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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