Chapter 19 Direct Marketing 2006 Thomson South Western 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 a building a relationship Ch 19 Direct Marketing 2 2006 Thomson South Western Direct Marketing 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 2006 Thomson South Western Close the sale Identify prospects for future contacts Provide in depth information Seek information from consumers Foster brand loyalty Ch 19 Direct Marketing 3 1 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 2004 about 1 2 billion 2006 Thomson South Western Ch 19 Direct Marketing 4 Direct Marketing Milestones 1450 Invention of movable type 1667 First gardening catalog 1744 Franklin formulates mailorder concept of satisfaction guaranteed 1872 Montgomery Ward catalog 1886 Sears starts mail order business 1917 Direct Marketing Advertising Association founded 2006 Thomson South Western Ch 19 Direct Marketing 5 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 2006 Thomson South Western Ch 19 Direct Marketing 6 2 Direct Marketing Today More than just mail order A 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 info Engage customers seek their advice and generate brand loyalty Ch 19 Direct Marketing 7 2006 Thomson South Western 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 to facilitate transactions On line shopping Cost per inquiry CPI and cost per order CPO advantages of direct marketing Ch 19 Direct Marketing 8 2006 Thomson South Western Database Marketing Knowing who the best customers are as well as what and how often they buy Mailing lists Internal lists External lists 2006 Thomson South Western Ch 19 Direct Marketing 9 3 List Enhancement Augmenting lists with externally provided lists Incorporating information from external databases Demographic data Geodemographic data Psychographic data Behavioral data Ch 19 Direct Marketing 10 2006 Thomson South Western The Marketing Database Includes data collected directly from individual customers Goal Develop cybernetic intimacy Marketing database applications RFM analysis Frequency marketing programs Cross selling Privacy concerns Ch 19 Direct Marketing 11 2006 Thomson South Western Media Applications in Direct Marketing Direct response advertising Direct Mail Telemarketing E mail Other media Magazines Newspapers Infomercials 2006 Thomson South Western Ch 19 Direct Marketing 12 4 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 Ch 19 Direct Marketing 13 2006 Thomson South Western E Mail Bulk e mail is known as spam 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 2006 Thomson South Western Ch 19 Direct Marketing 14 Direct Response Advertising Multiple media can be deployed to generate an immediate measurable response Most common media used are direct mail and telemarketing However all conventional media can be used 2006 Thomson South Western Ch 19 Direct Marketing 15 5 Direct Response Advertising in Other Media Magazines use bind in insert card 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 2006 Thomson South Western Ch 19 Direct Marketing 16 Coordination Challenge 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 2006 Thomson South Western Ch 19 Direct Marketing 17 6