Chapter 17

1. Chapter 17 Direct and Online Marketing: The New Marketing Model

2. Most Mass Marketing Involves One-Way Communications Aimed At Consumers. Direct Marketing Involves Two-Way Interactions With Customers. Mass Marketing and Direct Marketing

3. What is Direct Marketing? Direct Marketing Consists of Direct Connections With Carefully Targeted Individual Consumers to Both Obtain an Immediate Response and Cultivate Lasting Customer Relationships.

4. The New Direct Marketing Model • Some firms use direct marketing as a supplemental medium. • For many companies, direct marketing - especially Internet and e-commerce companies - constitutes a new and complete model for doing business. • Some firms use the new direct model as their only approach. • Experts envision a day when all buying and selling will involve direct connections between companies and their customers.

5. Benefits and Growth of Direct Marketing Convenient Consumer Relationship Building Buyers Benefits Sellers Benefits Easy & Private Reduces Costs Product Access & Selection Increases Speed & Efficiency Abundance of Information Provides Flexibility Global Medium Interactive & Immediate

6. Demassification – Focus is Toward Minimarkets The Growth of Direct Marketing Higher Costs of Driving, Traffic and Parking Congestion Consumers Lack of Time Convenience of Ordering From Direct Marketers Growth of Customer Databases

7. Mass Marketing Vs. One-to-One Marketing (Tab. 17.1) Mass Marketing One-to-One Marketing Average Consumer Individual Customer Customer Anonymity Customer Profile Standard Product Customized Market Offering Mass Production Customized Production Mass Distribution Individualized Distribution Individualized Message Mass Advertising Individualized Incentives Mass Promotion Two-Way Messages One-Way Message Economies of Scope Economies of Scale Share of Mind Share of Customer All Customers Profitable Customers Customer Attraction Customer Retention

8. Customer Databases • Customer Databases are an Organized Collection of Comprehensive Data About Individual Customers or Prospects Including: • Geographic, • Demographic, • Psychographic, and • Behavioral Data.

9. Database Marketing Identifying Prospects Database Marketing is the Process of Building, Maintaining, and Using Customer Databases and Other Databases for the Purposes of Contacting and Transacting With Customers. How Companies Use Their Databases: Deciding Which Customers Should Receive a Particular Offer Deepening Customer Loyalty Reactivating Customer Purchases

10. Forms of Direct Marketing Face-to-Face Selling Online Marketing Telemarketing Kiosk Marketing Direct Mail Direct-Response TV Marketing Catalog

11. Discussion Connections • When was the last time you bought something via direct marketing? • How did you buy it? • What did you buy and why did you buy it direct? • When was the last time that you rejected a direct marketing offer? Why did you reject it? • Based on these experiences, what advice would you give to direct marketers?

12. Online Marketing • Online Marketing is conducted through interactive online computer systems, which link consumers with sellers electronically. • Two types of online marketing channels: • Commercial Online Services offer information and marketing services to subscribers who pay a monthly fee. (i.e. American Online) • The Internet (the Net) is the vast global and public web of computer networks.

13. Who is the Online Customer? • They tend to be younger, more affluent, better educated, and more male than the general population; female usage almost equals males. • Other characteristic of net users: • Half are 40 years or older, • Differ psychographically, in approaches to buying and responses to marketing.

14. Create an Electronic Online Presence Buy Space on a Commercial Online Service Company Can Open It’s Own Corporate or Marketing Web Page Place Advertisements Online Place Ads in to Build Internet Brands or Attract Visitors to Web Site Buy Online Ads That Pop Up While Consumers are Surfing, “Banners” Content Sponsorships Creating Online Marketing

15. Participate in Forums, Newsgroups & Web Communities Forums: Discussion Groups on Commercial Online Services Newsgroups: Internet Version of Forums Web Communities: Sites Where Members Exchange Views Online Use E-Mail and Webcasting Customers Send Questions, Suggestions & Complaints Via E-Mail Webcasting: Automatic Downloading of Information to PC’s Creating Online Marketing

16. Limited Consumer Exposure and Buying Skewed User Demographics and Psychographics Promise and Challenge of Online Marketing Chaos and Clutter Security Ethical Concerns

17. Integrated Direct Marketing • Direct marketing campaigns that use multiple vehicles and multiple stages to improve response rates and profits. • Marketers seek to improve response rates and profits by adding media and stages that contribute more to additional sales than to additional costs.

18. An Integrated Direct-Marketing Campaign (Fig. 17.2) Paid ad with a response channel Direct Mail Outbound Telemarketing Face-to-face sales call Continuing Communication

19. Public Policy and Ethical Issues in Direct Marketing Irritation to Consumers Unfairness, Deception, or Fraud Invasion of Privacy

20. Review of Concept Connections • Discuss the benefits of direct marketing to customers and companies and the trends fueling its rapid growth. • Define a customer database and list the four ways companies use databases in direct marketing. • Identify the major forms of direct marketing. • Compare the two types of online marketing channels and explain the effect of the Internet on electronic commerce. • Identify the benefits of online marketing to consumers and marketers and the four ways marketers can conduct online marketing. • Discuss the public policy and ethical issues facing direct marketers.