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              Direct Marketing




McGraw-Hill/Irwin        © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
Direct Marketing Defined


“The total of activities by which the seller . . . direct
efforts to a target audience using one or more media for
the purpose of soliciting a response by phone, mail, the
internet or personal visit from a prospective customer.”
    Includes:
        Direct selling
        Direct mail
        Telemarketing
        Internet selling
        Direct action marketing
        Catalog selling
        Television/ print media
        Cable TV
Factors contributing to the growth of
direct marketing

 Consumer Credit Cards
    Over 1 billion credit cards in circulation
 Direct Marketing Syndicates Creating Opportunities
    List development
    Statement inserts
    Catalogs/Sweepstakes

 Changing Structure of American Society
    Increase in two income households
    Money-rich/Time-poor – need for convenience
 Technological Advances
    Better communications via electronic media & computers
    Rapid package delivery
    Electronic delivery systems

 Ability to measure effects of direct marketing efforts
    Cost per order/ Cost per inquiry
Direct Marketing Combines With . . .



      Advertising
      Public Relations
      Personal Selling
      Sales Promotion
      Support Media
Database Marketing

The use of specific information about individual
customers and/or prospects to implement more
effective marketing communications and selling.


 Used to:
   Improve selection of target markets
   Encourage repeat purchase
   Cross-sell other products and services
   Develop one-to-one relationships with
   customers
Developing a Database


  Sources of data base information
  Sources of data base information

   Internal Records
   U.S. Census Bureau
   U.S. Postal Service
   List Services
   SRDS – Direct Mail Lists and Data
   Simmons Market Research Bureau
   Direct Marketing Association
PETCO builds a database through its loyalty
program
Contents of a Comprehensive Consumer
Data Base


   Name                  Education
   Address/Zip code      Income
   Telephone number      Occupation
   Length of residence   Transaction
                         history
   Age
                         Promotion history
   Gender
                         Inquiring history
   Marital status
                         Unique identifier
   Family data
Contents of a Comprehensive Business to
Business Data Base


Name of company,            Size of business
contact or decision         Revenues
maker(s)
                            Number of
Title of contact            employees
Telephone number            Time in business
Source of order/inquiry     Headquarters
or referral                 location
Credit history              Multiple locations
Industrial classification   Purchase history
Direct Marketing Strategies


  One-step approach - direct marketing media
  used directly to solicit an order
  Two-step approach – multiple efforts used to
  generate a response. First effort is used to screen,
  qualify or interest potential buyers. Follow-up used to
  achieve order or close the sale.
  Direct Marketing Media
     Direct mail
     Broadcast media (direct response ads/informercials)
     Print media
     Telemarketing
     Direct selling
Types of Direct Mail


“All forms of advertising sent directly to
prospects through the U.S. Postal Service or
through private services.”


   Catalogs               Inclusions
   Flyers                 Reprints
   Folders                Sales letters
   Postcards              Self-mailers
Direct Mail Advantages and Disadvantages

  Advantages         Disadvantages


    Control          Delays in delivery
    Coverage         High cost per exposure
    Flexibility      List quality assurance
    Impact           Saturation among
    Reach            audience
    Response
    Selectivity
Porsche uses direct mail to target potential
customers
Direct Response Advertising Types


 “All forms of advertising designed to obtain
 immediate, direct response by mail, telephone, the
 Internet or personal visit from audience members.”


   TV and CATV commercials and infomercials selling
   products by phone or mail order.
   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.
   E-mail messages to computer users
Direct Response Pros & Cons

Advantages                  Disadvantages

Advertisers acquire or      Customers can’t handle or
enhance a data base of      inspect the product before
individual customers.       purchasing.
Customers are served        Merchandise returns and
with a greater selection    subscription cancellations
from a central inventory.   may be numerous.
Response options enable     Seller reputation and
audience to act right       prestige may be
after exposure occurs.      compromised by the poor
                            image of the method.
No store is required and
customers can buy from
their own homes.
Catalogs - Pros & Cons

 Advantages                       Disadvantages

 Provides buyers with wide
 selections                       Product costs are usually
                                  very high
 Usually welcomed by shoppers
                                  Cost per contact is
 Design offers high impact        relatively high
 potential
                                  Saturation for some
 Merchandise is centrally         markets is likely
 inventoried
                                  Delivery or fulfillment
 Fulfillment facilities closely   may be delayed
 controlled
                                  Customer can’t inspect or
 Timing can be geared to          handle goods
 seasonal needs
                                  Returns may sometimes
 Split-run testing can insure     be excessive
 effectiveness
Neiman Marcus uses traditional and online
catalogs
Outbound and Inbound Telemarketing

Outbound

 Telephone calling by the marketer or marketer’s
 agent to individual prospects, seeking purchase,
 subscription, membership, or participation by
 the call recipient.


