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- 1. Chapter 16 Direct and Online Marketing: Building Customer Relationships
- 2. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens Direct Marketing Many companies are adopting Direct Marketing as a primary marketing approach Direct marketers usually seek a direct, immediate, and measureable consumer response Direct Marketing consists of connecting directly with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships
- 3. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
- 4. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens Benefits to Customers Convenient, Easy & Private Ready Access to a Wealth of Products Systems & Products that Better Serve Guest Needs Interactive & Immediate Benefits to Companies Powerful Tool for Building Customer Relationships Can Target Small Groups or Individual Consumers Can Tailor Products and Services to Specific Customer Tastes Low-Cost, Efficient & Speedy Alternative for Reaching Markets
- 5. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens Customer Databases Customer Databases Customer Databases
- 6. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens Direct Marketing Builds customer relationships Basic- The company sells the product but does not follow up Reactive- Encourages the customer to call with questions or problems Accountable- Immediate call to client Proactive- Salesperson calls from time to time with improvements Partnership- Company and customer work together to deliver better value
- 7. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens Customer Value-Binding Approaches Structural Ties, Social Benefits & Financial Benefits Social Benefits & Financial Benefits Financial Benefits
- 8. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens Traditional Forms of Direct Marketing Direct-mail marketing One-to-one communication Postage cost is high and pace is slow Telephone marketing Do-not-call registry www.donotcall.com Opt-in system Kiosk marketing (selling)
- 9. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens Digital Direct Marketing Technologies Digital Direct Marketing Technologies Digital Direct Marketing Technologies
- 10. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens Setting up an Online Marketing Presence Creating a Website Creating a Website Placing Ads & Promotions Online Placing Ads & Promotions Online Creating or Participating in Social Networks Creating or Participating in Social Networks
- 11. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens Social Media Social – instinctual need to connect with other human beings Media – how we make those connections through the use of technology
- 12. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens Social Media for Business Use technology to effectively reach out and connect with other humans, create relationships, build trust and be there when the people in those relationships are ready to purchase our product offering (Safko, 2010) 2 way communication Listen first, understand the conversation, speak last Participating in the conversation
- 13. Legal and Ethical Issues Online Privacy and Security Online privacy is perhaps the number- one e-commerce concern Identification theft and commercial espionage are security fears of consumers and companies alike
- 14. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens Conclusion Online marketing is a must You must be active and engage clients Be professional. Keep your business profile business related and your personal sites personal.
Editor's Notes
- Direct marketing is an interactive system of marketing that uses one or more advertising media to affect a measurable response and/or transaction at any location With the trend toward more narrowly targeted marketing, many companies are adopting direct marketing as a primary marketing approach Beyond brand and relationship marketing, direct marketers usually seek a direct, immediate, and measureable consumer response Direct marketing consists of connecting directly with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships Interactive in the sense that you are deliberate is selecting the people that you are communicating to based on certain characteristics i.e. it is not a blanket, generic piece of communication Reasons for growth - Precision targeting Personalization Immediate results Measurability 1$ 12$ in sales for direct marketing 1$ 5.25$ for general advertising 163billion expenditure on direct marketing, generated 2 trillion sales Direct marketing has become the fastest growing form of marketing Much of the direct marketing growth is driven by online media Mobile marketing has an annual growth of 50% in 2011 Social media has increased by over 20%
- Facebook 2014 revenue 12.466 billion
- Benefits to Customers For customers, direct marketing is convenient, easy, and private (never close their doors, from the comforts of their home an offices, travel can book flights or hotels anytime they like when approached by direct marketing) Direct marketing gives buyers ready access to a wealth of products (unrestrained by physical boundaries, direct marketers can offer an almost unlimited selection to consumer almost anywhere in the world) Companies also use direct marketing to access guests and gain information that will develop systems and products to better serve their guests (luxury hotel customers are often asked which hotel features make them more loyal to a hotel) Finally, direct marketing is interactive and immediate (buyer and seller interact by phone or on the website to create the exact information, products, or services they desire) Benefits to Sellers Direct marketing is a powerful tool for building customer relationships Marketers can target small groups or individual consumers and promote their offers through personalized communications Because of the one on one nature, Companies can interact with customers by phone or online, learn more about their needs, and tailor products and services to specific customer tastes Direct marketing also offers sellers a low-cost, efficient, speedy alternative for reaching their markets # of inquires generated Ratio of conversions or purchases generated Communication impact
