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Chapter 19 Direct Marketing © 2006 Thomson/South-Western Introductory Scenario: Don’ Mess With Less Who was Les Wunderman? He created the Columbia House record club and “invented” the modern era of direct marketing

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Chapter 19

Direct Marketing

© 2006 Thomson/South-Western


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Introductory Scenario: Don’ Mess With Less

  • Who was Les Wunderman?

  • He created the Columbia House record club and “invented” the modern era of direct marketing

  • The genius of his idea was creating a dialogue (monthly response) with consumers which led to a building

    a relationship

Ch 19: Direct Marketing 2

© 2006 Thomson/South-Western


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Direct Marketing

  • Interactive system of marketing which uses one or more advertising media to effect a measurable response and/or transaction at any location

  • Common purposes of direct marketing

    • Close the sale

    • Identify prospects for future contacts

    • Provide in-depth information

    • Seek information from consumers

    • Foster brand loyalty

Ch 19: Direct Marketing 3

© 2006 Thomson/South-Western


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Direct Marketing: A Look Back

  • L.L. Bean founded in 1912

  • Fundamental strategy:

    • Commitment to quality

    • Descriptive copy that was informative, factual, low-key

    • Satisfaction guarantee

  • Bean built a good mailing list

  • By 1990 Bean’s sales were $600 million; by 2004, about $1.2 billion

Ch 19: Direct Marketing 4

© 2006 Thomson/South-Western


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Direct Marketing: Milestones

  • 1450–-Invention of movable type

  • 1667—First gardening catalog

  • 1744–-Franklin formulates mail-order concept of “satisfaction guaranteed”

  • 1872---Montgomery Ward catalog

  • 1886---Sears starts mail-order business

  • 1917 Direct Marketing Advertising Association founded

Ch 19: Direct Marketing 5

© 2006 Thomson/South-Western


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Direct Marketing: Milestones

  • 1928–-Third-class bulk mail introduced

  • 1950—First credit card

  • 1951–-Lillian Vernon places first ad

  • 1953–-Publishers Clearing House founded

  • 1967–-AT&T introduces toll-free 800

  • 1992–-Over 100 million in U.S. shop at home

Ch 19: Direct Marketing 6

© 2006 Thomson/South-Western


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Direct Marketing Today

  • More than just mail-order

  • A tool used by organizations throughout the world

  • Direct marketing often is not integrated with other advertising efforts

  • Three Principle Purposes

    • close a sale with a customer

    • ID prospects and develop customer info.

    • Engage customers, seek their advice and

      generate brand loyalty

Ch 19: Direct Marketing 7

© 2006 Thomson/South-Western


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What’s Driving Direct Marketing?

  • CONVENIENCE! for today’s dual income and single parent households.

  • More liberal attitudes toward using credit

  • Greater access to toll-free calling

  • Computer technology to facilitate transactions

  • On-line shopping

  • Cost per inquiry (CPI) and cost per order (CPO) advantages of direct marketing

Ch 19: Direct Marketing 8

© 2006 Thomson/South-Western


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Database Marketing

  • Knowing who the best customers are as well as what and how often they buy

  • Mailing lists

    • Internal lists

    • External lists

Ch 19: Direct Marketing 9

© 2006 Thomson/South-Western


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List Enhancement

  • Augmenting lists with externally provided lists

  • Incorporating information from external databases

    • Demographic data

    • Geodemographic data

    • Psychographic data

    • Behavioral data

Ch 19: Direct Marketing 10

© 2006 Thomson/South-Western


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The Marketing Database

  • Includes data collected directly from individual customers

  • Goal: Develop cybernetic intimacy

  • Marketing database applications

    • RFM analysis

    • Frequency-marketing programs

    • Cross-selling

  • Privacy concerns

Ch 19: Direct Marketing 11

© 2006 Thomson/South-Western


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Media Applications in Direct Marketing

  • Direct response advertising

  • Direct Mail

  • Telemarketing

  • E-mail

  • Other media

    • Magazines

    • Newspapers

    • Infomercials

Ch 19: Direct Marketing 12

© 2006 Thomson/South-Western


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Direct Mail

  • Advantages

    • Selective, flexible, little waste, lends itself to testing, uses many formats

  • Disadvantages

    • Direct mail is expensive

      • May cost 15 to 20 times more to reach a person with a direct mail piece than with a TV commercial

    • Mail lists can be plagued with bad addresses

    • Mail delivery dates can be unpredictable

Ch 19: Direct Marketing 13

© 2006 Thomson/South-Western


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E-Mail

  • Bulk e-mail is known as “spam”

  • However e-mail is an increasingly popular tool for marketers

  • Advantages

    • Cheap

    • Good response rates

  • Netiquette suggests getting consumer permission to send product information

  • Avoid bulk e-mailings

Ch 19: Direct Marketing 14

© 2006 Thomson/South-Western


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Direct Response Advertising

  • Multiple media can be deployed to generate an immediate, measurable response.

  • Most common media used are direct mail and telemarketing

  • However all conventional media can be used

Ch 19: Direct Marketing 15

© 2006 Thomson/South-Western


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Direct Response Advertising in Other Media

  • Magazines use bind-in insert card

  • Toll-free 800 numbers are vital to direct marketers using ads in newspapers and magazines

  • Infomercial

    • Long television advertisement

    • Range in length from 3 to 60 minutes

    • Keys to success

      • Testimonials

      • Frequent call to actions

      • Ensure same-day response

Ch 19: Direct Marketing 16

© 2006 Thomson/South-Western


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Coordination Challenge

  • Functional specialists across several media need to work together

  • Marketing databases can lead to interdepartmental rivalries

  • Growth of direct marketing often means cuts in other promotional budgets

  • One solution: the marcom manager

Ch 19: Direct Marketing 17

© 2006 Thomson/South-Western


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