Thursday, December 6, 2007
Next Class- 17th December 2007
Next class we are going to look at lead generation, list generation and list compilation.
26th November 2007
Benefits of Direct Marketing
• Home shopping- hassle free & fun, convenient
• Saves Time
• Introduces a customer to a large variety of products at a time
• Comparative shopping is possible by browsing through mail order catalogues & online shopping
• Can order goods for ourselves and others also
• Sellers also benefit, they can personalize & customize messages
• Direct marketers can build a continuous relationship with each customer. Example- Parents of newborn babies may receive periodic mailings on clothing's,toys as the child grows. Example- Nestle Baby division- builds a database continuously of new mother’s & send personalized packages of gifts & advice at the key stages in the baby’s life.
• Direct Marketing Strategies can be timed to reach prospects at the right time & moments. Thus Direct Marketing- receives a higher readership-because it is sent to more interested prospects.
• Direct Marketing strategies &offers- less visible to competitors
• Measurable response to Direct Marketing campaigns- to decide the more profitable ones.
Mass Marketing versus One-to- One Marketing
Mass Marketing One to One Marketing
• Average Customer Individual Customer
• Customer anonymity (not measured) Customer profile-measured
• Standard product Customized market offering
• Mass production Customized production
• Mass distribution Individualized distribution
• Mass advertising Personalized messages
• Mass promotion Individualized incentives
• One way message Two way communication
• Share of market Share of Customers
• Economies of scale Economies of scope
• All customers Profitable customers
• Customer Attraction Customer retention
• Incomplete data Comprehensive data
Why Direct Marketing
• Environment has become more complex
• Bargaining power of the consumers has increased
• Market-more competitive
• Cost of marketing a product- increased( retail shelf cost at outlets in major cities is costly)
• Advertising budgets-high
• Less customer loyalty
• Direct marketing helps companies focus on their marketing efforts
• Consumer life-style has changed. Today,customers look out for convenience in shopping. Tele- shopping,home shopping,catalogue marketing & online-cater to core customer value
• Globalization-facilitated growth of Direct Marketing
• Niche markets with distinct preferences
• Technology
Competencies of Direct Marketing
• Direct Marketing seeks to persuade people to buy products/ services, like all other promotions
• No intermediary-cost effective-reduces intermediary mark ups to increase profits
• Precision of targeters (specific individuals)
• Calls for immediate action
• Invisible strategies
• Measurement-performance tracking,efficient allocation of resources, relationship analysis-between customer characteristics & buyer behavior in their database.
• Personalization-individual customers addressed by name/title. Information from database is used to produce a specific appeal based on consumers personal characters/past purchase behaviour.
Objectives Of Direct Marketing
• Sale of Products / Services
• Lead Generation- People who respond to Direct Marketing or are interested – ‘Lead’
• Lead Qualification-prospect
• Establishing & Maintaining Customer Relations
• Suspects-Prospects- Customers-Clients-Advocates
• Direct marketing:
- Direct Contact- direct contact with customers- emails,telephone
- Direct Response- using Mass Media TV & Internet
• Direct Mail:
- Fax mail
- Email
- Voice mail
- Product catalogue
- Solo mails
• Direct Response:
- T.V. & Radio
- Infomercials
- Space advertising-print
- Speciality advertising in print
- Binding cards(response cards-magazines)
- Speciality advertising in various media –coupons, samples etc.
Advantages of Direct Marketing
• Selective Reach:
- Reaches large number of people
- Reduces waste coverage
- Consumers with highest potential-targeted
• Segmentation Capabilities:
- Marketers maintain lists of recent product purchasers, car buyers, bank card holders.
- Segmentation through these lists on the basis of -
*Geographic area
*Occupation
*Demographics
*Psychographics
*Marketers develop effective segmentation strategies
• Frequency:
- Build frequency levels-medium used
- Direct response TV advertising-inexpensive
- Direct Mail-frequency not easily accomplished
• Flexibility:
- Direct marketing-use a variety of creative forms
- Direct marketing-direct mail-detailed copy-provides lot of information
• Timing:
- Direct Marketing-unlike other media –can be much more timely. For example direct mail can be put together very quickly-distributed to the target population.
• Personalization: Personalize the message-most effective
• Costs:
- CPM for direct mail-high;its ability to specifically target the audience-eliminating waste coverage-reduces the actual CPM
- Ads on T.V. often the lowest priced available
- Cost per customer purchase contributes to cost effectiveness of direct response advertising, cost of media-low, each sale generated- inexpensive
• Measures the Effectiveness: Measures effectiveness effectively. Feedback-immediate and accurate.
Even personal selling calls for direct marketing attempts e.g. Smokin’ Joes gives users a plethora of coupons - an innovation in DM.
The key to direct marketing is the creation of a life time value.
Time and moment – the ‘contextuality’ of the mailer is a major plus point.
Competitors do not have easy access to the information so a promotional war does not get undertaken. Such promotional wars often hurt profit margins
eg. Pepsi and Coke.
Cost of marketing product: no need to have shelf life
High cost: multi aspects of media is a costly effort- an image building exercise
Less customer loyalty: brand switchers are plenty- individual profiling cannot be established
Product layering can become very beneficial in DM.
Direct Marketing-Disadvantages
• Image Factors: Direct mail-junk mail, direct response ads on TV-often low budgeted ads for low priced products-contributes to the image-something less than the best products are marketed. Therefore, home shopping channels-promote some expensive products. Tele- marketing & Spam-irritating to many consumers-lowering the image of direct marketing industry.
• Accuracy: One of the advantages of Direct Marketing-targeting specific,potential customers. But the effectiveness-depends on the accuracy of the lists used. Lists must be updated. Selectivity decreases if lists are not kept current. Computerization-improved the currency of the lists,yet ability to generate lists-a problem.
• Content Support: Direct response advertising-creation of mood-limited to the surrounding programme and /or editorial content. Direct mail, online services-unlikely to create a desirable mood.
• Rising Costs
For successful implementation of direct marketing programmes-company-number of decisions.
• Important to determine:
-What the program’s objectives will be
-Which markets to target-through the use of a list or a marketing database
-What direct marketing strategies will be employed
-How to evaluate the effectiveness of the programme.
• To determine the effectiveness of database-database-updated frequently. RFM Scoring Method-for database
• RFM-Recency,Frequency,Monetary transactions-between the company & the customer.
• Important for data to be entered-each time a transaction is made. The company can keep a track of -
-How recently purchases have been made
-How often are they made
-What amounts of money are spent
• Tracking which products/services are used-increases the abililty to track the customer population and develop effective marketing strategies
• By analyzing the database on a regular basis-the company can - Identify trends & buying patterns-to help establish a better relationship with its customers-by more effectively meeting their needs.
• Home shopping- hassle free & fun, convenient
• Saves Time
• Introduces a customer to a large variety of products at a time
• Comparative shopping is possible by browsing through mail order catalogues & online shopping
• Can order goods for ourselves and others also
• Sellers also benefit, they can personalize & customize messages
• Direct marketers can build a continuous relationship with each customer. Example- Parents of newborn babies may receive periodic mailings on clothing's,toys as the child grows. Example- Nestle Baby division- builds a database continuously of new mother’s & send personalized packages of gifts & advice at the key stages in the baby’s life.
• Direct Marketing Strategies can be timed to reach prospects at the right time & moments. Thus Direct Marketing- receives a higher readership-because it is sent to more interested prospects.
• Direct Marketing strategies &offers- less visible to competitors
• Measurable response to Direct Marketing campaigns- to decide the more profitable ones.
