moriarty8emedia15DirectResponse Marketing.ppt

Direct-ResponseMarketing,Advertising Principles and Practices,15-2,Questions Well Answer,How do we define direct marketing and explain the process?How are databases used in direct marketing?Who are the key players in direct marketing?What are some steps in evaluating the tools and media available to direct-response programs?,The Gecko Goes Direct,The GEICO spokes-creature gets attention and communicates a marketing-savvy audience.Heavy TV advertising including the cavemen and customer with celebrity testimonials prove that direct response sell a to a broad audience.Their share of premiums grew from 4.66.25%from 2001 to 2005.,15-3,Visit the Site,Prentice Hall,2009,15-4,What is direct marketing?,A multichannel system of marketing using various media to connect sellers and customers who deal with each other directly rather than using an intermediary,like a wholesaler or retailer.Designed to elicit an immediate response.Uses marketing research to develop strategy.Builds databases to target customers,prospects.Uses a variety of media,including new media.,15-5,Direct Marketing Industry,Prentice Hall,2009,15-6,Advantages of Direct Marketing,Can be personalized to be more persuasive.Results are measurable;ROI is more easily known.Relevant customer information can be collected to produce more useful databases and selective reach,reducing waste.Convenient to purchase;not restricted to a location.The marketer controls product until delivery.Advertising with direct-mail components is more effective.Flexibility in form and timing.,15-7,Disadvantages of Direct Marketing,Consumers are reluctant to purchase a product they cant touch or feel.Annoyances associated with direct marketing(junk mail,telemarketers).Customer privacy,data sharing,and identity theft issues.Tension between building long-term brand image and driving short-term sales.,15-8,Direct Marketing and Direct-Response Advertising,Direct marketing includes the whole marketing process.Direct-response advertising is a type of marketing communication that combines the characteristics of advertising and sales promotionattention-getting visuals,interesting copy,an offer,and relevant timing.Gives the reader,viewer,or listener a way to directly respond and contact the advertiser.High cost,but well-targeted.,15-9,Steps in the Direct Marketing Process,Setting objectives and making strategic decisions(research helps advertisers target,segment,prospect,and set objectives).The communication of an offer(the message)by the seller through the appropriate medium.Response,or customer ordering.Fulfillment,or filling orders and handling exchanges and returns.Maintenance of the companys database and customer service(relationship building).,The Direct-Marketing Process,15-10,Prentice Hall,2009,15-11,Objectives/Strategy,Provide product informationProvide space for detailed information.Create sales Order products,visit a dealer,return a response card,visit a Web site.Retain and strengthen customer relationshipsIt costs so much to acquire new customersDevelop leads Identify prospects for products(i.e.,cars)that people think before purchasing so follow-up phone calls,sales calls,or other contact can be made to help influence purchases(lead generation).Generate traffic Visit a store,attend an event,or otherwise interact with a brand.Test offers Pricing,packaging,promotional offers.,15-12,Targeting,Identifies who is to receive the offer.Important because the Cost Per Thousand is very high.Current customers are the best prospects.Order products,visit a dealer,return a response card,visit a websiteThree criteria(RFM)predict who is most likely to buy again:Recencythey purchased recentlyFrequencythey purchase oftenMonetarythey spend a lot of moneyProfilingFor acquiring new customers,a targeting strategy is to profile current customers and look for potential customers with similar profiles.,15-13,The Offer,Typically,consists of a product description,terms of sale,and payment delivery,and warranty information.Communicates benefits and answers“Whats in it for me?”for the buyerCalls on the buyer to take action.Offer provides all the information needed including price,the cost of shipping and handling,optional features,future obligations,availability of credit,extra incentives,time and quality limits,and guarantees or warrantiesSupported by a message strategy,a media strategy,and the database.,15-14,Message and Media Strategy,Message Development GuidelinesLonger and must contain more explanation and detail about price,style,and convenience;because if it doesnt persuade the receiver to respond,the message is wasted.Copy is written in a personal,one-to-one conversational style.Should reflect whether the offer is one-step or a two-step offer.One-Step OfferAsks for a direct sales response,includes a mechanism.Two-Step OfferDesigned to gather leads,answer consumer questions,set up appointments,and drive customers to a Web site or retail store.,15-15,The Response/Order,It