1. © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Chapter Fourteen
Direct Marketing
Direct Marketing
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

2. Direct Marketing Defined
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 prospect or customer
Radio
Telemarketing
TV Selling
Direct Selling
Magazine and Newspaper
Direct Mail

3. ALSO
“Direct marketing is an interactive system of marketing which uses one or more advertising media to affect a measurable response and/or transaction at any location.”

4. Growth of Direct Marketing
Direct Marketing Syndicates
Consumer Credit Cards
Miscellaneous factors
Changing Structure of Society
Changing Structure of Markets
Technological Advances

5. Direct Marketing Combines With . . .
Advertising
Public Relations
Internet
Direct Marketing
Support Media
Personal Selling
Sales Promotions

6. DM Ads

10. How Database Marketing Works

11. 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
Inquiry
Unique
Identifier

12. 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
Unique
Identifier

13. Characteristics of Direct Marketing
Customer/prospect databases that make 1:1 targeting possible
A view of customers as assets with lifetime value
Ongoing relationships and affinity with customers
Data-based market segmentation
Research and experimentation (testing)
Benefit-oriented direct-response advertising
Measurement of results and accountability for costs
Interactivity with customers on a personalized and individualized basis
Multimedia direct response communication
Multichannel fulfillment and distribution

14. Historic Comparison Between Direct and Traditional Brand Marketing
Direct Marketing
Traditional Brand Marketing
Direct selling to individuals with customers identifiable by name, address and purchase behavior
Mass selling with buyers identified as broad groups sharing common demographic and psychographic characteristics
Products have the added value of distribution direct to the customer, an important benefit
Product benefits do not typically include distribution to the customer’s door
The medium is the marketplace
The retail outlet is the marketplace
Marketing controls the product all the way through delivery
The marketer typically loses control as the product enters the distribution channel
Advertising is used to generate an immediate transaction … an inquiry or an order
Advertising is used for cumulative effect over time for building image, awareness, loyalty and benefit recall. Purchase action is deferred.
Repetition of offers, promotional messages, toll-free numbers and web addresses are used within the advertisement
Repetition of offers and promotional messages are used over a period of time
Customer feels a high perceived risk – product bought unseen, recourse is distant
Customer feels less risk – has direct contact with the product and direct recourse

15. Convergence of DM and Brand
The differences have blurred due to the digital revolution … today…
Most traditional marketers conduct marketing from a Web site, catalog, toll-free number and have a “call-to-action” in their ads
Most direct marketers now create and reinforce brand strategies at the individual level

16. Objectives of Database Marketing
Improve Selection of Market Segments
Stimulate Repeat Purchases
Objectives
Customer Relationship Management
Cross-selling Other Products

17. 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

18. Developing a Database Sources Kiosk Activity Direct Mails Surveys
Catalogs
111 Services
0800 toll free

19. Effective Databases RFM Scoring Recency Monetary transactions
(How much do they spend?)
Recency
(How recently did the customer purchase?)
Frequency
(How often do they purchase?)

20. Direct Marketing Strategies
One-Step
Two-Step
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

21. Direct-Marketing Media
Infomercials
Telemarketing
Print, catalogs
Broadcast
Teleshopping
TV Spots
Home shopping
Direct Mail

22. Types of Direct Mail
All forms of advertising sent directly to prospects through the Postal Service or through private services
Broadsides
Postcards
House lists
Inclusions
Catalogs
Reprints
Flyers
Sales letters
Folders
Self-mailers

23. Porsche Targets Prospects with Direct Mail

24. Success with Catalogs

25. TV Spots, Infomercials, and Homeshopping

26. A Direct Response Print Ad

27. Telemarketing Outbound Inbound
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.

28. Audiotex or Telemedia

29. Forms of Direct Selling
Repetitive person-to-person
Nonrepetitive person-to-person
Party Plans

30. Cutco Knives Employs Direct Selling

31. Measuring Effectiveness
Cost per Order (CPO)

32. Direct Marketing Advantages
Selective reach
Segmentation capabilities
Direct Marketing Advantages
Frequency potential
Flexibility
Timing
Personalization
Costs
Measures of effectiveness

33. Direct Marketing Disadvantages
Accuracy
Image factors
Content support
Do Not Contact lists
Rising costs

34. A number of factors are promoting the attractiveness of direct marketing. The main factors are:
Availability of consumer credit cards.
Availability of professional agencies.
Competitive Pressures, Rising Media Costs, and Market
Fragmentation.
Increasing family incomes, including dual-income
families.
Technological advances.