- Effective direct marketing begins with a good customer database A customer database is an organized collection of comprehensive data about individual customers or prospects, including: Geographic data (location, state, city, neighborhood) Demographic data (age, income, gender) Psychographic data (lifestyles, social class) Behavioral data (motivation, purpose of visit, e.g., leisure, business etc). In business-to-business marketing, the customer profile might contain: The products and services the customer has bought Past volumes and prices Key contacts Competing suppliers Status of current contracts Estimated customer spending for the next few years Assessments of competitive strengths and weaknesses in selling and servicing the account Direct marketing is an important tool in customer relationship management (CRM) programs Direct marketing allows companies to develop a strong relationship with their customers, which helps prevent them from switching to competitors Relationship marketing involves creating, maintaining, and enhancing strong relationships with customers The concept of relationship has expanded to include developing a relationship with all stakeholders who can help the company serve its customers
- We can distinguish five different levels of relationship that can be formed with customers who have purchased a company’s product, such as a meeting or a banquet: 1. Basic- The company sells the product but does not follow up in any way. 2. Reactive- The company sells the the product and encourage the customer to call whenever he or she has any questions or problems. 3. Accountable. The company’s representative phones the customer a short time after the booking to check with the customer and answer questions. During and after the event, the salesperson solicits from the customer any product improvement suggestions and any specific disappointments. This information helps the company improve its offering continuously. 4. Proactive- The salesperson or others in the company phone the customer from time to time with suggestions about improvements that have been made or creative suggestions for future events. 5. Partnership- The company works continuously with the customer and with other customers to discover ways to deliver better value.
- What specific marketing tools can a company use to develop stronger customer bonding and satisfaction? It can adopt any of three customer value-binding approaches The first relies primarily on adding financial benefits to the customer relationship Although these reward programs and other financial incentives build customer preference, they can be imitated easily by competition and thus may fail to differentiate the company’s offer permanently The second approach is to add social benefits, as well as financial benefits Here company personnel work to increase their social bonds with customers by learning individual customers’ needs and wants and then individualizing and personalizing their products and services They turn their customers into clients The third approach to building strong customer relationships is to add structural ties, as well as financial and social benefits Structural changes are difficult to implement, but they are harder for competitors to match and create a competitive advantage until they are matched
- The traditional forms of direct marketing used in the hospitality industry are direct-mail marketing, telephone marketing, and kiosk marketing Direct-Mail Marketing Involves sending an offer, announcement, reminder, or other item to a person at a particular address Direct mail is by far the largest direct marketing medium Direct mail is well suited to direct one-to-one communication It permits high target market selectivity, can be personalized, is flexible, and allows easy measurement of results Telephone Marketing Involves using the telephone to sell directly to consumers and business customers Properly designed and targeted telemarketing provides many benefits, including purchasing convenience and increased product and service information However, the explosion in unsolicited outbound telephone marketing over the years annoyed many consumers Do-not-call legislation has hurt the telemarketing industry, but not all that much In fact, do-not-call appears to be helping most direct marketers more than it’s hurting them Many of these marketers are shifting their call-center activity from making cold calls on often resentful customers to managing existing customer relationships Kiosk Marketing As consumers become more and more comfortable with computer and digital technologies, many companies are placing information and ordering machines—called kiosks (in contrast to vending machines, which dispense actual products)—in stores, airports, and other locations Today, thanks to a wealth of new