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Chapter14
- 1. Direct Marketing 1 4 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
- 2. QVC • $6.5 billion a year • 2nd most profitable channel • Once sold 4,000 silver rings ($70) in just 3 ½ minutes • 91 million homes • 1 in 10 make purchase • 40 to 60
- 3. Direct Marketing Defined The total of activities by which the seller directs efforts to 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 a target audience using one or more media for the purpose of soliciting a response by phone, mail, or personal visit from a prospect or customer personal visit from a prospect or customer RRaaddiioo DDiirreecctt MMaaiill TTVV SSeelllliinngg TTeelleemmaarrkkeettiinngg DDiirreecctt SSeelllliinngg MMaaggaazziinnee aanndd NNeewwssppaappeerr
- 4. Growth of Direct Marketing Consumer Credit Cards Consumer Credit Cards Changing Structure of Society Changing Structure of Society Technological Advances Technological Advances Direct Marketing Syndicates Direct Marketing Syndicates Miscellaneous Miscellaneous factors factors Changing Structure of Markets Changing Structure of Markets
- 5. Direct Marketing Combines With . . . AAddvveerrttiissiinngg Sales Sales Promotions Promotions Public Relations Public Relations Personal Selling Personal Selling IInntteerrnneett Support Media Support Media Direct Marketing
- 6. San Diego Encourages Visits
- 7. How Database Marketing Works
- 8. A Comprehensive Consumer Database Name Address/ Zip Code Telephone Number Length of Residence Age Gender Marital Status Family Data Education Income Occupation Transaction History Promotion History Inquiry History Unique Identifier
- 9. A Business-to-Business Database Contact Info Contact Title Telephone Number Source of order, inquiry, referral Credit History Industrial Classification Size of Business Revenues Number of Employees Time in Business Headquarters Location Purchase History Promotion History Inquiry History Unique Identifier
- 10. Test Your Knowledge For market segmentation and targeting, direct marketers rely most heavily on: A) Primary qualitative research B) Census data C) A database D) Survey responses E) Focus groups
- 11. Objectives of Database Marketing Improve Selection of Market Segments Improve Selection of Market Segments Stimulate Repeat Stimulate Repeat Purchases Purchases Cross-selling Other Cross-selling Other Products Products Customer Relationship Customer Relationship Management Management OObbjjeeccttiivveess
- 12. • Track Customer Purchases and group them on Purchase History • Build a data base • Keep track of communication preferences • Let customers decide how to give feedback • Empower staff to make decisions • Track Staff actions and make improvements • Try new ways to leverage customer intelligence • Always add to customer intelligence • Develop customer intelligence on past customers • Do it now
- 13. Developing a Database LLiisstt SSeerrvviicceess Direct Marketing Direct Marketing Association Association Standard Rate & Data Service Standard Rate & Data Service U.S. Postal Service U.S. Postal Service Simmons Market Research Bureau Simmons Market Research Bureau U.S. Census U.S. Census Bureau Bureau SSoouurrcceess
- 14. Effective Databases RRFFMM SSccoorriinngg Monetary transactions RReecceennccyy Monetary FFrreeqquueennccyy transactions
- 15. Direct Marketing Strategies OOnnee--SStteepp TTwwoo--SStteepp • The medium is used directly to obtain an order • Often use 800 number phone orders and credit card payment • May use one medium to obtain inquiry and qualify prospect • Typically follow up with a second medium to complete the sale
- 16. Direct-Marketing Media IInnffoommeerrcciiaallss TTeelleemmaarrkkeettiinngg PPrriinntt,, ccaattaallooggss BBrrooaaddccaasstt TTeelleesshhooppppiinngg Home shopping Home shopping TTVV SSppoottss DDiirreecctt MMaaiill
- 17. Types of Direct Mail All forms of advertising sent directly to prospects through the U.S. Postal Service or through private services HHoouussee lliissttss BBrrooaaddssiiddeess CCaattaallooggss FFllyyeerrss FFoollddeerrss IInncclluussiioonnss PPoossttccaarrddss RReepprriinnttss SSaalleess lleetttteerrss SSeellff--mmaaiilleerrss
- 18. Porsche Targets Prospects with Direct Mail
- 19. Test Your Knowledge Which of the following statements about the use of catalogs in the direct-marketing industry is true? A) Most business-to-business marketers use print catalogs. B) The number of catalogs mailed since 1984 has decreased significantly. C) Many companies use catalogs in conjunction with their more traditional sales and promotional strategies. D) No company today relies solely on catalog sales. E) The number of catalog shoppers has declined steadily since 1984.
