Monday, August 10, 2015
MAR 331 Critical Thinking Questions for Analysis Chapter 3 - Marketing Director for Shoe Store, National Airline Employee
Discussion and Critical Thinking, Q1, Q2, Q3 pp. 77-78. Fill in the table and explain in writing (chapter 3).
1. You have been hired as the new marketing director for a shoe store chain with 34 outlets. Your first task is to develop data warehouse. The vice president does not see the benefit of a warehouse and balks at the idea of spending $50,000 to build it. Using Figure 3.1 explain the various functions of the data warehouse and how it can benefit the shoe store chain.
One of the most important reasons to build a quality data warehouse is the fact that it helps the overall marketing management program. The company objectives of identifying the customers and making sure these customers know the company are achieved through utilizing data warehouse. The data is collected through various channels, analyzed and used to achieve those objectives. Today, having a strong online presence is equally or sometimes more important than a traditional brick-and-mortar location. Our shoe company has a strong online presence as well and has an online store.
According to Figure 3.1 there are 7 clearly identified functions of a data warehouse:
1) Customer communication – This is the most important function of the data warehouse. The information (names, last purchases, shoe sizes, contact info to name a few) that could be stored in the data warehouse will help the shoe company establish a closer relationship with the existing and prospective customers. This function can help improve the existing customers’ loyalty and facilitate the return for the next purchase, or it can help build the brand recognition and equity for the perspective customers. One way we could utilize the information is through personalization. We could start by sending personalized emails or newsletters with special offers or with new products (shoes) availability. This provides a feeling that the company personally values each customer.
2) Website operations – Even though we may have a strong presence online through our official website, we need to concentrate more on the database technology that could help our website become tailored to each individual viewer or shopper. This is why this function is very important. Such information can help the marketing program achieve better results and make more sales as a result. For example, the information that is gathered from a customer can be used when he/she logs back to their account. Specific offers and information will be displayed for their convenience. For example, a specific offer could be displayed, that our shoe company offers free shipping for purchases over $100. This visual promotion will encourage the shopper consider buying more.
3) Data-driven marketing programs –Data warehouse helps create numerous marketing programs, which can target specific customers, who tend to spend more or who only spend money on sales items. We also offer sales events and to be able to target the specific customers with higher purchasing power is a plus for the sales revenue in general. It also provides a more targeted way of marketing our products with a higher response levels than regular advertising.
4) Customer service operations – This is another important function of data warehouse. Today customer service plays a crucial role in developing positive relationship between a customer and a company. If we build a data warehouse, we will have access to information when it is needed. If there is a problem with the customer’s order or any other issue, the moment they call the representative can be half way ready to address any existing issues just by looking at the database. It can save time and therefore cut down certain costs. Plus, this quicker response time provides better overall customer service experience as well.
5) Customer information – This function helps cut down on certain costs connected with the lack of important company or product information that is posted on the website. With database all the frequently utilized information could be posted on the website under certain tabs like FAQ, Contact Us, Feedback, Directions and so forth. Here is the information that could be posted that would benefit the shoe company:
o Hours of operation for each location;
o The brand names size charts;
o “How To” section explaining how to care for the shoes with the products we offer (shoe shines and more);
o Feedback or Comments page that could be used to know what we are doing right or what needs to be fixed;
o Access to “My Account” where certain operations with the order could be done without the need to call to the customer service representative.
6) Sales staff operations – This function saves a lot of time for a company representative when the order is placed through a phone call. The available information about the customer’s previous transactions and contact information can help process the order faster and proceed to the next customer. This shortens the waiting time on the phone for another customer.
7) Market planning – The last function of data warehouse helps the marketing team ensure their marketing programs are effective. Database allows analyzing the information much faster by creating certain profiles of target markets, sales volumes of products during specific time period, and more. This information generally helps organize and prepare the stock. For, example, in our case, having 34 locations will not mean all of them sell the same amount of shoes and shoe types at the same time period. In order to improve the availability of the products that are desirable in specific locations, database analysis could be used. For example, high heel shoe varieties might be more numerous in the city location, while the variety of the flats and sneakers in the suburban areas.
2. Referring back to Question 1, assume you have been granted permission to build the data warehouse. For each of the following types of data, explain why they are important, how they will be collected, and how they will be used.
