MIT Sloan Management Review

Business Ethics and Public Policy, Marketing

 

Database Marketing: New Rules for Policy and Practice

By Frank V. Cespedes and H. Jeff Smith

July 15, 1993

DATABASE MARKETING PROGRAMS ARE ATTRACTING INCREASING AMOUNTS OF COMPANIES’ MARKETING RESOURCES AND TALENTS. BUT TOO OFTEN, MARKETER Signore consumer fears about the widespread availability and use of personal information. Innovative marketing tactics provoke a consumer backlash that can lead to restrictive legislation. The authors analyze the conflicting perspectives on database marketing and suggest some guidelines for companies to use for improving both the practice of database marketing and its climate. The best approach is to follow the “sunshine principle,” they argue, and allow consumers more access to and control over the information concerning them.

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Although a relatively recent development, database marketing (DBM) programs are already forcing important choices by companies, consumers, and legislators. These choices are changing society’s view of what constitutes good marketing practice in the United States and other countries where the conjunction of new technologies and selling requirements accelerate the use, and potential abuse, of information about individuals.

From a marketer’s perspective, DBM uses information about consumers in order to improve the efficiency of what might be called the Three Ts: targeting, tailoring, and tying.

  • In work with a defined customer or prospect list, DBM can improve the targeting of current and potential buyers. Even if the messages and products remain constant, the process allows companies to waste less effort, money, and other resources by not promoting to individuals who are unlikely to respond.
  • Going one step further, DBM allows companies to tailor marketing messages and products more specifically to customer groups. As a firm learns more about the heavy users of its product or service through DBM campaigns, it can provide different variations of the product mix to more customer sets. In some cases, this process can reach the level of the individual household.
  • By taking advantage of relationships the company has created through targeting and tailoring, it can develop and maintain better ties. What some dismiss as “junk mail,” many marketers legitimately view as the initial building... To read the complete article, login or sign-up using the form below.
 
 

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