
implement more efficient
and effective marketing
communications.
55
Chapter 20 Version 6e 24©2002 South-Western
Marketing Database 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.
55
Chapter 20 Version 6e 25©2002 South-Western
Data Warehouse 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.
55
Chapter 20 Version 6e 26©2002 South-Western
Building a Marketing DatabaseBuilding a Marketing Database
Enhance customer dataEnhance customer data
Analyze information Analyze information to find answersto find answers
Collect the right dataCollect the right data
55
Chapter 20 Version 6e 27©2002 South-Western
Collect the right dataCollect the right data
Response ListsResponse Lists Compiled ListsCompiled Lists
Building a Marketing DatabaseBuilding a Marketing Database55
Chapter 20 Version 6e 28©2002 South-Western
Building a Marketing DatabaseBuilding a Marketing Database55
Enhance customer dataEnhance customer data
CompiledData
CompiledData
ModeledData
ModeledData
CustomData
CustomData
Chapter 20 Version 6e 29©2002 South-Western
Enhance Customer DataEnhance Customer Data
ModeledData
ModeledData
CustomData
CustomData
Information has been sorted into distinct groups or clusters of
consumers or businesses based on census, household,
or business-level data.
Information has been sorted into distinct groups or clusters of
consumers or businesses based on census, household,
or business-level data.
Enhancement information acquired by the marketer, including customer surveys, customer participation
programs, product registration, warranty cards, or loyalty marketing programs.
Enhancement information acquired by the marketer, including customer surveys, customer participation
programs, product registration, warranty cards, or loyalty marketing programs.
55
Chapter 20 Version 6e 30©2002 South-Western
LifetimeValue Analysis
LifetimeValue Analysis
PredictiveModeling
PredictiveModeling Data MiningData Mining
CustomerSegmentation
CustomerSegmentation RFMRFM
Analyze information Analyze information to find answersto find answers
Building a Marketing DatabaseBuilding a Marketing Database55
Chapter 20 Version 6e 31©2002 South-Western
Customer SegmentationCustomer Segmentation55
Segmentation Segmentation BasesBases
Demographics
Geographics
Purchase Behavior
Psychographics
Chapter 20 Version 6e 32©2002 South-Western
Recency-Frequency-MonetaryRecency-Frequency-MonetaryAnalysis 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.
55
Chapter 20 Version 6e 33©2002 South-Western
Lifetime Value Analysis 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.
55
Chapter 20 Version 6e 34©2002 South-Western
Uses of Customer Lifetime ValueUses of Customer Lifetime Value55
Provides a basis fortargeting new customers
Provides a basis fortargeting new customers
Provides level of spendingto retain a customer
Provides level of spendingto retain a customer
Show expense to acquire anew customer
Show expense to acquire anew customer
Chapter 20 Version 6e 35©2002 South-Western
Predictive Modeling Predictive Modeling
A data manipulation
technique in which
marketers try to determine,
based on a past set of
occurrences, what the odds
are that a response or
purchase will take place
in the future.
55
Chapter 20 Version 6e 36©2002 South-Western
Database EnhancementDatabase Enhancement
The overlay of information
to customer or prospect
records for the purpose of
better describing or better
determining the
responsiveness of
customers or prospects.
55
Chapter 20 Version 6e 37©2002 South-Western
Data MiningData Mining
The process of using
statistical analysis to
detect relevant
purchasing behavior
patterns in a database.
55
Chapter 20 Version 6e 38©2002 South-Western
Data MiningData Mining
Create customer profilesCreate customer profiles
Uses ofData Mining
Uses ofData Mining
Determine the reasonfor customer loyalty
Determine the reasonfor customer loyalty
Analyze the potential return for strategies
Analyze the potential return for strategies
Help forecast sales Help forecast sales
55
Chapter 20 Version 6e 39©2002 South-Western
Learning Objective Learning Objective 66
Describe one-to-one marketing Describe one-to-one marketing using the Internet.using the Internet.
Chapter 20 Version 6e 40©2002 South-Western
Establish Enduring Customer RelationshipsEstablish Enduring Customer Relationships
Create a Multimedia Marketing InitiativeCreate a Multimedia Marketing Initiative
Deliver Personalized MessagesDeliver Personalized Messages
.com.com
One-to-One MarketingOne-to-One Marketingand the Internetand the Internet
66
Chapter 20 Version 6e 41©2002 South-Western
Learning Objective Learning Objective
Discuss privacy issues related Discuss privacy issues related to one-to-one marketing.to one-to-one marketing.
77
Chapter 20 Version 6e 42©2002 South-Western
Privacy Concerns withPrivacy Concerns withOne-to-One MarketingOne-to-One Marketing
Invasion ofInvasion ofPrivacyPrivacy
Invasion ofInvasion ofPrivacyPrivacy
Popularity of InternetPopularity of Internetfor data collection for data collection
Popularity of InternetPopularity of Internetfor data collection for data collection
UnawarenessUnawarenessof information collectedof information collected
UnawarenessUnawarenessof information collectedof information collected
Misunderstanding about Misunderstanding about privacy laws andprivacy laws and
regulationsregulations
Misunderstanding about Misunderstanding about privacy laws andprivacy laws and
regulationsregulations
77
