Chapter 14

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  • Chapter Fourteen Direct Marketing © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  • Relation to text This slide relates to material on p. 463 of the text. Summary Overview This slide provides an abbreviated version of the definition of direct marketing. Direct Marketing is a system of marketing by which organizations communicate directly with target customers to generate a response or transaction. Some direct marketing media are catalog selling, directing selling, telemarketing, TV selling, direction action advertising, and direct mail. Use of this slide This slide can be used to introduce and define direct marketing. More detailed discussion of direct marketing and its role in the IMC program will follow.
  • Relation to text This slide relates to material on pp. 463-465 of the text. Summary Overview Direct marketing is one of the fastest growing forms of promotion in terms of dollar expenditures. A number of factors have led to this extraordinary growth and are shown in this slide. These include: Consumer credit cards – makes it easy for consumers to purchase Changing structure of society – money-rich and time-poor society Direct marketing syndicates – companies specializing in list development Technical advances – easier for consumers to shop and for marketers to reach targeted consumers through direct marketing methods Miscellaneous factors – changing values, sophisticated marketing techniques, industry’s improved image Use of this slide This slide can be used to discuss reasons for the growth of direct marketing.
  • Relation to text This slide relates to material on pp. 465-467 of the text. Summary Overview This slide shows how direct marketing can be combined with other IMC tools. In some organizations direct marketing is used solely to generate customer response, while in others it is used in combination with the other elements in the IMC program including public relations, personal selling, sales promotion, support media, and advertising. Use of this slide This slide can be used to show that direct marketing can be used in combination with the various elements of the promotional mix and can work synergistically with these tools.
  • Relation to text This slide relates to material on pp. 467-469 of the text. Summary Overview Database marketing is the use of specific information about individual customers and/or prospects to implement more effective and efficient marketing communications. The objectives of database marketing are as follows: Improve selection of market segments – characteristics of the database can help the marketer more precisely target specific customers Stimulate repeat purchases – current customers have a high likelihood of future purchases Cross-selling other products – current customers have strong potential for purchasing related products Customer relationship management – maintain relationship through personalized communications Use of this slide This slide can be used to discuss database marketing. The success of a direct marketing program is often tied to the quality of the database of prospects and/or customers that a company has and to which messages can be sent.
  • Relation to text This slide relates to material on pp. 469-471 of the text. Summary Overview This slide shows the various sources of information used to create direct marketing databases. Some of sources are list services, Standard Rate and Data Service (SRDS), the U.S. Postal Service, the Direct Marketing Association, U.S. Census Bureau, and Simmons Market Research Bureau. Use of this slide This slide can be used to discuss the various sources marketers can use to provide information for the creation of their databases. Companies can also build their own databases using information from contest/sweepstakes entries, loyalty programs, completed warranty cards and customer surveys, and responses to promotional offers.
  • Relation to text This slide relates to material on p. 468 and Figure 14-3 of the text. Summary Overview This slide shows the various types of information that would be included in a consumer database. This information includes contact information, demographics, and historical information related to purchase, inquiries, and responses to promotions. Use of this slide This slide can be used to show the contents of a consumer database. More sophisticated databases might include information such as psychographics, neighborhood information, and credit histories.
  • Relation to text This slide relates to material on p. 468 and Figure 14-3 of the text. Summary Overview This slide shows the various information that would be included in a business- to-business database. This information includes contact information, information on decision makers, information about the business, and past purchase behavior. Use of this slide This slide can be used to show the contents of a business-to-business database. These types of databases are very important to business-to-business marketers.
  • Relation to text This slide relates to material on p. 471 of the text. Summary Overview This slide shows the two basic approaches that are generally used by direct marketers. One-step – the medium is used to directly obtain an order (e.g. TV offer with an 800 numbers) Two-step – may involve more than one stage with the first used to obtain an inquiry or qualify a prospect and the second to complete the sale. Use of slide This slide can be used to introduce one- and two-step direct marketing strategies. Many direct marketers use the two step approach whereby they use mass media to generate an inquiry and then follow up with more detailed information such as brochures, videos, CD-ROMs, and/or personal selling to complete the sale.
  • Relation to text This slide relates to material on p. 475 of the text. Summary Overview This slide provides shows a definition of direct response advertising which is all forms of advertising designed to obtain immediate response by mail, telephone, or personal visit from individual audience members. The slide also shows the various options available to marketers using direct response advertising. These include: Direct mail pieces and inserts soliciting sales or inquiries Coupon books, card decks, mini catalogs TV and CATV commercials and infomercials selling products by phone or mail order Newspapers, magazine, and other print media with send in or call in coupons Use of this slide This slide can be used to introduce direct response advertising and discuss the various options available for this form of advertising . Both print and television can be used effectively for direct response advertising
  • Relation to text This slide relates to material on pp. 471-474 of the text. Summary Overview More advertising dollars continue to be spent in direct mail than in almost any other advertising medium. Both large and small companies use direct mail effectively to communicate their messages. This slide summarizes the various options available to advertisers relative to direct mail. Some of these are house organs, inclusions, post cards, catalogs, reprints, sales letters, flyers, self-mailers and folders. Use of this slide This slide can be used to introduce direct mail as a promotional medium and to show the various forms of messages that can be sent through the mail.
