Direct Marketing Chapter Fourteen Direct Marketing

Direct Marketing Chapter Fourteen Direct Marketing
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

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 prospective customer.” Radio Direct Selling Telemarketing Magazine and Newspaper TV Selling Direct Mail Relation to text This slide relates to material on p. 447 of the text. Summary Overview This slide provides 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 magazine and newspaper, directing selling, telemarketing, TV selling, radio, and direct mail. Use of this slide This slide can be used to introduce and define direct marketing. More detailed discussion of direct marketing and its role in the IMC program will follow. TV Selling Radio Direct Mail Direct Selling Magazine and Newspaper © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Growth of Direct Marketing
Consumer Credit Cards Consumer Credit Cards Direct Marketing Syndicates Direct Marketing Syndicates Changing Structure of Society Changing Structure of Society Relation to text This slide relates to material on pp 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 and are shown in this slide. These include: Consumer credit cards – makes it easy for consumers to purchase Changing structure of society – money-rich and time-poor society Direct marketing syndicates – companies specializing in list development Technical advances – easier for consumers to shop and for marketers to reach targeted consumers through direct marketing methods Miscellaneous factors – changing values, sophisticated marketing techniques, industry’s improved image Use of this slide This slide can be used to discuss reasons for the growth of direct marketing. Technological Advances Technological Advances Miscellaneous factors © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Direct Marketing Combines With . . .
Advertising Advertising Internet Public Relations Public Relations Direct Marketing Relation to text This slide relates to material on pp 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 including public relations, personal selling, sales promotion, support media, and advertising. Use of this slide This slide can be used to show that direct marketing can be used in combination with the various elements of the promotional mix and can work synergistically with these tools. Support Media Support Media Personal Selling Personal Selling Sales Promotion Sales Promotion © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Database Marketing: How It Works
Relation to text This slide relates to material on pp and Figure 14-2 of the text. Summary Overview This slide presents a flow chart showing how a database works. It typically starts with the customer providing information through a warranty card or entering a sweepstakes. The information is then entered into computer and development of the database begins. The information is finally used in a variety of communication messages that are individually personalized to the consumer. Use of this slide This slide can be used to show how the process of database marketing operates. You might want to review the various steps in this process. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

A Comprehensive Consumer Data Base
Name Name Gender Gender Occupation Occupation Address/ Zip Code Address/ Zip Code Marital Status Marital Status Transaction History Transaction History Relation to text This slide relates to material on p. 451 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. This information includes contact information, demographics, and historical information related to purchase, inquiries, and responses to promotions. Use of this slide This slide can be used to show the contents of a consumer database. More sophisticated databases might include information such as psychographics, neighborhood information, and credit histories. Telephone Number Telephone Number Family Data Family Data Promotion History Promotion History Length of Residence Length of Residence Education Education Inquiring History Inquiring History Age Age Income Income Unique Identifier © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

A Comprehensive Business to Business Data Base
Comp. Contact or Decision Makers Comp. Contact or Decision Makers Industrial Classification Industrial Classification Headquarter, Multiple Location Headquarter, Multiple Location Title of Contact Title of Contact Size of Business Size of Business Purchase History Purchase History Relation to text This slide relates to material on p. 451 and Figure 14-3 of the text. Summary Overview This slide shows the various 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 contents of a business-to-business database. These types of databases are very important to business-to-business marketers. Telephone Number Telephone Number Revenues Revenues Promotional History Promotional History Source of Order/inquiry or Referral Source of Order/inquiry or Referral Number of Employees Number of Employees Inquiry History Inquiry History Credit History Credit History Time in Business Time in Business Unique Identifier © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Objectives of Database Marketing
Improve Selection of Market Segments Improve Selection of Market Segments Stimulate Repeat Purchases Stimulate Repeat Purchases Objectives Relation to text This slide relates to material on pp 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 as follows: 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-selling other products – current customers have strong potential for purchasing related products Customer relationship management – maintain relationship through personalized communications Use of this slide This slide can be used to discuss database marketing. 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. Cross-selling Other Products Customer Relationship Management Cross-selling Other Products © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Developing a Database List Services List Services Simmons Market Research Bureau Standard Rate & Data Service (SRDS) Standard Rate & Data Service (SRDS) Sources Relation to text This slide relates to material on p. 453 of the text. Summary Overview This slide shows the various sources of information used to create direct marketing databases. Some of 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. Use of this slide This slide can be used to discuss the various sources marketers can use to provide information for the creation of their databases. Companies can also build their own databases using information from contest/sweepstakes entries, loyalty programs, completed warranty cards and customer surveys, and responses to promotional offers. U.S. Census Bureau U.S. Census Bureau U.S. Postal Service U.S. Postal Service Direct Marketing Association Direct Marketing Association © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Effective Database Direct Marketing
Relation to text This slide relates to material on pp and IMC Perspective 14-1 of the text. Summary Overview This slide shows a direct mail piece sent by Hertz asking consumers to give their permission for Hertz to provide their name to its parent company, Ford, and others, and to allow Hertz to send information on other products and services. Use of this slide This slide can be used to show how a company can use cross-selling to create a database. This database information is then used to create special highly targeted discounts and promotions. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