Mass Marketing versus One-to- One Marketing
Mass Marketing One to One Marketing
• Average Customer Individual Customer
• Customer anonymity (not measured) Customer profile-measured
• Standard product Customized market offering
• Mass production Customized production
• Mass distribution Individualized distribution
• Mass advertising Personalized messages
• Mass promotion Individualized incentives
• One way message Two way communication
• Share of market Share of Customers
• Economies of scale Economies of scope
• All customers Profitable customers
• Customer Attraction Customer retention
• Incomplete data Comprehensive data
Why Direct Marketing
• Environment has become more complex
• Bargaining power of the consumers has increased
• Market-more competitive
• Cost of marketing a product- increased( retail shelf cost at outlets in major cities is costly)
• Advertising budgets-high
• Less customer loyalty
• Direct marketing helps companies focus on their marketing efforts
• Consumer life-style has changed. Today,customers look out for convenience in shopping. Tele- shopping,home shopping,catalogue marketing & online-cater to core customer value
• Globalization-facilitated growth of Direct Marketing
• Niche markets with distinct preferences
• Technology
Competencies of Direct Marketing
• Direct Marketing seeks to persuade people to buy products/ services, like all other promotions
• No intermediary-cost effective-reduces intermediary mark ups to increase profits
• Precision of targeters (specific individuals)
• Calls for immediate action
• Invisible strategies
• Measurement-performance tracking,efficient allocation of resources, relationship analysis-between customer characteristics & buyer behavior in their database.
• Personalization-individual customers addressed by name/title. Information from database is used to produce a specific appeal based on consumers personal characters/past purchase behaviour.
Objectives Of Direct Marketing
• Sale of Products / Services
• Lead Generation- People who respond to Direct Marketing or are interested – ‘Lead’
• Lead Qualification-prospect
• Establishing & Maintaining Customer Relations
• Suspects-Prospects- Customers-Clients-Advocates
• Direct marketing:
- Direct Contact- direct contact with customers- emails,telephone
- Direct Response- using Mass Media TV & Internet
• Direct Mail:
- Fax mail
- Voice mail
- Product catalogue
- Solo mails
• Direct Response:
- T.V. & Radio
- Infomercials
- Space advertising-print
- Speciality advertising in print
- Binding cards(response cards-magazines)
- Speciality advertising in various media –coupons, samples etc.
Advantages of Direct Marketing
• Selective Reach:
- Reaches large number of people
- Reduces waste coverage
- Consumers with highest potential-targeted
• Segmentation Capabilities:
- Marketers maintain lists of recent product purchasers, car buyers, bank card holders.
- Segmentation through these lists on the basis of -
*Geographic area
*Occupation
*Demographics
*Psychographics
*Marketers develop effective segmentation strategies
• Frequency:
- Build frequency levels-medium used
- Direct response TV advertising-inexpensive
- Direct Mail-frequency not easily accomplished
• Flexibility:
- Direct marketing-use a variety of creative forms
- Direct marketing-direct mail-detailed copy-provides lot of information
• Timing:
- Direct Marketing-unlike other media –can be much more timely. For example direct mail can be put together very quickly-distributed to the target population.
• Personalization: Personalize the message-most effective
• Costs:
- CPM for direct mail-high;its ability to specifically target the audience-eliminating waste coverage-reduces the actual CPM
- Ads on T.V. often the lowest priced available
- Cost per customer purchase contributes to cost effectiveness of direct response advertising, cost of media-low, each sale generated- inexpensive
• Measures the Effectiveness: Measures effectiveness effectively. Feedback-immediate and accurate.
Even personal selling calls for direct marketing attempts e.g. Smokin’ Joes gives users a plethora of coupons - an innovation in DM.
The key to direct marketing is the creation of a life time value.
Time and moment – the ‘contextuality’ of the mailer is a major plus point.
Competitors do not have easy access to the information so a promotional war does not get undertaken. Such promotional wars often hurt profit margins
eg. Pepsi and Coke.
Cost of marketing product: no need to have shelf life
High cost: multi aspects of media is a costly effort- an image building exercise
Less customer loyalty: brand switchers are plenty- individual profiling cannot be established
Product layering can become very beneficial in DM.
Direct Marketing-Disadvantages
• Image Factors: Direct mail-junk mail, direct response ads on TV-often low budgeted ads for low priced products-contributes to the image-something less than the best products are marketed. Therefore, home shopping channels-promote some expensive products. Tele- marketing & Spam-irritating to many consumers-lowering the image of direct marketing industry.
• Accuracy: One of the advantages of Direct Marketing-targeting specific,potential customers. But the effectiveness-depends on the accuracy of the lists used. Lists must be updated. Selectivity decreases if lists are not kept current. Computerization-improved the currency of the lists,yet ability to generate lists-a problem.
