Transcript Forms of Direct Marketing - UPM EduTrain Interactive Learning

Direct and Online
Marketing:
Building Direct Customer
Relationships
Chapter
14
Chapter Outline






Growth and Benefits of Direct Marketing
Customer Databases and Direct Marketing
Forms of Direct Marketing
Online Marketing
Setting up an Online Marketing Presence
The Promise and Challenges of Online
Marketing
 Public Policy Issues in Direct Marketing
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Previewing the Concepts
1.
2.
3.
4.
5.
Define direct marketing and discuss its
benefits to customers and companies.
Identify and discuss the major forms of direct
marketing.
Explain how companies have responded to the
Internet and other powerful new technologies
with online marketing strategies.
Discuss how companies go about conducting
online marketing to profitably deliver more
value to customers.
Overview the public policy and ethical issues
presented by direct marketing.
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Direct Marketing
Connecting directly with
carefully targeted individual
consumers to both obtain
an immediate response and
cultivate lasting customer
relationships.
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The New Direct-Marketing Model
 The new direct-marketing model:
– Direct marketing has undergone a dramatic
transformation.
– Most firms use direct marketing as a
supplemental channel or medium.
– For many companies, direct marketing
constitutes a new and complete model for
doing business.
– Some firms employ the direct model as their
only approach (e.g., Geico, Amazon, eBay).
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Marketing in Action
Amazon.com obssesses over making each customer’s
experience uniquely personal. Customers, like author Gary
Armstrong, are greeted on their personalized home page
which also features customized recommendations.
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Growth of Direct Marketing
 Direct marketing:
– Fastest growing form of marketing.
– 10% of U. S. economy ($ 2.1 trillion) is
generated by direct marketing sales.
– Direct marketing sales are expected to
grow at 5.3% annually through 2013.
– Direct marketing continues to become
more Web-oriented and Internet
marketing is the fast-growing form of
direct sales.
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Marketing in Action
Southwest Airlines uses techie direct marketing tools –
including a widget and a blog – to inject itself directly into
customers’ everyday lives in a way that media advertising
just cannot achieve.
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Benefits of Direct Marketing
 Benefits to buyers:
–
–
–
–
Convenient.
Easy to use.
Private.
Ready access to
products.
– Ready access to
wealth of
comparative
information.
– Immediate and
interactive.
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Benefits of Direct Marketing
 Benefits to sellers:
– Powerful tool for building customer
relationships.
– Offers a low-cost, speedy way to reach
markets, including business markets.
– Offers lower costs, improved efficiencies, and
speedier handling of channel and logistics
functions.
– Offers greater flexibility.
– Gives access to buyers that could not be
reached through other channels.
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Benefits of Direct Marketing
• Convenient
• Easy/private
• Wealth of products
• Information
• Interactive
• Immediate
• Low cost
• Efficient
• Speedy
• Improved efficiencies
• Flexibility
• Access to buyers
Benefits to
Buyers
Benefit to
Sellers
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Customer Database
An organized collection of
comprehensive data about
individual customers or
prospects, including
geographic, demographic,
psychographic, and
behavioral data.
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Marketing in Action
USAA uses its extensive database to tailor its
services to the specific needs of individual
customers, creating incredible customer loyalty.
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Figure 14.1:
Forms of Direct Marketing
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Forms of Direct Marketing
 Direct-mail marketing:
– Involves sending an offer, announcement,
reminder, or other item to a person at a
particular physical or virtual address.
– Largest direct marketing medium.
– Well-suited to one-to-one communication.
– Use of traditional forms may decline as
marketers switch to newer digital forms.
– Can be used effectively in combination with
other media, such as web sites.
– Often perceived as “junk mail”.
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Marketing in Action
Combining direct mail with personalized URLs cost JDA only $60,000
but yielded a high response rate and $13 million in sales.
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Forms of Direct Marketing
 Catalog marketing:
– Direct marketing
through print,
video, or digital
catalogs that are
mailed to select
customers, made
available in stores,
or presented
online.
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Forms of Direct Marketing
 Catalog marketing trends:
– More and more catalogs are going digital:
• Minimizes costs, and web space is unlimited.
• Allows real-time merchandising.
– Print catalogs are still the primary medium.
• Drives web traffic and can create an emotional
connection to the consumer.
– Expected catalog sales in 2013 = $182 billion.
