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Direct Marketing © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Direct Marketing Defined “The total of activities by which the seller directs efforts to a target audience using one or more media for the purpose of soliciting a response by phone, mail, or personal visit from a prospective customer.” TV Selling Radio Telemarketing Direct Selling Direct Mail Magazine and Newspaper © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Growth of Direct Marketing Consumer Credit Cards Direct Marketing Syndicates Changing Structure of Society Technological Advances Miscellaneous factors © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Direct Marketing Combines With . . . Advertising Public Relations Internet Direct Marketing Personal Selling Support Media Sales Promotion © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Database Marketing: How It Works © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A Comprehensive Consumer Data Base Name Gender Occupation Address/ Zip Code Marital Status Transaction History Telephone Number Family Data Promotion History Length of Residence Education Inquiring History Age Income Unique Identifier © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A Comprehensive Business to Business Data Base Comp. Contact or Decision Makers Industrial Classification Headquarter, Multiple Location Title of Contact Size of Business Purchase History Telephone Number Revenues Promotional History Source of Order/inquiry or Referral Number of Employees Inquiry History Credit History Time in Business Unique Identifier © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Objectives of Database Marketing Improve Selection of Market Segments Stimulate Repeat Purchases Objectives Cross-selling Other Products Customer Relationship Management © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Developing a Database List Services Standard Rate & Data Service (SRDS) Simmons Market Research Bureau Sources U.S. Census Bureau U.S. Postal Service Direct Marketing Association © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Effective Database Direct Marketing © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin One-Step Versus Two-Step Approach One-Step Two-Step • The medium is used directly to obtain an order • May use one medium to obtain inquiry and qualify prospect • Often use 800 number phone orders and credit card payment • Typically follow up with a second medium to complete the sale © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Direct-Marketing Media Direct Mail Catalogs Broadcast Media Telemarketing Media Print Media TV Spots Homeshopping Infomercials © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Types of Direct Mail “All forms of advertising sent directly to prospects through the U.S. Postal Service or through private services.” House lists Inclusions Broadsides Postcards Catalogs Reprints Flyers Sales letters Folders Self-mailers © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Porsche Targets Prospects with Direct Mail © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Direct Mail Advantages Control Coverage Selectivity Exclusivity Advantages Response Flexibility Reach Impact © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Direct Mail Disadvantages Disadvantages Clutter Negative Image of Medium Delays in Delivery High Cost Per Exposure List Quality Uncertainty No Content Support Saturation Among Audience © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Success With Catalog Direct Marketing © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Pros & Cons of Catalogs + Pros - Cons Provides buyers with wide selections Production costs are usually very high Usually welcomed by shoppers Saturation for some markets is likely Design offers high impact potential Delivery or fulfillment may be delayed Merchandise is centrally inventoried Customer can’t inspect or handle goods Fulfillment facilities closely controlled Timing can be geared to seasonal needs Split-run testing can ensure effectiveness © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin TV Spots, Infomercials, and Homeshopping © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A Direct Response Print Ad © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 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. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Outbound Telemarketing Advantages Disadvantages Interactive contact Intrusive nature Extensive reach Poor image of method Caller-controlled timing High cost of contact High impact Low conversion rate Extensive caller training Namelist inadequacies High termination rates High reneges, returns © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Inbound Telemarketing Pros & Cons + Pros - Cons Response is highly convenient for the audience Labor-intensive call answering facilities may be required Method permits interactive selling and service Personnel direction system may be required for efficiency Transactions are facilitated by high rate of credit card holding Nonproductive call rates may be exceedingly or unacceptably high Immediacy of method permits great control of inventory © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Three Forms of Direct Selling Repetitive personto-person selling Nonrepetitive personto-person selling Direct Selling Party Plans © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Cutco Knives Employs Direct Selling © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Direct Response Advantages Advertisers acquire or enhance a data base of individual customers Customers are served with a greater selection from a central inventory Response options enable audience to act right after exposure occurs No store is required and customers can buy from their own homes © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Direct Response Disadvantages Disadvantages Customers can’t handle or inspect the product before purchasing Merchandise returns and subscription cancellations may be numerous Seller reputation and prestige may be compromised by method’s poor image © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Overall Direct Marketing Pros & Cons Advantages Disadvantages Selective Reach Image Factors Segmentation Capability Accuracy Frequency Potential Content Support Flexibility Rising Costs Timing Personalization Economy Measurement of Effectiveness © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin