Potential of Geo-Marketing-Tools for the development of advanced Online-Marketing business models

Table of content

Table of figures

List of abbreviations

Executive Summary

1 Introduction
1.1 Background
1.2 Problem description
1.3 Objectives
1.4 Methodology

2 Marketing framework
2.1 Relationship Marketing and Customer Value
2.1.1 Transactional vs. relationship oriented marketing
2.1.2 Determinations of customer value
2.1.2.1 Yield potential
2.1.2.2 Development potential
2.1.2.3 Cross-buying potential
2.1.2.4 Loyalty potential
2.1.2.5 Reference potential
2.1.2.6 Information potential
2.1.2.7 Cooperation potential
2.1.2.8 Synergy potential
2.1.3 Interim results
2.2 Geo-Marketing
2.2.1 Terminological derivation
2.2.1.1 The marketing context
2.2.1.2 The interdisciplinary framework
2.2.2 Terminological definition
2.2.3 The database
2.2.3.1 Data sources
2.2.3.2 Data preparation
2.2.3.3 Utilizing the database
2.2.4 Interim results
2.3 Online-Marketing
2.3.1 Terminological derivation
2.3.2 Terminological definition
2.3.3 Technological excursus
2.3.4 Interim results
2.4 Chapter subsumption

3 Business Models
3.1 Preliminary considerations
3.1.1 Terminological derivation
3.1.2 Terminological definition and classification
3.2 Macro-environmental analysis
3.2.1 Political environment
3.2.1.1 Political surrounding
3.2.1.2 Legal aspects
3.2.2 Economical environment
3.2.3 Social environment
3.2.3.1 Structure of the community
3.2.3.2 Habits
3.2.4 Technological environment
3.2.4.1 IP-localization
3.2.4.2 Cellular-localization
3.2.4.3 GPS-localization
3.2.4.4 Localization by address-data
3.3 Chapter subsumption

4 Analysis
4.1 Recent Applications
4.1.1 Google AdWords
4.1.2 Oe-Navi
4.1.3 BMW ConnectedDrive
4.2 Gaps in the creation of value
4.2.1 Business matrix based analysis
4.2.2 Communication model based analysis
4.2.3 Chapter subsumption
4.3 Advanced Online-Marketing business models
4.3.1 Preliminary considerations
4.3.2 Advanced business models
4.3.3 Exemplifying advanced Online-Marketing business model

5 Conclusion
5.1 Subsumption of results
5.2 Critical appreciation
5.3 Outlook

ITM Checklist

Bibliography

Table of figures

Figure 2 - Changing focuses of relationship marketing

Figure 3 - The 4 Ps and 3 Rs in context to the customer attractiveness

Figure 4 - Customer attractiveness vs. marketing expenses

Figure 5 - Determinations of customer value

Figure 6 - Cost-benefit-ratio of perceived value

Figure 7 - Correlation of customer loyalty and lifetime value

Figure 8 - Layers of customer loyalty

Figure 9 - Marketing in context to the PDCA-cycle

Figure 10 - Scientific interdisciplinary of Geo-Marketing

Figure 11 - Geo-Marketing’s field of application

Figure 12 - Criteria’s for segmentation

Figure 13 - Geo-encoding and data collection

Figure 14 - Procedure model for the preparation of thematic maps

Figure 15 - System architecture and proceeding

Figure 16 - Geo-Marketing in context to customer-related data

Figure 17 - Group of subjects and possible connections

Figure 18 - Historical view on media types

Figure 19 - Communication model for online media

Figure 20 - Selected Online-Marketing methods in context to the marketing
mix

Figure 21 - Delimitation of Online- and Internet-Marketing

Figure 22 - Development of Internet Providers 2001 - 2004

Figure 23 - Growth of the internet community in Germany (1997 - 2006)

Figure 24 - Rising share of high speed connections in Germany (2003 - 2006)

Figure 25 - Convergence of enabling technologies and supplemental services

Figure 26 - Advantages of Online-Marketing for companies

Figure 27 - Advantages of Online-Marketing for customers

Figure 28 - Integrated communication model

Figure 29 - Porter's Value Chain

Figure 30 - Partial models of an integrated business model

Figure 31 - Systematic for proceeds models in e-business context

Figure 32 - 4C concept and classification of electronic business models

Figure 33 - Matrix for business model analysis

Figure 34 - Price transparency on the example of heise online

Figure 35 - Four forces of electronic business

Figure 36 - Ageing structure of population, PC- and Internet users
(Germany, 2002)

Figure 37 - Sociodemographic structure, population vs. community
(Germany, 2006)

Figure 38 - Duration and location of internet access (Germany, 2006)

Figure 39 - Most relevant online applications (Germany, 2006)

Figure 40 - Most frequent requested contents (Germany, 2003 - 2006)

Figure 41 - Online time increase (Germany, 1997 - 2006)

Figure 42 - The development of the Web

Figure 43 - Web 3.0 and request content on the example of askerus.de

Figure 44 - IP-localization on the example of utrace.de

Figure 45 - Localization by GPS-Satellite multilateration

Figure 46 - Use Geo-Marketing within the social network XING

Figure 47 - Interrelations of the communication and business model

Figure 48 - Regional advertising on example of Google AdWords

Figure 49 - The business model of Google AdWords on example of
SmartWayRepair

Figure 50 - Integrated communication model on example of Google AdWords

Figure 51 - Mobile advertising on example of Oe-Navi

Figure 52 - The business model of Oe-Navi on example of FAZ.net mobil

Figure 53 - Integrated communication model on example of Oe-Navi

Figure 54 - ConnectedDrive emergency handling

Figure 55 - ConnectedDrive on example of HRS

Figure 56 - The business model of ConnectedDrive on example of HRS

Figure 57 - Integrated communication model on example of Oe-Navi

Figure 58 - Three stages of value creation

Figure 59 - Potential for opening up new business models

Figure 60 - Characteristics of advanced Online-Marketing business models

Figure 61 - Process model of online banner advertisement

Figure 62 - Process model of advanced online banner advertisement

Figure 63 - The business model of advanced online banner advertisement

Figure 64 - Integrated communication model of advanced online banner
advertisement

Figure 65 - Localization accuracy in view of standard analyses raster-maps

List of abbreviations

illustration not visible in this excerpt

Executive Summary

“About 80% of all business-relevant information within a company has a relation to spatial data” (Wagner, 2006 p. 8)

Facing a rapid technological change and embedded in a highly competitive environment, companies are pressured to react quickly and to adopt fast to changing market conditions. Thereby, the capability of the recruitment, retention and recovery of customers more and more plays an important role. Furthermore, knowledge regarding promising customers becomes a factor of success.

Hence, methods of data-based customer management are used to handle these challenges. Furthermore, those methods were used accretive in view of online marketing activities. Thus, Online-Marketing increases sustainable its importance for a company as well.

But, with regard to the introducing quote, it could be ascertained that today’s Online-Marketing has no spatial justification, although about 80% of all business-relevant information is suggested to have a relation to spatial data.

Hence, the assignment at hand will explain the reader aspects of customer value in view of the principles of Customer Relationship Management as well as of Online- and Geomarketing. Furthermore, it will merge these ideas for the development of a structured communication and business model at the intersection of Geo- and Online-Marketing. Based on this, an analysis of recent applications will be done as well recent gaps shall be examined.

Finally, a recommendation regarding advanced Online-Marketing business models will be done by the development of an exemplary business model. Thus, the reader shall get to know the interrelations as well as some hints for further considerations will be given.

1 Introduction

To remain in a highly competitive environment companies need a clear picture of the current market situation and their customers (infas GEOdaten GmbH, 2006 p. 11). This is especially of importance concerning the adjustment of marketing activities. Embedded in a surrounding of shortened product life cycles and saturated markets, companies are more and more forced to acquire new customers and to improve the loyalty of recent customers. Thereby, the activities of recruitment and retention regarding the recent or potential customers have a task to geographical aspects. For naming those problems, the decisions about the advertising planning (Tappert, 2007 p. 9), the management of field service and sales representatives (infas GEOdaten GmbH, 2006 pp. 21, 37) as well as the customer segmentation (Holland, 2004 p. 81) shall be emphasized as examples. Thereby, especially new forms of communication concerning modern online technologies have to be taken into consideration, triggered by an ongoing trend of technological improvement.

1.1 Background

As a consequence of this ongoing technological improvement, marketing gets more and more data-based and technology-oriented. One result of this development is the aggravating change in the field of spatial marketing. Based on customer-related data and enabled by modern hard- and software technology, the role of Geo-Marketing increases rapidly. So, nowadays Geo-Marketing is no more related to pins on a map, but to a highly efficient type of data-based marketing.

Beside this, but based on the same technological development also, the importance of Online-Marketing increases as well. In that context, two essential factors of success have to be named: First, the unbroken swelling spread of the internet and second, the strong cross-linkage and convergence of different technologies. Whereas, based on the second aspect the ability arises to use online-services everywhere and at any time.

So, keeping these recent developments in mind, it might be unavoidable for companies to extend their Geo-Marketing activities in view of Online-Marketing as well as vice versa to optimize the Online-Marketing by cognitions of Geo-Marketing.

1.2 Problem description

With regard to the given statements the necessity of a merged view on Geo- and Online-Marketing arises. Thus, a sound analysis of these marketing segments is necessary to develop perceptions about gainful business applications. But as already mentioned, beside these business-related marketing aspects, the technological feasibility has to be examined as well. For that reason, marketing and technological aspects have to be scraped together to derive benefit and to detect new business models.

1.3 Objectives

With regard to the pictured endeavor of deriving benefit for companies by detecting new business models, this assignment shall examine, whether and how principles and methods of Geo-Marketing could be used in the field of Online-Marketing and as well, what the recent limitations are. Furthermore, a framework for the development of advanced Online-Marketing business models shall be provided.

1.4 Methodology

To achieve the stated aim of the Master Thesis, a thorough literature review will build the sound basis for this assignment. Thereby, the explanation of different marketing aspects, the development of a business model structure and the analysis of environmental limitations will be done by a literature based research. This should provide the reader both a broad understanding and an actual overview regarding the recent literature. In a further step, recent applications will be analyzed as well as possible new business applications shall be developed by a deductive argumentation. For that reason, the pictured all relevant aspects shall be put together. Based on this cross-sectional view, the aim of the Master Thesis, to derive benefit for companies by detecting recent gaps in the creation of value and by the development of new business models, should be reached. Finally, a brief subsumption, a critical appreciation and an outlook from the author’s point of view will be provided.

2 Marketing framework

With the aim to evaluate the potential of Geo-Marketing tools for the development of advanced Online-Marketing business models a sound analysis of relevant problem fields is needed for providing a broad theoretical background about all related aspects. Before starting the development of advanced business models the framework of marketing in general and of Geo- and Online-Marketing in special should be analyzed. Furthermore, interdependencies shall be outlined and the relevance for the development of advanced business models should be pointed out. In view of further explanations a detailed background of the understanding of business models will be provided also. So, a sound bases for remaining considerations shall be given.

2.1 Relationship Marketing and Customer Value

As a starting point for further considerations the marketing framework of this assignment shall be put into focus. Giving a first definition of what marketing means, marketing can be understood as a process within the economic- and social-structure which enables single persons and groups to satisfy their needs and wishes by creation, offering and exchange of products and other exchangeable objects of value (Kotler, et al., 2007 p. 11).

2.1.1 Transactional vs. relationship oriented marketing

Although the definition shows the interrelation of supply and demand quite well, it might be too unspecific to derive benefit for the further explanations. With regard to economical aspects and to confine the focus of this assignment, the following definition might be more useful: Marketing contains the conscious influence on commercial exploitation via the instrumental mix with the intention, to reach quantitative and qualitative objectives by generating customer benefits through a purposeful arrangement of sales-relevant business relations (Pepels, 2004 p. 25).

As this definition seems to be more applicable, it underlines the importance of business relations as well. Furthermore, it reflects the evolution of the comprehension of marketing over the years. Whilst the classical marketing concept has a transaction-oriented and new-customer-focused point of view, the modern understanding of marketing more and more puts the customer-relationship into the focus (Kuß, 2006 pp. 21-23).

illustration not visible in this excerpt

[Source: Graphic by author’s own, based on (Zollondz, 2006 p. 83) ]

A reason for that are the findings of several market- and customer researches: First, the realization of the correlation between the duration of the business relation and the increasing return per customer. Second, the insight that caused by high communication costs and decreasing advertisement-power the winning of new customers becomes more and more unprofitable. (Zollondz, 2006 p. 82).

In that context, customer relationship management could be defined as a management approach aligned to a systematic creation and care of customer-focused relations with the ideal-typical five process steps of accosting – winning over ­– informing – servicing – caring. (Zollondz, 2006 p. 85)

Beside this change from a transactional marketing approach to a relationship-oriented one, even the relationship-concept itself had changed the focal point over the years. Based on an increasing individualization, intensified efficiency-orientation and derivative IT-solutions the focus turned from customer satisfaction to customer value.

Figure 2 - Changing focuses of relationship marketing

illustration not visible in this excerpt

[Source: Graphic by author’s own, based on (Homburg, et al., 2004 p. 291)

and (Marketing.ch, 2003 p. 2) ]

Beside these aspects regarding relationships, the given definition of marketing also underlines the concept of the instrumental marketing mix. Thereby, companies try to optimize their allocation of resources with regard to the product, price, promotion and place for improving the commercial exploitation (Meffert, 2005 pp. 971-972). In respect to the initial letters this concept is called the 4P-concept (Zollondz, 2005 p. 8).

In an analogue style to this 4P-concept considering the instrumental marketing mix (Zollondz, 2005 pp. 11-12), a three-phases-model in view of relationships put across within the recent literature. This so called 3R-concept divides a relationship into the phases of recruitment, retention and recovery. Thereby, the recruitment shall intensify the customer dialog with the effort to improve the customer acquisition. Through the customer retention a consolidation and expansion of the relationship is aspirated. Finally, the recovery-phase contains activities to keep or win back customers. (Bruhn, 2002 pp. 32-33)

These two concepts can be conjoined to extend the ability of the company’s resource allocation. Furthermore, the correlation of marketing activities, their embedding in the relationship context as well as additional comparison to the customer attractiveness could be shown at a glance.

