5 & 6.contemporary direct marketing

1

By :

Prof. Amit Kumar

04/15/23

2

“A major change that is reshaping the face of selling is the growth of direct marketing. This session explores the major changes that are taking place, the key tools that can be used and how the direct marketing process can be effectively managed. It begins by explaining the meaning of direct marketing before discussing the use of database marketing. The management of direct marketing activities will then be explored, including setting objectives, targeting, achieving customer retention and creating action plans”.

ACCMAN

Importance of this course

Direct Marketing Contemporary Direct Marketing

04/15/23

Contents

• Key Differences between Direct Marketing & General Marketing

• Special Competencies of Direct Marketing

• Decision Variables of Direct Marketing

• Generic Objectives of Direct Marketing Programs

• The Media of Direct Marketing

• Consumer Concerns About Privacy

IILM-GSM


04/15/23 3

Definition of Direct Marketing

Direct marketing is an interactive system of marketing that uses one or more advertising

media to effect a measurable response and/or transaction at any location.

404/15/23 4

ACCMAN


General Marketing Vs. Direct Marketing

IILM-GSM


04/15/23 5

General Marketing Direct Marketing

Reaches a mass audience through mass media

Communicates directly with the customer or prospect

Communications are impersonal

Can personalize communication by name/title and with variable messages

Communication is one way-advertiser to prospect

Communications can be interactive

Promotional programs are highly visible

Promotional programs relatively ‘invisible’.

Amount of promotion controlled by the size of the budget

Size of budget can be determined by success of test/promotion

IILM-GSM


04/15/23 6

General Marketing Direct Marketing

Incomplete/sample data for decision-making purpose are taken from marketing research and / or sales call report

Comprehensive database drives direct marketing programs

Analysis conducted at segment level Analysis conducted at individual/firm level

Uses surrogate variables such as advertising awareness or intension to buy to measure effectiveness

Measure and therefore highly controllable

Desired action is either delayed or unclear

Specific action always requested by inquiry or purchase

General Marketing Vs. Direct Marketing

Special Competencies of Direct Marketing

• Precision Targeting

• Personalization

• Call for Immediate Action

• “Invisible” Strategies

• Measurability

IILM-GSM


04/15/23 7


Call for Immediate Action:

• Direct marketing program calls for specific and immediate action, typically the purchase of a product or a request for more information about it.

• This call for immediate action works against the prospect’s normal tendency to defer action, often permanently. ‘Limited Time Offer’, ‘Will Not be Repeated’, and ‘Your Prompt Reply Is Requested’ are all frequently used exhortations.

IILM-GSM


04/15/23 8


‘Invisible’ Strategies:

• The strategies and tactics of the direct marketer are less visible to competitors than are strategies that must be implemented in the mass media.

• Lack of visibility is especially important when testing direct marketing campaigns. – A traditional test market invariably tips off the competition; the

test of a direct marketing program may go unnoticed by competitors.

– However, by the time the competitor receives the communication, it may be too late to retaliate effectively.

IILM-GSM


04/15/23 9

Decision Variables of Direct Marketing

• In general marketing we discuss 4Ps. In direct marketing we can identify a set of decision variables that parallel, although not exactly same as 4Ps of general marketing.

• Added a fifth decision variable, customer service, is essential for the relationship marketing process.

1. Offer

2. Creative

3. Media

4. Timings/Sequencing

5. Customer Service

IILM-GSM


04/15/23 10


1. Offer

The offer is the complete proposition made by the marketer to a prospective customer. It includes the product or service itself, the price at which it is offered, any adjustments to the price, and other elements of the positioning strategy for the market.

IILM-GSM


04/15/23 11


2. Creative

The creative component of the direct marketing program includes the copy platform, the graphic design elements, any involvement techniques, and production considerations such as personalization.

IILM-GSM


04/15/23 12


3. Media

The media available to direct marketing include all those used by general marketing as well as direct mail, telephone and the new electronic media, especially the world Wide Web.

IILM-GSM


04/15/23 13


4. Timing

The direct mail marketers can decide when to mail, whereas the marketers who uses magazines must adjust to publication schedules and space availability.

How to take the greatest advantage of the timing variable is not well understood. One marketer suggests there are four dimensions to consider.

IILM-GSM


04/15/23 14


4. Timing

1. Recency (customers are most likely to buy again shortly after they have made a purchase)

2. Frequency (a multi-buyer is a better prospect than one who purchases infrequently)

3. Seasonality (it varies by the nature of the offer-for example, garden products in the late winter and Christmas gifts in the fall)

4. Role Transitions (such as purchase of a home or birth of a baby, marriage provide important indicators of a prospect’s propensity to purchase)

IILM-GSM


04/15/23 15

RFM analysis for a Catalogue RetailerRecency

Frequency Monetary 0-2 mths 3-4 mths 5-6mths Over 6mths

1 – 2 <$50 .050* .035 .010 .0011 – 2 Over $50 .050 .036 .011 .001

3 – 4 <$150O .080 .050 .015 .006

3 – 4 Over $150 .090 .050 .017 .008

5 – 6 <$300 .100 .060 .025 .010

5 – 6 Over $300 .120 .080 .027 .012

Over 6 <$450 .150 .100 .035 .018

Over 6 Over $450 .160 .110 . 040 .020 *% of customers in the cell who made a purchase from the last catalogue mailed to them .

