1.
Why would a customer database be so
useful for the companies described in this case? What would happen if these companies
had not kept their customer data in databases?
Customer database is a comprehensive list of various data about an
organization's past, current and potential clients. This data is then sorted
into information according to requirement, that could be marketing, sales,
purchase history, understanding what clients want, adverts, improving customer
experience, meeting customer expectations, promotion, preempting customer needs
et cetra.
Customer database is quite useful in specifically targeting a demography
of customers more open to receiving and purchasing particular products and
services being marketed to them. The reason for use of the customer database is
to mainly keep track of good and services sold, increase revenue, while
simultaneously reducing money spent and time used on generic advertising and
marketing which was not having the expected impact on company's bottom-line as
was the case with Monster.com, a job listing website. In the case of Quidsi, according to them, it
helped direct advert/promotion spending on "only" customers that does
a repeat purchase of products from them, even projects cost v revenue per
customer from its database. Online retailers have seen a marked improvement in
sales since the realization that using already available customer database
could improve revenue, started to get popular just over a decade ago. Without
these customer databases retailers and users of such information data would
need to source it from third parties .(Chen et al, 2012)
2.
How did better data management and
analytics improve each company's business performance? Give examples of two
decisions that were improved by mining these customer databases.
Forbes previously relied on third party research services to analyze
data in their consumer database, but then shifted to corporate database and
data mining of Forbes entire consumer base, through the use of regularly
collated data (Laudon & Laudon, 2013). This helped Forbes improve its
advert clients target of reaching a specific demography and in turn boost its
revenue stream. Monster.com was able to data mine information to help target and even
personalize packages to their most significant clients pool -HR executives.
3.
Are there any ethical issues raised by
mining customer databases? Explain your answer.
Yes there are ethical issues raised by mining customer databases.
Privacy for one, in the instance of Target (retailer), their data mine resulted
in a science based prediction extrapolated from consumer data led to pregnancy
prediction score and ability to pick out expectant mothers from a list of items
previously purchased. Target then pointedly sent baby coupon to people with the
appropriate prediction which made recipients uncomfortable. This
discomfort reflects an invasion of customer privacy on the part of Target. It
doesn't stop there for some companies who ensure they have levity with your
information by putting caveat in their Privacy policy that allows them to share
your information with various third parties for example organizations
affiliated them (whoever they may be), even going as far collecting other data
like social media, email exchange and consumer data from others and example is
Walmart who in their US CEO's statement said "Our ability to pull data
together is unmatched" even its blog Walmart claimed that their "data
volume is formidably huge, we are talking petabytes here" (2013,
November)
Reference
Chen D, Sai L. S. & Guo K. (2012,
August 27), Data Mining For The Online Retail Industry: A case Study Of RFM
Model-Based Customer Segmentation Using Data Mining. Retreived from https://link.springer.com/article/10.1057/dbm.2012.17
. Laudon K.C. & Laudon J.P. Management
Information System: Managing The Digital Firm. 14 Pp 243-244
Center for Media
Justice (2013) Consumers, Big Data, and Online Tracking in the Retail Industry:
A Case Study of Walmart Pp 20. Retreived from http://centerformediajustice.org/wp-content/uploads/2014/06/WALMART_PRIVACY_.pdf
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