Furthermore, the previous comparison of the classical marketing approach versus the customer oriented concept yields the ability of a classification of relationships and emphasizes the figuration of customer value (Meffert, 2005 p. 26). In this respect, new business ratios like the customer contribution margin and the customer value complement the usual ones just as profit, revenue and expenses (Bruhn, 2002 p. 32).

Figure 3 - The 4 Ps and 3 Rs in context to the customer attractiveness

illustration not visible in this excerpt

[Source: Graphic by author’s own, based on (Bruhn, 2002 p. 33) ,

(Bruhn, et al., 2005 p. 100) and (Homburg, et al., 2006 p. 322) ]

2.1.2 Determinations of customer value

The elucidations above explained the concept of customer relationship management. By comparing the traditional, transaction-oriented versus the modern relationship-oriented approach, the link to customer attractiveness was pointed out. Now, a detailed look seems necessary concerning this kind of attractiveness. As a first examination a confrontation of the customer attractiveness and the marketing expenses might be helpful.

Figure 4 - Customer attractiveness vs. marketing expenses

illustration not visible in this excerpt

[Source: Graphic by author’s own, based on (Bruhn, et al., 2005 p. 100)

(Homburg, et al., 2006 p. 322) and (Puscher, 2003 p. 5) ]

The figure clarifies the already mentioned correlation between decreasing marketing expenses and an increasing return per customer in the time course of the business relation. But, with regard to the shown customer attractiveness a rating problem arises concerning the monetary evaluation of a customer. So, on the one hand evaluation tools are needed for a customer measurement. On the other hand, the framework of this valuation tools has to be defined first. Whilst a detailed view on these evaluation tools goes too far for this assignment, the following subchapters just will explain the mentioned framework.

By creating and structuring this framework regarding the determinations of customer value a look on the company’s marketing goals provides two major aspects: Economical- and psychographic-marketing-goals. Thereby, economical goals are closely connected to other financial goals of the company like the profit and the contribution margin. Furthermore, the market share is a relevant economical marketing goal in that context. Beside this, phsycographic goals are aimed at factors like image and the level of awareness. (Meffert, 2005 pp. 76-78)

This respects the idea that companies not only profit by direct business activities with the customers, but also through the customers behaviour within its social environment. As a consequence, even the so called ‘neighbourhood effects’ (Bruns, 2007 pp. 132-133) were taken into consideration.

In respect of this idea, the framework can be contemplated in the two categories of market potentials and resource potentials. Thereby, the market potential subsumes all determinations regarding actual or future sales. Beside this, the resource potential conflates all customer-related indirect aspects which facilitate the company’s success.

Figure 5 - Determinations of customer value

illustration not visible in this excerpt

[Source: Graphic by author’s own, based on (Tomczak, et al., 2003 p. 138) ]

To give the reader an idea of how comprehensive this view on the customer value is, the named market and resource potentials shall be explained in the following.

2.1.2.1 Yield potential

As a first aspect determining the customer value, the yield potential can be taken into consideration. Beneath this, all customer-related recent monetary returns were subsumed. Based on this sales-oriented, direct and monetary return companies often implement a customer profitability analysis. (Tomczak, et al., 2003 p. 139)

Hereby, the problem of a causal cost accounting could be a big problem. And understanding customer profitability as a cost-benefit-ratio of the perceived benefits and sacrifices this involves the danger of accounting mistakes.

Figure 6 - Cost-benefit-ratio of perceived value

[Source: Graphic by author’s own, based on (Saliba, et al., 2000 p. 65) ]

Hence, Kotler, Keller and Bliemel propose in that context the implementation of the activity-based-costing approach. Via this approach, the accounting gathers all information regarding the customer-related profits and costs. So, a casual cost accounting in view of the customer profitability could be realized. Furthermore, a comparison with the profitability of the company’s products is possible. (Kotler, et al., 2007 pp. 54-55)

2.1.2.2 Development potential

Concerning the evaluation of a customer and its value for the company, the shown yield potential is not as important as the further value development. So, with regard to the above mentioned phases of a relationship, the development potential is a long term contemplation of customer-related growth-rates. (Tomczak, et al., 2003 p. 139)

As already shown, this development potential could be forced and skimmed within the relationship-phase of retention by several activities via the instrumental marketing mix (Bruhn, 2002 p. 33).

