1 Chapter 14 Direct-Response Marketing

2 Direct Marketing Direct marketing is an interactive system of marketing which uses one or more advertising media to effect a measurable response and/ or transaction at any location. In direct marketing, a database – a customer file – must exist.

3 Measurable Response Calculate Costs of Producing and Resulting Income Measurable Response Calculate Costs of Producing and Resulting Income Exchange Order Can be Made at Any Time Exchange Order Can be Made at Any Time Database Target Communication To Specific Customer Database Target Communication To Specific Customer Response Way for Consumer To Respond To Offer Response Way for Consumer To Respond To Offer Interactive Two-Way Communication Interactive Two-Way Communication Components of Direct Marketing

4 Direct Marketing Strategy Direct marketing uses the same general planning framework suggested for advertising. Certain elements are critical to success: Database quality. Targeting focus of the database. Direct marketing is a process that integrates the functions of: Communication. Selling. Distribution.

5 Common Thread that Runs Through All Types of Direct-Response Advertising is Action Common Thread that Runs Through All Types of Direct-Response Advertising is Action Achieve an Action-Oriented Objective Inquiry, Visit to Store, Answer to Survey, or Purchase of Product Achieve an Action-Oriented Objective Inquiry, Visit to Store, Answer to Survey, or Purchase of Product Can Use Any Medium Magazines, Newspapers, Radio, TV, Direct Mail, or Posters Can Use Any Medium Magazines, Newspapers, Radio, TV, Direct Mail, or Posters Reaches Prime Audience People Who Are More Likely to be Interested in the Product Reaches Prime Audience People Who Are More Likely to be Interested in the Product Direct-Response Advertising

6 Database Marketing With advent of computer and development of extensive databases, it is possible for an advertiser to develop one-on-one communication with potential customers. Database marketing targets the individual based on some common characteristics that predict that a particular consumer will be a good prospect. Information gathering such as this is called database marketing, relationship marketing, or MaxiMarketing. 6 Computer game makers such as Nintendo. American Express.

7 Advertisers More Than 12,000 are Involved. Primary Business Is Selling Products and Services by Mail Or Phone Advertisers More Than 12,000 are Involved. Primary Business Is Selling Products and Services by Mail Or Phone Agencies Advertising Agencies Independent Direct- Marketing Agencies Service Firms Fulfillment Houses Agencies Advertising Agencies Independent Direct- Marketing Agencies Service Firms Fulfillment Houses Consumers Convenient for Many People Mouse-Clicking Shopper Daring to Order Product Can’t See, Touch, Feel, Or Try Out Consumers Convenient for Many People Mouse-Clicking Shopper Daring to Order Product Can’t See, Touch, Feel, Or Try Out The Players in Direct- Response Marketing

8 Catalogs Broadcast Media Print Media Telemarketing Internet The Media of Direct Response Direct Mail Direct Response Is a Multimedia Field and Includes:

9 Direct Mail A Direct-Mail Piece is a Self-Standing Advertising Message for a Product or Service That is Delivered by Mail. Function is to Provide a Message That Moves the Reader to Purchase. Typical Package Has Outer Envelope, Letter, Brochure, Reply Card and Return Envelope. Target Must Decide Whether to Read or Throw Away; Decision May be Based on Outside Envelope.

10 Practical Tips # 1 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 looks like, and demonstrate how it is used. Answer questions, as a good salesperson does, 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 to call, and how to pay for the purchase.

11 Catalogs Specialty Catalogs May Own Stores Customers May Purchase Graphics Publication That Shows a Variety of Merchandise. Facing Saturated Markets. Armchair Shopping. Electronic

12 Personal Contact Personal, Live, Less Money Intrusive, Interruptive Inbound or Outbound Hire Outside Agency Simple Message Design Telemarketing More Direct- Marketing Dollars Are Spent on Telemarketing Than Any Other Medium.

13 Print Media Bind-Ins Stapled or Glued in Magazine and Must be Torn Out to Be Used. Bind-Ins Stapled or Glued in Magazine and Must be Torn Out to Be Used. Ads in Mass Media Are Less Directly Targeted, but Still Provide Opportunities for a Response: Ads in Mass Media Are Less Directly Targeted, but Still Provide Opportunities for a Response: Blow-Ins Blown Into Magazine After It is Printed; Loose and May Fall Out.

14 Cable TV Works Well Since It is Targeted to Particular Interests Cable TV Works Well Since It is Targeted to Particular Interests Good Infomercial Format Radio Doesn’t Usually Work Well Because Audience is Preoccupied Radio Doesn’t Usually Work Well Because Audience is Preoccupied TV and Radio Can Be Used in Direct-Marketing Advertising TV and Radio Can Be Used in Direct-Marketing Advertising Broadcast Media

15 Internet Selling Reduces the Need for Paper Catalogs That are Expensive to Produce and Send Internet Selling Reduces the Need for Paper Catalogs That are Expensive to Produce and Send Direct Marketing is the Model for E-Commerce The Internet Interactive Gathering Information Gathering Information Advantages Include: One-to-One Marketing One-to-One Marketing

16 Record the Names of Customers, Expires (Names No Longer Valid), and Prospects. Provide a Vehicle for Storing and Then Measuring The Results of Advertising. Provide a Vehicle for Storing and Then Measuring Purchasing Performance. Provide a Vehicle for Continuing Direct Communication by Mail or Phone. Managing a Database (Tab. 14.4) The Database is the Heart of Direct Marketing and Its Four Primary Objectives Are:

17 House List Marketer’s Own Customers or Members Response List People Who Have Responded To a Direct-Mail Offer Compiled List Rented From a Direct-Mail List Broker Types of Lists