Copyright © 2012 McGraw-Hill Companies, Inc., All right reversedMcGraw-Hill/Irwin

14

Direct Marketing

Direct Marketing Defined

Interactive TV

The Internet Other Media

Direct MailTelemarketing

Print

…an interactive system of marketing which uses one or more advertising media to effect

a measurable response and/or transactionat any location

14-2Direct Response Media tools

Growth of Direct Marketing

Technological Advances

CatalogsConsumer

Credit Cards

Changing Structure of

Society

14-3Money rich; time poor Shop on internet

Shop w/o leaving home

Direct Marketing Combines With…

Support Media

Support Media

Public Relations

Public Relations

Personal Selling

Personal Selling

AdvertisingAdvertising

Sales Promotion

Sales Promotion

Direct Marketing

Direct Marketing

14-4

Victoria SecretSolicit funds for charity

Car sales

Promotional product in mailer increases response rates

Airline price changes

Example of DM / Sales Promotion

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Costco sends promotional offer through the mail

Direct-Marketing Objectives

To seek a behavioral response

To build an image

To maintain customer satisfaction

To inform and/or educate customers in an attempt to lead to

future actions

Direct Marketing Strategies

One-StepOne-Step Two-StepTwo-Step

• Used directly to obtain an order

• Toll-free phone orders and credit card payments

• Knife sets or work out equipment

• Screens potential buyers

• Follow-up to complete the sale

• Car or insurance sales

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Types of Direct Marketing Media

• Direct Mail• Unsolicited; often called “junk mail”• Success depends on mailing list / ability to segment target

• Catalogs• Drives consumers on line or in store

• Broadcast Media (TV / radio) /Print Media• Email

• Spam is electronic equivalent of “junk mail”

• Infomercials• Low cost of commercials on cable • 30 minute “programs”

• Home shopping (QVC / HSN)

• Telemarketing• Sales by telephone• Do Not Call List 14-8

Direct Mail Example

• Target Criteria• Physicians in specialties• Highest income levels• Demographics of Porsche buyers• Specific geographic areas

• Hooks• Use X-ray of a Porsche 911 Carrera 4• Use medical terminology

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Example of Direct Marketing Targeting

14-10

Cabela’s catalogtargets

hunters and fishermen

Catalog Example

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Drives consumersin store and

online

Infomercials

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One of the most successful products advertised on infomercials

Direct Marketing via Email

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Forms of Direct Selling

Repetitive person-to-person

Nonrepetitive person-to-person

Party Plans

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Direct, personal presentation, demonstration and sales of products to consumers in their home

Mary Kay

Lifeinsurance

Tupperware

Measuring Effectiveness

Cost per Order (CPO)

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Example of CPO Calculation

• Cost of ad = $2,500• Profit per order = $5

• Needs more than 500 orders to be cost effective:

• $2,500 / $5

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Another Measure of Effectiveness

• Customer Lifetime Value (CLTV): Determines the dollar value associated with a long-term relationship with a customer

• Helps determine if a customer should be acquired

• Optimizes existing customers’ service levels

Direct Marketing Advantages

Selective reach

Segmentation

Frequency potential

Testing

Timing

Personalization

Costs

Measures of effectiveness

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Highest potential consumers

Based on age, income

Cheap, late night TV

Creative approaches

Put togetherquickly

Cheap, late night TV

No other mediummeasures as well

Direct Marketing Disadvantages

ImagefactorsImagefactors

AccuracyAccuracy

ContentsupportContentsupport

Risingcosts

Risingcosts

Do NotContact lists

Do NotContact lists

14-19

Junk mail

Need good lists

Mail not desirable mood

Postage increases