DIRECT MARKETING

Module I: Conceptual Framework of Direct Marketing Basics and scope of Direct Marketing, Objectives of Direct Marketing, Advantage & Disadvantage of Direct Marketing, Integrated Direct Marketing, Business, Strategic & Direct Marketing planning. ---------------------------------------------------------------------------------------------------------------------

Direct Marketing
Direct Marketing is the interactive use of advertising media to stimuli a behavior modification in such a way that this can be tracked, recorded and stored on a database for future retrieval & use. Interactive One to one interaction from markets to T.A. Advertising Media Use of combination of Media Direct Mail, T.V. , Newspaper Track, Record & Analyze Track spending, response and rate of return The basic purpose of any DM program is to get measurable response that will produce an immediate or ultimate profit. Direct Marketing is the planned recording, analysis and tracking of customer behavior to develop relational marketing strategies

CHANNEL of Direct Marketing

The mail (Direct Mail): Anything u mail out to people in which u r asking them to order something from u. e.g. Pizza hut, American express credit cards. Telephone (Telemarketing): Any phone call in which people are asked to make a purchase or give an appointment to meet one to one for an order. E.g. computer accessories, mutual funds, mobile services, credit cards, DTH. D Response print ad- Any ad that includes a toll free order number, a coupon, an order form for response. E.g. readers digest subscription cards D Response T.V. ad- Any ad that includes a toll free number or address to contact for orders. This also includes infomercials. E.g. Rudraksh or Slimming Belt. D Response Radio ad- Any ad that includes a toll free number or address to contact for orders. The response can be to the radio channel or directly to the sponsor of the ad. E.g. education or selling events, movies. Internet (Behavioral Targeting): Any website in which people are asked to place an order. e.g. computer accessories, gifts, books, music, financial services. Humans (Door-to-Door Selling, Party Plan Selling).: Leaflet distribution services are used extensively by the fast food industries, and many other business focusing on a local catchments 1

E-mail (E-mail Marketing).

Characteristics of Direct Marketing Communications

Direct marketing targets a carefully selected audience, as opposed to a mass audience It typically involves two-way communications; direct responses from customers make it interactive Direct-response results are quite measurable-marketers can determine what works and what does not. Strengths of Direct marketing model Cost-effective. Effectiveness can be measured directly by comparing purchasing behavior of targeted vs. non-targeted consumers. ( It is the only promotional element that is measurable) Direct contact with the customers ( DM tools creates a strong bond with customers as if the marketing to them personally) Consumers receive commercial messages which have been adjusted to their profile. Convenience.

Limitations / Disadvantages of the Direct Marketing approach

Sometimes criticized for generating unwanted solicitations (Junk Mail and Spam). Privacy concerns. Legitimate Direct Marketing firms should offer methods by which individuals can opt out of these lists upon request. Direct Marketing agencies must respect the 2

do-not-call list maintained by government agencies such as the Federal Trade Commission (FTC).

Advantages of Direct Marketing

Flexible Targeting Direct marketing enables you to talk directly identify, isolate and communicate with welldefined target markets. This means you get a higher conversion and success rate than if you tried communicating to everyone in the mass market. And direct marketing is also far cheaper than mass market communication. Multiple Uses Direct marketing doesn't just have to be used to sell - it can be used to test new markets and trial new products or customers, to reward existing customers to build loyalty, collect information for future campaigns, or segment a customer base. Cost-Effectiveness The cost per acquisition of direct mail can be significantly less than other marketing methods. Plus once you've acquired a customer, you can also benefit from highly profitable repeat sales, gained once again through direct marketing methods. Ease of Management Direct marketing provides greater control and accountability than other marketing methods. It is easy to measure results because you know exactly how many people you've contacted in the first place. Once you've run a direct marketing campaign and know the conversion rates involved, you can work on refining and improving your success rates. Plus it also makes it easier to plan, forecast and budget for future direct marketing campaigns. Rapid Delivery Direct marketing is both swift and flexible in achieving results. This is especially true for telemarketing, one of the direct marketing tools, as the results of a conversation can be logged immediately and scripts adjusted straight away to improve results. Testing Capability Direct marketing allows you to test, test and test again in order to hit upon the most successful combination of direct marketing tools. Any of these variables such as timing, list, message, mailer and offer can be adjusted, tested again, and measured to find the optimum direct marketing proposition. Relationship Building Direct marketing is far more effective at initiating and developing a meaningful dialogue with new customers. From the outset you have a direct relationship with them, which can also be used as part of a push pull strategy to stimulate demand for retailers. Targeting of Messages Direct marketing can enable you to target different messages to different recipients. Using technology such as digital printing, it's even possible to display different images, designs and offers in a direct mailer according to who it's being sent to, as well as personalizing the mailer to the recipient to increase conversion rates.