35. Direct Marketing Decisions
For successful implementation of direct-marketing, marketers must establish objectives, specify target market, choice of strategies, and set evaluation criteria.

36. Direct-Marketing Objectives
Objectives of direct marketing usually focus on seeking direct response in terms of behavior.

37. Market Segmentation
Market segmentation and targeting the right customers are critical to the success of promotional programme. Customers can be grouped on the basis of age, sex, income, education, lifestyle, and stage in family life cycle etc.

38. Direct marketers use a database.
The database should provide the answers to the following questions:
Where do they live?
How did they make contact first time?
What have they purchased?
How often have they purchased?
What is the monetary value of their purchases?
How do they order or purchase, through the Internet, mail, phone, or in person?
What is known about them and their families, occupation, education, children, interests, attitudes, and payment histories etc.?
In case of B2B, who are the influencers, users, deciders, and purchasers?
Location of corporate office and branch offices.

39. Direct Marketing Flow Chart
(Source: G. Belch and M. Belch, Advertising and Promotion. Based on figure by Martin Bair, Henry R. Hoke, Jr., and Robert Stone).

40. Direct Marketing Offer and Media
There are five important decision areas: product, offer, medium, distribution method, and creative strategy.
One-Step Approach
Two-Step Approach
Direct Mail
Catalogues
Broadcast Media
Print Media
Telemarketing
Electronic Shopping
Direct Selling

41. Advantages of Direct Marketing
Direct marketing offers the advantage of reaching large number of well- defined target customers and almost eliminates waste coverage.
Good quality databases are available from independent suppliers and the marketer can segment customer groups with considerable precision.
Direct marketer can personalise the message.
Direct marketing can deliver almost perfect offers to customers.
Marketer can build desired frequency level based on media.
Direct marketing offers creative flexibility in different media.
Direct marketer can quickly develop a list of specific profiles for direct mail.
Direct marketing is more effective in building customer relationship.
It is very cost effective considering the sale generated per contact.
The results can be measured most accurately.

42. The Processes of Direct and Interactive Marketing
Primary goal:
The creation and cultivation of a customer
Basic Premise:
Customer and prospect responses are measurable
Customer data drives all DM strategies
Multiple channels are used to serve the customer

43. Customer Similarity and Customer Value
Database technology made it possible to track customer transactions and actions
Lifetime Value of a Customer

44. The Direct and Interactive Marketing Model
Marketer
Direct
Communication
Hi-Tech
Media
Elect.
Print Media
Prospect/Customer Database
Target Customer/Prospect
Measurable
Response
and/or
Transaction
Historical Foundations
Multi-Channel
Fulfillment
Mail/Cat
Web
Physical
Store

45. Components of the Direct and Interactive Marketing Model
Direct Communication 1:1
Multiple Media
Measurable Response
Database
Customer Relationships
Multichannel Fulfillment/Distribution

46. Primary Applications of Direct and Interactive Marketing
Traffic-building at the seller’s location
Lead-generation at the buyer’s location
Mail order (remote location)
Multichannel distribution

47. Primary Users of Direct and Interactive Marketing
Product and service enterprises
Customer and industrial enteprises
Profit and non-profit organizations
Fundraising organizations
Political action groups

48. Trends in Direct and Interactive Marketing
Creating In-Store Traffic
Directing Online Traffic
Membership (similarity) Clubs
Issues of Privacy and Security

49. Customer Databases
An organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, psychographic, and behavioral data.

50. Forms of Direct Marketing