1. Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed McGraw-Hill/Irwin 14 Direct Marketing

2. Direct Marketing Defined Interactive TV The Internet Other Media Direct Mail Telemarketing Print …an interactive system of marketing which uses one or more advertising media to effect a measurable response and/or transaction at any location 14-2 Direct Response Media tools

3. Growth of Direct Marketing Technological Advances Catalogs Consumer Credit Cards Changing Structure of Society 14-3 Money rich; time poor Shop on internet Shop w/o leaving home

4. Direct Marketing Combines With… Support Media Support Media Public Relations Personal Selling Advertising Sales Promotion Direct Marketing 14-4 Victoria Secret Solicit funds for charity Car sales Promotional product in mailer increases response rates Airline price changes

5. Example of DM / Sales Promotion 14-5 Costco sends promotional offer through the mail

6. Direct-Marketing Objectives To seek a behavioral responseTo build an imageTo maintain customer satisfaction To inform and/or educate customers in an attempt to lead to future actions

7. Direct Marketing Strategies One-Step Two-Step Used directly to obtain an order Toll-free phone orders and credit card payments Knife sets or work out equipment Screens potential buyers Follow-up to complete the sale Car or insurance sales 14-7

8. Types of Direct Marketing Media Direct Mail Unsolicited; often called “junk mail” Success depends on mailing list / ability to segment target Catalogs Drives consumers on line or in store Broadcast Media (TV / radio) /Print Media Email Spam is electronic equivalent of “junk mail” Infomercials Low cost of commercials on cable 30 minute “programs” Home shopping (QVC / HSN) Telemarketing Sales by telephone Do Not Call List 14-8

9. Direct Mail Example Target Criteria Physicians in specialties Highest income levels Demographics of Porsche buyers Specific geographic areas Hooks Use X-ray of a Porsche 911 Carrera 4 Use medical terminology 14-9

10. Example of Direct Marketing Targeting 14-10 Cabela’s catalog targets hunters and fishermen

11. Catalog Example 14-11 Drives consumers in store and online

12. Infomercials 14-12 One of the most successful products advertised on infomercials

13. Direct Marketing via Email 14-13

14. Forms of Direct Selling Repetitive person-to-person Nonrepetitive person-to-person Party Plans 14-14 Direct, personal presentation, demonstration and sales of products to consumers in their home Mary Kay Life insurance Tupper ware

15. Measuring Effectiveness Cost per Order (CPO) 14-15

16. Example of CPO Calculation Cost of ad = $2,500 Profit per order = $5 Needs more than 500 orders to be cost effective: $2,500 / $5 14-16

17. Another Measure of Effectiveness Customer Lifetime Value (CLTV): Determines the dollar value associated with a long-term relationship with a customer Helps determine if a customer should be acquired Optimizes existing customers’ service levels

18. Direct Marketing Advantages Selective reach Segmentation Frequency potential Testing Timing Personalization Costs Measures of effectiveness 14-18 Highest potential consumers Based on age, income Cheap, late night TV Creative approaches Put together quickly Cheap, late night TV No other medium measures as well

19. Direct Marketing Disadvantages Image factors Accuracy Content support Rising costs Do Not Contact lists 14-19 Junk mail Need good lists Mail not desirable mood Postage increases