Database Marketing - a Case of Lab Sports UK - Research Paper Example

 Database Marketing – a case of Lab Sports UK Introduction According to Blattberg (2009), marketing has evolved from a support function to a revenue driving need for any organization that has a set up in the business arena today. Marketers have always looked for various variables amongst the past sales record that could assist them not just forecast but reach their precise target audience in an unprecedented manner, leading to saving of both time and cost. The advancements of science and technology and the embedment of the same towards the marketing function of an organization have led to discovery of classical tools and applications that would assist the marketing function on the whole. At the same time, the internet has also played a major role in the development of the same. In a matter of just a few years, internet has changed the outlook of the business across the globe and its application to marketing has been no different. This report aims at analyzing how information technology, primarily the internet and databases have changed the outlook of marketing across the business arena. The following section aims at highlighting how internet has influenced and assisted the marketing function on the whole. The Utility of Internet for Marketing Internet has added quite a lot of complexity to the marketing of products and services, boiling down to the difficulty level of the marketers, in accordance with Hughes (2005). Today, a surfer often observes that, for example, if the surfer has been on eBay to purchase a mobile or been to Amazon for purchasing a book, then while surfing various websites, the ads on the mailbox and other websites would be relevant to the purchases made in recent past by the surfer. Is that a mere co-incidence or is there another story behind the same? When referred to the concept of internet based marketing, Drozdenko (2002) suggests that a researcher often assumes marketing via email; however, there is a deep meaning within the same. Email marketing is a separate subject altogether but has lost its effectiveness with the enhancements of spam-guards in a mailbox. However, when it comes to the concept of internet marketing as mentioned previously, the story behind this is the fact that there are ‘spies’ on the internet that are not dangerous to the computer system or the operating system in terms of a virus, but reside on the internet browsing software. Marketers embed these spies generally on e-commerce based websites or those that are involved in blogging or forums of various products and services. These spies ‘jump’ on the surfer’s computer system software, reside at the same, and keep a track of the browsing history. This history is reported back to their origin, where a database is maintained. Like any other database, this database has numerous values within the same that would be discussed during the course of this report. According to Farris (2010), these trends initiated from the advent of e-commerce and online shopping websites, such as Amazon.com, eBay.com, Souq.com, along with the availability of websites that allowed users of various products and services to communicate, share their experiences, develop opinions, forums and other feedback sharing channels, such as GSMArena.com, Blogs and reviews have played a major role in this regard. Marketers seek for an opportunity to ease the process of identification of their target audiences; it was easier to identify the target audience and to develop segments and strata. As the surfers go to various websites for shopping, their preferences and profiles are saved and used for targeted marketing for future products and service offerings. The following section provides a deeper analysis of the database marketing. Database Marketing – an in-depth overview The concept of database marketing is simple; develop and maintain a database with consumer preferences and utilize the same for further product and service offerings, in accordance with Jackson (1998). These consumer preferences are obtained from the surfing history of customers, obtained via ‘spying’ through the internet browsers. For example, if an individual surfs GSMArena.com for a while, then surely he/she would see advertisements related to mobile phones while surfing various websites. These databases are inter-related to one another, and provide exchange of data as well. Development and maintenance of such databases is becoming an upcoming business today, in accordance with Ratner (2003), though discussion of the same lies beyond the scope of discussion. When a seller, for example a music store, approaches these database teams for the purpose of their marketing, these teams generate a query, through which their ‘spies’ catch any relevant or required behavior by their consumers and display the advertisements accordingly. Application & Benefits of Database Marketing According to Berry (2004), majority of the business sectors have developed databases and are yielding benefits out of the same – primarily, the banking sector and the retail markets are aggressively deploying this strategy, since the blogging, comments on forums, comparative web links, surfing history of various websites, etc. is quite ample to gain lead for generating and enhancing sales. These databases are developed and maintained by businesses themselves as well as by internet marketing specialist groups that intend to sell it for profit maximization. Arguably, this is a tremendous source for gaining competitive advantage for a firm. There are many advantages that can be retrieved from the application