• Content Support: Direct response advertising-creation of mood-limited to the surrounding programme and /or editorial content. Direct mail, online services-unlikely to create a desirable mood.
• Rising Costs
For successful implementation of direct marketing programmes-company-number of decisions.
• Important to determine:
-What the program’s objectives will be
-Which markets to target-through the use of a list or a marketing database
-What direct marketing strategies will be employed
-How to evaluate the effectiveness of the programme.
• To determine the effectiveness of database-database-updated frequently. RFM Scoring Method-for database
• RFM-Recency,Frequency,Monetary transactions-between the company & the customer.
• Important for data to be entered-each time a transaction is made. The company can keep a track of -
-How recently purchases have been made
-How often are they made
-What amounts of money are spent
• Tracking which products/services are used-increases the abililty to track the customer population and develop effective marketing strategies
• By analyzing the database on a regular basis-the company can - Identify trends & buying patterns-to help establish a better relationship with its customers-by more effectively meeting their needs.
19th November 2007
Background
Eg. SMS, toll free numbers, lucky draws, etc.
-It is considered to be the most efficient way to supplement your advertising.Direct response-feedback
-Dual capacity-Visual, demonstration + immediate response ( eg. Calling up a toll free number)
-Although it was earlier considered only in case of niche products, today it is today thought of as one of the most effective ways to build up brand loyalty.
-One of the earliest attempts at direct marketing began with Asian Sky Shop-toll free numbers. Also Reader’s digest has always used direct marketing as it was more viable for them.
-Direct marketing is a very expensive method but it turns out to be cost effective since you tend to zero down on your target audience.( Cost per thousand )
-Direct marketing helps to build up and strengthen the relationship between the consumer and the company, thus building up on brand loyalty.
-Also, consumers, when addressed with their name by the marketer, don’t feel a part of the crowd anymore. Thus it is a more personalized and customized form.
-When the consumer shows interest, you as a marketer know that he has turned from a suspect to a prospect.
-Marketers reach their customers through a database which could be attained through post offices, Telephone directories, or the latest method- through list brokers. (People who sell database for a particular sum). However the marketer’s job is not to just procure the database, but also to segment it and update it properly, because these databases may become redundant over time. ( Eg. Change in address, people going abroad, etc.)
-In order to incur profits, the cost of the product is determined after fixing the cost of direct marketing for one consumer.
Defining Direct Marketing
• Direct Marketing is a system of marketing by which organisations directly communicate with target customers to generate a response or transaction. This response may take the form of an inquiry, a purchase, or even a vote.
• It is “the total of activities by which the seller, in effecting the exchange of goods or/and services with the buyer, directs efforts to target audience using one or more media (direct selling, direct mail,telemarketing,direct-action advertising, catalogue-selling, cable TV selling etc) for the purpose of soliciting a response by phone, mail, or personal visit from a prospect or customer.”- Peter Bennet
Direct Marketing – Total Marketing – involves-
• Marketing Research
• Segmentation
• Evaluation
• Uses a set of direct- response media-direct mail, telemarketing, interactive TV, print, the internet and other media.
• Media-Tools for direct marketers-communication process.
Growth of Direct Marketing: 15th Century – the era of Printing Press. Ben Franklin-early 1700s-successful direct marketer.
• In 1880s-Warren Sears & Montgomery Ward- started in a major way-development & expansion of the U.S. Postal Service-catalogues-rural & urban dwellers.
Other reasons:
• Consumer Credit Cards.
• Direct Marketing syndicates
• Changing structure of society
• Changing market scenario
• Technological advances
Miscellaneous Factors:
• Improved image of industry
• Sophisticated marketing techniques
• Direct Marketing-an interactive system of marketing which uses one or more advertising media to affect the measurable response or transaction at any level.
