18C

INTEGRATED MARKETING

COMMUNICATIONS - 2

DIRECT MARKETINGLO5

18-2

ANY DIRECT COMMUNICATION WITH POTENTIAL BUYERS

[PROPSECTS] TO OBTAIN AN IMMEDIATE RESPONSE

TRENDS CAUSING GROWTH IN DIRECT MARKETING

• Growth and specialization of databases allows better definition of market segments and niche marketing.– Marriott, Hilton [from 4 target market

segments in 2000 to 12 or 13 in 2010]

• Lack of time drives the need for convenience.– Both parents work combined with the

social schedules of the children reduce the available time to shop.

FIGURE 18-8FIGURE 18-8 Business use and response rates of popular forms of direct marketing.

18-4

BENEFITS OF DIRECT MARKETING

Benefits to customersBenefits to customers Benefits to companiesBenefits to companies

Fun, Convenient & Hassle-Free

Fun, Convenient & Hassle-Free

Saves Time / Convenience

Saves Time / Convenience

Improved SelectionImproved Selection

More Comparison Shopping

More Comparison Shopping

Buy Mailing Lists for Almost Any Market

Buy Mailing Lists for Almost Any Market

Customized OffersCustomized Offers

Ongoing Relationships with Customers

Ongoing Relationships with Customers

Timed to Achieve Higher Readership & Response

Timed to Achieve Higher Readership & Response

Order Products for Themselves or Others

Order Products for Themselves or Others Direct Access to MarketsDirect Access to Markets

Not Location DependentNot Location Dependent

More Competitive Prices More Competitive Prices

Lower Marketing CostsLower Marketing Costs

Reduced Inventory ?Reduced Inventory ?

Shopping Privacy Shopping Privacy

MASS vs. 1:1 MARKETING

Average ConsumerAverage Consumer

Customer AnonymityCustomer Anonymity

Standard ProductStandard Product

Mass ProductionMass Production

Mass DistributionMass Distribution

Mass AdvertisingMass Advertising

Individual CustomerIndividual Customer

Customer ProfileCustomer Profile

Customized Market OfferingCustomized Market Offering

Customized ProductionCustomized Production

Individualized DistributionIndividualized Distribution

Individualized MessagesIndividualized Messages

Mass PromotionMass Promotion 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-Way MessageOne-Way Message

Economies of ScaleEconomies of Scale

Share of MindShare of Mind

All CustomersAll Customers

Customer AttractionCustomer Attraction

Mass Marketing One-to-One Marketing

DIRECT MARKETING COST / CONTACT

Sales Call

Trade Show

Internet

Direct Mailer

Catalog

Letter

Telesales

Bus Pub

Type of Contact

Cost per contact

THE ROLE OF DIRECT MARKETING

OTHER ACCOUNTS

RESELLER ACCOUNTS

NATIONAL ACCOUNT, OEM, DIRECT & FIELD

SALES FORCES

MARKETS OR INDUSTRIES

LARGER ACCOUNTS

SMALLER ACCOUNTS

HOW DO WE COST-EFFECTIVELY REACH TARGET MARKETS OF SMALL ACCOUNTS?

SEGMENTATION IS CRITICAL TO DIRECT MARKETING SUCCESS AND COST-

EFFICIENCY

A firm has a fish or fish related product, so it targets 44511 & 44522 [71,095 firms].

More information is needed to also target 44512, 44521, 44529, and 445299 [48,513 firms].

Approaching all 148,528 firms in 445 would have resulted in a large waste of money. You may have spent money going after up to 77,433 firms that do not have any use for the product!

U.S. DIRECT MARKETING 2005“U.S. Direct Marketing Today: Economic Impact 2005”, The Direct

Marketing Association

• $161.3 billion generate $1.85 trillion in sales– Every dollar spent returned $11.49 in revenue– ~13% of the $14 trillion U.S. economy [GDP]– 52% of expenditures were for B→C– 48% of expenditures were for B→B

• Responsible for employing 7.7% of the workforce

• Accounted for 47.9% of total advertising [2008 estimated at 53%]

U.S. DIRECT MARKETING 2005“U.S. Direct Marketing Today: Economic Impact 2005”, The Direct

Marketing Association

• By type of expenditure– Direct mail & catalog 31%– Telephone 29%– Internet mktg / comm / email / insert mail 9%

• 2007 – growing at more than 14% / year

• By expenditure objective– Lead generation [heavily B2B] 48%– Direct order generation [heavily B2C] 40%

U.S. DIRECT MARKETING 2005“U.S. Direct Marketing Today: Economic Impact 2005”, The Direct

Marketing Association

• Industry leaders

– Non-store retailers– Financial institutions– Motor vehicle manufacturers– General and apparel retailing

CONSUMER DIRECT MARKETING

AVON TUPPERWARE

DOORTO

DOOR

PARTIES

IN-HOMESALES

CONSUMERTYPES

CONSUMER DIRECT MARKETING

D O O RT O

D O O R

P A R T IE S

IN -H O M ES A L E S

C A T A L O G F L Y E R S

D IR E C TM A IL

C O N S U M E RT Y P E S

Coldwater Creek JUNK MAIL

CONSUMER DIRECT MARKETING

D O O RT O

D O O R

P A R T IE S

IN -H O M ES A L E S

C A T A L O G F L Y E R S

D IR E C TM A IL

IN T E R N E T

C O N S U M E RT Y P E S

INTERNET BENEFITS*

CONSUMER BUSINESS

CONVENIENCE

SPEED-TIME-PLACE

DIRECT MARKET ACCESS -MICROMARKETING POTENTIAL

COMPREHENSIVE PRODUCT SELECTION AND INFORMATION

“THE OVERWHELMED CONSUMER”

SALES-PROFITS-COST REDUCTION

STEALING YOUR IDENTITY

                                                                                                            

SOURCE: http://www.msnbc.com/news/660096.asp

INTERNET – THE DIFFERENCES ARE …

Market

Research

Target

Markets

Channels Sales

Orgs.

IMC

PREVIOUSLY ALL SEPARATE VEHICLES

FASTER - ITS OWN

ITS OWN ITS OWNEASIER ACCESS

DIRECT NOW

INTERNET – THE DIFFERENCES ARE …

CHANNEL

MARKET

RESEARCH

TARGET

MARKETS

CHANNELS SALES

ORGS.

IMC

ARE NOW INTEGRATED INTO ONE NEW APPROACH!

INTERNET ISSUES – STRATEGIC FIT

• WHAT TYPE OF BUSINESS DO YOU WANT TO BE IN?

• HOW DOES THE INTERNET FIT WITH THE REST OF THE BUSINESS?– ORDER PROCESSING AND ORDER SIZE

– COST OF DISTRIBUTION

– TYPES OF TRANSACTIONS

CONSUMER DIRECT MARKETING

D O O RT O

D O O R

P A R T IE S

IN -H O M ES A L E S

C A T A L O G F L Y E R S

D IR E C TM A IL

IN T E R N E T

E N DC A P

F L O O RS T A N D

C O U N T E RS T A N D

T A GA L O N G

V E N D IN GM A C H IN E

P O IN T -O F -P U R C H A S E

C O N S U M E RT Y P E S

COUNTER STAND

COUNTER STAND

END CAP FLOOR STANDS

KIOSK MARKETING

CONSUMER DIRECT MARKETING

D O O RT O

D O O R

P A R T IE S

IN -H O M ES A L E S

C A T A L O G F L Y E R S

D IR E C TM A IL

IN T E R N E T

E N DC A P

F L O O RS T A N D

C O U N T E RS T A N D

T A GA L O N G

V E N D IN GM A C H IN E

P O IN T -O F -P U R C H A S E T E L E S A LE S /T E L E M A R K E T IN G

CONSUM ERT Y P E S

CONSUMER DIRECT MARKETING

D O O RT O

D O O R

P A R T IE S

IN -H O M ES A L E S

C A T A L O G F L Y E R S

D IR E C TM A IL

IN T E R N E T

E N DC A P

F L O O RS T A N D

C O U N T E RS T A N D

T A GA L O N G

V E N D IN GM A C H IN E

P O IN T -O F -P U R C H A S E T E L E S A L E S

M A G A Z IN E S N E W S -P A P E R S

A DIN S E R T S

CO NSUM ERT Y P E S

NEWSPAPER STICKERS

CONSUMER DIRECT MARKETING

D O O RT O

D O O R

P A R T IE S

IN -H O M ES A L E S

C A T A L O G F L Y E R S

D IR E C TM A IL

IN T E R N E T(E -C O M M E R C E )

E N DC A P

F L O O RS T A N D

C O U N T E RS T A N D

T A GA L O N G

V E N D IN GM A C H IN E

P O IN T -O F -P U R C H A S E T E L E S A L E SA N D

T E L E M A R K E T IN G

M A G A Z IN E S N E W S -P A P E R S

IN S E R T S T V / R A D IOS H O P P IN G

D iIR R E S P O N S E

CO NSUM ERT Y P E S

Direct-response TV marketing

-QVC, HSN, the Jewelry Channel, …

DIRECT MARKETING LIFETIME VALUE:Membership Program Example

Cost of Campaign: $10,000 -$10,000

100 new members @ $70 $ 7,000 - 3,000

1st year “cost” $ 3,000

2d Year

80 renewals @ $70 $ 5,600 + 2,600

3d Year… $ 5,600 + 8,200

CUSTOMER SERVICESEtch-A-Sketch Tech Support

My Etch-A-Sketch has all of these funny little lines all over the screen.

Pick it up and shake it.

How do I turn my Etch-A-Sketch off? Pick it up and shake it.

How do I keep from losing my Etch-A-Sketch documents in the middle of my work?

Stop shaking it.