Fall+2008+Section+07-PS+Week+2

=**Class Discussion For Week 2**= =Marketing Analysis and Segmentation= **Key Points:  MARKET SEGMENTATION
 *  “Market Segmentation, Target Market Selection, Product/Service Value Proposition” (Salvary & Elberse)
 * Potential customers are divided into groups (segments) with defined characteristics, behaviors or needs. Segmentation is based on:
 * Benefits that customers are seeking
 * Customer characteristics (often demographics such as age, geographic location, behavior, etc.)
 * The purpose of segmentation is to better identify and address customers.

TARGET MARGET SELECTION
 * Evaluate the potential profitability of each market segment and chose which ones to go after.
 * Companies need to understand differentiation and determine whether they can adequately compete against existing competitors in those segments.
 * Ability to conceive and design
 * Ability to produce (quality and quantity)
 * Ability to market
 * Ability to finance
 * Ability to manage/execute
 * This provides an evaluation of strengths and weaknesses but it is not able to predict what would happen within the market or how competitors might react once the company enters the market.

POSITIONING
 * A positioning statement is a selling proposition that is unique to a particular product or service.
 * The goal of the positioning statement is to be clear, distinct, attractive to targeted segments, and helpful in defining the product or service in relation to the competition.
 * Our (product/brand) is (single most important claim) among all (competitive frame) because (single most important support).
 * Should answer:
 * Who are the customers?
 * What is the set of needs that the product fulfills?
 * Why is the product the best option to satisfy those needs?
 * Should show/tell/explain why it is better than the competition (differentiation).
 * Vertical differentiation: Consumers have varying opinions about quality and their willingness to pay for an increase of quality. When buyers agree that product A is better than product B. If both products are sold at the same price, everyone will choose product A over B.
 * Horizontal differentiation: Leverages the fact that people don’t all have the same preferences. When product A and B are different – other than quality levels – and sold at the same price, some will chose A and some will chose B. Companies should find segments that are not currently served by a competitor.
 * The traditional marketing mix can assist in differentiation:
 * Product: (i.e. packaging)
 * Price: (i.e. can signal quality)
 * Place: (i.e. online distribution, vending machines)
 * Promotion: (i.e. RedBull)

Something I found on Segmentation. They break down the segments into demographical components (such as Social class & Lifestyle) and provide descriptive analysis of presented veiwpoints. http://www.examstutor.com/business/resources/studyroom/marketing/market_analysis/8_psychographic_segmentation.php?style= Although not much of a "Eurika!", it does make an itnteresting read.

Strategy includes “Market Segmentation” Consider long term decisions to select best opportunity and plan strategy.
 * CLASS DAY NOTES**
 * Segmentation** - looking for market clusters; we can meet/fulfill the needs of clusters which are homogenous.

Herrmann Brain Dominance Instrument
[|"Putting Your Company's Whole Brain to Work"]

[|Factor Analysis Results for Class Groups]

Week # 2 Case: The Fashion Channel
We discussed the Fashion Channel case. We ended the evening discussing their options and strategies. One of the strategies they've implemented is to leverage off the fashionista niche - they franchise fashion bars - a very fashionable entertainment venue for the fashionistas, this is the teaser on Fashion Bars "//WELCOME TO FASHION BARS,Watching world's high fashion on your Fashion Bar's TVs is like sitting in celebrity seats at a fashion show. You admire the beautiful models from up close, discover intimate back stage details or attend interviews recorded off the catwalks... Visit our stylish Fashion Bars all over the world//".see http://www.ftv.com/fashion/page.php?P=995, and here's a screen shot - Please view linked PDF file. This document was generated by another student group, however has relevancy to our Fashion Channel case study. I found it to be an interesting read. The students use SWOT to perform case study analysis. http://gailparente.com/yahoo_site_admin/assets/docs/Segmentation_Analysis_-_The_Fashion_Channel.11884741.pdf


