chapter sixteen Relationship Building: Direct Marketing, Personal Selling, and Sales Promotion McGraw-Hill/Irwin Essentials of Contemporary Advertising Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

16-2 Objectives_1  Discuss the importance of relationship marketing and IMC  Define direct marketing and discuss its role in IMC  Explain the importance of databases to direct marketers  Discuss the role of personal selling in an IMC program

16-3 Objectives_2  Describe the advantages and drawbacks of personal selling  Define sales promotion and discuss its importance as a communications tool  Identify the benefits and drawbacks of sales promotion  Explain the difference between push and pull strategies

16-4 Direct Marketing Any direct communication to a consumer or business recipient that is designed to generate a response in the form of an order, a request for further information, and/or a visit to a store or other place of business for the purchase of a specific product(s) or services.

16-5 Largest Direct-Response Agencies  Draft Worldwide  Rapp Collins  Wunderman  Ogilvy One  McCann Relationship Marketing  Brann  Grey Direct  Targetbase Marketing  Devon Direct  Protocol Marketing Services

16-6 Database Marketing The development and maintenance of a data pool on current and prospective customers used to target, segment, and grade customers

16-7 Databases and Direct Marketing  Enables calculation of customer lifetime value  Utilizes loyalty programs to build customer relationships  Includes response to offers and offer details as new data points in database  Enables use of RFM formula to identify best customers

16-8 Exhibit 16-2 RFM Formula The RFM formula is a model that provides marketers with a method for determining the most valuable customers in a database based on recency, frequency, and monetary value. The larger a customer’s cumulative point score, the more likely they are to make additional purchases.

16-9 Advantages of Direct Marketing  Development of a good database  Relationship approach to marketing  Segmentation  Highly targeted messages  Accountability  Measurability  Efficient  Unlikely to draw competitive attention

16-10 Drawbacks to Direct Marketing  Bad reputation  No physical store experience  Lack of prestige associated with medium  Cost per contact  Clutter  Privacy concerns  Lack of information control for consumers

16-11 Types of Direct Response Advertising Direct Mail Interactive Catalog Sales PrintBroadcast

16-12 Profile of Buyers from Infomercials  Female  Middle aged  Caucasian  Employed full-time  Married with children  Suburbanite  $55,000 mean household income

16-13 Personal Selling The interpersonal communication process by which a seller ascertains and then satisfies the needs of a buyer to the mutual, long-term benefit of both parties

16-14 Advantages of Personal Selling  Personal nature  Persuasion power  Ability to deal with objections  Instant feedback  Tailored marketing messages  Demonstration ability  Relationship-based  Ability to ask for the close  Effectiveness

16-15 Drawbacks of Personal Selling  Labor intensive  High cost per contact  Low reach  Few economies of scale  Poor reputation  Dependence upon salespeople

16-16 Functions of Salespeople Information Gathering Information Providing Order Fulfillment Relationship Building

16-17 Sales Promotion A direct inducement that offers an incentive anywhere along the marketing route to enhance or accelerate the product’s movement from producer to consumer

16-18 Sales Promotion Elements  May be used anywhere in the marketing channel (trade and consumer)  Involves a direct inducement for the target to take some specific action  Designed to change the timing of a purchase or to shift inventory another channel member  Used as a value-added tool

16-19 Effective Sales Promotions  Set specific objectives  Set a relevant theme  Involve the trade  Coordinate with campaign  Understand roles of basic techniques  Use simple copy  Use contemporary graphics  Clearly communicate concept  Pretest and measure response  Reinforce brand message and image

16-20 Sales Promotion Strategies Producer Marketing communications Reseller End user Marketing communications Push Strategy End user Reseller Producer Request product Pull Strategy Marketing communications

16-21 Types of Trade Sales Promotions  Slotting allowances  Trade deals  Display allowances  Buyback allowances  Ad allowances  Co-op advertising  Dealer premiums  Conventions/ meetings

16-22 Types of Consumer Sales Promotions  POP materials  Coupons  Convenience cards  Cents-off promotions  Refunds/rebates  Premiums  Sampling  Combination offers  Contests/sweepstakes

16-23 Key Terms_1  Advertising allowance  Buyback allowance  Catalog  Cents-off promotion  Combination offer  Company convention  Consumer sales promotion  Contest  Convenience card  Cooperative advertising  Coupon  Customer lifetime value

16-24 Key Terms_2  Database  Database marketing  Database management  Database query  Dealer meeting  Direct marketing  Direct-response advertising  Direct sales  Direct selling  Display allowance  Diverting  Electronic coupon  Forward buying

16-25 Key Terms_3  Freestanding inserts  Game  In-store sampling  Linkage media  Loyalty program  Personal selling  Point-of-purchase materials  Polybagging  Premium  Pull strategies  Push money  Push strategies  Rebate  RFM formula  Sales promotion

16-26 Key Terms_4  Sampling  Slippage  Slotting allowance  Spiff  Sweepstakes  Telemarketing  Trade advertising  Trade concentration  Trade deal  Trade promotion