Chapter 1

1. Chapter 1 Introduction to Direct Marketing

2. Mass marketing to one on one • Mass marketing：Mass marketing is marketing with limited discrimination whereby everyone in the targeted audience receives the same message and offer to buy goods or services. • Direct marketing: Direct marketing is an interactive system of marketing which uses one or more advertising media to effect a measurable response and transaction at any location.

3. Six key elements • Direct marketing: Direct marketing is an interactivesystem of marketing which uses one or more advertising media to effect a measurableresponse and transaction at any location.

4. Mass marketing vs. direct marketing

5. Generation of Change • Postwar 1950s ;Australian companies followed a production-based philosophy.After the war the weapons factories were converted to produce consumer and business products such as packaged foods,furnishings,office equipment,white goods and so on. • Decade of selling 1960s;By the 1960s there was an over supply of many goods in the Australian market.warehouses were full of products and these far exceeded the needs of an already saturated market.

6. Generation of Change • The 1980s deregulation; Despite a mild recession in the early 1980s there were high wages, high inflation and high demand for all sorts of products. • Globalization ; • New Marketing Environments • The last of the millennium: The 1990s commenced with the worst depression in Australia since the 1930s. Along with these cuts businesses were looking for more cost effective ways of marketing their goods and services.

7. Media Developments • Magazine consumption; it also has some of the largest classified advertising newspapers in the world. • Outdoor media; • Direct mail growth ;Direct mail growing at an incredible rate of popularity as a very personalized medium for communication, as is the telephone. • Mass Information

8. The database • Sophistication of computers and software • Examples : • Visa card • Motor vehicle service history • Student records • Opportunities to gather more information

9. Direct Marketing Trends • Growth of direct marketing; • Direct marketing and the marketing mix

10. Direct marketing and the marketing mix • The term marketing mix describes the combination of the 4 elements that are the core of an organization's marketing system. When product, price, place and promotion are successfully mixed, they form a marketing program that provides need/want-satisfying goods and services to an organization's market. • Promotional activities form the separate sub-mix that we call the promotions mix or the communications mix in an organization's marketing program. • Direct marketing is a total marketing system and the marketing mix is just as important as it is with general/mass marketing.

11. Direct marketing strategic activities: • Integrated database marketing sales promotion • Direct mail and mail order telemarketing • Direct response broadcast marketing telesales • Direct response print marketing direct selling • Catalogue marketing automatic marketing • Internet marketing online shopping

12. The marketing and direct marketing mix

13. The Role of Direct Marketing • Building strong bonds of trust & credibility • Provide up to date market intelligence • Begins at the prospect stage • The compelling factor, a call for action • Coping with Change in the 21st Century • The Internet and virtual advertising: what next? • The risk is lack of skills to cope • Potential for information overload

14. Summary • Mass marketing to one to one is about the evolution of marketing from targeting the millions to targeting a few thousand, and yielding similar or better results. • Direct marketing is more personal, response oriented, discreet and measurable. • One of the most significant influences in the growth of direct marketing has been the growth of service industries. • Business are using the latest in technology to simplify operations and diminish costs. • Regulation are changing sometimes. • Direct marketing is used from the prospecting stage through the order taking and delivery stage and onto the follow up and repeat business stage. • The basic philosophical strategy of a marketing mix hasn’t really changed, but the ratios of the elements of that mix have changed to suit the more direct approach to marketing.

15. Chapter 2 Segmentation through list selection and database management

16. Learning objectives: This chapter gives an overview of the main issues involved in the management and development or mailing lists and database marketing techniques.

17. Content: Segmentation • Lists • List management • Databases • Database management

18. The importance of good lists • Mailing lists are the key to success of any direct marketing program. Access to a wide variety or quality mailing lists in Australia is possible • There is a greater availability of lists than ever before, particularly in the business to business sector. • Within this environment there continues to be an upsurge in direct in Australia and an increase in mailing list activity.

19. Types of mailing lists • Response lists Response lists are also known as “buyers’ lists” or “mail order lists”. Response lists are made up of people who have indicated a willingness to subscribe, buy ,donate or respond by mail. • Compiled lists These are names and addresses drawn from telephone books, directories, electoral roll, registrations at seminars, memberships at associations, birth notices, new home owners, boats owners, credit card holder, building society members, insurance policyholders and so on.

20. Types of mailing lists • Business lists Business lists, also known as “vertical lists”, are classified by the type of activity. • House lists A house list or “internal list” is a company’s own in-house list (or database)

21. The role of list manager: In many instances, list owners appoint list managers to maintain and promote rental of mailing lists. List managers perform all the following functions: • Are the “clearing house” for rental availability, that is, initial contact point • Handle all administration in the rental of the list • Promote them to likely users • Process list rental orders • Clear sample mailing pieces with list owner

22. The role of list manager: • Clear mailing dates with list owners • Invoice renters on behalf of list owners • Collect payments and remit them to list owners, less commission/management fees • Assume responsibility for all promotions • Provide list owners with regular detailed activity reports—including invoicing details • Liaise with other list brokers • Assume responsibility for the maintenance of lists , if required, either in-house or with outside computer service bureaus

23. List rental sources • Direct mail house: many mailing houses also compile and manage mailing lists, particularly for industrial markets. This allows them to provide one-stop marketing service • List owners: Many list owners rent their lists directly to users. However, many list owners prefer to leave all rental arrangements to a third party, such as a list broker, list manager or direct mail house. • Computer bureaus: A computer bureau that maintains a mailing list on behalf of an owner may have the responsibility of arranging rentals to prospective users.