 * __ The Fashion Channel Analysis __**



Tool and spreadsheet
 * Problem – new competitors erode market/revenue; lack of focus;
 * Created issue – created the market, temporary monopoly
 * What started look at the problem – no information about viewers, advertisers pay existing prices; new competitors more effective;
 * Make money – [1] ad revenue and [2] affiliate fees
 * Scenarios
 * Shot gun -cross segment
 * Focus on fashionistas
 * Focus on fashionista and planners

§  “The Fashion Channel” (TFC) successful cable TV network dedicated solely to fashion, with up to date features broadcast 24hrs a day, 7days a week. §  Founded in 1996 by two partners §  Jared Thomas was a founder and the CEO §  Dana Wheeler was Senor vice president of Marketing (hired 2006 to implement “Change” in market strategy) §  The Fashion Channel needed new/up-to-date “Segmentation and Positioning Strategy” (developed by Dana Wheeler) §  “Niche Network” ·  Most avid viewers were woman between 35 and 54 §  TFC needed to strengthen its competitive position in 2007 §  Other networks had noticed TFC’s success and were attempting to emulate programming ·  Lifetime & CNN both launched “Fashion Specific” programming §  Viewer performance needed to increase, or FTC needed to drop advertising price per unit by 10% over next year §  Increased spending on marketing campaigns by $15 million YOY from 2006-2007 §  Advertising (Wheeler felt this was TFC’s primary growth opportunity). ·  Dana’s objective was to support revenue growth as quickly as possible §  2 Key Levers to drive growth ·  Increase Viewership (increase ratings) ·  Increase advertising pricing §  Deliver Specific Target Groups §  2006 CEO Jared Thomas announced “It’s time for us to build a modern brand strategy and secure The Fashion Channel’s position as a market leader”. §  Immediately (competition is increasing and market share must be maintained   §   Senior Management Meeting “next week”…..Dana to present her strategy and seek colleague support   §   TFC had no historical “Market Segmentation” Strategies   ·   Did not attempt to market to any particular viewer segment   ·   Had theme “Fashion for Everyone”   ·   CEO Jared Thomas objective was that TFC message should “appeal to as broad group as possible”   ·   Historically broad marketing strategy had been successful for TFC   o   However in 2006 competitive dynamics had forced TFC to rethink marketing approach.   §   Concern was of “viewer fickleness”   ·   CEO Jared Thomas worried “It’s easy to spend a fortune pursuing viewers who wont stay with you”   ** Dana Wheeler’s Plan: ** “Build a strategy for segmentation, and use it as a base to employ all of the marketing tools - traditional and internet advertising, public relations and promotions – to reach the target consumers with integrated positioning messages”.
 * Who: **
 * What: **
 * Why: **
 * How: **
 * When: **
 * Additional Info: **

Here is a link to view the Market Segmentation exercise that we completed for The Fashion Channel.



 http://www.mystyle.com/mystyle/index.jsp
 * Recommendations (purposely leaving open, for class input): **

The Style (Part of the E! and G4 network family) network website has ads from K-Mart and Old Navy which are lower end price points http://www.ftv.com/fashion/page.php?P=24

Fashion TV targets a higher end segment and is more global than North American (not yet available on Comcast or other major cable networks) Ads on FTV were for Vacations to Greece and for a vacation on the Fashion TV cruise liner, which they purchased in 2007 for fashion show and VIPs

As there is a not in the case, "Tis case, though based on real events, is fictionalized, and any resemblance to actual ersons or entities is coincidental. There are occational references to actual companies in the narration." I would venture to guess that FTV is the basis for the case.

