Direct marketing

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14 Direct Marketing 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: ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ Direct selling Direct mail Telemarketing Internet selling Direct action marketing Catalog selling Television/ print media Cable TV 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 . . . ¾Advertising ¾Public Relations ¾Personal Selling ¾Sales Promotion ¾Support Media Database Marketing The use of specific information about individual customers and/or prospects to implement more effective marketing communications and selling. Used to: ¾ ¾ ¾ ¾ Improve selection of target markets Encourage repeat purchase Cross-sell other products and services Develop one-to-one relationships with customers Developing a Database Sources Sources of of data data base base information information 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 ƒ ƒ ƒ ƒ ƒ ƒ ƒ Name Address/Zip code Telephone number Length of residence Age Gender Marital status Family data Education Income Occupation Transaction history ƒ Promotion history ƒ Inquiring history ƒ Unique identifier ƒ ƒ ƒ ƒ Contents of a Comprehensive Business to Business Data Base ƒ Name of company, contact or decision maker(s) ƒ Title of contact ƒ Telephone number ƒ Source of order/inquiry or referral ƒ Credit history ƒ Industrial classification ƒ Size of business ƒ Revenues ƒ Number of employees 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 ƒ ƒ ƒ ƒ ƒ Direct mail Broadcast media (direct response ads/informercials) Print media Telemarketing Direct selling Types of Direct Mail “All forms of advertising sent directly to prospects through the U.S. Postal Service or through private services.” ƒ Catalogs ƒ Inclusions ƒ Flyers ƒ Reprints ƒ Folders ƒ Sales letters ƒ Postcards ƒ Self-mailers Direct Mail Advantages and Disadvantages Advantages ƒ ƒ ƒ ƒ ƒ ƒ ƒ Control Coverage Flexibility Impact Reach Response Selectivity Disadvantages ƒ ƒ ƒ ƒ Delays in delivery High cost per exposure List quality assurance Saturation among audience Porsche uses direct mail to target potential customers Direct Response Advertising Types “All forms of advertising designed to obtain immediate, direct response by mail, telephone, the Internet or personal visit from audience members.” 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 Direct Response Pros & Cons Advantages Disadvantages ƒ Advertisers acquire or enhance a data base of individual customers. ƒ Customers can’t handle or inspect the product before purchasing. ƒ Customers are served with a greater selection from a central inventory. ƒ Merchandise returns and subscription cancellations may be numerous. ƒ Response options enable audience to act right after exposure occurs. ƒ Seller reputation and prestige may be compromised by the poor image of the method. ƒ No store is required and customers can buy from their own homes. Catalogs - Pros & Cons Advantages ƒ Provides buyers with wide selections ƒ Usually welcomed by shoppers ƒ Design offers high impact potential ƒ Merchandise is centrally inventoried ƒ Fulfillment facilities closely controlled ƒ Timing can be geared to seasonal needs ƒ Split-run testing can insure effectiveness Disadvantages ƒ Product costs are usually very high ƒ Cost per contact is relatively high ƒ Saturation for some markets is likely ƒ Delivery or fulfillment may be delayed 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. Outbound Telemarketing Advantages Disadvantages ƒ Interactive contact ƒ Intrusive nature ƒ Extensive reach ƒ Poor image of method ƒ Caller-controlled timing ƒ High cost of contact ƒ High impact ƒ Extensive caller training ƒ Low conversion rate ƒ Namelist inadequacies ƒ High termination rates ƒ High reneges, returns Inbound Telemarketing Pros & Cons Advantages Disadvantages 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 holding. ƒ Immediacy of method permits great control of inventory ƒ Labor-intensive call answering facilities may be required. ƒ Personnel direction system may be required for efficiency. ƒ Nonproductive call rates may be exceedingly or unacceptably high.
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