digital technologies, direct marketers can reach and interact with consumers just about anywhere, at anytime, about almost anything E-mail One advantage of e-mail is that it is quick and thus a good way to get rid of excess inventory Make the e-mail event-driven and related to events that will be of interest to the person receiving the e-mail To address spam concerns, most legitimate marketers now practice permission-based e-mail marketing, sending e-mail pitches only to customers who "opt in." Mobile Phone Marketing With more than 285 million Americans now subscribing to wireless services, many marketers view mobile phones as the next big direct marketing medium A recent study estimates that worldwide mobile ad spending will grow from the current $3.1 billion annually to $28.8 billion by 2013 As with other forms of direct marketing, however, companies must use mobile marketing responsibly or risk angering already ad-weary consumers Podcasts and Vodcasts Podcasting and vodcasting are on-the-go, on-demand technologies With podcasting, consumers can download audio files (podcasts) or video files (vodcasts) via the Internet to a handheld device and then listen to or view them whenever and wherever they wish Interactive TV Interactive TV (iTV) lets viewers interact with television programming and advertising using their remote controls Interactive TV gives marketers an opportunity to reach targeted audiences in an interactive, more involving way During the ads, a bar at the bottom of the screen lets viewers use their remotes to choose additional content and offers, such as on-demand free product samples, brand channels, or video showcases
- Today, thanks to a wealth of new digital technologies, direct marketers can reach and interact with consumers just about anywhere, at anytime, about almost anything E-mail quick and a good way to get rid of excess inventory Make the e-mail event-driven and related to events that will be of interest to the person receiving the e-mail (Orlando, LA in my own example) To address spam concerns, most legitimate marketers now practice permission-based e-mail marketing, sending e-mail pitches only to customers who "opt in." Mobile Phone Marketing 285 million Americans subscribe to wireless services, marketers see mobile phones as the next big direct marketing medium A recent study estimates that worldwide mobile ad spending will grow from the current $3.1 billion annually to $28.8 billion by 2013 As with other forms of direct marketing, however, companies must use mobile marketing responsibly or risk angering already ad-weary consumers Podcasts and Vodcasts Podcasting and vodcasting are on-the-go, on-demand technologies With podcasting, consumers can download audio files (podcasts) or video files (vodcasts) via the Internet to a handheld device and then listen to or view them whenever and wherever they wish Interactive TV Interactive TV (iTV) lets viewers interact with television programming and advertising using their remote controls Interactive TV gives marketers an opportunity to reach targeted audiences in an interactive, more involving way During the ads, a bar at the bottom of the screen lets viewers use their remotes to choose additional content and offers, such as on-demand free product samples, brand channels, or video showcases
- In one way or another, most companies have now moved online. Creating a Website For most companies, the first step in conducting online marketing is to create a Website However, not just creating but designing an attractive site and find ways to get consumers to visit the site, stay around, and come back often Web sites vary greatly in purpose and content corporate (or brand) Website: customer goodwill, collect customer feedback, and supplement other sales channels rather than sell the company's products directly marketing Website: These sites engage consumers in an interaction that will move them closer to a direct purchase or other marketing outcome Placing Ads and Promotions Online Because of the internet, companies are shifting more of their marketing dollars to online advertising to build their brands or attract visitors to their Websites The major forms of online advertising include search-related ads, display ads, and online classifieds Online marketers use viral marketing, the Internet version of word-of-mouth marketing Creating or Participating in Online Social Networks (traffic, messaged can be targeted, increase awareness, manage online reputation) Over 100 million people visit a social network daily These social network users have changed the way we do business Countless independent and commercial Web sites have arisen that give consumers online places to congregate, socialize, and exchange views and information Participating successfully in existing online social networks presents challenges Companies participating in Web communities must learn how to add value for consumers to capture value in return Listening to what your customers saying is good, but engaging in the conversation is better
- Online privacy is perhaps the number-one e-commerce concern. Most e-marketers have become skilled at collecting and analyzing detailed consumer information. Marketing can easily track Web site visitors, and many consumers who participate in Web site activities provide extensive personal information. This may leave consumers open to information abuse if companies make unauthorized use of the information in marketing their products or exchanging database with other companies