Direct and Online Marketing: Building Direct Customer Relationships 17.

Direct and Online Marketing: Building Direct

Customer Relationships1717

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Learning Objectives

After studying this chapter, you should be able to:1. Define direct marketing and discuss its

benefits to customers and companies2. Identify and discuss the major forms of direct

marketing3. Explain how companies have responded to the

Internet and other powerful new technologies with online marketing strategies

4. Discuss how companies go about conducting online marketing to profitably deliver more value to customers

5. Overview the public policy and ethical issues presented by direct marketing

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Chapter Outline

1. The New Direct-Marketing Model2. Growth and Benefits of Direct

Marketing3. Customer Databases and Direct

Marketing4. Forms of Direct Marketing5. Online Marketing6. Integrated Direct Marketing7. Public Policy Issues in Direct Marketing

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The New Direct-Marketing Model

Direct marketing is:• A marketing channel

without intermediaries

• An element of the promotion mix

• Fastest-growing form of marketing

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Growth and Benefits of Direct Marketing

Benefits to Buyers

• Convenience• Ready access to many products• Access to comparative information about

companies, products, and competitors• Interactive and immediate

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Growth and Benefits of Direct Marketing

Benefits to Sellers

• Tool to build customer relationships

• Low-cost, efficient, fast alternative to reach markets

• Flexible• Access to buyers not

reachable through other channels

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Customer Databases and Direct Marketing

Customer Database

Customer database is an organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, psychographic, and behavioral data

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Customer Databases and Direct Marketing

Customer Database

Uses:• Locate good and potential customers• Generate sales leads• Learn about customers• Develop strong long-term relationships

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Forms of Direct Marketing

• Personal selling direct marketing• Direct-mail direct marketing• Catalog direct marketing• Telephone marketing• Direct-response television marketing• Kiosk marketing• Digital direct marketing• Online marketing

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Direct-mail marketing involves an offer, announcement, reminder, or other item to a person at a particular address

• Personalized• Easy-to-measure results• Costs more than mass media • Provides better results than mass media

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Benefits of Web-based catalogs

• Lower cost than printed catalogs

• Unlimited amount of merchandise

• Real-time merchandising• Interactive content• Promotional features

Challenges of Web-based catalogs

• Require marketing• Difficulties in attracting

new customers

Catalog direct marketing involves printed and Web-based catalogs

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Telephone direct marketing involves using the telephone to sell directly to consumers and business customers

• Outbound telephone marketing sells directly to consumers and businesses

• Inbound telephone marketing uses toll-free numbers to receive orders from television and print ads, direct mail, and catalogs

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Benefits of telephone direct marketing

• Purchasing convenience• Increased product

service and information

Challenges of Web-based catalogs

• Unsolicited outbound telephone marketing

• Do-Not-Call Registry

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Direct-response television (DRTV) marketing involves 60-to 120-second advertisements that describe products or give customers a toll-free number or Web site to purchase and 30-minute infomercials such as home shopping channels

• Less expensive than other forms of promotion

• Easier to track results

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Kiosk marketing involves placing information and ordering machines in stores, airports, trade shows, and other locations

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Digital direct marketing technologies• Mobile phone marketing• Podcasts• Vodcasts• Interactive TV

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Mobile phone marketing includes:• Ring-tone giveaways• Mobile games• Ad-supported content• Contests and sweepstakes

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Podcasts and Vodcast involve the downloading of audio and video files via the Internet to a handheld device such as a PDA or iPod and listening to them at the consumer’s convenience

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Interactive TV (ITV) lets viewers interact with television programming and advertising using their remote controls and provides marketers with an interactive and involving means to reach targeted audiences

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Online Marketing

Marketing and the Internet

Internet is a vast public web of computer networks that connects users of all types around the world to each other and to a large information repository

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Online Marketing

Online Marketing Domains

• Business to consumer (B2C)• Business to business (B2B)• Consumer to consumer (C2C)• Consumer to business (C2B)

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Online Marketing


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Online Marketing


Business to consumer (B2C) involves selling goods and services online to final consumers

Business to business (B2B) involves selling goods and services, providing information online to businesses, and building customer relationships

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Online Marketing


Consumer to consumer (C2C) occurs on the Web between interested parties over a wide range of products and subjects

• Blogs• Offer fresh, original, and inexpensive way to

reach fragmented audiences• Difficult to control

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Online Marketing


Consumer to business (C2B) involves consumers communicating with companies to send suggestions and questions via company Web sites

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Online Marketing

Types of Online Marketers

• Click-only marketers• Click-and-mortar

marketers

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Online Marketing


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Online Marketing


Click-only marketers operate only online without any brick-and-mortar presence

• E-tailers• Search engines and portals• Shopping or price comparison sites • Internet service providers (ISP)• Transaction sites • Content sites

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Online Marketing


E-tailers are dot coms that sell products and services directly to final buyers via the Internet

• Amazon• Expedia

Search engines and portals are ports of entry to the Internet

• Yahoo!• Google

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Online Marketing


Internet service providers (ISPs) provide Internet connections for a fee

• AOL• Earthlink

Shopping or price comparison sites provide product and price comparison information

• Yahoo! shopping

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Online Marketing


Transaction sites take commissions for transactions on their sites

• eBay

Content sites provide financial, news, research, and other information

• New York Times.com• ESPN.com

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Online MarketingTypes of Online Marketers

