LEAD STORY-DATELINE: Communiqué, December, 2001.

Many marketing organizations have turned to the use of databases in order to adopt a one-to-one marketing strategy. Some online marketing organizations have an existing subscriber database that they use to interactively communicate and transact with known customers, as well as for customer relationship management (CRM) purposes. Many more traditional marketing organizations, such as fast moving consumer goods (FMCG ) marketers, also use databases, even if they are databases such as those developed and maintained by third parties such as marketing researchers, retailers, and even government.

The advent of the modern relational database meant that many different data types could be stored (e.g. text, graphics, and sounds). More importantly, it meant that the data could be more easily accessed, manipulated, and examined for patterns and trends. Data is stored in two-dimensional tables of rows and columns, where each row represents the attribute data for each entity (customer) and columns represent the same attribute (first name, last name, address, and so on) for all records. The tables are linked together by common keys such as account numbers, and can be easily reconfigured. Databases are easily accessed and manipulated; you can link a single record in one table with another record in a second table, or many records in one table with records in a second table, or each record in a table with many in another table. Large firms tend to use third-party software modules from such suppliers as Oracle, SAP, and SQL Server 2000, while small businesses are likely to be using such software as Microsoft Access and FoxPro. As an indicator of their importance in marketing, it is estimated that up to half of all Fortune 1000 companies worldwide are using datamining.

1. What is database marketing? How are databases used?
   
   
2. Is the datamining of customer databases an example of the use secondary data in marketing research? Explain.
   
   
3. How is datamining related to the notion of customer lifetime value?
   
   
4. What investment do companies need to make to engage in database marketing?
   
   

Those firms using databases do so for a number of reasons. They may wish to identify potential customers (prospects rather than suspects), determine which customers should receive offers of particular value or product assortments, or deepen customer loyalty by making a special offer to a particular class of customer (e.g., most profitable to the company). Additionally, they may wish to reactivate customers who have not taken up offers for a period, or above a certain price. Most importantly, companies want to mine their data.

Datamining entails checking databases for patterns and trends, or searching out new connections between data. Modern software enables open-ended queries that involve systematic searches for relationships and patterns within and between databases. Four types of relationships might be searched for: Associations, classes, clusters, and sequences. Associations represent the association between sales of two product categories. Classes allow companies to examine, for example, gender (as a class) in the connection between data in different fields if males ages 25 to 39 often buy snack foods and cooked rotisserie chicken. Clusters allow the examination of logical relationships, such as demographics and supermarket location; mining this data cluster would identify market segments among other things. Sequences are used in anticipation of finding patterns and trends; for example, a supermarket might predict the incidence of cooked chicken being purchased based on purchases of snack foods.

Companies maintaining databases are also likely to use analytical software such as Cognos Scenario, Enterprise Miner and SPSS to undertake such datamining. While there are newer techniques such as neural networks, it is highly likely that techniques such as regression, correlation, and factor analyses are used in conjunction with graphical models, such as Bayesian networks, and simpler data visualizations.

Chung, H. Michael; King, David; Lee, Jae; Turban, Efraim; and Warkentin, Merrill. "Datamining: The Missing Link?," Electronic Commerce: A Managerial Perspective. Prentice Hall, Upper Saddle River, N.J.

Ziffer, Dan. "All That Glitters," Communiqué, Microsoft Corporation, Dec 2001/Jan 2002, pp.11-16.

- Stewart Adam

LEAD STORY-DATELINE: Business Week Online, November 14, 2001.

This article addresses the opportunities that now exist with the Internet (given the Net's boom and bust). Many firms were tremendously impacted when the dot-com bubble burst; these include telecommunication, networking equipment, business software, PC makers, e-commerce firms, and other Net startups. There have been 716 Net-based businesses that have closed since January 2000, and in the past two years an additional 1,000 have been acquired, often at significantly lower valuations. For example, the broadband service and content provider Excite@home was once valued at $6.7 billion, but was bought for only $10 million in November 2001 by Infospace. Thus, analysts see that the unrealistic hype and subsequent extreme pessimism has given way to a more realistic view of the Internet. Additionally, while the Internet still has great potential, it will now need to prove itself by more traditional measures of business success (such as sales and profits).

