C H A P T E R © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Direct Marketing Communications 20

20-2 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Learning Objectives After studying this chapter, you should be able to:  Understand the objectives of direct marketing communications, and describe their distinguishing characteristics.  Discuss the factors driving the growth in direct marketing communications.  Understand traditional direct marketing communications techniques such as direct mail, broadcast and print media, and telemarketing.  Recall examples of the use of technology such as electronic media in direct marketing communications.  Understand some of the ethical and legal issues facing marketers who use direct marketing communications.

20-3 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Skechers USA, Inc Skechers USA, Inc., is a global powerhouse in the lifestyle footwear industry, doing business in 100 countries, including Australia, Chile, China, India, and Japan. Skechers has always had popular products, with current offerings in 20 product lines with 200 styles. A multichannel international marketer, Skechers sells through a wide variety of outlets, including department stores, specialty and athletic stores, the Internet, and company-owned stores. In the United States Skechers operates 125 of its own stores. Outside the United States the company goes to market through 30 global distributors and has 22 company-owned stores.

20-4 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Direct Marketing Communications Direct Marketing Communications (DMC) have two primary objectives. Maintain and Enhance Relationships Whether those relationships have been established by direct marketing communications or by some other means. Establish Relationships Soliciting a direct and immediate response from prospects or customers.

20-5 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Direct Marketing Communications Several characteristics distinguish direct marketing from other marketing communications methods: Direct marketing targets a carefully selected audience, as opposed to a mass audience. It typically involves two-way communication; direct responses from customers make it interactive. Direct-response results are quite measurable - marketers can determine what works.

20-6 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Customer Database

20-7 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed DMC Benefits Measurable Action Objectives Although all marketing communications should try to achieve measurable results, their objectives are generally not as action-specific as those of direct marketing. Immediate Response Orientation Direct marketing communications often have deadlines for action and offer special incentives for taking immediate action.

20-8 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed The Growth of DMC Direct marketing communications have become a larger part of the total marketing communications picture in recent years. From 2002 to 2007, direct marketing is forecast to increase in efficiency with annual sales growing steadily at more than 9 percent. Total direct marketing expenditures will reach an estimated $255 billion by 2007, split fairly evenly between business and consumer markets. Expenditures on direct marketing are growing at a healthy rate, with the 2002–2007 growth rate expected to be 12 percent.

20-9 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Growth Catalysts 1.Increase in Customized Products 2.Fragmented Markets 3.Product Price Sensitivity 4.Shrinking Audiences for Network TV and Newspapers 5.Emphasis on Immediate Sales

20-10 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Direct Marketing Techniques DirectMarketingTechniques Direct Mail Broadcast Media Print Media ElectronicMedia Telemarketing

20-11 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Direct Mail AdvantagesDisadvantages Self-contained message. Flexibility in message content and form of delivery. Thorough coverage of target market. Fewer distractions from other media. A large number of consumers like to make mail-order purchases. High cost per exposure. Potential delivery delays. Lack of support from other media. “Junk mail” easy to ignore. Seen as wasteful, harmful to environment.

20-12 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Postcards Generally used to offer discounts, announce sales, or generate customer traffic. Sales Letter Typically includes recipient’s name; may be mailed with brochures, price lists, reply cards, and envelopes. more Types of Direct Mail Catalogs Describe and often picture the product sold.

20-13 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed VideoCatalogs Serve same purpose as print catalog, but are on videocassettes or CDs. more Types of Direct Mail PromotionalDisks Promotional interactive computer disks: allow the recipient to select information of interest. PromotionalCassettes Promotional videocassettes, audiocassettes, and CDs: used to send product information to selected audiences.

20-14 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Leaflets and Flyers Typically single pages that can be folded and included with sales letters. Types of Direct Mail StatementStuffers Ads included in other mail such as bank or credit card statements or shipped with catalog orders.

20-15 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Broadcast Media BroadcastMedia Infomercials DirectResponse Television Ads Direct Response Radio Ads

20-16 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Print Media Although not so tightly targeted as other direct marketing communications media, newspapers and magazines can also provide an opportunity for direct response. Consumers can respond to:  Ads carrying an address  Order form  Coupon  Telephone number. The response can be either to purchase or to request additional information.

20-17 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed TelemarketingTelemarketing Telemarketing is an interactive direct marketing communications approach that uses telephone calls to initiate, develop, and enhance relationships with customers. The public’s irritation with telemarketers and unethical practices by some telemarketers prompted the Federal Trade Commission (FTC) to enact a national “do not call” list that prohibits telemarketing calls to consumers who register with the FTC.

20-18 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Telemarketing Fraud National Consumers League’s top 10 telemarketing frauds list:  Work-at-home schemes—Kits sold with false promises of profits.  Prizes/sweepstakes—Phony prize awards requiring payment of fees first.  Credit card offers—Phony promises of credit cards requiring payment of fees in advance.  Advance fee loans—Empty promises of loans requiring payment of fees in advance.  Magazine sales—Fake sales or renewals for magazine subscriptions that are never received.

20-19 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed Telemarketing Fraud  Telephone slamming—Consumers’ phone service is switched without their knowledge or consent.  Buyers clubs—Consumers’ credit card and bank accounts may be charged with unauthorized purchases.  Credit card loss protection—Unnecessary insurance sold using scare tactics or misrepresentations.  Nigerian money offers—Consumers are lured into revealing their bank account numbers, against which fraudulent checks are written.  Telephone pay-per-call services—Some 900 number and other “pay-per-call” services are not worth the price of the call.

20-20 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5 th Ed SummarySummary After studying this chapter, you should be able to:  Understand the objectives of direct marketing communications, and describe their distinguishing characteristics.  Discuss the factors driving the growth in direct marketing communications.  Understand traditional direct marketing communications techniques such as direct mail, broadcast and print media, and telemarketing.  Recall examples of the use of technology such as electronic media in direct marketing communications.  Understand some of the ethical and legal issues facing marketers who use direct marketing communications.