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Kotler, Armstrong
Principles of Marketing 4e
Chapter 14
Direct and Digital Marketing
Chapter Objectives
1. Explain the nature of direct and digital marketing.
2. Discuss the benefits of direct and digital marketing
to both marketing organisations and their
customers, and identify the reasons for the rapid
growth in this area of integrated marketing
communication.
3. Discuss the various direct marketing techniques
and their application.
4. Explain how direct and digital marketing
campaigns are developed, pretested, implemented
and evaluated.
5. Discuss the public policy and ethical issues facing
direct and digital marketers.
Direct and Digital Marketing
• Internet is a public network.
• Intranet: secure websites accessed by company
employees only.
• Extranet: websites accessed by both employees
and
known customers.
• Customer relationship management (CRM):
–
–
–
–
one-to-one marketing (OnetoOne)
direct marketing or direct-order marketing
E-marketing
interactive marketing
Direct and Digital Marketing
• Another feature of a direct and digital
marketer is a digital knowledge base:
– A database of frequently asked questions or
solutions to problems maintained by a
company to assist customers.
Figure 14.1 Methods of Interacting
With Customers
What Is Direct Marketing?
• ‘Direct marketing is an interactive system of
marketing which uses one or more
advertising media to effect a measurable
response and/or transaction at any location.’
(Bob Stone, Successful Direct Marketing Methods. 4th ed, Lincolnwood,
Illinois: NTC Business Books, 1988), p. 3. )
Table 14.1 Forms of Direct and
Online Marketing
Table 14.2 Mass Marketing Versus
One-to-One Marketing
What Is Digital Marketing?
• Digital marketing entails interaction with
known customers and others in the
marketing channel, on a one-to-one basis,
often in real time, to maintain value-laden
relationships and to generate a
measurable response and/or transactions
using electronic network tools and
technologies.
What Is Digital Marketing?
• We live in an increasingly wired world, making up a
large part of the economy.
• Consumers are more knowledgeable and
increasingly selective about whom they will accept
communication from.
• Marketing organisations have changed in form and
value as a result of digitisation, globalisation and
deregulation.
• Other roles for the web include relationship
management.
• Due to interactivity in real-time, online marketing fits
more closely with direct response marketing than
with the old mass-marketing paradigm.
Digital One-to-One Marketing
Strategy
• The net permits interactive communication and is
useful for business processes such as order taking
and processing.
• The net facilitates CRM.
• However, household use of the net differs in
different countries even when they are culturally
close.
• Australasian marketing organisations seem less
willing to interact online on a one-to-one basis than
those in the UK.
• Content analysis of Australasian websites shows an
absence of features required for international
transactions or CRM in other than local markets.
Marketing organisations have changed in
form and value as a result of:
A.
B.
C.
D.
E.
digitisation
globalisation
deregulation
all of the above
none of the above
Figure 14.2 Industry Examples of
Customer Differentiation
Direct and Digital Database Use
• Direct and digital marketing entails development
and maintenance of electronic databases to
interact with past, present and/or potential
customers and others in the marketing channel,
on a one-to-one basis, often in real time, and
where the databases are used to maintain
value-laden relationships and to generate a
measurable response and/or transactions
through the integrated use of electronic network
tools and technologies.
How Are Direct and Digital
Marketing Databases Used?
• Marketing organisations use their
databases in a number of ways:
1.Identifying prospects
2.Deciding which customers should receive a
particular offer
3.Deepening customer loyalty
4.Reactivating customers
5.Data mining
Ben is checking for patterns and trends that might
exist in his customer database. He is engaging in:
A.
B.
C.
D.
E.
data imaging
data mining
data evaluation
data segmentation
data regression
How Are Direct and Digital
Marketing Databases Used?
1. Identifying prospects
– Many companies generate sales leads by
advertising their products or offers. Ads
generally have a response feature, such as a
business reply card or toll-free phone number.
The database is built from these responses.
How Are Direct and Digital
Marketing Databases Used?
2. Deciding which customers should
receive a particular offer
– Companies identify the profile of an ideal
customer for an offer. Then they search their
databases for individuals most closely
resembling the ideal type. By tracking
individual responses, the company can
improve its targeting precision over time.
How Are Direct and Digital
Marketing Databases Used?
3. Deepening customer loyalty
– Companies can build customers’ interest and
enthusiasm by remembering their preferences
and by sending appropriate information, gifts,
or other materials.
How Are Direct and Digital
Marketing Databases Used?
4. Reactivating customers’ purchases
– The database can help a company make
attractive offers of product replacements,
upgrades, or complementary products just
when customers might be ready to act.
How Are Direct and Digital
Marketing Databases Used?
5. Data mining
– Companies maintain many databases in what today
are large data warehouses. Data mining entails
checking databases for patterns and trends that are
hypothesised to exist, or in order to find new
connections between data item. Modern software
enables open-ended queries that involve systematic
searches for relationships and patterns within and
between databases.
Figure 14.5 An Integrated Direct
Marketing Approach
Direct and Digital Tools and
Techniques (1)
•
•
•
•
Direct Print and Reproduction
Direct Mail
Catalogues
Direct-response television, radio and print
marketing
• Telemarketing
Direct mail is a popular medium because
it:
A. can be personalised
B. permits target selectivity
C. is flexible
D. allows early testing and response
measurement
E. all of the above
Direct and Digital Tools and
Techniques (2)
•
•
•
•
Telesales
Electronic Dispensing and Kiosks
Direct Selling
Electronic Shopping
Evaluating Direct Marketing
Results
• Direct and online marketing organisations are
usually interested in a number of measures of
performance concerning individual programs and
integrated campaigns alike to allow later monitoring
of results such as:
–
–
–
–
–
–
–
sales lead generation
database generation
fulfilment response
product inquiries
sales response
profitability
return on the investment made in programs and
campaigns
– lifetime customer value
Evaluating Digital Marketing
Results
• Online Marketing Communications measures:
– Web-centric measures (log files, page
impressions)
– Audience-centric (cookies) measures
– Network-centric measures
• Digital Marketing Channel Performance
• Relationship Management
• Customer Lifetime Value
Evaluating Database Performance
• Three main criteria have been
identified as:
– Recency of purchase
– Frequency of purchase
– Monetary value of purchase
Privacy
• Privacy concerns cover such aspects as
cross-referencing data on individuals, access
to lists by the unscrupulous and the issue of
unwanted mail.
• SPAMMING: sending unsolicited email to
large numbers of people with a view to
making a sale.
• The best solution is to ask people which
product categories—if any—they would like
to receive information about.