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Chapter 17

Direct and Online Marketing: The New Marketing Model

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Most Mass Marketing Involves One-Way Communications Aimed At Consumers.

Mass Marketing and Direct Marketing

Direct Marketing Involves Two-Way Interactions With Customers.

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What is Direct Marketing?

Direct Marketing Consists of Direct Connections With

Carefully Targeted Individual Consumers to Both Obtain an

Immediate Response and Cultivate Lasting Customer

Relationships.

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The New Direct Marketing Model

Some firms use direct marketing as a supplemental medium.For many companies, direct marketing - especially Internet and e-commerce companies - constitutes a new and complete model for doing business.Some firms use the new direct model as their only approach.Experts envision a day when all buying and selling will involve direct connections between companies and their customers.

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Convenient

Easy & Private

Product Access &Selection

Abundance of Information

Interactive & Immediate

Buyers Benefits

Sellers BenefitsConsumer

Relationship Building

Reduces Costs

Increases Speed & Efficiency

Provides Flexibility

Global Medium

Benefits and Growth of Direct Marketing

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Demassification – Focus is Toward Minimarkets

Demassification – Focus is Toward Minimarkets

Higher Costs of Driving, Traffic and Parking Congestion

Higher Costs of Driving, Traffic and Parking Congestion

Consumers Lack of TimeConsumers Lack of Time

Convenience of Ordering From Direct Marketers

Convenience of Ordering From Direct Marketers

Growth of Customer DatabasesGrowth of Customer Databases

The Growth of Direct Marketing

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Average ConsumerAverage Consumer

Customer AnonymityCustomer Anonymity

Standard ProductStandard Product

Mass ProductionMass Production

Mass DistributionMass Distribution

Mass AdvertisingMass Advertising

Mass PromotionMass Promotion

One-Way MessageOne-Way Message

Economies of ScaleEconomies of Scale

Share of MindShare of Mind

All CustomersAll Customers

Customer AttractionCustomer Attraction

Mass Marketing Individual CustomerIndividual Customer

Customer ProfileCustomer Profile

Customized Market OfferingCustomized Market Offering

Customized ProductionCustomized Production

Individualized DistributionIndividualized Distribution

Individualized MessageIndividualized Message

Individualized IncentivesIndividualized Incentives

Two-Way MessagesTwo-Way Messages

Economies of ScopeEconomies of Scope

Share of CustomerShare of Customer

Profitable CustomersProfitable Customers

Customer RetentionCustomer Retention

One-to-One Marketing

Mass Marketing Vs. One-to-One Marketing (Tab. 17.1)

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Customer DatabasesCustomer Databases are an Organized Collection of Comprehensive Data About Individual Customers or Prospects Including: Geographic, Demographic, Psychographic, and Behavioral Data.

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Identifying Prospects Identifying Prospects

Deciding Which Customers Should Receive a Particular Offer

Deciding Which Customers Should Receive a Particular Offer

Deepening Customer LoyaltyDeepening Customer Loyalty

Reactivating Customer Purchases Reactivating Customer Purchases

Database MarketingDatabase Marketing is the Process of Building, Maintaining, and Using Customer Databases

and Other Databases for the Purposes of Contacting and Transacting With Customers.

How Companies Use Their Databases:

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Direct Mail

KioskMarketing

OnlineMarketing

Telemarketing

Direct-ResponseTV Marketing

Catalog

Face-to-Face Selling

Forms of Direct Marketing

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Discussion ConnectionsWhen was the last time you bought something via direct marketing? How did you buy it? What did you buy and why did you buy it

direct? When was the last time that you rejected a

direct marketing offer? Why did you reject it?

Based on these experiences, what advice would you give to direct marketers?

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Online MarketingOnline Marketing is conducted through interactive online computer systems, which link consumers with sellers electronically.Two types of online marketing channels: Commercial Online Services offer information

and marketing services to subscribers who pay a monthly fee. (i.e. American Online)

The Internet (the Net) is the vast global and public web of computer networks.

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Who is the Online Customer?

They tend to be younger, more affluent, better educated, and more male than the general population; female usage almost equals males.Other characteristic of net users: Half are 40 years or older, Differ psychographically, in approaches

to buying and responses to marketing.

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Create an Electronic Online Presence

Buy Space on a Commercial Online Service

Company Can Open It’s Own Corporate or Marketing Web Page

Place Advertisements OnlinePlace Ads in to Build Internet

Brands or Attract Visitors to Web Site

Buy Online Ads That Pop Up While Consumers are Surfing,

“Banners”Content Sponsorships

Creating Online Marketing

What is the focus of Web pages for companieslike Butterball?

Are they more for selling,or for information?

What information could a site like this provide?

•Cooking help

•Recipes

•CookingSafety

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Participate in Forums, Newsgroups & Web

CommunitiesForums: Discussion Groups on Commercial Online Services

Newsgroups: Internet Version of Forums

Web Communities: Sites Where Members Exchange Views Online

Use E-Mail and WebcastingCustomers Send Questions,

Suggestions & Complaints Via E-Mail

Webcasting: Automatic Downloading of Information to

PC’s

Creating Online Marketing

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Limited Consumer Exposure and BuyingLimited Consumer Exposure and Buying

Skewed User Demographics and PsychographicsSkewed User Demographics and Psychographics

Chaos and ClutterChaos and Clutter

Ethical ConcernsEthical Concerns

SecuritySecurity

Promise and Challenge of Online Marketing

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Integrated Direct Marketing

Direct marketing campaigns that use multiple vehicles and multiple stages to improve response rates and profits.Marketers seek to improve response rates and profits by adding media and stages that contribute more to additional sales than to additional costs.

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An Integrated Direct-Marketing Campaign (Fig. 17.2)

Paid ad with aresponse channel

Direct Mail

Outbound Telemarketing

Face-to-facesales call

Continuing Communication

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Irritation to

Consumers

Unfairness,Deception,

orFraud

Invasionof

Privacy

Public Policy and Ethical Issues in Direct Marketing

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Review of Concept Connections

Discuss the benefits of direct marketing to customers and companies and the trends fueling its rapid growth.Define a customer database and list the four ways companies use databases in direct marketing.Identify the major forms of direct marketing.Compare the two types of online marketing channels and explain the effect of the Internet on electronic commerce.Identify the benefits of online marketing to consumers and marketers and the four ways marketers can conduct online marketing.Discuss the public policy and ethical issues facing direct marketers.