Marketing 3344

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.

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

L.L. Bean built an entire business around direct marketing.

L.L. Bean built an entire business around direct marketing.

Ad in Context Example

L.L. Bean founded in 1912Fundamental strategy:

◦Commitment to quality◦Descriptive copy that was informative,

factual, low-key◦Satisfaction guarantee

Bean built a good mailing listBy 1990 Bean’s sales were $600

million; by 2007, over $1.5 billion

1450 Invention of movable type1667 First gardening catalog1744 Franklin formulates mail-order

concept of “satisfaction guaranteed”1872 Montgomery Ward catalog1886 Sears starts mail-order business1917 Direct Marketing Advertising

Association founded

1928 Third-class bulk mail introduced

1950 First credit card1951 Lillian Vernon places first ad1953 Publishers Clearing House

founded1967 AT&T introduces toll-free 8001992 Over 100 million in U.S. shop

at home

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

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.

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

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

Knowing who the best customers are as well as what and how often they buy.

Mailing lists:◦Internal lists◦External lists

Databases allow direct communication with customers like this Saturn newsletter.

Databases allow direct communication with customers like this Saturn newsletter.

Ad in Context Example

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Augmenting lists with externally provided lists

Incorporating information from external databases◦Demographic data◦Geodemographic data◦Psychographic data◦Behavioral data

PPT 19-13

Includes data collected directly from individual customers◦RFM Analysis of customers: recency,

frequency, monetaryGoal: Develop cybernetic intimacyMarketing database applications

◦Frequency-marketing programs◦Cross-selling

Privacy concerns◦Do not call registry◦Spam blockers◦Opt-out options

Direct response advertising

Direct MailTelemarketingE-mailOther media

◦Magazines◦Newspapers◦Infomercials

Advantages◦Selective, flexible, little waste, lends

itself to testing, uses many formatsDisadvantages

◦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

Direct mail offers some creative opportunities.

Direct mail offers some creative opportunities.

Ad in Context Example

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.

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.”

Bulk e-mail is known as “spam”Fraudulent email know as “phishing”However e-mail is an increasingly

popular tool for marketersAdvantages

◦Cheap◦Good response rates

Netiquette suggests getting consumer permission to send product information

Avoid bulk e-mailings

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

Magazine ads are ideal for Direct Response Advertising.

Magazine ads are ideal for Direct Response Advertising.

Ad in Context Example

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.

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

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.

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.

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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.