moriarty8e_media_15__Direct-Response Marketing

1、Direct-Response Marketing,Advertising Principles and Practices,15-2,Questions Well Answer,How do we define direct marketing and explain the process? How are databases used in direct marketing? Who are the key players in direct marketing? What are some steps in evaluating the tools and media availabl

2、e to direct-response programs?,The Gecko Goes Direct,The GEICO spokes-creature gets attention and communicates a marketing-savvy audience. Heavy TV advertising including the cavemen and customer with celebrity testimonials prove that direct response sell a to a broad audience. Their share of premium

3、s grew from 4.66.25% from 2001 to 2005.,15-3,Visit the Site,Prentice Hall, 2009,15-4,What is direct marketing?,A multichannel system of marketing using various media to connect sellers and customers who deal with each other directly rather than using an intermediary, like a wholesaler or retailer. D

4、esigned to elicit an immediate response. Uses marketing research to develop strategy. Builds databases to target customers, prospects. Uses a variety of media, including new media.,15-5,Direct Marketing Industry,Prentice Hall, 2009,15-6,Advantages of Direct Marketing,Can be personalized to be more p

5、ersuasive. Results are measurable; ROI is more easily known. Relevant customer information can be collected to produce more useful databases and selective reach, reducing waste. Convenient to purchase; not restricted to a location. The marketer controls product until delivery. Advertising with direc

6、t-mail components is more effective. Flexibility in form and timing.,15-7,Disadvantages of Direct Marketing,Consumers are reluctant to purchase a product they cant touch or feel. Annoyances associated with direct marketing (junk mail, telemarketers). Customer privacy, data sharing, and identity thef

7、t issues. Tension between building long-term brand image and driving short-term sales.,15-8,Direct Marketing and Direct-Response Advertising,Direct marketing includes the whole marketing process. Direct-response advertising is a type of marketing communication that combines the characteristics of ad

8、vertising and sales promotionattention-getting visuals, interesting copy, an offer, and relevant timing. Gives the reader, viewer, or listener a way to directly respond and contact the advertiser. High cost, but well-targeted.,15-9,Steps in the Direct Marketing Process,Setting objectives and making

9、strategic decisions (research helps advertisers target, segment, prospect, and set objectives). The communication of an offer (the message) by the seller through the appropriate medium. Response, or customer ordering. Fulfillment, or filling orders and handling exchanges and returns. Maintenance of

10、the companys database and customer service (relationship building).,The Direct-Marketing Process,15-10,Prentice Hall, 2009,15-11,Objectives/Strategy,Provide product information Provide space for detailed information. Create sales Order products, visit a dealer, return a response card, visit a Web si

11、te. Retain and strengthen customer relationships It costs so much to acquire new customers Develop leads Identify prospects for products (i.e., cars) that people think before purchasing so follow-up phone calls, sales calls, or other contact can be made to help influence purchases (lead generation).

12、 Generate traffic Visit a store, attend an event, or otherwise interact with a brand. Test offers Pricing, packaging, promotional offers.,15-12,Targeting,Identifies who is to receive the offer. Important because the Cost Per Thousand is very high. Current customers are the best prospects. Order prod

13、ucts, visit a dealer, return a response card, visit a website Three criteria (RFM) predict who is most likely to buy again: Recencythey purchased recently Frequencythey purchase often Monetarythey spend a lot of money Profiling For acquiring new customers, a targeting strategy is to profile current

14、customers and look for potential customers with similar profiles.,15-13,The Offer,Typically, consists of a product description, terms of sale, and payment delivery, and warranty information. Communicates benefits and answers “Whats in it for me?” for the buyer Calls on the buyer to take action. Offe

15、r provides all the information needed including price, the cost of shipping and handling, optional features, future obligations, availability of credit, extra incentives, time and quality limits, and guarantees or warranties Supported by a message strategy, a media strategy, and the database.,15-14,

16、Message and Media Strategy,Message Development Guidelines Longer and must contain more explanation and detail about price, style, and convenience; because if it doesnt persuade the receiver to respond, the message is wasted. Copy is written in a personal, one-to-one conversational style. Should refl

17、ect whether the offer is one-step or a two-step offer. One-Step Offer Asks for a direct sales response, includes a mechanism. Two-Step Offer Designed to gather leads, answer consumer questions, set up appointments, and drive customers to a Web site or retail store.,15-15,The Response/Order,It must b

18、e as easy as possible to respond. Offer options: online, mail, phone, fax Overcome resistance with: Toll-free telephone numbers for product support Free limited-time trials Acceptance of several different credit cards Create urgency by offering a gift or limited-time-only price deal.,15-16,Fulfillme

19、nt and Customer Maintenance,Fulfillment: getting the product ordered to customers Fulfillment includes all back-end functions related to processing the order: Delivering the product Receiving payment Providing tracking numbers Customer maintenance Tracking customer transactions and interactions with

20、 a database,15-17,Measurement and Evaluation,Various offers are evaluated and measured for effectiveness Track printed codes on mail-in responses Use different numbers for different TV commercials This info is used to identify the best offers and adjust the campaign accordingly,Principle: Because di