Business, Strategic, and Direct Marketing Planning

Traditional Marketing Planning Process + Internet acting as a marketing Distribution and Media channel. What do you want the DM to do for you E.g. Build traffic to storeDM to aim at increasing footfalls (Big Bazar budhwar) Build customer databaseDM to aim Feedback based article / radio prog Introduce a new product nationwide

Objectives of Direct Marketing

Improve Selection of Market Segments Stimulate Repeat Purchases Cross-selling Other Products Customer Relationship Management Immediate Sales 5

DIRECT MARKETING FLOW CHART

Module II: Analyzing & Enchasing Marketing opportunities for Direct Marketing Research design for direct marketers, The Customer Database: Analysis and Application, Consumer & Business mailing list, offer, Media of direct marketing- Magazines, Newspaper, TV/ Radio, Co-Ops, Telemarketing, Internet E-communications, Managing Direct Sales Force. -------------------------------------------------------------------------------------------------------------------

The Customer Database

Customer Centric approach enable companies to break a set of customers into smaller groups based an similarity of behavior, attitudes, demographics or psychographic variables. The groups called segments are identified to serve them thru special offers, promotions and rewards. The knowledge behind these goals is database. What is a marketing database? Marketing databases enables companies to use tools of DM. Database information can be used to offer products, impel actions from channels and drive marketing communication programs. Flat File Customer Records As entries become many data retrieval takes longer time. Relational File Large database when fields are added data becomes unwieldy. Reduced Processing Time as data is put into files, and than files are linked into tables. Source of information for generating database Types of Data maintained by companies Internally generated Data (Customer) Purchases Customer transactions Amount spent Transaction dates Promotion history Customer services Lifetime value External Data Address (street, telephone, E-mail) Household Demographics socioeconomic data Lifestyle psychographics Profitability

Data warehouse

A storage facility that takes data from a number of transaction systems and brings it together into a central repository The job of the data warehouse is to create a set of standardized fields for all of the different data elements in the various legacy systems. A subject-oriented, integrated, time-variant, non- updatable collection of data used in support of Management decision-making processes Subject-oriented: e.g. customers, patients, students, products Integrated: Consistent naming conventions, formats, encoding structures; from multiple data Sources Time-variant: Can study trends and changes Non-updatable: Read-only, periodically refreshed Data Mart: A data warehouse that is limited in scope 7

Advantages & DisadvantagesADVANTAGES

Enhances end-user access to a wide variety of data Business decision makers can obtain various kinds of trend reports e.g. the item with the most sales in a particular area / country for the last two years Increased data consistency Additional documentation of the data Potentially lower computing costs and increased productivity Providing a place to combine related data from separate sources Creation of a computing infrastructure that can support changes in computer systems and business structures Empowering end-users to perform any level of ad-hoc queries or reports without impacting the performance of the operational systems

The data warehouse is a good data storage and reporting system, but it is not easy or flexible to use for heavy data processing or modeling. A better solution is to extract information from the data warehouse and put it into a data mart : a database system designed for a smaller number of users with more specialized data uses. A comprehensive, customer-centric data warehouse is the optimal approach to handling the data and transforming it into useful information for developing customer-focused strategies and programs. In a data warehouse environment, marketers combine large amounts of information and then use data mining tehchniques to learn more about current and potential customers.

Data mining
Data mining is a process for discovering patterns and trends in large database sets to find useful decision-making information. Data mining is the extraction of hidden predictive information from large databases, There are a number of data mining tools and techniques. Some are used to identify significant relationships that exit among variables. Such tools are useful when there are many possible relationships. Once these relationships are identified, other types of tools are then used to understand the nature of the relationships. Data mining is an automated analytical process, processing large databases, searching for global patterns of behavior, customer attributes, content history or campaign response analysis across million of Consumer behavioral data. Customer data can be processed into segment groups or clusters of customers displaying similar characteristic e.g. SB with frequent withdrawals

Evolutiona Business Question ry Step Data Collection (1960s) Data Access (1980s) "What was my total revenue in the last five years?"

Enabling Technologies Computers, tapes, disks

Product Providers IBM, CDC

Characteristics Retrospective, static data delivery Retrospective, dynamic data delivery at record level

"What were unit sales Relational databases in New England last (RDBMS), Structured March?" Query Language (SQL), ODBC "What were unit sales in New England last March? Drill down to Boston." On-line analytic processing (OLAP), multidimensional databases, data warehouses Advanced algorithms, multiprocessor computers, massive databases

Oracle, Sybase, Informix, IBM, Microsoft

Data Warehousing & Decision Support (1990s) Data Mining (Emerging Today)

Pilot, Comshare, Retrospective, Arbor, Cognos, dynamic data Microstrategy delivery at multiple levels

"Whats likely to happen to Boston unit sales next month? Why?"

Pilot, Lockheed, IBM, SGI, numerous startups (nascent industry)

Prospective, proactive information delivery

Types of Data Analysis Study of purchase behavior with respect to products can give analysis like retention, attribution, and churn Consumer Behavior Analysis over the past month can give analysis like life cycle pattern of Consumer Behavior.

Role of DA in Successful direct marketing activities

Making the Connection with the customer. With businesses assuming global scales the biggest challenge that the companies are facing is Lack of Personal Touch How to bring in Intimacy into transactions- readily accessible timely flow of data about customer behavior, preferences, perceived needs, beliefs and attributes to be gathered and maintained at central location. Confidence in the accuracy or quality of customer data. Collection, storage, modification and maintenance of customer information goes a long way in customer relationship programs. Six Sigma aims at error free data storage and usage. Right time availability of quality customer information provides companies with actionable information used to recognize the need for innovative ways to continue to satisfy customer and stay profitable. 9

Mailing List
A mailing list is a collection of names and addresses used by an individual or an organization to send material to multiple recipients. Mailing lists are not sold but rented, typically for a onetime use.

Types of Mailing List

There are three types of mailing lists House lists Response lists Compiled lists

House list
House list are simply the database of an organization. It considered the key assets of an organization which include Current customers, Former customers and Prospects. It must be maintained and updated constantly. You own this list; you didnt purchase it. Each organization builds its house list (in house list) to fit its unique needs. Records may be collected from variety of internal sources such as Direct mail, Phone, Retail or Internet transactions.

Response list
Response list are the house list of other organization. Response lists consist of names and addresses of individuals who have responded to an offer of some kind (by mail, telephone, billing inserts, etc.) Response list are made up of individuals who have exhibited a particular kind of behavior Marketers believe that someone who has responded by mail/internet/telephone call once is likely to do it again You can buy this list from a list broker or from a business owner. It includes o Buyer list : list of individual who purchased something direct o Members /seminar attendee list: Individual who attended a conference, trade show, or industry event o Circulation list controlled/paid: Individual who have subscribed to business publications or news letters Controlled Circulation: these are free to qualified readers. To qualify subscriber must fall into a certain professional or managerial category and certify that they are decision maker or influencers for products offered by advertiser in the publications Paid Circulation: Subscribers pay a fee and not required to provide information in addition to their name and addresses o Credit card holders o Voter ID list by Election Commission

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Compiled lists
Complied list are made up of individuals without any previous indication of willingness to respond, but with some defined and identifiable characteristics such as demographics, psychographics, zip code These are list of people or business that is built from published, public sources such as yellow pages and phone books. These lists are the best source for reaching large groups of people or business Complied list are useful for retail, consumer goods and a business offer where reaching the right group is more critical than knowing that they have previously responded to a direct response offer You buy this list from a list broker, detailing what characteristics you want to screen for. This is normally lower than a response list Types of complied lists o Consumer compiled lists Census of India NCAER demographics and lifestyle data on Indian Consumer o Business Compiled List Registrar of Companies PHD Chambers of Commerce/FICCI/ ASSOCHEM Trade Journal / periodical Subscriber List / Management /HR consultants

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Profiling
Profiling is a first step in understanding an organizations customer by identifying demographics, psychographics attributes of each customer Profiling is the matching of mailing list of consumer database with the appended database.

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Privacy of Data
Information Primary use information used for purpose in hand Secondary use used for subsequent purposes Consumers are increasing becoming concerned about the need to protect and maintain privacy of identity. This can be done by registering or messaging DND. Also the receivers of DM list can opt out of giving personal information.

CRLV (LTV)
Use of database in classifying the customer into loyal customers, Repeat Purchases, One time buyers Customers can be treated as measurable assets and will soon find their way into company Balance sheets.

What is profiling?
Matching of mailing list of consumer database with the appended database Format of Recruiting Mailing List Magnetic tape, CDs, Zipped disks A number of mailing lists may be ordered from different sources. Merge/purge mailing lists so that lists are improved and put into standardized formats to maximize deliverability. Privacy of Data Information Primary use information used for purpose in hand Secondary use used for subsequent purposes

Consumers are increasing becoming concerned about the need to protect and maintain privacy of identity. This can be done by registering or messaging DND. Also the receivers of DM list can opt out of giving personal information.

