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Chapter 14
Direct Marketing
Chapter Objectives
• To recognize the purpose of direct marketing as a
communications tool
• To demonstrate the use of direct-marketing media
• To appreciate the strategies and tactics involved
in direct marketing
• To determine the scope and effectiveness of
direct marketing
Chapter 14 : Direct Marketing
Direct Marketing Defined
• “The total of activities by which the seller . . .
direct 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.”
• Aspect of total marketing
– involves marketing research, segmentation, evaluation.
Chapter 14 : Direct Marketing
Defining Direct Marketing
• Media for Direct marketing include:
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Direct Selling
Direct mail
Telemarketing
Internet selling
Direct action marketing
Catalog selling
Cable TV selling, etc.
Chapter 14 : Direct Marketing
Factors influencing Growth of
Direct Marketing
• Consumer Credit Cards
• Direct Marketing Syndicates
• Changing Structure of Society
• Technological Advances
• Miscellaneous Factors
Chapter 14 : Direct Marketing
Factors influencing Growth of
Direct Marketing
• Consumer Credit Cards
– Over 1 billion credit cards issued.
– Makes it feasible for purchase of items through direct
response channels.
Chapter 14 : Direct Marketing
Factors influencing Growth of
Direct Marketing
• Direct Marketing Syndicates
– new marketing opportunities with list development,
statement inserts, catalogues, and sweepstakes.
• Changing Structure of Society
– Money-rich, time -poor
– Dual income families increasing
– Busier society with less time for shopping
Chapter 14 : Direct Marketing
Factors influencing Growth of
Direct Marketing
• Technological Advances
– Electronic media and computers facilitating shopping
and marketing to desired target market.
– 11 million Canadian Households receive home
shopping programs
Chapter 14 : Direct Marketing
Factors influencing Growth of
Direct Marketing
• Miscellaneous Factors
– changing values
– sophisticated marketing techniques
– industry’s improved industry
Chapter 14 : Direct Marketing
Top 10 Direct Marketing Industries
115.2
Nonstore retailers
Real estate
General merchandise stores
$ Billions
55.2
50.4
47.3
Auto dealers/service stations 40.6
Membership organizations
39.3
Insurance carriers/agents 35.3
Food and kindred products 34.9
Health services
29.4
Depository institutions 28.8
Entertainment
0%
5%
Percentage Annual Growth 1994-1999
Chapter 14 : Direct Marketing
10%
15%
Role of Direct Marketing in
IMC Program
• Combines Direct Marketing & Advertising
– Direct Marketing is a form of advertising.
• Combines Direct Marketing & PR
– PR often employs Direct Marketing techniques
• (I.e. telemarketing, 1-800 numbers)
Chapter 14 : Direct Marketing
Role of Direct Marketing in
IMC Program
• Combines Direct Marketing & Personal Selling
– Telemarketing and direct selling are two methods of
personal selling.
• Combines Direct Marketing & Sales Promotion
– Direct Mail pieces are used to distribute sales
promotion
– Sales promotions build databases that can be used in
Direct Marketing.
Chapter 14 : Direct Marketing
Direct Marketing Objectives
• Behavioral
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• Non Behavioral
test drives
votes
contributions
sales
I.e. 2 to 3% response
rat
– build an image
– maintain customer
satisfaction
– inform/educate
customers
Chapter 14 : Direct Marketing
Developing a Database
• Database
– a list of customers and potential customers.
• Database Marketing
– use of specific information about individual customers
and/or prospects to implement more effective and
efficient marketing communications.
Chapter 14 : Direct Marketing
Contents of a Comprehensive
Consumer Data Base
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Name
Address/Zip code
Telephone number
Length of residence
Age
Gender
Marital status
Family data
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Education
Income
Occupation
Transaction history
Promotion history
Inquiring history
Unique identifier
Chapter 14 : Direct Marketing
Contents of a Comprehensive
B2B Data Base
• Name of company,
contact or decision
maker(s)
• Title of contact
• Telephone number
• Source of order/inquiry
or referral
• Credit history
• Industrial classification
• Size of business
• Revenues
• Number of employees
• Time in business
• Headquarters location
• Multiple locations
• Purchase history
Chapter 14 : Direct Marketing
Sources of Database Information
• Statistics Canada
– census data provide information on every household in
Canada.