Thereby, Bruhn and Michalski divide these activities of customer retention into four main categories. First, economical measures like bonus programs or club cards. Second, contractual ones, whose are regularizing the relationships’ duration. Third, activities regarding the technical/functional retention in respect of the product design and its interoperability as well as those, forced by the supply of replacement parts and cross-selling products. Finally, the emotional customer retention based on an intense customer satisfaction and loyalty. Hereby, satisfaction guarantees and a qualified management of customer complaints could be named as examples. (Bruhn, et al., 2005 pp. 101-102)

2.1.2.3 Cross-buying potential

The cross-buying potential of a customer is closely affiliated to the above explained development potential. Hereby, the potential depicts possible, additional future buys of a recent customer or at least, whether a further demand could be assumed (Tomczak, et al., 2003 p. 140).

From the company’s perspective is the major aim of activities regarding the cross-buying potential the enlargement of the share of wallet from existing customers (Newell, 2000 p. 57). In this respect, companies have to widen their view and have to take the up-sell of high-order products beside the aspect of cross-selling additional products into consideration (Hippner, et al., 2004 p. 260). This gives the customer the choice of additional or substitutive buys and intensifies the relationship as well as facilitating the increase of the share of wallet.

For skimming the cross-buying potential of promising customers Homburg, Schäfer and Schneider recommend a preferred customer treatment, exemplarily via a key account management (Homburg, et al., 2006 p. 312).

2.1.2.4 Loyalty potential

Beside the prospective buying potential, a main determination of the customers’ value is the loyalty. In view of the relationship this measured value represents the willingness of a customer to buy once again. So, the loyalty potential puts the focus on the buying behaviour in the course of time. (Tomczak, et al., 2003 pp. 140-141)

Compared to the cross-buying potential not only an enlargement of the share of wallet is aspirated. Furthermore, all activities regarding the customer’s loyalty tend to the creation of a share of life. So, the customer valuation is mainly determined by the lifetime of the relationship to the customer. (Brown, 2000 pp. 59-61)

Figure 7 - Correlation of customer loyalty and lifetime value

illustration not visible in this excerpt

[Source: (Brown, 2000 p. 60) , graphic by authors’ own]

As the graphic shows, loyalty can be put into consideration with the customer satisfaction as a determination of the customer value. But this point of view omits a detailed view on loyalty just understanding it in a positive way. Elaborating on loyalty spawns further aspects. So, Stanley and Markmann mention a constraint-based kind of loyalty beside the pictured dedication-based relationship maintenance (Tomczak, et al., 2003 p. 140).

Hinterhuber and Matzler segment loyalty even into three layers. First a so called delusive layer, whereby loyalty is understood just as the perception of repetitive buys. Hereby, the delusive aspect is caused by waiving the reasons regarding the additional buys of a customer. Second the layer of conditioned loyalty, which is based on a certain purpose of the customer to buy once again. A reason for this purpose of a customer is a profound knowledge of the company’s merits and capabilities. Finally the third layer of commitment as the strongest kind of loyalty. This takes place, if a customer prefers the advantage of a strong relationship more than short-term benefit. (Hinterhuber, et al., 2002 pp. 100-113)

Figure 8 - Layers of customer loyalty

illustration not visible in this excerpt

[Source: (Hinterhuber, et al., 2002 p. 101) , graphic by authors’ own]

2.1.2.5 Reference potential

Beside the above mentioned market potentials the resource potential conflates further indirect aspects by which a customer facilitates the company’s success. With regard to the social environment of a customer the reference potential shall be pictured first.

Hereby, the reference potential depicts a customer-related scale of reachable prospective customers by recommendation. In that context, the extent of the potential of a customer is mainly determined by the recommendation behaviour, the capability of impact, the contact-frequency, -intensity and -range within its social network. (Tomczak, et al., 2003 pp. 141-142)

In view of the recommendation behaviour, first a formation into direct word-of-mouth and indirect recommendations regarding the customers buying behaviour could be done (Tomczak, et al., 2003 p. 142). Furthermore, it has to be ascertained that the recommendation behaviour is mainly determined by the customers’ satisfaction (Cornelsen, 2001 p. 6). This is especially of importance concerning the swelling tertiary industry, because the demand of services mostly is characterized by the factor of reliance (Kotler, et al., 2007 p. 551). So, the customer satisfaction has a direct correlation to the acquisition of new customers (Meffert, 2005 p. 1165). In respect to this, the word-of-mouth communication is more of importance than the classical mass-communication (Hinterhuber, et al., 2002 pp. 12-13). But, in respect to the other industrial sectors an accretive customer-sided interconnection and an associated increase of the weight of the reference potential can be recognized also. This is mainly caused by the growing spread of the internet (Tomczak, et al., 2003 p. 142). As an early example of negative word-of-mouth propaganda with big consequences, the online-communication in 1999 regarding the Audi TT safety risks could be referenced (Menne, 2004 p. 37).

