Transcript Direct Marketing

WHAT IS DIRECT MARKETING?
Direct marketing consists of connecting directly with carefully targeted individual
consumers to both obtain an immediate response and cultivate lasting customer
relationships. Direct marketers communicate directly with customers, often on a oneto-one, interactive basis. Using detailed databases, they tailor their marketing offers
and communications to the needs of narrowly defined segments or even individual
buyers. Direct marketers usually seek a direct, immediate, and measurable consumer
response.
Kotler et al. 2010, ch 17, 550
HISTORY OF DIRECT MARKETING
•
Aaron Montgomery Ward opened first mail-order house in
1872
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Ward sent free catalogs to rural areas and then used PostOffice’s delivery
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Ward’s business model was based on non-negotiable prices
and wider collection than local businesses could provide in the
rural areas
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It was only until 1967 when Lester Wunderman identified,
named and defined term direct marketing
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Wunderman is considered to be father of various marketing
innovations such as American Express Rewards program
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Greatest revolution came in the recent decades with television
and internet
DIRECT MARKETING
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Overall approach to marketing. (Communication & distribution)
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Not a separate tool, need to be considered as a part of the marketing mix
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Direct marketing has become the fastest-growing form of marketing
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According to the book International Direct Marketing, Canadian organizations
spent US$9.669 billion on direct marketing in 2007, the eighth-largest amount in
the world
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Some examples are: email, phone, online advertising and database marketing.
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Focuses on the customer, data and testing.
CHARACTERISTICS THAT DISTINGUISH DIRECT
MARKETING FROM OTHER TYPES OF MARKETING
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Usage of databases to identify target
segments or markets
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Marketing messages directly addressed
to target segments
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Specific action as a goal
•
Heavy emphazis on measurement and
usage of the results
DMA = Direct
Marketing
Association, “a
trade organization
for data-driven
marketers which
seeks to advance
and protect
responsible datadriven marketing”
Visit the web page: https://thedma.org
FORMS OF DIRECT
MARKETING
Fa ce -to-face
s elling
Direct-mail
Online
marketing
New digital
technologes
marketing
Catalogue
marketing
Customers
and
prospects
Kiosk
marketing
Directresponse
television
marketing
Telemarketing
Kotler et al. 2010
FORMS OF DIRECT MARKETING
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Every medium which can be used to deilver communication to a customer can be
used in direct marketing
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Direct mail marketing (physical or virtual address):
 By far the largest direct marketing medium
 One-to-one communication
 All kinds of products
 ”Junk mail” key problem. Careful targeting.
 Easy to measure results
•
Catalogue marketing
 Print, video or digital catalogues
FORMS OF DIRECT MARKETING
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Telephone marketing
 20% of all direct marketing-driven sales.
 Purchasing convenience and increased product and service information
 ”Junk phone calls” -> Rules, Do Not Call –list.
•
Direct-response Television marketing
 Shopping channels or direct response television advertising
 Questionable relations (get fit by doing nothing, get rich schemes, etc.)
 Recent years some big comapnies (Apple, P&G, Disney)
FORMS OF DIRECT MARKETING
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Kiosk marketing
 Information and ordering machines in airports, stores, etc.
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New digital direct-marketing technologies
 Mobile marketing has grown rapidly since 2007
 Podcasts, vodcasts
 Interactive TV
DATABASE MARKETING
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Database marketing is the use of customer databases to enhance marketing
productivity through more effective acquisition, retention and development of
customers (Course 27E20100 – Database Marketing, fall 2015)
•
Database marketing is a form of direct marketing that uses databases of
customers to generate targeted lists for marketing communications (Marketingschools.org)
•
Database marketing is a systematic approach to the gathering, consolidation and
processing of consumer data (Techtarget.com)
EFFECTIVE DATABASE MARKETING
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Data collection
 Customer database
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Turning data into knowledge
 Analysing, segmentation, CLTV, RFM
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Developing and evolving marketing communication strategies
 Use of the data and knowledge for shaping the strategy
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Measuring the results
 Tracking results, improvements
DATABASE MARKETING STRATEGIES
EXAMPLE OF DATA COLLECTION
DIRECT AND DATABASE MARKETING IN B2C
ENVIRONMENT
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Consumer lists are usually based on household level and the customer database includes demographics,
psychographics and buying behavior (Meisner 2006; Kotler 2010)
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Understanding the different characteristics of different industries: for example retail versus food distribution
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Knowledge of privacy issues and legislation is required  Consumers have to have the possibility to decline the
message or unsubscribe
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Some consumers can resist to be tracked  How to change their minds?  Underlying the real benefits
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Consumers can get special discounts etc. via direct marketing programs  They can be part of the inner circle
and get special benefits that are available just for them (Gail 2010; Meisner 2006)
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New opportunities for B2C companies to attract their customers by offering instant coupons etc. and achieve the
goal of sales
 Proximity marketing = a wireless distribution of marketing content associated with a particular
place. The location of a device can be determined in several ways, i.e. by cell phone, a bluetooth or
WiFi, an internet enabled device with GBS or a NFC enabled mobile phone that can read a RFID
chip. NOTE! Reconsider always whether it fits on your business and consumers: sometimes it
can be seen as a creepy and invasive action! (Dushinski 2009)
DIRECT AND DATABASE MARKETING IN B2B ENVIRONMENT
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Business-to-business lead generation is direct marketing  a big role for a salesperson and the company:
how to support sales successfully and how salespeople can make it through?
Sell to the guy
who is looking
to buy
No idle chitchat
Know when to
quick talking
Develop an
understanding
of “how to craft
and present a
selling
argument”
Go for the close
A real hunger
for the sale
 1) Maximize salespeople’s effectiveness by decreasing their prospecting time, allowing more time for closing
2) Increase the potential revenue salespeople can make, thus making them more loyal to the company and
increasing their longevity with the company (Meisner 2006, 89.)
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B2B DM is highly focused, highly targeted process: list selection is critical (research and acquire the right type
of list), developing the offer accordingly and executing the DM based on the audience’s special characteristics
(Jones 2009)
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B2B list sources are usually firmographics or the characteristics of the company and then finding the right
person from the company (in smaller companies owner or president but in bigger companies finding the right
department and its individual in charge). (Meisner 2006) The database can consist of the buying behavior,
past volumes and prices, key contacts, competing suppliers, status of the current contracts, estimation of
future spending and assessments of competitive strengths and weaknesses (Kotler 2010)
•
Combination of different DM tactics is especially used in large B2B businesses: for example using e-mail
messages, printed mail brochures and telephone calls together. In small B2B businesses cost of the
marketing effort matters more: i.e. dealrized lead-generation programs, managed by the equipment
manufacturer or its designated agent (Meisner 2006)
CONCLUSIONS – WHAT ARE THE CHALLENGES IN DIRECT AND
DATABASE MARKETING?
Privacy breaches – avoid spam,
and trust on non-repudiation,
integrity and authentication! ( (Xu
& Quaddus 2010.)
Understanding the marketing
pyramid: how to make it all work
together? (referring to Meisner
2006, 17)  What is actually
direct marketing strategy versus
i.e. sales promotion or PR?
How to use the power of selling
techniques inside the chosen
direct marketing programs? 
Finding the best people in sales
but also requires other special
skills and training in DM
(Meisner 2006; Jones 2009)
Using the both halves of brain:
(right) creativity and subjective
thinking & (left) technical and
linear thinking = “whole-brain
marketing” (Meisner 2006)
Need of co-operation with
different departments  sharing
the real thinking of direct
marketing and its strategy
approach remembering the
overall goal of sales also inside
creative department (Meisner
2006)
Successful DM programs are not
appreciated enough: spicing
them up even though there are
no problems  “If it’s not
broken, don’t fix it” (Meisner
2006)
Keeping up with the “getting a
response in” –thinking instead of
“getting the message out”
(Meisner 2006)
How to manage lists and data
successfully?  collecting
targeted data, analyzing and
updating it! accordingly (Meisner
2006; Kotler 2010, Jones 2009)
Designing the DM programs so
that they can be tested and
tracked  variations by certain
media (Meisner 2006; Dushinski
2009 )
Meisner 2006, 17
Direct marketing as a
strategic promotional
discipline!
CONCLUSIONS – WHY DIRECT MARKETING IS USED?
Benefits to customers (consumers/buyers)
Benefits to companies (sellers)