- 21. TV Spots, Infomercials, and Homeshopping
- 22. • Catalogs $19.2 billion 2007 • TV $156 billion 2007 • Infomercials –Single female 18 to 34 earning $50,000 to $99,900 per year – Tell a story –Good at Branding –Must have a store presence
- 23. A Direct Response Print Ad
- 24. Telemarketing IInnbboouunndd Telephone calling by the marketer or marketer’s agent to individual prospects, seeking purchase, subscription, membership, or participation by the call recipient. Marketers facilitate and invite prospects to call a central location via a long distance number, by a toll-free 800 number, or a fixed-cost 900 number. OOuuttbboouunndd
- 26. Forms of Direct Selling Repetitive person-to-person Nonrepetitive person-to-person Party Plans
- 27. Cutco Knives Employs Direct Selling
- 28. Measuring Effectiveness Cost per Order (CPO)
- 29. Direct Marketing Advantages SSeelleeccttiivvee rreeaacchh SSeeggmmeennttaattiioonn ccaappaabbiilliittiieess FFrreeqquueennccyy ppootteennttiiaall FFlleexxiibbiilliittyy TTiimmiinngg PPeerrssoonnaalliizzaattiioonn CCoossttss MMeeaassuurreess ooff eeffffeeccttiivveenneessss
- 30. Direct Marketing Disadvantages Image factors Image factors AAccccuurraaccyy Content support Content support Rising costs Rising costs Do Not Do Not Contact lists Contact lists
Editor's Notes
- Relation to text This slide relates to material on p. 458-459 of the text. Summary Overview This is 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 magazines and newspapers, directing selling, telemarketing, TV selling, radio, and direct mail. Use of this slide This slide can be used to introduce and define direct marketing. Discussion of direct marketing and its role in the IMC program will follow.
- Relation to text This slide relates to material on p. 460 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. They include: Consumer credit cards, which make it easy for consumers to purchase. Direct-marketing syndicates that specialize in list development. The changing structure of American society and the market. We are a money-rich, time-poor society. We have more disposable income, but the increased popularity of physical fitness, do-it-yourself repairs, and home entertainment have reduced the time available for shopping. Technological advances, that make it easier for consumers to shop and for marketers to reach targeted consumers through direct marketing. Miscellaneous factors, including changing values, more sophisticated marketing techniques, and the industry’s improved image. Use of this slide This slide can be used to discuss the reasons behind the growth of direct marketing.
- Relation to text This slide relates to material on pp. 460-462 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 to build an image, maintain customer satisfaction, or inform customers so they will take actions in the future. Use of this slide This slide can be used to show that direct marketing can be used in combination with other elements of the promotional mix and can work synergistically with these tools.
- Relation to textThis slide relates to p. 462 and Exhibit 14-3 of the text. Summary OverviewThe city of San Diego encourages visits through direct mail pieces, which also refer to the city’s Web site. This is a good example of how direct marketing can be combined with other IMC tools. Use of this slideUse this slide to illustrate the synergy between direct mail pieces and another IMC tools.
- Relation to textThis slide relates to material on pp. 462-463 and Figure 14-2 of the text. Summary OverviewTo segment and target markets, direct marketers depend on databases that contain specific information about individual customers and/or prospects to implement more effective and efficient marketing communications. This “raw” information must be filtered to extract a smaller list of “ideal” consumers who meet the qualifications set by the marketer. This smaller list can then be used to determine the marketing strategy that will generate the biggest return for the advertising dollars spent. Use of this slideThis slide can be used to show how the process of database marketing operates.
- Relation to text This slide relates to material on pp. 462-463 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, including contact information, demographics, and historical information related to purchase, inquiries, and responses to promotions. More sophisticated databases might include information such as psychographics, neighborhood information, and credit histories. Use of this slide This slide can be used to show the contents of a consumer database.