2.1.2.6 Information potential

Whilst the above pictured reference potential focuses on the communication within the customer’s social network, the information potential depicts the informational stream amongst the customer and the company. Hereby, strategic as well as operative administrable information could be gathered by the company. (Tomczak, et al., 2003 p. 142)

Regarding the above mentioned step from a transactional view to a relationship-oriented marketing, it underlines the aspect of a bilateral communication between customer and company. Within the stages of a relationship, especially the after-sales-phase is of importance. On the one hand, customers have the biggest information needs at this time, on the other hand, the customer steps out of the anonymous clientele. (Wicher, 2003 pp. 105-106)

Beyond this customer-initiated information, which is mostly managed via a customer database or a Marketing Information System, the company can initiate the data generation as well. Established methods in that context are surveys on customer satisfaction and related issues. (Tomczak, et al., 2003 pp. 142-143)

These information streams can be used to optimize the company’s products and activities. This rather can end by an involvement of the customer at the product development or the service providing like a cooperative producer. Thus, the customer influences the style of the requested products or services essentially. As a consequence, the customer shifts to a so called prosumer; a conjoined term based on the terms producer and consumer. (Grün, et al., 2002 pp. 38-39)

2.1.2.7 Cooperation potential

With regard to the mentioned status of a prosumer, the cooperation potential depicts a further willingness and ability of a customer to support the seller for a certain time. So, the customer gets involved into the providers value chain. Hence, the cooperation potential is called integration potential as well. Thereby, mainly the integration potential accrues in aspects of quality, time and costs. (Tomczak, et al., 2003 pp. 143-144)

In view of the value chain, this cooperation often takes place by a division of the total output into several subservices, whereof some have to be finished by the customers themselves (Kotler, et al., 2007 p. 617).

Moreover, this even could be advanced by a parallel integration of the customer into the process of service rendering or product development (Meffert, 2005 pp. 1221-1222).

2.1.2.8 Synergy potential

Whilst the cooperation potential tends to an external potential of synergies, the synergy potential puts the focus on internal aspects. Referring to this, the synergy potential contains all aspects of compound effects within the company. As an indicator for a high synergy potential, the done business of a customer could be named. Thus, changes of the buying behavior of a customer with a high synergy potential have a big impact on the company. For example, through a reduced consumption, effects of scale disappear and upset the cost structure of the company. Beside these direct impacts also effects on affiliated companies are conceivable as well. (Tomczak, et al., 2003 pp. 144-145)

2.1.3 Interim results

The elucidations above have pictured the marketing framework of this assignment by providing a customer- and relationship-oriented understanding of marketing. Furthermore, it gave some hints in view of the determinations of an advantageously customer.

With regard to the given statements two major results arise. On the one hand, the insight that a transactional marketing approach might be insufficient in a surrounding of a more and more unprofitable acquisition of new customers. On the other hand, the realization that especially in the phase of recruitment customers with an expected high value in view of their market and resource potential should be addressed by marketing activities.

2.2 Geo-Marketing

Geo-Marketing as a data based kind of marketing ties up to these two aspects. Thereby, data of recent and aspirated customers is used for the optimization of all marketing activities through all 3R-Phases, especially within the phase of recruitment. So, marketing activities could be aimed at valuable customers and even a reduction in costs could be reached by a more focussed marketing. The following subchapters will explain this concept in detail.

2.2.1 Terminological derivation

For a common understanding of the term Geo-Marketing along the further text a definition is necessary. And as the first impression may imply, Geo-Marketing has something to do with Marketing focused on geographical aspects. Split in these two parts the conceptual approach should be started from the marketing perspective.

2.2.1.1 The marketing context

Whilst the elucidations above gave some hints about the marketing framework of this assignment, it has to be noticed that Geo-Marketing could be seen as a set of methods for arranging marketing activities within this framework.

Hence, a more activity-oriented view on marketing arises whereat marketing could be seen as a company’s process for reaching an aspirated trading position. The figure above shall picture these interdependencies along a standard PDCA-process^[1]. Furthermore it shows the concept behind the already mentioned 4P-Concept by putting the marketing strategy, the marketing tasks and the marketing instruments into context. Thus, from an economic point of view, it could be ascertained that marketing formulates a set of several requirements via the marketing mix for reaching defined objectives. Moreover, with regard to the above pictured marketing framework it could be remarked that the orientation towards the market and customers on the one hand and the focussing of marketing activities to promising customers on the other hand is a subserve way for reaching these objectives.

Figure 9 ­­­- Marketing in context to the PDCA-cycle

illustration not visible in this excerpt

[Source: Graphic by author’s own, based on (Zollondz, 2005 pp. 10-11) ]

2.2.1.2 The interdisciplinary framework

In addition to the shown perspective of marketing now the other part of the compound term Geo-Marketing should be on focus. Having on the one hand a set of (marketing) requirements, on the other hand a set of auxiliaries might be useful. So, a look behind the scenes of the ‘Geo’-term is necessary.