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Media Channel of Direct Marketing Magazines

Direct response print ads in magazines must make a definite offer or request that asks the reader to do something. Typically, such ads require a reader to send in a coupon or reply card, or call a toll-free number. Unlike general advertisers, who measure the effectiveness of their print ads in terms of reach and frequency, direct marketers measure the effectiveness of their print ads in terms of cost effectiveness either cost-per-inquiry or cost-per-order. Purpose of Advertising-leads, prospects, enquiries or orders Advantages: Magazine ads offer the advantages of Good color reproduction, A relatively long ad life (especially compared to daily newspapers), and A lower cost Creative costs for magazine ads are also usually lower than for direct mail.

Disadvantages Magazines' long lead times, Slower response, and Scarcer space than direct mail

Pilot Publication With in each category there are usually one or more publications that perform particularly well for the direct response advertiser at a lower cost than other publication in the group. Magazine may have Bind-In Printed piece bound into a magazine, catalog, etc. Often a reply card. These are common in magazines to offer subscriptions. Bingo Card Reply card in a publication offering an easy means to request information from advertisers whose ads appear in the publication. Called a "bingo card" because it is often covered with numbers corresponding to offered information, making the card look similar to a card used to play bingo Buying Direct Response space - Rate - Section - Discounts on repeat insertion - Seasonal discount - Umbrella contacts 15

Newspapers
While direct marketers advertise in magazines more than newspapers, newspapers have some distinct advantages. In addition to advertising in the regular pages of a newspaper, direct marketers also advertise in freestanding inserts (FSIs) that are usually distributed with the Sunday editions of newspapers. News paper remains one of the best direct marketing media. Preprints, Syndicate supplements, local newspaper, even the comics offer opportunities for direct marketers Advantages These include the variety of sections offered within a newspaper Shorter closing Dates, An immediate response, and Broad coverage of a large and diverse audience Disadvantages include poor ad reproduction and the limited availability of color.

Newspaper
Advantages High Coverage Low Cost Short Lead Time for Placing Ads Ads Can Be Placed in Interest Sections Timely (Current Ads) Reader Controls Exposure Can Be Used for Coupons Analysis the newspapers in terms of reach and - Courage - Circulation - H H (Household) penetration - Advertising lineage - Online version Disadvantages Short Life Clutter Low Attention Getting Poor Reproduction Quality Selective Reader Exposure

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T.V. Radio
Issues are The cost of commercial time period is based on Program Rating. The more highly rated the show, the higher the cost. Reach and Frequency as an indicator or direct response rates which represent the a true response on the media dollar Infomercials measure the impact after RADIO Radio costs less then television and offer more targeted Program formats Radio is apart for precise targeting Radio is portable, Casual and humorous.

Television
Advantages Mass Coverage High Reach Impact of Sight, Sound and Motion High Prestige Low Cost Per Exposure Attention Getting Favorable Image Availability of uniform national coverage Disadvantages Low Selectivity Short Message Life High Absolute Cost High Production Cost Clutter Inability to transmit detailed information Relatively high waste factor

Radio
Advantages Local Coverage Low Cost High Frequency Flexible Low Production Cost Well-segmented Audience Disadvantages Audio Only Clutter Low Attention Getting Fleeting Message Cant transmit complex messages or detailed information

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Direct mail
Direct mail is a method of communicating a message directly to a particular person, household or firm Uses of direct mail Consumer direct mail The uses of consumer-targeted direct mail are only limited by the scope of imagination. Some of the more common uses are:

2.

1. Selling direct Direct mail is a good medium for selling to customers without the need for middlemen. Product offerings can be described fully and orders can be sent straight back to the advertising company. Sales lead generation If a product requires a meeting between the customer and a specialised salesperson (e.g. fitted kitchens, central heating and insurance) direct mail is a useful method of acquiring good, qualified leads for the companys salespeople. Sales calls are expensive, so anything that improves call success rate is welcome. A well-planned mail shot can act as a preliminary sieve, pinpointing the best prospects and ranking others in terms of sales potential. The warmer the lead, the more effective will be the sales discussion with fewer wasted calls. Sales promotion Direct mail can send promotional messages money off vouchers, special offers, etc. to selected targets. This is a useful way of encouraging people to visit a shop or exhibition. Mail order Mail order companies use direct mail to recruit new customers and local agents, as well as direct selling. Fundraising An advantage of direct mail is ability to communicate personally with an individual. This makes it a powerful method of raising money. It can carry the long copy often needed to convince recipients of the worthiness of the charity, and make it more likely that the reader might respond with a donation. Dealer mailings If a product is sold through dealers or agents, they can use direct mail to reach prospective customers in their particular catchment area just as a producer might. Follow-up mailings The companys name can be promoted to customers by following any kind of sales activity with a mailing e.g. checking that the customer is satisfied with their purchase or informing them that perhaps a car they bought last year is coming up for its annual service.

3.

4.

5.

6.

7.

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 Business

direct mail Business markets are made up of closely defined, discrete groups of individuals. These groups may not be best reached by mass advertising media. Direct mail can be used to accurately identify different market sectors and provide messages appropriate to each sector. Some of the more common uses are: Product launch Often the launch of a new industrial product or business service entails getting the message across to a small, but significant, number of people who will influence buying decisions (e.g. catering managers and car fleet managers). Sales lead generation As in consumer markets, direct mail can effectively reach qualified sales leads for a companys sales force. Dealer support Direct mail makes it easy to keep dealers, retail outlets, franchise holders, etc. more fully informed of tactical marketing promotions and plans. Conferences and exhibitions Business and trade conferences and exhibitions are well-established means of communicating with potential customers and business colleagues. Direct mail can be used to invite delegates, who may be attracted if the event relates to a specific theme of direct interest to them. Follow-up mailing using the customer base Much business takes the form of repeat sales to existing customers. Since these are existing clients it can be worthwhile mailing them regularly, as long as the content of the mail-out relates to something that is new or of specific interest rather than simply junk mail. Marketing research/product testing Direct mail can be used for marketing research, especially amongst existing customers. Questionnaires can be used as part of a regular communication programme, with levels of response being increased by some kind of incentive.

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Internet Direct Marketing

As the Internet empowers customers to search, compare, and customize products, and even set prices, marketers must build their business around customer-centric strategies. The three multichannel E-business strategies are clicks-and-mortar (on-line outposts for traditional bricks-and-mortar companies); clicks and mail order (sites set up by companies that understand direct-to-consumer marketing); and clicks, bricks and mail order? (Companies that include the Internet as one among many sales channels) E-business includes three key components: E-communications, through which organizations deliver message to the prospects and customer including banner, buttons, E-mail E-communications can build one-to-one relationships with prospects and customers on the Web and target messages to individual users based on geography, content, purchasing behaviors, and demographic or firm graphic information. E-Commerce, which comprises a verity of on line commercial enterprise that include selling, logistics, data sharing (PAGE 284) E-Care, which includes customer contact, service and fulfillment E-care-Internet direct marketing used for customer service-that gives customers instant information about products and services, inventory levels, shipments, and returns. Spasm, the, quick, cheap mass contact the challenge is how to bring in quality results. How to establish credibility and relevance of selling proposition as a part of customer strategy. Source identification must be immediate in the Senders line and subject line must get the attention. Keep banner ads simple. Show people, use clear qualifying language, create a sense of urgency, and include a strong call to action. Establish a goal for a banner ad campaign by specifying how many sales, leads, members, subscribers, downloads, completed surveys, etc, are expected for the program. While a Web presence may trigger channel conflict among sales forces, distributors, and other channel partners, it is imperative to sell through channels that customers would like to buy from. To achieve its business goals on-line, an organization must translate its business processes into fast, easy-to-use processes that are Web-centric. To do so, it should examine every aspect of these processes from a customers point of view, and understand how interactions are triggered within the organization.

Internet
Advantages User Selects Product Information User Attention and Involvement Interactive Relationship Direct Selling Potential 20 Disadvantages Limited Creative Capabilities Technology Limitations Few Valid Measurement Techniques Limited Reach

TELE MARKETING
Tele marketing is the act of selling, promoting a product or service over the telephone. The purpose of telemarketing is to make a sale Telemarketing may be done from a company office, from a call centre, or from home It may involve either a live operator or a recorded message, in which case it is known as "automated telemarketing" TYPES Outbound telemarketing Inbound telemarketing Business to Consumer (B2C) telemarketing Business to Business (B2B) telemarketing Automated Telemarketing

Advantages
Provides a venue where you can easily interact with the prospect, answering any questions or concerns they may have about your product or service It's easy to prospect and find the right person to talk to It's cost-effective compared to direct sales Results are highly measurable You can get a lot of information across if your script is properly structured If outsourcing, set-up cost is minimal Increased efficiency since you can reach many more prospects by phone than you can with inperson sales calls Great tool to improve relationship and maintain contact with existing customers, as well as to introduce new products to them Makes it easy to expand sales territory as the phone allows you to call local, national and even global prospects.

