Chapter 19

1. Chapter 19 Direct Marketing and Personal Selling PPT 19-1 © 2009 South-Western, a part of Cengage Learning

2. Introductory Scenario: Don’ Mess With Less • Who was Les Wunderman? • He created the Columbia House record club and “invented” the modern era of direct marketing. • The genius of his idea was creating a dialogue (monthly response) with consumers which led to building a relationship with the brand. PPT 19-2

3. Direct Marketing An interactive system of marketing which uses one or more advertising media to effect a measurable response and/or transaction at any location. • Common purposes of direct marketing: • Solicit and close a sale • Identify prospects for future contacts • Provide in-depth information • Seek information from consumers • Foster brand loyalty PPT 19-3

4. Ad in Context Example L.L. Bean built an entire business around direct marketing. PPT 19-4

5. Direct Marketing: A Look Back • L.L. Bean founded in 1912 • Fundamental strategy: • Commitment to quality • Descriptive copy that was informative, factual, low-key • Satisfaction guarantee • Bean built a good mailing list • By 1990 Bean’s sales were $600 million; by 2007, over $1.5 billion PPT 19-5

6. Direct Marketing: Milestones • 1450 Invention of movable type • 1667 First gardening catalog • 1744 Franklin formulates mail- order concept of “satisfaction guaranteed” • 1872 Montgomery Ward catalog • 1886 Sears starts mail-order business • 1917 Direct Marketing Advertising Association founded PPT 19-6

7. Direct Marketing: Milestones • 1928 Third-class bulk mail introduced • 1950 First credit card • 1951 Lillian Vernon places first ad • 1953 Publishers Clearing House founded • 1967 AT&T introduces toll-free 800 • 1992 Over 100 million in U.S. shop at home PPT 19-7

8. Direct Marketing Today • More than just mail-order. • A complex, diverse tool used by organizations throughout the world. • Direct marketing often is not integrated with other advertising efforts. • Three Principle Purposes: • close a sale with a customer • ID prospects and develop customer database • Engage customers, seek their advice and generate brand loyalty PPT 19-8

9. What’s Driving Direct Marketing? • CONVENIENCE! for today’s dual income and single parent households. • More liberal attitudes toward using credit. • Greater access to toll-free calling. • Computer technology/new media facilitate online transactions. • More precise segmentation. • Opportunity for relationship building. • Cost per inquiry (CPI) and cost per order (CPO) advantages of direct marketing. PPT 19-9

10. Ad in Context Example Marketers, like The Adirondack Country Store, use catalogs, toll free numbers, and the Web to take advantage of direct marketing opportunities. PPT 19-10

11. Database Marketing • Knowing who the best customers are as well as what and how often they buy. • Mailing lists: • Internal lists • External lists PPT 19-11

12. Ad in Context Example Databases allow direct communication with customers like this Saturn newsletter. PPT 19-12

13. List Enhancement • Augmenting lists with externally provided lists • Incorporating information from external databases • Demographic data • Geodemographic data • Psychographic data • Behavioral data PPT 19-13

14. The Marketing Database • Includes data collected directly from individual customers • RFM Analysis of customers: recency, frequency, monetary • Goal: Develop cybernetic intimacy • Marketing database applications • Frequency-marketing programs • Cross-selling • Privacy concerns • Do not call registry • Spam blockers • Opt-out options PPT 19-14

15. Media Applications in Direct Marketing • Direct response advertising • Direct Mail • Telemarketing • E-mail • Other media • Magazines • Newspapers • Infomercials PPT 19-15

16. Direct Mail • Advantages • Selective, flexible, little waste, lends itself to testing, uses many formats • Disadvantages • Direct mail is expensive • May cost 15 to 20 times more to reach a person with a direct mail piece than with a TV commercial • Mail lists can be plagued with bad addresses • Mail delivery dates can be unpredictable PPT 19-16

17. Ad in Context Example Direct mail offers some creative opportunities. PPT 19-17

18. Telemarketing • Telemarketing can be a potent tool. As with direct mail: • Contacts can be selectively targeted. • The impact of programs is easy to track. • Experimentation with different scripts and delivery formats is simple and practical. • Telemarketing involves live constructive dialogue. • Telemarketing shares many of direct mail’s limitations: • Very expensive on a cost-per-contact basis. • Names and addresses go bad as people move, so too do phone numbers - 15 percent of the numbers called are inaccurate. • Telemarketing does not share direct mail’s flexibility in delivery options. When you reach people in their home or workplace, you have a limited span of time to convey information and request some response. • Telemarketing is becoming a highly maligned practice in consumers. • By 2007, over 70 percent of US households had registered their phone numbers with the “Do not call registry.” PPT 19-18

19. E-Mail • Bulk e-mail is known as “spam” • Fraudulent email know as “phishing” • However e-mail is an increasingly popular tool for marketers • Advantages • Cheap • Good response rates • Netiquette suggests getting consumer permission to send product information • Avoid bulk e-mailings PPT 19-19

20. Direct Response Advertising in Other Media • Magazines use bind-in insert cards • Toll-free 800 numbers are vital to direct marketers using ads in newspapers and magazines • Infomercial • Long television advertisement • Range in length from 3 to 60 minutes • Keys to success • Testimonials, Frequent call to actions, ensure same-day response • New research shows that direct response ads are the least likely to be zapped by DVR users PPT 19-20

21. Ad in Context Example Magazine ads are ideal for Direct Response Advertising. PPT 19-21

22. Closing the Sale with Direct Marketing and/or Personal Selling • Functional specialists across several media need to work together. • Marketing databases can lead to interdepartmental rivalries. • Growth of direct marketing often means cuts in other promotional budgets. • One solution: the MARCOM manager. PPT 19-22

23. The Critical Role ofPersonal Selling • The face-to-face communication and persuasion process. • Most effective with products or services that are: • Higher priced • Complicated to use • Tailored/customized to users’ needs • Offer a trade-in option • Judged at the point of purchase PPT 19-23

24. Types of Personal Selling • Order taking: accepting orders for merchandise or scheduling services; deal with existing customers who are lucrative to a business due the low cost of generating additional revenues from them. Order taking is the least sophisticated of selling efforts. • Creative selling:selling where customers rely heavily on the salesperson for technical information, advice, and service. It is the most sophisticated and complex selling effort. • System selling:entails selling a set of interrelated components that fulfill all or a majority of a customer’s needs in a particular area. System selling is often executed by a “team” of sales people. • The missionary salesperson:calls on accounts with the purpose of monitoring the satisfaction of buyers and updating buyers’ needs. They may provide product information after a purchase. PPT 19-24

25. Customer Relationship Management (CRM) • Salespeople play a critical role in cultivating long-term relationships with customers—which often is referred to as a customer relationship management (CRM) program. • CRM views the relationship with buyers as a partnership and a problem solving situation.