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18C INTEGRATED MARKETING COMMUNICATIONS - 2 LO5 DIRECT MARKETING ANY DIRECT COMMUNICATION WITH POTENTIAL BUYERS [PROPSECTS] TO OBTAIN AN IMMEDIATE RESPONSE 18-2 TRENDS CAUSING GROWTH IN DIRECT MARKETING • Growth and specialization of databases allows better definition of market segments and niche marketing. – Marriott, Hilton [from 4 target market segments in 2000 to 12 or 13 in 2010] • Lack of time drives the need for convenience. – Both parents work combined with the social schedules of the children reduce the available time to shop. FIGURE 18-8 Business use and response rates of popular forms of direct marketing. 18-4 BENEFITS OF DIRECT MARKETING Benefits to customers Benefits to companies Fun, Convenient & HassleFree Buy Mailing Lists for Almost Any Market Saves Time / Convenience Customized Offers Improved Selection Ongoing Relationships with Customers More Comparison Shopping Timed to Achieve Higher Readership & Response Order Products for Themselves or Others Direct Access to Markets Not Location Dependent Lower Marketing Costs More Competitive Prices Reduced Inventory ? Shopping Privacy MASS vs. 1:1 MARKETING Mass Marketing One-to-One Marketing Average Consumer Individual Customer Customer Anonymity Customer Profile Standard Product Customized Market Offering Mass Production Customized Production Mass Distribution Individualized Distribution Mass Advertising Individualized Messages Individualized Incentives Mass Promotion Two-Way Messages One-Way Message Economies of Scale Economies of Scope Share of Mind Share of Customer All Customers Profitable Customers Customer Attraction Customer Retention DIRECT MARKETING COST / CONTACT Sales Call Cost per contact Trade Show Telesales Letter Catalog Direct Mailer Internet Bus Pub Type of Contact THE ROLE OF DIRECT MARKETING MARKETS OR INDUSTRIES NATIONAL ACCOUNT, OEM, DIRECT & FIELD SALES FORCES LARGER ACCOUNTS SMALLER ACCOUNTS RESELLER ACCOUNTS OTHER ACCOUNTS HOW DO WE COST-EFFECTIVELY REACH TARGET MARKETS OF SMALL ACCOUNTS? SEGMENTATION IS CRITICAL TO DIRECT MARKETING SUCCESS AND COSTEFFICIENCY A firm has a fish or fish related product, so it targets 44511 & 44522 [71,095 firms]. More information is needed to also target 44512, 44521, 44529, and 445299 [48,513 firms]. Approaching all 148,528 firms in 445 would have resulted in a large waste of money. You may have spent money going after up to 77,433 firms that do not have any use for the product! U.S. DIRECT MARKETING 2005 “U.S. Direct Marketing Today: Economic Impact 2005”, The Direct Marketing Association • $161.3 billion generate $1.85 trillion in sales – – – – Every dollar spent returned $11.49 in revenue ~13% of the $14 trillion U.S. economy [GDP] 52% of expenditures were for B→C 48% of expenditures were for B→B • Responsible for employing 7.7% of the workforce • Accounted for 47.9% of total advertising [2008 estimated at 53%] U.S. DIRECT MARKETING 2005 “U.S. Direct Marketing Today: Economic Impact 2005”, The Direct Marketing Association • By type of expenditure – Direct mail & catalog – Telephone – Internet mktg / comm / email / insert mail 