Q4 Direct Marketing

Question 1

Growth of direct marketing (6)

Answer 1

1) consumer credit cards
2) expertise/direct marketing specialists
3) technological advances
4) changing structure of society
5) miscellaneous factors
6) demand by marketers for greater accountability

Question 2

Definitions

• direct marketing
• direct response media

Answer 2

1) direct marketing - a system of marketing by which an organisation communicates directly with customers to generate a response or transaction
2) direct response media - media used to seek a direct response from the consumer, including direct mail, telemarketing and the like.

Question 3

Direct combines with .. (6)

Answer 3

1) advertising
2) public relations
3) sales promotion
4) personal selling
5) support media
6) Internet

Question 4

Explanations

• advertising (1)
• public relations (1)
• sales promotion (1)

Answer 4

1) advertising
- direct marketing is in itself a form of advertising, whether though mail, print or TV, the direct response offer is the message itself.

2) public relations
- activities that often employ direct response techniques.

3) sales promotions
- company’s using direct marketing tools to inform customers of sales promotions.

Question 5

Explanations

• support media (2)
• personal selling (1)

Answer 5

1) support media
- to successfully implement direct marketing programs, companies must make a number of decisions. They must determine:
> what the programs objectives will be
> what markets to target
> what direct marketing strategies to use
> how to evaluate the effectiveness of the program

2) personal selling
- telemarketing and direct selling are two methods of personal selling used to generate sales.

Question 6

Direct marketing objectives

- behavioural outcomes (8)

Answer 6

1) induce sales/receive orders
2) receive enquiries
3) get customers to sales point/test drive
4) launch event registrations
5) encourage website visits
6) expressions of interest
7) entries into competitions
8) donations/votes

Question 7

Developing a data base (7 steps)

Answer 7

1) the product
2) into the data base MAW e.g. Filling in warranty card
3) digesting the data
4) an ideal consumer e.g. Clusters with common characteristics
5) using the knowledge e.g. Develop new products
6) sharing the data with retailers e.g. Fine tuning shelf displays
7) refining the database e.g. Continually update

Question 8

Objectives of data base marketing (4)

Answer 8

1) improve selection of market segments
2) stimulate repeat purchase
3) cross-selling other products
4) customer relationship management

Question 9

Improve selection of market segments (1)

Stimulate repeat purchases (1)

Answer 9

1) improve the selection of market segments
- some consumers are more likely to be potential customers than others.

2) stimulate repeat purchase
- once a purchase has been made, the customers name and other information are entered into the data parse. These preorder are proven direct market users, who offer high potential for repurchase.

Question 10

Cross-sell (1)

Customer relationship management (2)

Answer 10

1) cross sell
- customers who demonstrate a specific interest also constitute strong potential for other products of the same nature.

2) customer relationship management
- the aim of CRM is to establish a relationship with ones customers through a more personalised communisations and better target product or service offerings.
- for CRM to work effectively, a comprehensive data base is required along with specialised CRM software.

Question 11

A comprehensive data base (5)

Answer 11

1) name
2) gender
3) occupation
4) income
5) age

Question 12

Sources of database information (4)

Answer 12

1) the ABS
2) Australian post
3) service providers
4) associations for data driven marketing and advertising

Question 13

Negative perceptions of data base marketing (5)

Answer 13

1) privacy concerns
2) nuisance
3) overload/clutter
4) intrusive/interruptions
5) distrust

Question 14

Directing marketing media strategies

- 2 definitions

Answer 14

1) one step approach
- a direct marketing strategy in which the medium is used directly to obtain an order.

2) two step approach
- a direct marketing strategy in which the first effort is designed to screen or qualify potential buyers, while the second effort has the responsibility of generating the response.

Question 15

Directing marketing and strategies (7)

Answer 15

1) direct mail
2) catalogues
3) broadcast media
4) infomercials
5) home shopping
6) print media
7) telemarketing and SMS

Question 16

Direct mail (3)
Catalogues (2)

Answer 16

1) direct mail
- key to success of direct mail is the mailing list, which constitutes the database from which names are generated, and the ability to segment markets.
- segmentation on the basis of geography, demographics, and lifestyles has led to increased effectiveness.
- the lower cost of email and the convenience of the Internet have raised concerns among traditional direct mail marketers.

2) catalogues
- many companies use catalogues in conjunction with their more traditional sales and marketing communication strategies.
- catalogues are becoming available on the Internet for both consumer and b2b customers.

Question 17

Broadcast media (2)
Infomercials (3)

Answer 17

1) broadcast media
- direct marketing appears to have limited success in the broadcast industry.
- radio and TVs

2) infomercials
- a long commercial that ranges from several minutes to an hour.
- designed to be viewed as regular TV shows.
- uses both one and two step approaches.

