Direct and Online Marketing: Building Direct Customer Relationships Chapter 14

Rest Stop: Previewing the Concepts Define direct marketing and discuss its benefits to customers and companies Identify and discuss the major forms of direct marketing Explain how companies have responded to the Internet and other powerful new technologies with online marketing strategies

Rest Stop: Previewing the Concepts Discuss how companies go about conducting online marketing to profitably deliver more value to customers Overview the public policy and ethical issues presented by direct marketing

First Stop: Facebook Has tremendous impact and influence, not just as a sharing community but also as an Internet gateway Has the potential to become one of the world’s most powerful and profitable online marketers Entering the location based, deal-of-the-day online markets, and the banking business

Connecting directly with carefully targeted segments or individual consumers, often on a one-to-one, interactive basis Direct marketing

The New Direct-Marketing Model For many companies today, direct marketing constitutes a complete model for doing business Companies such as GEICO have built their entire approach to the marketplace around direct marketing

Marketing at Work Amazon is relentlessly customer-driven Visitors receive a unique blend of benefits: huge selection, good value, and convenience Online pioneer Amazon.com does much more than just sell goods on the Web. It creates direct, personalized online customer experiences

Direct Marketing Benefits to Buyers Convenient Easy Private Immediate and interactive Access to a wealth of: Products Comparative information about companies, products, and competitors

Direct Marketing Benefits to Sellers Building customer relationships Offers sellers a low-cost, efficient, speedy alternative to reach markets Online direct marketing results in lower costs, improved efficiencies, and speedier handling of channel and logistics functions

Direct Marketing Benefits to Sellers Offers greater flexibility Gives access to buyers that cannot be reached through other channels Southwest Airlines uses techie direct marketing tools—including a blog, DING! widget, and smartphone app—to inject itself directly into customers’ everyday lives—at their invitation Note to Instructor: Direct marketing allows marketers to make ongoing adjustments to prices and programs or make immediate, timely, and personal announcements and offers.

Organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, psychographic, and behavioral data Customer database

Customer Databases and Direct Marketing Note to Instructor: Companies use databases to locate good potential customers and generate sales leads. They also mine their databases to learn about customers in detail and then fine-tune their market offerings and communications to the special preferences and behaviors of target segments or individuals. In all, a company’s database can be an important tool for building stronger long-term customer relationships. Best Buy mines its huge database to glean actionable insights on customer interests, lifestyles, passions, and likely next purchases. It uses this information to develop personalized, customer-triggered promotional messages and offers.

Figure 14.1 – Forms of Direct Marketing Note to Instructor: The major forms of direct marketing are face-to-face or personal selling, direct-mail marketing, catalog marketing, telemarketing, direct-response television (DRTV) marketing, kiosk marketing, and online marketing.

Direct Mail Marketing Occurs by sending an offer, announcement, reminder, or other item directly to a person at a particular address Well suited to direct, one-to-one communication Permits high-target selectivity can be personalized, is flexible, and allows the easy measurement of results

Direct Mail Marketing Traditional direct mail can be an effective component of a broader integrated marketing campaign Insurance companies like Farmers Insurance rely heavily on TV advertising to establish broad customer awareness. However, they also use lots of good old direct mail to communicate with consumers in a more direct and personalized way.

Catalog Marketing Marketing through print, video, or digital catalogs that are mailed to select customers, made available in stores, or presented online Eliminate printing and mailing costs Online catalogs offer Unlimited amount of merchandise Broader assortment of presentation formats Real-time merchandising

Catalog Marketing Note to Instructor: With the stampede to the Internet, more and more catalogs are going digital. A variety of Web-only catalogers have emerged, and most print catalogers have added Web-based catalogs and smartphone catalog shopping apps to their marketing mixes. Digital catalogs: Days before the latest Lands’ End catalog arrives in the mail, customers can access it digitally at landsend. com , at Facebook, or via the Lands’ End mobile app

Telemarketing Using the telephone to sell directly to customers Marketers use: Outbound telephone marketing to sell directly to consumers and businesses Inbound toll-free numbers to receive orders from television and print ads, direct mail, or catalogs Provides purchasing convenience and increased product and service information

Telemarketing Marketers use inbound toll-free 800 numbers to receive orders from television and print ads, direct mail, or catalogs. Here, the Carolina Cookie Company urges, “Don’t wait another day. Call now to place an order or request a catalog.”

