CONTINENTE ONLINE: STARTING A ONE TO ONE MARKETING PROGRAM Joana Filipa Castro de Amorim Project submitted as partial requirement for the conferral of Master of Science in Business Administration Supervisor: Professor Eduardo Baptista Correia, Assistant Professor, ISCTE Business School Marketing, Operations and General Management Department Co-supervisor: Sara Bettencourt Teixeira, Customer Management, Continente Online - Sonae MC April 2013 To my Parents, Thank you for everything. Starting a One to One Marketing Program Acknowledges First of all I must say that this page is not only to thanks to all the people who helped me during the process of writing this thesis, but above all is a thank you to all the people who had an important and crucial role on my academic life. With this thesis I close seventeen years of studies and it seems to me a wonderful opportunity to write an overall acknowledge to everyone who have been by my side all these years. Thank you. Now, and trying being more specific, my first and biggest thank you is to my parents who always provided me all the things I ever needed. Thank you for all the effort you had paying my tuitions, I promise that I will compensate you with some future gifts and with some success (hopefully). Moreover, I must to thank Professor Eduardo Correia. Without his contribution this work would be certainly poorer. Thank you Sara Teixeira for having welcomed me so well in the Continente Online, and for all the help provided. Without it this thesis would not be possible. Thank you Sonae for the opportunity given which in the end made my thesis something much more exciting and challenging. My sincere thanks to the Continente Online’s team for all the help you have given me in the five months I spent with you. I must highlight the help that I receive from Tânia. Without her I would never be able to withdraw from the database all the information I needed throughout this thesis. Thank you João, you can be so annoying, like all the younger brothers are, but I love you and I always will, no matter what. Andreia, Catarina, Helena and Andreia, I promise I would write your names on acknowledges page and here it is. Thank you. For the rest of the people who are important to me, here is a thank you for existing in my life. Lisbon, April 2013 Joana Filipa Castro de Amorim III Joana Castro de Amorim, April 2013 Starting a One to One Marketing Program Contents List of Exhibits ...................................................................................................................... VIII Appendixes’ Index ................................................................................................................... XI Abstract ................................................................................................................................... XII Sumário ................................................................................................................................. XIII Executive Summary .............................................................................................................. XIV Abbreviations/Glossary ......................................................................................................... XVI Abbreviations ................................................................................................................ XVI Glossary ......................................................................................................................... XVI Definition of the Problem Context ....................................................................................... XVII Methodology ....................................................................................................................... XVIII Chapter | 1 – Literature Review ................................................................................................. 1 1.1. The Relevance of 1:1 Marketing ..................................................................................... 2 1.1.1. Customer Empowerment .......................................................................................... 2 1.1.2. Customer Oriented Organizations ............................................................................ 2 1.1.3. Important Dichotomies to Consider ......................................................................... 3 1.1.4. Retail’s Specific Case ............................................................................................... 4 1.2. Holistic Marketing ........................................................................................................... 5 1.2.1. Components of Holistic Marketing .......................................................................... 6 1.2.2. A Holistic Marketing Orientation and Customer Value ........................................... 7 1.3. Customer Relationship Management .............................................................................. 7 1.3.1. CRM Pitfalls ............................................................................................................. 8 1.4. One to One Marketing ..................................................................................................... 9 1.4.1. Identify ................................................................................................................... 10 1.4.2. Differentiate ........................................................................................................... 10 1.4.3. Interact .................................................................................................................... 10 1.4.4. Customize ............................................................................................................... 11 1.5. Marketing Information Systems .................................................................................... 12 1.5.1. Marketing Intelligence System ............................................................................... 12 1.5.2. Customer Databases and Database Marketing ....................................................... 13 IV Joana Castro de Amorim, April 2013 Starting a One to One Marketing Program 1.5.3. Data Mining ............................................................................................................ 13 1.5.4. Research Approaches ............................................................................................. 15 1.5.5. Barriers to the Use of Marketing Research ............................................................ 15 1.6. Segmentation, Targeting and Positioning ..................................................................... 16 1.6.1. Traditional Segmentation Criteria .......................................................................... 16 1.6.2. Psychographic Segmentation ................................................................................. 17 1.6.3. Behavioural Segmentation ..................................................................................... 20 1.6.4. Bases for Segmenting Business Markets ............................................................... 21 1.6.5. Effective Segmentation Criteria ............................................................................. 21 1.6.6. Niche Marketing ..................................................................................................... 21 1.6.7. Targeting and Positioning ...................................................................................... 22 1.7. Customer Profitability ................................................................................................... 22 1.7.1. Customer Profitability Analysis ............................................................................. 23 1.7.2. Customer Lifetime Value ....................................................................................... 24 1.7.3. Customer Equity ..................................................................................................... 25 1.8. Attracting, Retaining and Growing Customers ............................................................. 26 1.8.1 Customer’s Life Cycle ............................................................................................ 26 1.8.2. Forming Strong Customer Bonds ........................................................................... 27 1.8.3. Customer Defection ................................................................................................ 28 1.9. Customer Satisfaction ................................................................................................... 28 1.9.1. Customer Perceived Value ..................................................................................... 29 1.9.2. Measuring Satisfaction ........................................................................................... 30 1.9.3. Product and Service Quality ................................................................................... 31 1.9.4. Complaints ............................................................................................................. 32 Chapter | 2 – Continente Online ............................................................................................... 33 2.1. Continente Online – Brief Introduction ........................................................................ 34 2.1.1. Sonae ...................................................................................................................... 34 2.1.2. Continente .............................................................................................................