of database marketing. Firstly, marketers are responsible for the audit of each and every penny that they spent for the marketing of a product or service. Subsequently, in database marketing, accountability becomes an easy job since there is tangible evidence that each penny has been spent in the right direction, in accordance with Baggott (2007). Secondly, Baggott (2007) further states that it is easier to define segments and subsequently, target the right set of audiences. This leads to another benefit i.e. reaching the precise target audience, evident from the fact that the surfing history or blogging, etc. already illustrates the customer interest in the said product or service. Other than this, according to Tapp (2009), database marketing leads to one of the most effective modes of marketing i.e. direct or focused marketing. Since each surfer has a unique surfing history or at least a unique manner of approaching products and services, this would lead to knowing the precise need of the consumer; for example, if a surfer writers a review about a new mobile, then marketing the same mobile at a cheaper cost can lead to profitable outcome. Offers and incentives are easier to offer in a seemingly customized manner; for example, a click on the link would lead to a 10% discount for the buyer as you are the 100th customer, as stated by Shepard (1999). For a naïve surfer, a thought would be that this offer is for them specifically, and would be obliged by the incentive or the bundle offering as the case may be. A major advantage of database marketing is the fact that customer databases are maintained on various grounds and variables, as stated by Kleindl (2002). Thus, as a subsequent reaction, data mining and customer profiling becomes an easy task. Furthermore, Kleindl (2000) states that data mining and profiling can be done on any given set of variables or demographics, internet usage history and so on. Ease of segmentation, targeting and positioning also becomes a major benefit of the database marketing, in accordance with Schmid (1998). Using simple queries, segments can be developed and targeted via mail and on-page advertisements, thereon, positioning the product and service offerings in accordance with the under consideration segment. Reaching the Customers through Database Marketing – the case of Lab Sports UK Lab Sports UK is a relatively newer name in the field of specialized sports good retailers in the UK. It aims at bringing the classical, most desired and renowned sports brands under a single roof, including the likes of Reebok, Adidas, Nike, etc. With a wide array of products from these and many more similarly reputed brands, Lab Sports aims at becoming the ultimate choice of sports good consumers across the UK in the various counties. Currently, the store operates in very limited regions; however, the plans for expansion are on the cards. This section aims at analyzing how database marketing can influence the ability of Lab Sports (referred to as the business in the assignment here on) to define and reach its target audience. Firstly, it is critical to analyze for the business that it needs to embed information technology into its infrastructure involving actions much beyond just developing a website. Therefore, a thorough analysis of the current measures taken by the business shall be undertaken. The first and foremost visible step is the presence of a Privileged Club. This, in itself, is a classical mechanism for attracting and maintaining clientele and customer loyalty to the business; however, there is an issue that is obvious in this application. Not many surfers or visitors of the website would move to the hassle of printing the form, filling and dropping it to the location, as is the need according to the current scenario given on the website. In accordance with LeSueur (2007), surfers would more prefer a web based application form that can be filled and submitted instantaneously on the website, rather than the way things are done at present. Subsequently, a re-designed form would be truly helpful and effective. It would not just attract more people towards the store but would also allow creation of a spontaneous database at the backend. Tsiptsis (2010) suggests that this database would store values related to preferences, demographics, and other variables, by means of which various conclusions about the customer likings can be obtained, and retained for long run usage of the firm. Subsequently, a comprehensive data would be developed having input values from the customer, and on that, developing a data warehouse and creation of queries would be made possible, devised to computed, understand and analyze the customer requirements. This would be most helpful in developing future product and service offerings to suit customer preferences, leading to long run customer loyalty. The overall Privileged Club advantage has a tremendous feel and the benefits of the same depicted on the website is a great illustration. The formation of promos and community on the website are also attractive features that allow customer interaction with the strategic alliances ensuring that customers get something or the other of their interest on the website. After analyzing the readily taken steps and the alterations that are needed for the same, now is the time to analyze some prospect strategies of reaching the mass audiences. The business must look to develop strategic alliances with whole-sellers or retailers of non-competing products that are in the same industry. For example; association with clubs, alliances with sports playing institutions, sponsorship