Figure 10 - Scientific interdisciplinary of Geo-Marketing

illustration not visible in this excerpt

[Source: Graphic by author’s own, based on (Tappert, 2007 p. 9) ]

Within the Geo-Marketing the ‘Geo’-part subsumes several scientific disciplines beside the above mentioned economically aspect regarding the ‘Marketing’-part. Hereby, aspects of geography, geodesy, informatics and statistics were conjoined (Tappert, 2007 p. 9).

With regard to the above mentioned requirements, this interdisciplinary other part of Geo-Marketing deals with supporting auxiliaries. Those could be characterized by two main categories: data and methods (Schüssler, 2006 pp. 4-5). Combined with modern technology an application-oriented point of view arises and substantiates these auxiliaries to so called Geo-Information-Systems (GIS), which a suitable definition of Christiansen defines as “a system, consisting of hardware, software, data, procedures and a proper organisational context which compiles, stores, manipulates, analyses, models and visualises spatial data, to solve planning and management problems” (Christiansen, 1998 p. 1).

2.2.2 Terminological definition

After the terminological derivation of the two parts ‘Geo’ and ‘Marketing’ and the concepts behind, a definition of the term Geo-Marketing in total is required.

Therefore, a first approximation could be started with regard to aspects of segmentation. With the aim to find the best fit between customers’ needs and companies’ service offers, segmentation helps to parse a heterogenic total market into homogeny market segments (Homburg, et al., 2006 p. 35). As figure 9 illustrates, segmentation is an instrument to reach an aspirated trading position and to head marketing activities to the right direction. In context to geographical aspects, this process of segmentation can be conjoined with integrated geographical information (Holland, 2004 p. 81). So, beside a homogeny market segment even a location of the aspirated target group becomes possible.

With the above mentioned hypothesis of ‘neighbourhood effects’ this interrelation of customer-oriented and location-based data could be enhanced from segmentation aspects to marketing in total. Hereby, the hypothesis suggests a correlation between people and their environment like proverbial ‘birds of a feather flock together’ (Bruns, 2007 pp. 132-133).

Summing up the above given statements there might be a problem for companies having a lack of relevant information regarding the process of decision making in context to marketing activities. For closing this lack, customer relevant information gets enriched by geographical data in particular with regard to the process of segmentation. This process is called micro geographic segmentation (Szabo, 2006 pp. 59-62). Keeping the mentioned ‘neighbourhood effect’ in mind, this concept could be generalized to the instrumental marketing mix. So, the field of application of Geo-Marketing takes place in the area of tension in-between marketing’s requirements and the limitations of data and methods.

In that context, Schüssler gives a useful definition of Geo-Marketing characterizing it as the planning, coordination and control of companies’ customer-oriented market activities by means of geographic information systems using methods of spatial analysis, visualization and decision-relevant preparation of internal and external data (Schüssler, 2006 p. 9).

Figure 11 - Geo-Marketing’s field of application

illustration not visible in this excerpt

[Source: Graphic by author’s own, based on (Schüssler, 2006 p. 5) and (Tappert, 2007 p. 19) ]

For further explanations this definition shall be the common understanding of Geo-Marketing. Moreover, case-related specific applications of Geo-Marketing shall be named Geo-Marketing-Tools.

2.2.3 The database

The introducing chapters gave a sound background regarding the concept of relationship-oriented marketing, the value of customers and at least about Geo-Marketing. Thereby, relationship-oriented marketing was explained as a process of managing relationships over time. Implicitly, it has to be supposed that this concept requires a broad customer-focused knowledge especially in view of its value for the company. On the other hand, Geo-Marketing was introduced as the support of customer-oriented market activities by means of spatial information. So, as a common basis of interrelation both databases, first the one regarding the customers, second the spatial one could be ascertained. Thus, for the further text an examination of the creation and management of a conjoined database seems necessary now.

2.2.3.1 Data sources

The provided background along the framework of customer-oriented marketing and Geo-Marketing had given the reader a first impression of the relevance regarding the databases. Hence, the current subchapter shall exemplify the structure and sources of those information databases.

A first disposition of data can be done by the categories of internal and external information sources (Douard, 2006 p. 100). As internal data requires the existence of a merchandise planning and control system within the company, external data could be ascertained or procured (Schüssler, 2006 p. 24). As pictured above, mostly the measurable customer-related data has a company-internal source, whereas the derived data is often provided by a market researcher (Linder, 1999 p. 14).

