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Marketing 3344
 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.
An interactive system of marketing which
uses one or more advertising media to
effect a measurable response and/or
transaction at any location.

Common purposes of direct marketing:
◦
◦
◦
◦
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Solicit and close a sale
Identify prospects for future contacts
Provide in-depth information
Seek information from consumers
Foster brand loyalty
Ad in Context Example
L.L. Bean
built an
entire
business
around
direct
marketing
.
 L.L. Bean founded in 1912
 Fundamental strategy:
◦ Commitment to quality
◦ Descriptive copy that was informative,
◦
factual, low-key
Satisfaction guarantee
 Bean built a good mailing list
 By 1990 Bean’s sales were $600
million; by 2007, over $1.5 billion
 1450
 1667
 1744
Invention of movable type
First gardening catalog
Franklin formulates mail-order
concept of “satisfaction guaranteed”
 1872 Montgomery Ward catalog
 1886 Sears starts mail-order business
 1917 Direct Marketing Advertising
Association founded
 1928
 1950
 1951
 1953
 1967
 1992
Third-class bulk mail
introduced
First credit card
Lillian Vernon places first ad
Publishers Clearing House
founded
AT&T introduces toll-free 800
Over 100 million in U.S. shop
at home
 More than just mail-order.
 A complex, diverse tool used by
organizations throughout the world.
 Direct marketing often is not integrated with
other advertising efforts.
 Three Principle Purposes:
◦ close a sale with a customer
◦ ID prospects and develop customer
database
◦ Engage customers, seek their advice and
generate brand loyalty
 CONVENIENCE! for today’s dual income
and single parent households.
 More liberal attitudes toward using
credit.
 Greater access to toll-free calling.
 Computer technology/new media
facilitate online transactions.
 More precise segmentation.
 Opportunity for relationship building.
 Cost per inquiry (CPI) and cost per order
(CPO) advantages of direct marketing.
Ad in Context Example
Marketers, like The
Adirondack Country
Store, use catalogs, toll
free numbers, and the
Web to take advantage
of direct marketing
opportunities.
 Knowing who the best
customers are as well as
what and how often they
buy.
 Mailing lists:
◦ Internal lists
◦ External lists
Ad in Context Example
Databases allow direct
communication with
customers like this
Saturn newsletter.
 Augmenting lists with
externally provided lists
 Incorporating information
from external databases
◦ Demographic data
◦ Geodemographic data
◦ Psychographic data
◦ Behavioral data
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PPT 19-13
 Includes data collected directly from
individual customers
◦ RFM Analysis of customers: recency,
frequency, monetary
 Goal: Develop cybernetic intimacy
 Marketing database applications
◦ Frequency-marketing programs
◦ Cross-selling
 Privacy concerns
◦ Do not call registry
◦ Spam blockers
◦ Opt-out options
 Direct response
advertising
 Direct Mail
 Telemarketing
 E-mail
 Other media
◦ Magazines
◦ Newspapers
◦ Infomercials
 Advantages
◦ Selective, flexible, little waste, lends itself
to testing, uses many formats
 Disadvantages
◦ Direct mail is expensive
►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
Ad in Context Example
Direct mail
offers some
creative
opportunities
.
 Telemarketing can be a
potent tool. As
with direct mail:
–Contacts can be selectively targeted.
–The impact of programs is easy to track.
–Experimentation with different scripts
and delivery formats is simple and
practical.
–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, so too
do phone numbers - 15 percent of the numbers called
are inaccurate.
– 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 consumers.
– By 2007, over 70 percent of US households had
registered their phone numbers with the “Do not call
registry.”
 Bulk e-mail is known as “spam”
 Fraudulent email know as “phishing”
 However e-mail is an increasingly
popular tool for marketers
 Advantages
◦ Cheap
◦ Good response rates
 Netiquette suggests getting consumer
permission to send product information
 Avoid bulk e-mailings
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Magazines use bind-in insert cards
Toll-free 800 numbers are vital to direct
marketers using ads in newspapers and
magazines
Infomercial
– 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
Ad in Context Example
Magazine ads are
ideal for Direct
Response
Advertising.
 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
budgets.
 One solution: the MARCOM manager.
 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

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.
 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.
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