1. © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin14
Chapter Fourteen
Direct Marketing
Direct Marketing
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

2. Direct Marketing Defined
The total of activities by which the seller directs efforts to a target audience using one or more media for the purpose of soliciting a response by phone, mail, or personal visit from a prospect or customer
Radio
Telemarketing
TV Selling
Direct Selling
Magazine and Newspaper
Direct Mail
Relation to text
This slide relates to material on p of the text.
Summary Overview
This is an abbreviated version of the definition of direct marketing. Direct Marketing is a system of marketing by which organizations communicate directly with target customers to generate a response or transaction. Some direct marketing media are magazines and newspapers, directing selling, telemarketing, TV selling, radio, and direct mail.
Use of this slide
This slide can be used to introduce and define direct marketing. Discussion of direct marketing and its role in the IMC program will follow.

3. Growth of Direct Marketing
Direct Marketing Syndicates
Consumer Credit Cards
Miscellaneous factors
Changing Structure of Society
Relation to text
This slide relates to material on p. 460 of the text.
Summary Overview
Direct marketing is one of the fastest growing forms of promotion in terms of dollar expenditures. A number of factors have led to this extraordinary growth. They include:
Consumer credit cards, which make it easy for consumers to purchase.
Direct-marketing syndicates that specialize in list development.
The changing structure of American society and the market. We are a money-rich, time-poor society. We have more disposable income, but the increased popularity of physical fitness, do-it-yourself repairs, and home entertainment have reduced the time available for shopping.
Technological advances, that make it easier for consumers to shop and for marketers to reach targeted consumers through direct marketing.
Miscellaneous factors, including changing values, more sophisticated marketing techniques, and the industry’s improved image.
Use of this slide
This slide can be used to discuss the reasons behind the growth of direct marketing.
Changing Structure of Markets
Technological Advances

4. Direct Marketing Combines With . . .
Advertising
Public Relations
Internet
Direct Marketing
Relation to text
This slide relates to material on pp of the text.
Summary Overview
This slide shows how direct marketing can be combined with other IMC tools. In some organizations, direct marketing is used solely to generate customer response, while in others it is used in combination with the other elements in the IMC program to build an image, maintain customer satisfaction, or inform customers so they will take actions in the future.
Use of this slide
This slide can be used to show that direct marketing can be used in combination with other elements of the promotional mix and can work synergistically with these tools.
Support Media
Personal Selling
Sales Promotions

5. San Diego Encourages Visits
Relation to text This slide relates to p. 462 and Exhibit 14-3 of the text.
Summary Overview The city of San Diego encourages visits through direct mail pieces, which also refer to the city’s Web site. This is a good example of how direct marketing can be combined with other IMC tools.
Use of this slide Use this slide to illustrate the synergy between direct mail pieces and another IMC tools.

6. How Database Marketing Works
Relation to text This slide relates to material on pp and Figure 14-2 of the text.
Summary Overview To segment and target markets, direct marketers depend on databases that contain specific information about individual customers and/or prospects to implement more effective and efficient marketing communications. This “raw” information must be filtered to extract a smaller list of “ideal” consumers who meet the qualifications set by the marketer. This smaller list can then be used to determine the marketing strategy that will generate the biggest return for the advertising dollars spent.
Use of this slide This slide can be used to show how the process of database marketing operates.

7. A Comprehensive Consumer Database
Name
Address/
Zip Code
Telephone
Number
Length of
Residence
Age
Gender
Marital
Status
Family
Data
Education
Income
Occupation
Transaction
History
Promotion
Inquiry
Unique
Identifier
Relation to text
This slide relates to material on pp and Figure 14-3 of the text.
Summary Overview
This slide shows the various types of information that would be included in a consumer database, including contact information, demographics, and historical information related to purchase, inquiries, and responses to promotions.
More sophisticated databases might include information such as psychographics, neighborhood information, and credit histories.
Use of this slide
This slide can be used to show the contents of a consumer database.

8. A Business-to-Business Database
Contact Info
Contact Title
Telephone
Number
Source of order, inquiry, referral
Credit History
Industrial Classification
Size of Business
Revenues
Number of Employees
Time in Business
Headquarters Location
Purchase History
Promotion
History
Inquiry
Unique
Identifier
Relation to text
This slide relates to material on pp and Figure 14-3 of the text.
Summary Overview
This slide shows the types of information that would be included in a business-to-business database. This information includes contact information, information on decision makers, information about the business, and past purchase behavior.
Use of this slide
This slide can be used to show the type of information typically stored in a business-to-business database.

