direct marketing

1. DIRECT MARKETING
PEDA BABU VADIYALA
2015MBA0155
CENTRAL UNIVERSITY OF KARNATAKA

2. Learning Objectives
• To recognize the area of direct marketing as a
communication tool.
• To know the strategies and tactics involved in
direct marketing.
• To demonstrate the use of direct marketing
media.
• To determine the scope and effectiveness of
direct marketing.

3. Case study
• The New York Jets Turn to Direct Marketing
to fill the stadium

4. Defining Direct Marketing
• Direct marketing is a system of marketing by
which organizations communicate directly
with target customers to generate a response
or transaction. This response may take the
form of an inquiry, a purchase, or a even a
vote.

5. The Growth of Direct Marketing
• Consumer Credit cards:- there are now more
than 1 billion credit cards, this makes it
feasible for consumers to purchase both low
and high tickets items through direct response
channels and assure sellers that they will be
paid.

6. Contd..
• The changing structure of American society
and the market:- success of direct marketing
is that so many Americans are now “money
rich and time poor”. Home entertainment has
reduced the time available for shopping and
has increased the attractiveness of direct
purchases.

7. Contd..
• Technological advances:- the rapid
technological advancement of the electronic
media and the internet has made it easier for
consumers to shop and for marketers to be
successful in reaching the desired target
markets.
• Miscellaneous factors:- changing values, more
sophisticated marketing techniques, and the
industry’s improved image.

8. The Role of Direct Marketing in the IMC
Program
• Combining Direct Marketing with Adverting:-
direct marketing itself a form of advertising. It
usually contains a toll-free number or a form
that request mailing information.
• Combining Direct Marketing with Public
Relations:-companies use telemarketing
activities to solicit funds for charities.
Organizations engaging in PR activities may
include toll-free number or website in their
ads promotional markets.

9. Contd..
• Combining Direct Marketing with Personal
Selling:- telemarketing and direct selling are
two methods of personal selling used to
generate sales. Customer visits auto
showrooms to test-drives new cars, the sales
person then assumes responsibility for selling
effort.

10. Contd..
• Combining Direct Marketing with Sales
Promotions:- how many times have you received
a direct mail piece notifying you of a sales
promotion or event inviting you to participate in
contest. Ex: Nordstrom company call their
existing customers to notify them special sales
promotions.
• Combining Direct Marketing with Support
Media:- adding a promotional product to a direct
mailers has proven to increase response rates.

11. Direct-Marketing Objectives
• The direct marketer usually seeks a direct
response. The objectives of the program are
normally behavior.
• Ex:-test drives, votes, contributions, and sales.

12. Developing a Database
• Improving the selection of market
segmentation:- some consumers are more likely
to be potential purchasers. By analyzing the
characteristics of the database a marketer can
target a greater potential audience.
• Stimulate repeat purchases:- once a purchase
has been made, the customers name and other
information are entered into database. These
people are proven direct marketing users who
offer high potential for repurchase and a greater
likelihood of responding to an offer.

13. Contd..
• Cross sell:- customers who demonstrates a
specific interest also constitute strong
potential for products of the same nature.
• Customer relationship management (CRM):-
the aim of CRM is to establish a relationship
with one’s customers through affinities,
personalized communications and
products/service offerings. For CRM to work
effectively a data base is required.

14. Sources of Database Information
• The U.S. Census Bureau:- census data provide
information on almost every household in the
United States. Data include household size,
demographics, income and other information.
• The U.S. Postal Service:- postal zip codes and
the extended our digit code provide
information on both household and business
locations. Typically people residing in the
same zip code have the similar demographics.

15. Contd..
• List Brokers:- many provides of lists are
available. The accuracy and timeliness of lists
vary.
• Standard Rate and Data Service:- SRDS
provides information regarding both the
consumers and business lists.

16. Contd..
• Experian Simmons Market Research Bureau:-
SMRB conducts an annual study of customers
who buy at home via mail, telephone or
internet.
• Direct Marketing Association:- the direct
marketing trade organizations promotes direct
marketing and provides statistical information
on direct marketing.

17. Determining the Effectiveness of the
Database
• The more information about customer that
can be contained in the database, the more
effective it will be, a commonly employed
method for this purpose is the RFM scoring
method (Recency, Frequency, Monetary
transactions)

18. Direct-Marketing Strategies and
Media
1) In the One-step approach the medium is
used directly to obtain an order. In which
viewer is urged to phone a toll-free number
to place an order immediately.
2) In the Two-step approach may involve the
use of more than one medium. The first
effort is designed to screen or qualify
potential buyers. The second effort generate
the response.