**Week #2 Reading: Market-Based Management (Best) Chapters 5 & 6**
Chapter 5 Market Segmentation Key Points:
 * A Market Segmentation stratagy starts with the benefits a product offers for solving particular customer problems
 * Ask yourself "What PROBLEM is the customer trying to solve", provide product that will solve this problem.
 * Examples of product that takes customer needs into account: coffe cup holder (that heats the coffee) for long-haul truck drivers.
 * Examples of product that Does Not take customer needs into account: Second floor suites (with stairs) in retirement homes
 * **Can you provide additional examples?** ....................................
 * Quote from our reading "customers don't want a 1/4" drill, they want a 1/4" hole" (from our Marketing Malpractice reading)
 * Many forces shape the "need environment" of customers (demographics, lifestyle, usage behaviors, org culture)
 * We can use "Needs Based" segmentation to accuratly determine the requirements/expectations of select customers
 * Main benefit is that "segmentation is based on customer needs"
 * Segmentation Stratagey Acid test will allow us to determine if Segments are:
 * Identifiable
 * Attractive
 * Profitable
 * Well Positined
 * Segment Stratagies (dependant on companies core product, company size, company target customers, etc)
 * Mass Market Stratagy: Generic Value Proposition...Wal-Mart (low cost), Coca-Cola (everybody should enjoy Coca-Cola)
 * Large-Segment Stratagy: Addresses one set of "core customer" needs...
 * Adjacent-Segment Stratagy: Marketing to customer groups with needs that are "closely related" to core customer needs...allows for realatively easy marketplace entry (stratagy is often used when current market place has become saturated).
 * Multi-Segment Stratagies: Marketing same product to differant market segments.
 * Small Segment Stratagy: Focuses on smaller segments that are often "ignored" by large companies....this stratagy is often used by smaller organizations with less available resources for marketing expendatures.
 * Niche-Segment Stratagies: Uses highly refined marketing stratagies to target specialty markets.
 * Sub-Segment Stragagies: Used when Needs based market segmentation identifies additional customer requirements within particular product marketplace
 * Customer Relationship Marketing
 * Emphasizes company to individual customer value.....includes "one-on-one" relationship marketing programs.
 * Customer Relationship Management (CRM) attempts to build "high-level" relationships directly with high value customers
 * Plot the value to customer and value to company. If BOTH the customer and the company recieve value from the relationship then true CRM has been achieved.
 * It is critical that level's of value are identified early in "customer-company" relationship.
 * CRM uses:
 * Database Marketing (allows for programs such as hilton honors where company "knows" individual customers requirements)
 * Mass Personalization
 * Mass Customization
 * MY THOUGHTS: Market Segmentation is an obvious neccessity for successful organizational growth and long-term stability. Marketing departments within organizations (especially larger organanizations with extensive product lists and large budgets) must be able to adaquatelly direct the organization from a consumer needs perspective. As discussed in our readings this week, it is imparative that a company knows what problem it is trying to solve (i.e. customer need) and who it is trying to solve that problem for (i.e. market segment/customer base) BEFORE a solution is provided. I believe that by using Market Segmentation tools and stratagies, marketing departments can more successfully answer these questions....
 * **YOUR THOUGHTS (Please provide insight from your readings):..........**

Chapter 6 Competitor Analysis & Sources of Advantage Key Points:
 * Business With COST ADVANTAGE create superior customer value with products that have average benefits, yet are offered at below average price
 * Business with DIFFERENTIATION ADVANTAGE create superior customer value with products that have above average benefits and can be offered at above average prices
 * Competative Advantage: when a business develops advantages over competetors that are meaningful to customers & are sustainable
 * Three Sources of Competative Advantage
 * Cost Advantage (Variable Costs Advantage, Marketing Cost Advantage, Operating Cost Advantage)
 * Variable cost advantage allows for: Scale Effect, Scope Effect, Learning Effect
 * Marketing Cost Advantage allows for: Marketing Cost Scope Effect
 * Differentiation Advantage (Product differentiations, Service Quality, Brand Reputation)
 * Marketing Advantage (Market share advantage, Product line advantage, Channel advantage)
 * **What about Knowledge Advantages??????**
 * **How has knowledge advantage proven to be effective in Marketing?**
 * Competitor Intelligence
 * Ask "Which competitors a business should analyze"
 * Benchmark your Competitors
 * Analyze identified competitors
 * Obtain competitor intelligence
 * Industry Analaysis
 * It is important to understand:
 * Barriers to entry into a market
 * Barriers to exit from a market
 * Customer buying power (and effects on your chosen market)
 * Supplier selling power (consider how this effects your business environment)
 * Product substitutes (availability and impact on your chosen industry sector)
 * Competitive rivalry (how many competitors in market place, what is differance between products)
 * Prisoner's Dilemma (does cutting prices help or hurt your business)
 * **Are Advantages Sustainable????????**