There are four major trends that can be seen with the Internet. First, the value of bringing traditional business operations online (such as with more customized purchasing) will outstrip the benefits of getting more consumers to buy online; "the best sector will be business-to-business and initiatives that help companies put their own business on the Internet." This can be seen in the estimated 30 percent growth in firms' spending on Web initiatives and the fact that the majority of Net-related merger and acquisition deals were among firms that address areas such as customer-relationship management, supply-chain management, and information sharing. The best opportunities for the Net will be in helping firms cut costs, improve operations, and gain a better understanding of their customers' needs.

Second, the momentum in online retailing is swinging to established retailers; with the exception of Amazon and eBay, this sector is becoming just another sales channel for giant brick and mortar retailers. Amazon even has found that its highest-margin business is in providing Web and fulfillment services for other retailers. The good news, however, is that online retail sales are still growing. Third, there are some niches of online business that have really taken hold; for example, online travel sales have enjoyed phenomenal success with sales of $13.8 billion in 2000. Fourth, Web media and entertainment sites will continue to experience problems due to a decline in ad revenue with the recession, the diminishing multitude of options, and the still slow loading of video and music. With fewer media choices online and more acceptance of broadband technologies, this may improve in the future. Thus, while the Internet revolution may be over, in its place is the Internet evolution that will see the survival and growth of big brand names, lean upstarts, and the B2B market.

TALKING IT OVER AND THINKING IT THROUGH!

1. What are the four major trends for the Internet addressed in the article?
   
   
2. Per the article, what firms are most likely to see success online in the future?
   
   
3. Per the article, what evidence is there for the strength of the B2B market versus the B2C market?

THINKING ABOUT THE FUTURE!

This article points out how the Internet revolution will now be replaced by the Internet evolution. With this evolution, there will be more pressure on firms to demonstrate solid business results with their use of the Internet. Thus, firms will utilize the Internet more to cut costs, streamline operations, and to better reach and understand their consumers rather than to try to go after a completely new market that may or may not exist. For example, for online retailers, they are not reaching new customers as much as providing another channel to reach current customers or to serve a niche market. Thus, those firms who will be successful with the Internet will be those who utilize it to better serve their current customers, primarily in the B2B market, but also in the B2C market.

SOURCES:

Salkever, Alex. "Seeing the Net With Clearer Vision," Business Week Online, November 14, 2001.

- Jacqueline K. Eastman

LEAD STORY-DATELINE: The Wall Street Journal, April 18, 2001.

E-mail marketing is fast and cheap. The average bulk rate letter costs 18 cents in postage plus the cost of printing and preparation. An outbound e-mail costs about one-half cent to deliver. A print campaign may take three months to create, while an e-mail promotion takes three weeks to create. A print campaign takes six months or more to evaluate, while an e-mail promotion will get about 40 percent of the responses in one hour and 80 percent in 72 hours.

E-mail marketing has become very effective, specifically for companies such as Renaissance Cruise lines. Renaissance sent one to two e-mails per week to travel agents in general and three E-mails to targeted customers. Though this may seem too frequent, only 0.1 percent of their customers have opted out. Renaissance Cruises is taking e-mail marketing one step farther with the help of Grey Direct.

Technology and software allow the e-mail promotions to be taken to a new level of personalization. Travel agents can go directly to Renaissance through a link provided in the e-mail promotion to check for scheduling, pricing, availability, and other pertinent information. "Push to Talk" enables travel agents responding to e-mail promotions to chat with Renaissance customer service agents in real time.

"Push to Talk" has the potential to enhance e-mail direct marketing by allowing consumers to directly contact the company to ask questions not answered by the promotional information provided. The downside to "Push to Talk" is consumers' leeriness about opening attachments because of computer virus concerns. Grey Direct hopes to persuade other businesses to try this new technique of reaching out to customers. They will charge 75 cents to 95 cents for every person who connects to the company using the technology.

TALKING IT OVER AND THINKING IT THROUGH!

1. What advantages and disadvantages do you see with "Push to Talk" as compared to other direct response marketing tools?



2. Grey Direct will charge 75 cents to 95 cents for every person who connects to the company using the technology. Does this seem like a reasonable fee? Explain.



3. What products or services would benefit the most from the integration of "Push to Talk" into an e-mail promotion? Are there some products or services that would not benefit? Explain.

THINKING ABOUT THE FUTURE!

As with all innovations, recognition and acceptance are critical to success. As "Push to Talk" becomes more widely used, consumers' recognition and trust of it will grow, reducing fears about computer viruses. If consumers recognize "Push to Talk" as a convenience or added service provided by a company to give additional support, consumer acceptance will increase. Providing "Push to Talk" may enhance the credibility of a marketer's message, as it provides real time experts to answer consumers' questions.

