Page 259 - DMGT550_RETAIL_MANAGEMENT

Retail Management

Notes Electronic Data Interchange (EDI) is the inter-organisational exchange of business documents in
structured, machine processable form. It has its own memory, where it can store the collected
data and display the summary to user.

Did u know? The newest source tags are paper-thin and easily integrated into automated
production processes. These tags are applied in primary packaging (or within or on the
product itself – for example, incorporated into woven garment tags) and under labels on
bottles.

14.7 Customer Database Management

A database refers to the collection of comprehensive information about customers and prospects
such as demographic and psychographic profiles, products and services they buy, and purchase
volumes, etc., arranged in a manner that is available for easy access and retrieval. Databases
allow marketers access to an abundance of information, often through a computer system such
as sales reports, news articles, company news releases, and economic reports from government
and private agencies, etc., that can be useful in making various marketing decisions.
A simple purchase at any retail store can enable the store to gather a vast amount of information
about its customers and products. The use of systems to organise, retrieve, search and manage
that data is termed as database management. Data can be with respect to products, customers,
vendors and suppliers or a combination of them put together.
The elements of database management are data warehousing and data mining. Let us take the
example of a customer who buys a pair of cotton chino trousers from a large department store
chain in Mumbai. The customer is also a member of the loyalty programme run by this chain
and visits the store frequently.

By swiping the customer loyalty card at the time of purchase, an entire information system
starts functioning. The store’s computer sends the information to the company’s central computer,
which usually hosts the data warehouse. From this data warehouse, the organisation is able to
retrieve data that will give important information about the purchase made, the total number of
purchases made, the colour, size and demographic data of the customer.
The data warehouse is at the core of the system, which enables the retailer to gather, manage and
utilise the information needed by him to remain competitive in today’s fast changing marketplace.

The manner in which companies do business and interact with their customers has changed
rapidly over the years. It is now necessary to track changes in consumer demand, as consumer
loyalty to a retail store cannot be taken for granted. Taken from the term mining, which means
digging out something from the earth, data mining refers to the extraction of data for specific
applications with the use of technology. The concept of data mining is not new, as for many
years, statisticians, used to mine data manually. Technology has enabled the automation of the
data mining process and has integrated it with a data warehouse, which enables the availability
of data in a manner relevant for various business. Data mining can help extract information
from a database that the user did not know existed. Finding a relationship between variables
and customer behaviors that is non-intuitive is what data mining hopes to do.
The information unearthed by data mining can also help the Customer Relationship Management
Process (CRM). By identifying specific market segments and their buying behaviour, it is possible
to develop campaigns, promotions and offers which are aligned to the needs, wants and attitudes
of the customer, thereby offering value as perceived by the customer.

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