Chapter 14
Direct Marketing
Chapter 14 : Direct Marketing
Chapter Objectives
• To recognize the purpose of direct marketing as a communications tool
• To demonstrate the use of direct-marketing media
• To appreciate the strategies and tactics involved in direct marketing
• To determine the scope and effectiveness of direct marketing
Chapter 14 : Direct Marketing
Direct Marketing Defined
• “The total of activities by which the seller . . . direct efforts to a target audience using one or more media for the purpose of soliciting a response by phone, mail, or personal visit from a prospective customer.”
• Aspect of total marketing– involves marketing research, segmentation, evaluation.
Chapter 14 : Direct Marketing
Defining Direct Marketing
• Media for Direct marketing include:
– Direct Selling– Direct mail– Telemarketing– Internet selling – Direct action marketing – Catalog selling– Cable TV selling, etc.
Chapter 14 : Direct Marketing
Factors influencing Growth of Direct Marketing
• Consumer Credit Cards
• Direct Marketing Syndicates
• Changing Structure of Society
• Technological Advances
• Miscellaneous Factors
Chapter 14 : Direct Marketing
Factors influencing Growth of Direct Marketing
• Consumer Credit Cards
– Over 1 billion credit cards issued.
– Makes it feasible for purchase of items through direct response channels.
Chapter 14 : Direct Marketing
Factors influencing Growth of Direct Marketing
• Direct Marketing Syndicates– new marketing opportunities with list development,
statement inserts, catalogues, and sweepstakes.
• Changing Structure of Society– Money-rich, time -poor– Dual income families increasing– Busier society with less time for shopping
Chapter 14 : Direct Marketing
Factors influencing Growth of Direct Marketing
• Technological Advances– Electronic media and computers facilitating shopping
and marketing to desired target market.– 11 million Canadian Households receive home
shopping programs
Chapter 14 : Direct Marketing
Factors influencing Growth of Direct Marketing
• Miscellaneous Factors
– changing values– sophisticated marketing techniques– industry’s improved industry
Chapter 14 : Direct Marketing
Top 10 Direct Marketing Industries
115.2
55.2
50.4
47.3
40.6
39.3
35.3
34.9
29.4
28.8
0% 5% 10% 15%Entertainment
Depository institutions
Health services
Food and kindred products
Insurance carriers/agents
Membership organizations
Auto dealers/service stations
General merchandise stores
Real estate
Nonstore retailers $ Billions
Percentage Annual Growth 1994-1999
Chapter 14 : Direct Marketing
Role of Direct Marketing in IMC Program
• Combines Direct Marketing & Advertising
– Direct Marketing is a form of advertising.
• Combines Direct Marketing & PR
– PR often employs Direct Marketing techniques
• (I.e. telemarketing, 1-800 numbers)
Chapter 14 : Direct Marketing
Role of Direct Marketing in IMC Program
• Combines Direct Marketing & Personal Selling
– Telemarketing and direct selling are two methods of personal selling.
• Combines Direct Marketing & Sales Promotion
– Direct Mail pieces are used to distribute sales promotion
– Sales promotions build databases that can be used in Direct Marketing.
Chapter 14 : Direct Marketing
Direct Marketing Objectives
• Behavioral – test drives– votes – contributions– sales– I.e. 2 to 3% response
rat
• Non Behavioral– build an image– maintain customer
satisfaction– inform/educate
customers
Chapter 14 : Direct Marketing
Developing a Database
• Database– a list of customers and potential customers.
• Database Marketing– use of specific information about individual customers
and/or prospects to implement more effective and efficient marketing communications.
Chapter 14 : Direct Marketing
Contents of a ComprehensiveConsumer Data Base
• Name• Address/Zip code• Telephone number• Length of residence• Age• Gender• Marital status• Family data
• Education• Income• Occupation• Transaction history• Promotion history• Inquiring history• Unique identifier
Chapter 14 : Direct Marketing
Contents of a ComprehensiveB2B Data Base
• Name of company, contact or decision maker(s)
• Title of contact
• Telephone number
• Source of order/inquiry or referral
• Credit history
• Industrial classification
• Size of business
• Revenues
• Number of employees
• Time in business
• Headquarters location
• Multiple locations
• Purchase history
Chapter 14 : Direct Marketing
Sources of Database Information
• Statistics Canada– census data provide information on every household in
Canada.