SOURCES:

Vranica, Suzanne. "Grey Direct Pushes the E-Mail Envelope," The Wall Street Journal, April 18, 2001, pB8.

- Renée J. Fontenot

LEAD STORY-DATELINE: Business Week, July 30,2001.

Remember how the independent film The Blair Witch Project became a mega-hit on a shoestring budget? Or how the Harry Potter book release became a major media event? How can you, as a marketer, pull off something like that? Well, the answer is: buzz marketing. Using this technique, marketers lure the customers to be their goodwill ambassadors, spreading the positive word-of-mouth for their products. At times, marketers try to create a mystery around their products, revealing the secrets only to select few customers who they believe are opinion leaders and trendsetters. These recipients then spread the word to more carriers, much in the same fashion that a virus spreads in a population.

Despite the apparent spontaneity of these informal "pass-along" conversations, the buzz marketing campaigns are meticulously planned and the results carefully monitored. For example, in a recent campaign, the VF Corp. contacted 200,000 carefully selected web users as part of its buzz campaign. Within four months, the campaign had generated a total of 436,000 visitors at its Lee Dungarees Web site.

Several companies have been experimenting with buzz marketing. Piaggio USA recently hired models to visit trendy cafes and clubs in L.A. riding their Vespa scooters to talk up their product and brand. Similarly, Chrysler planted early units of its PT Cruiser in rental fleets in Miami to get the buzz going. Lucky Strike "Forces" have been offering free coffee, cell-phone calls, and even beach chairs to smokers suffering outside their office buildings because of their offices' no smoking policy.

Compared to traditional advertising, buzz marketing is subtle, relatively less expensive, and much more effective with the younger generation. However, there are a couple of things that marketers need to beware of when using buzz marketing. First, measuring the reach of a buzz campaign isn't as precise as that of AC Nielsen's ratings. Second, there is a real risk that the campaign may not evolve as desired and may end up creating a negative impact. For example, when IBM stenciled wordless images of a peace symbol, heart, and penguin to create buzz for its "Peace Love Linux" campaign, the move backfired as the company was portrayed as a corporate vandal writing graffiti on the sidewalks of Chicago and San Francisco.

TALKING IT OVER AND THINKING IT THROUGH!

1. How does buzz marketing work?
   
   
2. In what ways is buzz marketing superior to traditional advertising?
   
   
3. What are some of the drawbacks of using buzz marketing?
   
   

THINKING ABOUT THE FUTURE!

Marketers are always on the lookout for new means of communicating their message to their target audience. Given that the traditional media such as television and magazines are cluttered with ads, people are looking for more effective, cost-efficient, and less-cluttered means of communicating. Buzz marketing is one such alternative. One factor that has fuelled the growth of buzz marketing is the Internet. The Internet provides a means of quick and inexpensive communication. Thus, it is very easy to spread word to a large section of the target population using this medium. While people may enjoy some of the buzz marketing campaigns for their novelty and fresh approach, there is a real danger of overkill. If too many companies start doing it, or if the attempt to spread word is too obvious and intrusive, it could lose its effectiveness and could turn into just another means of communication.

SOURCES:

Khermouch, Gerry and Jeff Green . "Buzz Marketing," Business Week, July 30,2001, pp. 50-56.

- Praveen Aggarwal

LEAD STORY-DATELINE: Business Week, September 3, 2001.

If you have been using your computer to surf the Internet, the chances are you are familiar with the X10 wireless camera. The ad for this product appears as a pop-under, especially at such popular sites as the New York Times and Amazon.com. A pop-under is a screen that launches beneath a Web page. Thus, you don't even notice it until you close your browser, and as soon as you do that, it is sitting there on your computer screen, in its own little window! Despite the fact that they cost a lot more than banner ads—about $5 per 1000 impressions against $1 for banner ads—they are increasing in popularity. And according to some advertisers, they are even proving to be effective.

The X10 camera, for example, has moved from obscurity to the fourth most visited web site on the Internet, thanks to pop-under ads. Similarly, e-tailer Half.com has reported a 66% increase in its traffic since it started using this new advertising technique on the Internet. The diet company, Nutri/System Inc. is even attributing sales growth to the use of pop-unders. Of the 10% click through rate reported for some of the pop under campaigns, about 4% stick around at the site. This is far better than the 1% (or less) rate achieved by the banner ads. It also compares favorably with some of the traditional media. For example, the coupon redemption rate currently stands at a little more than 1% and direct mail generates a response rate of about 2%.

So, are people happy to see pop-unders pop on their screen? Certainly not. Many find them annoying and intrusive. But then, advertising is not about winning popularity contests. One can recall several cute and creative television commercials that did little good to their companies. On the other hand, pop-unders are proving to be effective. In a sense, they are like junk mail and telemarketing calls. They are annoying but they get the job done. Pop-under sales have nearly doubled since November. Fastclick.com Inc. has served more than 2 billion pop-unders on 4,00 web sites for 20 advertisers. Pop-unders are larger and provide an opportunity for richer, more complex graphics. Whether we like them or hate them, they are here to stay.

TALKING IT OVER AND THINKING IT THROUGH!

1. What are pop-unders and how do they work?
   
   
2. Compare the effectiveness of pop-unders with some traditional promotional media.

THINKING ABOUT THE FUTURE!

Given that more and more households in this country, as well as abroad, continue to get access to the Internet, its importance as an advertising medium has grown tremendously. The Internet is also emerging as a distribution channel, thereby increasing its attractiveness as a POP display vehicle. Advertisers have tried various formats of advertising on the Internet— banner ads, click-through buttons, interstitials, and so on. Pop-unders are different in the sense that the user does not see them until she closes her browser button. Thus, the user gets to see the ad after she is done browsing the Internet. These ads also provide a richer and more complex graphics capabilities, and are therefore particularly attractive to any advertiser who wants to tell a product story. Despite their annoying nature, they are effective. As research evidence accumulates documenting their effectiveness, we are likely to see an increase in their usage.

SOURCES:

Neuborne, Ellen. "Irksome-- and Effective," Business Week, September 3,2001, p. EB 6.

-Praveen Aggarwal

LEAD STORY-DATELINE: E-Commerce Times, September 7, 2001.

Online ads are starting to look increasingly like television ads. Additionally, online ads have the advantage over television advertising of measurability. There are three issues though that are impeding the widespread use of online ads. First, only two of the top twenty advertisers spend more than one percent of their budgets online (Walt Disney and Microsoft which both have online properties). The majority of firms buy online ads out of their direct mail budget, which is the smallest part of the media plan typically. If firms would instead utilize the television budget, there would be a lot more potential for online ads. A second issue is the spread of broadband. While the lack of broadband access in many homes limits the use of streaming multimedia advertising, broadband access is increasing at the rate of 440,000 new U.S. households a month. In the meantime, the Interactive Advertising Bureau (IAB) has issued guidelines for using streaming media ads, such as designing them with stop buttons so consumers can halt them if needed. The final issue is the need to reduce the clutter of online ads and instead determine means in which online advertisers can get consumers' attention and build a strong impression on consumers. For example, several firms have effectively developed opt-in games that both increase awareness and help them develop a customer e-mail list for future one-to-one contact. Thus, while the majority of online users understand the need for online ads, marketers need to use them more effectively to enhance their future use.

TALKING IT OVER AND THINKING IT THROUGH!

1. What are the three issues impacting the widespread effective use of online advertising?
   
   
2. What would you recommend marketers do to address these issues and enhance the future of online advertising?

THINKING ABOUT THE FUTURE!

Now that the Internet bubble has burst, online marketers need to be able to demonstrate the effectiveness of online advertising to enhance its future. E-marketers first need to focus on the measurability of the Internet as a key strength of the medium. While a click-through measure is useful, this is often very low. Thus, marketers need to demonstrate other means of effectiveness, such as developing opt-in lists and improving brand image, and illustrate the advantages of these measures to other media. Additionally, marketers will need to get more creative with their use of online advertising to attract attention, both from consumers and industry. Care must be taken to address the bandwidth issue and the guidelines from the IAB may help here. Finally, marketers need to illustrate the effectiveness of these creative ads to attract a larger portion of the budget online advertising. This could happen with online advertising awards or using mini-case successes in attracting online advertising. Thus, as the novelty factor wears off for online advertising, marketers need to demonstrate the competitive value of promoting online versus other media.

SHARING THE NEWS

Break the class up into small groups and have them look at advertising on the Web. Each group sould select one ad they feel is effective and one ad they feel is not and discuss why: clutter, impact on brand image, easy to remember, excitement, and appropriate for target market, etc.