9. Test Your Knowledge
For market segmentation and targeting, direct marketers rely most heavily on:
A) Primary qualitative research
B) Census data
C) A database
D) Survey responses
E) Focus groups
Ans: C

10. Objectives of Database Marketing
Improve Selection of Market Segments
Stimulate Repeat Purchases
Objectives
Customer Relationship Management
Cross-selling Other Products
Relation to text
This slide relates to material on pp of the text.
Summary Overview
Database marketing is the use of specific information about individual customers and/or prospects to implement more effective and efficient marketing communications. The objectives of database marketing are to:
Improve selection of market segments – characteristics of the database can help the marketer more precisely target specific customers
Stimulate repeat purchases – current customers have a high likelihood of future purchases
Cross-sell other products – current customers have strong potential for purchasing related products
Manage customer relationships – maintain relationship through personalized communications
The success of a direct marketing program is often tied to the quality of the database of prospects and/or customers that a company has and to which messages can be sent.
Use of this slide
This slide can be used to discuss database marketing.

11. Developing a Database Sources List Services Simmons Market
Research Bureau
Standard Rate &
Data Service
Sources
Relation to text
This slide relates to material on p. 466 of the text.
Summary Overview
There are various sources of information that can be used to create direct marketing databases. Some of these sources are list services, Standard Rate and Data Service (SRDS), the U.S. Postal Service, the Direct Marketing Association, U.S. Census Bureau, and Simmons Market Research Bureau.
Consumer-goods manufacturers, banks, credit bureaus, retailers, charitable organizations, and other business operations also sell lists and information, with which companies can build their databases.
Companies can also build databases using information from contest/sweepstakes entries, loyalty programs, completed warranty cards and customer surveys, and responses to promotional offers
Use of this slide
This slide can be used to discuss the various sources from which marketers can obtain information for their databases.
U.S. Census Bureau
U.S. Postal Service
Direct Marketing
Association

12. Monetary transactions
Effective Databases
RFM Scoring
Monetary transactions
Recency
Frequency
Relation to text This slide relates to p. 466 of the text.
Summary Overview Collecting names and information for use in a database is not enough; to be effective, the list must be kept current, purged of old and/or inactive customers, and updated frequently. The U.S. Postal Service recommends an RFM scoring method for this purpose.
RFM stands for the recency, frequency, and monetary transactions between the company and the customer. Specifically, data must be entered each time there is a transaction so the company can track how recently purchases have been made, how often they are made, and how much money is being spent.
Use of this slide Use this slide when discussing the need to keep databases current if they are to be effective.

13. Direct Marketing Strategies
One-Step
Two-Step
The medium is used directly to obtain an order
Often use 800 number phone orders and credit card payment
May use one medium to obtain inquiry and qualify prospect
Typically follow up with a second medium to complete the sale
Relation to text
This slide relates to material on pp of the text.
Summary Overview
This slide shows the two basic approaches that are used by direct marketers.
One-step – the medium is used to directly obtain an order (e.g. TV offer with an 800 numbers)
Two-step – may involve more than one medium, with the first being used to obtain an inquiry or qualify a prospect and the second to complete the sale.
Many direct marketers use the two step approach whereby they use mass media to generate an inquiry and then follow up with more detailed information such as brochures, videos, CD-ROMs, and/or personal selling to complete the sale.
Use of slide
This slide can be used to introduce one- and two-step direct marketing strategies.