IILM-GSM


RFM Target Strategies

RECENCYFrequency Monetary 0 -2 mths 3-4 mths 5-6mths Over 6mths

1 – 2

1 – 2

<$50

Over $50

First time customers Low value customers

3 – 4

3 – 4

<4150

Over $150

Early repeat customers

Defectors

5 – 6

5 – 6

Over 6

Over 6

<$300

Over $300

<$450

Over

High-value customers Core defectors

IILM-GSM



Relative importance of these four decision variables in creating a response:– Reaching right person accounts for 50% of a program’s impact.

– The offers and timings are at 20% each.

– The creative elements accounts for only 10%.

IILM-GSM


04/15/23 18


5. Customer Service– The types of customer services offered, are important

techniques for overcoming customer resistance to buying via direct-response media.

– Even more important is the level of customer service provided-speed and accuracy of order fulfillment, handling inquiries and complaints and a guaranteed return policy.

– Businesses always look ways to improve their services in ways that provide genuine value to customers.

FedEx now offers free software that allows its customers to schedule and track their own shipment via

Web site.

IILM-GSM


04/15/23 19

General Objectives of Direct Marketing Programs

• Each direct marketing program or campaign should, of course, have specific and measurable objective. It is useful, to think about four broad types of objectives:

These broad classes of objectives are:

1. Sales of product or service

2. Lead generation

3. Lead qualification

4. Building and maintaining customer relationship

IILM-GSM


04/15/23 20


Sales of Product or Service

• Most of the direct marketing communications we are accustomed to receiving as consumers are designed to accomplish the sale of a product or service.

IILM-GSM


04/15/23 21


Generating and Qualifying Sales Leads

• Leads are generated when a prospect requests additional information as a result of a direct marketing communication.

• When prospects respond to a follow-up mailing, answer questions, or engage in any other behavior that indicates they have a genuine intension to buy, they become ‘qualified prospects’.

IILM-GSM


04/15/23 22


Building & Maintaining Customer Relationships• Direct marketer’s job is to move the customer through a

series of steps that culminate in the customer being an advocate/partner for the firm’s product.

IILM-GSM


04/15/23 23Prospect

Customer

Client

Supporter

Advocate

Partner

The Media of Direct Marketing Programs

• Virtually all of the media shown can be used to transmit direct marketing offers. It is important to remember that, although many of the media are used by both general marketers and direct marketers, the direct marketers uses and evaluates the effectiveness of media differently.

IILM-GSM


04/15/23 24

The Media of Direct Marketing

1. Telephone

2. Direct Mail

1. Solo Mailings, 2. Catalogs

3. Broadcast & Electronic Media

1. Direct-Response Television

2. Direct-Response Radio

3. Internet & World Wide Web

4. Space Advertising in Print Media

1. Newspapers and Magazines

5. Specialty Advertisements in Print Media

1. Newspaper Insert, 2. Bind-Ins and Blow-Ins

3. Bingo Cards, 4. Bill/Package Stuffers

IILM-GSM


04/15/23 25

Media of Direct Marketing

Bind-Ins and Blow-Ins:

• These advertisements, usually in the form of postal reply cards, are found in most magazines today.

• These cards can be stapled into the magazine (bind-ins)-a more expensive method, but the cards are less likely to be lost.

• Or, they can literally be blown in by specilized machinery-a cheaper method, but the cards are more easily misplaced.

IILM-GSM


04/15/23 26


Bingo Cards:

• Most trade journals and many general interest magazines contain reader service cards, affectionately known in the trade as bingo cards.

• The reader can use these cards to send away for additional information from advertisers in that issue.

IILM-GSM


04/15/23 27


Bill/Package Stuffers:

• An opportunity to transmit a direct-response offer to a prospective customer without incurring postage cost.

• The package in which your last mail-order purchase arrived probably also contained a brochure, a mini catalog, or current issue of the entire catalog.

• A bill from a retailer or a credit card company often contains a number of brochures and perhaps even a sample of perfume

IILM-GSM


04/15/23 28

Consumer Concerns about Privacy

• Consumers are aware of the amount of information that business and government have about them, and they are concerned that it may be misused in a way that damages them.

• It is also important to note that this is primarily a concern of consumers, not business customers.

IILM-GSM


04/15/23 29


• The DMA is active in considering privacy issues in the context of governmental concern and in recommending ways for its members to deal with consumer privacy concerns.

• Authors and Consultants Don Peppers and Martha Regers have a website called Marketplace 1 to 1 (www.1to1.com). The site has a strong privacy statement of their privacy policy.

IILM-GSM


04/15/23 30


IILM-GSM


04/15/23 31

5 & 6.contemporary direct marketing

Leadership & Management

growth of direct marketing

direct marketing process

meaning of direct marketing

marketing research

use of database marketing

action plans

unclear specific action

controllable desired