Preparing for the big holiday game

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Michael Haydock
Michael Haydock
During August, marketing chiefs at major retailers are like athletes before the big game. They know what's on the line. The decisions they make about how and where to allocate the holiday season marketing budget will likely spell the difference between victory and defeat for the entire year. And it's a long time until next season.

It has never been harder to figure out where to spend marketing dollars. It used to be enough to have a big budget.

You'd divide your resources among TV, radio, newspapers, direct mail and the catalog. No longer. Today, there are far more places to spend – and, potentially, waste – your money: countless cable channels, Web ads, YouTube.

Fortunately, analytics technology can help. Most big companies already perform basic analysis to understand the effectiveness of their marketing programs. However, they are almost always looking at the numbers independent of the customer dimension.

It is much more important to understand how effective specific marketing initiatives are with individual customers.

The average retailer serves customers who fall into at least a dozen distinct categories. These include extremely loyal shoppers, as well as customers who only shop sales or only shop the retailer in a single narrow category.

With so many customer groups and so many media types, it becomes a very complex web to untangle.

Modern analytics can tell a retailer how well a product is selling with a certain category of customer in a specific market, and how badly with another group in another market. It can tease out crucial facts. For example, analytics can tell marketers that the online ads are effective against one competitor but not another. It can recommend a robust defensive strategy aimed at maximizing revenue, such as running a print campaign targeting a specific set of customers in a specific market.

This holiday season, retailers need to rely on more sophisticated analytics to achieve a distinct advantage in the marketplace.

That will give them greater ability to pull in more revenue from current customers and attract new customers.

mhaydock@us.ibm.com

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