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14
Direct Marketing
McGraw-Hill/Irwin
Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed
Direct Marketing Defined
…an interactive system of marketing which
uses one or more advertising media to effect
a measurable response and/or transaction
at any location
Print
Interactive TV
Direct Mail
Telemarketing
The Internet
Other Media
Direct Response Media tools
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Growth of Direct Marketing
Shop w/o leaving home
Consumer
Credit Cards
Catalogs
Changing
Structure of
Society
Technological
Advances
Money rich; time poor
Shop on internet
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Direct Marketing Combines With…
Solicit funds for charity
Victoria Secret
Public
Relations
Advertising
Direct
Marketing
Sales
Promotion
Airline price changes
Personal
Selling
Support
Media
Car sales
Promotional product in mailer
increases response rates
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Example of DM / Sales Promotion
Costco sends promotional offer through the mail
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Direct-Marketing Objectives
To seek a behavioral response
To build an image
To maintain customer satisfaction
To inform and/or educate
customers in an attempt to lead to
future actions
Direct Marketing Strategies
One-Step
Two-Step
• Used directly to obtain
an order
• Screens potential
buyers
• Toll-free phone orders
and credit card
payments
• Follow-up to
complete the sale
• Car or insurance sales
• Knife sets or work out
equipment
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Types of Direct Marketing Media
• Direct Mail
• Unsolicited; often called “junk mail”
• Success depends on mailing list / ability to segment target
• Catalogs
• Drives consumers on line or in store
• Broadcast Media
• Email
(TV / radio)
/Print Media
• Spam is electronic equivalent of “junk mail”
• Infomercials
• Low cost of commercials on cable
• 30 minute “programs”
• Home shopping
• Telemarketing
(QVC / HSN)
• Sales by telephone
• Do Not Call List
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Direct Mail Example
• Target Criteria
• Physicians in specialties
• Highest income levels
• Demographics of Porsche buyers
• Specific geographic areas
• Hooks
• Use X-ray of a Porsche 911 Carrera 4
• Use medical terminology
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Example of Direct Marketing Targeting
Cabela’s catalog
targets
hunters and fishermen
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Catalog Example
Drives consumers
in store and
online
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Infomercials
One of the most successful products
advertised on infomercials
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Direct Marketing via Email
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Forms of Direct Selling
Direct, personal presentation, demonstration and sales of products
to consumers in their home
Repetitive
person-to-person
Mary
Kay
Nonrepetitive
person-to-person
Life
insurance
Party Plans
Tupper
ware
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Measuring Effectiveness
Cost per Order (CPO)
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Example of CPO Calculation
• Cost of ad = $2,500
• Profit per order = $5
• Needs more than 500 orders to be
cost effective:
• $2,500 / $5
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Another Measure of Effectiveness
• Customer Lifetime Value (CLTV):
Determines the dollar value associated
with a long-term relationship with a
customer
• Helps determine if a customer should be
acquired
• Optimizes existing customers’ service
levels
Direct Marketing Advantages
Selective reach
Segmentation
Frequency potential
Highest potential
consumers
Based on age,
income
Cheap,
late night TV
Testing
Creative
approaches
Timing
Put together
quickly
Personalization
Costs
Measures of effectiveness
Cheap,
late night TV
No other medium
measures as well
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Direct Marketing Disadvantages
Need good lists
Accuracy
Image
factors
Junk mail
Do Not
Contact lists
Content
support
Mail not desirable mood
Rising
costs
Postage increases
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