Part 5
Principles: IMC and Total Communication
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How does direct-response marketing work?
What are the primary tools and media
available to direct-response programs?
How are databases used in direct marketing?
What are some of the trends and challenges
facing direct-response marketing?
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Direct-response marketing is a multichannel system of
marketing using various media to connect sellers
and customers who deal with each other directly
rather than using an intermediary, like a wholesaler
or retailer.
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Relies on communication sent directly to
consumers.
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The response comes directly back to the source.
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Includes a strong focus on market research.
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Designed to elicit an immediate response.
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Uses a variety of traditional and nontraditional
media.
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1.
2.
3.
4.
Marketers who use direct-response to sell products or
services.
Agencies that specialize in direct-response
advertising.
Phone, mail, or Internet media that deliver messages.
Consumers who receive the information and
sometimes initiate the contact.
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Marketers
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Traditionally, the biggest direct-response users
have been book and record clubs, publishers,
insurance companies, sellers of collectibles, and
gardening firms.
More recently, computer companies have used the
direct-response model effectively.
Direct marketing can contribute to the brand
impression, as well as sales. This may be positive or
negative.
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Agencies and media companies
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Advertising agencies: department or separate
direct-response company owned by the agency.
Direct marketing agencies: independent, full-service
direct marketing agencies specializing in direct
response.
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Service firms: printing, mailing, list brokering, data
management.
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Fulfillment houses: ensure that consumer requests
are fulfilled in a timely manner.
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Customers and prospects
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They might dislike intrusiveness of direct-response
advertising, but appreciate the convenience.
Types of customers
◦ Push-button shopper (phone)
◦ Mouse-clicking shopper (computer)
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This B2B brochure
was designed to
promote the
durability of Crane &
Company’s banknote
paper.
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Objectives and strategies
Direct marketing can be used to:
1.
Provide in-depth product information
2.
Drive traffic to a store or website
3.
Develop leads for follow-up sales contacts
4.
Drive a response
5.
Retain or strengthen customer relationships
6.
Test offers to predict their effectiveness
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Targeting
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Current customers are the best prospects.
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Three criteria predict who is most likely to buy again:
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Profiling
◦ They may order products, visit a dealer, return a response
card, visit a Web site.
◦ Recency: they purchased recently
◦ Frequency: they purchase often
◦ Monetary: they spend a lot of money
◦ For acquiring new customers, a targeting strategy is to
profile current customers and look for potential customers
with similar profiles.
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The offer
 Typically consists of a product description, terms of
sale, and payment delivery, and warranty information.
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Communicates benefits and answers “What’s in it for
me?” for the buyer.
Provides all the information needed.
Supported by a message strategy, a media strategy,
and the database.
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This direct-mail campaign appears to contain a packet of toy soldiers,
but when opened, they turn out to be figures of children doing normal
childhood activities. The message on the package, which is also the
campaign theme is, “Turn Soldiers Back Into Children.” Do you think this
is an effective public service piece?
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Message and media strategy
◦ Messages are often longer, with more explanation and detail about
price, style, and convenience.
◦ Messages should be highly personalized.
◦ Should reflect whether the offer is one-step or a two-step offer.
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One-Step Offer
◦ Asks for a direct sales response, includes a mechanism.
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Two-Step Offer
◦ Designed to gather leads, answer consumer questions, set up
appointments, drive customers to a website or retail store.
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The response/order
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The message must make response as easy as possible.
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Overcome resistance with:
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◦ Offer options: online, mail, phone, fax
◦ Toll-free telephone numbers for product support
◦ Free limited-time trials
◦ Acceptance of several different credit cards
Create urgency by offering a gift or limited-time-only
price deal.
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Fulfillment and customer follow-up
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Getting the product to those who ordered it.
Fulfillment includes all back-end functions related to
processing the order:
◦ Delivering the product
◦ Receiving payment
◦ Providing tracking numbers
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The most critical aspect is maintaining a customer
relationship.
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Response measurement and evaluation
 Various offers are evaluated and measured for
effectiveness.
◦ Track printed codes on mail-in responses
◦ Use different numbers for different TV commercials
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This is used to identify the best offers and adjust the
campaign accordingly.
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This is the most popular method.
A print advertising message for a product or
service, delivered by mail
Variable data campaigns utilize digital printing to
highly personalize messages.
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Most direct mail is sent using bulk mail permits.
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CPM is high, but it’s easy to calculate payout rate.
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This envelope is used by
the Billings Chamber of
Commerce/Convention &
Visitors Bureau to send
information about visitor,
tourism and relocation
opportunities.
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Direct mail message design
Tips for writing an effective direct-response letter:
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Get attention
Be relevant
Personalize
Use a strong
lead-in
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The offer
The letter
Drive to website
The closing
Test, test, test
As a class: Discuss specific examples of each of these points.
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Issues: trees, water, waste
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Critics of direct mail cite
its environmental impact.
Production of direct mail
uses an estimated 100
million trees and 28 billion
gallons of water annually.
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A multiple-page direct mail publication showing a
variety of merchandise.
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21st century growth is in specialty catalogs, aimed
at niche markets.
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Catalogs can drive e-commerce, website purchases.
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Catalogs create a lasting impression.
