Describe the five ways companies use database marketing

What will be an ideal response?

In general, companies can use their databases in five ways:
1. To identify prospects–Many companies generate sales leads by advertising their product or service and including a response feature, such as a link to a home page, a business reply card, or a toll-free phone number, and building a database from customer responses. The company sorts through the database to identify the best prospects, then contacts them by mail, e-mail, or phone to try to convert them into customers.
2. To decide which customers should receive a particular offer–Companies interested in selling, up-selling, and cross-selling set up criteria describing the ideal target customer for a particular offer. Then they search their customer databases for those who most closely resemble the ideal. By noting response rates, a company can improve its targeting precision.
3. To deepen customer loyalty–Companies can build interest and enthusiasm by remembering customer preferences and sending appropriate gifts, discount coupons, and interesting reading material.
4. To reactivate customer purchases–Automatic mailing programs (automatic marketing) can send out birthday or anniversary cards, holiday shopping reminders, or off-season promotions.
5. To avoid serious customer mistakes–Capturing all transactions and communications in a customer database can save companies from mistakes such as making conflicting offers to one customer and not providing proper service to good customers.