Direct-Response Television (DRTV) Marketing Marketing via television, including direct-response television advertising (or infomercials) and interactive television (iTV) advertising Note to Instructor: Using direct- response television advertising, direct marketers air television spots, often 60 or 120 seconds in length, which persuasively describe a product and give customers a toll-free number or a Web site for ordering. It also includes full 30-minute or longer advertising programs, called infomercials, for a single product. A more recent form of direct-response television marketing is interactive TV (it) marketing. It lets viewers interact with television programming and advertising using their remote controls. Interactive TV gives marketers an opportunity to reach targeted audiences in an interactive, more involved way. Large, well-known companies—such as Kodak—are now using direct-response TV to get the message out directly to customers

Kiosk Marketing Product or service information and ordering machines are placed by companies in stores, airports, hotels, college campuses, and other locations Red box operates more than 27,000 DVD rental kiosks in supermarkets and fast-food outlets nationwide

Efforts to market products and services and build customer relationships over the Internet Online marketing

Marketing and The Internet Internet: Vast public web of computer networks that connects users of all types around the world to each other and an amazingly large information repository Has given marketers a whole new way to create value for customers and build relationships with them

Marketing and The Internet Click-only companies: Dot-coms, which operate online only and have no brick-and-mortar market presence Include e-tailers, search engines and portals, transaction sites, content sites, and online social networks Click-and-mortar companies: Traditional brick-and-mortar companies that have added online marketing to their operations

Click-and-Mortar Marketing Staples backs its “that was easy” positioning by offering a full range of contact points and delivery modes Note to Instructor: The success of the dot-coms has caused existing brick-and-mortar manufacturers and retailers to re-examine how they serve their markets. That is why, almost all of these traditional companies have created their own online sales and communications channels, and have become click-and-mortar companies.

Online Marketing Click-and-mortar business trends: Almost all traditional companies have set up their own online sales and communication presence. Many click-and-mortar firms are having more online success than their click-only competitors.

Figure 14.2 – Online Marketing Domains

Online Marketing Domains Businesses selling goods and services online to final consumers Business-to-Consumer (B-to-C) Marketing Businesses using online marketing to reach new business customers, serve current customers more effectively, and obtain buying efficiencies and better prices Business-to-business (B-to-B) online marketing Online exchanges of goods and information between final consumers Consumer-to-consumer (C-to-C) online marketing Online exchanges in which consumers search out sellers, learn about their offers, initiate purchases, and sometimes even drive transaction terms Consumer-to-business (C-to-B) online marketing

Online journals where people post their thoughts, usually on a narrowly defined topic Blogs

Blogs Offer fresh, original, personal, and cheap way to enter into consumer online conversations Cluttered and difficult to control Purex used SocialSpark to help introduce its Purex Complete 3-in-1 Laundry Sheets via blogs such as Freaky Frugalite, Bargain Briana, 3 Kids and Us, and others that reach homemakers

Figure 14.3 – Setting Up for Online Marketing Note to Instructor: Companies conduct online marketing in any or all of the five ways shown in the figure. For most companies, the first step in conducting online marketing is to create a Web site. As consumers spend more and more time on the Internet, companies are shifting more of their marketing dollars to online advertising to build their brands or attract visitors to their Web sites. The popularity of the Internet has resulted in a rash of online social networks or Web communities. The widespread adoption of mobile devices and the surge in mobile Web traffic have made mobile marketing a must for most brands.

Corporate (or brand) Web Site Designed to build customer goodwill, collect customer feedback, and supplement other sales channels rather than sell the company’s products directly You can’t buy anything at Nestlé’s colorful Wonka.com site, but you can learn about different Nestlé candy products or just hang around for a while and “feed your imagination.”

Interacts with consumers to move them closer to a direct purchase or other marketing outcome Marketing Web site

Web Sites Should be: Easy to use Professional looking Physically attractive Useful Interactive Linked to other related sites Promotional

Appears while consumers are browsing the Web Online advertising

Forms of Online Advertising Appear anywhere on an Internet user’s screen and are often related to the information being viewed Display ads Text-based ads and links appear alongside search engine results on sites Search-related ads (or contextual advertising) Companies gain name exposure on the Internet by sponsoring special content on various Web sites Content sponsorships Internet version of word-of-mouth marketing Viral marketing Note to Instructor: Viral marketing involves creating a Web site, video, e-mail, mobile message, advertisement, or other marketing event that is so infectious that customers will seek it out or pass it along to their friends.

