Database marketing is a type of direct marketing that uses customer or potential customer databases to produce tailored messages in order to advertise a product or service. As with direct marketing, the mode of communication might be any addressable media.
What is it?
The contrast between direct and database marketing derives largely from the emphasis placed on data analysis. The use of statistical approaches to build models of consumer behavior, which are subsequently utilized to choose clients for communications, is emphasized in database marketing. As a result, database marketers are frequent users of data warehouses, because having more data on customers enhances the probability of building a more accurate model. Marketing databases are classified into two types: consumer databases and company databases.
Diving in Deep
Consumer databases are generally oriented at businesses that sell to consumers, often known as B2C or BtoC. Business marketing databases are frequently far more advanced in terms of the information they can give. This is mostly due to the fact that commercial databases are not subject to the same privacy regulations as consumer databases.
The "database" is often a compiled "list" of name, address, and transaction history details from internal sales or delivery systems, or a bought-in compiled "list" from another business that has acquired such information from its clients. Charity donation forms, application forms for any free product or contest, product warranty cards, subscription forms, and credit application forms are common sources of collected lists.
If the messages created through database marketing are unwanted by the recipient, they are referred to as junk mail or spam. Direct and database marketing firms, on the other hand, believe that sending a targeted letter or e-mail to a client who has requested to be contacted about products that may be of interest to the customer helps both the consumer and the marketer.
Some governments and organizations require that individuals be able to prevent their names and addresses from being added to or removed from database marketing lists.
In the 1980s, database marketing developed as a new and better kind of direct marketing. Traditional "list broking" was under pressure to modernize during this time period since it was offline and tape-based, and lists tended to contain little data. At the same time, with new technology allowing for the recording of consumer answers, direct response marketing was on the rise, with the goal of establishing two-way contact, or conversation, with customers.
Although database marketing may be used by organizations of any size, it is especially well-suited to businesses with a high number of consumers. This is due to the fact that a big population gives more opportunities to identify customer or prospect categories that may be interacted with in a tailored manner. In smaller databases, the expenditure necessary to distinguish messages will be difficult to justify economically. As a result, database marketing has thrived in industries such as financial services, telecommunications, and retail, all of which may create massive quantities of transaction data for millions of customers. Database marketing applications may be split logically into those that target existing customers and those that target potential consumers.