Disadvantages
There is a high acquisition cost per sale for purchased prospect lists that typically contain many unqualified prospects Telemarketing has a negative image and that negative image can tarnish your business reputation Its all about the people performing the call. If they don't have the right training, the outcome will be poor, as a result destroying your business' credibility If hiring an outside firm to do telemarketing, there is lesser control in the process given that the people making the calls are not your employees May need to hire a professional to prepare a well-crafted and effective script It can be extremely expensive, particularly if the telemarketing is outsourced to an outside firm Scope of Telemarketing 1. Selling 21 2. Setting qualified appointment

3. Generating leads 5. Providing customer services 7. Pursuing collections INBOUND Telemarketing

4. Surveys 6. Advertising

Inbound calls are when customers call in, an IVR (Interactive Voice Response) most likely will take the call and will prompt them for information, the call in turn is routed to the proper department or person, and the call is handled. Inbound telemarketing representatives answer questions, collect information, and process orders from calls that comes in. In the inbound category, you have the types of interactions that are initiated by the customer: Customer service (customers call with questions about their accounts) Sales (customers call in response to direct mail or other advertising or to purchase items) Technical support (customers call with questions about how to use a product or a service) The inbound calls may be generated as a result of any one of a number of methods, including: print media advertisements (newspapers and magazines), broadcast media (radio and television), direct mail advertising (just dont call it junk mail), and Internet ads that feature a toll-free number. OUTBOUND Telemarketing Outbound telemarketing can be aimed directly at the end consumer It initiates the call to the customer or prospect, making use of technology such as predictive dialers. Outbound telemarketing efforts use lists of numbers, with varying degrees of qualification, to reach as many prospects as possible in a given time frame The lists can come from a variety of sources, whether specifically generated through a direct response campaign such as publishers bingo cards or a range of Internet marketing endeavors. With outbound call centers, the company initiates the call. This includes the following: Telemarketing (salespeople call customers or prospects) Collections (agents call customers regarding overdue bills) STEPS IN OUTBOUND TELEMARKETING The first step to launching an outbound telemarketing campaign is to define your market. Once you have determined exactly who you are trying to reach, put together a telemarketing list for your telemarketer to call. If you don't have a database of target prospects, you can buy a list from a third party. The next step would be to write a script. Customize a short script that will help your telemarketer effectively promote your products or services to your target market. Determine whether your campaign will be B2B or B2C. 22

 Set up a phone call to role play the script with your telemarketer.

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Four Basic Elements upon which Successful Outbound telemarketing Depends are List or Target audiences Offer Being Communicated Telephone sales representative Script and message to be communicated How to estimate telemarketing cost Cost per call for handling inbound calls Cost per decision maker contact in outbound calls *Outbound calls are usually of longer duration and often require more experienced & higher paid personal

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Module III: Managing the Creativity Process in Direct Marketing Introducing Creative Practices and techniques, Direct Marketing Creativity, Basic Steps of Managing catalogue & print advertising, Innovation through Creativity & testing The Strategic drivers of Creative Practices -----------------------------------------------------------------------------------------------------------------------------------

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Managing creative Process in Direct Marketing

Developing and sending the right message to the right consumer at the right time is the heart of any successful direct marketing creative. Creative Copy (Text element): A set of words expressing an idea. It is creating a new and unique box that not only entices customers, but also keeps them interested and wanting to return for more information. Copy should include appeals that will satisfy one or more human wants of the prospect. Translate selling points into customer benefits. The more benefits you can point out for prospects, the more likely they will buy. Problem solving approach to headline Visual (Pictorial/graphic element): It is the pictures, graphics, sounds that not only entertain but also inform. For example, the simplicity of the M for Macdonald or Nike swoosh has generated more brand recognition than the majority of sophisticated campaigns that have appeared in the last decade. You have created a cultural icon. Choice of Message and Media: Massage Format: Comfort level of the recipient: Fast-paced, in-your-face messages may be exciting to some, but they can be intimidating to others. Likewise, asking someone to provide personal information or even purchase a product when they are not totally sure of why they are doing it can be very discomforting. Comfort, if recipients perceive that the sender knows them and understands their needs, like, and dislikes, and then applies this information in the messages sent, it creates a feeling that the sender really does care. In turn, recipients feel that they can maintain and even enhance their relationship with that company. Comfort is also based on consistency. Media choice: Preference of the recipient: Marketing communications truly become creative when the appropriate messages are transmitted through the most appropriate channels that are linked together for maximum efficiency. The recipients preference of channels is the key driver. Different individuals feel more comfortable communicating through some channels rather than others. Printed materials allow the recipients to take their time to view it, digest it, and then act on it. In its own way, this is stickiness. Whether to use a simple self-mailer, an elaborate self-mailer, or the classic mailing package (outside mailing envelope, letter, circular/brochure and response form) depends upon your budget and your target market

