Download Chapter 14

14
Direct Marketing
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
QVC
• $6.5 billion a year
• 2nd most profitable channel
• Once sold 4,000 silver rings ($70) in
just 3 ½ minutes
• 91 million homes
• 1 in 10 make purchase
• 40 to 60
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 prospect or customer
TV Selling
Radio
Telemarketing
Direct Selling
Direct Mail
Magazine and Newspaper
Growth of Direct Marketing
Direct
Marketing
Syndicates
Consumer
Credit Cards
Miscellaneous
factors
Changing
Structure of
Society
Changing
Structure of
Markets
Technological
Advances
Direct Marketing Combines With . . .
Advertising
Public
Relations
Internet
Direct
Marketing
Support
Media
Personal
Selling
Sales
Promotions
San Diego Encourages Visits
How Database Marketing Works
A Comprehensive Consumer Database
Name
Gender
Occupation
Address/
Zip Code
Marital
Status
Transaction
History
Telephone
Number
Family
Data
Promotion
History
Length of
Residence
Education
Inquiry
History
Age
Income
Unique
Identifier
A Business-to-Business Database
Contact Info
Industrial
Classification
Headquarters
Location
Contact
Title
Size of
Business
Purchase
History
Telephone
Number
Revenues
Promotion
History
Source of
order, inquiry,
referral
Number of
Employees
Inquiry
History
Credit
History
Time in
Business
Unique
Identifier
Test Your Knowledge
For market segmentation and targeting, direct
marketers rely most heavily on:
A) Primary qualitative research
B) Census data
C) A database
D) Survey responses
E) Focus groups
Objectives of Database Marketing
Improve Selection of
Market Segments
Stimulate Repeat
Purchases
Objectives
Cross-selling Other
Products
Customer Relationship
Management
• Track Customer Purchases and group them
on Purchase History
• Build a data base
• Keep track of communication preferences
• Let customers decide how to give feedback
• Empower staff to make decisions
• Track Staff actions and make improvements
• Try new ways to leverage customer
intelligence
• Always add to customer intelligence
• Develop customer intelligence on past
customers
• Do it now
Developing a Database
List Services
Standard Rate &
Data Service
Simmons Market
Research Bureau
Sources
U.S. Census
Bureau
U.S. Postal
Service
Direct Marketing
Association
Effective Databases
RFM Scoring
Monetary
transactions
Recency
Frequency
Direct Marketing Strategies
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
Direct-Marketing Media
Infomercials
Telemarketing
Print, catalogs
Broadcast
Teleshopping
TV Spots
Home
shopping
Direct Mail
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
Porsche Targets Prospects with Direct Mail
Test Your Knowledge
Which of the following statements about the use of
catalogs in the direct-marketing industry is true?
A) Most business-to-business marketers use
print catalogs.
B) The number of catalogs mailed since
1984 has decreased significantly.
C) Many companies use catalogs in
conjunction with their more traditional
sales and promotional strategies.
D) No company today relies solely on catalog
sales.
E) The number of catalog shoppers has
declined steadily since 1984.
Success with Catalogs
TV Spots, Infomercials, and Homeshopping
• Catalogs $19.2 billion 2007
• TV $156 billion 2007
• Infomercials
– Single female 18 to 34 earning $50,000
to $99,900 per year
– Tell a story
– Good at Branding
– Must have a store presence
A Direct Response Print Ad
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 facilitate and
invite prospects to call a
central location via a long
distance number, by a tollfree 800 number, or a
fixed-cost 900 number.
Audiotex or Telemedia
Forms of Direct Selling
Repetitive
person-to-person
Nonrepetitive
person-to-person
Party Plans
Cutco Knives Employs Direct Selling
Measuring Effectiveness
Cost per Order (CPO)
Direct Marketing Advantages
Selective reach
Segmentation capabilities
Frequency potential
Flexibility
Timing
Personalization
Costs
Measures of effectiveness
Direct Marketing Disadvantages
Accuracy
Image
factors
Do Not
Contact lists
Content
support
Rising
costs