Introduction
Marketing is a vital tool for attracting and maintaining new customers. Technically, it refers to “the process of communicating the value of a product or service to customers” (Kotler & Keller, 2012, p. 23). Alternatively, it may be argued as encompassing the process through which organizations promote their products and services. These processes may be approached from either direct or indirect marketing.
Database marketing is one of the direct marketing techniques. It is “…a systematic approach of gathering, consolidating, and processing of consumer data (both for customers and potential customers) that is maintained in a company’s database” (Baesens et al, 2002, p.191).
The process is aimed at generating communication to customers who are personalized in the attempt to promote a company’s products (marketing). In database marketing, an enormous emphasis is placed on the significance of data analysis. Often, this step entails deployment of statistical methods to aid in coming up with models for describing behaviors of consumers.
From these behaviors, specific promotional techniques are derived to address specific customers’ segments. For accuracy in deriving the model, is it crucial for an organization deploying database marketing to have large data warehouse because “having a greater amount of data about customers increases the likelihood that a more accurate model can be built” (Baesens et al., 2002, p.195).
Essentially, there are two main types of databases for marketing. These are business and customer databases. The focus of this proposal is on customer databases. Therefore, the aim of this proposal is to come up with a database marketing solution for ARAMARK to help the company attract new customers to achieve a higher retention rate of the existing clients.
Project Objectives
ARAMARK sells its food products to varying markets, which are dominated by consumers with varying buying capabilities. Based on this difference of consumers of the products of ARAMARK, the primary objective of this project is to deploy the data warehouse of the company especially pertaining to the past purchases of consumers in the varying markets.
The attempt seeks to derive a marketing model that would result to increasing consumption on these markets by 10 percent besides retaining the existing customers. This framework is ideally a behavioral segmentation model of database marketing. Therefore, in the model, the consumers will be segmented based on “recency, frequency, and monetary value of the past purchases” (Hughes, 2000, p.63).
By increasing the consumption of the ARAMARK’s products by 10 percent, it implies that the project proposal has an objective of increasing the profitability of the company. To do this, database house will also be used to provide information on the area where consumers are not satisfied with either the products or the means through which the products are delivered to them (customer service).
When this information is analyzed, products can be modified to meet the concerns of the customers. Service delivery can be altered to suit the needs of consumers who are required to attain the 10 percent increase in consumption.
Project Description including Database Information
This project depends principally on customer databases since they contain the information of people to whom the ARAMARK’s products were sold, when, and how often the persons buy. To acquire information on how often a given customer buys, it is significant to maintain the name and the email contact of the customer.
The information is utilized in designing marketing strategies and advertising techniques to capture these particular customer segments. This idea is inspired by the perception, “selling to an existing customer is far easier and cheaper in comparison to new customers” (Shepard, 1999, p.47).
This means that, for the case of ARAMARK, it is easier to target selling again to a customer who has prior experience with ARAMARK’s products in relation to a new customer seeking new food preferences. Once an analysis is conducted on why different customers purchase ARAMARK’s products, the product’s attribute associated with the cited reason for purchasing the food products can be improved.
The project capitalizes on this idea in the attempt to deploy the information contained in the customer databases to build a sustained customer loyalty to the ARAMARK’s food products.
The database information particularly on the market segments that buy a given food product of ARAMARK together with the respective amounts is significant in helping to attain the target of 10 percent increase in the consumption of ARAMARK’s products in all the market segments.
The claim holds because, with this information, it is possible to target specific segments with the most precise offers that will accurately hike consumption levels within the segments.
Background and Significance
ARAMARK has an immense number of consumers. In particular, according to ARAMARK (2012), “it provides services in nearly every industry including businesses, colleges and universities, healthcare, sports and entertainment, parks and resorts, conference centers, conference centers, cultural attractions, and senior living” (Para 3).
Garnering information on the markets produces a mega database, which, while well utilized might serve to enormously boost the organization’s marketing efforts.
Developing a database marketing strategy based on customer databases is particularly likely to be successful since “having a greater amount of data about customers increases the likelihood that a more accurate model for database marketing can be built” (Drake & Rhonda, 2006, p.317).
ARAMARK happens to have a huge number of customers. When ARAMARK implements this project, it will produce a myriad of benefits to the company.
Firstly, ARAMARK will develop the capacity to retain its existing customers since the future decisions on diversification of products and strategies for improvement of service delivery will be laid squarely on the needs of a particular group of customers occupying specific market segments.
Therefore, in the re-designing of products to meet the emerging needs of the customers, only those things that drive consumption in particular markets will be incorporated. This leads to cutting costs associated with attempts to re-design products in a manner that will not produce any impacts in terms of hiking future demands.
When products are redesigned to match particular priory known needs of consumers, it also becomes easier to place them in the market because the products are consumer-need oriented. Consequently, ARAMARK would benefit through hiked values generated from the existing pool of customers, as well as in the reduction of costs for serving the customers.
Designing of products to meet the needs of the customers based on the analysis of the information contained in customer databases aids incredibly in enhancing customer satisfaction (Rouse, 2007, Para.3).
Arguably, customer satisfaction amounts to customer retention and hence maintained profitability of an organization. Additionally, database marketing has the benefit of producing “effective marketing communications through a more personal approach following the development of new improved products or services” (Shepard, 1999, p.72).
Overall, database marketing will benefit ARAMARK through increasing sale levels to both new and old consumers due to reasons attributed to the development of the capacity to identify the concerns of consumers. It will improve timing through the development of cute mechanisms of identification of the consumer needs coupled with a means of placing and positioning the products and or services to yield optimal sales.
Sample Database Files
The building block of the consumer data files is the general information of the consumers.
This information is arranged in the following order: name of the customer, email address, location of the customer, age, preferred ARAMARK’s food products, reason for preference, preferred products of another company that may substitute ARAMARK’s preferred product, reason for the preference of the product, and the number of times that customer consumes the selected ARAMARK’s product in a week.
Additionally, a field is also created to garner information on how the customer came to know about the ARAMARK’s product. An example of customer’s general information files is shown below.
From the above generic files, information on the specific elements contained in the file of the general information is developed for all the customers.
These files also record the number of customers citing, for instance, the particular substitute product, preferred ARAMARK’s product, and the reason for the preference among other things cited above in the generic file information example. An example of such a file is shown below.
The aim of developing the files such as the one exemplified above is to provide a means of quantifying the concerns of the customers about ARAMARK’s products so that effort to market the products can be focused on the specific products, which face the most adverse disadvantages of placement and positioning.
Action Plan: How to accomplish Goals and overcome anticipated Obstacles
In any project, goals act as the guide to the desired output of the project under consideration. This means that, without goals, a project lacks direction. The goal of the project discussed here is to deploy database marketing to ensure retention and attraction of new clients for ARAMARK’s food products in the effort to boost the company’s profitability.
To achieve this goal, an action plan is necessary coupled with provision of a means of countering the expected obstacles to the accomplishment of the goals (Drake & Rhonda, 2006, p.319). The goal of the database marketing in ARAMARK is achieved through a number of ways.
Firstly, customer communication channels are created to address personalized customer concerns. These communications are based on information regarding the customers contained in ARAMARK’s customer database. This makes it possible to realize the goal of the project since the communication to customer about the products of the company is based on the customer’s perception about the products.
Therefore, customers develop a feeling that what the company is offering in its menus is just what they want. This stands out as the idea of producing to meet market demands as opposed to producing to sale. Apparently, organizations build customer databases to help them enhance customer communications (Rouse, 2007, Para.
1). Another action plans is to create an appended data for the information existing in the ARAMARK customer databases. According to Edward, Leung, and Jonson (2004), it is possible today to append data to any name and address file to learn about the age, income, home value, home ownership, presence of children, length of residence, and about forty other valuable pieces of information about any household” (p.158).
This information is utilized to guide strategies for customers’ communication within market segments and sub segments. The appended consumption behavior and demographic data are then deployed to develop a predictive model, which helps to “predict accurately, which customers are most likely to defect, as well as those who are most likely to respond to new initiatives” (Edward, Leung, & Jonson, 2004, p.159).
Coupled with customer communications, appended data is pivotal in hiking customer response rates to advertising and reduction of attrition rates.
Implementation of the marketing strategies faces major obstacles especially in matters of determining the right ways to penetrate markets. To overcome this obstacle in this project proposal, penetration analysis is conducted using database analytical software.
The attempt is aimed at coming up with precise data on the percentages of sales that ARAMARK has on each market, which is segmented on income level basis and other demographic factors.
This way, it is possible to locate the characteristics of the customers who frequently visit particular stores, areas where a group of stores is located, and the characteristics that unify the entire pool of ARAMARK’s consumers.
Consequently, it becomes possible to derive advertising campaigns that target all the consumers of ARAMARK, consumers of a specific regional area, and or consumers of a specific store. In the case of ARAMARK, this can be consumers of the healthcare industry, colleges, and universities amongst others.
Cost and Benefit Assessment
In the current project, cost benefit analysis is conducted to estimate various monetary values associated with the project. However, in a cost benefit analysis, a major challenge is encountered in that there is a need to express all the costs into a common denominator, for instance, monetary values for this case.
A further challenge also comes up since it is necessary to express benefits and costs of the project with particular consideration of the inflation rates of the dollar. In this perspective, arguably, upon successful implementation of the database marketing strategy, an increment in sales may be produced. However, in the real sense, when factoring the inflation rates, no gain is realized in terms of profitability.
However, it is critical to quantify the anticipated gains in revenues, market gains, and gains associated with customer retention. According to Russell and Labe (1994), an organization may “build the world’s best and cleanest database, but with no plan in place or proper team in place to maximize the use of the database, it will be good for nothing” (p.7).
The concern raised here means that it is necessary to consider labor costs for the implementation of the project. Money is required to hire people who will compile and analyze the data available within the ARAMARK’s databases. Additional costs are encountered, which are associated with the needs to put in place some web communication systems to link the database marketing strategies to the vast pool of ARAMARK’s customers.
However, it is expected that these costs will be recovered within a period of two years by the increased sales. Hence, revenues also increase.
The 10% increment in the profitability of the company will be achieved from customer retention efficiencies within all markets having sale opportunities, acquisition efficiencies, and convergence of various offline and online marketing initiatives arrived at after an analysis of the customer databases of ARAMARK.
These aspects are given a thorough treatment in the section of how to create or improve ARAMARK’s customer database to support its marketing efforts. Addressing large number of customers with standardized marketing techniques often leads to a reduction in the profitability of organizations since ineffectiveness of the marketing strategies to win the customers truncates to dwindled sale volumes.
Therefore, this project reduces the costs since the innovated marketing techniques have specific areas of concern through the deployment of the customer databases depending on the needs of consumers. Such strategies are effective for the specific market segments.
The benefit of increased sales through attracting of new customers implies that the company improves its market share in relation to the company competing in the food service sector targeting the market segments that are also targeted by ARAMARK. The following table shows a template that is utilized in conduction a costs benefit analysis for the proposed project.
Template for cost Benefit Analysis.
How to create or improve ARAMARK’s customer database to support its marketing efforts
In the above section, it has been discussed that the 10 percent increment in the profitability of the ARAMARK is akin to the enhancement of various efficiencies of activities associated with efforts to win new, as well as retaining the existing pool of consumers of food products sold by ARAMARK.
In this section, it is found imperative to discuss how the developed ARAMARK’s customer databases will be deployed to support the marketing efforts of the company.
In the first place, when the customer data warehouses are ready, they will be deployed to determine acquisition efficiencies. It is imperative that the company negates focusing certain advertising efforts within the areas where they are ineffective.
For non-online advertising modes such as consumers’ magazines, leaflets, and others, the data warehouse may provide ample basis for their elimination and or their redesign to meet the needs of the targeted audience. Data for promotion history is critical in helping to build responses in the market segments, which are identified as having a positive response to the marketing efforts of ARAMARK.
This makes it possible to build “models that utilize promotion history data to help in increasing the response rate after the merge or purge process” (Prinzie & Dirk, 2005, p.31).
Once the acquisition efficiencies are determined from the data warehouse, the second endeavor is to work on retention efficiency models, which is accomplished by developing and building the myriads of communication models likely to win the loyalty of the consumers of ARAMARK food products.
The approach used here is to “efficiently convert subscribers and improve renewals at each contract to produce a compounding effect in the growth of a subscriber file” (Drake & Rhonda, 2006, p.321). In the background section, it is argued that ARAMARK supplies foods products to widen the number of industries whose incomes are valid. Consequently, in deriving the retention efficiencies, price differentiation is significant.
Hence, an effort is made to develop a model that explains the price sensitivities of the various consumers per industry basis in the effort to derive the appropriate pricing strategy for each market segment from the ARAMARK’s data warehouses.
Other ways of creating and or improving ARAMARK’s customer database to support its marketing efforts include developing models for pricing processes, cross-selling opportunities, and staffing efficiencies. The particular model adopted is inspired by the characteristics of consumers in each industry to which ARAMARK offers foods products.
From the paradigms of staffing efficiencies, the developed ARAMARK’s database marketing strategies are enhanced by ensuring the staff is able to consolidate data from the vast number of consumers both fast and effectively.
Apart from the staff making it possible to have a quick access of data utilized in making the decision on the appropriate marketing strategy for each segment, enhancement of staffing efficiencies is aimed at ensuring that thorough reports of the success of the database-informed marketing strategies are also available.
This step acts as the future inputs of new mechanisms of improving the ways of targeting consumers with changing preferences. Process efficiencies involve data standardization to enhance the efficiency of the data consolidation. The aim is to make sure the available data is appropriate and reflective of the actual concerns of consumers on the ground.
With regard to Drake and Rhonda (2006), cross selling opportunities are also critical in the identification of the optimal product stream to maximize the lifetime value of customers in a bid to utilize segmentation and regression models to identify best prospects for the next offer” (p.323). The models serve the purpose of aiding to identify the people who are likely to substitute ARAMARK’s products, with which product, and why.
The goal is to utilize the data to engineer a means of improving the products of the company to meet the emerging needs of the consumers so that the customer communication strategy developed pays attention to the concerns, which are then backed up by actual reflection of the concerns in the products themselves.
Conclusion
Marketing is a critical component of facilitating and boosting the volumes of sales for companies’ products. This goal is often accomplished either directly or indirectly. In this paper, a project deploying database marketing strategies is proposed. The paper strongly holds that such a project will substantially aid in increasing the profitability levels of the company by an approximated increase of 10%.
Additionally, the paper maintains that employing customers’ databases to effect marketing strategies is critical in an organization that has large numbers of consumers. ARAMARK serves a large number of industries.
Therefore, it has a large pool of consumers. As a result, as discussed in the paper, there is a need to have a data store for customers that, once analyzed, can help any organization in its strategizing in terms of which product or service it needs to maintain, discard, and or improve to maintain or rather attract a bigger pool of customers.
Reference List
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