chapter sixteen

Relationship Building:

Direct Marketing, Personal Selling,

and Sales Promotion

McGraw-Hill/IrwinEssentials of Contemporary Advertising Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

16-2

Objectives_1

Discuss the importance of relationship marketing and IMC

Define direct marketing and discuss its role in IMC

Explain the importance of databases to direct marketers

Discuss the role of personal selling in an IMC program

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Objectives_2

Describe the advantages and drawbacks of personal selling

Define sales promotion and discuss its importance as a communications tool

Identify the benefits and drawbacks of sales promotion

Explain the difference between push and pull strategies

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Direct Marketing

Any direct communication to a consumer or business recipient that is designed to generate a response in the form of an order, a request for further information, and/or a visit to a store or other place of business for the purchase of a specific product(s) or services.

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Largest Direct-Response Agencies

Draft Worldwide Rapp Collins Wunderman Ogilvy One McCann

Relationship Marketing

Brann Grey Direct Targetbase

Marketing Devon Direct Protocol Marketing

Services

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Database Marketing

The development and maintenance of a data pool on current and prospective customers used to target, segment, and grade customers

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Databases and Direct Marketing

Enables calculation of customer lifetime value

Utilizes loyalty programs to build customer relationships

Includes response to offers and offer details as new data points in database

Enables use of RFM formula to identify best customers

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Exhibit 16-2 RFM Formula

The RFM formula is a model that provides marketers with a method for determining the most valuable customers in a database based on recency, frequency, and monetary

value. The larger a customer’s cumulative point score, the more likely they are to make additional purchases.

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Advantages of Direct Marketing

Development of a good database

Relationship approach to marketing

Segmentation

Highly targeted messages

Accountability Measurability Efficient Unlikely to draw

competitive attention

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Drawbacks to Direct Marketing

Bad reputation No physical store

experience Lack of prestige

associated with medium

Cost per contact Clutter Privacy concerns Lack of information

control for consumers

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Types of Direct Response Advertising

Direct Mail

InteractiveCatalogSales

PrintBroadcast

16-12

Profile of Buyers from Infomercials

Female Middle aged Caucasian

Employed full-time Married with children

Suburbanite $55,000 mean household income

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Personal Selling

The interpersonal communication process by which a seller ascertains and then satisfies the needs of a buyer to the mutual, long-term benefit of both parties

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Advantages of Personal Selling

Personal nature Persuasion power Ability to deal with

objections Instant feedback Tailored marketing

messages

Demonstration ability

Relationship-based Ability to ask for the

close Effectiveness

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Drawbacks of Personal Selling

Labor intensive High cost per contact Low reach Few economies of scale Poor reputation Dependence upon salespeople

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Functions of Salespeople

Information Gathering

Information Providing

Order Fulfillment

Relationship Building

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Sales Promotion

A direct inducement that offers an incentive anywhere along the marketing route to enhance or accelerate the product’s movement from producer to consumer

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Sales Promotion Elements

May be used anywhere in the marketing channel (trade and consumer)

Involves a direct inducement for the target to take some specific action

Designed to change the timing of a purchase or to shift inventory another channel member

Used as a value-added tool

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Effective Sales Promotions

Set specific objectives

Set a relevant theme Involve the trade Coordinate with

campaign Understand roles of

basic techniques

Use simple copy Use contemporary

graphics Clearly

communicate concept

Pretest and measure response

Reinforce brand message and image

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Sales Promotion Strategies

ProducerMarketing

communicationsReseller

End user

Marketing communications

Push Strategy

End user

ResellerProducer Request product Request product

Pull StrategyMarketing communications

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Types of Trade Sales Promotions

Slotting allowances Trade deals Display allowances Buyback allowances Ad allowances Co-op advertising Dealer premiums Conventions/ meetings

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Types of Consumer Sales Promotions

POP materials Coupons Convenience cards Cents-off promotions Refunds/rebates Premiums Sampling Combination offers Contests/sweepstakes

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Key Terms_1

Advertising allowance

Buyback allowance Catalog Cents-off promotion Combination offer Company

convention

Consumer sales promotion

Contest Convenience card Cooperative

advertising Coupon Customer lifetime

value

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Key Terms_2

Database Database marketing Database

management Database query Dealer meeting Direct marketing

Direct-response advertising

Direct sales Direct selling Display allowance Diverting Electronic coupon Forward buying

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Key Terms_3

Freestanding inserts Game In-store sampling Linkage media Loyalty program Personal selling Point-of-purchase

materials

Polybagging Premium Pull strategies Push money Push strategies Rebate RFM formula Sales promotion

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Key Terms_4

Sampling Slippage Slotting allowance Spiff Sweepstakes

Telemarketing Trade advertising Trade concentration Trade deal Trade promotion