Topic 3: Direct Marketing
Definition and What it includes
General advertising is controlled, identifiable information and persuasions by means of mass communication media.
“controlled” because the advertiser decides the content, timing and direction of the message (vs. public relations where the publicist has no control over these things)
“identifiable” because the source of the message is disclosed (vs. propaganda where the propagandist remains anonymous).
The primary goal of general advertising is to create/increase revenue.
Propaganda is the communication of a point of view with the ultimate goal of having the recipient of the appeal come to “voluntarily” accept the position as if it were his/her own/ it is a mass suggestion through the manipulation of symbols and the psyche of the individual.
Public Relations is a communication activity with a non-customer. The audience includes labor, stockholders, employees and government in order to maintain favorable relations AND the placement is free.
Publicity is communication in the form of a news story that pertains to an organization and/or its products. It is transmitted through a mass media at no charge and it is part of the public relations effort within an organization.
Direct marketing includes persuasive information. This is a special kind of marketing which uses response advertising (mail, television, magazines, newspapers, radio, the web) to generate a response. Responses include inquiries, orders, memberships, and/or contributions. These responses are tracked and measured and a marketing database is manufactured.
Key idea: measurable response
What is included within direct marketing:
Mail , or what we refer to as “junk mail” is included because it utilizes database lists.
Once a response is received, it is “caught”. The largest users are charities who are willing to spend 8 cents to make 10 cents, just enough to show a slight profit but primarily to capture names.
Mail is the oldest form of direct response advertising and allows for selectivity, personal selling, longer/more informative copy and immediate and measurable results.
“Personal: because this mail is often address to Mr. or Ms. or a first name.
The armed forces sends direct marketing mail to high school graduates as the services target high school grads.
There are 3 basic formats for direct mail. A classic direct mail offer utilizes a separate mailing envelope and ranges from a simple business letter to a lavish package stuffed
with brochures and other inserts. A self-mailer does not have an outer envelope and may vary from a single sheet of paper folded once for mailing to a wonderfully complex piece of multiple sheets and preformed envelopes. Generally a self mailer comes off the press complete and ready to address and mail and hence are less expensive than classic mailing packages because there is only one component to produce and no inserting needed. A catalog is a magazine and can be hundreds of pages.
Catalogues are also included within direct marketing. Retail mailers often announce sales in order to build foot traffic to the store. They might also present a full line of merchandise, such as the famous and comprehensive Sears, Montgomery Ward, or J.C.
Penney catalogues did in the past. Today there are stores everywhere, but in a rural society, ordering through mail catalogue was the only option. These catalogues included everything from fine jewelry, through appliances, furniture, clothing, food staples and even kid houses. The various Sears kit houses were convenient and affordable and in fact, many are still standing and considered very desirable as a piece of Americana.
These full-line catalogues are very expensive to produce and postage is high hence few exist today.
How does a retailer use a catalogue? If you purchased slacks Saturday, you might get a catalogue sent to you from the same store for sweaters.
Newspaper direct response has a telephone number and/or an address clearly stated.
Numbers or addresses are necessary as a way to “catch” respondents. Many of such ads are in the financial section.
The classified ads qualify as direct marketing as inquiries can be counted (car, job/employment, housing, personnels).
Magazines contain direct response as well. Sometimes there are mail-order sections within a general magazine. The advantage to magazines is that they have a selective audience as well as a long life including pass-along value. There is also a prestige for the advertiser to be placed in a magazine vs. a newspaper in that the reproduction is of a higher quality, with better color options.
Radio direct response ads end with an 800 number. For example, colleges and events will often use a direct response approach. Again, as with magazines, radio format offers a highly segmented audience excellent for specialized direct response advertisers.
Television direct response, as with radio, offers an 800 number. Often the ad will have an urgency attached to it, such as “available for a limited time” or “order now and we will also send you this…” or “we will double size it”. The cost of television prohibits primetime placement for these ads, but they permeate late night and early morning programming. The one exception for prime-time placement is with travel locales, such as
1-800- Bahamas or 1-800-Pennsylvania.
Memorable campaigns include “ginsu knives” the name of which suggest the Japanese
Samurai heritage but in fact was a made-up word and the knives were US manufactured.
Buy one set and if you order now, you will get additional knives; Craftmatic beds; and
APEX courses in which the audience is told “I can’t call you…you’ve got to call me”
The ad requires that the viewer take some action within minutes, usually to make the phone call, hence the use of urgency in the sales pitch. Moreover, the more involved the viewer is with the programming, the less likely they are to respond to the call to action.
Therefore, ad placement during times of lower viewer involvement such as late night, reruns, talk shows, old moves, are the best vehicles for direct response. Independent stations tend to run more or such programming. Seasonality is another factor in that the first and third quarters tend to be the best seasons for direct response. Geographic locations also vary for responsiveness, with Maine having among the lowest response rates vs. California with one of the highest response rates.
