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Chapter 14 Direct Marketing

Chapter 14 Direct Marketing. Direct Marketing. Interactive system of marketing Uses one or more advertising media to effect a measurable response and/or transaction at any location Uses a set of direct-response media

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Chapter 14 Direct Marketing

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  1. Chapter 14Direct Marketing

  2. Direct Marketing • Interactive system of marketing • Uses one or more advertising media to effect a measurable response and/or transaction at any location • Uses a set of direct-response media • Direct-response media:Tools by which direct marketers implement the communication process

  3. Factors that Led to the Growth of Direct Marketing Development and expansion of the Postal Service Consumer credit cards Changing structure of American society and the market Technological advances Changing values and lifestyles More sophisticated marketing techniques The industry’s improved image

  4. Role of Direct Marketing in the IMC Program • Combines: • Advertising and public relations • Personal selling and sales promotions • Support media • Companies decide: • Program objectives • Which markets to target and the strategies to use • How to evaluate the program’s effectiveness

  5. 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

  6. Direct-Marketing Approaches • One-step approach:Medium is used directly to obtain an order • Two-step approach:Uses more than one medium • First effort - Screens potential buyers • Second effort - Generates the response

  7. Direct-Marketing Media Direct Mail Catalogs E-mail Broadcast Media TV Spots Infomercials Home Shopping Print Media Telemarketing

  8. Direct Mail • Unsolicited mail • Advertisers spend substantially on this medium • Keys to success • Mailing list:Database from which names are generated • Ability to segment markets and offers • Threat - The Internet

  9. Catalogs and E-mail • Catalogs • Number of catalogs mailed is decreasing • Available on the Internet for consumer and business-to-business customers • E-mail:Electronic version of regular mail • Direct mail on the Internet • Lower cost and higher effectiveness than traditional direct mail • Spam:Electronic equivalent of junk mail

  10. Broadcast media and TV spots • Broadcast media • Categories - Television and radio • Direct-response advertising: Sales response for the offered product is solicited, through the one- or two-step approach • Support advertising: Supports other forms of advertising • TV spots • Short-form programs, include direct-response commercials seen on TV

  11. Infomercial and Home Shopping • Infomercial:Long commercial designed for 30-minute or 1-hour time slot • Designed to be viewed as a regular TV show • Effective with a broad demographic base • Home shopping • Substantial growth due to toll-free telephone numbers and widespread use of credit cards

  12. Print Media and Telemarketing • Print media • Difficult to use for direct marketing • Ads compete with the clutter of other ads • Space is relatively expensive • Response rates and profits are low • Telemarketing:Sales by telephone • Declined due to its potential for fraud and deception, and for annoyance

  13. Direct Selling • Direct, personal presentation, and sales in consumers’ homes • Repetitive person-to-person selling - Salesperson visits the buyer’s location to sell frequently purchased products • Nonrepetitive person-to-person selling - Salesperson visits the buyer’s location to sell infrequently purchased products • Party plans - Salesperson offers products to groups of people through parties and demonstrations

  14. Figure 14.2 - Sales Strategy (Methods Used to Generate Sales, Reported as a 2012 of Sales Dollars)

  15. Evaluating the Effectiveness of Direct Marketing • Cost per order (CPO): Evaluates the relative effectiveness of an ad based on the number of calls generated • 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

  16. Advantages and Disadvantages of Direct Marketing Advantages Disadvantages • Selective reach • Segmentation capabilities • Frequency • Testing • Timing • Personalization • Costs • Measures of effectiveness • Image factors • Accuracy • Content support • Rising costs • Do Not Contact lists

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