method of using data collected from a wide number of consumer purchasing sources to target individuals for marketing campaigns. This is an accurate, expensive method of reaching a select target audience. The proliferation of computerized databases has created a huge flood of junk mail and junk faxes.
collection, storage, analysis, and use of all available data about a prospect or customer; usually maintained on a computer file. Data may be collected from past purchases, such as items purchased, and the recency, frequency, and monetary value of purchases, or it may be nonpurchase related, such as income, education level, and age. Data can be generated by the marketer's activities (sales, surveys) and supplemented by data purchased from other sources. Database marketing assumes that the marketer can predict future purchase behavior through analysis of customer characteristics and past actions. Database marketing increases the cost effectiveness of promotions by segmentation of the customer list into clearly defined target groups with a high probability of purchase. Marketers can also use their understanding of the likes and dislikes of the market gleaned from analysis of the database to design or suggest new products. Although database marketing has been dominated by direct marketers, mass marketers are beginning to understand and use it as well. Some consumers have concerns about the privacy of the information maintained on databases.