Inbound

 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.
Outbound Telemarketing

Advantages            Disadvantages

Interactive contact   Intrusive nature
Extensive reach       Poor image of method
Caller-controlled     High cost of contact
timing                Low conversion rate
High impact           Extensive caller training
                      Namelist inadequacies
                      High termination rates
                      High reneges, returns
Inbound Telemarketing Pros & Cons


Advantages                     Disadvantages

Response is highly              Labor-intensive call
convenient for the              answering facilities may
audience.                       be required.
Method permits interactive      Personnel direction
selling and service.            system may be required
Transactions are facilitated    for efficiency.
by high rate of credit card     Nonproductive call rates
holding.                        may be exceedingly or
Immediacy of method             unacceptably high.
permits great control of
inventory
Overall Direct Marketing Pros & Cons


Advantages                      Disadvantages

 Selective Reach                 Image Factors

 Segmentation Capability         Accuracy
 Frequency Potential             Content Support
 Flexibility
 Timing
 Personalization
 Economy
 Measurement of Effectiveness

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Chap14 Direct Marketing

  • 1. 14 Direct Marketing McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
  • 2. Direct Marketing Defined “The total of activities by which the seller . . . direct efforts to a target audience using one or more media for the purpose of soliciting a response by phone, mail, the internet or personal visit from a prospective customer.” Includes: Direct selling Direct mail Telemarketing Internet selling Direct action marketing Catalog selling Television/ print media Cable TV
  • 3. Factors contributing to the growth of direct marketing Consumer Credit Cards Over 1 billion credit cards in circulation Direct Marketing Syndicates Creating Opportunities List development Statement inserts Catalogs/Sweepstakes Changing Structure of American Society Increase in two income households Money-rich/Time-poor – need for convenience Technological Advances Better communications via electronic media & computers Rapid package delivery Electronic delivery systems Ability to measure effects of direct marketing efforts Cost per order/ Cost per inquiry
  • 4. Direct Marketing Combines With . . . Advertising Public Relations Personal Selling Sales Promotion Support Media
  • 5. Database Marketing The use of specific information about individual customers and/or prospects to implement more effective marketing communications and selling. Used to: Improve selection of target markets Encourage repeat purchase Cross-sell other products and services Develop one-to-one relationships with customers
  • 6. Developing a Database Sources of data base information Sources of data base information Internal Records U.S. Census Bureau U.S. Postal Service List Services SRDS – Direct Mail Lists and Data Simmons Market Research Bureau Direct Marketing Association
  • 7. PETCO builds a database through its loyalty program
  • 8. Contents of a Comprehensive Consumer Data Base Name Education Address/Zip code Income Telephone number Occupation Length of residence Transaction history Age Promotion history Gender Inquiring history Marital status Unique identifier Family data
  • 9. Contents of a Comprehensive Business to Business Data Base Name of company, Size of business contact or decision Revenues maker(s) Number of Title of contact employees Telephone number Time in business Source of order/inquiry Headquarters or referral location Credit history Multiple locations Industrial classification Purchase history
  • 10. Direct Marketing Strategies One-step approach - direct marketing media used directly to solicit an order Two-step approach – multiple efforts used to generate a response. First effort is used to screen, qualify or interest potential buyers. Follow-up used to achieve order or close the sale. Direct Marketing Media Direct mail Broadcast media (direct response ads/informercials) Print media Telemarketing Direct selling
  • 11. Types of Direct Mail “All forms of advertising sent directly to prospects through the U.S. Postal Service or through private services.” Catalogs Inclusions Flyers Reprints Folders Sales letters Postcards Self-mailers
  • 12. Direct Mail Advantages and Disadvantages Advantages Disadvantages Control Delays in delivery Coverage High cost per exposure Flexibility List quality assurance Impact Saturation among Reach audience Response Selectivity
  • 13. Porsche uses direct mail to target potential customers
  • 14. Direct Response Advertising Types “All forms of advertising designed to obtain immediate, direct response by mail, telephone, the Internet or personal visit from audience members.” TV and CATV commercials and infomercials selling products by phone or mail order. 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. E-mail messages to computer users
  • 15. Direct Response Pros & Cons Advantages Disadvantages Advertisers acquire or Customers can’t handle or enhance a data base of inspect the product before individual customers. purchasing. Customers are served Merchandise returns and with a greater selection subscription cancellations from a central inventory. may be numerous. Response options enable Seller reputation and audience to act right prestige may be after exposure occurs. compromised by the poor image of the method. No store is required and customers can buy from their own homes.
  • 16. Catalogs - Pros & Cons Advantages Disadvantages Provides buyers with wide selections Product costs are usually very high Usually welcomed by shoppers Cost per contact is Design offers high impact relatively high potential Saturation for some Merchandise is centrally markets is likely inventoried Delivery or fulfillment Fulfillment facilities closely may be delayed controlled Customer can’t inspect or Timing can be geared to handle goods seasonal needs Returns may sometimes Split-run testing can insure be excessive effectiveness
  • 17. Neiman Marcus uses traditional and online catalogs
  • 18. Outbound and Inbound Telemarketing Outbound Telephone calling by the marketer or marketer’s agent to individual prospects, seeking purchase, subscription, membership, or participation by the call recipient. Inbound 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.
  • 19. Outbound Telemarketing Advantages Disadvantages Interactive contact Intrusive nature Extensive reach Poor image of method Caller-controlled High cost of contact timing Low conversion rate High impact Extensive caller training Namelist inadequacies High termination rates High reneges, returns
  • 20. Inbound Telemarketing Pros & Cons Advantages Disadvantages Response is highly Labor-intensive call convenient for the answering facilities may audience. be required. Method permits interactive Personnel direction selling and service. system may be required Transactions are facilitated for efficiency. by high rate of credit card Nonproductive call rates holding. may be exceedingly or Immediacy of method unacceptably high. permits great control of inventory
  • 21. Overall Direct Marketing Pros & Cons Advantages Disadvantages Selective Reach Image Factors Segmentation Capability Accuracy Frequency Potential Content Support Flexibility Timing Personalization Economy Measurement of Effectiveness