  • Relation to text This slide relates to material on pp. 471-74 that discusses direct mail. Summary Overview This slide summarizes the advantages of direct mail which include: Control Coverage Exclusivity Flexibility Impact Reach Response Selectivity Use of slide This slide can be used to discuss the advantages of direct mail. Many companies both large and small use direct mail to attract interest and attention from targeted consumers.
  • Relation to text This slide relates to material on pp. 471-74 that discusses direct mail. Summary Overview This slide summarizes the disadvantages of direct mail which include: Clutter Negative image of medium Delays in delivery High cost per exposure List quality uncertainty No content support Saturation among audience Use of slide This slide can be used to discuss the disadvantages of direct mail. While direct mail continues to be a favorite medium of many marketers, this medium has been impacted by the Internet as many companies have begun sending messages online.
  • Relation to text This slide relates to material on pp. 474-475 of the text. Summary Overview This slide summarizes the advantages and disadvantages of catalogs. They are: Advantages Provides buyers with wide selections Usually welcomed by shoppers Design offers high impact potential Merchandise is centrally inventoried Fulfillment facilities closely controlled Timing can be geared to seasonal needs Split-run testing can insure effectiveness Disadvantages Production costs are very high Saturation for some markets is likely Delivery or fulfillment may be delayed Customer can’t inspect or handle goods Use of this slide This slide can be used to discuss advantages and disadvantages of using catalogs as a direct marketing medium. The number of catalogs mailed and the number of catalog shoppers have both increased in recent years.
  • Relation to text This slide relates to material on pp. 477-478 of the text. Summary Overview Telemarketing involves using the telephone to solicit sales. This slide provides a definition of outbound and inbound telemarketing. Outbound – telephone calling by the marketer to the individual prospect Inbound – marketers solicits prospect to call an 800 or 900 number Use of this slide This slide can be used to introduce telemarketing as a direct marketing tool. The telemarketing industry is a very big business as it employs over six million people and generates over $600 billion in sales each year.
  • Relation to text This slide relates to material on pp. 477-478 of the text. Summary Overview This slide summarizes the advantages and disadvantages of outbound telemarketing. Advantages Interactive contact Extensive reach Caller controlled High impact Disadvantages Intrusive nature Poor image High cost of contact Low conversion rate Extensive caller training Name list inadequacies High termination rate High reneges, returns Use of this slide This slide can be used to discuss the advantages and disadvantages of outbound telemarketing. You might not that with the creation of the “Do Not Call” list by the FTC, the use of this form of telemarketing will be limited.
  • Relation to text This slide relates to material on pp. 477-478 of the text. Summary Overview This slide summarizes the advantages and disadvantages of inbound telemarketing. Advantages Response is convenient for audience Permits interactive selling and service Transactions are facilitated by high rate of credit card holding Immediacy of method permits great control of inventory Disadvantages Labor-intensive call answering facilities required Personnel direction system may be required for efficiency Nonproductive call rates may be exceedingly or unacceptably high Use of this slide This slide can be used to discuss the advantages and disadvantages of inbound telemarketing whereby customers initiate the call to a company.
  • Relation to text This slide relates to material on pp. 478-480 of the text. Summary Overview Direct selling is the personal presentation or demonstration and the sales of products and services to consumers in their homes, at work or in other places. There are three forms of direct selling: Repetitive person-to-person selling – salesperson visits the buyers home, job or other location to sell frequently purchased items (Amway) Nonrepetitive person-to-person selling – salesperson visits the buyers home, job or other location to sell infrequently purchased items (e.g., insurance) Party plans – salesperson offers products or services to groups of people through home or office parties and demonstrations (Tupperware) Use of this slide This slide can be used to introduce direct selling. Avon, Cutco, Mary Kay Inc., and Tupperware are some of the best-known direct-selling companies in the U.S. and are now extending their programs overseas.
  • Relation to text This slide relates to material on pp. 478-480 of the text. Summary Overview This slide summarizes the advantages of using direct response advertising. They are: Advertisers acquire or enhance a database of customers Customers are served with a greater selection from a central inventory Response options enable audience to act right after exposure occurs No store is required and customers can buy from their own homes Use of this slide This slide can be used to discuss the advantages of direct response advertising. Direct response advertising can be an effective way to communicate messages and generate sales.
  • Relation to text This slide relates to material on pp. 478-480 of the text. Summary Overview This slide summarizes the disadvantages of using direct response advertising. They are: Customers can’t handle or inspect products before purchasing Merchandise returns and subscriptions cancellations may be numerous Seller reputation and prestige may be compromised by method’s poor image Use of this slide This slide can be used to discuss the disadvantages of direct response advertising. Despite these disadvantages direct response advertising has grown sharply in recent years.
  • Relation to text This slide relates to material on pp. 480-481 of the text. Summary Overview This slide summarizes the overall advantages and disadvantages of direct marketing. Advantages Selective reach Segmentation capability Frequency potential Flexibility Timing Personalization Economy Measurement of effectiveness Disadvantages Image factors Accuracy Content support Rising costs Use of this slide This slide can be used to summarize the overall advantages and disadvantages of direct marketing. Although many of these have already been presented, this slide provides a general review.
  • Chapter 14

    1. 1. Direct Marketing © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    2. 2. Direct Marketing Defined Catalog Selling TV Selling Direct Mail Direct Action Advertising Direct Selling © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin “ The total of activities by which the seller directs efforts to a target audience using one or more media for the purpose of soliciting a response by phone, mail, or personal visit from a prospective customer.” Catalog Selling Direct Selling Direct Action Advertising Direct Mail Telemarketing TV Selling
    3. 3. Growth of Direct Marketing Consumer Credit Cards Consumer Credit Cards © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Miscellaneous factors Technical Advances Direct Marketing Syndicates Changing Structure of Society Technical Advances Direct Marketing Syndicates Changing Structure of Society
    4. 4. Direct Marketing Combines With . . . Sales Promotion Personal Selling Public Relations Advertising © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Direct Marketing Public Relations Personal Selling Sales Promotion Support Media Advertising
    5. 5. Objectives of Database Marketing Cross-selling Other Products Stimulate Repeat Purchases Improve Selection of Market Segments © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Objectives Improve Selection of Market Segments Stimulate Repeat Purchases Cross-selling Other Products Customer Relationship Management
    6. 6. Developing a Database U.S. Census Bureau Direct Marketing Association U.S. Postal Service Standard Rate & Data Service (SRDS) List Services © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Sources List Services Direct Marketing Association Standard Rate & Data Service (SRDS) U.S. Postal Service Simmons Market Research Bureau U.S. Census Bureau
    7. 7. A Comprehensive Consumer Data Base © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Name Address/ Zip Code Telephone Number Length of Residence Age Sex Marital Status Family Data Education Income Occupation Transaction History Promotion History Inquiring History Unique Identifier Name Address/ Zip Code Telephone Number Length of Residence Age Sex Marital Status Family Data Education Income Occupation Transaction History Promotion History Inquiring History
    8. 8. A Comprehensive Business to Business Data Base Comp. Contact or Decision Makers Title of Contact Telephone Number Source of Order/inquiry or Referral Credit History Industrial Classification Size of Business Revenues Number of Employees Time in Business Headquarter, Multiple Location Purchase History Promotional History Inquiry History Inquiry History Promotional History Purchase History Headquarter, Multiple Location Time in Business Number of Employees Revenues Size of Business Industrial Classification Credit History Source of Order/inquiry or Referral Telephone Number Title of Contact Comp. Contact or Decision Makers © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Unique Identifier
    9. 9. One-Step Versus Two-Step Approach One Step <ul><li>The medium is used directly to obtain an order </li></ul><ul><li>Often use 800 number phone orders and credit card payment </li></ul><ul><li>May use one medium to obtain inquiry and qualify prospect </li></ul><ul><li>Typically follow up with a second medium to complete the sale </li></ul>© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin One Step Two Step
    10. 10. Direct Response Advertising Types © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Direct Mail Pieces and Inserts Soliciting Inquiry Recipients. “ All forms of advertising designed to obtain immediate, direct response by mail, telephone, or personal visit from individual audience members.” TV and CATV Commercials and Infomercials Selling Products by Phone or Mail Order. TV and CATV Commercials and Infomercials Selling Products by Phone or Mail Order. Card Decks, Coupon Booklets and Mini-catalogs Seeking Orders for One or More Products. Newspapers, Magazines and Other Print Media Ads With Send-in or Call-in Coupon Order Forms. Direct Mail Pieces and Inserts Soliciting Inquiry Recipients. Card Decks, Coupon Booklets and Mini-catalogs Seeking Orders for One or More Products.
