Post on 31-Dec-2015
transcript
Direct Response and Direct Mail Advertising
Is it effective or merely Is it effective or merely annoying?annoying?
What Is Direct Marketing?
Reflects a distribution approach in Reflects a distribution approach in which the seller deals directly with which the seller deals directly with the consumer. the consumer.
Does not utilize the services of a Does not utilize the services of a retailer or wholesalerretailer or wholesaler
Utilizes the mass media, direct mail, Utilizes the mass media, direct mail, door-to-door sellingdoor-to-door selling
Direct Response Advertising includes any form of includes any form of
advertising utilized in advertising utilized in direct marketingdirect marketing
used to sell goods used to sell goods directly to the directly to the consumer.consumer.
it is action orientedit is action oriented– example: use a example: use a
coupon, call 800 coupon, call 800 numbernumber
Why Use Direct Response Advertising?
targeted communicationstargeted communications– tailor message with demos, psychographics or tailor message with demos, psychographics or
consumption profilesconsumption profiles measurable resultsmeasurable results the message of direct response is personalthe message of direct response is personal
– i.e., direct mail is addressed to you!i.e., direct mail is addressed to you! Direct mail can be personal through one Direct mail can be personal through one
on one communicationon one communication
Direct Marketing Objectives
Direct OrdersDirect Orders– Solicit and close a saleSolicit and close a sale
Lead GenerationLead Generation– Generate interest in a product and provide the Generate interest in a product and provide the
prospective buyer to request additional information prospective buyer to request additional information or qualify for a follow-up or qualify for a follow-up
Traffic GenerationTraffic Generation– Motivate to visit a business to make a purchaseMotivate to visit a business to make a purchase
Why has Direct Response Become so Popular?
Societal FactorsSocietal Factors– working women; increased value of leisureworking women; increased value of leisure– Convenience; targeted approaches to Convenience; targeted approaches to
shoppingshopping TechnologyTechnology
– increased availability of computers , credit increased availability of computers , credit cards and 800 numberscards and 800 numbers
Higher Quality Good and ServicesHigher Quality Good and Services
The Image of the Direct Marketer
Concerns over EthicsConcerns over Ethics– DMA has increased warranties and DMA has increased warranties and
investigated to reduce fraudulent offersinvestigated to reduce fraudulent offers Consumer sensitivity to privacy and list Consumer sensitivity to privacy and list
buildingbuilding Intrusive Nature of the ApproachIntrusive Nature of the Approach
The Many Approaches of the Direct Marketer
Direct MailDirect Mail– utilizes data basesutilizes data bases
– good for identifying new customers and serving good for identifying new customers and serving existing onesexisting ones
– creativity importantcreativity important
TelemarketingTelemarketing– $10 billion spent annually$10 billion spent annually
– $500 billion in sales$500 billion in sales
– Avoidance a problemAvoidance a problem
Forms of Direct Marketing TelemarketingTelemarketing
– Outboard – seek Outboard – seek prospectsprospects
– Inboard – order takingInboard – order taking
– UpsellingUpselling
– 900 #’s (info)900 #’s (info)
– Random Digit DialingRandom Digit Dialing
TV ShoppingTV Shopping– infomercialsinfomercials
– Networks (QVC,HSN)Networks (QVC,HSN)
Radio and Direct Response Advertising
Radio has one distinct disadvantage in Radio has one distinct disadvantage in stimulating direct responses - a lack of stimulating direct responses - a lack of visuals!visuals!
Plus is the relatively small investment Plus is the relatively small investment required by the manufacturerrequired by the manufacturer
Segmentation possibleSegmentation possible Generally a secondary outlet supplementing Generally a secondary outlet supplementing
other forms through cueingother forms through cueing
Magazines and Print Direct Response
Major advantages Major advantages include:include:– Audience selectivityAudience selectivity
– Longer shelf lifeLonger shelf life
– Loyal medium usersLoyal medium users
– Quality, size and Quality, size and color reproductioncolor reproduction
– PrestigePrestige
Direct Sales Offers CatalogsCatalogs
– early retailers found this to be a successful early retailers found this to be a successful way to introduce products to the frontierway to introduce products to the frontier
directed at low and middle income familiesdirected at low and middle income families
– now has sales projected to exceed $65 billion now has sales projected to exceed $65 billion in 1999; Japan - $200 millionin 1999; Japan - $200 million
– primarily successful due to changing social primarily successful due to changing social conditionsconditions
Major Types of Catalogs Retail CatalogsRetail Catalogs Full-Line Full-Line
Merchandise Merchandise CatalogsCatalogs
Business to business Business to business catalogscatalogs
Consumer Specialty Consumer Specialty CatalogsCatalogs
Trends in Cataloging Increasing specialty is reducing revenueIncreasing specialty is reducing revenue higher quality publications are very higher quality publications are very
expensive to publish and mailexpensive to publish and mail looking for alternative distribution looking for alternative distribution
systems - like Sunday newspaper insertssystems - like Sunday newspaper inserts Threat of TV shopping!Threat of TV shopping!
Negative Options Direct Response
You enter into a You enter into a membership membership agreement and receive agreement and receive the merchandise the merchandise unless you indicate unless you indicate you do not want it!you do not want it!