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The Outer Envelope Make the envelope look as though a human being has touched it. Use a live stamp. Include a teaser line on the envelope. Use color and graphics. Include both sides of the envelope. Include your return address. Try elegant simplicity. The Letter The letter is the most important element of your direct mail campaign. It sets the tone for the whole package. The letter is like the salesperson who goes house to house to sell your product. Here are 10 steps toward creating an effective direct mail letter Humanize your letter Avoid the fourth-paragraph disease. Use interesting letterhead Personalize your salutation Use crossheads Include a call to action Sign your letter in blue ink The Brochure Include all your ordering information in the brochure Use headlines with full sentences Use lifestyle photographs Know the difference between features and benefits Include captions or callouts with all your photographs Use color Keep the folds in mind

The Order Form Whether you call it a reply card, a reservation form, or a trial certificate, the order form should be a mini-ad for your product or service. It should include your most important sales points. You order form should stand on its own as an effective selling tool. Effective Print Ads Print ads must stop the reader and engage his or her attention and interest in order to stand out among the advertisers in a magazine or newspaper. While the general ad may rest after making an impression, the response admust stimulate immediate action. Make your strongest appeal to your best prospects-people with the strongest desire for what youre selling. How to effectively use advertising space 27

 Review your target audience. Decide which publications your buyers might read. Call the publisher for rates and a media kit.

STEPS
Create a profile of the target audience by identifying them demographically What are their common characteristics? What do they look like? Are they young, old or middle age? Are they predominantly male or female? What do they do for a living? Do they have families? How educated are they? At the microscopic level understand their lifestyles, interests, actions and behaviors Do they regularly read newspapers & magazines? Or like getting mail? Talk to the prospect in language he or she will understand, and quickly get to the point or make a promise and prove that you can deliver what was promised. Televisions primary purpose is creating the buzz. Effective television advertising requires finding the best time, channel, and event or topic to maximize your reach. Radio is all about frequency. Most individuals are usually doing something else while listening to the radio, so they need to quickly internalize the message. Because the message may not have their undivided attention, it needs to be repeated over and over Websites, blogs and especially, e-mails. Websites are great at presenting vast amounts of information in graphically entertaining ways. Preparing an integrated communications plan

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Module IV: Direct Marketing into Business B to B Marketing, Making a lead generation programme, Overview of Ecommerce ---------------------------------------------------------------------------------------------------------------E-Commerce, which comprises a verity of on line commercial enterprise that include selling, logistics, data sharing Overview of Ecommerce Stage I E-commerce sites are one-way communications that focus on products and services. These sites are product oriented. Catalogs/ Brochure ware Stage II Sites that add information on how and where a prospect can busy products and services. Sales oriented. Stage III sites allow for commerce, but dont link on-line sites with off- line systems. Users who register, however, will be recognized whenever they visit. Most E com site are in this category Stage IV E-commerce sites link on-line and off-line databases and enable and encourage customer dialogues. Constructing a home page and listing the site with the usual search engines. Although these activities are clearly a start, a truly successful channel strategy that incorporates Web sites utilizes the single characteristic that sets the site apart: it ability to establish ad maintain an ongoing, direct relationship with the customer. Tracking site visits and usage is an accepted activity among all organizations, large and small, that employ Web sites. The site must incorporate the relationship-oriented twin components of ease of use and specialized information or links to other relevant sites to create a value added experience for the customer/visitor. Once the customer has located the site, the extent to which it is user-friendly is paramount. Ease of navigation, accessible information, and the ability to complete a transaction. To achieve its business goals on-line, an organization must translate its business processes into fast, easy-to-use processes that are Web-centric. To do so, it should examine every aspect of these processes from a customers point of view, and understand how interaction is triggered within the organization.

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Lead-Generation Programs (Page 403 - 407) Business-to-Business Business-to-Consumer Public Relations Measuring e-mail Campaigns Number of e-mails opened, number of visitors to a companys like return visits to the site, which can be monitored through cookies and/or IP (Internet protocol) addresses. Also, companies can see and examine the time of the day, day of week, and month of the year that the visits were made and even see features about the users computer hardware, software, and Internet service. Measuring Events Imagine assessing the performance of an event. What should be measured? First measure each critical touch point that the customer has in engaging with the company. By measuring and capturing this type of information, a baseline can be created to compare the results from one event to a similar event. The following key metrics will provide valuable information in assessing the performance of events : Cost per contact Cost per visitor research Cost per qualified lead: Divide total program cost be the number of qualified lead generated Expense to Revenue Ratio

B2B Direct Marketing

Characteristic Sales volume Purchase volume Number of buyers B2B Market Greater Greater Fewer B2C Market Smaller Smaller Many Smaller Diffuse More Impersonal Single/Multiple Simpler No Advertising

Size of individual buyers Larger Location of buyers Concentrated

Buyer-seller relationship Closer Buying influences Type of negotiations Use of reciprocity Key promotion method Multiple More complex Yes Personal Selling

