Lecture Advertising and promotion: An integrated marketing communications perspective (10/e): Chapter 14 - George E. Belch, Michael A. Belch

Chapter 14 - Direct marketing. The main goals of this chapter are: To recognize the area of direct marketing as a communications tool, to know the strategies and tactics involved in direct marketing, to demonstrate the use of direct-marketing media, to determine the scope and effectiveness of direct marketing.

Chapter 14 Direct  Marketing Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Direct Marketing  Interactive system of marketing   Uses one or more advertising media to effect a  measurable response and/or transaction at any  location  Uses a set of direct­response media  Direct­response media: Tools by which direct  marketers implement the communication process Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Factors that Led to the Growth of Direct  Marketing Development and expansion of the Postal Service Consumer credit cards Changing structure of American society and the market Technological advances Changing values and lifestyles More sophisticated marketing techniques The industry’s improved image Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Role of Direct Marketing in the IMC  Program  Combines:  Advertising and public relations  Personal selling and sales promotions  Support media  Companies decide:  Program objectives   Which markets to target and the strategies to use  How to evaluate the program’s effectiveness Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Direct­Marketing Objectives To seek a behavioral response To build an image To maintain customer satisfaction To inform and/or educate customers in an attempt to lead to future actions Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Direct­Marketing Approaches  One­step approach: Medium is used directly to  obtain an order  Two­step approach: Uses more than one medium  First effort ­ Screens potential buyers  Second effort ­ Generates the response Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Direct­Marketing Media Direct Mail Catalogs E-mail Broadcast Media TV Spots Infomercials Print Media Telemarketin g Home Shopping Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Direct Mail   Unsolicited mail  Advertisers spend substantially on this medium  Keys to success  Mailing list: Database from which names are  generated  Ability to segment markets and offers  Threat ­ The Internet Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Catalogs and E­mail  Catalogs  Number of catalogs mailed is decreasing  Available on the Internet for consumer and  business­to­business customers  E­mail: Electronic version of regular mail  Direct mail on the Internet   Lower cost and higher effectiveness than traditional  direct mail  Spam: Electronic equivalent of junk mail Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Broadcast media and TV spots  Broadcast media  Categories ­ Television and radio  Direct­response advertising: Sales response for the  offered product is solicited, through the one­ or two­ step approach  Support advertising: Supports other forms of  advertising  TV spots  Short­form programs, include direct­response  commercials seen on TV Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of 10 McGraw-Hill Education Infomercial and Home Shopping  Infomercial: Long commercial designed for 30­ minute or 1­hour time slot  Designed to be viewed as a regular TV show  Effective with a broad demographic base  Home shopping  Substantial growth due to toll­free telephone  numbers and widespread use of credit cards Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of 11 McGraw-Hill Education Print Media and Telemarketing  Print media  Difficult to use for direct marketing  Ads compete with the clutter of other ads  Space is relatively expensive  Response rates and profits are low  Telemarketing: Sales by telephone  Declined due to its potential for fraud and deception,  and for annoyance Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of 12 McGraw-Hill Education Direct Selling  Direct, personal presentation, and sales in  consumers’ homes  Repetitive person­to­person selling ­ Salesperson  visits the buyer’s location to sell frequently  purchased products  Nonrepetitive person­to­person selling ­ Salesperson  visits the buyer’s location to sell infrequently  purchased products  Party plans ­ Salesperson offers products to groups  of people through parties and demonstrations Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of 13 McGraw-Hill Education Figure 14.2 ­ Sales Strategy (Methods Used to  Generate Sales, Reported as a 2012 of Sales Dollars) Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of 14 McGraw-Hill Education Evaluating the Effectiveness of Direct  Marketing  Cost per order (CPO): Evaluates the relative  effectiveness of an ad based on the number of calls  generated  Customer Lifetime Value (CLTV): Determines  the dollar value associated with a long­term  relationship with a customer  Helps determine if a customer should be acquired  Optimizes existing customers’ service levels  Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of 15 McGraw-Hill Education Advantages and Disadvantages of  Direct Marketing Advantages Disadvantages • Selective reach • Image factors • Segmentation capabilities • Accuracy • Frequency • Content support • Testing • Rising costs • Timing • Do Not Contact lists • Personalization • Costs • Measures of effectiveness Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of 16 McGraw-Hill Education  ... Development and expansion of the Postal Service Consumer credit cards Changing structure of American society and the market Technological advances Changing values and lifestyles More sophisticated marketing. .. Space is relatively expensive  Response rates and profits are low  Telemarketing: Sales by telephone  Declined due to its potential for fraud and deception,  and for annoyance Copyright © 2 014 McGraw-Hill Education All... Program  Combines:  Advertising and public relations  Personal selling and sales promotions  Support media  Companies decide:  Program objectives   Which markets to target and the strategies to use