SOURCES:

Regan, Keith. "Connecting With the Future of Online Ads," E-Commerce Times, September 7, 2001

- Jacqueline K. Eastman

LEAD STORY-DATELINE: BRW, August 3, 2001.

What's the difference between a focus group, an arcade game and a reality television show? Nothing it seems, when it comes to reality TV shows like Survivor 1, 2 and soon 3, Big Brother, Boot Camp and new shows yet to hit our screens, according to Herceg and Flattery (2001).

But why are viewers so enamoured with these new shows where people debase themselves—for example the US show Diet features a group of overweight people attempting to shake off their extra pounds? Well, it's all designed to hold viewers' eyeballs ready and primed to take in the next batch of television commercials. The show Big Brother held Australian Network Ten's head above financial water while the two top-rating networks, Nine and Seven, fought with their new TV ratings agency Oztam. This ratings agency was set up at the behest of the television networks, and had dared to show that the previously unassailable Nine Network was being hard pressed by Network Seven for ratings supremacy.

But wait, there's more! Soon North Americans will be begging their TV networks to push reality TV into the video dustbin, and buy a hybrid TV show—Fat Cow Motel—that is almost lived in by the audience. Imagine watching a show where at the end of every episode, viewers can use their cellphone's (mobile phone) small message service (SMS) and the Internet to have clues sent to them so they can solve a new puzzle each week. If you played along with Cloudmakers.org prior to the release of Stephen Spielberg's movie AI: Artificial Intelligence, then you are aware of how involving this type of activity can become. However, this time around, the advertisers will be involved. Viewers might be able to assign the characters from their least favourite television commercials to some hideous role in Fat Cow Motel. The name of the game is interactivity and loyalty through involvement. So if you think it is safe to sleep through your favourite TV shows, your life is about to change—for the better or worse, depending on your viewing tastes.

TALKING IT OVER AND THINKING IT THROUGH!

In this section, we consider further the matter of interactive, high-involvement television:

1. Do you regard interactivity as a necessary ingredient to increasing television viewing? If so, why? If not, why not?
   
   
2. Might highly involving television programs, where interactivity causes them to become more like arcade games, have an adverse effect on the effectiveness of commercials shown in these programs? (Hint: Read the Digging Deeper section)
   
   
3. Might the context within which a digitised commercial is shown on a Web site be related to the effectiveness of the commercial?
   
   
4. TV viewers are very familiar with the use of their sets, even though anecdotal evidence suggests that older folk find it difficult to manually program video recorders. Given there is varied experience with Web usage, might such experience be related to the effectiveness of commercials shown on Web sites?

DIGGING DEEPER

Goldberg and Gorin (1987) examine the relationship between the positive or negative mood induced by television programs and the attitudes and behaviours towards products featured in commercials shown during these programs. They review the extant literature and note varying hypotheses concerning the relationship between mood and recall. We do not delve into their research methods here; rather we concentrate on their discussion of the results. They point out "within the scope of this research, the evidence suggests that the happy and sad TV programs … induced subjects to feel happy or sad as they watched. This induced mood carried over to the subjects' felt mood while they watched the commercial" (Goldberg and Gorn, 1987 p.398). They also point out that "to some extent … viewing the happy program led to improved recall of the commercials."

Such studies are examining the association between two stimuli—a happy/sad TV program and the associated commercial. There are many issues surrounding such research, and the findings are not always in accord with each other. One issue is how a frivolous commercial might be deemed to be inappropriate in a 'sad' TV program showing victims coping with famine or a natural disaster; where there is another effect not being taken into account by the researchers. Such studies raise questions about the effectiveness of commercials shown in an inappropriate context. How effective might an information-laden commercial be when aired in a program such as Fat Cow Motel given that Goldberg and Gorn (1987, p.400) note "The happy or sad nature of the program influenced subjects' felt mood more as they watched the emotional as opposed to informational commercials"?

SOURCES:

Goldberg, Marvin E. and Gerald J. Gorn. "Happy and Sad TV Programs: How They Affect Reactions to Commercials," Journal of Consumer Research, Vol. 14, 1987, pp.387-403.

Herceg, Rosemary and Tim Flattery. "Fat Cow Motel Refreshes Tired TV," BRW, August 3, 2001, p.28.

- Stewart Adam