Click-and-mortar companies are brick-and-mortar companies with an online presence

Advantages of click-and-mortar companies include:• Known and trusted brand names• Strong financial resources• Large customer bases• Industry knowledge• Reputation• Strong supplier relationships• Providing customers with more options

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Online Marketing

Setting Up an Online Presence

Creating a Web site requires designing an attractive site and developing ways to get consumers to visit the site, remain on the site, and return to the site

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Online Marketing


Types of sites• Corporate Web site• Marketing Web site

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Online Marketing


Corporate Web site is designed to build customer goodwill and to supplement other channels, rather than to sell the company’s products directly to:

• Provide information• Create excitement• Build relationships

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Online Marketing


Marketing Web site is designed to engage consumers in interaction that will move them closer to a direct purchase or other marketing outcome

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Online Marketing

Designing Effective Web Sites

To attract visitors, companies must:• Promote in offline promotion and online

links• Create value and excitement• Constantly update the site• Make the site useful

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Online Marketing


The seven Cs of effective Web site design1. Context2. Content3. Community4. Customization5. Communication6. Connection7. Commerce

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Online Marketing


Context is the site’s layout

Content is the site’s pictures, sound, and video

Community is the site’s means to enable user-to-user communication

Customization is the site’s ability to tailor itself to different users or to allow users to personalize the site

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Online Marketing


Communication is the way the site enables user-to-user, user-to-site, or two-way communication

Connection is the degree that the site is lined to other sites

Commerce is the site’s capabilities to enable commercial transactions

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Online Marketing


The eighth CTo keep customers coming back, the site

needs to constantly change

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Online Marketing

Placing Ads and Promotions Online

Forms of online advertising

• Display ads• Search-related ads• Online classifieds

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Online Marketing


Display ads • Banners are banner-shaped ads found on a

Web site• Interstitials are ads that appear between screen

changes• Pop-ups are ads that suddenly appear in a new

window in front of the window being viewed• Rich media ads incorporate animation, video,

sound, and interactivity

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Online Marketing


Search-related ads are ads in which text-based ads and links appear alongside search engine results on sites such as Google and Yahoo! and are effective in linking consumers to other forms of online promotion

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Online Marketing


Other forms of online promotion include:

• Content sponsorships• Alliances• Affiliate programs• Viral advertising

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Online Marketing


Content sponsorships provide companies with name exposure through the sponsorship of special content such as news or financial information

Alliances and affiliate programs are relationships where online companies promote each other

Viral marketing is the Internet version of word-of-mouth marketing and involves the creation of a Web site, e-mail message, or other marketing event that customers pass along to friends

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Online Marketing

The Future of Online Advertising

Online advertising provides a useful purpose as a supplement to other marketing efforts and is playing an increasingly important role in the marketing mix

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Online Marketing

Creating or Participating in Web Communities

Web communities allow members to congregate online and exchange views on issues of common interest

• iVillage.com• MyFamily.com

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Online Marketing

Using E-mail

Marketers are developing enriched messages that include animation, interactivity, and personal messages with streaming audio and video to compete with the cluttered e-mail environment

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Online Marketing

Using E-mail

Spam is unsolicited, unwanted commercial e-mail messages

Permission-based marketing allows users to opt in or opt out of e-mail marketing

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Online Marketing

The Promise and Challenges of Online Marketing

Online marketing will remain an important approach in the marketing mix to:

• Build customer relationships• Improve sales• Communicate company and product

information• Deliver products and services more effectively

and efficiently

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Integrated Direct Marketing

Integrated direct marketing involves the use of carefully coordinated multiple media, multiple state campaigns

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Public Policy Issues in Direct Marketing

• Customer irritation, unfairness, deception, and fraud

• Privacy• Security

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Irritation, Unfairness, Deception, and Fraud

Irritation includes annoying and offending customers

Unfairness includes taking unfair advantage of impulsive or less-sophisticated buyers

Deception includes “heat merchants” who design mailers and write copy designed to mislead consumers

Internet fraud includes identity theft and financial scams

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Invasion of Privacy

The concern is that marketers may know too much about consumers and use this information to take unfair advantage

• Sale of databases• Microsoft

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A Need for Action

• California Online Privacy Protection Act (OPPA)

• Children’s Online Privacy Protection Act (COPPA)

• TRUSTe

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Discussion Question

Michael Dell began selling computers from his dorm room, and the rest is history. He is one of the world’s richest men and runs one of the largest companies.

But recently things have changed. Research the challenges facing Dell today and decide if the direct-marketing approach is still the best strategy for Dell.

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Review Questions

1. Define direct marketing and discuss its benefits to customers and companies

2. Identify and discuss the major forms of direct marketing

3. Explain how companies have responded to the Internet and other powerful new technologies with online marketing

4. Discuss how companies go about conducting online marketing to profitably deliver more value to customers

5. Overview the public policy and ethical issues presented in direct marketing

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PowerPoint created by:

Ronald Heimler

• Dowling College, MBA• Georgetown University, BS Business

Administration• Adjunct Professor, LIM College, NY• Adjunct Professor, Long Island

University, NY• Lecturer, California Polytechnic State

University, Pomona, CA• President, Walter Heimler, Inc.

Direct and Online Marketing: Building Direct Customer Relationships 17.

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Transcript of Direct and Online Marketing: Building Direct Customer Relationships 17.