Direct and Online Marketing: The New Marketing Model

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Chapter 17

• Direct and Online Marketing The New Marketing
  Model

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Mass Marketing and Direct Marketing
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What is Direct Marketing?

Direct Marketing Consists of Direct Connections
With Carefully Targeted Individual Consumers to
Both Obtain an Immediate Response and Cultivate
Lasting Customer Relationships.
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The New Direct Marketing Model

• Some firms use direct marketing as a supplemental
  medium.
• For many companies, direct marketing -
  especially Internet and e-commerce companies -
  constitutes a new and complete model for doing
  business.
• Some firms use the new direct model as their only
  approach.
• Experts envision a day when all buying and
  selling will involve direct connections between
  companies and their customers.

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Benefits and Growth of Direct Marketing
Convenient
Consumer Relationship Building
Buyers Benefits
Sellers Benefits
Easy Private
Reduces Costs
Product Access Selection
Increases Speed Efficiency
Abundance of Information
Provides Flexibility
Interactive Immediate
Global Medium
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The Growth of Direct Marketing
Demassification Focus is Toward Minimarkets
Higher Costs of Driving, Traffic and Parking
Congestion
Consumers Lack of Time
Convenience of Ordering From Direct Marketers
Growth of Customer Databases
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Mass Marketing Vs. One-to-One Marketing (Tab.
17.1)
Mass Marketing
One-to-One Marketing
Average Consumer
Individual Customer
Customer Anonymity
Customer Profile
Standard Product
Customized Market Offering
Mass Production
Customized Production
Mass Distribution
Individualized Distribution
Individualized Message
Mass Advertising
Individualized Incentives
Mass Promotion
Two-Way Messages
One-Way Message
Economies of Scope
Economies of Scale
Share of Mind
Share of Customer
All Customers
Profitable Customers
Customer Attraction
Customer Retention
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Customer Databases

• Customer Databases are an Organized Collection of
  Comprehensive Data About Individual Customers or
  Prospects Including
• Geographic,
• Demographic,
• Psychographic, and
• Behavioral Data.

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Database Marketing
Identifying Prospects
Database Marketing is the Process of Building,
Maintaining, and Using Customer Databases and
Other Databases for the Purposes of Contacting
and Transacting With Customers. How Companies Use
Their Databases
Deciding Which Customers Should Receive a
Particular Offer
Deepening Customer Loyalty
Reactivating Customer Purchases
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Forms of Direct Marketing
Face-to-Face Selling
Online Marketing
Telemarketing
Direct Mail
Kiosk Marketing
Direct-Response TV Marketing
Catalog
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Discussion Connections

• When was the last time you bought something via
  direct marketing?
• How did you buy it?
• What did you buy and why did you buy it direct?
• When was the last time that you rejected a direct
  marketing offer? Why did you reject it?
• Based on these experiences, what advice would you
  give to direct marketers?

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Online Marketing

• Online Marketing is conducted through interactive
  online computer systems, which link consumers
  with sellers electronically.
• Two types of online marketing channels
• Commercial Online Services offer information and
  marketing services to subscribers who pay a
  monthly fee. (i.e. American Online)
• The Internet (the Net) is the vast global and
  public web of computer networks.

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Who is the Online Customer?

• They tend to be younger, more affluent, better
  educated, and more male than the general
  population female usage almost equals males.
• Other characteristic of net users
• Half are 40 years or older,
• Differ psychographically, in approaches to buying
  and responses to marketing.

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Creating Online Marketing
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Creating Online Marketing
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Promise and Challenge of Online Marketing
Limited Consumer Exposure and Buying
Skewed User Demographics and Psychographics
Chaos and Clutter
Security
Ethical Concerns
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Integrated Direct Marketing

• Direct marketing campaigns that use multiple
  vehicles and multiple stages to improve response
  rates and profits.
• Marketers seek to improve response rates and
  profits by adding media and stages that
  contribute more to additional sales than to
  additional costs.

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An Integrated Direct-Marketing Campaign (Fig.
17.2)
Paid ad with a response channel
Direct Mail
Outbound Telemarketing
Face-to-face sales call
Continuing Communication
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Public Policy and Ethical Issues in Direct
Marketing
Irritation to Consumers
Unfairness, Deception, or Fraud
Invasion of Privacy
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Review of Concept Connections

• Discuss the benefits of direct marketing to
  customers and companies and the trends fueling
  its rapid growth.
• Define a customer database and list the four ways
  companies use databases in direct marketing.
• Identify the major forms of direct marketing.
• Compare the two types of online marketing
  channels and explain the effect of the Internet
  on electronic commerce.
• Identify the benefits of online marketing to
  consumers and marketers and the four ways
  marketers can conduct online marketing.
• Discuss the public policy and ethical issues
  facing direct marketers.