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www.bradford.ac.uk/management

MARKETING

COMMUNICATIONS

Week 8

Direct MarketingMartin Haley

Office : Airedale Building Room 1.3

E-mail : [email protected]

http://www.bradford.ac.uk/management

http://www.bradford.ac.uk/management



Direct marketing

“Any activity which creates and

profitably exploits a one-to-onerelationship between acompany and its customer orprospect”

Drayton Bird



Other Definitions

“Direct marketing is a method of

distribution in whichtransactions are completedbetween buyer and seller

without the intervention of asalesperson or retail outlet”

Stan Rapp 1980



Other definitions

“Direct marketing is the process in

which individual customers‟ responses

and transactions are recorded.. and thedata used to inform the targeting,execution and control of actions ..that

are designed to start, develop andprolong profitable customerrelationships” IDM 2000



TICC factor

Targeting – DM is precision targeting

Interaction- generates direct enquiries from

customers and prospects

Control – accountable, because directenquiries and orders are measurable

Continuity – increasing customer loyalty,retention and recruitment



A bit of history

Direct marketing‟s roots are in mail order

„We guarantee all our goods. If any of them

are unsatisfactory after due inspection, wewill take them back, pay all expenses andrefund the money paid for them.‟

Montgomery Ward catalogue (USA)1875



Direct Marketing types

Pedigree brand – First Direct,

Direct Line, Bordeau Direct

Hybrid brands - Next

Sales channel and brand vehicle-Tesco



Catalysts of change

Decline of personal service

Increased retail power

Demise of brand loyalty

Technology

A more demanding customer



Market fragmentation

Social & demographic changes

Economic & distribution changes

Technological changes in the media

Need for faster investment recoveryNeed for lower transaction costs



How the computer changed thescore

Cheap, powerful technology accessible

Segmentation by customer behaviour

Transactional database

Credit scoring

Electoral rollCensus data & predictive modelling

Postcode software developed



The Database

• Improves targeting

• Measures results

• Facilitatescontinuity

• Identifies key

customers

• Analyses financialperformance

• Provides predictiveinformation

• Triggers communication

• Helps marketingresearch



Lifestyle databases

•Income category

•Housing type•Motivations

•Purchases

•Sports & Hobbies

•Reading & viewing patterns



Business Markets

SIC from 1948 to now

Government statistical reports harmonised withEC

17 sections

14 sub-sections60 divisions

222 groups

503 classes – 142 subclasses



Advantages of a relational

database• ALL customers,

not just a sample

• RFV

• Who they are

• Which ones are new

• Who is lapsed or

dormant

• Who buys what product

• Continuous information

• Up to date• Analysis of marketing

activity

• Controlled testing• Forecasting



Testing

• “To find a Prince, you have to kiss an

awful lot of frogs” (anon)

• “If you rely on testing, you don‟t have to

worry about creative flair, or guesswork.Your customers will tell you” Drayton Bird



Its not what you say its whatpeople hear

• Save 50 per cent

• 50 per cent off

• Save £15

• Two for £30

• Half price

• Buy one get oneFREE



Users of direct marketing

• Banks

• Building societies

• Charities

• Airlines• Travel agents

• Real estate agents

• Computer/supplies

• Theatre/cinema tickets

• Restaurants

• Clothes shops andretailers

• Car makers

• Magazines

• Business to businesssuppliers

• Book & music clubs

• Self improvement

• Insurance• Health care



Integrating DM into the mix

Support for other activities

Personal selling and sales force

Multiple channel selling

Accessing difficult locations/ lowpriority customers

Locating new customers



Advantages of Direct Marketing

• targeting

• cost effective

• control and accountability

• immediate and flexible• opportunity to test

• International

• opportunity to build a database

• tailored messages

• long-term customers

• multifunctional



Disadvantages of DirectMarketing

– upsetting channel intermediaries

– high acquisition costs

– heavy investment cost to build database – Risk

– intrusion/invasion of privacy ( More to

Come on this!)



Direct Marketing Media

• Direct mail

• Door to door

• Inserts• Radio

• TV

• Telemarketing

• Catalogues

• Parcel inserts• Press

• The Internet



Direct Mail

• Personally addressed, sent through thepost, highly targeted.