must be as easy as possible to respond.Offer options:online,mail,phone,faxOvercome resistance with:Toll-free telephone numbers for product supportFree limited-time trialsAcceptance of several different credit cardsCreate urgency by offering a gift or limited-time-only price deal.,15-16,Fulfillment and Customer Maintenance,Fulfillment:getting the product ordered to customersFulfillment includes all back-end functions related to processing the order:Delivering the productReceiving paymentProviding tracking numbersCustomer maintenanceTracking customer transactions and interactions with a database,15-17,Measurement and Evaluation,Various offers are evaluated and measured for effectivenessTrack printed codes on mail-in responsesUse different numbers for different TV commercialsThis info is used to identify the best offers and adjust the campaign accordingly,Principle:Because direct-marketing messages are constantly being measured,it is easier to learn what works and modify succeeding campaigns based on results than with advertising.,15-18,Using Databases,Marketers use databases to:Keep track of customersIdentify prospectsSegment groups into customers and prospects,to send relevant offers to each groupE.g.,Carnival Cruise Lines segments customers into new customers,returning passengers,and frequent cruisers.Each group gets a different“Sail and Sign”card,each with different perks and privilegesDirect marketers use the same strategy when sending offers to customers or prospects.Better customers get more premium quality pieces than lower-usage customers who get a more modest piece.,15-19,A Circular Process,Databases are an important source of information at the both the beginning of the direct-marketing process and the end.Used to update personal information(e.g.,addresses,marital status,family status)plus get and keep info about interactions with the company.Primary database objectives:Record names of customersStore and measure ad resultsStore and measure purchasing performanceVehicle for continuing direct communication,Principle:A reliable database of customer and prospect contact information lies at the heart of effective direct marketing.,15-20,Database Management Process,Collection Point Completed warranty card,contest entry,trade show cardData EntryEntered into computer and merged with other informationData AssessmentDetermine relevant level of detailData ClusteringCreate clusters of characteristics and behaviors for segmenting or targetingData ApplicationApply to marketing strategy or problem(e.g.,send coupons)Data SharingManufacturer shares info with retailersData RefinementCorrections,updates,additions,deletions,15-21,Database Management Process,Prentice Hall,2009,15-22,Lists,Customer and prospect information including addresses,phones,emails.Can be purchased or rented from list brokers.Lists tied to demographics,psychographics,geography,hobbies,affiliations,postal routes.New lists are crated by merging and purgingThree types of lists:House lists:marketers own customers or membersResponse lists:people who respond to some type of direct-response offerCompiled lists:specific categories such as new homebuyers,graduating seniors,new mothers,15-23,Data-Driven Communications,Companies use info from previous communications to target,respond to,and interact with customers.Services like Prodigy and Melissa Data offers online buying and purchase reminders that marketers,can access.,Principle:Data-driven communication lets the brand speak with a sense of history of the customer relationship because it tracks the customers interactions with the brand.,Melissa Data,15-24,The Melissa Data Web site explains the services offered by this company in database collection and management.,Prentice Hall,2009,Visit the Site,15-25,Data-Driven Communications,Date MiningSifting and sorting through company database information to target customers and maintain a relationship.Information is used for behavior targeting(finding customers who might be interested in certain offers)and prospecting(profiling existing customers to find more,similar,potential customers).Privacy IssuesCookies(that track online visits)and loyalty cars(like frequent flyer cards)concern privacy advocates.Sometimes info is collected with the subjects permission and knowledge;sometimes without.When does efficiency in targeting become invasion of privacy?,15-26,Customer Relationship Management(CRM),Identifies and analyzes customer behavior patterns to maximize the profitability of each relationship.Sophisticated database technology links transactions and customer characteristics to help companies:Improve service that are important to most profitable customers.Attract new customers with similar characteristics.Reward the best customers.Identify and eliminate unprofitable customers.,15-27,Four Key Players in Direct-Response Marketing,AdvertisersAgenciesMedia CompaniesCustomers,15-28,Key Players:(1)Advertisers,Companies whose primary business is selling products and services by mail or