One-Step Versus Two-Step Approach
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 Relation to text This slide relates to material on p. 456 of the text. Summary Overview This slide shows the two basic approaches that are generally 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 stage with the first used to obtain an inquiry or qualify a prospect and the second to complete the sale. Use of slide This slide can be used to introduce one- and two-step direct marketing strategies. 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. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Direct-Marketing Media
Direct Mail Direct Mail Catalogs Catalogs Telemarketing Broadcast Media Broadcast Media Media Relation to text This slide relates to material on pp that discusses direct media. Summary Overview This slide summarizes the types of media available to direct marketers, including direct mail, telemarketing, direct-response broadcasting, the Internet, and print. 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 . Both print and television can be used effectively for direct response advertising Print Media Print Media TV Spots TV Spots Homeshopping Infomercials Homeshopping Infomercials © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Types of Direct Mail “All forms of advertising sent directly to prospects through the U.S. Postal Service or through private services.” House lists Inclusions Broadsides Broadsides Postcards Postcards House lists Inclusions Catalogs Catalogs Reprints Reprints Relation to text This slide relates to material on pp 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 various options available to advertisers relative to direct mail. Some of these are house lists, inclusions, post cards, catalogs, reprints, sales letters, flyers, self-mailers and folders. 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. Flyers Flyers Sales letters Sales letters Folders Folders Self-mailers © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Porsche Targets Prospects with Direct Mail
Relation to text This slide relates to material on pp and Exhibit 14-6 of the text. Summary Overview This slide shows how Porsche North America uses direct marketing to appeal to upscale audiences. Porsche has been a long term believer of 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. Media advertising is used image building, while direct marketing plays a more targeted role. Use of this slide This slide can be used to show an example of how a company uses direct mail. Porsche directs their mail pieces to a precisely defined target market that is screened to match the demographics of Porsche buyers in selected geographic areas. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Direct Mail Advantages
Control Control Coverage Coverage Selectivity Exclusivity Exclusivity Advantages Relation to text This slide relates to material on pp , which discusses direct mail. Summary Overview This slide summarizes the advantages of direct mail, which include: Control Coverage Exclusivity Flexibility Impact Reach Response Selectivity Use of slide This slide can be used to discuss the advantages of direct mail. Many companies both large and small use direct mail to attract interest and attention from targeted consumers. Response Response Flexibility Flexibility Reach Impact Reach Impact © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Direct Mail Disadvantages
Clutter Clutter Negative Image of Medium Negative Image of Medium Delays in Delivery Delays in Delivery High Cost Per Exposure Relation to text This slide relates to material on pp , which discusses direct mail. Summary Overview This slide summarizes the disadvantages of direct mail, which include: Clutter Negative image of medium Delays in delivery High cost per exposure List quality uncertainty No content support Saturation among audience Use of slide This slide can be used to discuss the disadvantages of direct mail. While direct mail continues to be a favorite medium of many marketers, this medium has been impacted by the Internet as many companies have begun sending messages online. High Cost Per Exposure List Quality Uncertainty List Quality Uncertainty No Content Support Saturation Among Audience No Content Support © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Success With Catalog Direct Marketing
Relation to text This slide relates to material on pp of the text. Summary Overview This slide shows the Fall 2006 catalog for Illuminations. Illuminations sells directly through catalogs but also uses them to inform consumers of product offerings available in the stores. Use of this slide This slide can be used to show an example of how a company that started out exclusively a a catalog company has branched into retail outlets. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Pros & Cons of Catalogs + Pros - Cons
Provides buyers with wide selections Provides buyers with wide selections Production costs are usually very high Production costs are usually very high Usually welcomed by shoppers Usually welcomed by shoppers Saturation for some markets is likely Saturation for some markets is likely Design offers high impact potential Design offers high impact potential Delivery or fulfillment may be delayed Delivery or fulfillment may be delayed Relation to text This slide relates to material on pp of the text. Summary Overview This slide summarizes the advantages and disadvantages of catalogs. They are: Advantages Provides buyers with wide selections Usually welcomed by shoppers Design offers high impact potential Merchandise is centrally inventoried Fulfillment facilities closely controlled Timing can be geared to seasonal needs Split-run testing can insure effectiveness Disadvantages Production costs are very high Saturation for some markets is likely Delivery or fulfillment may be delayed Customer can’t inspect or handle goods Use of this slide This slide can be used to discuss advantages and disadvantages of using catalogs as a direct marketing medium. The number of catalogs mailed and the number of catalog shoppers have both increased in recent years. Merchandise is centrally inventoried Merchandise is centrally inventoried Customer can’t inspect or handle goods Fulfillment facilities closely controlled Fulfillment facilities closely controlled Timing can be geared to seasonal needs Timing can be geared to seasonal needs Split-run testing can ensure effectiveness Split-run testing can ensure effectiveness © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