of sporting events. During these collaborative measures, the prospect customers can be given various questionnaires and feedback forms by means of which their information and choice of preferences can be obtained. This information would be useful for the organization in the long run perspective. Another step could be having spy-networked across the purchases of sports goods from websites such as Amazon.com, Souq.com, eBay.com, etc. This would provide lead towards prospect customer base, and counter offers can lead to gaining a higher bit of customer acceptance. The key towards success for the business remains database marketing. As mentioned in the previous sections of this report, database marketing would definitely affect the way the target audience is reached by the business. The crucial aspect of database marketing is the development of such a database itself. In the said scenario, there can be several sources discussed as below: The privileged club forms being filled by the customers would definitely be a tremendous source for getting customer information and other details relevant to their pull towards coming to the business The only drawback at present is that limited information can be taken – no one would prefer printing five to ten pages and then fill them and drop them to the outlets. If these forms are converted to online forms, it would be much more easier for the customer and then the influx of information can be expected to be on the higher side. In addition, more questions can be placed and a deeper insight to the customer preferences or choices. The key is: the more input, values, choices, etc. taken from the customer, the more precise choice of the customer can be obtained. The POS (point of sales) terminals can be a useful place for the collection of information and for this various mediums can be used. Feedback form is an effective mechanism for the same. Another mode of data collection can be the card-charging – since most of the customers today prefer payment via plastic money (credit/debit cards) today, thus, these cards can be utilized to extract customer spending history and other details. Surveys at the retail outlets or on the websites can lead to collecting more information that would assist in determining the consumer spending habits and their demographics for critical analyses of their preferences. Collection of competitor sales data can also be vital in determining regional sales patterns, thereby tracing the outlets selling most products and other variables related to the trend identification Surveys can also be conducted at the similar spots to get information on the differential edge that competitors have, leading to collection of further fruitful data. The business can also make use of the internet spies and have them disbursed through various websites; this would provide a deeper knowledge of the customer spending habits and their preferences can also be located by using cookies and other forms of similar spies. Information or data is the fundamental requirement for the development of a database, and as mentioned, the development of the database is the actual ground work needed. Thereon, data warehouses can be developed and ad hoc or pre-defined queries can be run to obtain data in the desired format and pattern based on certain defined filtrations. The business of Lab Sports is highly specialized in nature and in such a scenario, database marketing provides the most viable solution as through it, the very precise target audience can be achieved; the cost of the same is much cheaper when compared to the cost of other sources of media management and marketing channels to reach such a precise audience. Conclusion To conclude, in accordance with Strauss (2008), it can be stated that the database marketing phenomenon is relatively newer to the marketers however, without the concept growing gradually to its maturity stage, it has been applied in a bulk mechanism leading to its impact being devastated to the negative side. A classical example of the same is that the concept of internet spies discussed earlier has been negated through the patches of various anti-virus software that lead to the elimination of such spies from the operating system – because many spies intended to create malfunction in the operating system, and subsequently, those meant for marketing have to suffer as well. However, according to Nash (2000), the gurus of IT are formulating and enhancing this mechanism further so that this concept gains momentum as it has the potential to generate immense revenue for the developers. The business under consideration needs to analyze and understand the fact that its product offering is highly specialized in nature and subsequently, reaching the target audience would be on the expensive side. Database marketing is a cost effective solution for this and such business to reach its target audience, as suggested by Hughes (1995). These databases can be developed internally or can be purchased on contractual basis; however, their presence would allow the marketing individuals to know where precisely their target audience lies and can be targeted accordingly. As a result, huge advertising and marketing cost can be saved to provide cost operations to the organization on the whole. The business, on a general note, is in its growing stage; therefore, an application at this point in time can truly prove to be more effective then if done at a later stage because getting and hitting the right audience from initial phase is what can lead to a quicker break even for the business. 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