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Case Study 2 ( We are teamed up with Team 11)

 
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Miguel Francisco



Joined: 30 Aug 2012
Posts: 48
Location: Odessa, Texas

PostPosted: Mon Oct 08, 2012 6:17 pm    Post subject: Case Study 2 ( We are teamed up with Team 11) Reply with quote

Team 11 and Team 14

Your selection is as follows:
Case Study Title: Data Warehousing at REI: Understanding the Customer
Review Video: CSV-4
Review Case: CS-4

Your Question is:
Describe some of the marketing strategies that REI’s data warehouse will allow them to use. Would these have been possible before the data warehouse was built?
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Miguel Chavez
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Debra Belt



Joined: 29 Aug 2012
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Location: Odessa, TX

PostPosted: Tue Oct 09, 2012 9:16 pm    Post subject: From Team 11 Reply with quote

We previously agreed to the following:
Question 1: Team 14
Question 2: Team 11

If possible would we would like to answer Question 1 as we have a marketing major on our team. Would your team be willing to change to the following?
Question 1: Team 11
Question 2: Team 14

Please let us know as soon as possible.
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Miguel Francisco



Joined: 30 Aug 2012
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Location: Odessa, Texas

PostPosted: Wed Oct 10, 2012 2:30 am    Post subject: Yes Reply with quote

Yeah sure we'll take the second question...
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Miguel Chavez
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Mauro Montoya



Joined: 28 Aug 2012
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Location: Midland TX

PostPosted: Wed Oct 10, 2012 1:04 pm    Post subject: Reply with quote

Marketing strategies would have been possible through some sort of feedback like surveys or taking note of what is selling in a certain area/season compared to others. The data warehouse makes feedback automatic, specific to the customer and has a higher number of participants not just the ones who take the time to respond.

They could offer a ski training course to new customers or promote new equipment to those who may have worn their old ones out.
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michael.utpb@gmail.com



Joined: 28 Aug 2012
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Location: Midland, TX

PostPosted: Wed Oct 10, 2012 2:41 pm    Post subject: Question 2-suggestion Reply with quote

Before the data warehouse was built REI was not able to collect and track much information on their customers. The reason behind the IBM’s DB2 was to help REI figure out how they could better serve their customers. With over 30 million customers it would take them a long time to track each individual customer’s favorite outdoor activities. As Julie Derry stated data warehouse allowed them “to reach further, look deeper, and act faster.” Although they were able to track exactly what each customer ordered they did not have a system set up to configure how they could exactly track each individual order and memorize what outdoor events they liked. It is possible to have done it before data warehouse was built; but it would take many years to be able to consistently send out location information, gear information, etc. to each individual person each time they would order something. They would have had to eventually set up a system like data warehouse to allow them to plan these marketing strategies.
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Vanessa Arguello
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Miguel Francisco



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Location: Odessa, Texas

PostPosted: Wed Oct 10, 2012 3:43 pm    Post subject: Not really Reply with quote

I believe that they still could’ve done all of their marketing strategies without IBM, it just wouldn’t have been as fast or as effective. They could’ve asked all their customers to fill out paper surveys but by the time they had gathered all the data and try to implement it the results might be out of date. They also could’ve grouped store products by what activities are available in the geographic area but this would take a long time and possibly lose money because even if the activities are available, majority if the people in the area might not partake in the activities. The benefits that IBM gave REI was speed and accuracy along with many more, the style of marketing could still be done but it wouldn’t have been as reliable.
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Miguel Chavez
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Nick Knorr



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PostPosted: Wed Oct 10, 2012 4:38 pm    Post subject: Without IBM Reply with quote

REI was able to market well as they specialize in a more niche market, outdoor sports. REI is a CO-OP meaning they are owned by their customers so it is safe to assume that the customers are pretty focused on being out in nature and have views pretty inline with the company. Why this is a benefit for marketing prior to IBM is that even though the specialization of database will certainly improve the targeting of the marketing, REI never really had a scatter gun approach because they are niche so in most cases there was at least a little interest across the small spectrum of outdoor sports. As for suggestions of trails and activities those are regional so the suggestions were likely to be helpful prior to the IBM venture. Most certainly though the data base tech will fine tune the marketing to such a point that an REI email would almost feel like it was coming from a friend. This can only serve to further solidify the relationship between company and owners/customers.
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NicK Knorr
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April Williams



Joined: 28 Aug 2012
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PostPosted: Wed Oct 10, 2012 5:14 pm    Post subject: Question #2 Reply with quote

Marketing strategies that REI's data warehouse allows them to use are features such as online ordering and customer recognition. Without IBM their ability to track orders and customer's preferences would not be as efficient as it is now. IBM provides REI with an outlet to access several things at once. You can recognize customer needs much easier and provide them with information for their future orders and even events happening within their area. Without the data warehouse it would have been harder to track information based on an individual customer level.
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April Williams
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Debra Belt