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Module V: Direct Marketing Implementation and Control Marketing Intelligence- Modeling for business decision support, Mathematics tool for control in direct marketing, Future of Direct Marketing -----------------------------------------------------------------------------------------------------------------------------Modeling for Business Decision Support Modeling means simplifying a complex situation and observing key components or relationships. The outcome of customer database is expressed in a model which can help marketers to take business strategy decisions Modeling Helps marketers to select their target market Modeling is not the same as testing or data mining, Modeling Permits marketers to test large number of variables and also defined which variable has greatest impact. Modeling is directed (Before it begins, it is need to define the variables) but data mining is less directed. It allows marketers to define their best customers and prospects Modeling is the first step in designing contact strategies that enhance lifetime value of customer Customer & Prospect Modeling Customer models use purchase history, credit usage, and other behavior data to sort the customers from best to worst so that it is clear who most qualifies for a specific offer. While modeling began as a segmenting tool, it plays an increasingly important role in communications. Knowledge gained about certain customers can help marketers featured in creative executions. Defining the Variables Variable are characteristics linked to customers. Key types of characteristics might include Neighborhood factors (Income, age, education), Household factors (Types of car etc), Behavior (how recently, frequently and how much people have purchased) and Contact (Frequency of offer sent) Modeling uses two kinds of variables 1. Dependent variable (It is the behavior being analyzed or It is the factor you want to be able to predict or forecast) 2. Independent variables (what you already know about the customers) A model compares one Dependent Variable against many numbers of Independent variables

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Modeling Techniques

Two useful techniques for response modeling are Regression and CHAID (Chi squared Automated Interactive Detector) Regression model compare Individual model to the dependent variables. The one that best correlates is given the highest statistical weight in the model, the next best correlation a lower weight, etc. CHAID estimates the probability of independence. The lower the probability, the more important the variables. CHAID eavaluate all variables and builds the tree with the most important at the top, less important variables under each cell. It is very easy to understand Role of Modeling Techniques in Direct Marketing Identify the best customer: Using Modeling, marketers can identify their best customer from a million name database and present their conclusions in visual , easy to understand graphs and chart Comparing Customer Characteristics: Modeling provides insights of customer i.e what form of message, media and distribution stimulate the customer response (what made the difference between responding and not responding) Building Relationship: Modeling is the first step in designing contact strategies that enhance lifetime value of customer. Modeling such as Regression analysis finds the strength of relationship, Degree of relationship etc. Portfolio, product or economy level prediction: A very often Modeling can be used to find the DM budget and cost effectiveness of DM program

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 Increases the Response Rate: Modeling can reduce the Overhead expenditure and helps the leading problem in direct marketing it increase the cost per customer and hence increase the response rate

Mathematics tool for control in direct marketing,

Direct Marketer has to observe, track and trigger purchase behavior by identifying selective segmented customer. Contribution to marketing cost and profit Overheads
en t
Co m st o Te aili f le ng m ,a ar d s ke , t in g

Marketing cost

Fu lfil lm

Profit

Cost of Goods

Sales

Single Transaction Costs and Contribution to Marketing Costs and Profit The direct costs can be classified into three categories: merchandise or service, fulfillment, and direct overhead. The merchandise or service costs should include all expenses and staffing related to purchasing, marketing, transporting, and storing the products or services being sold. Fulfillment costs should include all costs and people related to processing, filling, and delivering an order. Direct overhead can include costs associated with computer services, finance/accounting, office space, and a charge for some management staff Marketing Costs 33

The costs of placing advertisements, making mailings, or selling by telephone are really selling expenses. Response Rate Promotion costs (Money invested at the beginning of the program), contribution to marketing costs and profits associated with each transaction (return of investment) one can calculate the response rate. Continuous Revenue Relationships CRR is a process to create a way to acquire and retain the customer and then be able to get repeat sales from them on a continuous basis. Internet access providers, banks, utilities, credit card companies, cable TV providers, and music or books or coffee continuities all have continuous revenue relationships rather than single order relationship The dynamics of continuous revenue relationships are such that, while each payment may be small, on average the total revenue from one customer is high.

Key Performance Indicators

Cost per inquiry (CPI): Cost per Order (CPO): Cost per thousand (CPT): Total cost of a mailing / number of enquiries received Total cost of mailing / number on actual order common rate for list rentals based on actual fee is based on per 1000 respondents

Benefits of Direct marketing

Engineering a Direct Marketing Business: Direct marketing is the key tool of the future to achieve greater response rates and higher levels of success from marketing initiatives DM provides Innovation at Channel: DM provides customer delight & loyalty. INNOVATION: CREATIVE STIMULATORS SCAMPERS Substitute Combine Add or Adapt 34

Modify Put to others uses Eliminate Reverse

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