• 15% of all promotional expenditure

• Costly £250-500 per thousand.

• As volumes have increased response

rates have fallen.• 75% opened, 53% read ( Day 2000)



Telemarketing

• Inbound and Outbound calls.

• Research, selling, building relationships.

• Immediate feedback, opportunity to overcome

objections, effectiveness easily measured.

• Canned, Framed or Customised

• Cost approx £10 per call to reach decision

maker• Carelines and Customer Feedback



Print

• Catalogues Freemans, GUS, Grattans.

• Mini Catalogues- Innovations,Kaleidoscope, Racing Green, RSPB.

• Press Ads. with direct responsemechanism.



Door to Door

• Traditional Milk, Pop, Ringtones, Tea

• Avon

• Door to door leaflet drops



New Media

• Interactive digital television, shoppingchannels

• Internet

• SMS



Interactive MarketingCommunication Tools

• Portal Advertising

• Sales Promotion

• Wired Publicity

• E-journals

• Direct Marketing online

• E-sponsorship

• Customised selling

• Web exhibitions



Portal Advertising

• Offers virtual space

• Gateway to the internet

• Ideal for banner type advertisements

• Maybe interactive TV in the future• BA‟s targeted by key word triggers

• Becoming performance based

• Why banner adverts? – Anticipation that they get clicked

– Visitors view either consciously or sub-consciously

• Costs reducing as space becomes cheaper



Sales Promotion

• Traditional methods just as applicable onthe web such as incentive schemes

• You gain point through surfing/visit to

change to products –driven by need fornew business

• Free product based business models an

example with revenue from support -Linux



Wired Publicity

• Non personal initiative

• Company has little direct control over it

• Maybe can have a strong indirectinfluence –owning your own website.

• Graffiti marketing by Third Voice – allowsusers to leave comments on websitesthey‟ve visited. Good or bad



E-journals

• Text based news groups

• Generally tightly controlled –so focus onvalue added information

• Similar to traditional trade journals –inproviding technical info to a specific reader

• Future will harness media rich applicationssee www.interscience.com)

http://www.interscience.com/

http://www.interscience.com/



Direct Marketing online

• Emails a direct marketing tool with no geographicalboundaries -global

• Encourages WOM –spreading the word called viralmarketing –an informal approach

• Consider Hotmail with 30millian subscribers “get you freee-mail at Hotmail”

• People will communicate if there is true intrinsic value

• Dm on the internet needs to be part of an integrated

approach• Consider Jungle.com‟ move from posted catalogues topersonal email catalogues



E-sponsorship

• Many websites are funded through on linesponsorship deals

• Why? –so companies can reach a largerpotential audience cost effectively

• Same thinking as applies to normal sponsorship.

• Extension is co-branding

• Sponsored content sites include newspapers

and magazines• Sponsored search engines e.g.Excite



Customised selling

• Businesses strive for mass customisationoffering unique products to individual customersleading to relationship marketing

• Internet is a enabler of this approach

• But products need to be adaptable such asinformation- intensive products

• Consider computers and Dell‟s specify your

unique system.• Many websites incorporate data gathering tool

such as cookies to tailor offerings as well asidentifying the customer



Web exhibitions

• Digital exhibition hall or conference on line

• Use of products like Canoma can extendinteractivity see (www.new-beetle.com/ )

• VRML (Vitual Reality Markup Language)though inhibited by band width isdeveloping interactivity see

(www.palm.com) and interact with a PDA

E b i id f i t t d

http://www.new-beetle.com/

http://www.palm.com/

http://www.palm.com/






E-business grid for integratedMarketing Communications

SUPPORT

Specialist support

centres

VIRTUALVirtual businessCommunities

Advanced customer

Service applications

PORTAL

Gateway/utilities

NETWORK

Entertainment

Product line extensions

INTEGRATION

D

Y N A M I C

C R E A T I V I T Y & I N N O V

A T I O N

low

low

High

High

T h l i l d l t f



Technological developments formarketing communications

• Demand is calling for quick information andformat of websites are changing from html toXML language to facilitate database driven

websites with customisable icons• Further developments include

– Real time audio/video –see RealPlayer

– Internet conferencing, see Net Meeting

– interactive chat on your website

– Virtual interactive environments

l8adirect marketing and internet

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