Clow Imc08 Im 11

Chapter 11
Database and Direct Response Marketing

and Personal Selling
CHAPTER OBJECTIVES
Students should be able to answer the following questions:
11.1 What role does database marketing, including the data warehouse, data coding and
analysis, and data mining, play in creating and enhancing relationships with
customers?
11.2 How can database-driven marketing communication programs help personalize
interactions with customers?
11.3 How do database-driven marketing programs create sales and build bonds with
customers?
11.4 When should direct response marketing programs be used to supplement other
methods of delivering messages and products to consumers?
11.5 What are the tasks involved in developing successful personal selling programs for
consumers and businesses?
11.6 How should database marketing and personal selling programs be adapted to
international settings?
OVERVIEW
The secrets to developing loyalty include recognition, relationships, and rewards. Building
them requires effective use of the IMC Promotional tools displayed in Figure 11.1:
1. Database and direct response marketing

2. Sales promotions
3. Public relations and sponsorships
Sephora
Cosmetics and the more general beauty industry offer a rich environment for creating
successful loyalty programs, where Sephora has enjoyed a great deal of success.
Copyright © 2018 Pearson Education Ltd. Page 11- 1

One key to the company’s success has been the highly sophisticated personalized data
program.
Questions for Students:
1. Have you ever shopped at Sephora? Describe your experience.
2. What other products primarily targeted to women would be well served by

loyalty programs?
The first part of this chapter examines database marketing, including methods for building
data warehouses, data coding, data mining, and data-driven communications and marketing
programs.
Three key data-driven marketing programs are permission marketing, frequency programs,
and customer relationship management.
Database programs are also used for direct response marketing techniques, including direct
mail, television programs, other traditional media, alternative media, and telemarketing.
Databases are also used to support personal selling.
Objective 11.1: What role does database marketing, including the data
warehouse, data coding and analysis, and data mining play in
creating and enhancing relationships with customers?
Database Marketing
Database marketing involves collecting and utilizing customer data for the purposes of
enhancing interactions with customers and developing customer loyalty.
Successful database marketing emphasizes (1) identifying customers and (2) building
relationships with them.
Figure 11.2 summarizes the tasks involved in database marketing.
Building a Data Warehouse
A data warehouse holds all customer data.
The operational database contains the transactions individuals have with the firm and
follows accounting principles.

A wide variety of information about customers themselves, purchasing patterns and histories,
preferences, and marketing programs to which they responded should be included.
Examples of data and analyses found in a standard marketing data warehouse include the
following:
• Customer names and addresses

• Email addresses and the cookies that record visits to the company’s
website
• History of every purchase transaction
• History of customer interactions, such as inquiries, complaints, and returns
• Results of any customer surveys
• Preferences and profiles supplied by the customer
• Marketing promotions and response history from marketing campaigns
• Appended demographic and psychographic data
• Database coding such as lifetime value and customer segment clusters
Email, Mobile, and Internet Data
Whenever possible, collect consumer email addresses and utilize cookies to record website
visit patterns.
Most database programs take advantage of digital tracking to register and store website visits
and browsing patterns regardless of the type of digital device (computer, tablet, or mobile
phone).
This information allows for personalization of the firm’s website for individual customers.
Purchase and Communication Histories
Both histories are important to a database program; what customers bought and a record of
other interactions with the company (complaints, inquiries, compliments).
Personal Preference Profiles
The goal is to record what works and what does not in terms of marketing efforts directed at
specific consumers.
Customer Information Companies
Information may be provided by outside firms, such as Knowledge Base Marketing,

Donnelly, Dialog, and Claritas.

Geocoding
Geocoding is the process of adding geographic codes to each customer record so the person
can be located on a map.
CACI Coder Plus is a commonly used software to record customer activity.
Question for Students: Are these tactics invasions of privacy?
Database Coding and Analysis
The goal of this process is to be able to personalize marketing messages to customers.
Lifetime Value Analysis
Lifetime value is the figure that represents the profit potential of a customer throughout the
lifetime of a relationship. It can be for a specific individual or for a customer segment.
The key figures are revenues, costs, retention rates, and visits or purchases per period
(normally one year).
Lifetime value analysis stresses the value of investing in a long-term relationship with a
customer or set of customers.
Customer Clusters
Coding can be used to group customers into clusters based on a wide variety of criteria.
Location Data Tracking
The newest form of data analytics is based on information provided by mobile GPS
technology.
Mobile phone companies can track customer locations and combine it with profile
information.
This type of information may be valuable to sports properties as well as restaurants and
retailers.
Data Mining
Data mining is a program used to develop a profile of a firm’s best customers.
Data mining normally involves one of two approaches:

1. Building profiles of customer groups.
2. Preparing models that predict future purchase behaviors based on past purchases.
Figure 11.3 displays the purposes served by data coding and data mining.
Objective 11.2: How can database-driven marketing communication

programs help personalize interactions with customers?
Database-Driven Marketing Communications
Figure 11.4 details why the internet is important for customer communications, including the
following reasons:
 It is the cheapest form of communication.