• Direct Marketing is used for-
-Niche Products
-Service Products/Programmes
Traditionally Direct Marketing was done by
• Catalogues
• Direct Mail
• Telemarketing
Basic Reasons for the Growth of Direct Marketing
1) Changing Market Place
• Growth of Delivery systems
• Affordable computing power & growth of databases (databases-used for future purpose)
2) Changing Role of Direct Marketing
• Building &maintaining Customer Relationship
• To maximize Sales
• To maximize Customer loyalty
3) Changing Cost Structures
• It is getting to be more expensive to use mass-media
• Advertising is done through line extensions
• (advertising is above the line expenditure )
• Increasing clutter in Media
4) Technological Development
• Changes in the market place- B2B selling-it has increased or had tremendous growth
• The change place of market –example-home, office etc.
The Three Key Elements of Direct Marketing
• Interactive System- Two way communication between the marketer & his/her target market. The response or non-response of the customer completes the communication leap-in the Direct Market process.
Example: Filling in the response coupon by the customer & mailing it
• Measurability of Response- The number of coupons indicates the response rate to marketer’s communication.
• Direct Marketing activities not Location specific-Marketer can interact with customer over phone,through mail, Internet.
Eg. SMS, toll free numbers, lucky draws, etc.
-It is considered to be the most efficient way to supplement your advertising.Direct response-feedback
-Dual capacity-Visual, demonstration + immediate response ( eg. Calling up a toll free number)
-Although it was earlier considered only in case of niche products, today it is today thought of as one of the most effective ways to build up brand loyalty.
-One of the earliest attempts at direct marketing began with Asian Sky Shop-toll free numbers. Also Reader’s digest has always used direct marketing as it was more viable for them.
-Direct marketing is a very expensive method but it turns out to be cost effective since you tend to zero down on your target audience.( Cost per thousand )
-Direct marketing helps to build up and strengthen the relationship between the consumer and the company, thus building up on brand loyalty.
-Also, consumers, when addressed with their name by the marketer, don’t feel a part of the crowd anymore. Thus it is a more personalized and customized form.
-When the consumer shows interest, you as a marketer know that he has turned from a suspect to a prospect.
-Marketers reach their customers through a database which could be attained through post offices, Telephone directories, or the latest method- through list brokers. (People who sell database for a particular sum). However the marketer’s job is not to just procure the database, but also to segment it and update it properly, because these databases may become redundant over time. ( Eg. Change in address, people going abroad, etc.)
-In order to incur profits, the cost of the product is determined after fixing the cost of direct marketing for one consumer.
Defining Direct Marketing
• Direct Marketing is a system of marketing by which organisations directly communicate with target customers to generate a response or transaction. This response may take the form of an inquiry, a purchase, or even a vote.
• It is “the total of activities by which the seller, in effecting the exchange of goods or/and services with the buyer, directs efforts to target audience using one or more media (direct selling, direct mail,telemarketing,direct-action advertising, catalogue-selling, cable TV selling etc) for the purpose of soliciting a response by phone, mail, or personal visit from a prospect or customer.”- Peter Bennet
Direct Marketing – Total Marketing – involves-
• Marketing Research
• Segmentation
• Evaluation
• Uses a set of direct- response media-direct mail, telemarketing, interactive TV, print, the internet and other media.
• Media-Tools for direct marketers-communication process.
Growth of Direct Marketing: 15th Century – the era of Printing Press. Ben Franklin-early 1700s-successful direct marketer.
• In 1880s-Warren Sears & Montgomery Ward- started in a major way-development & expansion of the U.S. Postal Service-catalogues-rural & urban dwellers.
Other reasons:
• Consumer Credit Cards.
• Direct Marketing syndicates
• Changing structure of society
• Changing market scenario
• Technological advances
Miscellaneous Factors:
• Improved image of industry
• Sophisticated marketing techniques
• Direct Marketing-an interactive system of marketing which uses one or more advertising media to affect the measurable response or transaction at any level.
• Direct Marketing is used for-
-Niche Products
-Service Products/Programmes
Traditionally Direct Marketing was done by
• Catalogues
• Direct Mail
• Telemarketing
Basic Reasons for the Growth of Direct Marketing
1) Changing Market Place
• Growth of Delivery systems
• Affordable computing power & growth of databases (databases-used for future purpose)
2) Changing Role of Direct Marketing
• Building &maintaining Customer Relationship
• To maximize Sales
• To maximize Customer loyalty
3) Changing Cost Structures
• It is getting to be more expensive to use mass-media
• Advertising is done through line extensions
• (advertising is above the line expenditure )
• Increasing clutter in Media
4) Technological Development
• Changes in the market place- B2B selling-it has increased or had tremendous growth
• The change place of market –example-home, office etc.
