Database marketing is a form of direct marketing using databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes. The method of communication can be any addressable medium, as in direct marketing. There are two main types of marketing databases, 1) Consumer databases, and 2) business databases. Consumer databases are primarily geared towards companies that sell to consumers, often abbreviated as business-to-consumer or BtoC. Business marketing databases are often much more advanced in the information that they can provide. This is mainly because business databases aren’t restricted by the same privacy laws as consumer databases.
The “database” is usually name, address, and transaction history details from internal sales or delivery systems, or a bought-in compiled “list” from another organization, which has captured that information from its customers. Typical sources of compiled lists are charity donation forms, application forms for any free product or contest, product warranty cards, subscription forms, and credit application forms.
The communications generated by database marketing may be described as junk mail or spam, if it is unwanted by the addressee. Direct and database marketing organizations, on the other hand, argue that a targeted letter or e-mail to a customer, who wants to be contacted about offerings that may interest the customer, benefits both the customer and the marketer. Sources of data
Although organizations of any size can employ database marketing, it is particularly well-suited to companies with large numbers of customers. This is because a large population provides greater opportunity to find segments of customers or prospects that can be communicated with in a customized manner. In smaller (and more homogeneous) databases, it will be difficult to justify on economic terms the investment required to differentiate messages. As a result, database marketing has flourished in sectors, such as financial services, telecommunications, and retail, all of which have the ability to generate significant amounts of transaction data for millions of clients.
Database marketing applications can be divided logically between those marketing programs that reach existing customers and those that are aimed at prospective customers.