 It is available 24/7.
 Metric analysis reveals that the customer read the message, time it was read, and how
much time was spent reading it.
 Customers are able to access additional information whenever they want.
 It can build a bond with customers.
The internet provides instant communications, easy and viable analyses, and messages can be
adapted to specific customers.
Identification Codes
The first step is to assigning individual customers IDs and passwords to use. This facilitates
all other communications.
Personalized Communications
Building customer profiles leads to more individualized messages being sent to them.
Cookies are uses to facilitate building profiles.
Customized Content
In addition to personalized communications, data can be analyzed in order to customize

content.
As an example, Netflix can make movie suggestions based on past rentals.
In-Bound Telemarketing
The goal is to have quick access to customer information for the person receiving the call so
that the employee can personalize conversations with customers.

Trawling
Trawling is the process of searching the database for a specific piece of information for
marketing purposes (e.g., Home Depot finding people about to move and contacting them).
Objective 11.3: How do database-driven marketing programs create sales

and build bonds with customers?
Database-Driven Marketing Programs
The most common database-driven marketing programs are
 Permission marketing
 Frequency programs
 Customer relationship management
Permission Marketing
In a permission marketing program, the company only sends promotional information to

customers who give permission. This provides the following advantages:
 Response rates are often higher.

 Marketing costs are reduced because people who are not interested in the
products do not receive marketing materials.
 Customers can be reached by telephone, mail, or email.
Keys to Success in Permission Marketing
For a permission marketing program to succeed, the marketing team ensures that the
recipients have agreed to participate.
The marketing material should be relevant to the consumer receiving it.
The marketing team monitors responses and customizes the permission program to meet
individual customer needs.
Figure 11.5 lists the steps of permission marketing, as follows:
1. Obtain the permission of the consumer.

2. Once the consumer has consented, the marketer is then ready to offer the
consumer a full curriculum of information.
3. Reinforce the incentives by giving new ones.
4. Increase the permission level from the consumer to include information about the
consumer’s family, life, hobbies, interests, attitudes, and opinions.

5. Leverage the information gathered in step four to provide for the needs of the
customer more effectively.
Permission Marketing Enticements
Empowerment means consumers believe they have power throughout the relationship and not
just at the beginning when they agreed to join the program.
Figure 11.6 lists reasons customers consumers opt-in to permissions marketing programs:
 Sweepstakes or chance to win (41 percent)

 Found site randomly (37 percent)
 Email required to access content (38 percent)
 Already a customer (40 percent)
 Friends recommended (24 percent)
Figure 11.7 provides a list of motives that help retain customers in a permission marketing
relationship
Empowerment means consumers believe they have power throughout the relationship and not
just at the beginning when they agreed to join the program.
Reciprocity is a sense of obligation to the company.
Question for Students: Are you part of any permission marketing programs? What do
you like, or dislike, about them?
Frequency Programs
A frequency program, or a loyalty program is an incentive plan designed to cause customers

to make repeat purchases. Companies develop frequency programs for two primary reasons:
1. To develop loyalty in customers

2. To match or preempt the competition
Figure 11.8 identifies the benefits of loyalty programs cited by customers.
Goals
Figure 11.9 shows the common objectives of frequency programs:
 Maintain sales, margins, or profits

 Increase loyalty of existing customers
 Preempt or match a competitor’s frequency program
 Induce cross-selling to existing customers