- Customer data – This information is very important for the database because it contains valuable information that could be utilized for marketing programs for existing and potential customers. Customer data includes names, addresses, telephone numbers, emails and other relevant information. This data will be provided to our company voluntarily by the customers through the following steps:
o Through official website, where a customer can submit email to receive special offers;
o At the 34 locations at the point of sale at the cashier;
o Online and in store through filling out a form to receive a rewards card.
This data will be used for various purposes. For example, personalization could be implemented while shopping on the website. Special offers and sales events information will be sent out to the specific target market. Newsletters about the company events will be generated and sent to enhance brand awareness and recognition.
- Transaction data – This data includes customer transactions like purchases and returns, interactions with the company like customer service call, and other related data. It is very important because it tracks down all the activities that could be analyzed later on to improve company’s business (products, shipping service, customer service and more). The data will be collected through several channels:
o Website purchases;
o Customer service call;
o Online customer service forms;
o Website cookies that provide info about what products were viewed, how long each page was viewed and so on;
This type of data will be used to mainly follow up with the customers by generating emails or customer representative phone call (if customer specified phone as the preferred method of contact). In addition, customer service department can utilize the data to efficiently deal with any related issued with products.
- Appended data – This data is usually collected through a third party. We may not be able to always collect all the necessary data, therefore we could utilize services from some of the well-known independent marketing firms. This data is important as it provides the ability to target specific segments according to demographic and psychographic characteristics. For example, marketing campaign can be tailored according to gender, income or special hobbies to raise the possibility of a response. The shoe company can also target certain customers through direct mail campaign, who otherwise do not have access to online offers and sales event information. This is possible because of the geocoding feature of such data.
- Analytical data – Analytical data consists of the statistics and facts that were generated through examination of all the available data. This data is very important for various marketing purposes. For example, customer quantities could be looked at through the prism of marketing dollars spent on acquiring them. It could be collected through:
o Lifetime value analysis;
o RFM Analysis (recency, frequency, and monetary);
- In the case of our shoe company, such data could be used for making sure the marketing budget is spent on raising revenues and lifetime values. In addition, Lifetime value analysis can help our sales or customer service representative see the relationship the customer has with the store and make certain decisions just by knowing that information. Through RFM analysis our shoe company can tailor its advertising program to specific groups that would account for the largest number of customers in the system. In addition, the emails with offers could be sent out to those with higher recency numbers, as they are believed to buy again sooner than others.
3. You are employed by a national airline and have been assigned to collect and interpret data using a lifetime value analysis procedures. Using information collected from a loyalty program, the average lifetime value of business people who sign up for the frequency program is $5,000. After a further analysis, three categories emerged:
1) Light users with lifetime values of $3,000 or less (33%)
2) Moderate users with lifetime values of $3,000 to $5,500 (57%)
3) Heavy users with lifetime values of $5,500 or more (10%)
a. Which group of users deserves the most attention from the marketing department? Why does it have more potential than the others?
b. What type of marketing or communication programs would you design for each of the three lifetime value group?
a. Ideally, the group that deserves most attention from marketing department is the heavy users with lifetime values of $5,000 or more. These are the customers that would receive the best treatment if for any reason they are not satisfied with the service when dealing with the company. This group is very important because it generates profit of $5,500 and up for the company. However, this group only account for 10%. Therefore, it is important to pay attention to the moderate users as well because they account for 57% of all users. Since this is a high percentage number, then marketing team could increase efforts on trying to increase their lifetime values, which would move them to the preferred group of high users.
b. For all three users groups, the marketing communication program would be aimed at retention. It is clear from the lifetime value numbers why it is important to retain existing customers. Light users could be gone if they are not provided with incentives, and moderate or high users could slowly move toward light users if nothing is done. So programs like frequent flyer can help the customer build up their equity and fly more. Light users would be targeted through special advertising campaign that would encourage people to start traveling by air with this specific company through direct communication, database warehouse utilization and special sales programs that could facilitate the need to travel. If the company considers to let the light users go and concentrate on the other two more important groups, then they could simply stop or lower the amount of marketing dollars spend on this group. For moderate users, an email or a direct mail would be sent after 3 months to encourage using the same airline. A survey with a follow up to enhance further experience. For high users, customer service would be enhanced so that these customers will not even think of changing the airline in case any problem occurs.
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