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PostPosted: Thu Oct 11, 2012 11:11 pm    Post subject: Question 1 Reply with quote

Team 11 has answered Question 1. It is posted in our Forum. We have not had a chance to proof it, but you should be able use the information to answer Question 2. We should have a final draft ready to submit tomorrow. I will keep you posted.
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michael.utpb@gmail.com



Joined: 28 Aug 2012
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Location: Midland, TX

PostPosted: Fri Oct 12, 2012 2:16 pm    Post subject: Reply with quote

Sounds good thanks Debra. Also let us know when you are done with your draft and Kayla is going to combine both answers together and let everyone proof before she submits it on sunday.
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Vanessa Arguello
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Mauro Montoya



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PostPosted: Fri Oct 12, 2012 4:43 pm    Post subject: Reply with quote

Well from what I understood, it only enhances the marketing strategies already in place. Providing customized catalogs is a great idea but I think print is on its way out. I see more of an Amazon approach where you are given recommendations from what you have purchased or looked at. Or say the data base knows you are shopping with a mobile device and could recommend a solar powered charger for your camping trip. I do think they did well without the data warehouse, but will now have more information to work from and improve customer satisfaction. Not sure about the place example, I'd figure placing a store in cities closer to outdoor type locations is ideal. I could be wrong though, they do sell boats in Midland.
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Debra Belt



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PostPosted: Fri Oct 12, 2012 5:47 pm    Post subject: Case 2 Question 1 - Final Draft (From Team 11) Reply with quote

Please let us know when Question 2 has been completed. We would like to review the final draft of both questions before it is submitted.

-Team 11

Recreational Equipment, Inc. or REI, is a consumer co-op that aims to sell high quality outdoor recreational equipment at competitive prices. REI’s co-operative business structure allows the company to maintain a high level of product quality while offering those products at the most competitive price possible. REI operates close to 90 stores nationwide and is expanding its storefront operations at a rate of six to eight new stores each year. Along with their brick and mortar operations, REI also uses direct marketing tools, i.e. catalogs, mailers, and e-commerce platforms, i.e. their company website www.REI.com.

In order to better reach and understand its customer’s wants and needs, REI has partnered with IBM to create a specialized data warehouse program. According to the text, a Warehouse Management System (WMS) tracks and controls the flow of goods from distribution centers to customers. Using customers’ orders, the WMS can direct the movement of goods based on immediate conditions for space, equipment, inventory, and personnel. For REI it can improve operational performance and decision making (Laudon, 2011, page 280). The WMS is part of REI’s Supply Chain Execution System, which manages the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner (Laudon, 2011, page 280). By using this data warehouse system, REI can offer a tailored experience to each customer or member that shop at any one of its retail outlets. Data warehousing technology is essential to REI’s success in today’s market climate.

REI’s success within the market is dependent upon its marketing strategy to obtain new and retain existing members. A firm’s marketing strategy, or marketing mix, is the unique combination of product, place, price, and promotion. Promotion is divided further into four categories, mainly advertising, direct selling, public relations, and sales promotion. Utilizing their extensive data warehouse, REI can efficiently allocate its resources in each area of it marketing mix.

PRODUCT: REI has a Demand Planning System in place. Demand Planning is part of a Supply Chain Management System, which enables REI to model its existing supply chain, generate demand forecasts for products, and develop optimal sourcing and manufacturing plans. This help REI make better decisions such as determining how much of a specific product to manufacture in a given time period; establishing inventory levels for raw materials, intermediate products, and finished goods; determining where to store finished goods; and identifying the transportation mode to use for product delivery (Laudon, 2011, page 279). The Demand Planning System helps REI determine the product capacity at each location that will satisfy all of its customers’ demands (Laudon, 2011, page 279). The Demand System that REI has in place is a web-based tool for collaborative planning, forecasting and replenishment (CPFR) for sharing and combining its sales forecasts with those of its major sales partners (Laudon, 2011, page 279-280). This assists REI in realizing and predicting which brands and types of products are selling or not selling. For REI this can increase the availability of products in stock when customers need them, while reducing the number of excess finished goods in inventory and forecasting errors (Laudon, 2011, page 279-280). Also because REI uses intranets and extranets, all members of the supply chain are instantly able to communicate with each other, using up-to-date information to adjust purchasing, logistics, manufacturing, packaging, and schedules. A manager can use a Web interface to tap into suppliers’ systems to determine whether inventory and production capabilities match demand for the firms’ products (Laudon, 2011, page 280). For these reasons, REI has the ability to offer a wide range of products to its members. REI is able to track a member’s purchases by type and brand. By storing members’ purchasing history, REI can remind members which products they have purchased in the past and suggest new products they may be interested in.

PLACE: Expanding into new markets is critical for REI’s continued success. Each time a member makes a purchase at REI, their member profile is accessed for a variety of information. Their address and location are noted and REI compiles this information into a database. Overtime, REI’s operational managers are able to notice trends in geographic regions. For example, a customer from Midland must travel five hours to Dallas in order to shop at the closest REI store. If REI notices that sales at a particular store are rising due to many members from the same geographic region, they might start looking into the logistics of expanding by placing a store closer to the Permian Basin. Many companies currently request zip code information at the time of sale to acquire this information. REI has automated this by requiring members to create profiles and online accounts.

PRICE: Pricing is very important and often the most difficult to manage. Many forces can affect the price of a product: regulation, competition, and supply chain to name just a few. REI is a member co-operative, meaning that REI is owned by its members. The primary goal of a co-op is to offer top quality merchandise at the lowest possible cost to its members. REI uses its data warehousing to ensure it keeps buying products that are selling and divesting product lines that are not selling. By focusing on buying product lines that the customer is interested in, REI can buy larger quantities and usually offer them at a lower cost. This also increases REI’s bottom line since REI is spending less on overhead prices and increasing its profit margin.

PROMOTION: Promotion is possibly the largest area that REI can utilize its data warehousing technology. In gathering member purchase history, REI is better able to allocate its resources into several different categories. REI’s advertising can be greatly impacted by having its member data available. It does so through a Customer Relationship Management system. With this system, REI can directly serve its customers, providing REI opportunities to increase customer retention by singling out profitable long-term customers for preferable treatment. Software such as this can assign each customer a score based on that person’s value and loyalty to REI and provide that information to employees who can best handle that customer’s needs (Laudon, 2011, page 289-290). Direct selling also would benefit from the ability to access member data. Store associates are able to better help a member in store when they know which brands they prefer or type of equipment they usually purchase. The associate can also offer like-products and new products with greater success by understanding their customers better.

In addition, REI uses its website to market to its customers. Using the internet to market allows for brand development, product promotion, and sales. This includes an understanding of design factors to ensure that REI is able to market their products, develop reports on product performance, retrieve feedback from customers, and manage product development. It also allows an understanding of how enterprise wide-systems for product management, sales force management, and customer relationship management are used to develop products that consumers want, to manage the customer relationship, and to manage an increasingly mobile sales force (Laudon, 2011, page 26).

Through these systems, REI should be able to expand its advertising, based upon member data, to target specific member niches. Much like other retailers do, REI could offer specialized catalogs sent to members with specialized interests, using behavioral targeting methods. One behavioral targeting method in which REI uses is tracking the history of its customers on its website; REI tracks the clicking behavior of individuals for the purpose of understanding their interests and intentions, and exposing them to advertisements which are uniquely suited to their behavior. Ultimately, this more precise understanding of the customer leads to more efficient marketing (the firm pays for ads only to those shoppers who are most interested in their products) and larger sales revenues (Laudon, 2011, page 322). This is not only used in REI’s website, but in the store and with printing promotions as well. For example, members with an affinity for hiking or camping would receive the REI Mountaineer catalog, while members usually purchasing water related products would receive the REI Just Add Water catalog. Both sets could still receive the main catalog, but REI could address each of their main member categories.

Using the warehousing technology, REI could develop a mobile app for its members and make it accessible to services such as Apple, Inc.’s Passbook. With Passbook, REI’s app would alert members of current store promotions once the member is within proximity to the store. These promotions would be based upon the members purchase history and profile. REI could use this to better target and suggest products to its members in a visual and tactile interface; much like it already does on its website.

In conclusion, REI wants their services/products to be relevant to their coop members. According to Julie Derry, Director of Online Programs, they attempt to “reach farther, look deeper, and act faster” through tracking their customers. REI tracks the way in which the customer interacts with the store, and then uses that information to better serve the customer: assists the customer with finding products, recommending clinics, providing product information such as product recalls, and tracking of dividends. Essentially, REI uses their Warehousing Management System to market to their customers through the internet, customer relationship management, behavioral targeting, and a supply chain planning and execution system using demand planning. This provides relevant content recommendations for each customer. As Ms. Derry stated, “[REI] is blending the best technology with the best outdoor stewardship.”


Laudon, K. C. (2011). Essentials of Management Information Systems. Upper Saddle River, New Jersey: Pearson Education, Inc. publishing as Prentice Hall.
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April Williams



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PostPosted: Sun Oct 14, 2012 7:36 pm    Post subject: Team 11's response Reply with quote

Thank you Team 11 for the great response to question one for the case study! I really like how you incorporated the four P's as the marketing strategy. I can tell a marketing major is in the group! Thanks again! Smile
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April Williams
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