Transcript Moriarty_8e_Basic_15

Direct-Response Marketing
Part 5: Principles: How to Win the Battle of the
Buzz
Chapter 15
Prentice Hall, © 2009
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CHAPTER KEY POINTS
Questions We’ll Answer
• How do we define direct marketing and
explain the process?
• How are databases used in direct
marketing?
• Who are the key players in direct
marketing?
• What are some steps in evaluating the
tools and media available to directresponse programs?
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THE PRACTICE OF DIRECT MARKETING
What is direct marketing?
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A multichannel system of marketing using
various media to connect sellers and
customers who deal with each other directly
rather than using an intermediary, like a
wholesaler or retailer.
Designed to elicit an immediate response.
Uses marketing research to develop strategy.
Builds databases to target customers,
prospects.
Uses a variety of media, including new media.
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THE PRACTICE OF DIRECT MARKETING
Advantages of Direct Marketing
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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 (not wholesaler or distributor)
controls product until delivery.
Advertising with direct-mail components is more
effective.
Flexibility in form and timing.
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THE PRACTICE OF DIRECT MARKETING
Disadvantages of Direct Marketing
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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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THE PRACTICE OF DIRECT MARKETING
Direct Response Advertising
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Direct marketing includes the whole
marketing process.
Direct-response advertising is a type of
marketing communication that combines
the characteristics of advertising and sales
promotion—attention-getting visuals,
interesting copy, an offer, and relevant
timing.
– Gives the reader, viewer, or listener a way to
directly respond and contact the advertiser
– High cost, but well-targeted
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THE PRACTICE OF DIRECT MARKETING
Direct Response Advertising
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Direct marketing includes the whole
marketing process.
Direct-response advertising is a type of
marketing communication that combines
the characteristics of advertising and sales
promotion—attention-getting visuals,
interesting copy, an offer, and relevant
timing.
– Gives the reader, viewer, or listener a way to
directly respond and contact the advertiser
– High cost, but well-targeted
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THE PRACTICE OF DIRECT MARKETING
Steps in the DM 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 PRACTICE OF DIRECT MARKETING
Objectives/Strategy
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Provide product information
– Provide space for detailed information
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Create sales
– Order products, visit a dealer, return a response card, visit a Web
site
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Retain and strengthen customer relationships
– It costs so much to acquire new customers
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Develop leads
– Identify prospects for products (i.e. cars) that make people think
before purchasing so follow-up phone calls, sales calls, or other
contact can be made to help influence purchases (lead
generation).
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Generate traffic
– Visit a store, attend an event, or otherwise interact with a brand.
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Test offers
– Pricing, packaging, promotional offers.
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THE PRACTICE OF DIRECT MARKETING
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 Web
site
• 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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THE PRACTICE OF DIRECT MARKETING
The Offer
• Typically consists of a product description, terms of
sale, and payment delivery, and warranty
information.
• Communicates benefits and answers “What’s in it
for me?” for the buyer.
• Calls on the buyer to take action.
– Offer provides all the information needed including price,
the cost of shipping and handling, optional features,
future obligations, availability of credit, extra incentives,
time and quality limits, and guarantees or warranties.
• Supported by a message strategy, a media strategy,
and the database.
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THE PRACTICE OF DIRECT MARKETING
Message and Media Strategy
• Message Development Guidelines
– Longer and must contain more explanation and detail about
price, style, and convenience; because if it doesn’t persuade the
receiver to respond, the message is wasted.
– Copy is written in a personal, one-to-one conversational style.
– Should reflect whether the offer is one-step or a two-step offer.
• One-Step Offer
– Asks for a direct sales response, includes a mechanism.
• Two-Step Offer
– Designed to gather leads, answer consumer questions, set up
appointments, drive customers to a Web site or retail store.
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THE PRACTICE OF DIRECT MARKETING
The Response/Order
• It must be as easy as possible to respond.
– Offer options: online, mail, phone, fax
• Overcome resistance with:
– Toll-free telephone numbers for product support
– Free limited-time trials
– Acceptance of several different credit cards
• Create urgency by offering a gift or limited-timeonly price deal.
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THE PRACTICE OF DIRECT MARKETING
Fulfillment/Customer Maintenance
• Fulfillment—getting the product ordered to
customers
• Fulfillment includes all back-end functions
related to processing the order:
– Delivering the product
– Receiving payment
– Providing tracking numbers
• Customer maintenance
– Tracking customer transactions and interactions with
a database
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THE PRACTICE OF DIRECT MARKETING
Measurement and Evaluation
• Various offers are evaluated and measured for
effectiveness.
– Track printed codes on mail-in responses
– Use different numbers for different TV commercials
• This info is used to identify the best offers and
adjust the campaign accordingly.
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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DATABASES: THE FOUNDATION OF DM
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 lowerusage customers who get a more modest piece.
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DATABASES: THE FOUNDATION OF DM
Database Management Process
1. Collection point
– Completed warranty card, contest entry, trade show card
2. Data entry
– Entered into computer and merged with other information
3. Data assessment
– Determine relevant level of detail
4. Data clustering
– Create clusters of characteristics and behaviors for segmenting or
targeting
5. Data application
– Apply to marketing strategy or problem (e.g., send coupons)
6. Data sharing
– Manufacturer shares info with retailers
7. Data refinement
– Corrections, updates, additions, deletions
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DATABASES: THE FOUNDATION OF DM
Lists
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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:
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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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DATABASES: THE FOUNDATION OF DM
Data-Driven Communications
• Companies use info from previous communications
to target, respond to, and interact with customers.
• Services like Prodigy and Melissa Data offers
online buying and purchase reminders that
marketers, can access.
• Date Mining
– Sifting and sorting through company database information to
target customers and maintain a relationship.
– Information is used for behavior targeting and prospecting
• Privacy Issues
– Cookies (that track online visits) and loyalty cars (like frequent
flyer cards) concern privacy advocates.
– Sometimes info is collected with the subjects permission and
knowledge; sometimes without.
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THE KEY PLAYERS
Key Players: (1) Advertisers
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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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THE KEY PLAYERS
Key Players: (2) Agencies
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Advertising agencies—department or
separate direct-response company owned
by the agency
Direct marketing agencies—independent,
full-service direct marketing agencies
specializing in direct response
Service firms—printing, mailing, list
brokering, data management
Fulfillment houses—store/ship requested
information/products
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THE KEY PLAYERS
Key Players: (3) Media Companies
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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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THE KEY PLAYERS
Key Players: (4) Customers
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Dislike intrusiveness, but appreciate
convenience
Types of customers
– Push-button shopper (phone)
– Mouse-clicking shopper (computer)
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THE TOOLS OF DIRECT MARKETING
(1) Direct Mail
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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, but easy to calculate payout rate
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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
number of recipients.
• Catalogs can drive e-commerce, Web site
purchases.
• Specialty catalogs are growing in number.
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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
– Do Not Call registry, “Privacy Manager,” and
Caller ID restrict access by telemarketers
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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 direct-response ads.
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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, lowcost messages to mass audience
• Spam is an issue
• Permission marketing gives recipients the
choice to “opt in” or “opt out”
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INTEGRATED DIRECT MARKETING
What is 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 IN DIRECT MARKETING
What are the global trends and issues?
• 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.
• Creative messages, visuals, and words often don’t
easily translate across cultures.
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mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
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