What is direct marketing 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 Designed to elicit an immediate response Uses marketing research to develop strategy Builds databases to target customers prospects Uses a variety of meda including new media Prentice Hall 2009 15 1 Direct Marketing Industry Direct Marketing Industry Prentice Hall 2009 15 5 Advantages of Direct Advantages of Direct Marketing Marketing Can be personalized to be more persuasive 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 direct mail components is more effective Flexibility in form and timing Prentice Hall 2009 15 3 Disadvantages of Direct Disadvantages of Direct Marketing Marketing Consumers are reluctant to purchase a product they Annoyances associated with direct marketing junk can t tough or feel mail telemarketers issues Customer privacy data sharing and identity theft Tension between building long term brand image and driving short term sales Prentice Hall 2009 15 4 Direct Marketing and Direct Marketing and Direct Response Advertising Direct Response Advertising Direct marketing includes the whole marketing process Direct response advertising is a type of marketing communication that combines the characteristics of advertising and sales promotion attention 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 Prentice Hall 2009 15 5 Steps in the Steps in the Direct Marketing Process Direct Marketing Process 1 Setting objectives and making strategic decisions research helps advertisers target segment prospect and set objectives 2 The communication of an offer the message by the seller through the appropriate medium 3 Response or customer ordering 4 Fulfillment or filling orders and handling exchanges and returns 5 Maintenance of the company s database and customer service Relationship Building Prentice Hall 2009 15 6 Step 1 Step 1 Objectives Strategy Objectives Strategy Provide product information Provide space for detailed information Create sales Action Order products visit a dealer return a response card visit a Web site 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 Generate Traffic Visit a store attend an event or otherwise interact with a brand Test offers Pricing packaging promotional offers Prentice Hall 2009 15 7 Targeting Targeting Identifies who is to receive the offer Important because the Cost Per Thousand is very high Current customers are the best prospects Order products visit a dealer return a response card visit a website Three criteria RFM predict who is most likely to buy again Recency they purchased recently Frequency they purchase often Monetary they spend a lot of money Profiling For acquiring new customers a targeting strategy is to profile current customers and look for potential customers with similar profiles Prentice Hall 2009 15 8 The Offer Step 2 The Offer Step 2 Typically consists of a product description sale and payment delivery and warranty information Communicate benefits and answers What s in it for me for the buyer Calls on the buyer to take action Def of offer Offer 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 Prentice Hall 2009 15 9 Message and Media Strategy Message and Media Strategy Message Development Guidelines Longer and must contain more explanation and detail about price style and convenience because if it doesn t persuade the receiver to respond the message is wasted Copy is written in a personal one to one conversational style Should reflect whether the offer is one step or a two step offer One Step Offer Two Step Offer Asks for a direct sales response includes a mechanism Designed to gather leads answer consumer questions set up appointments and drive customers to a Web site or retail store Prentice Hall 2009 15 10 The Response Order Step 3 The Response Order Step 3 It must be 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 Prentice Hall 2009 15 11 Step 4 Step 4 Fulfillment and Customer Fulfillment and Customer Maintenance 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 a database Prentice Hall 2009 15 12 Step 5 Step 5 Measurement and Evaluation 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 direct marketing messages are constantly being measured it is easier to learn what works and modify succeeding campaigns based on results than with advertising Prentice Hall 2009 15 13 Using Databases Using Databases Marketers use databases to Keep track of customers Identify Prospects Segment groups into customers and prospects to 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 customers or prospects Better customers get more premium quality pieces than lower usage