Figure 12 - Criteria’s for segmentation

illustration not visible in this excerpt

[Source: Graphic by author’s own, based on (Zollondz, 2005 p. 15) ]

Both, internal and external data were often conflated in so called Customer Relationship Management Systems (CRM-Systems). Those systems conflate all customer-related data of the company in one database. Considering the use of this data-pool those systems could be divided into communicative, operative and analytic CRM-Systems (Homburg, et al., 2006 pp. 233-235). Beside these customer-related data likewise spatial data is procured mostly external as well (Bernhardt, 2002 pp. 129-149).

Qualifying the data in a second step by its information content, a further division into spatial and attribute data can be done (Szabo, 2006 pp. 33-35). Hereby, spatial data subsumes all data with specific characteristics of geographic attributes whilst attribute data all elements with non-geographic nature conflates. Focusing on the spatial data a further classification into points, lines and areas is common (Schüssler, 2006 p. 19).

The database in total is mainly characterized by the source of the data, the spatial or non-spatial (attribute) information content and the geographic dimension of the spatial data.

2.2.3.2 Data preparation

For the appreciation of information regarding aspects of Geo-Marketing, databases require all data to be associated with spatial information. To ensure this, a unique geo-key has to be assigned to every record. As the external data mostly has such a geo-key, a preparation of the internal data in that context is necessary. Groundwork for the use of the data in that context is the so called process of geo-encoding.

Hereby, the data gets enhanced by a geo-key within three steps (infas GEOdaten GmbH, 2006 p. 35):

1. A quality assurance of the present data to avoid failures regarding the further data manipulation.
2. The attachment of the site-coordinate to facilitate digital mapping and the analysis of spatial interrelation.
3. The assignment of an individual geo-key to allow the enrichment by external (prepared) data.

Figure 13 - Geo-encoding and data collection

illustration not visible in this excerpt

[Source: Graphic by author’s own, based on (infas GEOdaten GmbH, 2006 p. 35) ]

Complying with these prerequisites, all data of the database could be connected to establish a basis for an increase in value and use (infas GEOdaten GmbH, 2006 p. 9).

2.2.3.3 Utilizing the database

As the previous subchapter has shown, the database can be understood as a pool of several - indeed associated - data. So, the main appreciation carries out by the sensible use of these data. Like the definition of Geo-Marketing already emphasized, thereby methods of spatial analysis, visualization and decision-relevant preparation play an important role.

Keeping the aspect of a decision-relevant data preparation in mind, as a starting point for further considerations a need for customer-related decisions shall be assumed. Moreover, these decision-problems have to be in spatial context. However, to support the process of decision making a set of methods depending on the economical interrogation could be used (Schüssler, 2006 pp. 48-81):

- Generalization
- Queries
- Analyses
- Visualization

Via a generalization of the data a preparation in context to the economic decision-problem takes place. With the aim to allow a greatest possible impression of the information the data gets simplified, aggregated, selected or accentuated (Schüssler, 2006 pp. 49-52).

To answer well defined questions, queries are a useful method of direct information support. These queries are categorized by the spatial relation into spatial- and attribute-queries (Schüssler, 2006 pp. 52-55).

In a further step analyses enhance the query-concept by creating new information. Whilst the query just evaluates the existing data, new useful content could be generated by an analysis. Examples for analyses in spatial context are the spatial calculations for creating distances or areas based on raw coordinates (Schüssler, 2006 pp. 56-70).

The most important method of Geo-Marketing is the visualization of the generalized, queried or analysed data. Hereby, the set of problem-relevant data is pictured in a map based on and with regard to the associated spatial information. Hence, a map could be configured for a plain, well arranged and manageable rehash of information concerning the needed decision (Schüssler, 2006 pp. 70-73). With regard to the master data and in view of the problem-relevant questions the following figure shows various styles of thematic maps as well as a procedure model for the preparation of drawing.

Figure 14 - Procedure model for the preparation of thematic maps

illustration not visible in this excerpt

[Source: Graphic by author’s own, based on (Freckmann, 2007 pp. 5-6) ]

So, through a generalization, queries, analyses and visualizations raw data could be prepared decision-relevant. Supporting this, mainly the above mentioned CRM-Systems in combination with Geo-Information-Systems were used to provide companies manageable information within the decision making process.

To substantiate this, a small case study shall conclude the statements by providing the reader an example of use. For the further explanations the Sparkasse Bochum shall be taken into consideration. The Sparkasse Bochum is a credit institute embedded in the Sparkassen Finanzverbund. With about 1350 employees the Sparkasse Bochum realized a balance sheet total of 5.4 bn. EUR in 2006. (Sparkasse Bochum, 2008)

[...]

---

^[1] Author’s note: PDCA is an acronym for the so called Deming-cycle with the process-steps Plan – Do – Check – Act (Zollondz, 2006 p. 91).