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By :

Prof. Amit Kumar

04/15/23

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“A major change that is reshaping the face of selling is the growth of direct marketing. This session explores the major changes that are taking place, the key tools that can be used and how the direct marketing process can be effectively managed. It begins by explaining the meaning of direct marketing before discussing the use of database marketing. The management of direct marketing activities will then be explored, including setting objectives, targeting, achieving customer retention and creating action plans”.

ACCMAN

Importance of this course

04/15/23

Direct Marketing Managing a Direct Marketing Campaign

In order to inform customers about various products and ultimately sell them, marketing managers routinely conduct marketing campaigns of varied types as part of overall marketing strategy. They may be for:

Launch of a new product Test marketing of a new product Relaunch of an old product with more features Campaign for specific occasions Campaign to build brand image, e.g. with a

celebrity

Direct Marketing Managing a Direct Marketing Campaign

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Introduction: Campaign Management

ACCMAN

• The starting point for the campaign management is the marketing plan: direct marketing should be fully integrated with all marketing and promotional mix elements to provide a coherent marketing strategy.

• In particular direct marketers must understand how the product is being positioned in the marketplace in terms of its target market (where it is to compete) and differential advantage (how it is to compete).

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Managing a Direct Marketing Campaign

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

Managing a Direct Marketing Campaign

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Marketing Plan(Strategy Hierarchy)

Identifying and Understanding Target Audience

Setting Campaign Objectives

Creative Decisions Media Decisions

Campaign Execution and Evaluation

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

Managing a Direct Marketing CampaignIdentify and Understand the Target Audience

• Using market segmentation variables such as …….

• Direct marketers also need to understand the buyer behavior of the target audience. David Ogilvy, a famous advertising guru, once wrote ‘never sell to a stranger’.

• Once the target audience has been defined, a list is required which may be obtained from an in-house database or through an external broker.

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Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

1. Financial Objectives– Sales volume and value, profit, return on investment

2. Communication Objectives– Awareness, stimulate trial, positioning of brand in

consumers’ minds, remind and reinforce

3. Marketing Objectives– Customer acquisition/retention, lead/enquiry generation,

number of orders, response rate (proportion of contacts responding)

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Managing a Direct Marketing CampaignSetting Campaign Objectives

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

Marketing Objectives:

– Acquiring new customers is usually much more costly than retaining existing ones.• When calculating the resources to be used to create

new customers, the concept of LTV should be used. This is the measure of the profits of customers over their expected life with the company.

– Retaining as an objective has spawned loyalty program such as frequent flyer schemes (airlines) and loyalty cards (supermarkets).

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Managing a Direct Marketing CampaignSetting Campaign Objectives

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

In order to achieve objectives, companies need to produce

an effective creative brief which includes the following:

1. Communication objectives

2. Target market analysis

3. Brand benefits (and weaknesses)

4. Development of the offer

5. Message communication

6. Action Plan

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Managing a Direct Marketing CampaignCreative Decisions

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

1. Communication objectives

• This spells out what the campaign is hoping to achieve, such as sales volume and value, number of orders, customer retention and/or acquisition and lead generation.

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Managing a Direct Marketing CampaignCreative Decisions

2. Target Market Analysis

• Target consumers will be identified, profiled and their needs and buyer behavior analyzed. This is essential so that the creative team adopts the Ogilvy philosophy of never selling to a stranger.

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

3. Brand benefits

• The product features can be linked by use of phrases like ‘which results in’ or ‘which means that’. Any differential advantages need to be identified through an analysis of competitor brands’ strength & weaknesses.

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Managing a Direct Marketing CampaignCreative Decisions

4. Development of an offer

• Potential offers should be pre-tested with the target audience to establish their attractiveness. Offers may be price related or take the form of free gifts (e.g. a free telephone/radio alarm to people taking out insurance.

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

5. Message Communication

• In direct mail the offer can be communicated by the envelope as well as the internal contents. Recipients must be told clearly how to respond.

