Reference no: EM131194520

When it started a century ago, marketing treated all customers the same. By the 1960s, marketers were able to break that anonymous mass into segments. Now customer databases allow them to treat customers as individuals. They may know consumers’ names and addresses, what they buy, what they have stopped buying and even how they respond to a rise in the price of dog food. For big multinational retailers, this is the equivalent of going back to the days of the individual store owner who knew and greeted each customer personally. The benefits are potentially huge: instead of spending millions on advertising beamed at people who may be indifferent or even hostile to it, retailers can use databases to help them hang on to their existing customers and persuade them to buy more. But it is not trouble-free: databases are expensive to collect and analyze, and some customers may see such individual marketing as an invasion of their privacy. Talbot’s, a 385-store women’s clothing chain based in Massachusetts, has compiled a database of 7 million names that includes information about customers’ sizes. This has enabled them to forecast more accurately which sizes will sell in particular stores. It also asks all customers for their post codes when they pay, to help it plan new store openings. The effort seems to be paying off. For the past five years the company has been opening around 50 new stores a year. Source: The Economist 4 March 1995 Discussion: A system like the one above would have cost millions of dollars to install. What were the major tangible and intangible costs? What were the tangible and intangible benefits?