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Forms of Direct Marketing
 Telephone marketing:
– Accounts for 17% of all direct-marketing driven
sales.
– Used in both consumer and B2B markets.
– Marketers use outbound and inbound calls.
• Outbound: Sell directly to consumer.
• Inbound: Toll-free ordering or order faxing.
– Do-not-call legislation has impacted
the telemarketing industry.
• Many telemarketers have shifted to other forms
of direct marketing.
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Marketing in Action
Marketers use
toll-free 800
numbers to
receive orders
from TV and
print ads, direct
mail, or even
catalogs. Direct
response ads
always feature a
call to action, as
shown in the ad
at right.
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Forms of Direct Marketing
 Direct-response
TV marketing:
– Direct-response
television
advertising
(DRTV):
• TV spots that
are 60 or 120
seconds long.
Ads for products like Snuggies
have become DRTV classics.
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Forms of Direct Marketing
 Direct-response TV marketing:
– Infomercials:
• A 30 minute or longer advertising
program for a single product.
 Home shopping channels:
– Entire cable channels dedicated to
selling multiple brands, items, and
services.
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Forms of Direct Marketing
 Kiosk marketing:
– Information and
ordering machines
generally found in
stores, airports, and
other locations.
– E.g., Redbox
operates more than
15,000 DVD rental
kiosks nationwide.
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Forms of Direct Marketing
 New digital direct
marketing
technologies:
– Mobile phone
marketing:
• Mobile ad
spending is
expected to grow.
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Forms of Direct Marketing
 New digital direct marketing
technologies:
– Podcasts and vodcasts.
• Purina Petcasts.
– Interactive TV (ITV):
• Viewer engagement is much higher than
with regular TV ads.
 Online marketing is the final form of
direct marketing.
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Forms of Direct Marketing
 Podcasts and vodcasts involve the
downloading of audio and video files via
the Internet to a handheld device such as a
PDA or portable media player and listening
to them at the consumer’s convenience.
 Interactive TV (ITV) lets viewers interact
with television programming and
advertising using their remote controls and
provides marketers with an interactive and
involving means to reach targeted
audiences.
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Online Marketing
Company efforts to market
products and services and
build customer relationships
over the Internet.
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Online Marketing
 Marketing and the
Internet:
– Usage continues to
grow with Internet
household penetration
equaling 72.5%.
– 33% of American
consumers chose the
Internet as the secondmost-essential medium
in their lives.
– Online marketing
efforts are expanding.
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Online Marketing
 Click-only companies:
– So-called dot-coms, which operate only online
without any brick-and-mortar presence.
 Types of click-only firms:
– E-tailers (Amazon).
– Search engines and
portals (Google, Yahoo!).
– Transaction sites (eBay).
– Content sites (ESPN).
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Online Marketing
 Click-and-mortar
companies:
– Traditional
brick-andmortar
companies that
have added
online marketing
to their
operations.
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Online Marketing
 Click-and-mortar business trends:
– Almost all traditional companies have
set up their own online sales and
communication presence.
– Many click-and-mortar firms are having
more online success than their click-only
competitors.
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Figure 14.2:
Online Marketing Domains
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Online Marketing
 Business-to-consumer (B2C) online marketing:
– Businesses selling goods and services online to
final consumers.
 Trends:
– Online buying continues to grow.
– The Internet influences 35% of total retail
sales; 50% of US households shop online.
– B2C consumers differ from off-line consumers
because customers initiate and control the
Internet exchange process.
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Online Marketing
 Business-to-business (B2B) online
marketing:
– Businesses using B2B Web sites, e-mail, online
catalogs, online trading networks, and other
online resources to reach new business
customers, serve current customers more
effectively, and obtain buying efficiencies and
better prices.
– Most major B2B marketers offer online
product information, purchasing, and support.
– Many firms use the Internet to build stronger
customer relationships.
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Online Marketing
 Consumer-to-consumer (C2C) online
marketing:
– Online exchanges of goods and information
between final consumers.
– Auction sites such as eBay offer marketplaces
to buy or exchange goods.
– Blogs and forums facilitate information
interchanges.
• Marketers are tapping into blogs as a medium for
reaching carefully targeted consumers.
• Firms should monitor blogs for what is being said.
