1. Marketing 3344

2.  Who was Les Wunderman?  He created the Columbia House record club and “invented” the modern era of direct marketing.  The genius of his idea was creating a dialogue (monthly response) with consumers which led to building a relationship with the brand.

3. An interactive system of marketing which uses one or more advertising media to effect a measurable response and/or transaction at any location.  Common purposes of direct marketing: ◦ Solicit and close a sale ◦ Identify prospects for future contacts ◦ Provide in-depth information ◦ Seek information from consumers ◦ Foster brand loyalty

4. L.L. Bean built an entire business around direct marketing. Ad in Context Example

5.  L.L. Bean founded in 1912  Fundamental strategy: ◦ Commitment to quality ◦ Descriptive copy that was informative, factual, low-key ◦ Satisfaction guarantee  Bean built a good mailing list  By 1990 Bean’s sales were $600 million; by 2007, over $1.5 billion

6.  1450Invention of movable type  1667First gardening catalog  1744Franklin formulates mail-order concept of “satisfaction guaranteed”  1872Montgomery Ward catalog  1886Sears starts mail-order business  1917 Direct Marketing Advertising Association founded

7.  1928Third-class bulk mail introduced  1950First credit card  1951Lillian Vernon places first ad  1953Publishers Clearing House founded  1967AT&T introduces toll-free 800  1992Over 100 million in U.S. shop at home

8.  More than just mail-order.  A complex, diverse tool used by organizations throughout the world.  Direct marketing often is not integrated with other advertising efforts.  Three Principle Purposes: ◦ close a sale with a customer ◦ ID prospects and develop customer database ◦ Engage customers, seek their advice and generate brand loyalty

9.  CONVENIENCE! for today’s dual income and single parent households.  More liberal attitudes toward using credit.  Greater access to toll-free calling.  Computer technology/new media facilitate online transactions.  More precise segmentation.  Opportunity for relationship building.  Cost per inquiry (CPI) and cost per order (CPO) advantages of direct marketing.

10. Marketers, like The Adirondack Country Store, use catalogs, toll free numbers, and the Web to take advantage of direct marketing opportunities. Ad in Context Example

11.  Knowing who the best customers are as well as what and how often they buy.  Mailing lists: ◦ Internal lists ◦ External lists

12. Databases allow direct communication with customers like this Saturn newsletter. Ad in Context Example

13. 13  Augmenting lists with externally provided lists  Incorporating information from external databases ◦ Demographic data ◦ Geodemographic data ◦ Psychographic data ◦ Behavioral data PPT 19-13

14.  Includes data collected directly from individual customers ◦ RFM Analysis of customers: recency, frequency, monetary  Goal: Develop cybernetic intimacy  Marketing database applications ◦ Frequency-marketing programs ◦ Cross-selling  Privacy concerns ◦ Do not call registry ◦ Spam blockers ◦ Opt-out options

15.  Direct response advertising  Direct Mail  Telemarketing  E-mail  Other media ◦ Magazines ◦ Newspapers ◦ Infomercials

16.  Advantages ◦ Selective, flexible, little waste, lends itself to testing, uses many formats  Disadvantages ◦ Direct mail is expensive ► May cost 15 to 20 times more to reach a person with a direct mail piece than with a TV commercial ◦ Mail lists can be plagued with bad addresses ◦ Mail delivery dates can be unpredictable

17. Direct mail offers some creative opportunities. Ad in Context Example

18.  Telemarketing can be a potent tool. As with direct mail: – Contacts can be selectively targeted. – The impact of programs is easy to track. – Experimentation with different scripts and delivery formats is simple and practical. – Telemarketing involves live constructive dialogue.

19.  Telemarketing shares many of direct mail’s limitations: – Very expensive on a cost-per-contact basis. – Names and addresses go bad as people move, so too do phone numbers - 15 percent of the numbers called are inaccurate. – Telemarketing does not share direct mail’s flexibility in delivery options. When you reach people in their home or workplace, you have a limited span of time to convey information and request some response. – Telemarketing is becoming a highly maligned practice in consumers. – By 2007, over 70 percent of US households had registered their phone numbers with the “Do not call registry.”

20.  Bulk e-mail is known as “spam”  Fraudulent email know as “phishing”  However e-mail is an increasingly popular tool for marketers  Advantages ◦ Cheap ◦ Good response rates  Netiquette suggests getting consumer permission to send product information  Avoid bulk e-mailings

21.  Magazines use bind-in insert cards  Toll-free 800 numbers are vital to direct marketers using ads in newspapers and magazines  Infomercial – Long television advertisement – Range in length from 3 to 60 minutes – Keys to success ► Testimonials, Frequent call to actions, ensure same-day response ► New research shows that direct response ads are the least likely to be zapped by DVR users

22. Magazine ads are ideal for Direct Response Advertising. Ad in Context Example

23.  Functional specialists across several media need to work together.  Marketing databases can lead to interdepartmental rivalries.  Growth of direct marketing often means cuts in other promotional budgets.  One solution: the MARCOM manager.

24.  The face-to-face communication and persuasion process.  Most effective with products or services that are: ◦ Higher priced ◦ Complicated to use ◦ Tailored/customized to users’ needs ◦ Offer a trade-in option ◦ Judged at the point of purchase

25.  Order taking: accepting orders for merchandise or scheduling services; deal with existing customers who are lucrative to a business due the low cost of generating additional revenues from them. Order taking is the least sophisticated of selling efforts.  Creative selling: selling where customers rely heavily on the salesperson for technical information, advice, and service. It is the most sophisticated and complex selling effort.

26.  System selling: entails selling a set of interrelated components that fulfill all or a majority of a customer’s needs in a particular area. System selling is often executed by a “team” of sales people.  The missionary salesperson: calls on accounts with the purpose of monitoring the satisfaction of buyers and updating buyers’ needs. They may provide product information after a purchase.

27. 27  Salespeople play a critical role in cultivating long-term relationships with customers— which often is referred to as a customer relationship management (CRM) program.  CRM views the relationship with buyers as a partnership and a problem solving situation.