    11. 11. Types of Direct Mail House organs © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Broadsides Broadsides Catalogs Catalogs Flyers Flyers Folders Folders Inclusions Postcards Postcards Reprints Reprints Sales letters Sales letters Self-mailers “ All forms of advertising sent directly to prospects through the U.S. Postal Service or through private services.” House organs Inclusions
    12. 12. Direct Mail Advantages Response Reach Impact Flexibility Exclusivity Coverage Control © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Advantages Control Coverage Exclusivity Flexibility Impact Reach Response Selectivity
    13. 13. Direct Mail Disadvantages High Cost Per Exposure No Content Support List Quality Uncertainty Delays in Delivery Negative Image of Medium Clutter © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Disadvantages High Cost Per Exposure Clutter Negative Image of Medium Delays in Delivery List Quality Uncertainty No Content Support Saturation Among Audience
    14. 14. Pros & Cons of Catalogs Production Costs Are Usually Very High Delivery or Fulfillment May Be Delayed Production Costs Are Usually Very High Saturation for Some Markets Is Likely Provides Buyers With Wide Selections Usually Welcomed by Shoppers Design Offers High Impact Potential Merchandise Is Centrally Inventoried Fulfillment Facilities Closely Controlled Timing Can Be Geared to Seasonal Needs Split-run Testing Can Insure Effectiveness Customer Can’t Inspect or Handle Goods Delivery or Fulfillment May Be Delayed Delivery or Fulfillment May Be Delayed Delivery or Fulfillment May Be Delayed Saturation for Some Markets Is Likely Production Costs Are Usually Very High Production Costs Are Usually Very High Split-run Testing Can Insure Effectiveness Timing Can Be Geared to Seasonal Needs Fulfillment Facilities Closely Controlled Merchandise Is Centrally Inventoried Design Offers High Impact Potential Usually Welcomed by Shoppers Provides Buyers With Wide Selections © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin + Pros - Cons
    15. 15. Outbound and Inbound Telemarketing © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Inbound Outbound Outbound Telephone calling by the marketer or marketer’s agent to individual prospects, seeking purchase, subscription, membership, or participation by the call recipient. Marketers’ facilities and invitations to prospects to call a central location or long distance number or by toll-free, 800 or fixed cost 900 number.
    16. 16. Outbound Telemarketing Namelist Inadequacies High Termination Rates High Reneges, Returns Poor Image of Method Low Conversion Rate Intrusive Nature High Cost of Contact Extensive Caller Training Interactive Contact Extensive Reach Caller-controlled Timing High Impact High Termination Rates Namelist Inadequacies Extensive Caller Training Low Conversion Rate High Cost of Contact Poor Image of Method Intrusive Nature High Impact Caller-controlled Timing Extensive Reach Interactive Contact © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Advantages Disadvantages
    17. 17. Inbound Telemarketing Pros & Cons Personnel Direction System May Be Required for Efficiency Labor-intensive Call Answering Facilities May Be Required Nonproductive Call Rates May Be Exceedingly or Unacceptably High Response Is Highly Convenient for the Audience Method Permits Interactive Selling and Service Transactions Are Facilitated by High Rate of Credit Card Holding Immediacy of Method Permits Great Control of Inventory Personnel Direction System May Be Required for Efficiency Labor-intensive Call Answering Facilities May Be Required Immediacy of Method Permits Great Control of Inventory Transactions Are Facilitated by High Rate of Credit Card Holding Method Permits Interactive Selling and Service Response Is Highly Convenient for the Audience © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin + Pros - Cons
    18. 18. Three Forms of Direct Selling © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Direct Selling Party Plans Repetitive person- to-person selling Nonrepetitive person- to-person selling Repetitive person- to-person selling Nonrepetitive person- to-person selling
    19. 19. Direct Response Advantages © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Advertisers Acquire or Enhance a Data Base of Individual Customers Advertisers Acquire or Enhance a Data Base of Individual Customers No Store Is Required and Customers Can Buy From Their Own Homes Response Options Enable Audience to Act Right After Exposure Occurs Customers Are Served With a Greater Selection From a Central Inventory Response Options Enable Audience to Act Right After Exposure Occurs Customers Are Served With a Greater Selection From a Central Inventory
    20. 20. Direct Response Disadvantages Merchandise Returns and Subscription Cancellations May Be Numerous Customers Can’t Handle or Inspect the Product Before Purchasing © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Disadvantages Customers Can’t Handle or Inspect the Product Before Purchasing Merchandise Returns and Subscription Cancellations May Be Numerous Seller Reputation and Prestige May Be Compromised by Method’s Poor Image
    21. 21. Overall Direct Marketing Pros & Cons © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Accuracy Rising Costs Image Factors Content Support Selective Reach Segmentation Capability Frequency Potential Flexibility Timing Personalization Economy Advantages Disadvantages Measurement of Effectiveness Accuracy Image Factors Content Support Selective Reach Segmentation Capability Frequency Potential Flexibility Timing Personalization Economy Measurement of Effectiveness

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