 Did you Know Key Points: Milkshake Study: "To build brands that MEANS SOMETHING to customers, you need attach them to products that MEAN SOMETHING to customers"
 *  “Marketing Malpractice” (Christensen, Cook, Hall)  **
 * 90% of new consumer products fail
 * Know your customer
 * Products must solve the customers problem/Job
 * Re-invent your product around customer needs
 * Purpose brands are brands with a clear purpose or job in mind. Consumers understand what purpose brands are and rely on them for specific jobs.
 * If properly executed similar product can be effectively marketed to differant groups (with only minor product changes)
 * Consider "Arm & Hammer"
 * They used to only have one product
 * They realized that this single product could be used to solve the problems of many differant customer types
 * They created a diverse product mix based on thier original flagship product
 * Yes, I do use Arm & Hammer Laundry Detergent
 * Yes, I do use Arm & Hammer Fridge & Freezer Baking Soda
 * Those Guys (and Gals) are genius!!!
 * Extend Brand Quality without Destryoing it
 * Endorser brands are a continuation of an established brand. (e.g. Courtyard, or Residence Inn for Marriot.) This allows a company to play in different markets without creating brand confusion, if executed properly.
 * Marriot did a good well
 * I'll bet Steve Jobs is grateful that Sony executives spent too many nights in the Karaoke bars.........what a shame!
 * Apple products that extend brand quality and provide a diverse product mix: iPhone and iTouch; iPod in several different sizes; newer iPods allow for not only music but radio, books, videos, pictures, almost any media; and several laptop choices for different segments.

<span style="COLOR: rgb(0,0,0)">

Three ways to find clusters that have a lot in common (fulfillment of need)

Market-Based Management (Best)

 * 1) **BEST & HBS** (includes extra step) Segmentation
 * Demographics:
 * Simplistic approach – example: 1950s following WWII not many consumer products so consumers buy anything. Segment is based on history in this context.
 * Psycho graphics:
 * Brain dominance approach – example: people’s psyche (aspects of our personalities, thoughts that don’t change) we target products that reach that segment’s psyche.
 * Find needs or benefits segment is seeking
 * Reduce down to those you can observe with your eyes see benefits because you know if you are actually satisfying them. Market research – ethnography (social research) [1] watch you without you knowing it and [2] insights by watching people. - from observable – select target market
 * Differential advantage:
 * Ask the question “what can my company do better than anyone else?”
 * Can I satisfy a need better than any other competitor?
 * Can I maximize profit more than any competitors?

Price assumption Cost plus (what to make plus markup) Insights into value to consumer – willingness to pay higher price ANSWER = who has the greatest incentive to meet that need (ex: getting paid more).Competitors can meet the need but their cost structure is lower; they make higher profits; more incentive to meet need. Earn more so try harder – motivated. Incentive makes a difference. Example I: Shoes cost $150 – cost is $1 – incentive $149
 * Paul Dwyer Class Interactive Discussion**
 * Vertical and Horizontal Positioning
 * Vertical = if difference in price and quality - customer decision on quality.Enough in common (vertical) that quality (defined in marketing is how well it meets your needs) then it matches your needs when price is not the same.
 * Horizontal = if same price, think both are same quality. The buyer’s choice of items is more nebulous.Not tied to definition of quality

