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UNC-Chapel Hill JOMC 170 - Direct Marketing

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1Direct MarketingChapter 19© 2006 Thomson/South-WesternCh 19: Direct Marketing 2Introductory Scenario:Don’ Mess With Less• Who was Les Wunderman?• He created the Columbia Houserecord club and “invented” themodern era of direct marketing• The genius of his idea was creatinga dialogue (monthly response) withconsumers which led to a buildinga relationship© 2006 Thomson/South-WesternCh 19: Direct Marketing 3Direct Marketing• Interactive system of marketingwhich uses one or more advertisingmedia to effect a measurableresponse and/or transaction at anylocation• Common purposes of directmarketing– Close the sale– Identify prospects for future contacts– Provide in-depth information– Seek information from consumers– Foster brand loyalty© 2006 Thomson/South-Western2Ch 19: Direct Marketing 4Direct 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-WesternCh 19: Direct Marketing 5Direct Marketing:Milestones• 1450–-Invention of movable type• 1667—First gardening catalog• 1744–-Franklin formulates mail-order concept of “satisfactionguaranteed”• 1872---Montgomery Ward catalog• 1886---Sears starts mail-orderbusiness• 1917 Direct Marketing AdvertisingAssociation founded© 2006 Thomson/South-WesternCh 19: Direct Marketing 6Direct Marketing:Milestones• 1928–-Third-class bulk mailintroduced• 1950—First credit card• 1951–-Lillian Vernon places first ad• 1953–-Publishers Clearing Housefounded• 1967–-AT&T introduces toll-free 800• 1992–-Over 100 million in U.S. shopat home© 2006 Thomson/South-Western3Ch 19: Direct Marketing 7Direct Marketing Today• More than just mail-order• A tool used by organizations throughout theworld• Direct marketing often is not integrated withother advertising efforts• Three Principle Purposes– close a sale with a customer– ID prospects and develop customer info.– Engage customers, seek their advice andgenerate brand loyalty© 2006 Thomson/South-WesternCh 19: Direct Marketing 8What’s Driving DirectMarketing?• CONVENIENCE! for today’s dual incomeand single parent households.• More liberal attitudes toward using credit• Greater access to toll-free calling• Computer technology to facilitatetransactions• On-line shopping• Cost per inquiry (CPI) and cost per order(CPO) advantages of direct marketing© 2006 Thomson/South-WesternDatabaseMarketing• Knowing who the bestcustomers are as well as whatand how often they buy• Mailing lists– Internal lists– External listsCh 19: Direct Marketing 9© 2006 Thomson/South-Western4List Enhancement• Augmenting lists withexternally provided lists• Incorporating information fromexternal databases– Demographic data– Geodemographic data– Psychographic data– Behavioral dataCh 19: Direct Marketing 10© 2006 Thomson/South-WesternThe Marketing Database• Includes data collected directlyfrom individual customers• Goal: Develop cyberneticintimacy• Marketing database applications– RFM analysis– Frequency-marketing programs– Cross-selling• Privacy concernsCh 19: Direct Marketing 11© 2006 Thomson/South-WesternMedia Applications inDirect Marketing• Direct response advertising• Direct Mail• Telemarketing• E-mail• Other media– Magazines– Newspapers– InfomercialsCh 19: Direct Marketing 12© 2006 Thomson/South-Western5Direct Mail• Advantages– Selective, flexible, little waste,lends itself to testing, uses manyformats• Disadvantages– Direct mail is expensive• May cost 15 to 20 times more toreach a person with a direct mailpiece than with a TV commercial– Mail lists can be plagued with badaddresses– Mail delivery dates can beunpredictableCh 19: Direct Marketing 13© 2006 Thomson/South-WesternE-Mail• Bulk e-mail is known as “spam”• However e-mail is an increasinglypopular tool for marketers• Advantages– Cheap– Good response rates• Netiquette suggests gettingconsumer permission to sendproduct information• Avoid bulk e-mailingsCh 19: Direct Marketing 14© 2006 Thomson/South-WesternDirect ResponseAdvertising• Multiple media can bedeployed to generate animmediate, measurableresponse.• Most common media used aredirect mail and telemarketing• However all conventionalmedia can be usedCh 19: Direct Marketing 15© 2006 Thomson/South-Western6Direct ResponseAdvertising in Other MediaCh 19: Direct Marketing 16• Magazines use bind-in insert card• Toll-free 800 numbers are vital todirect marketers using ads innewspapers 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-WesternCoordination Challenge• Functional specialists across severalmedia need to work together• Marketing databases can lead tointerdepartmental rivalries• Growth of direct marketing often meanscuts in other promotional budgets• One solution: the marcom managerCh 19: Direct Marketing 17© 2006


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