Direct MarketingDirect Marketing

direct efforts to a target audience using one or more media for the purpose of soliciting a response by phone, mail, the internet or personal visit from a prospective customer.” Include

Direct Marketing

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McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.

Direct Marketing Defined

“The total of activities by which the seller direct

efforts to a target audience using one or more media for the purpose of soliciting a response by phone, mail, the internet or personal visit from a prospective customer.”

Includes:

Factors contributing to the growth of

direct marketing

¾ Consumer Credit Cards

ƒ Over 1 billion credit cards in circulation

¾ Direct Marketing Syndicates Creating Opportunities

ƒ List development

ƒ Statement inserts

ƒ Catalogs/Sweepstakes

¾ Changing Structure of American Society

ƒ Increase in two income households

ƒ Money-rich/Time-poor – need for convenience

¾ Technological Advances

ƒ Better communications via electronic media & computers

ƒ Rapid package delivery

ƒ Electronic delivery systems

¾ Ability to measure effects of direct marketing efforts

ƒ Cost per order/ Cost per inquiry

Direct Marketing Combines With

Database Marketing

Used to:

¾ Improve selection of target markets

¾ Encourage repeat purchase

¾ Cross-sell other products and services

¾ Develop one-to-one relationships with

customers

The use of specific information about individual customers and/or prospects to implement more effective marketing communications and selling.

Sources of data base information

Developing a Database

¾ Internal Records

¾ U.S Census Bureau

¾ U.S Postal Service

¾ List Services

¾ SRDS – Direct Mail Lists and Data

¾ Simmons Market Research Bureau

¾ Direct Marketing Association

PETCO builds a database through its loyalty program

Contents of a Comprehensive Consumer Data Base

ƒ Promotion history

ƒ Inquiring history

ƒ Unique identifier

Contents of a Comprehensive Business to Business Data Base

ƒ Time in business

ƒ Headquarters location

ƒ Multiple locations

ƒ Purchase history

Direct Marketing Strategies

¾ One-step approach - direct marketing media used directly to solicit an order

¾ Two-step approach – multiple efforts used to generate a response First effort is used to screen,

qualify or interest potential buyers Follow-up used to achieve order or close the sale

¾ Direct Marketing Media

Types of Direct Mail

“ All forms of advertising sent directly to

prospects through the U.S Postal Service or through private services.”

Direct Mail Advantages and Disadvantages

ƒ High cost per exposure

ƒ List quality assurance

ƒ Saturation among audience

Porsche uses direct mail to target potential customers

Direct Response Advertising Types

ƒ TV and CATV commercials and infomercials selling products by phone or mail order

ƒ Newspapers, magazines and other print media ads with send-in or call-in coupon order forms

ƒ Direct mail pieces and inserts soliciting inquiry

recipients

ƒ Card decks, coupon booklets and mini-catalogs

seeking orders for one or more products

ƒ E-mail messages to computer users

“ All forms of advertising designed to obtain

immediate, direct response by mail, telephone, the Internet or personal visit from audience members.”

Direct Response Pros & Cons

ƒ Advertisers acquire or

enhance a data base of

individual customers

ƒ Customers are served

with a greater selection

from a central inventory

ƒ Response options enable

audience to act right

after exposure occurs

ƒ No store is required and

customers can buy from

their own homes

ƒ Customers can’t handle or inspect the product before purchasing

ƒ Merchandise returns and subscription cancellations may be numerous

ƒ Seller reputation and prestige may be

compromised by the poor image of the method

Catalogs - Pros & Cons

Advantages

ƒ Provides buyers with wide

selections

ƒ Usually welcomed by shoppers

ƒ Design offers high impact

ƒ Customer can’t inspect or handle goods

ƒ Returns may sometimes

be excessive

Neiman Marcus uses traditional and online catalogs

Outbound and Inbound Telemarketing

Outbound

Telephone calling by the marketer or marketer’s agent to individual prospects, seeking purchase, subscription, membership, or participation by

the call recipient.

Inbound

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.

ƒ Poor image of method

ƒ High cost of contact

ƒ Low conversion rate

ƒ Extensive caller training

ƒ Namelist inadequacies

ƒ High termination rates

ƒ High reneges, returns

Inbound Telemarketing Pros & Cons

Advantages

ƒ Response is highly

convenient for the

audience

ƒ Method permits interactive

selling and service

ƒ Transactions are facilitated

by high rate of credit card

be required

ƒ Personnel direction system may be required for efficiency

ƒ Nonproductive call rates may be exceedingly or unacceptably high

Overall Direct Marketing Pros & Cons