Branding – is noun picking to attach to value proposition Example: Snapple
 * Paul Dwyer - Conceptual map to explain how to compare things. X and Y axis**

NOTE: Christensen’s view of choosing brand name different


 * <span style="COLOR: rgb(0,0,0)">Re-Discovering Market Segmentation (Yankelovich & Meer) **
 * 1) **Yankelovich and Meer Segmentation ([|View Slide Share])**
 * Focus on needs and benefits. How important is the need.
 * High involvement - House – price, commitment, more time to decisions, emotional commitment, consider options, extreme emotional investment, varies by relationship to amount of money.
 * Low involvement - Toothpaste
 * First look at corporate strategy for brand as starting point for brand.
 * Consider corporate strategy first.
 * Second identify the most profitable – repeat buyers.
 * Third make intuitive sense to senior managers who don’t know the details of the market – easy to understand.
 * Fourth, be willing to revise value offering. Needs change over time.

NOTE - There are always exceptions to behaviors and attitudes. Segmentation is one of the ways of clustering markets.

Paul Dwyer – Discussion of [|Brain Dominance Tool] How do we differ in our thinking? Mathematical technique – factor analysis SPSS – four dimensions (world is three dimensions- sometimes “time” is fourth). Find correlations to reduce down to smaller number of correlations. We reduce 4 to 2 – igen value greater than 1 – good enough to express correlation. This can be used to measure data to make segments – factor analysis. [|String theory] (10 dimension) analysis. Reviewed class graph and assigned Selu to group two and Lonny to group three (correlations opposite of known members in that group).

= =

**[|What Customers Want from Your Products]**
= =
 * Published: || January 16, 2006 ||
 * Authors: || //Clayton M. Christensen//, //Scott Cook//, and //Taddy Hall// ||


 * 1) **Clayton Christensen Segmentation ([|Howard Dresner Interviews Christensen 2004])**
 * Use term “jobs”. Product to do a job (needs/benefits)
 * Markstrat - Simulation later do segmentation. Surface looks done wrong but products make are imaginary. Vodite uses behavior based segments.
 * Every product has three different jobs
 * Functional aspect: physiological and safety
 * Emotional aspect: belonging
 * Social aspect: esteem and self actualization
 * Use Mazlo hierarchy of needs
 * Buying to meet needs – example of drill and hole
 * No solution
 * Imperfect solution
 * Require considerable effort and expense
 * Most successful brands [1] save time, [2] reduce risk but should include all 4 (reduce risk of poor selection) [3] buyer feel good [4] confer status
 * Most successful new brands do #1 and #2
 * Disruptive and sustaining innovation
 * [[image:file:moz-screenshot.jpg]][[image:file:moz-screenshot-1.jpg]]
 * New growth ten times fore likely to succeed on disruptive innovation.
 * In sustaining leader beat new entrants 100% of time – when only a little better – risky
 * Disruptive go for unprofitable – not competition, least resistant. Large company can’t make investment for less then a certain amount. Performance can use and absorb – bells and whistles not simple – Mainstream market incremental performance – curse of incremental-ism – breakthrough jump not often.
 * Less price, less performance – market overlooked – offer product to that segment
 * While Prof. Dwyer stated that this concept of disruptive innovation might seem counterintuitive, I find it very logical. Why try to compete for an existing customer base with a marginally better product, when a new product could create a new customer base that could be targeted without competition by introducing a new product, at least at first, before other substitute products are introduced. The concept was started with Sony’s walkman as described by Christensen in the personal music field. I feel that Apple’s I-pod is a good example of this concept in today’s world, moving from the Discman to digital music.
 * Industry three kinds of people:
 * Rule makers – industry leaders, rules dictate path
 * Rule takers – only get what the makers want – looser usually
 * Rule breaker – overturn - incremnatlism – write industry rules and overthrow industry boundaries – can be huge winners
 * Can become the Rule Makers by shaking up the industries. Usually is LOWER tech
 * Do not rely on change behavior find what already doing and make it easier
 * Allow less wealthy and less skilled people to do it.
 * One job to many jobs – grow the purpose of the endorser brand (baking soda) – endorser brand to purpose brand – umbrella brand and market word of job – like litter baking soda. Make it simple.
 * One product to many products – Shake job – same shake with different package
 * functional – hunger
 * emotional – not being board, de-stress
 * social – kids involved
 * keep busy while commute, last longer, entertain kids
 * fruit chunks to improve
 * Straw wider so drink faster
 * Thin

PART II Abercrombie Fitch

We discussed A&F's various brands and who they compete with in each of their markets. Below is a table showing how some of their primary competitors have fared over the past one year. The differing direction in these companies stock prices and how they each choose to market their products during times when the economy is struggling seems an interesting comparison It is interesting to note that Abercrombie & Fitch, J. Crew, and American Eagle are all down approximately 40% YoY while GAP is holding steady. Note* A one year window was taken as it is assumed consumer confidence was much higher towards the end of Q307 then it is presently.

One platform, four brands – Price by Age Segmentation Cannibalization – steal from brand chain – compete against each other in same brand different segmentation Even their ads are similar across their product lines. Practically the same ad aimed at 7 year olds as 22 year olds.
 * Aspire
 * Atmosphere
 * Size
 * Style
 * Self-select
 * Habitation

First photo on Abercrombie web site. What exactly are they selling?

Abercrombie Kids is selling the same nothing?

So when we look at the first two web sites we see a clothing company selling close to mostly to partly naked people. Now looking at Ruehl we can see an even more perplexing notion. We sell close you can not wait to get out of. Or we sell close the for men that make women loose theirs.

In looking at the marketing strategy, the consistency across the age spectrum for the target market of their stores does show alignment which in turn provides them with an identifiable form of branding for their lines. We could venture to speculate in this case of Sex sells, if you wear these close you will get... What you are looking for just as when you see Mouse ears it would be a completely different type of fun you are after.

<span style="FONT-FAMILY: 'Arial','sans-serif'">One question which may keep this marketing team hopping would be how do we build a Brand and minimize cannibalism, or do they care. If we address the latter, the class had a few suggestions on sizing, pricing, and overall atmosphere. Yet Paul brought to point of aspiring in consumers. Nothing could be truer when we look at the target for Abercrombie Kids and Abercrombie. When boys have their first thought of girls they instantly aspire, so could we then speculate they are creating a long term customer even if there are size and price barriers. The young pubescent boy will look to the ads on the Ruehl site and aspire to be the man with the girl in the photo. So this would be true Branding not Cannibalism as the consumer will move through their own life cycle as it relates to their stores yet the whole time increasing their revenue to the corporation as a whole.

[|Bloggingstocks.com - Abercrombie and Fitch Financial Results]

//Abercrombie & Fitch (NYSE: ANF - option chain) shares are dropping sharply today after the company reported an 11% drop in August same-store sales when analysts had been expecting a 7.9% decrease. Last month, July sales disappointed investors and we pointed out a potential trade with an annualized return over 35%.//

As consumer confidence lacks in today's economy, the retail sector continues to feel the struggle of meeting year over year sales. A&F and other like retailers continue to drop in sales as discount stores like Ross and TJ Max are some of the few retail locations meeting and/or beating LY sales. As A&F has expanded their brand lines, the possibility of cannibalizing their own business is a potential concern for growth. Many organizations work off of the good, better, best brand line strategy just as competitors of A&F. Examples are Bananas Republic, The Gap and Old Navy; The Limited and Express; and in the automobile world Acura and Honda; Lexus and Toyota.

