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Direct Marketing: The Dialogue Builder For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Chapter Outline What are the strengths of direct marketing? What is the biggest strength of direct mail? The biggest limitation? What are the strengths and weaknesses of telemarketing? How can direct marketing efforts be evaluated? What are the major issues and concerns related to direct marketing? For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Chapter Perspective A big advantage of Direct Marketing over Advertising and Sales Promotion: Advertisin g and Sales Promotion Direct Marketing Very Interactive For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Opening Case: Orange Glo For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Opening Case: Orange Glo Challenge: Expanding Orange Glo’s distribution and profit The use of a direct marketing program featuring: Answer: Results: • On-air demonstrations and direct selling on Home Shopping Network • 30-minute infomercials promoting and selling its brands featuring Billy Mays as spokesperson • One of the fastest-growing private companies • $250 million in annual sales For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Direct Marketing Direct marketing: An interactive, databasedriven messaging system that uses a range of media to motivate a response from customers and prospects For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Direct Marketing 2/3 of Americans Respond Every Year Direct Marketing 4 Primary Media: Mail, Telephone, Email, Infomercials Also Known As Direct Response: Because It Is Two-way in Nature For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Figure 18-1 + For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Direct Marketing’s Strengths Interactive Direct Marketing Strengths Measurable Fast and Flexible For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin What Are Direct Marketing’s Strategies? Front end strategies Delivering the message Back end strategies Handling consumer responses and delivering the product For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Front & Back End Components Front End Components The Offer Targeted Databases The Response Back End Components Fulfillment Customer Service Privacy Protection For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin The Offer The offer: Everything, both tangible and intangible, promised by a company in exchange for money or some other desired behavior For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin An Offer From an Exclusive Resort + For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin IMC In Action: 1-800-Flowers For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin IMC In Action: 1-800-Flowers Challenge: Promoting and delivering flowers nationwide The use of an IMC program featuring: Answer: Results: • TV, radio, and direct mail messages delivering the offer • 1-800-FLOWERS; web site, handling responses • 2,500 local florists fulfilling orders Named “top gift site on the web” For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Direct Mail Direct mail: One form of direct response advertising that uses mail rather than other media to deliver a brand offer For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin An Example Of a Set Of Materials In a Mail Package + For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Strengths And Limitations Of Direct Mail Strengths Limitations • Addressability • Can receive more attention than advertising • Not as much clutter as advertising • Message can be tailored to any size or shape • Postage can be costly • Some offers can be costly to produce • Complex offers can require long lead times Vs. For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Telemarketing Telemarketing: The practice of using the telephone to deliver a brand message designed to create a sale or sales lead Controversial… … but Big Business 43 Billion For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Figure 18-2: A Range of Automated Phone System Options For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Strengths And Limitations Of Telemarketing Strengths • Personal • Addressability • Interactive Limitations Vs. • Human callers can be costly • Intrusive (unwanted calls) For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin How Can Direct Marketing Efforts Be Evaluated? List Types Frequency of Exposure Offer Values Testing Creative Approach Media Mix Used For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Ultimate Test: Effectiveness Number of responses Number of offers mailed 5 / 100 Total cost of mailing Number of sales made $1,000 / 5 = Response Rate = 20 = Cost Per Sale = $200 For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Insight: Tracking Customer Costs/Profits Direct marketers are very proficient tracking their costs and profits because the medium is the easiest to measure in terms of cost per sale. One rule of thumb: in most direct-marketing programs, a customer isn’t profitable until the third time he or she buys. For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Think About It Email Campaign If you had to design an e-mail campaign for your organization, how would you make it appealing and not just annoying spam? For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Tales From the Real World The public often wonders: “how did they get my name (or address, phone number, or email account)?” In the real world, it’s fairly easy to acquire a database list of many different types of individuals. In fact, it’s amazing how specific some of the lists can be. Some examples of lists offered for sale by a list broker in their catalog: “accupuncturists,” “golfers,” and “nuclear physicists.” For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Final Note: • The increasing amount of clutter and privacy concerns suggests that the Direct Marketing winners will be those organizations who: • Are creative in making their appeals stand out • Are sensitive to consumer privacy concerns For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Questions – 18 Define Direct Marketing Strengths and Limitations of Direct Mail? Strengths and Limitations of Telemarketing? Why Can a Direct Marketing Message be Evaluated More Directly than a TV Commercial or Publicity Release? Strengths and Limitations of Direct Marketing? For use only with Duncan texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin