14

Direct Marketing

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 minutes 91 million homes 1 in 10 make purchase 40 to 60

Direct Marketing Defined

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
TV Selling Telemarketing Direct Mail

Radio

Direct Selling

Magazine and Newspaper

Growth of Direct Marketing

Direct Marketing Syndicates Miscellaneous factors Changing Structure of Markets

Consumer Credit Cards

Changing Structure of Society Technological Advances

Direct Marketing Combines With . . .

Advertising Internet Public Relations

Direct Marketing
Support Media Sales Promotions Personal Selling

San Diego Encourages Visits

How Database Marketing Works

A Comprehensive Consumer Database

Name Address/ Zip Code Telephone Number

Gender Marital Status Family Data

Occupation Transaction History Promotion History

Length of Residence
Age

Education

Inquiry History
Unique Identifier

Income

A Business-to-Business Database
Industrial Classification Size of Business Revenues Number of Employees Time in Business Headquarters Location Purchase History Promotion History Inquiry History Unique Identifier

Contact Info Contact Title Telephone Number Source of order, inquiry, referral Credit History

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 Stimulate Repeat Purchases

Objectives

Cross-selling Other Products Customer Relationship Management

 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 Services Standard Rate & Data Service

Simmons Market Research Bureau

Sources
U.S. Census Bureau Direct Marketing Association U.S. Postal Service

Effective Databases

RFM Scoring

Recency

Monetary transactions Frequency

Direct Marketing Strategies

One-Step The medium is used directly to obtain an order Often use 800 number phone orders and credit card payment

Two-Step May use one medium to obtain inquiry and qualify prospect Typically follow up with a second medium to complete the sale

Direct-Marketing Media

Infomercials Print, catalogs Teleshopping Home shopping

Telemarketing Broadcast TV Spots

Direct Mail

Types of Direct Mail

All forms of advertising sent directly to prospects through the U.S. Postal Service or through private services
House lists Broadsides Catalogs Flyers Folders Inclusions Postcards Reprints Sales letters Self-mailers

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

Outbound

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

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

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 reach Segmentation capabilities Frequency potential

Flexibility
Timing Personalization Costs Measures of effectiveness

Direct Marketing Disadvantages

Accuracy

Image factors

Content support

Do Not Contact lists

Rising costs