[|Ross Stores Reports August 2008]


 * <span style="COLOR: rgb(0,0,0)">MORE INFORMATION ON SEGMENTATION **

LIBRARY OF CONGRESS BUSINESS REFERENCE SERVICE http://www.loc.gov/rr/business/marketing/intro.html

MORE MARKETERS WANT TO GET TO KNOW YOU by By Michael Bush and Rupal Parekh Advertising Age; 8/25/2008, Vol. 79 Issue 32, p11-11, 1/4p

(I'm sorry, I don't know how to create links so I inserted the entire article...) <A href="http://search.ebscohost.com.ezproxy.willamette.edu/login.aspx?direct=true&db=buh&AN=34192585&site=ehost-live">More marketers want to get to know you.</A>

CRM surges as brands demand measurable ROI during downturn The days of putting millions of dollars against something without being able to track its effectiveness are soon to be over.

Enter CRM.

As the U.S. economy worsens and consumers rein in discretionary spending, brands are ramping up their customer-relationship-management efforts, aiming to grab some of that money by building one-to-one relationships with consumers.

Feel-good talk about leveraging CRM-the art of using tools such as database maintenance and customer segmentation-to boost understanding of consumers isn't anything new. Ask around, though, and industry folks will tell you 2008 is shaping up to be the year in which companies put their money where their mouths are-with a looming recession making brands more sensitive than ever about the returns on their marketing investments. CRM-software-industry global revenue is projected to jump 14.2% this year to $8.9 billion, according to research house Gartner.

CRM, long valued by marketers for its measurability, historically has been embraced by certain sectors (namely financial services and automotive) more than others. But the Direct Marketing Association's Quarterly Business Review for the first quarter of 2008 found that 50% of the marketers surveyed said they would increase their spending on database segmentation, overlays and analysis should there be a recession.

Package-goods giant Procter & Gamble, long accustomed to a bombard-the-masses-with-heavily-tested-ads strategy, has been working on better personalizing the consumer experience. CRM is also the force behind Coca-Cola's My Coke Rewards online program, the multiyear customer-loyalty marketing blitz into which it's poured millions of dollars. Hewlett-Packard is said to have recently completed the biggest implementation of Oracle's Siebel CRM software in history.

JCPenney is the latest big name trying to develop lasting consumer relationships. Its new JCP Rewards program lets customers earn points to snag members-only benefits. Rival Macy's West, one of the retailer's biggest divisions, also has been investing in CRM to decipher a more effective media mix and gauge reaction to digital efforts. "We don't ever feel satisfied with our current media mix and are constantly looking to optimize either by improving response or reducing cost [or both]," said Mike Monroe, VP-media and advertising operations. "As customers become more adept at using digital media and other mediums, those fields have been added into our database. We're much more interested in measuring engagement and attaching a monetary value to it and less interested in looking at impressions."

"Providing a 10%-off reward because someone spends $100 today needs to be delivered within a personalized, relevant brand experience," said Loreen Babcock, CEO of consulting firm Unit 7. "Context is everything-to the point of understanding whether 10% off is even relevant to specific individuals."

"Budgets are getting tight with the economy, and we all know it's cheaper to retain vs. acquire a customer," said Peter Kim, senior partner at Dachis Corp.

A number of agency pros said the surge in CRM isn't necessarily tied to the economy. But Mike Gatti, executive director of the Retail Advertising & Marketing Association, disagreed. "Absolutely it is," said Mr. Gatti, who has seen most association members increase their CRM efforts. "Budgets aren't being raised, and in some cases they're being squeezed, so they to have market as cost-effectively as possible. The choices of where to market are expanding much faster than budgets."

According to David Scholes, Targetbase President-CEO, "People are turning to more-measurable programs and a focus on ROI in a tight economy. But the bigger trend is the recognition that we need to understand the customer better. … This is a sea change in the marketing discipline, not just the effects of the economy."

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