Direct MarketingDirect Marketing

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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

RadioRadio

Direct SellingDirect Selling Magazine and NewspaperMagazine and Newspaper

Direct MailDirect MailTelemarketingTelemarketing

TV SellingTV Selling

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

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

Growth of Direct Marketing

Technological Advances

Technological Advances

Changing Structure of

Society

Changing Structure of

Society

Consumer Credit Cards

Consumer Credit Cards

Miscellaneous factors

Miscellaneous factors

Direct Marketing Syndicates

Direct Marketing Syndicates

Changing Structure of

Markets

Changing Structure of

Markets

Direct Marketing Combines With . . .

AdvertisingAdvertising

Sales Promotions

Sales Promotions

Public Relations

Public Relations

Personal Selling

Personal Selling

InternetInternet

Support Media

Support Media

Direct Marketing

Direct Marketing

San Diego Encourages Visits

How Database Marketing Works

A Comprehensive Consumer Database

Name

Address/Zip Code

TelephoneNumber

Length ofResidence

Age

Gender

MaritalStatus

FamilyData

Education

Income

Occupation

TransactionHistory

PromotionHistory

InquiryHistory

UniqueIdentifier

A Business-to-Business Database

Contact Info

Contact Title

TelephoneNumber

Source oforder, inquiry,

referral

CreditHistory

IndustrialClassification

Size of Business

Revenues

Number ofEmployees

Time in Business

HeadquartersLocation

PurchaseHistory

PromotionHistory

InquiryHistory

UniqueIdentifier

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

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

ObjectivesObjectives

• 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 ServicesList Services

Direct MarketingAssociation

Direct MarketingAssociation

Standard Rate &Data Service

Standard Rate &Data Service

U.S. Postal Service

U.S. Postal Service

Simmons MarketResearch BureauSimmons MarketResearch Bureau

U.S. Census Bureau

U.S. Census Bureau

SourcesSources

Effective Databases

RFM ScoringRFM Scoring

FrequencyFrequency

RecencyRecency MonetarytransactionsMonetary

transactions

Direct Marketing Strategies

One-StepOne-Step Two-StepTwo-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

Direct-Marketing Media

Home shopping

Home shopping

InfomercialsInfomercials

TeleshoppingTeleshopping

Print, catalogsPrint, catalogs BroadcastBroadcast

TV SpotsTV Spots

TelemarketingTelemarketing

Direct MailDirect Mail

Types of Direct Mail

House listsHouse lists

BroadsidesBroadsides

CatalogsCatalogs

FlyersFlyers

FoldersFolders

InclusionsInclusions

PostcardsPostcards

ReprintsReprints

Sales 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

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

InboundInbound

Telephone calling by the marketer or marketer’s agent to individual prospects, seeking purchase, subscription, membership, or participation by the call recipient.

Marketers facilitate and invite prospects to call a central location via a long distance number, by a toll-free 800 number, or a fixed-cost 900 number.

OutboundOutbound

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 reachSelective reach

Segmentation capabilitiesSegmentation capabilities

Frequency potentialFrequency potential

FlexibilityFlexibility

TimingTiming

PersonalizationPersonalization

CostsCosts

Measures of effectivenessMeasures of effectiveness

Direct Marketing Disadvantages

ImagefactorsImagefactors

AccuracyAccuracy

ContentsupportContentsupport

Risingcosts

Risingcosts

Do NotContact lists

Do NotContact lists