Direct Marketing

1. 14 Direct Marketing

2. Direct Marketing Defined Print Interactive TV Direct Mail Telemarketing Other Media The Internet …an interactive system of marketing which uses one or more advertising media to effect a measurable response and/or transactionat any location Direct Response Media tools 14-2

3. Growth of Direct Marketing Shop w/o leaving home Consumer Credit Cards Catalogs Changing Structure of Society Technological Advances Shop on internet Money rich; time poor 14-3

4. Direct Marketing Combines With… Advertising Public Relations Sales Promotion Personal Selling Support Media Solicit funds for charity Victoria Secret Direct Marketing Airline price changes Car sales Promotional product in mailer increases response rates 14-4

5. Example of DM / Sales Promotion Costco sends promotional offer through the mail 14-5

6. 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

7. Direct Marketing Strategies One-Step Two-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 14-7

8. 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

9. 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 14-9

10. Example of Direct Marketing Targeting Cabela’s catalog targets hunters and fishermen 14-10

11. Catalog Example Drives consumers in store and online 14-11

12. Infomercials One of the most successful products advertised on infomercials 14-12

13. Direct Marketing via Email 14-13

14. Forms of Direct Selling Direct, personal presentation, demonstration and sales of products to consumers in their home Repetitive person-to-person Mary Kay Nonrepetitive person-to-person Life insurance Party Plans Tupper ware 14-14

15. Measuring Effectiveness Cost per Order (CPO) 14-15

16. 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 14-16

17. 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

18. Selective reach Segmentation Direct Marketing Advantages Frequency potential Testing Highest potential consumers Timing Based on age, income Personalization Cheap, late night TV Costs Creative approaches Measures of effectiveness Put together quickly Cheap, late night TV No other medium measures as well 14-18

19. Direct Marketing Disadvantages Accuracy Need good lists Imagefactors Contentsupport Junk mail Mail not desirable mood Risingcosts Do NotContact lists Postage increases 14-19