14. Direct-Marketing Media
Infomercials
Telemarketing
Print, catalogs
Broadcast
Relation to text
This slide relates to material on pp that discusses direct media.
Summary Overview
This slide summarizes the types of media available to direct marketers, such as direct mail, telemarketing, direct-response broadcasting, the Internet, and print.
Unlike infomercials and home shopping channels, which have relied on broadcast or cable TV, electronic teleshopping is an online shopping and information retrieval service access through personal computers. For example, QVC, the home shopping channel, started iQVC, an Internet home shopping channel that compliments its cable TV channel.
Use of this slide
This slide can be used to introduce direct response advertising and discuss the various options available for this form of advertising.
Teleshopping
TV Spots
Home shopping
Direct Mail

15. Types of Direct Mail
All forms of advertising sent directly to prospects through the U.S. Postal Service or through private services
Broadsides
Postcards
House lists
Inclusions
Catalogs
Reprints
Relation to text
This slide relates to material on pp of the text.
Summary Overview
More advertising dollars continue to be spent in direct mail than in almost any other advertising medium. Both large and small companies use direct mail effectively to communicate their messages. This slide summarizes the options available to direct mail advertisers, including house lists, broadsides, inclusions, post cards, catalogs, reprints, sales letters, flyers, self-mailers and folders.
Keys to the success of direct mail are the mailing list and the ability to segment markets.
Use of this slide
This slide can be used to introduce direct mail as a promotional medium and to show the various forms of messages that can be sent through the mail.
Flyers
Sales letters
Folders
Self-mailers

16. Porsche Targets Prospects with Direct Mail
Relation to text
This slide relates to material on pp and Exhibit 14-6 of the text.
Summary Overview
Porsche North America uses direct marketing to appeal to upscale audiences. Porsche has been a long term believer in direct marketing, at one point using this medium exclusively. After limited success as a sole medium, direct mail was then combined with other IMC elements, such as television and magazine advertising.
Although direct mail continues to be a favorite medium, its use is being seriously threatened by the Internet.
Use of this slide
This slide can be used as an example of how a company uses direct mail.

17. Test Your Knowledge
Which of the following statements about the use of catalogs in the direct-marketing industry is true?
A) Most business-to-business marketers use print catalogs.
B) The number of catalogs mailed since has decreased significantly.
C) Many companies use catalogs in conjunction with their more traditional sales and promotional strategies.
D) No company today relies solely on catalog sales.
E) The number of catalog shoppers has declined steadily since 1984.
Ans: C

18. Success with Catalogs Relation to text
This slide relates to material on p. 469 of the text.
Summary Overview
This slide shows a catalog for Illuminations, which not only sells directly through catalogs, but also uses them to inform consumers of product offerings available in the stores.
While some predicted that catalogs would cease to exist with more use of the Internet, the opposite is true. The emotional appeal of the traditional catalog exceeds that of online catalogs.
Use of this slide
This slide can be used to show an example of a company that started out exclusively as a catalog company has branched into retail outlets.

19. TV Spots, Infomercials, and Homeshopping
Relation to text This slide relates to pp of the text.
Summary Overview TV spots, infomercials, and homeshopping channels such as QVC effectively sell products. The development of toll-free telephone numbers, combined with the widespread use of credit cards has led to a dramatic increase in the number of people who shop via their TV sets. The majority of direct-marketing broadcast advertising now occurs on TV, rather than on radio.
Bentley, represented on this slide, uses a televised infomercial to attract buyers.
Use of this slide Use this slide to discuss the various ways television is used in direct marketing programs.

20. A Direct Response Print Ad
Relation to text
This slide relates to material on p. 472 of the text.
Summary Overview
This slide is shows an ad for the Morning Sunshine Rooster Bowl by Lennox. It is an example of direct response advertising, which has the goal of soliciting an immediate response from the consumer. Toll free numbers are generally included so the receiver can immediately call to place an order.
Use of this slide
This slide can be used to discuss direct response advertising and how print and can be used effectively as direct response media.

21. Telemarketing Outbound Inbound
Telephone calling by the marketer or marketer’s agent to individual prospects, seeking purchase, subscription, membership, or participation by the call recipient.
Marketers facilitate and invite prospects to call a central location via a long distance number, by a toll-free 800 number, or a fixed-cost 900 number.
Relation to text This slide relates to p. 472 and Figure 14-6 of the text.
Summary Overview Telemarketing means using the telephone to solicit sales. This slide provides a definition of outbound and inbound telemarketing.
Outbound – the marketer calls individual prospects
Inbound – marketers solicit prospects to call a long distance number, a toll-free 800 number, or a fixed-cost 900 number
The telemarketing industry is a very big business:
Over 6.5 million people work in the telemarketing industry
There are over 50,000 call centers in the United States
Marketers spend over $76 billion a year on outbound telemarketing calls
Use of this slide
This slide can be used to introduce telemarketing as a direct marketing tool.

