Direct Marketing 14 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

QVC $6.5 billion a yearyear 2 nd 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 6060

Direct Marketing Defined Radio Direct Selling Magazine and Newspaper Direct Mail Telemarketing TV Selling 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

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

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

San Diego Encourages Visits

How Database Marketing WorksDatabaseWorks

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

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

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

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

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

Developing a DatabaseDatabase List Services Direct Marketing Association Direct Marketing Association Standard Rate & Data Service Standard Rate & Data Service U.S. Postal Service Simmons Market Research Bureau Simmons Market Research Bureau U.S. Census Bureau Sources

Effective Databases RFM Scoring Frequency Recency Monetary transactions

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

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

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

Porsche Targets Prospects with Direct Mail

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.

Success with CatalogswithCatalogs

TV Spots, Infomercials, and Homeshopping

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

A Direct Response Print Ad

Telemarketing 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. Outbound

Audiotex or Telemedia

Forms of Direct Selling Repetitive person-to-person Nonrepetitive person-to-person Party PlansPlans

Cutco Knives Employs Direct Selling

Measuring Effectiveness Cost per Order (CPO)

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

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