24. Placing a list order Checklist of information The following indicates the type of checklist of vital information that should be gathered and the questions that should be answered prior to placing a list order. • List description • Quantity /Selectivity • Coding applications • Rental rates • Deliverability guarantee • List formats • List usage • Delivery instructions

25. List rental procedures Thirteen steps to successfully renting and using a mailing list Step One You approach the rental contact to discuss the list and confirm your desire to rent it Step Two The rental contact requests a sample of your mailing package Step Three You provide a sample of your mailing package Step Four The list owner approves the sample

26. Thirteen steps to successfully renting and using a mailing list Step Five • The rental contact prepares and sends the list rental agreements to you, the renter Step Six • You check, sign and return the list rental agreement to the rental contact Step Seven • The rental contact orders your list selections Step Eight • The ordered address diskette is sent or data emailed to the mailing house or list manager/broker

27. Thirteen steps to successfully renting and using a mailing list Step Nine • You dispatch the components of your mailing package to the mailing house Step Ten • The mailing house assembles and addresses the mailing packages and lodges them with Australia Post or an alternative carrier Step Eleven • The mailing house invoices you for the processing and postage Step Twelve • The rental contact invoices you for the list rental charges Step Thirteen • You return the undeliverables — dead mail — to the rental contact

28. List Rental Costs, Terms, Conditions • Rates higher are for names of proven mail order buyers • Rates are lower for inquirers or inactive names • Rates for high profile personalised contacts may fetch as much as 30% above normal • Electronic media • Sheet listings (hard copy)

29. Mailing List Security • Storage • Seeding • Safeguards against misuse • General

30. List Processing • Merge/purge: A merge/purge program is the matching of two or more mailing lists by computer to remove duplications so that each addressee receives only on mailing piece. • List suppression

31. Mailing list maintenance Coding mailing list data There are many variables that can be keyed to a name and address, such as: • Sex • Job function title • Division or department • Company name • Telephone number • Geographics • Type of product purchased • Length of time on file • Source • Date of last transaction

32. Standard Industry Classification (SIC)

33. Example

34. Introducing Databases • A database is any collection of data organised for storage in a computer memory and designed for easy access by authorised users • The data may be in the form of text, numbers, or encoded graphics

35. A Customer Database • More than a mailing list • Evolves over time • Best way to talk to existing customers • Means for building relationships with customers • Ideal for loyalty marketing • Relevancy—information and customers • Right messages for the right people

36. What is Database Marketing? • Creating data records about customers • Using this data to analyse customer patterns • Then promote them benefit of brand loyalty • Use in low cost sales methods (telemarketing etc) • Subdivide into special segments • Tailor offers to individuals or businesses • Compare customers with non-customers • Identify prospects most likely to become customers

37. Database Characteristics • Potential & actual customers all become identified as records • Records contain marketing information • All information is accessible during communications • It records responses to all initiatives • Information is critical for marketers • Used to ensure approach is coordinated • It can often replace some market research • Automatic processing & assessing

38. Database Design • Optimum field size must be determined • All data to conform to consistent rules • Data must include postcodes • Data should include account coding • Data should always be verified • Data should be updated regularly

39. Use of databases • A database facilitates such direct marketing tasks as selecting market segments, increasing repeat purchases by building customer relationships, enhancing cross-selling and gaining competitive superiority.

40. Selection of market segments • Databases make possible the implementation of sophisticated market segmentation based on such characteristics as demographics, geographic location, previous, purchase behaviour and the likelihood of repeat business. Targeted segments are more responsive to a company’s direct marketing efforts, which leads to increased productivity and lower costs.

41. Cross selling • When a company owns several businesses that share a common database, it can use that data to cross-sell.

42. Competitive superiority As can be seen with the RACV model, a business can establish a position of competitive superiority by building and exploiting a database containing information about its existing and potential customers. Databases can even become a competitive weapon when they are used in marketing efforts directs directed at owners of a particular competitor’s product.

43. Database management with recency, frequency and monetary values • Recency, frequency and monetary (RFM) values define a company’s best customers. That is , those who are most likely to purchase again because they have bought most recently , bought most frequently , or spent a specified amount of money.

44. The strengths of database marketing • It is measurable • It can be tested • It is selective • It can be personalised • It is flexible • Databases Weaknesses

45. The weaknesses of database marketing • Expense associated with establishing and managing databases • Difficult and time consuming to keep records up to date Strengths outweigh weaknesses

46. Forms of Segmentation • Geographic • Demographic • Geo-demographic • Psychographic • Attitudinal • Behavioural

47. Geo-demographics • Geo-demographics is a form of segmentation based on the premise that a blend of socio-economic characteristics lead to attitudes which lead to consumer behaviours

48. Census Collection District (CCD) • Objectives: • Profiling • Selections • Targeting • Site location planning • Modelling

49. advantages of geo-demographics • It is relatively inexpensive method of accessing a segmented market • It is a powerful data enhancement to existing customer records • It produces high value , low cost and relatively quick market research output • It is very actionable • It is successful and effictive

50. When to use them and not to use geo-demographics • The use of geo-demographics adds most value where there is little customer information • The use of geo-demographics also adds value where transactional and behavioural data are weak. • The use of geo-demographics adds value where internal demographic information is poor. • The use of geo-demographics adds value where acquisition is a key focus in marketing activity. However, geo-demographics is unlikely to be useful where the relationship with individuals is primarily business to business rather than business to consumer.