Social media direct marketing can provide real user

benefit (special deals, early-bird offers, VIP) (Gail 2010)
+ combining it to “street team marketing” can enhance
its strength even more

Personalization in marketing communications can save
consumer’s time and money + it can make the
consumer to feel like the company really understand
what are her/his needs


A greater measure of control: consumers can choose
between different direct marketing medias (Kotler 2010)

DM is interactive and immediate  interaction with
seller by phone or online and doing the order on the
spot (Kotler 2010)


B2B buyers can get information without having
meetings with salespeople due to access to information
about companies, products and competitors (Kotler

2010)
D ATA
Using data warehouse and data mining in DM
strategies = vast amount of business intelligence 
ability to look at information from different dimensions
can increase business insight + it is an opportunity to
reveal hidden correlations, associations, patterns and
trends: companies can make better predictions and find
valuable business opportunities (Xu & Quaddus 2010)
DM with customer data systems, such as OLAP tool
(online analytical processing,) allow companies to have
customer information from all customer touch points 
analyzing who are profitable and non-profitable
customers (RFM model) (Xu & Quaddus 2010; Meisner
2006) and using LTV (lifetime value) calculations 
learning from customers (Kotler 2010)
It can be a low cost, efficient and speedy alternative for
reaching the markets
Flexibility = marketers can make ongoing adjustments to
prices and programs and immediate personal
announcements and offers as well (Kotler 2010)

DM gives access to buyers that the company cannot
reach via other channels (Kotler 2010)

Supports the general organizational marketing goal of
making sales (Meisner 2006)
BUT MOST OF ALL REMEMBER IMC STRATEGY: REACHING CUSTOMERS VIA
DIFFERENT CHANNELS SIMULTANEOUSLY AND SYNERGISTICALLY!
CASE KESKO AND S-RYHMÄ
On the their way to sufficient Direct Marketing
LOYALTY PROGRAMS
 Swiping a Plussa-card or a S-card has become second nature to
Finnish people these days
 Both grocery stores get valuable data of our shopping habits in
order to improve their store selection as well as marketing
 Finland is a late bloomer when it comes to direct marketing in
grocery stores, in the US it has been common already from the mid
90’s
 Perhaps small rewards (points and vouchers) cannot only convince
consumers to favor one retailer over another?
HOW ABOUT PRIVACY PROTECTION?
 It is not illegal to collect individual shopping information and use it in
direct marketing as long as they have consent of the customer
 Stores have made restrictions to collect data to their own loyalty programs,
perhaps thinking it would scare the consumers away if it was allowed
 There was a fuss over S-ryhmä changing these rules and informing it in a
way that majority of people would not notice it
 In these kind of cases media often takes the side of the consumer and
makes it sound like sham -> S-Ryhmä has later explained the fuss and
ensured that the customer information is being used carefully and by no
means against the customer, quite the opposite
 Privacy protection concerns and new EU regulation about using shopping
information for profiling people keeps grocery stores cautious
SUFFICIENT DIRECT MARKETING = BETTER
CUSTOMER SERVICE
Kesko and S-ryhmä have been both
collecting shopping data for a while now
but mostly to manage their stock not
sufficiently in a marketing purpose
Kesko has advanced computer
technique to enable effective direct
marketing; hundreds of sale items are
matched with hundreds of thousands
customer’s saved shopping history
information
Every purchase is saved on the loyalty
card and that information is used to
target suitable offers to specific
consumers either through emails or text
messages
Kesko started their direct marketing
about three years ago. Starting from
1.10.2016 Keskos’s loyalty program
Plussa is making major improvements to
their services making them more
personal, easier and rewarding
S-Ryhmä is getting pass the media fuss
and improving their data collection in
order to satisfy customer needs, not only
to enhance direct marketing but also for
digital services such as electronic
warranty receipts
In the future there might be an advanced
direct marketing program where stores
could predict customers wants and
needs and offer compelling personal rollin products
WHAT DO YOU THINK ABOUT GROCERY STORES
USING YOUR SHOPPING HISTORY FOR DIRECT
MARKETING?
There was a scandal in US where the grocery store concluded a teenage girl to be
pregnant based on what she had bought from the store and congratulated her and
her family with suitable offers and vouchers, when in fact her parents were not aware
of what had been going on in their daughter’s bedroom
THANK YOU!
REFERENCES
Dushinski, K. 2009. The Mobile Marketing Handbook: A Step by-Step Guide to Creating Dynamic Mobile Marketing Campaigns. Info
today: New Jersey.
Gail, Z. M. 2010. 30 Days to Social Media Success: The 30 Days Results Guide to Making the Most of Twitter, Blogging, LinkedIn and
Facebook. Franklin Lakes. (Pages 129-132).
Jones, S. K. 2009. Business-to-Business Marketing. Seven Proven Strategies for Increasing Profits through Internet Direct Marketing.
Fifth edition. Maximum: Canada.
Meisner, C. 2006. The Complete Guide to Direct Marketing. Creating breakthrough programs that really work. Kaplan: United States.
Xu, J. & Quaddus, M. 2010. E-business in the 21st century. Realities, Challenges and Outlook. World Scientific: Singapore.
Kuningaskuluttaja 2014. Ruokakauppa toi Suomeen henkilökohtaiset tarjoukset. Yle.fi web article 12.4.2012.
http://yle.fi/aihe/artikkeli/2014/12/04/ruokakauppa-toi-suomeen-henkilokohtaiset-tarjoukset
S-Ryhmä 2016. S-Ryhmä: asiakas voi päättää miten hänen tietojaan käytetään. S-Ryhmä website 19.8.2016.
https://www.s-kanava.fi/web/s-ryhma/uutinen/s-ryhma-asiakas-voi-paattaa-miten-hanen-tietojaanhyodynnetaan/2940293_384136
K-Plussa 2016. Plussa uudistuu. K-Plussa website.
https://www.plussa.com/Plussa-uudistuu/#Tallainen-on-uusi-Plussa
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"Direct Marketing Association emphasizes the importance of being 'Data Driven'".
Retrieved 2015-07-04.
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The Power of Direct Marketing: ROI, Sales, Expenditures, and Employment in the US,
2009-2010 Edition
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Brandweek 50, no. 36. D1-D4 "The Next Generation of Direct Marketing." Academic
Search Complete, EBSCOhost, 2009, p. 6.
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Kotler, Philip R, 2010 Principles of Marketing, Eighth Canadian Edition, Pearson
Education Canada
http://www.pearsoned.ca/highered/showcase/kotler/pdf/9780132473958_ch17.pdf
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https://codemyviews.com/blog/12-brilliant-direct-marketing-pieces-you-have-to-see
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www.customerthink.com, what is database marketing and when can it be used
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http://www.fusionb2b.com/blog/2010/04/6-database-marketing-strategies