March 6, 2017

Direct Marketing and Its Management - Kotler's Chapter - Topic Summary



Direct Marketing - Definition by Direct Marketing Association (DMA)


"Direct marketing is an interactive marketing system that uses one or more advertising media to effect a measurable response and/or transaction at any location."

The response of direct marketing is measurable as the marketing messages are sent to expected marketing decision makers and the messages are so designed that responses can be clearly identified.

Direct marketing messages are now being used to build relationships also. Examples would be sending birthday cards and information booklets.

Direct marketing is growing at higher rate than that of retail sales. Even in business-to-business to sales direct marketing is delivering results.

Direct marketing accounts for almost 48% of total advertising spending, and companies spend more than $161 billion on direct marketing per year (2005 year).

Direct marketing produced $2.05 trillion in sales in 2012.

Personalizing communications and providing information about the products about which they have interest at the right time increases marketing communication effectiveness. Right information about the right product (which he intends to buy) to the right person at the right time is the focus of direct marketing. Databases are used to pick the potential right customers and the things they may be interested in.

Benefits Reported by Users


Consumers short of time and tired of traffic and parking headaches appreciate direct marketing.
Significant number of persons report benefits from direct marketing methods. Consumers report that home shopping is convenient and also allows them to compare catalogues and order. Even business buyers report that they can go through relevant literature and make better choices without tying up time in meeting salespeople.

The growth of next-day delivery via FedEx, Airborne, and UPS has made delivery fast and easy.


Benefits Reported by Sellers


Sellers are reporting benefits. Sellers can buy targets mailing lists like recently married people, people who had a child birth recently, people who bought a home recently etc. They can customize and personalize messages. Direct marketing can be so designed that the message reach the prospects at the right moment and hence read by more-interested persons. The cost effective approaches can be determined among the direct marketing approaches.  Direct marketing approach becomes less visible to competitors.

For every $167 spent on direct mail, U.S. marketers sell $2,095 in goods. (Figure of 2014 or 2015)
http://squidcircle.com/cool-stats/

Direct Marketing Channels


Direct Mail
Catalog Marketing
Telemarketing
Interactive TV
Kiosks
Web Sites
Mobile Devices
Newspaper Advertisements with offers
Radio Ads with offers
TV Ads with offers
Home shopping TV channels

Direct Mail


In direct marketing, an offer, announcement, reminder or other item is sent to an individual customer. Highly selective mailing lists are used for the purpose. Letters, flyers, foldouts, CDs, DVDs, and computer discs and pen drives are sent through direct mail and parcel services. Although the cost per thousand people is higher than mass media, the people reached are better selected participants,  But direct mail is already a saturated channel as the response rates are falling in recently in financial services industry as compared to earlier days.

In the design of direct-mail campaigns or programs, marketers have to decide on their objectives, target markets, and prospects, offer elements, means of testing the campaigns and measures of campaign success.

Objectives

In the case of expected orders, a response rate of 2% is normally considered good. The response rate is determined by the product category, price and the nature of offer. Direct mail can also be used to produce prospect leads, strengthen customer relationships.

Direct Mail Offer Elements

The direct mail offer strategy has five elements - the product, the offer, the medium, the distribution method, and the creative strategy. All can be tested. The mail itself has five components: the outside envelope, sales letter, circular, reply form, and reply envelope.

Some important findings of researchers related to direct mail communications.

1. The envelope should contain an illustration, and it must have a catchy reason to open it such as the announcement of a contest or benefit. Sometimes a nonstandard shape or size of envelope also attracts the attention.
2. The sales letter has to be brief on a good quality paper. It must start with a personal salutation and a headline in bold type. It should be signed by someone whose title is important. Computer-typed or printed letters are getting better response compared to printed letters. A pithy P.S. also increases response rate.
3. A colorful brochure or circular with detailed explanation of the offer accompanying the letter increases the response rate and offsets the increased cost.
4. The mailers must have a toll-free number for giving clarifications and bookings and a supporting website from which coupons etc. can be printed.
5. A postage free-reply envelope dramatically increases response rate.

Once again it is important to stress that all can be test marketed.

Direct marketing has effect on awareness, intention to buy and word of mouth apart from the actually buy order.

Direct marketers can calculate life time value of customers and campaign break-even response rate can be determined.

Direct Mail Target Selection

Recency, frequency and monetary amount are the criteria based on which targets are selected for sending direct mail. Point systems are used to select potential buyers. The potential targets are also determined by demographic segmentation to decide the products which are offered to certain segments.

Catalog Marketing


In catalog marketing, catalog containing all items offered by sale by the firm is given to customers. The marketing method is used in both business to business sales as well as business to consumer sales.

Read Catalog Strategists Tool Book
http://www.nmoa.org/catalog/catalogtoolkit.htm
NMOA - National Mail Order Association

The catalog marketing is an important segment of sales in USA. The internet and catalog retailing industry includes 20000 companies with annual revenue of $350 sales. The companies operate special call centers to answer questions related to items covered in the catalogues, send free gifts and sales promotion vouchers, operate ecommerce sites to make buying more convenient and even organize exhibitions to provide a chance to see and feel the products. More detailed catalogs are uploaded on the websites to make more information accessible to interested persons.

Dell is the leading catalog marketer in USA.
http://www.encyclopedia.com/economics/economics-magazines/industry-profiles-catalog-and-mail-order-houses-0


Print versus Digital Catalogs


Why the Print Catalog Is Back in Style
Denise Lee Yohn
Harvard Business Review, FEBRUARY 2015
https://hbr.org/2015/02/why-the-print-catalog-is-back-in-style

http://blog.catalogmachine.com/marketing/digital-catalogs-best-product-marketing-sales-tool-small-businesses-online-stores/

https://www.bakergoodchild.co.uk/the-role-of-print-in-direct-marketing/

http://www.prnewswire.com/news-releases/ricoh-engagement-marketing-executive-symposium-fosters-conversations-on-prints-role-in-an-omnichannel-world-300390148.html

http://squidcircle.com/cool-stats/


Seven Tips for Direct Marketers (Graphics services example)
https://www.xerox.de/digitaldruck/latest/BDMWP-02G.PDF


http://www.euromonitor.com/direct-selling-in-the-us/report

References

Marketing Management, 13th Edition, Philip Kotler and Kevin Lane Keller
Marketing Management, 15th Edition, Philip Kotler and Kevin Lane Keller, 2016



Planned Revision schedule for marketing chapters is in February and March

Updated  9 March 2017, 29.1.2015, 11.6.2014,19.3.2013, 2.12.2011

Kotler's Book Chapter
http://www.pearsoned.ca/highered/showcase/kotler/pdf/9780132473958_ch17.pdf


1 comment: