Solomon rprc11 PPT 05 Accessible

Marketing: Real People, Real Choices

Eleventh Edition

Chapter 5
Marketing Analytics:
Welcome to the Era of
Data-Driven Insights!

Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
Learning Objectives
5.1 Explain how marketers increase long-term success
and profits by practicing customer relationship
management (CRM).
5.2 Understand Big Data and data mining, and how
marketers can put these techniques to good use.
5.3 Describe what marketing analytics include and how
organizations can leverage both marketing analytics and
predictive analytics to improve marketing performance.
5.4 Understand how to create and use a personal
database to manage your career.
Real People, Real Choices: Decision
Time at the Philadelphia Phillies
• Which option should be pursued?
– Option 1: Build an enterprise data warehouse
internally.
– Option 2: Outsource the data enterprise platform.
– Option 3: Wait for a vendor to deliver this as a
packaged service.
Customer Relationship Management (CRM):
A Key Decision Tool for Marketers
• Customer relationship management (CRM): a

systematic tracking of consumer preferences and
behaviors to tailor the value proposition to each
individual’s unique wants and needs.
• The big data revolution and enhanced analytical
capabilities allow firms to enhance the customer
experience.
• MarTech: the blending of marketing and technology has
affected roles in the C-suite with the addition of the chief
customer officer (CCO).
Why Is CRM So Effective? CRM
Facilitates One-to-One Marketing
• Steps in one-to-one marketing
1. Identify and get to know customers in detail

2. Differentiate customers in terms of their needs and
their value to the company.
3. Interact with customers to improve cost efficiency
and effectiveness
4. Customize some aspect of goods or services
At Its Core, CRM Is about Two-Way
Communication
• CRM means getting “up close and personal” with
customers.
• CRM captures information at each customer touchpoint
• CRM systems allow customers to check the status of a
delivery, receive an appointment reminder text message
from a dentist, or receive an email from a car dealership
asking the consumer to complete a satisfaction survey.
Marketing Automation
• Marketing automation: systems and technologies to put a
set of rules in place for handling marketing processes
without human intervention.
• Lead: person or firm with a potential interest in buying.
• Sales Funnel: to sell products to buyers
• Lead nurturing: sending relevant content to the prospect
Connecting with Customers
• Many firms prosper by using CRM to generate customer
satisfaction, sales, and business efficiency.
• Amazon: customizes product recommendations
• Adidas: creates new products
• Disney’s MyMagic+: collects data allowing Disney to
communicate with each customer and manage each
relationship effectively
Measuring Marketing Success
• Metrics are measurements or scorecards used to identify
the effectiveness of various strategies or tactics.
• Marketing control means the ability to identify
deviations in expected performance—both positive and
negative—as soon as they occur.
Choosing the Right Metrics Depends on
SMART Goals
Smart Goals: An Example
• “To increase customer conversion rates for new referral
customers by 15 percent by the end of Quarter 4, as
tracked and measured by our CRM software.”
• What are some ways a firm might go about
measuring this goal?
CRM Metrics and Key Performance
Indicators
• How do you measure and track your goals?
– User adoption metrics
– Customer perception metrics,
– Business performance metrics
Big Data: Zettabytes Rule
• Big data: a popular term to
describe the growth of
structured and
unstructured data.
– Hard to process using
traditional database
techniques
– Internet data can be
hard to analyze using
traditional approaches
– Internet of Things
Big Data: Potential to Provide
Competitive Advantages
• Big data have the ability to give an organization a
competitive advantage in three main areas:
– Identifying new opportunities for greater ROMI
– Turning insights gained into better products
– Delivering timely information more efficiently and
effectively
IoT Continues to Grow Increasing the
Size of Big Data
• IoT: contributes to the exponential growth of data
• Ordinary things are connected to the Internet and
communicate information.
• What kinds of things? Medical devices, cars, toys,
video games, a six-pack of beer in your fridge
• What can we gain? Insight into the extent and way
people use everyday objects
Figure 5.2 Sources of Big Data for
Marketers
Big Data Creation, Sources, and Usage
• Millions of pieces of information that make up Big Data
originate from two source categories:
– Social media sources
– Corporate IT sources
– Government and NGO sources
– Commercial entity sources including scanner data
– Partner database sources
Social Media Sources
• Web scraping
• Sentiment analysis
– Measuring brand attitude by assessing the context or
emotion of online comments
• Brand mapping
Corporate IT Sources
• CRM Databases
• Web Analytic Databases
• Enterprise Resource Planning (ERP) Databases
• Accounting-Related Databases
Government and NGO Sources
• Increased types and amounts of government-generated
data are accessible to enterprising marketers.
– Example: U.S. Census
( www.census.gov )
Commercial Entity Sources
• Many companies today
collect data in large
quantities to sell to other
organizations.
– Credit card purchase
data
– Supermarket scanner
data
– Sold in aggregate form
How do you feel about your

