Direct MarketingDirect Marketing

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Catalog SellingCatalog Selling

Direct SellingDirect Selling Direct Action AdvertisingDirect Action Advertising

Direct MailDirect MailTelemarketingTelemarketing

TV SellingTV SellingCatalog SellingCatalog Selling TV SellingTV Selling

Direct MailDirect Mail

Direct Action AdvertisingDirect Action AdvertisingDirect SellingDirect Selling

Direct Marketing Defined

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

“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.”

“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.”

Miscellaneous factorsMiscellaneous factors

Technical AdvancesTechnical Advances

Direct Marketing SyndicatesDirect Marketing Syndicates

Changing Structure of SocietyChanging Structure of Society

Consumer Credit CardsConsumer Credit Cards

Technical AdvancesTechnical Advances

Direct Marketing SyndicatesDirect Marketing Syndicates

Changing Structure of SocietyChanging Structure of Society

Consumer Credit CardsConsumer Credit Cards

Growth of Direct Marketing

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

PublicRelations

PublicRelations

PersonalSelling

PersonalSelling

SalesPromotion

SalesPromotion

SupportMedia

SupportMedia

AdvertisingAdvertising

SalesPromotion

SalesPromotion

PersonalSelling

PersonalSelling

PublicRelations

PublicRelations

AdvertisingAdvertising

Direct Marketing Combines With . . .

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

DirectMarketing

DirectMarketing

Improve Selection of Market Segments

Improve Selection of Market Segments

Stimulate Repeat Purchases

Stimulate Repeat Purchases

Cross-selling Other Products

Cross-selling Other Products

Customer Relationship Management

Customer Relationship Management

Cross-selling Other Products

Cross-selling Other Products

Stimulate Repeat Purchases

Stimulate Repeat Purchases

Improve Selection of Market Segments

Improve Selection of Market Segments

Objectives of Database Marketing

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

ObjectivesObjectives

List ServicesList Services

Direct MarketingAssociation

Direct MarketingAssociation

Standard Rate &Data Service

(SRDS)

Standard Rate &Data Service

(SRDS)

U.S. Postal Service

U.S. Postal Service

Simmons MarketResearch BureauSimmons MarketResearch Bureau

U.S. Census Bureau

U.S. Census Bureau

U.S. Census Bureau

U.S. Census Bureau

Direct MarketingAssociation

Direct MarketingAssociation

U.S. Postal Service

U.S. Postal Service

Standard Rate &Data Service

(SRDS)

Standard Rate &Data Service

(SRDS)

List ServicesList Services

Developing a Database

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

SourcesSources

A Comprehensive Consumer Data Base

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Name

Address/Zip Code

TelephoneNumber

Length ofResidence

Age

Sex

MaritalStatus

FamilyData

Education

Income

Occupation

TransactionHistory

PromotionHistory

InquiringHistory

UniqueIdentifier

Name

Address/Zip Code

TelephoneNumber

Length ofResidence

Age

Sex

MaritalStatus

FamilyData

Education

Income

Occupation

TransactionHistory

PromotionHistory

InquiringHistory

Comp. Contact or Decision

Makers

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

Headquarter, Multiple Location

Purchase History

Promotional History

Inquiry HistoryInquiry History

Promotional History

Purchase History

Headquarter, Multiple Location

Time in Business

Number of Employees

Revenues

Size of Business

Industrial Classification

Credit History

Source of Order/inquiry

or Referral

Telephone Number

Title of Contact

Comp. Contact or Decision

Makers

A Comprehensive Business to Business Data Base

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Unique Identifier

One StepOne Step Two StepTwo StepOne StepOne Step

• The medium is used directly to obtain an order

• Often use 800 number phone orders and credit card payment

• May use one medium to obtain inquiry and qualify prospect

• Typically follow up with a second medium to complete the sale

One-Step Versus Two-Step Approach

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Direct Response Advertising Types

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Direct Mail Pieces and Inserts Soliciting Inquiry

Recipients.

Direct Mail Pieces and Inserts Soliciting Inquiry

Recipients.

Direct Mail Pieces and Inserts Soliciting Inquiry

Recipients.

Direct Mail Pieces and Inserts Soliciting Inquiry

Recipients.

“All forms of advertising designed to obtain immediate, direct response by mail, telephone, or

personal visit from individual audience members.”

“All forms of advertising designed to obtain immediate, direct response by mail, telephone, or

personal visit from individual audience members.”

TV and CATV Commercials and Infomercials Selling

Products by Phone or Mail Order.

TV and CATV Commercials and Infomercials Selling

Products by Phone or Mail Order.

TV and CATV Commercials and Infomercials Selling

Products by Phone or Mail Order.

TV and CATV Commercials and Infomercials Selling

Products by Phone or Mail Order.

Card Decks, Coupon Booklets and Mini-catalogs Seeking Orders for One or

More Products.

Card Decks, Coupon Booklets and Mini-catalogs Seeking Orders for One or

More Products.

Card Decks, Coupon Booklets and Mini-catalogs Seeking Orders for One or

More Products.

Card Decks, Coupon Booklets and Mini-catalogs Seeking Orders for One or

More Products.

Newspapers, Magazines and Other Print Media Ads

With Send-in or Call-in Coupon Order Forms.

Newspapers, Magazines and Other Print Media Ads

With Send-in or Call-in Coupon Order Forms.

House organsHouse organsHouse organsHouse organs

Types of Direct Mail

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

BroadsidesBroadsidesBroadsidesBroadsides

CatalogsCatalogsCatalogsCatalogs

FlyersFlyersFlyersFlyers

FoldersFoldersFoldersFolders

InclusionsInclusionsInclusionsInclusions

PostcardsPostcardsPostcardsPostcards

ReprintsReprintsReprintsReprints

Sales lettersSales lettersSales lettersSales letters

Self-mailersSelf-mailers

“All forms of advertising sent directly to prospects through the U.S. Postal Service or

through private services.”

“All forms of advertising sent directly to prospects through the U.S. Postal Service or

through private services.”

ControlControl CoverageCoverage

ExclusivityExclusivity

FlexibilityFlexibility

ImpactImpactReachReach

ResponseResponse

SelectivitySelectivity

ResponseResponse

ReachReach ImpactImpact

FlexibilityFlexibility

ExclusivityExclusivity

CoverageCoverageControlControl

Direct Mail Advantages

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

AdvantagesAdvantages

High Cost Per ExposureHigh Cost Per ExposureHigh Cost Per ExposureHigh Cost Per Exposure

ClutterClutter

Negative Image of MediumNegative Image of Medium

Delays in DeliveryDelays in Delivery

List Quality UncertaintyList Quality Uncertainty

No Content SupportNo Content Support

Saturation Among AudienceSaturation Among Audience

No Content SupportNo Content Support

List Quality UncertaintyList Quality Uncertainty

Delays in DeliveryDelays in Delivery

Negative Image of MediumNegative Image of Medium

ClutterClutter

Direct Mail Disadvantages

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

DisadvantagesDisadvantages

Production Costs Are Usually Very High

Production Costs Are Usually Very High

Delivery or Fulfillment May Be Delayed

Delivery or Fulfillment May Be Delayed

Production Costs Are Usually Very High

Production Costs Are Usually Very High

Saturation for Some Markets Is Likely

Saturation for Some Markets Is Likely

Provides Buyers With Wide Selections

Provides Buyers With Wide Selections

Usually Welcomed by Shoppers

Usually Welcomed by Shoppers

Design Offers High Impact Potential

Design Offers High Impact Potential

Merchandise Is Centrally Inventoried

Merchandise Is Centrally Inventoried

Fulfillment Facilities Closely Controlled

Fulfillment Facilities Closely Controlled

Timing Can Be Geared to Seasonal Needs

Timing Can Be Geared to Seasonal Needs

Split-run Testing Can Insure Effectiveness

Split-run Testing Can Insure Effectiveness

Customer Can’t Inspect or Handle Goods

Customer Can’t Inspect or Handle Goods

Delivery or Fulfillment May Be Delayed

Delivery or Fulfillment May Be Delayed

Delivery or Fulfillment May Be Delayed

Delivery or Fulfillment May Be Delayed

Delivery or Fulfillment May Be Delayed

Delivery or Fulfillment May Be Delayed

Saturation for Some Markets Is Likely

Saturation for Some Markets Is Likely

Production Costs Are Usually Very High

Production Costs Are Usually Very High

Production Costs Are Usually Very High

Production Costs Are Usually Very High

Split-run Testing Can Insure Effectiveness

Split-run Testing Can Insure Effectiveness

Timing Can Be Geared to Seasonal Needs

Timing Can Be Geared to Seasonal Needs

Fulfillment Facilities Closely Controlled

Fulfillment Facilities Closely Controlled

Merchandise Is Centrally Inventoried

Merchandise Is Centrally Inventoried

Design Offers High Impact Potential

Design Offers High Impact Potential

Usually Welcomed by Shoppers

Usually Welcomed by Shoppers

Provides Buyers With Wide Selections

Provides Buyers With Wide Selections

Pros & Cons of Catalogs

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

+ Pros+ Pros - Cons- Cons

Outbound and Inbound Telemarketing

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

InboundInbound

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.

OutboundOutboundOutboundOutbound

Namelist InadequaciesNamelist Inadequacies

High Termination RatesHigh Termination Rates

High Reneges, ReturnsHigh Reneges, Returns

Poor Image of MethodPoor Image of Method

Low Conversion RateLow Conversion Rate

Intrusive NatureIntrusive Nature

High Cost of ContactHigh Cost of Contact

Extensive Caller TrainingExtensive Caller Training

Interactive ContactInteractive Contact

Extensive ReachExtensive Reach

Caller-controlled TimingCaller-controlled Timing

High ImpactHigh Impact

High Termination RatesHigh Termination Rates

Namelist InadequaciesNamelist Inadequacies

Extensive Caller TrainingExtensive Caller Training

Low Conversion RateLow Conversion Rate

High Cost of ContactHigh Cost of Contact

Poor Image of MethodPoor Image of Method

Intrusive NatureIntrusive Nature

High ImpactHigh Impact

Caller-controlled TimingCaller-controlled Timing

Extensive ReachExtensive Reach

Interactive ContactInteractive Contact

Outbound Telemarketing

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

AdvantagesAdvantages DisadvantagesDisadvantages

Personnel Direction System May Be Required

for Efficiency

Personnel Direction System May Be Required

for Efficiency

Labor-intensive Call Answering Facilities May

Be Required

Labor-intensive Call Answering Facilities May

Be Required

Nonproductive Call Rates May Be Exceedingly or

Unacceptably High

Nonproductive Call Rates May Be Exceedingly or

Unacceptably High

Response Is Highly Convenient for the

Audience

Response Is Highly Convenient for the

Audience

Method Permits Interactive Selling and Service

Method Permits Interactive Selling and Service

Transactions Are Facilitated by High Rate of

Credit Card Holding

Transactions Are Facilitated by High Rate of

Credit Card Holding

Immediacy of Method Permits Great Control of

Inventory

Immediacy of Method Permits Great Control of

Inventory

Personnel Direction System May Be Required

for Efficiency

Personnel Direction System May Be Required

for Efficiency

Labor-intensive Call Answering Facilities May

Be Required

Labor-intensive Call Answering Facilities May

Be Required

Immediacy of Method Permits Great Control of

Inventory

Immediacy of Method Permits Great Control of

Inventory

Transactions Are Facilitated by High Rate of

Credit Card Holding

Transactions Are Facilitated by High Rate of

Credit Card Holding

Method Permits Interactive Selling and Service

Method Permits Interactive Selling and Service

Response Is Highly Convenient for the

Audience

Response Is Highly Convenient for the

Audience

Inbound Telemarketing Pros & Cons

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

+ Pros+ Pros - Cons- Cons

Three Forms of Direct Selling

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

DirectSellingDirectSelling

PartyPlansPartyPlans

Repetitiveperson-

to-person selling

Nonrepetitive person-

to-person selling

Repetitiveperson-

to-person selling

Nonrepetitive person-

to-person selling

Direct Response Advantages

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

No Store Is Required and Customers Can Buy From Their Own Homes

No Store Is Required and Customers Can Buy From Their Own Homes

Response Options Enable Audience to Act Right After Exposure Occurs

Response Options Enable Audience to Act Right After Exposure Occurs

Customers Are Served With a Greater Selection From a Central Inventory

Customers Are Served With a Greater Selection From a Central Inventory

Advertisers Acquire or Enhance a Data Base of Individual Customers

Advertisers Acquire or Enhance a Data Base of Individual Customers

Response Options Enable Audience to Act Right After Exposure Occurs

Response Options Enable Audience to Act Right After Exposure Occurs

Customers Are Served With a Greater Selection From a Central Inventory

Customers Are Served With a Greater Selection From a Central Inventory

Advertisers Acquire or Enhance a Data Base of Individual Customers

Advertisers Acquire or Enhance a Data Base of Individual Customers

Customers Can’t Handle or Inspect the Product Before Purchasing

Customers Can’t Handle or Inspect the Product Before Purchasing

Merchandise Returns and Subscription Cancellations

May Be Numerous

Merchandise Returns and Subscription Cancellations

May Be Numerous

Seller Reputation and Prestige May Be Compromised by

Method’s Poor Image

Seller Reputation and Prestige May Be Compromised by

Method’s Poor Image

Merchandise Returns and Subscription Cancellations

May Be Numerous

Merchandise Returns and Subscription Cancellations

May Be Numerous

Customers Can’t Handle or Inspect the Product Before Purchasing

Customers Can’t Handle or Inspect the Product Before Purchasing

Direct Response Disadvantages

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

DisadvantagesDisadvantages

Overall Direct Marketing Pros & Cons

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

AccuracyAccuracy

Rising CostsRising Costs

Image FactorsImage Factors

Content SupportContent Support

Selective ReachSelective Reach

Segmentation CapabilitySegmentation Capability

Frequency PotentialFrequency Potential

FlexibilityFlexibility

TimingTiming

PersonalizationPersonalization

EconomyEconomy

AdvantagesAdvantages DisadvantagesDisadvantages

Measurement of Effectiveness

Measurement of Effectiveness

AccuracyAccuracy

Image FactorsImage Factors

Content SupportContent Support

Selective ReachSelective Reach

Segmentation CapabilitySegmentation Capability

Frequency PotentialFrequency Potential

FlexibilityFlexibility

TimingTiming

PersonalizationPersonalization

EconomyEconomy

Measurement of Effectiveness

Measurement of Effectiveness