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© 2009 South-Western, a part of Cengage Learning

Chapter 19

Direct Marketing

and Personal Selling

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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 building a relationship with the brand.

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Direct Marketing

An 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:

– Solicit and close a sale– Identify prospects for future contacts– Provide in-depth information– Seek information from consumers– Foster brand loyalty

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L.L. Bean built an entire business around direct marketing.

L.L. Bean built an entire business around direct marketing.

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Ad in Context Example

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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 2007, over $1.5 billion

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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

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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

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Direct Marketing Today

More than just mail-order. A complex, diverse 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 database– Engage customers, seek their advice and

generate brand loyalty

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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/new media facilitate

online transactions. More precise segmentation. Opportunity for relationship building. Cost per inquiry (CPI) and cost per order

(CPO) advantages of direct marketing.PPT 19-9

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Marketers, like The Adirondack Country Store, use catalogs, toll free numbers, and the Web to take advantage of direct marketing opportunities.

Marketers, like The Adirondack Country Store, use catalogs, toll free numbers, and the Web to take advantage of direct marketing opportunities.

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Ad in Context Example

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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

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Databases allow direct communication with customers like this Saturn newsletter.

Databases allow direct communication with customers like this Saturn newsletter.

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Ad in Context Example

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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

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The Marketing Database

Includes data collected directly from individual customers– RFM Analysis of customers: recency, frequency,

monetary Goal: Develop cybernetic intimacy Marketing database applications

– Frequency-marketing programs– Cross-selling

Privacy concerns– Do not call registry– Spam blockers– Opt-out options

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Media Applications in Direct Marketing

Direct response advertising Direct Mail Telemarketing E-mail Other media

– Magazines– Newspapers– Infomercials

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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

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Direct mail offers some creative opportunities.

Direct mail offers some creative opportunities.

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Ad in Context Example

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Telemarketing

Telemarketing can be a potent tool. As with direct mail:– Contacts can be selectively targeted.– The impact of programs is easy to track.– Experimentation with different scripts and delivery formats is simple and

practical.– Telemarketing involves live constructive dialogue.

Telemarketing shares many of direct mail’s limitations:– Very expensive on a cost-per-contact basis.– Names and addresses go bad as people move, so too do phone numbers - 15

percent of the numbers called are inaccurate.– Telemarketing does not share direct mail’s flexibility in delivery options. When

you reach people in their home or workplace, you have a limited span of time to convey information and request some response.

– Telemarketing is becoming a highly maligned practice in consumers.– By 2007, over 70 percent of US households had registered their phone numbers

with the “Do not call registry.”

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E-Mail

Bulk e-mail is known as “spam” Fraudulent email know as “phishing” 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

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Direct Response Advertising in Other Media

Magazines use bind-in insert cards 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

► New research shows that direct response ads are the least likely to be zapped by DVR users

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Magazine ads are ideal for Direct Response Advertising.

Magazine ads are ideal for Direct Response Advertising.

Ad in Context Example

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Closing the Sale with Direct Marketing and/or Personal Selling

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.

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The Critical Role ofPersonal Selling

The face-to-face communication and persuasion process.

Most effective with products or services that are:– Higher priced– Complicated to use– Tailored/customized to users’ needs – Offer a trade-in option– Judged at the point of purchase

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Types of Personal Selling

Order taking: accepting orders for merchandise or scheduling services; deal with existing customers who are lucrative to a business due the low cost of generating additional revenues from them. Order taking is the least sophisticated of selling efforts.

Creative selling: selling where customers rely heavily on the salesperson for technical information, advice, and service. It is the most sophisticated and complex selling effort.

System selling: entails selling a set of interrelated components that fulfill all or a majority of a customer’s needs in a particular area. System selling is often executed by a “team” of sales

people.

The missionary salesperson: calls on accounts with the purpose of monitoring the satisfaction of buyers and updating buyers’ needs. They may provide product information after a purchase. PPT 19-24

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Customer Relationship Management (CRM)

Salespeople play a critical role in cultivating long-term relationships with customers—which often is referred to as a customer relationship management (CRM) program.

CRM views the relationship with buyers as a partnership and a problem solving situation.