A data warehouse is a centralized repository for

enterprise data, facilitating management decisions and

serving as the basis for analytical systems. In marketing,
it allows organizations to capture, organize, and store
customer and market data for decision-making. Data
warehouses provide ready access to organized data,
supporting the decision-making process by offering
insights into markets and customers

Data warehouses support strategic views of marketing activities, aiding in

customer value and business returns. Key processes include:

1. Data Collection: Capture, organize, verify, and integrate data from internal
and external sources for database loading.
2. Data Management: Format and store data for easy access by warehouse
users.
3. Data Access: Use specialized tools for querying, analyzing, and
creating/distributing business reports.

Data warehouses are integral to Marketing Decision Support Systems

(MDSS), enabling access to data for creating reports, analyzing sales trends,
identifying market patterns, and informing decisions on new products,
pricing, segmentation, marketing campaigns, and distribution channels

A data mart is a condensed version of a data warehouse, designed for specific user
groups. It provides fast, specialized access and control, minimizing performance
sacrifices. Useful when a full data warehouse is impractical, data marts may include
specialized datasets, allowing users flexibility, such as combining internal and
external data for analysis.

Data Mining in internet-based marketing involves analyzing vast datasets, including

purchase histories and web usage, to extract meaningful patterns and rules. This
computer-based exploration is crucial for improving marketing, sales, and customer
support operations. When combined with data warehousing, Data Mining enhances
Marketing Decision Support Systems (MDSS), enabling a shift from operational
support to a focus on actual customer behavior. The synergy between data mining
 and data warehousing facilitates the extraction of strategic opportunities from
comprehensive customer knowledge.

Multinational organizations face a data deluge due to internet-driven global

data growth. Paradoxically, excessive data can impede interpretation,
leading to less valuable insights. To address this, marketers use data mining
as a key component of knowledge-based marketing strategies, enabling
rapid collection, processing, and dissemination of strategic information.

Key Points:

1. Data Overload: Large organizations generate abundant marketing data

daily, facilitated by the internet's global reach.
2. Challenge of Exponential Growth: Exponential data growth can ironically
result in less valuable information, overwhelming managers.
3. Need for Strategic Processing: Marketers must develop procedures for
processing, filtering, and interpreting data strategically.
4. Role of Data Mining: Data mining serves as the engine for knowledge-
based marketing, allowing rapid collection, processing, dissemination, and
action on information for a first-mover advantage.
5. Data Collection Process: Initiated by online transaction processing (OLTP)
systems, customer interactions generate transaction records capturing
various details.
6. Transaction Types: Data includes product purchases, catalog references,
special offers, credit card numbers, order size, and time since the last
purchase.
7. Transaction Generation: Order entry, billing, and shipping systems, along
with interactions with banks and shipping companies, contribute to
additional transaction records.
8. Customer Service Impact: Post-purchase interactions, like calls to
customer service, further enrich the data.
9. Internet Transactions: Online transactions link purchase behavior with
web-browsing activities, connecting to purchase histories, financial records,
and personal identity information.

Data mining involves various tasks for analyzing data collected in a data
warehouse, employing different methodologies based on research goals. Key
data mining tasks include:

1. Classification: Assigning predetermined codes to database records, often

using decision tree analysis techniques.
2. Estimation: Using input data to estimate continuous variables like age and
income, commonly employing neural networks.
3. Affinity Grouping: Developing rules of association to group variables that
appear correlated, such as market basket analysis linking items consumers
buy together.
4. Description: Making summary observations to enhance understanding of
the data's underlying phenomena, often using market basket analysis, query
tools, and visualization techniques.
5. Clustering: Segmenting a heterogeneous population into homogeneous
clusters based on similarity measures, with clustering algorithms aiding
analysis.
6. Prediction: Classifying records based on predicted future values or
behaviors, utilizing techniques like neural networks, market basket analysis,
and decision trees.