Home shopping allows the consumer to call a toll free number to directly purchase merchandise advertised on television. Home Shopping Network (HSN) and QVC are the primary stations offering home shopping. The programs contain a sense of urgency in that there is always a limited quantity of product available and a counter at the corner of the television screen counts the number down. The telephone number is prominently displayed with on-air talent modeling the product and discussing the benefits. Often a buyer’s voice is placed on-air raving about the purchase. There are also on-line sites for these shopping networks that allow the consumer to purchase at any time even if the product is not on-air at that time. Additionally, there are newsletters and schedules that inform the consumer as to what products will be televised at what times. Membership clubs offer discounts for merchandise as well as provide a database for sales efforts.
Telephone , or tele-marketing, has all but disappeared due to the FCC advent of the “do not call list”. Prior to this list, marketers phoned potential customers but as the practice proliferated, so did the aggressive efforts of the caller to make a contact. Eventually calls were being placed at all hours. One device allowed for the placement of multiple calls, and if one connection was made, the others were disconnected. In 1992 the Telephone
Consumer Protection Art created boundaries for telemarketers.
The marketer made outbound calls to the customer, often in a random dialing pattern within certain areas (for home delivery of newspapers) but this process was expensive because connections were not always made.
Inbound calls were when the customer phoned into the marketer perhaps in response to an ad seen or heard or viewed.
A database is a list of potential customers/clients with very specific demographic or psychographic characteristics. Databases are very valuable and are “rented” by marketers for a mailing. There are numerous database brokers who prepare and “rent” these lists.
These lists are perishable as information ages (i.e., people move, marry or pass away).
To mail materials to a non-existent customer is wasteful as well as losing the potential for a response hence procedures exist for the updating of these lists.
There are two forms of databases. The hierarchical system built around the idea of a single, central record where all information relating to a customer is contained in a master
record. Airline and hotel reservation systems have been developed in this way. Singlerecord databases contain all the information about a customer in a master record. There is no need to cross-reference other sources. Single-record databases provide high volume access and ease of use, but their analytical capabilities can be limited by the extent of the data available.
This is a relational database which is a more recent approach to database development and utilization, providing the advantages of simplicity and flexibility, minimizing redundancy. Related information is drawn from different databases such as a product database that may list a customer’s name and address from a warranty card. This information is then used to direct a promotional message to this consumer. At the same time, separate product files make possible product line analysis regardless of customer.
Links can be established too with billing and/or shipping and inventory records.
However it is important to select information because unnecessary information can be expensive to acquire. Selecting the most likely prospects may require an external database and buying this may be wise because maintenance of a large list can be a problem.
A database must be designed to eliminate duplicated information, that is, wasted effort.
Customer lists from different sources may duplicate each other. By using merge/purge techniques on computerized database lists to eliminate duplication, it is possible to locate from each the name/address records in an abbreviated form, called a match code. These are constructed so that each individual record can be compared with every other record.
Millions of records can be compared using this technique, eliminating redundancy as well as also identifying buyers as a prospect for future response.
Controlling and maintaining the list requires three functions: a. nixie removal – mail that has been returned as undeliverable (i.e., moved, deceased) needs to be entered and corrected (can use birth/death notices, marriage registrations, driver’s license); b. change of address updates – first class mail in the US is automatically returned and for a fee, the sender can be notified of a changed address – the postal service has a variety of address correction procedures like the computerized National Change of Address file; c. record status update – keeping the record current by entering new transactions promptly.
Enhanced databases are those that have been expanded to include more than just a name, address and telephone number. Information about purchases, demographic and psychographic information as well as geographic and environmental information is also included.
There are numerous existing lists that can be utilized for the construction of a database, such as telephone directories that provide information such as household mobility, multiunit buildings, gender from first names, ethnicity from surnames. There are also city directories that provide information for those who are either unlisted or lack telephone service. Voter registration files provide party affiliation information, important for political campaign efforts. Real estate records can be used for offers that relate to such industries as home furnishings, service industries including maintenance and landscaping.
Automobile and drier’s license registrations can provide vehicle information as well as
suggest associations about the customer’s lifestyle and coupled with a driver’s license may provide such information as age, gender, height, weight (i.e., retail sales) as well as physical condition (i.e., health insurance). Lifestyle compilations are partially derived from warranty registration as well as survey responses and include information about the consumer’s lifestyle, activities and interests as well as gender, title, age, marital status, income, occupation, credit card usage, children, education, ethnicity. Credit reporting databases offer both negative and positive screens to allow for the suppression of promotional efforts to those with poor records.
Marketing on the web is expanding exponentially. As with early telemarketing efforts that were intrusive at inconvenient times and thus were counterproductive, present web direct marketing’s power will require a responsibility to use the medium with discretion.
Pop-up screens may be filtered out by some internet providers, but other forms of marketing still invade the viewer’s screen as well as the mailbox with solicitations sent to thousands of addresses simultaneously. Just as random digit dialing allowed the telemarketer to reach larger numbers of prospects by dialing numerous numbers at once until a connection was made, direct marketing on the web entails sending messages to numerous addresses at once. Again, filters may remove unwanted sales efforts, but the subject line tends to be very enticing, like a headline, and internet users will often open the message. Once opened, information may be captured by the marketer to be used in database construction.