MARKETING COMMUNICATIONS

Week 8 Direct Marketing

Martin Haley Office : Airedale Building Room 1.3 E-mail : M.Haley1@Bradford.ac.uk

www.bradford.ac.uk/management

Direct marketing
Any activity which creates and profitably exploits a one-to-one relationship between a company and its customer or prospect
Drayton Bird

Other Definitions
Direct marketing is a method of distribution in which transactions are completed between buyer and seller without the intervention of a salesperson or retail outlet
Stan Rapp 1980

Other definitions
Direct marketing is the process in which individual customers responses and transactions are recorded.. and the data used to inform the targeting, execution and control of actions ..that are designed to start, develop and prolong profitable customer relationships IDM 2000

TICC factor
Targeting DM is precision targeting
Interaction- generates direct enquiries from customers and prospects

Control accountable, because direct enquiries and orders are measurable Continuity increasing customer loyalty,

retention and recruitment

A bit of history
Direct marketings roots are in mail order
We guarantee all our goods. If any of them are unsatisfactory after due inspection, we will take them back, pay all expenses and refund 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 vehicleTesco

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 recovery

Need for lower transaction costs

How the computer changed the score

Cheap, powerful technology accessible
Segmentation by customer behaviour Transactional database Credit scoring Electoral roll

Census data & predictive modelling

Postcode software developed

The Database
Improves targeting Measures results Facilitates continuity Identifies key customers Analyses financial performance Provides predictive information Triggers communication Helps marketing research

Lifestyle databases
Income category
Housing type

Motivations
Purchases

Sports & Hobbies

Reading & viewing patterns

Business Markets
SIC from 1948 to now
Government statistical reports harmonised with EC

17 sections
14 sub-sections

60 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 dont have to worry about creative flair, or guesswork. Your customers will tell you Drayton Bird

Its not what you say its what people hear

Save 50 per cent Two for 30 50 per cent off Save 15

Half price
Buy one get one FREE

Users of direct marketing

Banks Building societies Charities Airlines Travel agents Real estate agents Computer/supplies Theatre/cinema tickets Restaurants Clothes shops and retailers Car makers Magazines Business to business suppliers 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/ low priority 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 Direct Marketing

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 the post, 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 response mechanism.

Door to Door
Traditional Milk, Pop, Ringtones, Tea Avon Door to door leaflet drops

New Media
Interactive digital television, shopping channels Internet SMS

Interactive Marketing Communication 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 BAs 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 on the web such as incentive schemes You gain point through surfing/visit to change to products driven by need for new 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 indirect influence owning your own website. Graffiti marketing by Third Voice allows users to leave comments on websites theyve visited. Good or bad

E-journals
Text based news groups Generally tightly controlled so focus on value added information Similar to traditional trade journals in providing technical info to a specific reader Future will harness media rich applications see www.interscience.com)

Direct Marketing online

Emails a direct marketing tool with no geographical boundaries -global Encourages WOM spreading the word called viral marketing an informal approach Consider Hotmail with 30millian subscribers get you free e-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 to personal email catalogues

E-sponsorship
Many websites are funded through on line sponsorship deals Why? so companies can reach a larger potential 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 customisation offering unique products to individual customers leading to relationship marketing Internet is a enabler of this approach But products need to be adaptable such as information- intensive products Consider computers and Dells specify your unique system. Many websites incorporate data gathering tool such as cookies to tailor offerings as well as identifying the customer

Web exhibitions
Digital exhibition hall or conference on line Use of products like Canoma can extend interactivity see (www.new-beetle.com/) VRML (Vitual Reality Markup Language) though inhibited by band width is developing interactivity see (www.palm.com) and interact with a PDA

E-business grid for integrated Marketing Communications

DYNAMIC CREATIVITY & INNOVATION
High

SUPPORT Specialist support centres

VIRTUAL
Virtual business Communities Advanced customer Service applications

PORTAL
Gateway/utilities
low low

NETWORK
Entertainment
Product line extensions
High

INTEGRATION

Technological developments for marketing communications

Demand is calling for quick information and format of websites are changing from html to XML 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