19. Direct Marketing Media
1) Direct Mail:- the key success of direct mail is
mailing lists. While direct mail continues to be a
favorite medium of many advertisers. An
estimated $ 44 billion in 2009.
2) Catalogs:- major participants in the direct
marketing business include catalog companies.
With an estimated 13.5 billion catalogs mailed in
2009. Ex:- companies like Nordstrom sell directly
through catalogs but also use them to inform
consumers products offerings available in the
stores.

20. Contd..
3) Broadcast Media:- direct marketing in the
broadcast industry has been truly remarkable. Over
77% of population reported that they had viewed a
direct response appeal on TV. $ 5.3 billion
advertising billings in 2009.
4) TV Spots:- In DM industry as short form
programs, these spots include direct response
commercials commonly seen on television for
products such as drugs & toiletries and video
supplies.

21. Contd..
5) Infomercials:- an infomercial is a long
commercial that is designed to fit in to 30 minutes
or 1 hour time shot. Infomercial are produced by
the advertisers and are designed to be viewed as
regular TV shows.
Ex:-both Hillary Clinton and Barack Obama used
infomercials in their presidential campaign in 2008.
6) Home shopping:- development of toll-free
telephone numbers, increase in the number of
people who shop via their TV sets through home
shopping channels.

22. Contd..
7) Print Media:- magazines and news papers are
different media to use for direct marketing. Because
these ads have to compete with the clutter of other
ads & because the space is relatively expensive,
response rates and profits may be lower than in
other media.
8) Telemarketing:- if you have a telephone you
probably do not have to be told about
telemarketing or sales by telephone. Both profit &
charitable organizations have employed this
medium effectively.

23. DIRECT SELLING
1) Repetitive person-to-person selling:- the salesperson
visits the buyers home jobsite, or other location to
sell frequently purchased products or services.
2) Non repetitive person-to-person selling:- the
salesperson visits the buyers home jobsite, or other
location to sell infrequently purchased products or
services. (Ex:- world book Encyclopedia)
3) Party plans:- the salesperson offers products or
services to group of people through home or office
parties and demonstrations.

24. Evaluating The Effectiveness Of Direct
Marketing
• Measuring the effectiveness of direct
marketing is not difficult.
• Using Cost per order (CPO) advertisers can
evaluate the relative effectiveness of an ad in
only a few minutes based on the number of
calls generated.

25. Advantages of Direct Marketing
1) Selective Reach:- DM lets the advertiser reach a
large number of people and reduces or
eliminate waste coverage.
2) Segmentation capabilities:- lists may allow
segmentation on the basis of geographic area,
occupation, demographics, and job title to
mention few.
3) Frequency:- depending up on the medium used.
It may be possible to build frequency levels.
Consumers may be annoyed to receive the same
mail repeatedly.

26. Contd..
4) Testing:- DM allows for a strong ability to test the
effectiveness of the overall program as well as
specific elements.
5) Timing:- many media requires long range
planning and have long closing dates, direct
response advertising can be much more timely.
6) Personalization:- no other medium can
personalize the message as well as direct media.
Parents with children at different age levels can be
approached, with their child name included in the
appeal.

27. Contd..
7) Costs:- while the CPM for direct mail may be
very high on an absolute and a relative basis, its
ability to specifically target the audience and
eliminate waste coverage reduces the actual
CPM.
8) Measures of effectiveness:- no other medium
can measure the effectiveness of its efforts as
well as direct response. Feed back is often
immediate and allows accurate.

28. Disadvantages of Direct Marketing
1) Image factors:- mail segmentation of this industry is
often referred to as junk mail. Many people believe
unsolicited mail promotes junk products and other
dislikes.
2) Accuracy:- people move, change occupations, and so
on and if the lists are not kept current selectivity will
decrease.
3) Content support:- In direct response advertising,
mood creation is limited to the surrounding program
and/or editorial content. Direct mail and online
services are unlikely to create a desirable mood.

29. Contd..
4) Rising costs:- as postal rates increases direct
mail profits are immediately and directly
impacted. The same is true for print costs, which
drives up the costs of mailers and catalogs.
5) Do not contact lists:- do not call lists now
exist for both land and cell phones. A do not
contact list in which consumers can choose not
to receive junk mail is under consideration by
FTC.

30. Thank You