TV Spots, Infomercials, and Homeshopping
Relation to text This slide relates to material on pp of the text. Summary Overview This slide shows how Volvo uses an infomercial to attract buyers. TV 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. Use of this slide This slide can be used to discuss the various ways television is used in direct-marketing programs. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

A Direct Response Print Ad
Relation to text This slide relates to material on p. 460 of the text. Summary Overview This slide is shows an ad for the Morning Sunshine Rooster Bowl by Lennox and 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 in direct response advertising so the receiver can immediately call to place the 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. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Outbound and Inbound Telemarketing
Telephone calling by the marketer or marketer’s agent to individual prospects, seeking purchase, subscription, membership, or participation by the call recipient. 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. Relation to text This slide relates to material on pp of the text. Summary Overview Telemarketing involves using the telephone to solicit sales. This slide provides a definition of outbound and inbound telemarketing. Outbound – telephone calling by the marketer to the individual prospect Inbound – marketers solicits prospect to call an 800 or 900 number Use of this slide This slide can be used to introduce telemarketing as a direct marketing tool. The telemarketing industry is a very big business as it employs over six million people and generates over $600 billion in sales each year. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Outbound Telemarketing
Advantages Disadvantages Interactive contact Interactive contact Intrusive nature Intrusive nature Extensive reach Extensive reach Poor image of method Poor image of method Caller-controlled timing Caller-controlled timing High cost of contact High cost of contact Relation to text This slide relates to material on pp of the text. Summary Overview This slide summarizes the advantages and disadvantages of outbound telemarketing. Advantages Interactive contact Extensive reach Caller controlled High impact Disadvantages Intrusive nature Poor image High cost of contact Low conversion rate Extensive caller training Name list inadequacies High termination rate High reneges, returns Use of this slide This slide can be used to discuss the advantages and disadvantages of outbound telemarketing. You might not that with the creation of the “Do Not Call” list by the FTC, the use of this form of telemarketing will be limited. High impact High impact Low conversion rate Low conversion rate Extensive caller training Extensive caller training Namelist inadequacies Namelist inadequacies High termination rates High termination rates High reneges, returns © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Inbound Telemarketing Pros & Cons
Response is highly convenient for the audience Response is highly convenient for the audience Labor-intensive call answering facilities may be required Labor-intensive call answering facilities may be required Method permits interactive selling and service Method permits interactive selling and service Personnel direction system may be required for efficiency Personnel direction system may be required for efficiency Relation to text This slide relates to material on pp of the text. Summary Overview This slide summarizes the advantages and disadvantages of inbound telemarketing. Advantages Response is convenient for audience Permits interactive selling and service Transactions are facilitated by high rate of credit card holding Immediacy of method permits great control of inventory Disadvantages Labor-intensive call answering facilities required Personnel direction system may be required for efficiency Nonproductive call rates may be exceedingly or unacceptably high Use of this slide This slide can be used to discuss the advantages and disadvantages of inbound telemarketing whereby customers initiate the call to a company, and also to discuss the development of the “Do Not Call List” described in Ethical Perspective 14-1. Transactions are facilitated by high rate of credit card holding Transactions are facilitated by high rate of credit card holding Nonproductive call rates may be exceedingly or unacceptably high Immediacy of method permits great control of inventory Immediacy of method permits great control of inventory © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Three Forms of Direct Selling