The Three Key Elements of Direct Marketing
• Interactive System- Two way communication between the marketer & his/her target market. The response or non-response of the customer completes the communication leap-in the Direct Market process.
Example: Filling in the response coupon by the customer & mailing it
• Measurability of Response- The number of coupons indicates the response rate to marketer’s communication.
• Direct Marketing activities not Location specific-Marketer can interact with customer over phone,through mail, Internet.
Group Project – Due on the 4th of February 2008
Presentation is compulsory
Choose a product of your choice and formulate a DM plan keeping in mind. Here one must come up with mail order as well as direct mail
a) Product offering
b) Lead generation
c) Loyalty programmes
d) Data base development
e) Offers
f) Customer Relationship Management (CRM)
Choose a product of your choice and formulate a DM plan keeping in mind. Here one must come up with mail order as well as direct mail
a) Product offering
b) Lead generation
c) Loyalty programmes
d) Data base development
e) Offers
f) Customer Relationship Management (CRM)
Individual Project-Due on th 14th of January,2008
Topic 1
A famous chef has published a book ‘Thai Exotic’ on Thai cookery exclusively for the Indian market. He has taken special care by recommending easily available Indian ingredients and condiments instead of Thai names. To begin with, the book will be marketed within Mumbai city. The retail price of the book is Rs. 1325. Gross Profit on the sales per book is 40%. The purchase of a book enables you to a free gift of 2 wine glasses costing Rs. 50 each. As a direct marketing consultant, give your recommendations and formulate a plan. Do you recommend direct mail or mail order? If direct mail, then suggest
a) Your methodology of soliciting list. (Based on how you segment your target audience)
b) What would your trigger message on the envelope be?
c) What would be your incentive or quick response line? ( the ‘You’ approach, or use of the AIDA model to attract consumers)
d) Your idea of a continuity programme.
(How many books are to be sold? Do we factor in the cost of procuring the database?)
If mail order then suggest:
a) Media strategy and recommendations
b) What would be your headline of the mail order?
c) What would be your incentive or quick response line?
d) Your idea of Customer Relationship Management (CRM)?
OR
Topic 2
Formulate a direct marketing plan for an organizer of theme birthday parties keeping in mind the following:
a) Product offering
b) Lead generation
c) Data base development
d) Guarantees offered
e) Quick response or incentive lines
f) Continuity programme ( how will you keep your customer with you-cross selling, upselling, etc)
A famous chef has published a book ‘Thai Exotic’ on Thai cookery exclusively for the Indian market. He has taken special care by recommending easily available Indian ingredients and condiments instead of Thai names. To begin with, the book will be marketed within Mumbai city. The retail price of the book is Rs. 1325. Gross Profit on the sales per book is 40%. The purchase of a book enables you to a free gift of 2 wine glasses costing Rs. 50 each. As a direct marketing consultant, give your recommendations and formulate a plan. Do you recommend direct mail or mail order? If direct mail, then suggest
a) Your methodology of soliciting list. (Based on how you segment your target audience)
b) What would your trigger message on the envelope be?
c) What would be your incentive or quick response line? ( the ‘You’ approach, or use of the AIDA model to attract consumers)
d) Your idea of a continuity programme.
(How many books are to be sold? Do we factor in the cost of procuring the database?)
If mail order then suggest:
a) Media strategy and recommendations
b) What would be your headline of the mail order?
c) What would be your incentive or quick response line?
d) Your idea of Customer Relationship Management (CRM)?
OR
Topic 2
Formulate a direct marketing plan for an organizer of theme birthday parties keeping in mind the following:
a) Product offering
b) Lead generation
c) Data base development
d) Guarantees offered
e) Quick response or incentive lines
f) Continuity programme ( how will you keep your customer with you-cross selling, upselling, etc)
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