21、rect-marketing messages are constantly being measured, it is easier to learn what works and modify succeeding campaigns based on results than with advertising.,15-18,Using Databases,Marketers use databases to: Keep track of customers Identify prospects Segment groups into customers and prospects, to

22、 send relevant offers to each group E.g., Carnival Cruise Lines segments customers into new customers, returning passengers, and frequent cruisers. Each group gets a different “Sail and Sign” card, each with different perks and privileges Direct marketers use the same strategy when sending offers to

23、 customers or prospects. Better customers get more premium quality pieces than lower-usage customers who get a more modest piece.,15-19,A Circular Process,Databases are an important source of information at the both the beginning of the direct-marketing process and the end. Used to update personal i

24、nformation (e.g., addresses, marital status, family status) plus get and keep info about interactions with the company. Primary database objectives: Record names of customers Store and measure ad results Store and measure purchasing performance Vehicle for continuing direct communication,Principle:

25、A reliable database of customer and prospect contact information lies at the heart of effective direct marketing.,15-20,Database Management Process,Collection Point Completed warranty card, contest entry, trade show card Data Entry Entered into computer and merged with other information Data Assessm

26、ent Determine relevant level of detail Data Clustering Create clusters of characteristics and behaviors for segmenting or targeting Data Application Apply to marketing strategy or problem (e.g., send coupons) Data Sharing Manufacturer shares info with retailers Data Refinement Corrections, updates,

27、additions, deletions,15-21,Database Management Process,Prentice Hall, 2009,15-22,Lists,Customer and prospect information including addresses, phones, emails. Can be purchased or rented from list brokers. Lists tied to demographics, psychographics, geography, hobbies, affiliations, postal routes . Ne

28、w lists are crated by merging and purging Three types of lists: House lists: marketers own customers or members Response lists: people who respond to some type of direct-response offer Compiled lists: specific categories such as new homebuyers, graduating seniors, new mothers,15-23,Data-Driven Commu

29、nications,Companies use info from previous communications to target, respond to, and interact with customers. Services like Prodigy and Melissa Data offers online buying and purchase reminders that marketers, can access.,Principle: Data-driven communication lets the brand speak with a sense of histo

30、ry of the customer relationship because it tracks the customers interactions with the brand.,Melissa Data,15-24,The Melissa Data Web site explains the services offered by this company in database collection and management.,Prentice Hall, 2009,Visit the Site,15-25,Data-Driven Communications,Date Mini

31、ng Sifting and sorting through company database information to target customers and maintain a relationship. Information is used for behavior targeting (finding customers who might be interested in certain offers) and prospecting (profiling existing customers to find more, similar, potential custome

32、rs). Privacy Issues Cookies (that track online visits) and loyalty cars (like frequent flyer cards) concern privacy advocates. Sometimes info is collected with the subjects permission and knowledge; sometimes without. When does efficiency in targeting become invasion of privacy?,15-26,Customer Relat

33、ionship Management (CRM),Identifies and analyzes customer behavior patterns to maximize the profitability of each relationship. Sophisticated database technology links transactions and customer characteristics to help companies: Improve service that are important to most profitable customers. Attrac

34、t new customers with similar characteristics. Reward the best customers. Identify and eliminate unprofitable customers.,15-27,Four Key Players in Direct-Response Marketing,Advertisers Agencies Media Companies Customers,15-28,Key Players: (1) Advertisers,Companies whose primary business is selling pr

35、oducts and services by mail or phone, or direct response advertising. Retail stores who use direct marketing as a supplement to other forms of marketing. Dell, GEICO,15-29,Key Players: (2) Agencies,Advertising agenciesdepartment or separate direct-response company owned by the agency Direct marketin

36、g agenciesindependent, full-service agencies specializing in direct response Service firmsprinting, mailing, list brokering, data management Fulfillment housesstore/ship requested information/products,15-30,Key Players: (3) Media Companies,The media that deliver messages by phone, mail, or the Web U

37、sed to make an offer with a prospect U.S. Postal Service,15-31,Key Players: (4) Customers,Dislike intrusiveness, but appreciate convenience Types of customers Push-button shopper (phone) Mouse-clicking shopper (computer),15-32,Tools of Direct Marketing,Direct Mail Catalogs Telemarketing Direct-Respo

38、nse Advertising Web-based e-marketing,15-33,The Tools of Direct Marketing: (1) Direct Mail,A print advertising message for a product or service, delivered by mail Most popular method Variable data use digital printing to highly personalize messages Uses bulk mail rates Response is 23% Fairly high CP

39、M, but easy to calculate payout rate,15-34,Advantages Tells a story Engages attention Personalizes message Builds in feedback Reaches the unreachable,Description The medium offers a variety of formats and provides enough space to tell a complete sales story. Because direct mail has little competitio

40、n when it is received, it can engage the readers attention. Because of the use of databases, it is not possible to personalize direct mail across a number of consumer characteristics, such as name, product usage, purchase history, and income. Direct mail is particularly conducive to marketing resear

41、ch and can be modified until the message design matches the needs of the desired target audience. Direct mail allows the marketer to reach audiences who are inaccessible by other media.,Table 15.1Advantages of Direct Mail,15-35,Advantages Negative perceptions Cost Mailing list Response rates Vulnera

