Transcript class 19 10-12

Content Wraps
• Saatchi, Zenith and Toyota partnered with The CW
Network, D.C. Comics, and Warner-Brothers
Studios to develop a customized experience
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Product Placement
C3 Retention Rates
Any Surprises?
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Creative Execution
Assignment
Kate will send out schedule
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Advertising Principles
and Practices
Direct-Response
Marketing
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Who am I?
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Hand Out
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Advertising and DR
• Art vs. Science
• Soft measures vs. hard measures
• Stickiness vs. awareness building (hand out #2)
• Now starting to blend, esp with growth of digital.
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What is direct marketing?
• Connecting sellers and customers to deal with
each other directly rather than using an
intermediary, like a wholesaler or retailer.
• Designed to elicit an immediate response.
• Emphasis on tested methods and an iterative
process to develop strategy.
• Database, database, database!
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Case Study
• Meredith Corporation
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The Gecko Goes Direct
• Gecko, Caveman, celebrity
testimonials
• Their share of premiums
grew from 4.6–6.9%
from 2001 to 2006.
Visit the
Site
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Direct Marketing Industry
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Advantages of Direct Marketing
• Can be personalized to be
more persuasive.
• Results are measurable; ROI is
more easily known.
• Relevant customer information
can be collected to produce
more useful databases and
selective reach, reducing waste.
• Convenient to purchase; not
restricted to a location.
• The marketer controls product
until delivery.
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Disadvantages of Direct
Marketing
 Consumers are reluctant
to purchase a product
they can’t touch or feel.
 Annoyances associated
with direct marketing
(junk mail,
telemarketers).
 Customer privacy, data
sharing, and identity theft
issues.
 Tension between building
long-term brand image
and driving short-term
sales.
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Steps in the
Direct Marketing Process
1. Setting objectives and making strategic decisions
(research helps advertisers target, segment,
prospect, and set objectives).
2. The communication of an offer (the message)
by the seller through the appropriate medium.
3.
Response, or customer ordering.
4.
Fulfillment, or filling orders and handling
exchanges and returns.
5. Maintenance of the company’s database and
customer service (relationship building).
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The DirectMarketing
Process
Prentice Hall, © 2009
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Objectives/Strategy
• Provide product information
• Create sales
• Retain and strengthen customer relationships
• Develop leads
• Generate traffic
• Test offers
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Targeting
• Identifies who is to receive the offer.
• Important because the Cost Per Thousand is very high.
• Current customers are the best prospects.
• Order products, visit a dealer, return a response card, visit a
website
• Three criteria (RFM) predict who is most likely to
buy again:
• Recency—they purchased recently
• Frequency—they purchase often
• Monetary—they spend a lot of money
• Profiling
• For acquiring new customers, a targeting strategy is to profile
current customers and look for potential customers with similar
profiles.
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Measurement and Evaluation
Principle:
Because direct-marketing messages are constantly
being measured, it is easier to learn what works and
modify succeeding campaigns based on results than
with advertising.
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Branded Content-Absolut
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Using Databases
 Marketers use databases to:
 Keep track of customers
 Identify prospects
 Segment groups into customers and prospects, to
send relevant offers to each group
 E.g., Carnival Cruise Lines segments customers
into new customers, returning passengers, and
frequent cruisers.
 Each group gets a different “Sail and Sign” card, each
with different perks and privileges
 Direct marketers use the same strategy when
sending offers to customers or prospects.
 Better customers get more premium quality pieces
than lower-usage customers who get a more modest
piece.
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A Circular Process
• Primary database objectives:
1.
2.
3.
4.
Record names of customers
Store and measure ad results
Store and measure purchasing performance
Vehicle for continuing direct communication
Principle:
A reliable database of customer and prospect contact
information lies at the heart of effective direct marketing.
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Database Management Process
1.
Collection Point
•
2.
Data Entry
•
3.
Apply to marketing strategy or problem (e.g., send coupons)
Data Sharing
•
7.
Create clusters of characteristics and behaviors for segmenting or targeting
Data Application
•
6.
Determine relevant level of detail
Data Clustering
•
5.
Entered into computer and merged with other information
Data Assessment
•
4.
Completed warranty card, contest entry, trade show card
Manufacturer shares info with retailers
Data Refinement
•
Corrections, updates, additions, deletions
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Database Management Process
Prentice Hall, © 2009
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Lists
•
Customer and prospect information including addresses, phones,
emails.
•
Can be purchased or rented from list brokers.
•
Lists tied to demographics, psychographics, geography, hobbies,
affiliations, postal routes .
•
New lists are crated by merging and purging
•
Three types of lists:
• House lists: marketers own customers or members
• Response lists: people who respond to some type of direct-response offer
• Compiled lists: specific categories such as new homebuyers, graduating
seniors, new mothers
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Four Key Players in
Direct-Response Marketing
1.
Advertisers
2.
Agencies
3.
Media Companies
4.
Customers
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Key Players: (1) Advertisers
• Companies whose primary
business is selling products
and services by mail or
phone, or direct response
advertising.
• Retail stores who use direct
marketing as a supplement
to other forms of marketing.
• Dell, GEICO
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Key Players: (2) Agencies
• Advertising agencies—
department or separate
direct-response company
owned by the agency
• Direct marketing
agencies—independent,
full-service agencies
specializing in direct
response
• Service firms—printing,
mailing, list brokering,
data management
• Fulfillment houses—
store/ship requested
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information/products
Key Players: (3) Media Companies
• The media that deliver messages by phone,
mail, or the Web
• Used to make an offer with a prospect
• U.S. Postal Service
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Key Players: (4) Customers
• Dislike intrusiveness, but appreciate
convenience
• Types of customers
• Push-button shopper (phone)
• Mouse-clicking shopper (computer)
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Tools of Direct Marketing
1. Direct Mail
2. Catalogs
3. Telemarketing
4. Direct-Response
Advertising
5. Web-based emarketing
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The Tools of Direct Marketing:
(1) Direct Mail
• A print advertising
message for a product or
service, delivered by
mail
• Most popular method
• Variable data use digital
printing to highly
personalize messages
• Uses bulk mail rates
• Response is 2–3%
• Fairly high CPM,15-36
but
Table 15.1
Advantages of Direct Mail
Advantages
Description
Tells a story
The medium offers a variety of formats and provides enough space to tell
a complete sales story.
Engages attention
Because direct mail has little competition when it is received, it can
engage the reader’s attention.
Personalizes message
Because of the use of databases, it is not possible to personalize direct
mail across a number of consumer characteristics, such as name,
product usage, purchase history, and income.
Builds in feedback
Direct mail is particularly conducive to marketing research and can be
modified until the message design matches the needs of the desired
target audience.
Reaches the unreachable
Direct mail allows the marketer to reach audiences who are inaccessible
by other media.
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Table 15.1
Disadvantages of Direct Mail
Advantages
Description
Negative perceptions
The main drawback of using direct mail is the widespread perception that
it is junk mail. According to a Harris-Equifax Consumer Privacy Survey,
about 46 % of the public see direct-mail offers as a nuisance, and 90%
consider them an invasion of privacy.
Cost
Direct mail has a higher cost per thousand than mass media. A great
deal of this high cost is a result of postage. (However, it reaches a more
qualified prospect with less waste.) Another cost factor is the
maintenance of the database.
Mailing list
To deliver an acceptable response rate, the quality of the mailing list is
critical. It must be maintained and updated constantly.
Response rates
Because of the changing nature of mailing lists, as well as the difficulty of
keeping relevant data in the database, the response rate can be a slow
as 2 or 3%. Even with that low response, however, database marketers
can still make money.
Vulnerability
Direct-mail delivery is vulnerable to natural disasters as well as
catastrophes such as the 9/11 terrorist attacks.
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Creating Effective Direct
Mail
• Get the attention of the targeted prospect as the
envelope comes from the mailbox.
• Create a need for the product, show what it looks
like, and demonstrate how it is used.
• Answer questions, as a good salesperson does,
and reassure the buyer.
• Provide critical information about product use.
• Inspire confidence, minimize risk, and establish
that the company is reputable.
• Make the sale by explaining how to buy, how to
order, where to call, and how to pay for the
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purchase.