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A number of marketers
use CD catalogs
because they provide
more product
information and
interactivity. This one
was designed for
Microflex, a B2B
company in the
automotive industry.
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Almost as persuasive as personal sales, but much
less expensive.
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Inbound calls are initiated by a customer. Outbound
calls originate from the firm.
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The message must be simple, compelling, and
short.
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Issues: intrusion, privacy, and fraud.
◦ Predictive dialing can call even unlisted numbers.
◦ Fraudulent behavior has tarnished telemarketing’s image.
◦ Do Not Call registry, “Privacy Manager,” and Caller ID
restrict access by telemarketers.
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Print Media
◦ Ads in newspapers and magazines feature a coupon,
order form, address, toll-free number; ask for response.
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Broadcast Media
◦ Radio provides targeted audiences, especially mobile
audiences.
◦ Cable is targeted to particular interests.
◦ TV uses infomercials and direct-response ads.
As a class: go to http://searsarchives.com
for historical catalog examples from Sears.
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Combines strengths of direct mail and
telemarketing.
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Moves marketers closer to one-to-one marketing.
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Three basic types of e-mail campaigns:
1. Addressable to current customers
2. Addressable to prospects
3. Unsolicited and often unwanted, or spam
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Issue: spam
◦ The FTC has determined that 90% of all spam involving
business and investment opportunities contain false or
misleading information.
◦ Critics would like to see the government close down e-mail
operations.
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Permission marketing
◦ Gives recipients the choice to “opt in” or “opt out.”
◦ Every customer who opts in is a qualified lead.
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Marketers use databases to:
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◦ Keep track of customers and identify prospects.
◦ Segment groups into customers and prospects, to send
relevant offers to each group.
Carnival Cruise Lines:
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Segments customers into new customers, returning
passengers, and frequent cruisers.
Each group gets a different “Sail and Sign” card, each with
different perks and privileges.
Direct marketers use the same strategy when
sending offers to customers or prospects.
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A database is important at both the beginning of the
direct marketing process and at the end.
(Figure 16.3 Database Marketing visual here)
Using database marketing, planners can continually improve the
effectiveness of their marketing communication campaigns.
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Customer and prospect
information including addresses,
phones, emails.
Can be purchased or rented from
list brokers.
Tied to demographics,
psychographics, geography,
hobbies, affiliations, postal routes.
New lists are crated by merging
and purging.
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Three types of lists:
1. House lists: includes the marketer’s own
customers or members.
2. Response lists: people who respond to some
type of direct-response offer.
3. Compiled lists: specific categories such as new
homebuyers, graduating seniors, new mothers.
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This is a postcard mailed to B2B direct marketers offering lists
classified into 47 different types of buying characteristics. It
separates prospects in terms of 47 “buying influence selectors” that
include such factors as job function, industry, and decision patterns.
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Services such as Prodigy and Melissa Data offer
online buying and purchase reminders that
marketers can access.
Data Mining
◦ Sifting and sorting through company database information to
target customers and maintain a relationship.
◦ Information is used for behavioral targeting and prospecting.
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The privacy issue
◦ Information is often collected with permission or knowledge.
◦ Many ads and online messages use behavioral targeting.
To learn more: review “A Principled Practice: PRIVACY: The
Need to Use But Not Abuse Consumer Information.”
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A systematic way to get close to your best current
and potential customers.
Linking the channels
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It seeks to achieve precise, synchronized use of the
right media, at the right time, with a measurable
return on dollars spent.
For example, direct mail with a reply card and an
800 number could be followed by a phone call.
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Creating loyalty
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When effective, one-on-one
communication leads to a customer
retention strategy that ultimately
increases brand loyalty.
Lifetime Customer Value (LCV) is an
estimate of how much purchase
volume a customer or target market
will generate over a length of time.
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The use of databases, credit cards, toll-free numbers
and the Internet are driving direct marketing growth
in Far Eastern and European countries.
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Direct marketing is especially important in countries
where advertising is tightly regulated.
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Government postal regulations also limit the use of
direct mail.
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Regulations, standards,
and cultural meanings
vary greatly from country
to country.
Creative messages,
visuals, and words often
don’t easily translate
across cultures.
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Advantages:
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It can be personalized to be more persuasive.
Results are measurable; ROI is more easily known.
Relevant customer information can be collected to produce
more useful databases and selective reach, reducing waste.
Products are convenient to purchase, unrestricted by location.
The marketer (not wholesaler or distributor) controls product
until delivery.
Advertising with direct-mail components is more effective.
It affords flexibility in form and timing.
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Limitations:
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Consumers are reluctant to purchase a product they can’t
touch or feel.
Annoyances associated with direct marketing: junk mail,
online pop-ups, ad clutter, and telemarketers.
Customer privacy, data sharing, and identity theft issues.
Tension between building long-term brand image and driving
short-term sales.
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In Chapter 17, we will:
Consider the various ways people are
engaged in brand experiences through
promotions.
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“The Gecko and Friends
Drive Customer Response”
Key lessons:
 Geico’s aggressive campaigns demonstrate how
effective direct-response advertising can sell a
product to a wide-ranging and varied audience.
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GEICO reportedly spent $561 million on advertising in
2008. In lieu of a sales force, direct ad does the job.
As a class: What others can you think of?
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