- Relation to text This slide relates to material on pp. 462-463 and Figure 14-3 of the text. Summary Overview This slide shows the types of 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 type of information typically stored in a business-to-business database.
- Ans: C
- Relation to text This slide relates to material on pp. 463-465 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 to: 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-sell other products – current customers have strong potential for purchasing related products Manage customer relationships – maintain relationship through personalized communications 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. Use of this slide This slide can be used to discuss database marketing.
- Relation to text This slide relates to material on p. 466 of the text. Summary Overview There are various sources of information that can be used to create direct marketing databases. Some of these 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. Consumer-goods manufacturers, banks, credit bureaus, retailers, charitable organizations, and other business operations also sell lists and information, with which companies can build their databases. Companies can also build databases using information from contest/sweepstakes entries, loyalty programs, completed warranty cards and customer surveys, and responses to promotional offers Use of this slide This slide can be used to discuss the various sources from which marketers can obtain information for their databases.
- Relation to textThis slide relates to p. 466 of the text. Summary OverviewCollecting names and information for use in a database is not enough; to be effective, the list must be kept current, purged of old and/or inactive customers, and updated frequently. The U.S. Postal Service recommends an RFM scoring method for this purpose. RFM stands for the recency, frequency, and monetary transactions between the company and the customer. Specifically, data must be entered each time there is a transaction so the company can track how recently purchases have been made, how often they are made, and how much money is being spent. Use of this slideUse this slide when discussing the need to keep databases current if they are to be effective.
- Relation to text This slide relates to material on pp. 466-468 of the text. Summary Overview This slide shows the two basic approaches that are 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 medium, with the first being used to obtain an inquiry or qualify a prospect and the second to complete the sale. 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. Use of slide This slide can be used to introduce one- and two-step direct marketing strategies.
- Relation to text This slide relates to material on pp. 468-473 that discusses direct media. Summary Overview This slide summarizes the types of media available to direct marketers, such as direct mail, telemarketing, direct-response broadcasting, the Internet, and print. Unlike infomercials and home shopping channels, which have relied on broadcast or cable TV, electronic teleshopping is an online shopping and information retrieval service access through personal computers. For example, QVC, the home shopping channel, started iQVC, an Internet home shopping channel that compliments its cable TV channel. 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.
- Relation to text This slide relates to material on pp. 468-469 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 options available to direct mail advertisers, including house lists, broadsides, inclusions, post cards, catalogs, reprints, sales letters, flyers, self-mailers and folders. Keys to the success of direct mail are the mailing list and the ability to segment markets. 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. 468-469 and Exhibit 14-6 of the text. Summary Overview Porsche North America uses direct marketing to appeal to upscale audiences. Porsche has been a long term believer in direct marketing, at one point using this medium exclusively. After limited success as a sole medium, direct mail was then combined with other IMC elements, such as television and magazine advertising. Although direct mail continues to be a favorite medium, its use is being seriously threatened by the Internet. Use of this slide This slide can be used as an example of how a company uses direct mail.
- Ans: C
- Relation to text This slide relates to material on p. 469 of the text. Summary Overview This slide shows a catalog for Illuminations, which not only sells directly through catalogs, but also uses them to inform consumers of product offerings available in the stores. While some predicted that catalogs would cease to exist with more use of the Internet, the opposite is true. The emotional appeal of the traditional catalog exceeds that of online catalogs. Use of this slide This slide can be used to show an example of a company that started out exclusively as a catalog company has branched into retail outlets.
- Relation to textThis slide relates to pp. 469-472 of the text. Summary OverviewTV spots, infomercials, and homeshopping channels such as QVC effectively sell products. The development of toll-free telephone numbers, combined with the widespread use of credit cards has led to a dramatic increase in the number of people who shop via their TV sets. The majority of direct-marketing broadcast advertising now occurs on TV, rather than on radio. Bentley, represented on this slide, uses a televised infomercial to attract buyers. Use of this slideUse this slide to discuss the various ways television is used in direct marketing programs.
- Relation to text This slide relates to material on p. 472 of the text. Summary Overview This slide is shows an ad for the Morning Sunshine Rooster Bowl by Lennox. It is an example of direct response advertising, which has the goal of soliciting an immediate response from the consumer. Toll free numbers are generally included so the receiver can immediately call to place an order. Use of this slide This slide can be used to discuss direct response advertising and how print and can be used effectively as direct response media.
- Relation to textThis slide relates to p. 472 and Figure 14-6 of the text. Summary OverviewTelemarketing means using the telephone to solicit sales. This slide provides a definition of outbound and inbound telemarketing. Outbound – the marketer calls individual prospects Inbound – marketers solicit prospects to call a long distance number, a toll-free 800 number, or a fixed-cost 900 number The telemarketing industry is a very big business: Over 6.5 million people work in the telemarketing industry There are over 50,000 call centers in the United States Marketers spend over $76 billion a year on outbound telemarketing calls Use of this slide This slide can be used to introduce telemarketing as a direct marketing tool.
- Relation to textThis slide relates to p. 472 of the text. Summary OverviewTelemedia is the use of telephone and voice information services, such as 900, 800, and 976 numbers, to market, advertise, promote, entertain, and inform. Many of these services are interactive, and are used by entertainment, health care, banking and finance companies, and government services. The illustration on this slide shows how 800, 976, and 900 numbers are used as marketing tools. Use of this slideUse this slide to discuss the use of 800, 900, and 976 numbers in a telemarketing program.
- Relation to text This slide relates to material on pp. 473-474 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 uses this technique. Nonrepetitive person-to-person selling – salesperson visits the buyers home, job or other location to sell infrequently purchased items, such as insurance Party plans – a salesperson offers products or services to groups of people through home or office parties and demonstrations 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. Use of this slide This slide can be used to introduce direct selling.
- Relation to text This slide relates to material on pp. 473-474 and Exhibit 14-13 of the text. Summary Overview This slide is an ad for Cutco, which is one of many companies that use direct selling to market their products. Cutco has been extremely successful with this sales format. Use of this slide This slide can be used to show an example of a company that relies heavily on the use of direct selling.
- Relation to textThis slide relates to p. 475 of the text. Summary OverviewAdvertisers can evaluate the effectiveness of an ad by dividing the cost of the ad by the average size of the orders placed. For instance, if an ad cost $100 to run, and it generates 25 orders that averaged $20 each, or $500 in sales, the ad was effective. On the other hand, if a $100 ad only generates five orders worth an average of $10 each, then the ad cost more than the revenue it generated and was unsuccessful. Use of this slideUse this slide to explain how to measure the effectiveness of direct-marketing programs.
- Relation to text This slide relates to material on pp. 475-476 of the text. Summary Overview This slide summarizes the advantages of direct marketing, including: Selective reach, which lets the advertiser reach a large number of people, while minimizing waste coverage. Segmentation capabilities, based on geographic area, occupation, demographics, job title, and more. Frequency potential, which means how often the target market is exposed to the ad. Flexibility. Ad creativity is limited only by the imagination of the person creating it and the medium being used. Timing. Direct marketing materials can often be put together and distributed quickly, unlike other media, which may require long-range planning. Personalization. No other advertising medium can personalize the message as well as a direct media. Costs. The ability to target the audience and eliminate waste coverage reduces the actual CPM. Measurement of effectiveness. Feedback is often immediate and always accurate. Use of this slide This slide can be used to summarize the advantages of using direct marketing.
- Relation to text This slide relates to material on pp. 476-477 of the text. Summary Overview This slide summarizes the disadvantages of direct marketing, including: Image factors. The mail segment of this industry is often referred to as junk mail, and junk emails fare no better. Accuracy. Computerization has greatly improved the accuracy and currency of lists, but the cost of generating a lead can be expensive, depending on the quality desired. Content support. Mood creation is limited to the surrounding program and/or the editorial content. Rising costs. As postal rates and print costs increase, direct-mail profits are immediately impacted. “Do not contact” lists. Do Not Call lists now exist for both land and cell phones, and a “Do Not Contact” list for junk mail is under consideration. Use of this slide This slide can be used to summarize the disadvantages of using direct marketing.