Writing Effective Letters
• Attention
• Pictures and benefit-oriented headlines to grab attention
or generate curiosity.
• Personalize
• Use a name or, if not available, a topic (“Dear Cat
Lover”).
• Lead in
• A brief yet compelling or surprising statement—“Dear
Friend: I could really kick myself!”
• The Offer
• Make it as early in the letter as possible.
• The Letter
• Use testimonials or other specifics to describe benefits.
• The Closing
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Issue: Trees, Water, and
Waste
• Direct mail uses an estimated 100 million trees
and 28 billion gallons of water per year
• Plus disposal and recycling costs; in Colorado,
direct mail accounts for 340 million pounds of
trash per year.
• Should direct mail be banned?
• Would this infringe on advertisers’ rights to
commercial free speech?
• What do you do if you’re an environmentally
responsible advertiser?
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The Tools of Direct Marketing:
(2) Catalogs
• A multiple-page direct
mail publication showing
a variety of merchandise
• Increasing in number;
even while marketers are
refining databases,
cutting back on no. of
recipients
• Catalogs can drive
e-commerce, Web site
purchases
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• Specialty catalogs are
Table 15.2
Advantages and Disadvantages of Catalogs
Advantages
Description
Targeted
Can be directed at specific market segments.
Engages attention
Employs high-quality design and photography (see Alsto’s cover).
Complete information
Extensive product information and comparisons are provided.
Convenience
Offer a variety of purchase options.
Disadvantages
Description
Negative perceptions
Catalogs are viewed as junk mail by many recipients.
Costs
The cost per thousand of catalogs is higher than mass media.
Response rate
The response is relatively low at 3 to 4%.
Mailing list
Databases must be constantly maintained.
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The Tools of Direct Marketing:
(3) Telemarketing
• Almost as persuasive as
personal sales, but a lot less
expensive.
• Inbound vs. outbound.
• Message must be simple,
compelling, and short.
• Issues include intrusion,
privacy, and fraud.
• Predictive dialing can call even
unlisted numbers
• Fraudulent behavior has
tarnished telemarketing’s image
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• Do Not Call registry,
“Privacy
Manager,” and Caller ID
The Tools of Direct Marketing:
(4) Direct-Response Advertising
• Print Media
• Ads in newspapers and
magazines feature a
coupon, order form,
address, toll-free number;
ask for response.
• Broadcast Media
• Radio provides targeted
audiences, especially
mobile audiences.
• Cable is targeted to
particular interests.
• TV uses infomercials
and
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direct-response ads.
The Tools of Direct Marketing:
(5) Internet
• Combines strengths of direct
mail and telemarketing.
• Moves marketers closer to
one-to-one marketing.
• Combines database
information and email
technology for highly
personalized, low-cost
messages to mass audience.
• Spam is an issue.
• Permission marketing gives
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recipients the choice
Eddie Bauer
• The Eddie Bauer Web site lets site visitors “try
on” clothes in a virtual dressing room” and also
sends email messages offering special prices
based on customers’ past purchases.
Visit the
Site
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Integrated Direct Marketing:
•
A systematic way to get close to your best
current and potential customers.
•
Seeks to achieve precise, synchronized use
of the right media, at the right time, with
a measurable return on dollars spent.
•
Direct mail with a reply card and an 800
number, followed by a phone call.
•
Lifetime Customer Value (LCV) is an
estimate of how much a purchase volume
a customer or target market will generate
over a length of time.
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Global Considerations
•
The use of databases, credit cards, toll-free
numbers and the Internet are driving direct
marketing growth in Far Eastern and
European countries.
•
Direct marketing is especially important in
countries where advertising is tightly
regulated.
•
Government postal regulations also limit the
use of direct mail.
•
Regulations, standards, and cultural
meanings vary greatly from country to
country.
•
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Creative messages, visuals, and words often
Discussion Questions
Discussion Question 1
• Most people hate telemarketing. Say you work for
the local campus environmental organization.
• How could you conduct a campus and community
telemarketing effort that would not generate
resistance?
• Apply your ideas to developing a telemarketing
program to promote campus fund-raising for a
good cause, such as a campus Habitat for
Humanity project?
• Your primary targets are students, faculty, and
staff.
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