• Canada Post
– Postal Codes provide information on household and
business locations.
• List services
– Many providers of lists are available.
• Info Canada
– Provincial Business Directory.
Chapter 14 : Direct Marketing
Sources of Database Information
• Marketing research houses
– Large research houses conduct annual studies of
customers who buy at home via mail or telephone.
• Direct Marketing Association
– The direct marketers’ trade organization promotes
direct marketing and provides stats on direct marketing
use.
• Others
– Canadian Marketing Association, Dunn and Bradstreet,
Fortune 500, Book of Lists, etc.
Chapter 14 : Direct Marketing
Direct Marketing Media Strategy
• Two approaches to Direct Marketing:
– One-step approach - medium is used directly to obtain
an order. (I.e. commercials with toll-free numbers.)
– Two-step approach - may involve the use of more than
one medium.
• 1st effort - screen, qualifies potential buyers.
• 2nd effort - generates the response.
Chapter 14 : Direct Marketing
Direct Marketing Mediums
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Direct Mail
Catalogues
Broadcast Media
Infomercials
TV Advertorials
Teleshopping
Electronic Teleshopping
E-mail Marketing
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Direct Mail
• Unsolicited mail you receive
– Often called junk mail
– more advertising dollars being spent on direct mail than
most other forms.
• Not restricted to small companies
– Large companies also increasing expenditures in direct
mail. (I.e. American Express, AOL, RBC)
Chapter 14 : Direct Marketing
Catalogues
• Many companies use catalogues in conjunction
with traditional sales and promotional strategies
– Ie) Sears selling directly through catalogues and using
them to inform consumers about products in store
• Now available on the internet for both B2B and
consumer use
Chapter 14 : Direct Marketing
Direct Mail
• Mailing Lists are keys to success of Direct Mail
– lists are more current, eliminating waste coverage.
Chapter 14 : Direct Marketing
Strengths of Direct Mail
(Fig. 14-4)
Chapter 14 : Direct Marketing
Broadcast Media
• Two major broadcast media:
– Television
– Radio
• Direct Response
– Product or service is offered and a sales response is
solicited through one or two-step approach
• Support Advertising
– Supports other forms of advertising
Chapter 14 : Direct Marketing
Infomercials
• Long commercial ranging from 3-60 minutes
• Produced by advertisers and designed to replace
TV shows
• Very effective
Chapter 14 : Direct Marketing
TV Advertorials
• Show the public the entire model range of a
product
• Provides information in a series of 5-minute films
Chapter 14 : Direct Marketing
Teleshopping
• Shopping via the TV set
• At maturity point of their cycle due to increase in
internet shopping
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Print Media
• Magazines and newspapers are difficult media to
use for direct marketing due to high clutter from
competition and expensive rates.
• Most likely found in specific areas
Chapter 14 : Direct Marketing
Telemarketing
• Sales by the telephone
• Two types:
– Outbound and Inbound
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Outbound and Inbound Telemarketing
• Outbound
• Inbound
Telephone calling by the
marketer or marketer’s
agent to individual
prospects, seeking
purchase, subscription,
membership, or
participation by the call
recipient.
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.
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E-Mail Marketing
• A form of direct marketing via the internet
• One of the fastest growing forms of direct
marketing over the last 5 years
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Direct Marketing Strengths
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Selective Reach
Segmentation Capability
Frequency Potential
Flexibility
Timing
Personalization
Economy
Measurement of Effectiveness
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Direct Marketing Weaknesses
• Image Factors
• Accuracy
• Content Support
Chapter 14 : Direct Marketing