Database marketing is a form of direct marketing in which use is made of database of either existing or potential customers to generate personalized communication with the ultimate objective of promoting a product or service for marketing purposes.  Database marketing lays stress on the use of statistical techniques to develop models of consumer behavior. These are then used to select customers for communications.  As database marketing makes use of data, the database marketers tend to use data warehouses quite frequently.  The reason behind this is that when you have a great amount of data available at your disposal, the chances of building a more accurate model also increase.

Many a times, the communication generated by database marketing is treated as junk mail or spam, especially if it is not wanted by the addressee, to whom it is targeted.

Database marketing is more suitable for those companies, who have a large base of customers.  The reason is that because a large population provides greater opportunity to find segments of customers or prospects that can be communicated with in a customized manner.

Database marketing has proved to be quite popular and effective is sectors, such as financial services, telecommunications, and retail, all of which have the ability to generate significant amounts transaction data for millions of customers. Database marketing can be used both for existing customers as well as prospective customers as well.

When focus is on existing customers, database marketing t marketers often build elaborate databases of customer information.  This includes a variety of data, such as Name, address, history of shopping and purchases, demographic, as well as history of past communication to and from the customer to organizations.

Marketing of prospects relies extensively on third-party sources of data. There are several agencies that provide such type of data.  These data may include, name, address and telephone numbers along with demographics, some of which is supplied by the prospects themselves, while in some cases it is inferred by the data base compiler.