data being sold in aggregate
form to other firms?
Partner Database Sources
• Two-way information exchanged between purchasing
organization and suppliers
• Benefits both buyers and sellers
– Real-time demand signals
– Replace inventory with information
– Fewer stock-outs
Data Mining
• The biggest data challenge for many firms is determining
what to do with it all!
• Data mining: the process by which analysts identify
unique patterns of behavior in big data.
• Data warehouse: a system to store and process data
• Big Data can increase the problem of information
overload where marketers are buried in so much data
that it becomes nearly paralyzing to decide which of it
provides useful information and which does not.
Data Warehouses
Massive data warehouses—also sometimes called “server

farms”—yield important information for marketers.
Primary Data: Types of Data for Data
Mining
Structured Data Unstructured Data
• Date • Body of Emails
• Time • Tweets
• Census Data • Facebook Status
• Facebook “Likes” Update Messages
• Video Transcripts
Figure 5.4 Uses of Data Mining
Data Scientists: Transforming Big Data
into Winning Insights
• Data scientists transform data into insights, a challenging
proposition!
– Requires understanding of advanced analytics as well
as the ways companies interact with consumers
• Data scientists search through disparate data sources to
discover hidden insights.
– Advanced degrees, often PhDs
– Six-figure starting salaries
Augmented Intelligence: Enhancing
Consumer Experiences with Big Data
• Echo: relies on artificial intelligence (AI) and machine
learning
• AI: Your smartphone recognizes you
• Primary value of AI is helping deliver a better customer
experience
• Augmented intelligence: goal to create systems that
operate without humans; systems that make humans
better, smarter, and happier by being more efficient with
automatization.
Reality Check for Marketers: Ethical
Considerations in Using Big Data
• Cyber security
• Cyberattack
• Hackers
• Data breach
Deep Learning and Misinformation
• As we said in Chapter 1, “ethics is job one!”
• Recent advances in AI and deep learning, a subset of
machine learning, make deepfake videos a real and
potentially dangerous phenomenon
• Deepfake videos: a realistic-looking photo or video of
people doing or saying things they did not actually do or
say
Blockchain and Big Data Challenges
• Blockchain: a type of database that exists on multiple
computers simultaneously, containing “blocks” of data
that are linked together as “chains” of data that can’t be
altered.
• Blockchain technology assures data scientists of data
integrity.
• Blockchain is the technology behind Bitcoin.
Big Data: Some Final Thoughts
• Mining of Big Data can provide marketers with valuable
new insights
• Mining of Big Data also also presents difficult new
technological, analytic, and ethical challenges!
Does knowing how companies seek to use personal

information change your perspective of marketing?
A Primer on Analytics
• Marketing analytics: a group of technologies and
processes that enable marketers to collect, measure,
analyze, and assess the effectiveness of marketing
efforts including advertising.
• Analytics makes sense of Big Data for use in marketing
decision making.
Connect Digital Marketing Channels to
Marketing Analytics
• Marketers have long faced challenges in determining
campaign and channel effectiveness.
• Digital marketing has become an increasingly important
element of the marketer’s toolbox.
– More people are spending increasing time online
– Much easier to track consumer behavior in response
to digital marketing actions
Connect with Consumers across Digital
Marketing Channels
• Today’s consumer is an omnichannel media user.
• More people across the globe use the Internet for a wider
array of purposes.
• Digital must reinvent their strategies to keep up.
• Greater pressure to demonstrate the ROI (return on
investments) and ROX (return on experience) of their
efforts.
Figure 5.7 Major Digital Marketing
Channels
Business Models for Digital Marketing
• Digital marketing investments tied to actions users take.
• Cost-per-click basis: only when consumer clicks on the
ad.
• Cost-per-impression basis: each time ad shows up on a
page the user views.
Marketing Accountability within Digital
Marketing Channels
• Search engine optimization (SEO): your site ranks highly
on search engines
• Marketing analytics: ability to analyze the performance of
all these channels.
• Compare average cost per customer transaction to the
average value of each transaction per channel.
Table 5.3 Marketing Performance Calculation and
Comparison: Specialty Headphones Example
Digital Average Customer Transaction Average Value of Digital
Average Cost per Customer Transaction
Marketing
Channel  Total Sales Attributed to Channel /   Total Spend Attributed to Channel /  Marketing Channel Investment
 
Average Customer Transaction, Start fraction, Total Sales Attributed to Channel over Total Number of Customers Acquired Through Channel, end fraction

Average Cost per Customer Transaction, Start fraction, Total Spend Attributed to Channel over Total Number of Customers Acquired Through Channel, end fraction
 Average value of digital marketing channel investment, average customer transaction minus average cost per customer
(Average Customer Transaction

 Total Number of Customers   Total Number of Customers Acquired 
 Acquired Through Channel   Through Channel   Average Cost Per Customer)
   