• In telemarketing, scripts are often used to communicate message.

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Managing a Direct Marketing CampaignCreative Decisions

6. Action Plan

• An action plan focusing on when the campaign is to run, how often and recommendations regarding the most appropriate media to use needs to be drawn up.

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

Managing a Direct Marketing CampaignMedia Decisions

1. Telephone

2. Direct Mail

1. Solo Mailings, 2. Catalogs

3. Broadcast & Electronic Media

1. Direct-Response Television

2. Direct-Response Radio

3. Internet & World Wide Web

4. Space Advertising in Print Media

1. Newspapers and Magazines

5. Specialty Advertisements in Print Media

1. Newspaper Insert, 2. Bind-Ins and Blow-Ins

3. Bingo Cards, 4. Bill/Package Stuffers

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

Direct Mail:

• Direct mail is material set by post to a home or business address with the purpose of promoting a product and/or maintaining an ongoing relationship.

• The effectiveness of direct mail relies heavily on the quality of the mailing list.

• The management of direct mail involves asking five questions:

1. Who: Who is the target market? Who are we trying to influence?

2. What: What response is required? A sale, an enquiry?

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Managing a Direct Marketing CampaignMedia Decisions

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

Direct Mail:

• The management of direct mail involves asking five questions:

3. Why: Why should they buy or make an enquiry? Is it because of our product is faster, cheaper etc.?

4. Where: Where can they be reached? Can we obtain their home or working address?

5. When? When is the best time to reach them? Often this is at the weekend for consumers and Tuesday, Wednesday or Thursday for business people.

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Managing a Direct Marketing CampaignMedia Decisions

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

• Once the creative & media decisions have been made, the action plan will be executed. Campaign should be evaluated against defined objectives which include:– Sales volume or value

– Response rate and number of enquiries

– Cost per order/enquiry/sale

– Number of new customer

– Conversion rate from enquiry to sale

– Renewal rate

– Repeat purchase rate

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Managing a Direct Marketing CampaignCampaign Execution and Evaluation

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

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Managing a Direct Marketing CampaignCampaign Execution and Evaluation

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

Measure Operationalization

Response rate Percentage of prospects contacted who replied

Number of inquiries No of requests for information

Number of qualified leads No of leads who expressed interest

New customer acquired No of purchasers who had not purchased before

Customer acquisition cost Total marketing costs divided by number of new customers

Lapsed customer reactivated Inactive customers who purchased

Average sales Total sales divided by no of buyers

Product returns & adjustments Dollar amount of returns and adjustments

Customer service requests No of post-sale service requests

Customer lifetime value (LTV) Net present value of a customer over a specified period of time

• Most of these objectives measure the immediate (short-term) impact of a DM campaign. Direct marketers should not ignore longer term impact of a campaign which takes into account the LTV of a customer.

• A campaign in the short term may not appear cost effective, but when the impact through renewals and repeat purchase is taken into account its longer term value may be very positive.

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Managing a Direct Marketing CampaignCampaign Execution and Evaluation

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

While evaluating past programs, the direct marketer should

also uncover their budgets. Previous budgets are

extremely useful in at least two ways:

1. They show the manner in which budgets are typically presented in that firm, prevents a great deal of ‘rework’.

2. They can help advert mistakes arising from not including key cost components. This kind of error can make the difference between a successful DM campaign and a disastrous failure.

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Managing a Direct Marketing CampaignDetermining the Budget

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN

• The example shows a sample budget for a hypothetical direct mailing. It is essential that the budget be broken down into individual elements, each of which can be costed separately.

• It also shows a time schedule for a relatively simple direct mail program using several different vendors. It lists each separate activity indicating the beginning and ending date for each one and its resulting duration.

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Managing a Direct Marketing CampaignDetermining the Budget

Direct Marketing Managing a Direct Marketing Campaign

ACCMAN