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d. Targeted customers outperformed the control by 4 to 1. e. None of the above; all were results of the promotion. 7. Compute the lift in sales in the following table.
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Number promoted Teens Control 20s and 30s Control 40s and 50s Control Seniors Control Total 100,000 20,000 100,000 20,000 90,000 20,000 60,000 20,000 430,000 Sales rate 8.80% 7.00% 6.60% 5.80% 7.20% 6.00% 5.10% 4.30% Lift Lift in sales
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8. Which of the following is the best number of segments to create for segment marketing a. 100 b. 80 c. 50 d. 12 e. 6 9. What is the best way to design segments a. Something that you can relate to and design programs for b. RFM groupings c. LTV segments d. SIC segments e. None of the above 10. When should segments be revised a. Monthly b. Quarterly c. Never; keep them consistent d. After each promotion e. Once a year
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ost manufacturers sell their products through wholesalers, dealers, brokers, or agents. They don t have to deal directly with the ultimate consumer of the product. This situation has both a good and a bad side. The good side is that the manufacturer is selling in wholesale quantities. It has hundreds instead of millions of customers to worry about. The bad side is that if the intermediaries are not good at their business, sales will falter, and there is not much that the manufacturer can do about it. It is hard to introduce new products when you cannot communicate with your ultimate consumers. Database marketing has provided a new method of handling the marketing of business products. If the manufacturer can just get its hands on the names and addresses of the ultimate consumers, it can correspond with them, introduce them to new products, and drive them to the dealers. Many dealers resist this approach. Their fear is that the manufacturer will use this information to go around them and sell products directly to the ultimate consumers. This situation almost drove Compaq out of business. Compaq had a network of wholesalers and retailers that were the exclusive marketers of its computers. Beginning in the middle 1980s, Compaq developed an excellent database of registered users of Compaq products. The company knew their names, their addresses, their positions in business, their occupations, the software they used, and scores of other pieces of information about them. But it never once contacted any of them directly, for fear that its retailers would stop promoting the Compaq name.
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Meanwhile Dell, Gateway, and then IBM began to sell PCs directly to the public, stealing market share away from Compaq. When Compaq nally woke up to its losing strategy and began to sell direct, it was too late. Compaq had dropped to the back of the pack. With database marketing, the ideal strategy for a supplier is to work to make its dealers, agents, and brokers successful. The supplier wants to help them to succeed in their business. As a result, the dealers will push the sale of the supplier s products. Presented in this chapter are several case studies in which suppliers have done just that.
Top 10 Prospects
A manufacturer of industrial components made 40,000 different products and had $400 million in sales through 1800 independent agents. While $400 million may sound like a lot, it was less than 1 percent of the $87 billion in annual sales in this business category. The independent agents handled the products of many other manufacturers in addition to this rm s. Some agents were very good at pushing this rm s brand. Others were not so good. The company wanted to stand out from the crowd. It turned to Scott Brostoff of CSC Advanced Database Solutions to come up with a method of helping its agents succeed. Each agent had a unique territory. The rm had compiled a list of hundreds of thousands of ultimate customers based on their deliveries over 3 years. CSC decided to take this database and add Dun & Bradstreet data to it, showing for each customer the SIC code, annual sales, number of employees, and actual products that the customer had purchased. What types of data are available from Dun & Bradstreet for appending to a business-to-business le Some different types are listed in Figure 9-1. Scott decided to feed the D&B information into a model that showed which products in which quantities customers in each SIC code bought. Armed with that information, CSC decided to use the D&B data to identify prospects in each agent s territory that were not currently buying the rm s products. The model was designed to score each prospect in order to determine the 100 prospects in each agent s territory that would be
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