Examples: Columbia Examples: Columbia House, Book of the House, Book of the Month ClubsMonth Clubs
Identification of Prospects
Build leads by emphasizing the offer, not Build leads by emphasizing the offer, not the creative elements - keep your copy the creative elements - keep your copy development shortdevelopment short
Include most important product benefitsInclude most important product benefits Assume you must increase involvement Assume you must increase involvement
levelslevels Try to appeal to everyoneTry to appeal to everyone
Business to Business Aspects
Smaller market than for consumer Smaller market than for consumer goodsgoods
Concentrated buying decisions - Concentrated buying decisions - usually by groupsusually by groups
Higher per purchase expenditureHigher per purchase expenditure Flexibility - target the needs of the Flexibility - target the needs of the
consumer!consumer!
Direct Mail Advertising Lead GenerationLead Generation Mail OrderMail Order Loyalty ProgramsLoyalty Programs Database BuildingDatabase Building Dealer SupportDealer Support
Major Characteristics of Direct Mail
SelectivitySelectivity Personal sellingPersonal selling Longer, more informative copyLonger, more informative copy More Immediate ResultsMore Immediate Results
Direct Marketing and Technology
Advent of computersAdvent of computers Development and Development and
proliferation of credit proliferation of credit cardscards
Increased capability to Increased capability to segment and divide segment and divide customer basescustomer bases
Increased number of Increased number of communications optionscommunications options
Current Trends of Interest
Selective BindingSelective Binding– Newsweek and other publications are introducing Newsweek and other publications are introducing
a printing technology to reach certain groups of a printing technology to reach certain groups of consumers based on purchase behavior and demosconsumers based on purchase behavior and demos
TV and Radio personalizationTV and Radio personalization– cable TV - lifestyle programming; franchising and cable TV - lifestyle programming; franchising and
mini-networksmini-networks– pay per view pay per view – infomercialsinfomercials
Technology Based Marketing and Promotions
Interactive TelevisionInteractive Television InfomercialsInfomercials Home Shopping ChannelsHome Shopping Channels On-Line ServicesOn-Line Services Direct Marketing on the InternetDirect Marketing on the Internet
Interactive Television Shop Interactively by Shop Interactively by
utilizing product menus utilizing product menus and examining specific and examining specific productsproducts
Traditional schedules will Traditional schedules will fall by the way sidefall by the way side– Menu driven Menu driven
programming/viewingprogramming/viewing
Introduction of Demand Introduction of Demand Based AdvertisingBased Advertising
– detailed infodetailed info
Intro of Superior SegmentsIntro of Superior Segments
Infomercials Is this really just a cure for insomnia?Is this really just a cure for insomnia? Self-selected information regarding products and Self-selected information regarding products and
servicesservices Many Fortune 500 companies now utilize (Avon)Many Fortune 500 companies now utilize (Avon) Great way to acquire market research and Great way to acquire market research and
develop data basesdevelop data bases More conversational format, demonstrationsMore conversational format, demonstrations Interactive possibilitiesInteractive possibilities
Home Shopping Channels
Emergence of retail Emergence of retail sponsored channels sponsored channels (i.e., Nordstroms, (i.e., Nordstroms, Macy’s, Sears)Macy’s, Sears)
Expected continued Expected continued penetration of new penetration of new targeted segmentstargeted segments
Instant Access via Instant Access via interactive approaches interactive approaches
On-Line Services AOL, Compuserve, MSN and Prodigy are AOL, Compuserve, MSN and Prodigy are
the leaders in providing access to direct the leaders in providing access to direct marketersmarketers
Prodigy reaches in excess of 2 million Prodigy reaches in excess of 2 million householdshouseholds
On-Line MallsOn-Line Malls– Comp - u - Store’s on line selection exceeds Comp - u - Store’s on line selection exceeds
250,000 products250,000 products
On Line Shopping Phenomena
Ease and convenience, Ease and convenience, simplicity and simplicity and effectivenesseffectiveness
On-Line Banking, ATM On-Line Banking, ATM and investment and investment informationinformation– 25% U.S. households 25% U.S. households
have $ in mutual funds - have $ in mutual funds - why not use PCs to why not use PCs to access and evaluate access and evaluate performanceperformance
Customer Needs - Online Services
Prestige - Prestige - esteem gained through knowledge esteem gained through knowledge and use of technologyand use of technology
ConvenienceConvenience Instant GratificationInstant Gratification Novelty and ExcitementNovelty and Excitement EfficiencyEfficiency Ease of UseEase of Use TimelinessTimeliness - real time information on stocks - real time information on stocks
Business CatalystsDistribution Chain Inefficiencies
Typical Distribution Channel with several Typical Distribution Channel with several intermediaries with the most immediate handler intermediaries with the most immediate handler generating 40 - 60% markups! Is there a perception generating 40 - 60% markups! Is there a perception of lack of value added?of lack of value added?– Manufacturer - $40Manufacturer - $40– Wholesaler - $43Wholesaler - $43– Distributor - $47Distributor - $47– Retailer - $94Retailer - $94
–Consumer - +135%Consumer - +135%
Delayering the Channel of Distribution - Step 1
Manufacturer - $40Manufacturer - $40 Distributor - $44Distributor - $44 Retailer - $88Retailer - $88
Consumer - +120%Consumer - +120%
Delayering - Step 2 Manufacturer - $40Manufacturer - $40 Retailer - $80Retailer - $80
Consumer - +100%Consumer - +100%
Delayering - Step 3Manufacturer - $40Manufacturer - $40
Consumer - $44 - +10%Consumer - $44 - +10%