Chapter 10

Direct Marketing

10-1

1. Identify purposes served by direct marketing.

2. Explain the popularity of direct marketing.

3. Distinguish a mailing list from a marketing database, and review the applications of each.

4. Describe the media used by direct marketers in delivering messages to consumers.

10-2

Direct Marketing Today

• Direct marketing has its roots in catalog companies such as L.L.Bean.

• Many types of organizations are increasing their expenditures on direct marketing. These expenditures serve three primary purposes:

• Closing sales with customers

• Identifying prospects for future contacts

• Offering information and incentives to foster brand loyalty

10-3

Growing Popularity

• The growing popularity of direct marketing can be attributed to several factors.

• Convenience—credit cards, 800 numbers, and the Internet

• Computer power—building and mining large customer information files

• Tracking—lends itself to current emphasis on measurable outcomes

10-4

Database Marketing

• A mailing list is a file of names and addresses of current or potential customers, such as lists that might be generated by a credit card company or a catalog retailer.

• Internal lists—valuable for creating relationships with current customers

• External lists—useful in generating new customers

• List enhancement—adding demographic, geodemographic, psychographic, or behavioral data

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Database Marketing, Continued

• A marketing database is a natural extension of the internal list, but it also includes information about individual customers and their specific preferences and purchasing patterns.

• A marketing database allows organizations to identify and focus their efforts on their best customers using a recency, frequency, and monetary (RFM) analysis.

• Recognizing and reinforcing preferred customers helps build loyalty:

• Follow-up letters, discounts, coupons

• Frequency-marketing programs—database, benefit package, communications strategy

• Cross-selling opportunities also emerge once a database is in place.

• One can gain keener information about the motivations of current best customers, and insights usually emerge about how to attract new customers.

• However, companies must be sensitive to consumer’s rights and wishes to protect their privacy.

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Media Used in Direct Marketing

• Direct-marketing programs emanate from mailing lists and databases, but there is still a need to deliver a message to the customer.

• Direct mail, telemarketing, and email are the most common means used in executing direct marketing programs. Email is most successful when it avoids spam and uses opt-in lists.

• Because the advertising done as part of direct-marketing programs typically requests an immediate response from the customer, it is known as direct-response advertising.

• Conventional media such as newspapers, magazines, and radio also can be used to request a direct response by offering an 800 number or a Web address to facilitate customer contact.

• Television makes use of the infomercial for direct-response advertising. Successful infomercials require:• a same-day response• frequent closes• testimonials (celebrities do no harm, but are not essential)

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