Question 18

Home shopping channels (1)
Print media (2)

Answer 18

1) home shopping channels
- the development of till free telephone numbers, combined with the widespread use of credit cards has to led to a rise in the number of people who shop via their TV sets through home shopping channels.

2) print media
- magazines and newspapers are also used for direct marketing.
- these ads compete with clutter of other ads and because of the space is relatively expensive, response rates and profits may be lower than in other media.

Question 19

Telemarketing and SMS (3)

Answer 19

• effectively uses both one and two step approaches.
• telemarketing can be either inbound or outbound.
• problems associated with telemarketing includes its potential for annoyance in the business to consumer market.

Question 20

Internet (4)

Answer 20

• the Internet is a way to both communicate and sell directly.
• direct digital communication is related to both direct mail or email. Email can be highly targeted and relies on lists and databases .
• personalisation and preferences should be taken into consideration and subscribe and unsubscribe are the opt in and opt out mechanisms used.
• multichannel regaining is the ecommerce side of online marketing, with many organisations addressing the needs of those customers who state that they research products online but make their purchases through traditional outlets.

Question 21

Direct selling

• one point
• 2 examples
• 3 forms of direct selling

Answer 21

• an additional element of the direct marketing program is direct selling - the direct, personal presentation, demonstration and sales of products and services to consumers in their homes, clubs or workplace.
• e.g. Avon and Tupperware.
  1) network repetitive person to person selling
  2) non repetitive person to person selling
  3) party plans

Question 22

Explanation of the 3 forms + example

Answer 22

1) network repetitive person to person selling
- the salesperson visits the buyers home, job site or other location to sell frequently purchased products or services. E.g. Enjo

2) non repetitive person to person selling
- the salesperson visits the buyers home, job site or other location to sell infrequently purchased products or services e.g. Oxfam child sponsorship

3) party
- the salesperson offers products or services to groups of people through home or office parties and demonstrations e.g. Tupperware

Question 23

Advantages of digital marketing (9)

Answer 23

1) selective reach
2) segmentation capabilities
3) frequency
4) creative flexibility
5) timing
6) personalisation
7) costs
8) measures of effectiveness
9) testing

Question 24

Selective reach (2)
Segmentation capabilities (1)

Answer 24

1) selective reach
- direct marketing lets the advertiser reach a large number of people and reduces or eliminates waste coverage.
- a good database allows for minimal waste, as only those consumers with the highest potential are targeted.

2) segmentation capabilities
- lists allow segmentation on the basis of geographic area, occupation, demographics and job title. Combining this information with the geocoding capabilities of value segments, markets can develop effect segmentation strategies.

Question 25

Frequency (2)
Creative flexibility (1)
Personalisation (1)

Answer 25

1) frequency
- it is possible to build up frequency levels.
- frequency can be built up by developing a multichannel strategy and being available in different media.

2) creative flexibility
- can take on a varieties of forms from flat mail to unique items and unusual sizes.

3) personalisation
- no other advertising medium can personalisation the message as well as direct media.

Question 26

Limitations of direct marketing (6)

Answer 26

1) image factors
2) accuracy
3) content support
4) rising costs
5) interactivity and negativity
6) do not call/do not mail registers

Question 27

Accuracy (2)
Content support (1)

Answer 27

1) accuracy
- if the databases are not kept current, selectivity will decrease.
- the cost of generating a lead can range from a few dollars to as much as hundreds depending on its quality.

2) content support
- in direct response advertising, mood creation is limited to the surrounding problem or editorial content. Direct mail and online services are unlikely to create a desirable mood.

Question 28

Rising costs (2)
Interactivity and negativity (1)

Answer 28

1) Rising costs
- as postal rates increase, direct mail profits are immediately and directly impacted.
- the low cost of email has led many companies to switch to this medium.

2) interactivity and negativity
- if customers are not happy and an organisation does not respond in a timely and helpful manner, then it is immediately apparent to all if it is online, and if it originated in any other media it may gravitate to online quickly.

Question 29

Explanations:

• consumer credit cards
• the changing structure of society and the market
• technological advances
• demand by marketers for greater accountability

Answer 29

1) consumer credit cards - this makes it feasible for consumers to purchase both low and high ticket items through direct response channel and assures sellers that they will be paid.
2) the changing structure of society and market - many people are becoming ‘time poor and money rich.’ Women are also working more than previously.
3) technological advances - the rapid technological advancement of electronic media payment systems, computers and websites has made it easier for consumers to shop directly and for marketers to be successful in reaching the desired targets.
4) demand by marketers for greater accountability - direct marketing communication lends itself to behavioural and measure able outcomes and therefore is more clearly accountable.