phone,or direct response advertising.Retail stores who use direct marketing as a supplement to other forms of marketing.Dell,GEICO,15-29,Key Players:(2)Agencies,Advertising agenciesdepartment or separate direct-response company owned by the agencyDirect marketing agenciesindependent,full-service agencies specializing in direct responseService firmsprinting,mailing,list brokering,data management Fulfillment housesstore/ship requested information/products,15-30,Key Players:(3)Media Companies,The media that deliver messages by phone,mail,or the WebUsed to make an offer with a prospectU.S.Postal Service,15-31,Key Players:(4)Customers,Dislike intrusiveness,but appreciate convenienceTypes of customersPush-button shopper(phone)Mouse-clicking shopper(computer),15-32,Tools of Direct Marketing,Direct MailCatalogsTelemarketingDirect-Response AdvertisingWeb-based e-marketing,15-33,The Tools of Direct Marketing:(1)Direct Mail,A print advertising message for a product or service,delivered by mailMost popular methodVariable data use digital printing to highly personalize messagesUses bulk mail ratesResponse is 23%Fairly high CPM,but easy to calculate payout rate,15-34,AdvantagesTells a storyEngages attentionPersonalizes messageBuilds in feedbackReaches the unreachable,DescriptionThe medium offers a variety of formats and provides enough space to tell a complete sales story.Because direct mail has little competition when it is received,it can engage the readers attention.Because of the use of databases,it is not possible to personalize direct mail across a number of consumer characteristics,such as name,product usage,purchase history,and income.Direct mail is particularly conducive to marketing research and can be modified until the message design matches the needs of the desired target audience.Direct mail allows the marketer to reach audiences who are inaccessible by other media.,Table 15.1Advantages of Direct Mail,15-35,AdvantagesNegative perceptions CostMailing listResponse ratesVulnerability,DescriptionThe main drawback of using direct mail is the widespread perception that it is junk mail.According to a Harris-Equifax Consumer Privacy Survey,about 46%of the public see direct-mail offers as a nuisance,and 90%consider them an invasion of privacy.Direct mail has a higher cost per thousand than mass media.A great deal of this high cost is a result of postage.(However,it reaches a more qualified prospect with less waste.)Another cost factor is the maintenance of the database.To deliver an acceptable response rate,the quality of the mailing list is critical.It must be maintained and updated constantly.Because of the changing nature of mailing lists,as well as the difficulty of keeping relevant data in the database,the response rate can be a slow as 2 or 3%.Even with that low response,however,database marketers can still make money.Direct-mail delivery is vulnerable to natural disasters as well as catastrophes such as the 9/11 terrorist attacks.,Table 15.1Disadvantages of Direct Mail,15-36,Creating Effective Direct Mail,Get the attention of the targeted prospect as the envelope comes from the mailbox.Create a need for the product,show what it looks like,and demonstrate how it is used.Answer questions,as a good salesperson does,and reassure the buyer.Provide critical information about product use.Inspire confidence,minimize risk,and establish that the company is reputable.Make the sale by explaining how to buy,how to order,where to call,and how to pay for the purchase.Use an incentive to encourage a fast response.,15-37,Writing Effective Letters,Attention Pictures and benefit-oriented headlines to grab attention or generate curiosity.Personalize Use a name or,if not available,a topic(“Dear Cat Lover”).Lead in A brief yet compelling or surprising statement“Dear Friend:I could really kick myself!”The Offer Make it as early in the letter as possible.The Letter Use testimonials or other specifics to describe benefits.The Closing Repeat the offer,add incentives or guarantees,and include a clear call to action.,15-38,Issue:Trees,Water,and Waste,Direct mail uses an estimated 100 million trees and 28 billion gallons of water per yearPlus disposal and recycling costs;in Colorado,direct mail accounts for 340 million pounds of trash per year.Should direct mail be banned?Would this infringe on advertisers rights to commercial free speech?What do you do if youre an environmentally responsible advertiser?,15-39,The Tools of Direct Marketing:(2)Catalogs,A multiple-page direct mail publication showing a variety of merchandiseIncreasing in number;even while marketers are refining databases,cutting back on no.of recipientsCatalogs can drive e-commerce,Web site purchasesSpecialty catalogs are growing in number,15-40,AdvantagesTargetedEngages attentionComplete informationConvenience,DescriptionCan be directed at specific market segments.Employs high-quality design and photography(see Alstos cover).Extensive product information and comparisons are provided.Off