Banner Ads $450,000 (Sales) / 10,000 $100,000 (Spent) / 10,000 $45 (Avg. Customer Transaction)  $10
(Customer Transactions)  (Avg. Cost per Customer
(Customer Transactions) 
Transaction)  $35 (Average
$10 (Average Cost per Customer
Start fraction $100,000, spent over 10,000, customer transactions end fraction = $10, average cost per customer transaction $45, average customer transaction minus $10, average cost per customer transaction = $35, average value of digital marketing channel investment
$45 (Average Customer

Start fraction $450,000, sales over 10,000, customer transactions end fraction = $45, average customer transaction
Value of Digital Marketing Channel

Transaction) Transaction)
Investment)
Facebook Ads $1,200,000 (Sales) / 15,000 $240,000 (Spent) / 15,000 $80 (Avg. Customer Transaction)
 $16 (Avg. Cost per Customer
(Customer Transactions)  $80 (Customer Transactions)  $16
Start fraction $1,200,00, sales over 15,000, customer transactions end fraction = $80, average customer transaction Start fraction $240,000, spent over 15,000, customer transactions end fraction = $16, average cost per customer transaction Transaction)  $64 (Average Value
$80, average customer transaction minus $16, average cost per customer transaction = $64, average value of digital marketing channel investment
(Average Customer (Average Cost per Customer of Digital Marketing

Transaction) Transaction) Channel Investment)
Search Engine $2,100,000 (Sales) / 40,000 $200,000(Spent) / 40,000 $52.5 (Avg. Customer Transaction)
Optimization  $5 (Avg. Cost per Customer
(Customer Transactions)  (Customer Transactions)  $5
Start fraction $2,100,000, sales over 40,000, customer transactions end fraction = $52.5, average customer transaction Start fraction $200,000, spent over 40,000, customer transactions end fraction = $5, average cost per customer transaction Transaction)  $47.5 (Average $52.5, average customer transaction minus $5, average cost per customer transaction = $47.5, average value of digital marketing channel investment
$52.5 (Average Customer (Average Cost per Customer Value of Digital Marketing
Transaction) Transaction) Channel Investment)
Total across $3,750,000 (Sales) / 65,000 $57.69 (Avg. Customer
Channels (Sum $540,000 (Spent) / 65,000
Transaction)  $8.31 (Avg. Cost
of Total Values (Customer Transactions)  (Customer Transactions)  $8.31
Start fraction, $3,750,000, sales over 65,000, customer transactions end fraction = $57.69, average customer transaction Start fraction $540,000, spent over 65,000, customer transactions end fraction = $8.31, average cost per customer transaction
per Customer transaction)  $49.38
$57.69,average customer transaction minus $8.31, average cost per customer transaction = $49.38, average value of digital marketing channel investment
in Each Channel $57.69 (Average Customer (Average Cost per Customer

Input into the (Average Value of Digital Marketing
Transaction) Transaction)
Formulas) Channel Investment)
Marketing Accountability within Non-
digital Marketing Channels
• We can use marketing analytics to generate insights
related to non-digital marketing channels—such as direct
mail.
• Use a specific URL within a direct mail campaign that
isn’t displayed elsewhere. The URL could link to a
landing page.
• Other identifiers of different tactics; unique promotional
codes, QR codes, or phone numbers for customer follow-
up.
Marketing Metrics and Predictive
Analytics
Marketing metrics help marketers understand current
performance.
• Predictive analytics is a “crystal ball” through which
marketers can use large quantities of data to predict the
success of future initiatives.
• Anticipatory shipping: a data-driven algorithm using AI
that provides the capability to make highly accurate
shipping decisions based on past behavior, even before
a customer’s next purchase decisions are fully finalized.
Discussion: Marketing Metrics and
Predictive Analytics
• What types of purchase patterns and behaviours
(available to banks and credit card issuers) are likely to
be associated with whether or not a student goes away
for spring break?
• Are there indicators of preferred locations?
• How could marketers use this information to come up
with targeted offers and customized services?
Brand You: Creating, Organizing, and Mining Your
Personal Career Big Data—for the Lifetime of Your Career
• One-to-one marketing for Brand You requires a good

database.
• Creating your own database for your contacts means
deciding on the information you wish to include.
• Your customer database can be used for
– Customer acquisition
– Customer retention
• To keep your brand on top of mind and maintain a
relationship, send your contact something of value.
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Marketing: Real People, Real Choices

• Customer relationship management (CRM): a

1. Identify and get to know customers in detail

How do you feel about your

Massive data warehouses—also sometimes called “server

Does knowing how companies seek to use personal

(Average Customer Transaction

$45 (Average Customer

Value of Digital Marketing Channel

(Average Customer (Average Cost per Customer of Digital Marketing

in Each Channel $57.69 (Average Customer (Average Cost per Customer

• One-to-one marketing for Brand You requires a good

This work is protected by United States copyright laws and is

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