Chapter 17: Managing Personal Communications

Chapter 17: Managing Personal Communications

• Direct Marketing- the use of consumer-direct channels to reach and deliver goods and services to customers without using marketing middlemen.
• Direct-order Marketing-  a fast growing avenue, partly responsible to high and increased costs of reaching business markets through a sales force.
• The Benefits of Direct Marketing
• Consumers short of time and tired of traffic and parking headaches appreciate:
• Toll-free numbers
• Always open web sites
• Next day delivery
• Commitment to customer service
• Direct marketers benefits:
• Buy a list containing names of almost any group (left-handed people, millionaires)
• Customize and personalize messages to build customer relationships
• Reach interested prospects at the right moment
• Easily test alternative media and messages
• Measure responses to determine profitability
• Direct Mail
• Sending an offer, announcement, reminder, or other item to an individual consumer.
• Objectives- Marketers judge a campaign's success by the response rate.
• Target markets and prospects- Direct marketers apply the RFM (recency, frequency, monetary amount) formula to select customers according to:
•  how much time has passed since their last purchase
• how many times they have purchased
• how much they have spent since becoming a customer
• Marketers also identify prospects on the basis of:
• Age
• Sex
• Income
• Education
• Previous mail-order purchases
• Occasion
• Offer Elements
• Five elements of the offer strategy:
• The product
• The offer
• The medium
• The distribution method
• The creative strategy
• Five components of the mailing itself:
• The outside envelope
• Sales letter
• Circular
• Reply form
• Reply envelope
• Testing Elements
• Great advantages of direct marketing:
• Ability to test
• Under real marketplace conditions
• Different elements of an offer strategy
• Products
• Product features
• Copy platform
• Mailer type
• Envelope
• Prices
• Mailing lists
• Measuring Success: Lifetime Value
• By adding up the planned campaign costs, the direct marketer can determine the needed break-even response rate (net of returns and bad debts).
• Catalog Marketing
• Companies may send full-line merchandise catalogs, specialty consumer catalogs, and business catalogs, usually in print form but also as DVDs or online.
• Telemarketing
• The use of telephone and call centers to attract prospects, sell to existing customers, and provide service by taking orders and answering questions.
• Inbound telemarketing- receiving calls from customers
• Outbound telemarketing- initiating calls to prospects and customers.
• National Do Not Call Registry- established in 2003 - consumer telemarketing lost most of its effectiveness.
• Other Media for Direct-Response Marketing
• Direct marketers use all major media. Newspapers and magazines, radio ads, infomercials.
• Customer Database and database Marketing- a proprietary customer database can provide a company with significant competitive advantage.
• Companies can use their databases in five ways for direct marketing:
1. To identify prospect
2. To decide which customers should receive a particular offer
3. To deepen customer loyalty
4. To reactivate customer purchases
5. To avoid serious customer mistakes
• Five main problems can prevent a firm from effectively using database marketing:
1. Some situations are not conducive to database marketing.
• Building a customer database may not be worthwhile when:
1. The product is a once in a lifetime purchase
2. Customers show little loyalty  to a brand
3. The unit sale is very small so customer lifetime value is low
4. The cost of gathering information is too high
5. There is no direct contact between the seller and ultimate buyer
2. Building and maintaining a customer database require a large investment.
3. Employees may resist becoming customer-oriented and using the available information
4. Not all customers want a relationship with the company.
5. The assumption behind CRM may not always hold true.
• Public and Ethical Issues in Direct Marketing
• Direct marketers and their customers usually enjoy mutually rewarding relationships.