Downtown Port Hope
Precision Marketing: Direct
Back To Basics
Session 2
Albert Mastromartino
Copyright © 2015 Albert Mastromartino; Sir Sandford Fleming College; Other Rights holders as indicated . All Rights Reserved.
Objective:
 To explore a practical, business-building
approach to marketing in our current
environment
 Recap highlights of Marketing Basics
 Exploring the basics of Direct Marketing as a
platform for Online/Digital marketing
Agenda
 Recap and Context
 Continuation from Last Session
 Direct Marketing Basics: The Link to Digital
 Wrap-up
MARKETING IS…
Marketing Is…
Organization’s
Needs
Customer’s
Needs
MARKETING
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Marketing Is…
Anything and everything that:
• Identifies Customer wants/needs
• Satisfies Customer wants/needs
• Satisfies Our Organization’s needs
(All three necessary)
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The Marketing Mix
ENVIRONMENTAL SCAN
Needs
Product
Price
Marketing
Communications
Distribution
(Promotion)
(Place)
7
THE CUSTOMER
The Customer:
Marketing for Profit (vs. Revenue)
SHARE OF WALLET vs. SHARE OF MARKET?
 Customer always right?
 Pareto principle 80/20
 6-8 times more expensive to acquire new customer
than selling more to existing customer
CRM: CUSTOMER RELATIONSHIP MARKETING
Customer Goals of Relationship Marketing
SEGMENTATION
Segmentation
Regular
Percolated
Coffee
Regular
Percolated
Coffee
Regular
Percolated
Coffee
Regular
Instant
Coffee
Decaffeinated
Percolated
Coffee
Regular
Instant
Coffee
Decaffeinated
Instant
Coffee
Regular
Percolated
Coffee
Decaffeinated
Percolated
Coffee
Regular
Instant
Coffee
Flavoured
Percolated
Coffee
Flavoured
Decaffeinated
Percolated
Coffee
Flavoured
Regular
Instant
Coffee
MARKET RESEARCH
The Problem
Defining the Problem
1. Define Key Business Issue
2. Define Management Problem
3. Define Research Problem
FIVE WHY’s?
OPTIONS
Qualitative and Quantitative
SECONDARY RESEARCH
PRIMARY RESEARCH
FOCUS GROUPS
SURVEYS
RECALL
EXPERIENTIAL
TEST MARKETS
TRACKING
OTHERS
OTHERS
OTHERS
Focus Groups
 Happy Planet case
Data Collection Methods
Survey
Structured questionnaire
www.SurveyMonkey.com
Observation
Personal or electronic (Web
cookies)
Experiment
Simulated or market test
Testing…
Control
Test
Cell
Cell
(Status Quo)
(New Experiment)
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Test Measurement
 Keep variables to a minimum
 Test and Control cells
Cell A
(Control)
2016
2015
% Change
Cell B
(Test)
DIFFERENCE
PLANNING
Planning components
Objective
Strategy
Tactics/
Executions
24
Planning components
Objective
Strategy
- Direct
- Interactive
- Digital
Tactics/
Executions
- Mail
- Social Media
- Website
- Mobile
- Augmented Reality
25
MARKETING COMMUNICATIONS
(PROMOTION)
26
The Marketing Communications Mix
Needs
Marketing
Communications
Advertising
Direct
Sales Promotion
Interactive
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“AND SHE’S BUYING …”
INVESTMENT
LEVEL
POSITIONING
29
30
Positioning
 Driven Wild case
Creative Strategy






ADVERTISING OBJECTIVE
TARGET AUDIENCE
BENEFIT
SUPPORT
TONE
EXECUTIONAL CONSIDERATIONS
LET’S TALK ABOUT YOU…
33
Let’s talk about you…
 Discuss a marketing communication
initiative you have tried that left you
disappointed
 Using the principles discussed in our
program:
 What went right?
 What would you do differently next time?
DIRECT MARKETING
35
Direct Marketing
An interactive marketing system controlled by
the marketer. The marketer develops and
promotes products directly to customers, and
then accepts and distributes orders directly.
Marketer
Media
Customer
Direct Marketing is…
 Response driven (vs. “image”/ “brand” driven)
 Target specific
 Personalized messages (rather than generalized)
 Non-personalized (highly selective target)






Two-way dialog (interactive)
Immediate behavior (vs. long-term build/response)
Motivational message (action-oriented vs. attitude)
Measurable & testable results
Flexible
Less “wasted reach”
Direct Marketing
Bob Stone:
 Direct marketing is an interactive system of
marketing which uses one or more advertising
media to effect a measurable response and/or
transaction at any location
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DM Program
 Purpose: elicit a measurable response & create profit
 Objectives:








Generate traffic
Build awareness/image
Generate/qualify leads
Penetrate new markets
Reactivate old accounts
Upgrade current accounts
Cross-sell products/services
Build long-term (lifetime) value of customer**
AM’s Approach…
Personal Selling involves
person-to-person
communication with a
prospect. It is a process of
developing relationships,
discovering needs,
matching appropriate
products to these needs,
and communicating
benefits through informing,
persuading and reminding.
+
Mass Advertising involves
person-to-mass target
communication with a group
of prospects using one or
more media. Designed to
generate awareness of
something (product
existence, brand image,
sales promotion, etc.).
Direct Marketing Basics




Offer
Creative
List
Media
Elements of Promotion
30%
List/Media
40%
Copy
Layout
Offer
15%
15%
OFFER
Database
LIST
Target Market(s)
Keys to DM Success






Right product/service
Right offer
Right media
Right format
Right tests
Right analysis
Target
Most specific target medium
 Demographic
 Psychographic
 Regional
 SIC and contact position
The Offer
Direct Marketing Offer
 A promise for a payment
 An offer includes:
 Product or service
 “Delivery”
 Other factors
 Need to know the target “hot buttons”
 Must be:
 Believable
 Promote involvement
 Creative
Elements of an Offer










Price
Shipping & Handling
Unit of Sale
Optional Features
Future Obligation(s)
Credit Options
Incentives
Time Limits
Quantity Limits
Guarantees
More on Offers…
 Merchandising the Offer
 Free Gift Offers
 Get-a-Friend Offers
 Structuring Offers for Results
 Obtain a maximum # of new customers as quickly as possible
 Determine the repeat business factor(s) as quickly as possible
 Break even or make a target profit in the shortest time
Planning the Offer
1. Establish objectives
2. Set the level of offer “attractiveness”
3. Lower offer risk
4. Creative appeal
PRICE
 Sufficient mark-up?
 Competitive?
 Communicate value?
Price & Payment Terms
 Highest response rate
 Examples:





Half-price
Buy one get one free
50% off
Trial
Test-Test-Test to determine best price
Price & Payment Terms
Unit of Sale:
 “Each”?
 “Two for”?
 “Set of X”?
Price & Payment Terms
 ASSUME: Item $7.95 each…
 2 for $15.90 (same price, but you get twice
the average sale)?
 First for $11.95 ... second for $3.95 (same
total dollars if you sell two units – and if
you don’t sell two units you get a higher
price for a single unit).
Shipping and handling
● Revenue Generator
● Effect on profits
● Influences response
Shipping and handling
Rule of thumb
 Shipping and handling should not exceed
10 % of the basic selling price.
 Testing is advisable.
Optional features.
Special colours
Odd sizes
Special binding for books,
personalization.
Often increase the average order:
 Publisher of a dictionary offered thumb
indexing at $2 extra, 25 % of total
purchasers opted for this added feature.
Future obligation
Automatic billing, if customers don’t elect
to cancel.
“Take ten CD’s/books for $1 and agree to
buy six more in the coming twelve
months.”
“Get volume one free – others will be
sent a regular intervals.”
Credit options.
 The average order is usually 15 % or
more larger than a cash order.
 Offer Credit
 30 Days
 90 Days
 Don’t Pay a cent
 “5 Easy Payments”
Incentives
Free gifts
Discounts
Sweepstakes
Toll-free ordering – ease of ordering.
(increase the average order 15% +)
Incentives




Premiums
Games/contests/sweepstakes
Cost savings
Test on front and back ends
“AND SHE’S BUYING …”
INVESTMENT
LEVEL
Time Limits
Sales Promotion Strategy
Creates Urgency
Quantity Limits
Increases performance
“Only 5,000 will be minted”
Limited Edition Art
TESTING & MEASUREMENT
TESTING
 2 Cell Approach
 Test Only One Variable At A Time
 Remember Marketing Mix Principles
MEASUREMENT
 Tracking
 ROI-Based
Risk Reduction
 How to lessen consumer risk (or perception
of risk)
 Risk Prevention
 INDUCE TRIAL

Guarantees
Guarantees
 Never pass up this method when trying to
make a sale
 Don’t make an offer without a guarantee
 Have to live with it, once offered!
Target Focus
Key Customer:
 Recency
 Frequency
 Monetary Value
 Lifetime Value
Data Sources
 Rented Lists
 Purchase Orders
 Accounting records
 Shipping records
 Service reports
 Customer inquiries
 Customer warranties
 Surveys
 Internet “cookies”
 Purchased lists
 Etc.
But what is relevant?
LET’S TALK ABOUT YOU…
68
Let’s talk about you…
 Referring to marketing communication
initiative you have tried that left you
disappointed
 Which of the Direct Marketing concepts
discussed would have produced more
positive results? Why?
WRAP-UP
70
Next time?
Digital/Interactive Marketing
 Applying Direct and Marketing Basics principles in a
high tech context
 Digital and New Media/Technologies for greater
profitability
HOME WORK:
 Based on in class activities, develop a basic Direct
Marketing Plan for your business (No Internet Please)
 Prepare to discuss next time