1. Direct Marketing Overview
Chapter One
The Scope of Direct Marketing

2. Impact of Direct Marketing
25% of U.S. marketer’s budgets are now spent on Direct Marketing
Greater $ spent on Direct Marketing than Newspapers and Broadcast TV
Business to Business (B to B) Direct Marketing is increasing faster than Business to Consumer (B to C) Direct Marketing

3. Structure of marketing channels
Producer of consumer products and services
Agent
Ultimate consumers
Wholesaler
Retailer
Producer of industrial products and services
Industrial users
Industrial distributor 6

4. Common marketing channels for consumer goods and services
A. Producer
Schwan’s
B. Producer
Blue Bell
C. Producer
Mars
D. Producer
Mansar Products
(Jewelry)
agent
indi r ect
wholesaler
wholesaler
di r ect
retailer
retailer
retailer
consumer
consumer
consumer
consumer

5. Common Marketing Channels for Industrial Goods and Services
A. Producer B. Producer C. Producer D. Producer
Stake
Fastener
Company
IBM
Caterpillar
Harkman
Electric
agent
agent
Industrial
Distributor
Industrial
distributor
Industrial
user
Industrial
user
Industrial
user
Industrial
user

6. From Principles of Marketing

7. What is Direct Marketing?
What is unique about direct marketing compared to other forms of marketing is that all the activities are designed to be:
Measurable
Targeted
Create one to one relationships between marketers and customers

8. Direct Marketing Defined
Direct Marketing is the interactive use of advertising media to stimulate an (immediate) behavior modification in such a way that this behavior can be tracked, recorded, analyzed, and stored on a database for future retrieval and use.

9. Direct Marketing Defined
Direct Marketing is the
interactive - one to one communication
use of advertising media – use a variety of media to create synergy
to stimulate an (immediate) behavior modification – motivate a customer to take action that he or she would not otherwise take
in such a way that this behavior can be tracked, recorded, analyzed, and
stored on a database for future retrieval and use.

10. Basics of Direct Marketing
Elements of Promotion
Customer Lifetime Value ($CLV) and other $
Customer Loyalty
Churn = Customer Turnover
Pareto’s Law - 80% of Sales come from 20% of Customers (other variations of)

11. Elements of Promotion

12. Financial Dimensions of DM
Customer Lifetime Value (CLV)
The $value in sales over the long term (several years) a customer has to an organization
Recency
The amount of time since a person or firm last purchased
Frequency
The number of times a customer buys within a season or year
Monetary
The amount of money a customer spends within a season or year

13. Basics of Direct Marketing
Customer Loyalty – important because it costs 5-10 times as much to attract new customers than to keep existing customers
Churn = Customer Defections/Turnover
Pareto’s Law - 80% of Sales come from 20% of Customers (other variations of)

14. One-to-One and Customer Relationship Marketing
Data Mining – Using information from an organization’s existing customer base
Customer Relationship Management (CRM) –sharing information across organizational boundaries to provide seamless superior customer service
Click Through Response (CTR) – provides the ability to capture valuable information in “real time” to be used in data mining, CRM,

15. Behavior, Context, and Observation
Traditional Direct Marketers observed the relationship between certain customer behaviors that led to future desired customer behaviors, but did not necessarily understand why customers behaved the way they did.
Future successful direct marketers will need to go beyond observation and correlation to understanding the “why” or what motivates buyers to behave in a desired manner.

16. Integrated Marketing Communications (IMC)
Brand Direct –
the merging of Brand Marketing and Response Marketing

17. Too Much of a Good Thing?
Problems with intrusiveness, legal, and privacy

18. M&M’s Valentine’s Day Campaign