Repetitive person- to-person selling Repetitive person- to-person selling Nonrepetitive person- to-person selling Nonrepetitive person- to-person selling Direct Selling Relation to text This slide relates to material on pp 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) Nonrepetitive person-to-person selling – salesperson visits the buyers home, job or other location to sell infrequently purchased items (e.g., insurance) Party plans – salesperson offers products or services to groups of people through home or office parties and demonstrations (Tupperware) Use of this slide This slide can be used to introduce direct selling. 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. Party Plans © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Cutco Knives Employs Direct Selling
Relation to text This slide relates to material on pp and Exhibit of the text. Summary Overview This slide is an ad for Cutco, which is one of the many companies that use direct selling as the primary method of marketing their products. 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. Cutco has been extremely successful using this type of direct marketing program. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Direct Response Advantages
Advertisers acquire or enhance a data base of individual customers Advertisers acquire or enhance a data base of individual customers Customers are served with a greater selection from a central inventory Customers are served with a greater selection from a central inventory Relation to text This slide relates to material on pp of the text. Summary Overview This slide summarizes the advantages of using direct response advertising. They are: Advertisers acquire or enhance a database of customers Customers are served with a greater selection from a central inventory Response options enable audience to act right after exposure occurs No store is required and customers can buy from their own homes Use of this slide This slide can be used to discuss the advantages of direct response advertising. Direct response advertising can be an effective way to communicate messages and generate sales. Response options enable audience to act right after exposure occurs Response options enable audience to act right after exposure occurs No store is required and customers can buy from their own homes © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Direct Response Disadvantages
Customers can’t handle or inspect the product before purchasing Customers can’t handle or inspect the product before purchasing Merchandise returns and subscription cancellations may be numerous Relation to text This slide relates to material on pp of the text. Summary Overview This slide summarizes the disadvantages of using direct response advertising. They are: Customers can’t handle or inspect products before purchasing Merchandise returns and subscriptions cancellations may be numerous Seller reputation and prestige may be compromised by method’s poor image Use of this slide This slide can be used to discuss the disadvantages of direct response advertising. Despite these disadvantages direct response advertising has grown sharply in recent years. Merchandise returns and subscription cancellations may be numerous Seller reputation and prestige may be compromised by method’s poor image © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Overall Direct Marketing Pros & Cons
Advantages Disadvantages Selective Reach Selective Reach Image Factors Image Factors Segmentation Capability Segmentation Capability Accuracy Accuracy Frequency Potential Frequency Potential Content Support Content Support Relation to text This slide relates to material on pp of the text. Summary Overview This slide summarizes the overall advantages and disadvantages of direct marketing. Advantages Selective reach Segmentation capability Frequency potential Flexibility Timing Personalization Economy Measurement of effectiveness Disadvantages Image factors Accuracy Content support Rising costs Use of this slide This slide can be used to summarize the overall advantages and disadvantages of direct marketing. Although many of these have already been presented, this slide provides a general review. Flexibility Flexibility Rising Costs Timing Timing Personalization Personalization Economy Economy Measurement of Effectiveness Measurement of Effectiveness © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Direct Marketing Chapter Fourteen Direct Marketing

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Direct Marketing Chapter Fourteen Direct Marketing

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