Internal Data

Many companies build extensive internal databases, electronic collections of consumer and market information obtained from data sources within the company network. Marketing managers can readily access and work with information in the database to identify marketing opportunities and problems, plan programs, and evaluate performance.

Author I The marketing Comment | information system begins and ends with users—with assessing their information needs and then delivering information that meets those needs.

Author I

The problem isn't finding Comment | information—the world is bursting with information from a glut of sources. The real challenge is to find the right information—from inside and outside sources—and to turn it into customer insights.

Internal databases

Electronic collections of consumer and market information obtained from data sources within the company network.

Information in the database can come from many sources. The marketing department furnishes information on customer transactions, demographics, psychographics, and buying behavior. The customer service department keeps records of customer satisfaction or service problems. The accounting department prepares financial statements and keeps detailed records of sales, costs, and cash flows. Operations reports on production schedules, shipments, and inventories. The sales force reports on reseller reactions and competitor activities, and marketing channel partners provide data on point-of-sale transactions. Harnessing such information can provide powerful customer insights and competitive advantage.

Here is an example of how one company uses its internal database to make better marketing decisions:

APizza Hut's database contains detailed customer data on 40 million U.S. households, gleaned from phone orders, online orders, and point-of-sale transactions at its more than 7,500 restaurants around the nation. The company can slice and dice the data by favorite toppings, what you ordered last, and whether you buy a salad with your cheese and pepperoni pizza. It then uses all this data to enhance customer relationships. For example, based on extensive analysis of several years of purchase transactions, Pizza Hut designed a VIP (Very Into Pizza) program to retain its best customers. It invites these customers to join the VIP program for $14.95 and receive a free large pizza. Then, for every two pizzas ordered each month, VIP customers automatically earn a coupon for another free large pizza. Pizza Hut tracks VIP purchases and targets members with additional e-mail offers. In all, the campaign not only retained Pizza Hut's top customers but attracted new customers as well. The program also generated a lot of online buzz. Says one blogger, "So who is always on my mind when I feel like pizza? Who is sending me coupons and free things that make me want to get pizza rather than make dinner? You got it, Pizza Hut. They had me buy in and now they'll have my loyalty. They make it so easy that I wouldn't want to bother getting it anywhere else."8

Internal databases usually can be accessed more quickly and cheaply than other information sources, but they also present some problems. Because internal information was often collected for other purposes, it may be incomplete or in the wrong form for making marketing decisions. For example, sales and cost data used by the accounting department for preparing financial statements must be adapted for use in evaluating the value of a specific customer segment, sales force, or channel performance. Data also ages quickly; keeping the database current requires a major effort. In addition, a large company produces mountains of information, which must be well integrated and readily accessible so that managers can find it easily and use it effectively. Managing that much data requires highly sophisticated equipment and techniques.

Marketing intelligence

The systematic collection and analysis of publicly available information about consumers, competitors, and developments in the marketing environment.

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