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Online Marketing
 Consumer-to-business (C2B) online
marketing:
– Online exchanges in which consumers
search out sellers, learn about their
offers, and initiate purchases, sometimes
even driving transaction terms.
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Figure 14.3:
Setting Up for Online Marketing
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Online Marketing
 Corporate web sites:  Marketing web sites:
– Designed to build
customer goodwill,
collect customer
feedback, and
supplement other
sales channels,
rather than to sell
the company’s
products directly.
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– A web site that
engages consumers
in interactions that
move them closer
to a direct
purchase or other
marketing
outcome.
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Online Marketing
 Online marketers should pay careful attention to
the seven Cs of effective Web site design:
–
–
–
–
–
–
–
Context.
Content.
Community.
Customization.
Communication.
Connection.
Commerce.
 Constant change (8th C) helps encourage repeat
visits.
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Online Marketing
 Context is the site’s layout.
 Content is the site’s pictures, sound,
and video.
 Community is the site’s means to
enable user-to-user communication.
 Customization is the site’s ability to
tailor itself to different users or to
allow users to personalize the site.
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Online Marketing
 Communication is the way the
site enables user-to-user, user-tosite, or two-way communication.
 Connection is the degree that the
site is linked to other sites.
 Commerce is the site’s capabilities
to enable commercial
transactions.
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Online Marketing
 Placing ads and promotions online:
– Forms of online advertising:
• Banner ads.
• Interstitials.
• Pop-up or pop-under ads.
• Rich media ads.
• Search-related ads (contextual
advertising).
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Online Marketing
 Placing ads and promotions online:
– Other forms of online promotion:
• Content sponsorships (sponsoring special
content).
• Alliances and affiliate programs (work with
firms to promote each other).
• Viral marketing (Internet version of wordof-mouth).
– Burger King’s Subservient Chicken campaign
was a huge success.
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Marketing in Action
OfficeMax’s ElfYourself.com viral web site logged
193 million visits with no promotion at all. Onethird of the site’s visitors were influenced to shop at
OfficeMax.
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Forms of Online Advertising and
Promotion
Banner Ads
Viral
marketing
Affiliate
programs
Alliances
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Interstitials
Searchrelated ads
Content
sponsorships
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Online Marketing
 Creating or participating in online
social networks:
– Also called web communities.
• E.g., MySpace, Facebook, YouTube.
– Marketers can participate in existing
online communities or set-up their own.
– More focused niche social networks are
emerging which can be used to target
special interest groups.
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Online Marketing
 Using e-mail:
– 79% of all direct marketing campaigns employ
e-mail.
– Enriched e-mail messages can grab attention.
– Spam accounts for 90% of all e-mail sent.
– Permission-based e-mail marketing is key.
– E-mail can produce a ROI 40-50% higher than
other forms of direct marketing.
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Public Policy and Ethical Issues in
Direct Marketing
 Irritation, unfairness, deception, and fraud:
– Direct marketing excesses may offend
consumers.
– Direct marketing has been accused of taking
unfair advantage of impulsive or less
sophisticated buyers.
– Internet fraud and phishing are growing
concerns.
– Internet shoppers have online security
concerns.
– Marketers often find it difficult to restrict
access by vulnerable or unauthorized groups.
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Public Policy and Ethical Issues in
Direct Marketing
 Invasion of privacy:
– Database marketing allows customers to
receive offers closely matched to their
interests.
– Critics worry whether marketers know TOO
much about consumers.
– Online privacy (particularly for children) is of
particular concern.
– If marketers don’t prevent privacy abuse,
legislators may step in.
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Fuel For Thought
Many people feel that marketers know
more about their current and potential
customers than they really should. How do
YOU feel about the following?
Should credit card companies be allowed
to share data with merchants who accept
the cards? What about selling their data
to other businesses?
Is it ethical for credit bureaus to compile
and sell lists of people who have recently
applied for credit cards?
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Reviewing the Concepts
1.
2.
3.
4.
5.
Define direct marketing and discuss its
benefits to customers and companies.
Identify and discuss the major forms of direct
marketing.
Explain how companies have responded to the
Internet and other powerful new technologies
with online marketing strategies.
Discuss how companies go about conducting
online marketing to profitably deliver more
value to customers.
Overview the public policy and ethical issues
presented by direct marketing.
Copyright 2011, Pearson Education Inc., Publishing as Prentice-Hall
14 - 51