Direct and Database Marketing of Joe Deluccis in the UK - Case Study Example

Direct and Database Marketing of Joe Delucci’s in the United Kingdom Introduction In this paper, the writer shall present the concept of direct and database marketing and how it benefits companies who implement it. In order to illustrate the mentioned concept, the writer has decided to pick Joe Delucci’s Gelato- a company that sells Italian ice cream in several areas in the Southern region of the United Kingdom. The company has branches in Essex, Derbyshire, the West Midlands, Kent, London, Bedfordshire and Warwickshire. It conducts its direct and database marketing activities through its three websites (www.joedeluccis.com) and the company even has its own Twitter and Facebook accounts (http://twitter.com/joedeluccis and (http://www.facebook.com/profile.php?id=1471105082#!/profile.php?id=1129087682&ref=search&sid=506722875.578012033..1) in order to keep in touch with their customers. The following paragraphs shall present the company’s direct marketing and database marketing techniques, and how such techniques would lead to the company’s increased profitability. Using the Internet for Database Marketing The fact that the Internet has evolved into a sort of electronic ‘marketspace’, illustrates how digitization has indeed taken over the world. Unlike the physical marketplace, wherein interactions take place between the seller and the buyer, the marketspace of the Internet is really different. Through the Internet, marketers can finally conduct surveys and analyze the behaviours of their consumers in a manner that was not previously possible (Rayport & Sviokla, 1994). According to Locke (2000), tracking software available on online websites has the ability to record details about the activities conducted by consumers, allowing companies to gain access into their behaviours and decisions. Joe Delucci’s in fact, has an online tracker, wherein they display the number of ice cream scoops being ordered by their consumers. The tracker continues to be updated every second, and to date, the company has successfully sold over 5 million scoops of their ‘genuine Italian gelatti and sorbetti’ (Joe Delucci’s gelato, 2010). Direct marketing is actually marketing products and services to customers without the use of mainstream channels and mediums such as the television, radio, magazines and newspapers. This is especially useful for companies that do not have the budget for high exposure advertisement (through the mediums just mentioned). Joe Delucci’s is a relatively small company, even though it has several branches already. Launching their own website, and holding accounts on popular social networking websites such as Twitter and Facebook are perfect examples of how it can market itself to its consumers at a minimal cost. Aside from using the internet, other forms of direct marketing also include direct mail, telemarketing, flyer marketing, broadcast faxing, and the like. However, out of all these methods, Joe Delucci’s seems to be faring quite well marketing its products through the Internet. The entry of the company into social networking websites is indeed quite beneficial for the company since social networking websites remain to be one of the most popular trends to hit the global scene. In fact, they are so popular, they have been integrated into the lifestyles of so many people, regardless of the person’s age. Initially meant to help connect people from all parts of the world to other people from different networks, social networking websites such as Twitter and Facebook are now used for business purposes (Telecommunication Weekly, 2009) Facebook has become the number one social networking website in the world, taking over MySpace, which previously held the same honour. It has even been reported that Facebook has an estimate of 12 billion visitors who have an account, and these numbers continue to grow every minute of every hour (Presse, 2009). Twitter, on the other hand, has less features that Facebook, but it is still centered around the same concept- that of bringing people together. It is actually a micro-blogging website, that allows users to be connected with other users, and they can also gain access to each other’s updates (BBCnews.com, 2009). Although Joe Delucci’s does have a Twitter account, the writer has found out that the account is not updated as often as it should. This therefore implies that there is a need for the company to recognize the value of the website in terms of boosting its business. In fact, it can take a few pointers from other business organizations (large scale and small scale), some of which are utilizing online websites such as Twitter, in order to communicate with its customers. Twitter, for example, has a feature wherein the company can directly send messages to customers, even if one of the parties is gaining access through the Internet through a mobile phone. The company can also post any announcements and news updates on their progress through the micro-blogging site, and its customers would finally be able to be updated with the latest happenings at Joe Delucci’s. Facebook, as was mentioned is also one of the most popular social networking websites that can be used in order to effectively market products and services. Big and small organizations can make use of the websites’ applications in order to advertise what they have to offer. For instance, if Joe Delucci’s plans to launch new flavours of their gelatos and sorbets, having an account on Facebook can help them spread the word to their customers and the general public. One of the most popular features of Facebook to date is the establishment of fan pages, which allows organizations to let themselves be known to the global community. These fan pages also help to unite individuals who have the same interests. In this case, their interests may be Joe Delucci’s delicious sorbets and gelatos. The company, on the other hand, can present information to all Facebook users about their contact details, their addresses, and other services that they may offer. In order to show the public their products, the company can also upload photos of their products, in order to boost the curiosity of other users. This way, the company would also be able to gauge just how many people are loyal to their products, since (fan pages for example) is a way for people to declare their loyalty and their preference for a certain brand. In addition, the company also has the chance to gain feedback from their customers, (either negative or positive), and this therefore helps to boost the company’s development levels (Paulos, 2008). Databases actually showcase two types of information. The first is operational information and the second is marketing information. The latter consists of the address of the customer, contact numbers at home and in the workplace, and even the method of payment. The former may refer to the response rate of customers, in addition to any preferences. The main concept of database itself, is that it consists of a collection of various information, all of which are organized in such a manner so that viewers can easily access the information being presented. Database marketing, on the other hand, is used as the basis for a company to embark on other promotional activities. These include the sending of promotional materials via email and snail mail. Customer information can also be used in order to carry out telemarketing activities (Callan & Teasdale, 1999). According to Fairlie (1995), on the other hand, has referred to database as a ‘collection of data entries’ that are all arranged within a computer by a software package, permitting users to ‘relate, collate, summarise and reproduce entries in accordance with any internally logical criteria.’ In other words, a database is where a wide variety of information can be acquired from. Companies really make an effort to establish their own database in order to build a list of clients that companies can use in order to market their products and services to. Thus, the concept of database marketing involves the ability of a company to target their previous customers, in the hopes that these customers would be their customers again, and possibly provide them with lead referrals. When it comes to the information that is being stored in databases, it must be mentioned that these are not just limited to basic information only. In addition to the customer’s contact details, some databases may contain other information pertaining to the customers’ demographics as well. For instance, some databases are concerned with the income of the customers, their educational levels, professional levels, and so on. Knowing such information would really allow marketers to determine the needs and the expectations of their customers, therefore allowing them to provide products and services that fit with the expectations and desires of the buyers (Francese & Renaghan, 1990). Database Marketing for Establishing Relationships One of the main purposes of database marketing is to be able to establish closer relationships with the customers. In a study conducted by Barnes (2000), wherein 400 relationships of the customers of financial firms, groceries, and the telecommunications industry was the main focus of the study. The researcher found out that in order for customers to be more satisfied with the products and services being offered to them, close relationships between the customer and the members of the company, and the strength of the relationship are all important factors which influence the customers’ satisfaction levels. In a separate study conducted by Bolton (1988), another factor that affects the customer’s satisfaction level would be the length of the relationship that exists between the customer and the staff of the organization. Based on the results of the study, it was also found out that when the company fails to provide service/ products, and the transaction process itself does not meet the customer’s expectations, such experiences shall affect future interactions with the same customer since it directly affects the customer’s decisions. Thus, there appears to be a direct relationship that exists between how much a customer is satisfied and how he/she can be of value to the company for a lifetime. According to Fournier (1998), there exists a conceptual foundation that is needed in order to understand the relationships that are established between the customer and the brand. This conceptual foundation was actually adapted from Hinde (1995), who stated that relationships depend on four factors. These are 1) the exchange that occurs between two (or more parties) in the relationships, otherwise deemed to be ‘reciprocal exchange,’ 2) whether the purpose of the relationships successfully fulfils the goals of the parties involved, 3) ‘multiplex’ so that different forms can be taken on, and 4) the entire process itself, which may change over a period of time. All of the four factors just mentioned can be related to database marketing. For one thing, the exchange that takes place between the customer and the company allows companies to acquire data about their customers, therefore allowing them to provide their customers with better products and services. Basically, the goal of all companies would be to generate greater profits, while the customer wishes to be satisfied with the product/service being offered to him/her. Since relationships have a ‘multiplex’ nature, customers and members of the company may need to interact on more than one occasion. During these moments, or ‘touch points’ there is a need for effective management. Database marketing so happens to be able to manage all of these touch points. However, there is emphasis on database marketing and the relationships that are established in a business setting. It must be noted that relationships are processes that may change with time. Since the main purpose of database marketing is to collect information, act after acquiring the information, evaluate the action taken, collect even more information, and take actions based on the information provided. The information acquired from the customer in turn, including the analysis and the conclusions that are produced from the acquired information may also change over time, just like how relationships change. According to Peppers and Rogers (1997), one of the ways through which relationships can be managed is through the information acquired and stored. This has been greatly helped with the invention of the computer and its development over the years. These days, companies base their marketing plans on the idea that they first need to know their customer, find out what the customer wants, and do their best to make sure that they give the customer what he/she wants. Peppers & Rogers (1997) mentions that there are actually 7 steps in the database marketing process. This framework includes the acquiring of information, analyzing the information, building relationships, and the inclusion of the following steps. The first refers to the company’s responsibility in creating a customer database. The information then acquired should also be analyzed, and this is the second step. The third step consists of the company actually choosing the number of customers that they should choose to make up their target market. The fourth step consists of the company being able to target their customers by using the appropriate and most effective marketing strategies. The fifth step, on the other hand, refers to the company’s ability to develop their programs that aim to foster relationships between the company and the customers. For instance, the implementation of rewards programs is a good example. Another example would be the customization of products and services being offered. Companies must also look into precautions that may interfere with their business transactions. One such example if the invasion of privacy. When keeping a customer database, companies must assure the customers that their information shall be kept safe and shall not be revealed to the public. Their identities must also be protected. Should the company wish to publish content and information relayed by the customer, it is mandatory that the customer asks for permission first. The seventh step involves the development of metrics in order to evaluate the process. Disadvantages of Database Marketing Despite the many advantages being offered by the internet especially when it comes to business organizations, most consumers feel that shopping through the Internet is not commonly done and it is something that they still have a lot of apprehensions about. They are also scared of revealing too much information of themselves and exposing such information over the Internet, where others may gain access to their data (Soopramanien & Robertson, 2004). There have also been reports stating that customer database marketing does not receive the same results that companies aim for. For example, in a press release by Insight Technology has revealed that only 31 percent of companies feel that they actually benefit from database marketing. 38 percent also reveal that they were able to achieve minor returns. In addition, the Gartner Group also reported that at least 45 percent of database marketing programs fail to produce favourable customer results from the customer interactions established. 51 percent of the companies that were included in the same study were unable to acquire positive returns in a period of 3 years. In another report released by the Meta Group, it has been noted that 75 percent of the database marketing strategies that have been implemented by various companies fail to actually produce results as initially aimed for (Sheth & Sisodia, 2001). Furthermore, according to Consulting company Mercer Management Consulting, a mere 38 percent of companies actually expect that their database marketing methods will actually provide them returns. Only 26 percent also expect actual returns from their tools that are geared towards customer profitability. There are a number of reasons why database marketing may fail to meet the objectives of some companies. For one thing, organization members may not always agree on ‘who owns the customer’ when finalizing a sales transaction (Boehm, 2001). There may be conflicts that exist between the marketing team and the finance team, in addition to the conflicts that may occur between the marketing team and the IT team. The parties mentioned may have conflicts with how much effort they should put into prioritizing the customer files, which may result in established relationships. In other words, one department may feel that customer information is crucial towards designing and driving marketing strategies. Other departments may not also have the same view when it comes to handling customer data. According to Peppers & Rogers (1997), other factors that may influence the success of database marketing include the structure of the organization itself and the compensation schemes that are provided to both the members of the organization and the customer. These must both adapt to meet the company’s aim of being more customer-oriented. Another study conducted by Reinhartz et al. (2004) resulted in the findings that when the employees of a company are rewarded efficiently for their efforts in cultivating customer-employee relationships, there is a likely chance that database marketing would be more effective. In addition, the reason why database marketing may not be so effective in some companies is because a large number of companies (92 percent in the companies surveyed) have been found to view customer information as important to their organization, while other companies do not agree (88 percent). Fournier (1998) also feels that there may be some companies that do not treat their customers equally. They may also expect too much returns from their customers. For instance, some loyal customers may be expected to pay more for a product/service than other customers. As such, companies may pay more attention to their loyal customers and less attention towards their average customers. One of the main purposes of customer database marketing is the ability of companies to identify their ‘best customers’ and determine how they can possibly serve them in the best way (Peppers & Rogers, 1997). However, according to Malthouse & Blattberg (2005), some of the best customers in the future are often average customers in the past. Conclusion However, despite such setbacks, it cannot be denied that the number of Internet users are increasing, and if Joe Delucci’s wants to be successful, and it is determined in expanding to other areas in the United Kingdom (and even the world), it has to really make its presence felt in cyberspace. In fact, based on research studies, the number of Internet users around the world has been estimated to be about 1.3 billion already. This writer feels that Joe Delucci’s should really make use of technology in order to interact with their customers. For instance, they can use the websites previously mentioned in order to find out the type of flavours that their customers would want them to develop. They can also gather customer feedback through these sites. In fact, both direct marketing and database marketing can be made to go hand in hand with each other. Through direct marketing by using social networking websites for instance, companies can gain acquire new information for their database from websites such as Facebook. By the year 2011 and 2012, it is expected that such numbers would increase to at least 2 billion Internet users (World Internet Usage and Population Statistics, 2008). It should also be more in touch with updating its technology, starting by adopting upgraded software that would help in database marketing. Undoubtedly, although traditional marketing methods still do work, the marketing opportunities being provided by the Internet and other forms of technology should not be ignored, and instead, should be taken advantage of. References Barnes, J.C. (2001) A guide to business continuity planning, Rothstein Associates Inc. BBCnews.com, (2009) ‘Tweet smell of success over Digg,’ Retrieved on April 15th 2010 from http://news.bbc.co.uk/2/hi/technology/7844595.stm Boehm, E. (2001) The contribution of economic indicator analysis to understanding and forecasting business cycles, Melbourne Institute working paper Series wp2001n17, Melbourne Institute of Applied Economic and Social Research, The University of Melbourn Callan, R.J. and Teasdale, A. (1999) Hotel guest history as the foundation for database marketing: embracing a pilot survey of UK hotels, Journal of Vacation Marketing, 5, 140. Fairlie, R. 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