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Direct Marketing
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
ALSO
“Direct marketing is an interactive
system of marketing which uses one or
more advertising media to affect a
measurable response and/or
transaction at any location.”
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
DM Ads
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
Characteristics of Direct
Marketing
• Customer/prospect databases that make 1:1 targeting
possible
• A view of customers as assets with lifetime value
• Ongoing relationships and affinity with customers
• Data-based market segmentation
• Research and experimentation (testing)
• Benefit-oriented direct-response advertising
• Measurement of results and accountability for costs
• Interactivity with customers on a personalized and
individualized basis
• Multimedia direct response communication
• Multichannel fulfillment and distribution
Historic Comparison Between Direct and
Traditional Brand Marketing
Direct Marketing
Traditional Brand Marketing
Direct selling to individuals with customers
identifiable by name, address and
purchase behavior
Mass selling with buyers identified as
broad
groups
sharing
common
demographic
and
psychographic
characteristics
Product benefits do not typically include
distribution to the customer’s door
Products have the added value of
distribution direct to the customer, an
important benefit
The medium is the marketplace
The retail outlet is the marketplace
Marketing controls the product all the way
through delivery
The marketer typically loses control as the
product enters the distribution channel
Advertising is used to generate an
immediate transaction … an inquiry or an
order
Advertising is used for cumulative effect
over time for building image, awareness,
loyalty and benefit recall. Purchase action
is deferred.
Repetition
of
offers,
promotional
messages, toll-free numbers and web
addresses
are
used
within
the
advertisement
Customer feels a high perceived risk –
product bought unseen, recourse is
distant
Repetition of offers and promotional
messages are used over a period of time
Customer feels less risk – has direct
contact with the product and direct
recourse
Convergence of DM and Brand
• The differences have blurred due to the
digital revolution … today…
• Most traditional marketers conduct
marketing from a Web site, catalog, toll-free
number and have a “call-to-action” in their
ads
• Most direct marketers now create and
reinforce brand strategies at the individual
level
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
Kiosk Activity
Direct Mails
Surveys
Sources
Catalogs
111 Services
0800 toll free
Effective Databases
RFM Scoring
Recency
Monetary
transactions
(How recently did
the customer
purchase?)
(How much do
they spend?)
Frequency
(How often do they
purchase?)
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 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
Success with Catalogs
TV Spots, Infomercials, and Homeshopping
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
A number of factors are promoting the attractiveness of direct
marketing. The main factors are:
 Availability of consumer credit cards.
 Availability of professional agencies.
 Competitive Pressures, Rising Media Costs, and Market
Fragmentation.
 Increasing family incomes, including dual-income
families.
 Technological advances.
Direct Marketing Decisions
For successful implementation of
direct-marketing, marketers must
establish objectives, specify target
market, choice of strategies, and set
evaluation criteria.
Direct-Marketing Objectives
Objectives of direct marketing usually
focus on seeking direct response in
terms of behavior.
Market Segmentation
Market segmentation and targeting the right
customers are critical to the success of
promotional programme. Customers can be
grouped on the basis of age, sex, income,
education, lifestyle, and stage in family life
cycle etc.
Direct marketers use a database.
The database should provide the answers to the following questions:

Where do they live?

How did they make contact first time?

What have they purchased?

How often have they purchased?

What is the monetary value of their purchases?

How do they order or purchase, through the Internet, mail, phone, or in
person?

What is known about them and their families, occupation, education,
children, interests, attitudes, and payment histories etc.?

In case of B2B, who are the influencers, users, deciders, and
purchasers?

Location of corporate office and branch offices.
Direct Marketing
Marketing Research
Direct
Marketing
Flow Chart
Market
Segmentation
Direct Response
Advertising
Advertising
Creation
Media
Direct Mail Telephone
Broadcast
Internet
Newspaper Magazine
Others
Direct Response Expenditures
Direct Mail Telephone
Broadcast
Internet
Newspaper Magazine
Others
Distribution Channels
Measurable Response
Vending
Machines
Mail Order,
Mail/Phone
Personal Visit
to Seller
Customer / Prospect
Database
Response / Transaction
Completion
Personal Visit or
Call to Buyer
(Source: G. Belch and
M. Belch, Advertising
and Promotion. Based
on figure by Martin
Bair, Henry R. Hoke,
Jr., and Robert Stone).
Direct Marketing Offer and Media
There are five important decision areas: product, offer, medium, distribution
method, and creative strategy.

One-Step Approach

Two-Step Approach

Direct Mail

Catalogues

Broadcast Media

Print Media

Telemarketing

Electronic Shopping

Direct Selling
Advantages of Direct Marketing

Direct marketing offers the advantage of reaching large number of welldefined target customers and almost eliminates waste coverage.

Good quality databases are available from independent suppliers and
the marketer can segment customer groups with considerable precision.

Direct marketer can personalise the message.

Direct marketing can deliver almost perfect offers to customers.

Marketer can build desired frequency level based on media.

Direct marketing offers creative flexibility in different media.

Direct marketer can quickly develop a list of specific profiles for direct
mail.

Direct marketing is more effective in building customer relationship.

It is very cost effective considering the sale generated per contact.

The results can be measured most accurately.
The Processes of Direct and Interactive
Marketing
• Primary goal:
– The creation and cultivation of a
customer
• Basic Premise:
– Customer and prospect responses are
measurable
– Customer data drives all DM
strategies
– Multiple channels are used to serve
the customer
Customer Similarity and
Customer Value
• Database technology made it
possible to track customer
transactions and actions
• Lifetime Value of a Customer
The Direct and Interactive Marketing
Model
Prospect/Customer
Database
Marketer
Direct
Communication
Hi-Tech
Elect.
Media
Media
Multi-Channel
Measurable
Fulfillment
Response
Print
Media
Direct
and/or
Transaction
Mail/Cat
Target Customer/Prospect
Web
Physical
Store
Components of the Direct and Interactive
Marketing Model
• Direct Communication 1:1
• Multiple Media
• Measurable Response
• Database
• Customer Relationships
• Multichannel
Fulfillment/Distribution
Primary Applications of Direct and Interactive
Marketing
• Traffic-building at the seller’s
location
• Lead-generation at the buyer’s
location
• Mail order (remote location)
• Multichannel distribution
Primary Users of Direct and
Interactive Marketing
• Product and service enterprises
• Customer and industrial enteprises
• Profit and non-profit organizations
• Fundraising organizations
• Political action groups
Trends in Direct and Interactive Marketing
• Creating In-Store Traffic
• Directing Online Traffic
• Membership (similarity) Clubs
• Issues of Privacy and Security
Customer Databases
An organized collection of
comprehensive data about
individual customers or prospects,
including geographic,
demographic, psychographic, and
behavioral data.
Forms of Direct Marketing