31% 29% 9% • 2007 – growing at more than 14% / year • By expenditure objective – Lead generation [heavily B2B] – Direct order generation [heavily B2C] 48% 40% U.S. DIRECT MARKETING 2005 “U.S. Direct Marketing Today: Economic Impact 2005”, The Direct Marketing Association • Industry leaders – Non-store retailers – Financial institutions – Motor vehicle manufacturers – General and apparel retailing CONSUMER DIRECT MARKETING CONSUMER TYPES IN-HOME SALES DOOR TO DOOR AVON PARTIES TUPPERWARE CONSUMER DIRECT MARKETING CONSUMER TYPES IN-HOME SALES DOOR TO DOOR PARTIES DIRECT MAIL CATALOG FLYERS Coldwater Creek JUNK MAIL CONSUMER DIRECT MARKETING CONSUMER TYPES IN-HOME SALES DOOR TO DOOR PARTIES DIRECT MAIL CATALOG INTERNET FLYERS INTERNET BENEFITS* CONSUMER CONVENIENCE SPEED-TIME-PLACE COMPREHENSIVE PRODUCT SELECTION AND INFORMATION “THE OVERWHELMED CONSUMER” BUSINESS DIRECT MARKET ACCESS -MICROMARKETING POTENTIAL SALES-PROFITS-COST REDUCTION STEALING YOUR IDENTITY SOURCE: http://www.msnbc.com/news/660096.asp INTERNET – THE DIFFERENCES ARE … PREVIOUSLY ALL SEPARATE VEHICLES Market Target Research Markets FASTER ITS OWN EASIER ACCESS Channels Sales IMC Orgs. ITS OWN ITS OWN DIRECT NOW INTERNET – THE DIFFERENCES ARE … CHANNEL MARKET TARGET RESEARCH MARKETS CHANNELS SALES ORGS. ARE NOW INTEGRATED INTO ONE NEW APPROACH! IMC INTERNET ISSUES – STRATEGIC FIT • WHAT TYPE OF BUSINESS DO YOU WANT TO BE IN? • HOW DOES THE INTERNET FIT WITH THE REST OF THE BUSINESS? – ORDER PROCESSING AND ORDER SIZE – COST OF DISTRIBUTION – TYPES OF TRANSACTIONS CONSUMER DIRECT MARKETING CONSUMER TYPES IN-HOME SALES DOOR TO DOOR PARTIES DIRECT MAIL CATALOG FLYERS INTERNET END CAP POINT-OF-PURCHASE FLOOR STAND COUNTER STAND TAG ALONG VENDING MACHINE KIOSK MARKETING END CAP FLOOR STANDS COUNTER STAND COUNTER STAND CONSUMER DIRECT MARKETING CONSUMER TYPES IN-HOME SALES DOOR TO DOOR PARTIES DIRECT MAIL CATALOG FLYERS INTERNET END CAP POINT-OF-PURCHASE FLOOR STAND COUNTER STAND TELESALES / TELEMARKETING TAG ALONG VENDING MACHINE CONSUMER DIRECT MARKETING CONSUMER TYPES IN-HOME SALES DOOR TO DOOR PARTIES DIRECT MAIL CATALOG FLYERS INTERNET END CAP POINT-OF-PURCHASE FLOOR STAND COUNTER STAND TELESALES TAG ALONG VENDING MACHINE AD INSERTS MAGAZINES NEWSPAPERS NEWSPAPER STICKERS CONSUMER DIRECT MARKETING CONSUMER TYPES IN-HOME SALES DOOR TO DOOR PARTIES DIRECT MAIL CATALOG FLYERS INTERNET (E-COMMERCE) END CAP POINT-OF-PURCHASE FLOOR STAND COUNTER STAND TELESALES AND TELEMARKETING TAG ALONG VENDING MACHINE INSERTS MAGAZINES TV / RADIO SHOPPING DiIR RESPONSE NEWSPAPERS Direct-response TV marketing -QVC, HSN, the Jewelry Channel, … DIRECT MARKETING LIFETIME VALUE: Membership Program Example Cost of Campaign: 100 new members @ $70 1st year “cost” $10,000 $ 7,000 $ 3,000 -$10,000 - 3,000 2d Year 80 renewals @ $70 $ 5,600 + 2,600 3d Year… $ 5,600 + 8,200 CUSTOMER SERVICES Etch-A-Sketch Tech Support My Etch-A-Sketch has all of these funny little lines all over the screen. Pick it up and shake it. How do I turn my Etch-A-Sketch off? Pick it up and shake it. How do I keep from losing my Etch-A-Sketch documents in the middle of my work? Stop shaking it.