• Canada Post– Postal Codes provide information on household and
business locations.
• List services – Many providers of lists are available.
• Info Canada– Provincial Business Directory.
Chapter 14 : Direct Marketing
Sources of Database Information
• Marketing research houses– Large research houses conduct annual studies of
customers who buy at home via mail or telephone.
• Direct Marketing Association– The direct marketers’ trade organization promotes
direct marketing and provides stats on direct marketing use.
• Others – Canadian Marketing Association, Dunn and Bradstreet,
Fortune 500, Book of Lists, etc.
Chapter 14 : Direct Marketing
Direct Marketing Media Strategy
• Two approaches to Direct Marketing:– One-step approach - medium is used directly to obtain
an order. (I.e. commercials with toll-free numbers.)– Two-step approach - may involve the use of more than
one medium.• 1st effort - screen, qualifies potential buyers.
• 2nd effort - generates the response.
Chapter 14 : Direct Marketing
Direct Marketing Mediums
• Direct Mail• Catalogues• Broadcast Media• Infomercials• TV Advertorials• Teleshopping• Electronic Teleshopping• E-mail Marketing
Chapter 14 : Direct Marketing
Direct Mail
• Unsolicited mail you receive– Often called junk mail– more advertising dollars being spent on direct mail than
most other forms.
• Not restricted to small companies– Large companies also increasing expenditures in direct
mail. (I.e. American Express, AOL, RBC)
Chapter 14 : Direct Marketing
Catalogues
• Many companies use catalogues in conjunction with traditional sales and promotional strategies– Ie) Sears selling directly through catalogues and using
them to inform consumers about products in store
• Now available on the internet for both B2B and consumer use
Chapter 14 : Direct Marketing
Direct Mail
• Mailing Lists are keys to success of Direct Mail– lists are more current, eliminating waste coverage.
Chapter 14 : Direct Marketing
Strengths of Direct Mail(Fig. 14-4)
Chapter 14 : Direct Marketing
Broadcast Media
• Two major broadcast media:
– Television– Radio
• Direct Response– Product or service is offered and a sales response is
solicited through one or two-step approach
• Support Advertising– Supports other forms of advertising
Chapter 14 : Direct Marketing
Infomercials
• Long commercial ranging from 3-60 minutes
• Produced by advertisers and designed to replace TV shows
• Very effective
Chapter 14 : Direct Marketing
TV Advertorials
• Show the public the entire model range of a product
• Provides information in a series of 5-minute films
Chapter 14 : Direct Marketing
Teleshopping
• Shopping via the TV set
• At maturity point of their cycle due to increase in internet shopping
Chapter 14 : Direct Marketing
Print Media
• Magazines and newspapers are difficult media to use for direct marketing due to high clutter from competition and expensive rates.
• Most likely found in specific areas
Chapter 14 : Direct Marketing
Telemarketing
• Sales by the telephone
• Two types:– Outbound and Inbound
Chapter 14 : Direct Marketing
Outbound and Inbound Telemarketing
• OutboundTelephone calling by the
marketer or marketer’s agent to individual prospects, seeking purchase, subscription, membership, or participation by the call recipient.
• InboundMarketers’ facilities and
invitations to prospects to call a central location or long distance number or by toll-free, 800 or fixed cost 900 number.
Chapter 14 : Direct Marketing
E-Mail Marketing
• A form of direct marketing via the internet
• One of the fastest growing forms of direct marketing over the last 5 years
Chapter 14 : Direct Marketing
Direct Marketing Strengths
• Selective Reach
• Segmentation Capability• Frequency Potential• Flexibility• Timing• Personalization• Economy• Measurement of Effectiveness
Chapter 14 : Direct Marketing
Direct Marketing Weaknesses
• Image Factors
• Accuracy
• Content Support