Direct MarketingDirect Marketing

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

“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.”

ALSO

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

DM Ads

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

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

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

Products have the added value of distribution direct to the customer, an important benefit

Product benefits do not typically include distribution to the customer’s door

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

Repetition of offers and promotional messages are used over a period of time

Customer feels a high perceived risk – product bought unseen, recourse is distant

Customer feels less risk – has direct contact with the product and direct recourse

Historic Comparison Between Direct and Traditional Brand Marketing

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

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

Kiosk ActivityKiosk Activity

0800 toll free0800 toll free

Direct MailsDirect Mails

111 Services111 Services

SurveysSurveys

CatalogsCatalogs

SourcesSources

Effective Databases

RFM Scoring RFM Scoring

Frequency(How often do they

purchase?)

Frequency(How often do they

purchase?)

Recency(How recently did

the customer purchase?)

Recency(How recently did

the customer purchase?)

Monetarytransactions

(How much do they spend?)

Monetarytransactions

(How much do they spend?)

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 Postal Service or through

private services

All forms of advertising sent directly to prospects through the Postal Service or through

private services

Porsche Targets Prospects with Direct Mail

Success with Catalogs

TV Spots, Infomercials, and Homeshopping

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

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 Flow Chart

Direct M arketing

M arketing Research

M arketSegm entation

D irect ResponseAdvertis ing

Advertis ing Creation

M edia

D irect M ail Telephone Broadcast Internet Newspaper M agazine O thers

D irect M ail Telephone Broadcast Internet Newspaper M agazine O thers

D irect Response Expenditures

D istribution Channels

M easurable R esponse

VendingM achines

M ail O rder,M ail/Phone

Personal Visitto Seller

Personal Visit orCall to Buyer

Custom er / ProspectDatabase

Response / TransactionCom pletion

(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 well-defined 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

Marketer

Direct

Communication

Hi-Tech

Media

Elect.

Media

Print Media

Prospect/Customer Database

Target Customer/Prospect

Measurable

Response

and/or

Transaction

Multi-Channel

Fulfillment

Direct

Mail/Cat

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