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Integrating Direct
Marketing and Personal
©2012 Cengage Learning. All Rights Reserved.
Introductory Scenario:
Don’t Mess With Les
Who was Les Wunderman?
He created the Columbia House record club and
“invented” the modern era of direct marketing.
The genius of his idea was creating a dialogue
(monthly response) with consumers which led to
building a relationship with the brand.
This “relationship” created through dialogue
resulted in multiple purchases over time.
The Evolution of Direct Marketing
An interactive system of marketing which uses one or
more advertising media to effect a measurable
response and/or transaction at any location.
• The scope of direct marketing:
An interactive dialogue with consumers
Pursues an immediate, measureable
response (e.g. sale or inquiry)
Identify prospects for future contacts
Transactions can take place anywhere
Mail, telephone, Internet
Availability in the physical and virtual world
Direct Marketing: A Look Back
• L.L. Bean was founded in 1912 on $400.00
• Fundamental strategy:
o Commitment to quality
o Descriptive copy that was informative,
factual, and low-key
o Satisfaction guarantee
• L.L. Bean built a good mailing list
• By 1990 L.L. Bean’s sales were $600
million; by 2009, over $1.4 billion
Direct Marketing: Milestones
1450 Invention of movable type
1667 First gardening catalog
1744 Franklin formulates mail-order concept of
“satisfaction guaranteed”
1872 Montgomery Ward catalog
1886 Sears starts mail-order business
1917 Direct Marketing Advertising Association
Direct Marketing: Milestones
Third-class bulk mail introduced
First credit card
Lillian Vernon places first ad
Publishers Clearing House founded
AT&T introduces toll-free 800 service
Over 100 million in U.S. shop at home
Direct Marketing Today
Rooted in, but much more than just mail-order.
Many different activities using multiple media
A complex, diverse tool used by organizations
throughout the world.
Three Principle Purposes:
Close a sale with a customer
ID prospects and develop customer database
Engage customers, seek their advice and generate brand
loyalty—remember consumer generated content—how are
new technologies being used to do this?
What’s Driving the Growth of
Direct Marketing?
CONVENIENCE for today’s dual income and
single parent households.
Still liberal attitudes toward using credit—despite
the recent recession.
Greater access to toll-free calling.
Computer technology/new media facilitate online
transactions and database management.
More precise segmentation.
Opportunity for relationship building.
Cost per inquiry (CPI) and cost per order (CPO)
advantages of direct marketing.
Courtesy Adirondack Country Store
Marketers like the
Adirondack Country
Store, use catalogs,
toll- free numbers,
and the Web to take
advantage of direct
Database Marketing
• Knowing who the best customers
are as well as what and how often
they buy.
• Mailing lists:
o Internal lists (existing customers)
o External lists
© Cabella’s; Used with permission
Databases allow
to reach their best
customers with direct
List Enhancement
• Internal lists can be augmented with
externally provided lists
• Incorporating information from
external databases
o Demographic data
o Geo-demographic data
o Psychographic data
o Behavioral data
The Marketing Database
Includes data collected directly from
individual customers
Goal: Develop cyber intimacy
Database marketing creates efficiencies
– Targeted versions of catalogs: seasonal, age specific
Marketing Database Applications
Includes data collected directly from
individual customers
RFM Analysis of customers: recency, frequency, and
Past behaviors can be used to predict future behavior
Reinforcing and recognizing best customers
Frequency-marketing programs
Stronger position to cultivate new customers
through more astute external list purchases
The Privacy Concern
Privacy concerns result in:
Do not call registry
Spam blockers
Opt-out options
Firms can overcome privacy concerns
Nurture the relationship with current customers with
honest, effective service
Courtesy, Zero Knowledge Systems, Inc.
The Internet has heighted consumer privacy
concerns with respect to direct marketing
Media Applications in Direct Marketing
Direct response advertising on TV
Direct Mail
Email/Mobile marketing
Other media
o Magazines
o Newspapers
o Infomercials
Direct Mail
Selective, flexible, little waste, lends itself to
testing, uses many formats
Direct mail is expensive
o May cost 15 to 20 times more to reach a
person with a direct mail piece than with a
TV commercial
Mail lists can be plagued with bad addresses
Mail delivery dates can be unpredictable
Telemarketing can be a potent tool. As with direct mail:
Contacts can be selectively targeted.
o The impact of programs is easy to track.
o Experimentation with different scripts and delivery formats is
simple and practical.
o Telemarketing involves live constructive dialogue.
Telemarketing shares many of direct mail’s limitations:
Very expensive on a cost-per-contact basis.
Names and addresses go bad as people move, and wide
spread use of cell phones has made directories nearly
Telemarketing does not share direct mail’s flexibility in delivery
options. When you reach people in their home or workplace,
you have a limited span of time to convey information and
request some response.
Telemarketing is becoming a highly maligned practice in
The FTC’s “Do Not Call” list has millions of subscribers
Bulk email is known as “spam”
Fraudulent email know as “phishing”
However email is an increasingly popular tool for
• Advantages
Good response rates—better than direct mail
Netiquette suggests getting consumer
permission to send product information
(i.e. obtaining opt-in permission)
Avoid bulk emailings
Direct Response Advertising in Other
Magazines use bind-in insert cards
Toll-free 800 numbers are vital to direct
marketers using ads in newspapers and
o Long television advertisement
Range in length from 3 to 60 minutes
Keys to success
- Testimonials, frequent call to actions,
ensure same-day response
- New research shows that direct response
ads are the least likely to be zapped by
DVR users
Courtesy, Oreck Corporation
Magazine ads
are ideal for
Closing the Sale with
Direct Marketing and/or Personal
• Functional specialists across several
media need to work together.
• Marketing databases can lead to
interdepartmental rivalries.
• Growth of direct marketing often
means cuts in other promotional
• One solution: the MARCOM manager
The Critical Role of Personal Selling
• The face-to-face communication and
persuasion process
• Most effective with products or
services that are:
Higher priced
Complicated to use
Tailored/customized to users’ needs
Offer a trade-in option
Judged at the point-of-purchase
Types of Personal Selling
Order taking:
Accepting orders for merchandise or scheduling services; deal with
existing customers who are lucrative to a business due the low cost
of generating additional revenues from them. Order taking is the
least sophisticated of selling efforts.
Creative selling:
Selling where customers rely heavily on the salesperson for
technical information, advice, and service. It is the most
sophisticated and complex selling effort.
System selling:
Entails selling a set of interrelated components that fulfill all or a
majority of a customer’s needs in a particular area. System selling
is often executed by a “team” of sales people.
The missionary salesperson:
Calls on accounts with the purpose of monitoring the satisfaction of
buyers and updating buyers’ needs. They may provide product
information after a purchase.
Customer Relationship
Management (CRM)
Salespeople play a critical role in cultivating
long-term relationships with customers—which
often is referred to as a customer relationship
management (CRM) program.
CRM views the relationship with buyers as a
partnership and a problem solving situation.
Note, newer descriptions of this process use the
phrase “customer experience management”