22. Audiotex or Telemedia
Relation to text This slide relates to p. 472 of the text.
Summary Overview Telemedia is the use of telephone and voice information services, such as 900, 800, and 976 numbers, to market, advertise, promote, entertain, and inform. Many of these services are interactive, and are used by entertainment, health care, banking and finance companies, and government services.
The illustration on this slide shows how 800, 976, and 900 numbers are used as marketing tools.
Use of this slide Use this slide to discuss the use of 800, 900, and 976 numbers in a telemarketing program.

23. Forms of Direct Selling
Repetitive person-to-person
Nonrepetitive person-to-person
Relation to text
This slide relates to material on pp of the text.
Summary Overview
Direct selling is the personal presentation or demonstration and the sales of products and services to consumers in their homes, at work or in other places. There are three forms of direct selling:
Repetitive person-to-person selling – salesperson visits the buyers home, job or other location to sell frequently purchased items. Amway uses this technique.
Nonrepetitive person-to-person selling – salesperson visits the buyers home, job or other location to sell infrequently purchased items, such as insurance
Party plans – a salesperson offers products or services to groups of people through home or office parties and demonstrations
Avon, Cutco, Mary Kay Inc., and Tupperware are some of the best-known direct-selling companies in the U.S. and are now extending their programs overseas.
Use of this slide
This slide can be used to introduce direct selling.
Party Plans

24. Cutco Knives Employs Direct Selling
Relation to text
This slide relates to material on pp and Exhibit of the text.
Summary Overview
This slide is an ad for Cutco, which is one of many companies that use direct selling to market their products. Cutco has been extremely successful with this sales format.
Use of this slide
This slide can be used to show an example of a company that relies heavily on the use of direct selling.

25. Measuring Effectiveness
Relation to text This slide relates to p. 475 of the text.
Summary Overview Advertisers can evaluate the effectiveness of an ad by dividing the cost of the ad by the average size of the orders placed. For instance, if an ad cost $100 to run, and it generates 25 orders that averaged $20 each, or $500 in sales, the ad was effective. On the other hand, if a $100 ad only generates five orders worth an average of $10 each, then the ad cost more than the revenue it generated and was unsuccessful.
Use of this slide Use this slide to explain how to measure the effectiveness of direct-marketing programs.
Cost per Order (CPO)

26. Direct Marketing Advantages
Selective reach
Segmentation capabilities
Direct Marketing Advantages
Frequency potential
Flexibility
Timing
Personalization
Costs
Measures of effectiveness
Relation to text
This slide relates to material on pp of the text.
Summary Overview
This slide summarizes the advantages of direct marketing, including:
Selective reach, which lets the advertiser reach a large number of people, while minimizing waste coverage.
Segmentation capabilities, based on geographic area, occupation, demographics, job title, and more.
Frequency potential, which means how often the target market is exposed to the ad.
Flexibility. Ad creativity is limited only by the imagination of the person creating it and the medium being used.
Timing. Direct marketing materials can often be put together and distributed quickly, unlike other media, which may require long-range planning.
Personalization. No other advertising medium can personalize the message as well as a direct media.
Costs. The ability to target the audience and eliminate waste coverage reduces the actual CPM.
Measurement of effectiveness. Feedback is often immediate and always accurate.
Use of this slide
This slide can be used to summarize the advantages of using direct marketing.

27. Direct Marketing Disadvantages
Accuracy
Image factors
Content support
Relation to text
This slide relates to material on pp of the text.
Summary Overview
This slide summarizes the disadvantages of direct marketing, including:
Image factors. The mail segment of this industry is often referred to as junk mail, and junk s fare no better.
Accuracy. Computerization has greatly improved the accuracy and currency of lists, but the cost of generating a lead can be expensive, depending on the quality desired.
Content support. Mood creation is limited to the surrounding program and/or the editorial content.
Rising costs. As postal rates and print costs increase, direct-mail profits are immediately impacted.
“Do not contact” lists. Do Not Call lists now exist for both land and cell phones, and a “Do Not Contact” list for junk mail is under consideration.
Use of this slide
This slide can be used to summarize the disadvantages of using direct marketing.
Do Not Contact lists
Rising costs