Online social networks Online communities where people congregate, socialize, and exchange views and information Online social networks

Online Social Networks Marketers can engage in these in two ways: Participate in existing Web communities Set up their own Challenges of participating in existing Web communities: Results are hard to measure Such online networks are largely user controlled

Sending highly targeted, tightly personalized, relationship-building marketing messages via e-mail E-mail marketing

Spam Unsolicited, unwanted commercial e-mail messages E-mail can be an effective marketing tool. But there’s a dark side—spam, unwanted commercial e-mail that clogs up our inboxes and causes frustration. Note to Instructor: To address the issue of spams, most legitimate marketers now practice permission-based e-mail marketing, sending e-mail pitches only to customers who opt in. Many companies use configurable e-mail systems that let customers choose what they want to get.

Marketing to on-the-go consumers through mobile phones, smartphones, tablets, and other mobile communication devices Mobile marketing

Marketing At Work Marketers large and small are weaving mobile marketing into their direct marketing mixes Zipcar’s iPhone app lets members find and book a Zipcar, honk the horn (so they can find it in a crowd), and even lock and unlock the doors—all from their iPhone.

Public Policy and Ethical Issues in Direct Marketing Annoys customers Takes unfair advantage of impulsive buyers Internet fraud Phishing – Identity theft that uses deceptive e-mails and fraudulent Web sites to fool users into divulging their personal data Online security Access by vulnerable or unauthorized groups

Public Policy and Ethical Issues in Direct Marketing Internet fraud has multiplied in recent years. The FBI’s Internet Crime Complaint Center provides consumers with a convenient way to alert authorities to suspected violations

Public Policy and Ethical Issues in Direct Marketing – Consumer Privacy Invades privacy Ready availability of information leaves consumers open to abuse

Public Policy and Ethical Issues in Direct Marketing – A Need for Action Government agencies are investigating on: Do-not-call lists Do-not-mail lists Do-not-track lists Can Spam legislation Congress is drafting legislation that would give consumers more control over how Web information is used Note to Instructor: To head off increased government regulation, four advertiser groups—the American Association of Advertising Agencies, the Association of National Advertisers, the DMA, and the Interactive Advertising Bureau—recently issued new guidelines for Web sites. Among other measures, the guidelines call for Web marketers to alert consumers if their activities are being tracked. The ad industry has agreed on an advertising option icon —a little “i” inside a triangle—that it will add to most behaviorally targeted online ads to tell consumers why they are seeing a particular ad and allowing them to opt out.

Public Policy and Ethical Issues in Direct Marketing – A Need for Action The FTC is taking a more active role in policing online privacy In 2000, Congress passed the Children’s Online Privacy Protection Act (COPPA), which requires Web site operators targeting children to post privacy policies on their sites Many companies have responded to privacy and security issues with actions of their own Note to Instructor: TRUSTe, a nonprofit self-regulatory organization, works with many large corporate sponsors, including Microsoft, Yahoo!, AT&T, Facebook, Disney, and Apple, to audit privacy and security measures and help consumers navigate the Web safely.

Public Policy and Ethical Issues in Direct Marketing – A Need for Action Note to Instructor: In an effort to build consumer confidence in shopping direct, the DMA launched a “Privacy Promise to American Consumers.” The Privacy Promise requires that all DMA members adhere to a carefully developed set of consumer privacy rules. Members must agree to notify customers when any personal information is rented, sold, or exchanged with others. They must also honor consumer requests to opt out of receiving further solicitations or having their contact information transferred to other marketers. Finally, they must abide by the DMA’s Preference Service by removing the names of consumers who do not wish to receive mail, telephone, or e-mail offers. By clicking on the little AdChoices advertising option icon in the upper right of this online ad, consumers can learn why they are seeing the ad and opt out if they wish

Rest Stop: Reviewing the Concepts Define direct marketing and discuss its benefits to customers and companies Identify and discuss the major forms of direct marketing Explain how companies have responded to the Internet and other powerful new technologies with online marketing strategies

Rest Stop: Reviewing the Concepts Discuss how companies go about conducting online marketing to profitably deliver more value to customers Overview the public policy and ethical issues presented by direct marketing

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