Researchers seeking behavioral insights in large customer

databases commonly employ the following data mining techniques:

1. Market Basket Analysis: Searches for associations, such as

identifying patterns like professional women with 5 Series BMWs
also using web-enabled mobile phones. Effectiveness depends on
having a predefined idea for exploration.
2. Cluster Analysis: Groups customers based on the hypothesis that
similar types exhibit similar behaviors, often using K-means cluster
analysis to assign objects to relatively homogeneous groups.
3. Decision Trees: Facilitates classification in directed data mining,
dividing data into subsets with simple rules to link customer
characteristics with purchase behaviors.
4. Query Tools: Uses Structured Query Language (SQL) for
preliminary data analysis, employing summaries like averages and
cross-tabulations to identify patterns for more structured analyses.
5. Neural Networks: Utilizes computer models simulating neural
connections in the human brain for classification, clustering, and
prediction. Involves training the network to perform tasks and
executing assigned tasks in areas like identifying customer clusters,
detecting credit card fraud, diagnosing medical conditions, and
predicting equipment failure rates.

On-line Analytical Processing (OLAP):

 OLAP is a family of tools for analyzing and generating reports from large
databases, storing data in a multidimensional format for quick access and
analysis.

 Database Structure: OLAP relies on databases that allow multidimensional

views, facilitating visualization of relationships between pre-designated
variables.
 Applications: Useful for achieving a higher-level view of data, such as total
sales or profitability, by product line, sales territory, or market segment.
 Updates: OLAP databases are typically updated in batch mode from
multiple sources, optimized for analysis and reporting, unlike online
transaction processing (OLTP) databases focused on transaction updates.
 User Interaction: OLAP systems store answers to predefined business
questions, allowing users to choose from predetermined options for data
types and display formats, often presenting output as charts, graphs, tables,
or maps.
 Benefits: Addresses the challenge of distributing information to diverse
users with varying reporting needs, reducing response times for repeated
queries on large databases.
 Dimensionality: Time series data is common in OLAP databases, enabling
marketers to analyze trends in various aspects of the business, compare
current and historical results, and explore multiple hierarchies and classes
within dimensions.
 Relation to Data Mining: While OLAP can be used with data mining, it is
not a substitute. OLAP tools are powerful for report generation, but data
mining tools excel in finding patterns. Data mining is considered more
powerful than OLAP because it can discover new solutions beyond predefined
questions.

Geographic Information Systems (GIS) in Marketing:

GIS systems empower marketers to map customers, competitors, suppliers,

sales concentrations, prospects, and partners, facilitating applications like
site selection, trade-area analysis, environmental analysis, territory design,
network planning, and risk analysis.

 Capabilities: GIS systems have evolved to include integrated Global

Positioning System (GPS) functionality for real-time location reporting,
mapping transportation fleet movements, sales representative reporting, and
managing key assets on the move.
 Visualization: GIS data offer powerful visualization opportunities, linking
consumer behavior to specific locations at specified times.
 In essence, GIS systems provide marketers with valuable tools for spatial
analysis and strategic decision-making

GIS in Marketing:

 Mapping: GIS enables mapping of customers, competitors, suppliers, and

sales concentrations.
 Applications: Supports site selection, trade-area analysis, environmental
analysis, territory design, network planning, and risk analysis.
 Capabilities: Integrated GPS functionality for real-time location reporting,
including mapping fleet movements and sales representative activities.
 Visualization: Powerful visualization opportunities linking consumer
behavior to specific locations and times.

In summary, GIS provides marketers with essential tools for spatial analysis
and strategic decision-making.

Geographic Information in Marketing:

1. Customer Location:
 Links behavioral data with time and location.
 Powerful for mapping and predicting consumer behavior.
 Mobile ecommerce enables identification and mapping at the point of
purchase.
2. Geographic Market Information:
 Associates marketing data with physical maps.
 Classification by county, city, ZIP code, Census tract, etc.
3. Marketing Activity Location:
 Links POS transactions, distribution patterns, direct response results,
and sales forecasts to geographic locations.
4. Business Location:
 Labels business facilities on a map, displaying retail density, population
density, buying power, and media coverage.
5. Marketing Resource Location:
 Links assets in motion through GPS from trucks, autos, aircraft, and
wireless devices to their physical locations.