1. BSAD 113 DIRECT MARKETING Lars Perner, Instructor 1 DIRECT MARKETING l Economics of eliminating intermediaries l Services provided by intermediaries l Circumstances favoring direct marketing l Opportunities for segmentation

2. BSAD 113 DIRECT MARKETING Lars Perner, Instructor 2 Is “Eliminating the Middleman” A Good Idea? l Intermediaries usually perform services more efficiently than you can l Optimal length of challens May change over time

3. BSAD 113 DIRECT MARKETING Lars Perner, Instructor 3 Services Provided By Intermediaries l Breaking bulk l Financing l Contact with customers l Consolidating goods l Distribution l Services

4. BSAD 113 DIRECT MARKETING Lars Perner, Instructor 4 Types of Direct Marketing l Direct sale to consumer supposedly eliminates “fat” from distributors (e.g., Dell) l Catalog retailers Specialty Convenience l Customizers e.g., Expedia (Travel) l Promotional Infomercials l Combinations e.g., Geico

5. BSAD 113 DIRECT MARKETING Lars Perner, Instructor 5 Circumstances Favoring Direct Marketing l Large absolute margins (e.g., Dell) l Need for customization l Large inventory l Need to target narrow segment

6. BSAD 113 DIRECT MARKETING Lars Perner, Instructor 6 Means of Segmentation in Direct Marketing l Income l Past purchases l Ethnic surnames l Credit history l Hobbies/interests (magazine subscription lists)

7. BSAD 113 DIRECT MARKETING Lars Perner, Instructor 7 Sources of Info for Direct Marketing Segmentation l Phone books--often contain both names and addresses; yellow pages l State registrations (vehicle, driver’s licenses) l Past purchases (from company or outside) l Professional and school directories l Magazine subscription lists l Credit rating bureaus

8. BSAD 113 DIRECT MARKETING Lars Perner, Instructor 8 Advanced Segmentation Techniques in Direct Marketing l “ Merge-Purge” merge: add lists together; add purchased lists to own customer list purge: sort of duplicates special software allows for standardization of addresses (“phonetic” matching possible )

9. BSAD 113 DIRECT MARKETING Lars Perner, Instructor 9 Sources of List Value l Recency l Frequency of purchase l Value of past purchases l Geography (zip code as surrogate for lifestyle) l Gender identifiability