Equitec Case - Consumer Behavior

EquitecGroup 6:Imran Ahmed, Brian Dorne, Todd Hadley, Cheryl McIntosh, Desiree Sheikholeslami andJulio Velo

Problem StatementHere are some of the questions that many businesses find themselves seeking answers for:How to deliver results that meet high level of financial expectations?To increase market share with a shrinking consumer populationTo boost operational effectiveness while cutting overhead expensesTo bring the greatest value to consumers at the lowest costTo engage customers who have a plethora of purchasing options

Marketing Research IndustryDatabase Marketing is more efficient than previous methods such as mass marketingWidely used method for gathering marketing data in retail industryCan be useful to any size company if the database is built according to needsDatabase Marketing leaders include:Acxiom, Experian, EMC Corp., Merkle, Targetbase, Knowledgebase Marketing, Allant Group, Epsilon, Equifax Database Services, Harte-Hanks, TNS North America

Types of Marketing ResearchDatabase Marketing includes multiple types of Market ResearchBusiness to Consumer (B2C)Companies try to gather as much data as they can about potential customers through just about any methodIncludes, advertisement tracking, customer satisfaction research, brand equity research, concept testing, etcBusiness to Business (B2B)Much more limited than B2C, but it can be easier to obtain. Business can easily gather information about other businesses by simple contact or research of public informationDifficult to build a target market plan because B2B research usually contains limited data, as compared to the millions of data points obtained in B2C

Introducing EquitecEquitec aims to answer some of the important questions listed in the problem statementFounded in 1995, with a mission to optimize client growth and productivityEquitec merged with OPUS Interactive, a multichannel consortia database company, in 2003As of early 2007, Equitec was acquired by Acxiom, a global leader in customer information management and technology

Equitec’s Business ModelUnlike many other marketing research firms, Equitec mainly operated within a “niche”Equitec focused on the “Retail Industry” for marketing and merchandising optimizationEquitec solutions offered intelligence for retailers in, but not limited to the following areas:Supply chain efficienciesRevenue growth while curtailing operational costsImproving incremental sales, profits and ROITarget marketing at the household or business levelEquitec focused on “Individual Determinants” of consumer behavior (Demographics, Psychographics, Personality etc)Consumer Dynamics is Equitec’s proprietary information platform

Data MiningData mining is the process of finding hidden patterns in large amounts of informationIt relays in a pattern recognition algorithm, mathematical and statistical models, to find correlations between different sources of dataIn the case of Consumer Dynamics, consumer information and data from Point of sale (POS) is processed by a Statistical Analysis System (SAS) to generate strategic business intelligence for Equitec’s clients

Data Mining – General ProcessBusinessKnowledgeData WarehouseTarget DataPatternsDatabasesLogisticsShippingTransformationSelectionData MiningEvaluationInventoryPurchasing

Data Mining-Consumer DynamicsConsumer Dynamics PlatformStatisticalAnalysisSystemStrategicNew Potential Market locationsProspect OpportunitiesMerchandizingTrendsActionable Market SegmentsOptimal Marketing

Consumer Dynamics Database (CDD)Consumer Dynamics is Equitec’s proprietary information platform – data mining softwareIt integrates point-of-sale (POS) and other sales data with external consumer informationIt identifies clients’ most responsive consumer segments and creates strategies targeted at these segmentsConsumer Dynamics delivers efficiency to its clients due to the information harnessed through its predictive data mining capability

Consumer DynamicsDatabase StructureReadyWillingAble

Case QuestionsWhich variables in the Consumer Decision Process (CDP) model are captured in the Consumer Dynamics Database (CDD) model?How should a firm use this information to improveTargeted promotionsStore locationsStore inventories and supply chain management andReturn on marketing investmentsWhich retailers (or organizations) would be the best target clients for Equitec?

Question 1:Consumer Decision Process (CDP) model vs. Consumer Dynamics Database (CDD) model?The CDD model captures several variables of the CDP model, specifically those related to Environmental Influences and Individual differencesThe Consumer Dynamics Database (CDD) focuses on retail Point of Sale (POS) and customer information data. The intelligence gathered from CDD is most suitable for the Need Recognition stage. However, other stages of the CDP model are captured as wellEquitec’s clients are able to utilize the strategic data provided by the CDD to lead customers through the early stages of the CDP model

Consumer Decision Process (CDP)Need RecognitionEnvironmentalInfluencesStimuliSearchInternal SearchIndividualDifferencesExposurePre-consumption EvaluationAttentionPurchaseComprehensionMemoryConsumptionAcceptancePost-consumption EvaluationRetentionSatisfactionDissatisfactionExternal SearchDivestment

Variables from CPD modelcaptured by CDDCDDCDPEnvironmentalInfluencesIndividualDifferencesIndividualDifferencesresourcesmotivationEnvironmentalInfluencescultureknowledgesocial classattitudespersonal influencepersonalityfamilyvaluessituationlifestyle

Question 1: CDP vs. CDD ConclusionEquitec’s Consumer Dynamic Database captures several variables of the Consumer Decision Process, but not allSome variables are directly covered by Equitec’s Consumer Dynamics Database, e.g. attitude and lifestyleOther variables such as culture, social class, resourcesetc, can be inferred from the information provided by Equitec’s CDD

Question 2a: Improve Targeted PromotionsData generated by the CDD software could be analyzed to target consumer segments for future promotionsSegmenting data could also direct the choice of appropriate media outlets for marketingClients could later use the CDD to assess the effectiveness of promotionsThe CDD software increased clients’ marketing response rates by 562 times greater than a general mailing

Question 2a: Improve Targeted Promotions - ExamplecouponPOSTargetSegmentsCDDBefore using CDD, coupons were sent to all market segmentsBased on POS data, CDD indicates which arethe best market segmentsCoupons are then sent to these target segments, generating more revenue

Question 2b: Improve Store LocationsThe CDD tool makes traffic data available to stores by tying zip codes to POS transactions. Retailers can analyze zip code data to see where customers live. The results can be used to determine if a company should open a new location. Conversely, it can also point out the need to close a location.Other demographics can be analyzed to match the store’s target demographics to an appropriate location or decide whether to focus on web sales

Question 2c: Improve Inventories & SCMThe CDD can improve product line depth and breadth by identifying customer segments for each product or product line and using that information to guide purchasing decisionsCDD not only helps to identify areas of inventory growth but can also assist in reduction of “unproductive inventory” (Per Acxiom Corp, approx. $280 billion worldwide for Retail)This, in turn, improves supply chain management, since the retailer has a better idea of what, how much and when to purchase (accelerated time-to-benefit)Analysis of buying preferences can also help retailers select items to cross-merchandise with products that customers are already buying

Question 2d: Improve Marketing ROIThe CDD can be used to perform more accurate cost-benefit analyses of marketing effortsA retailer could compare response versus costs for various promotions to decide which promotions to repeat and which ones to stop usingData mined through retailers flow to the manufacturers so that product lines can be tweaked. Coupons and promotions driven by manufacturers can also be better targeted

Equitec ClientsEquitec’s clients include:Home DepotProctor & GambleGeneral ElectricSabre Systems

Question 3:Best Target ClientsEquitec’spotential clients could include:All national retailers, to better target promotions to specific customer segmentsConsulting firms, to help provide services for smaller clientsReal estate agencies, to improve customer satisfaction by providing customers a better match for their needsChurches, to segment and target potential members based on local demographicsUniversities, to guide decisions about curriculum, degree programs, extension of academic programs and locations according to the local market

Equitec TodayJanuary 5, 2007: Acxiom Corporation announced its acquisition of EquitecEquitec acquisition expanded and enhanced Acxiom’s retail business solution capabilities“This acquisition enables Acxiom to offer a unique combination of custom consulting and analysis, deep customer insight and standardized assessment that accelerates financial return for retailers,” said Acxiom Company Leader Charles D. MorganThe acquisition solidified a business relationship that dated to 1999 when the two companies initiated the Market Advantage joint venture

ReferencesJames A. O'Brien, G. M. (2009). Management Information Systems (9th ed.). New York: McGraw-HillAcxiom Press Release: Acxiom Extends Retail Solutions with Acquisition of EquitecDMNews Article: Equitec Buy Extends Acxiom's Retail Abilities

Equitec Case - Consumer Behavior

More Related Content

What's hot (20)

Similar to Equitec Case - Consumer Behavior (20)

Equitec Case - Consumer Behavior