42、bility,Description The main drawback of using direct mail is the widespread perception that it is junk mail. According to a Harris-Equifax Consumer Privacy Survey, about 46 % of the public see direct-mail offers as a nuisance, and 90% consider them an invasion of privacy. Direct mail has a higher co

43、st per thousand than mass media. A great deal of this high cost is a result of postage. (However, it reaches a more qualified prospect with less waste.) Another cost factor is the maintenance of the database. To deliver an acceptable response rate, the quality of the mailing list is critical. It mus

44、t be maintained and updated constantly. Because of the changing nature of mailing lists, as well as the difficulty of keeping relevant data in the database, the response rate can be a slow as 2 or 3%. Even with that low response, however, database marketers can still make money. Direct-mail delivery

45、 is vulnerable to natural disasters as well as catastrophes such as the 9/11 terrorist attacks.,Table 15.1Disadvantages of Direct Mail,15-36,Creating Effective Direct Mail,Get the attention of the targeted prospect as the envelope comes from the mailbox. Create a need for the product, show what it l

46、ooks like, and demonstrate how it is used. Answer questions, as a good salesperson does, and reassure the buyer. Provide critical information about product use. Inspire confidence, minimize risk, and establish that the company is reputable. Make the sale by explaining how to buy, how to order, where

47、 to call, and how to pay for the purchase. Use an incentive to encourage a fast response.,15-37,Writing Effective Letters,Attention Pictures and benefit-oriented headlines to grab attention or generate curiosity. Personalize Use a name or, if not available, a topic (“Dear Cat Lover”). Lead in A brie

48、f yet compelling or surprising statement“Dear Friend: I could really kick myself!” The Offer Make it as early in the letter as possible. The Letter Use testimonials or other specifics to describe benefits. The Closing Repeat the offer, add incentives or guarantees, and include a clear call to action

49、.,15-38,Issue: Trees, Water, and Waste,Direct mail uses an estimated 100 million trees and 28 billion gallons of water per year Plus disposal and recycling costs; in Colorado, direct mail accounts for 340 million pounds of trash per year. Should direct mail be banned? Would this infringe on advertis

50、ers rights to commercial free speech? What do you do if youre an environmentally responsible advertiser?,15-39,The Tools of Direct Marketing: (2) Catalogs,A multiple-page direct mail publication showing a variety of merchandise Increasing in number; even while marketers are refining databases, cutti

51、ng back on no. of recipients Catalogs can drive e-commerce, Web site purchases Specialty catalogs are growing in number,15-40,Advantages Targeted Engages attention Complete information Convenience,Description Can be directed at specific market segments. Employs high-quality design and photography (s

52、ee Alstos cover). Extensive product information and comparisons are provided. Offer a variety of purchase options.,Table 15.2Advantages and Disadvantages of Catalogs,Disadvantages Negative perceptions Costs Response rate Mailing list,Description Catalogs are viewed as junk mail by many recipients. T

53、he cost per thousand of catalogs is higher than mass media. The response is relatively low at 3 to 4%. Databases must be constantly maintained.,15-41,The Tools of Direct Marketing: (3) Telemarketing,Almost as persuasive as personal sales, but a lot less expensive. Inbound vs. outbound. Message must

54、be simple, compelling, and short. Issues include intrusion, privacy, and fraud. Predictive dialing can call even unlisted numbers Fraudulent behavior has tarnished telemarketings image Do Not Call registry, “Privacy Manager,” and Caller ID,15-42,The Tools of Direct Marketing: (4) Direct-Response Adv

55、ertising,Print Media Ads in newspapers and magazines feature a coupon, order form, address, toll-free number; ask for response. Broadcast Media Radio provides targeted audiences, especially mobile audiences. Cable is targeted to particular interests. TV uses infomercials and direct-response ads.,15-

56、43,The Tools of Direct Marketing: (5) Internet,Combines strengths of direct mail and telemarketing. Moves marketers closer to one-to-one marketing. Combines database information and email technology for highly personalized, low-cost messages to mass audience. Spam is an issue. Permission marketing g

57、ives recipients the choice to “opt in” or “opt out.”,15-44,Eddie Bauer,Visit the Site,The Eddie Bauer Web site lets site visitors “try on” clothes in a virtual dressing room” and also sends email messages offering special prices based on customers past purchases.,15-45,Integrated Direct Marketing:,A

58、 systematic way to get close to your best current and potential customers. Seeks to achieve precise, synchronized use of the right media, at the right time, with a measurable return on dollars spent. Direct mail with a reply card and an 800 number, followed by a phone call. Lifetime Customer Value (

59、LCV) is an estimate of how much a purchase volume a customer or target market will generate over a length of time.,15-46,Global Considerations,The use of databases, credit cards, toll-free numbers and the Internet are driving direct marketing growth in Far Eastern and European countries. Direct marketing is especially important in countries where advertising is tightly regulated. Government postal regulations also limit the use of direct mail. Regulations, standards, and cultural meanings vary greatly from country to country. Creative mes