 Differentiate a parity brand
 Preempt the entry of a new brand
Principles
Successful loyalty programs are based on two principles: added value and reciprocity.
Data-Driven Customization
The key to successful frequency programs is the development of a database that allows for
accumulation of purchase and personal data.
Collecting data allows companies to customize loyalty programs to meet each individual’s
needs.
Maximize Motivation
The best target for a frequency program is the group in the middle, neither low nor heavy
users. Incentives can encourage this group to continue to buy because they often will make
enough purchases in order to redeem incentives.
Question for Students: Do you use frequency programs? Which ones?
Customer Relationship Management
Customer relationship management programs allow companies to use databases to customize

products and communications with customers with the goals of higher sales and profits.
Unfortunately, however, most CRM endeavors were not successful.
The two primary metrics of CRM are
1. lifetime value of the customer

2. share of customer
Share of customer refers to the percentage of expenditures a customer makes with one
particular firm compared to total expenditures in that product category.
A CRM program relies on quality service. CRM programs fail because they
 Fail to identify markets

 Roll out the program before changing the organization
 Are technology driven rather than customer driven
 Stalk customers, rather than woo customers

Objective 11.44: When should direct response marketing programs be used
to supplement other methods of delivering messages and
products to consumers?
Direct Response Marketing
Direct response marketing (or direct marketing) is the targeting of products to customers
without the use of other channel members.
A list of methods to carry out direct marketing is provided in Figure 11.10.
Direct marketing programs are designed to develop closer relationships with customers
through the following direct contact:
 Mail
 Catalogs
 Bill Stuffers
 Telemarketing
 Mass media (t.v., radio)
 Internet (search engine)
 Email
Direct Mail
The most common form of direct marketing is through the mail.
Types of Commercial Lists
A response list, which consists of customers who have made purchases or responded to direct
mail offers in the past.
A compiled list provides specific information about customers who meet a specific
demographic profile.
The primary advantage of direct mail is that it can be targeted to various consumer groups
with measurable results.
The primary disadvantage of direct mail is clutter.
Catalogs
Many consumers tend to be more favorable in their responses to catalogs because they are
viewed at one’s leisure.

Many consumers save catalogs and pass them along. The key to successful cataloging is an
enhanced database.
Catalogs are widely used in business-to-business marketing situations.
Mass Media
The most common forms of mass media used in direct marketing are television, radio,
magazines, and newspapers.
On television, infomercials can be part of an overall network (Home Shopping) or prepared

for more traditional channels.
Internet and Email
The internet provides a new channel for direct marketing. For most companies, the internet is
a place for consumers and businesses to get more information. Many companies use the
internet to display goods and services customers can order directly.
Internet direct marketing programs are not only fast but can also suggest the goods and
services to the consumer that are based on that individual’s past purchasing or click-stream
behaviors.
Direct Sales
In the consumer sector, companies such as Amway, Mary Kay, and Avon use direct sales.
The salesperson contact friends, relatives, coworkers and others and provides them with
small catalogs or marketing brochures.
Alternatively, individuals may host parties and invite friends and relatives to see products.
Telemarketing
Inbound telemarketing occurs when an individual initiates a call to a company. When a

customer places an order, cross-selling can occur by offering other products or services.
The least popular method for direct marketing is outbound telemarketing. Cold calling
consumers yields few buyers and alienates many people.
Objective 11.5: What are the tasks involved in developing successful personal
selling programs for consumers and businesses?

Personal Selling
Personal selling offers a face-to-face opportunity to build relationships with consumers. It

takes place in both consumer and business-to-business transactions.
In relationship selling, the goal is to create a customer for life, not for a single transaction.
Figure 11.11 lists the steps in the selling process.
Question for Students: Do you get annoyed when a salesperson is “pushy?”
Generating Leads
Referrals are ideal leads because most recommendations are made by satisfied individuals.
Referral marketing is a strategic approach designed to generate leads from both customer and
noncustomer sources.
Figure 11.12 identifies types of referrals.
Experience referrals directly result of a company’s work and typically come from current
and former customers.
An expertise referral is made by a non-client.
Reputation referrals are provided by non-clients. They are based on the reputation that a
company holds in a community or industry.
The final type method for generating leads is a network referral. These referrals are the least
attractive because the prospect has limited knowledge of the company.
For generating leads, databases provide quality leads, especially internal databases. Most of
these leads are generated through some type of advertising or inquiry.
Direct response ads in various media such as television, radio, magazines or newspapers can
generate leads. Online ads on various websites or search engines may also generate leads.
Qualifying Prospects
Qualifying prospects means evaluating leads on two dimensions: (1) the potential income
the lead can generate and (2) the probability of acquiring the prospect as a customer.

Knowledge Acquisition
During the knowledge acquisition phase, salespeople or individuals within the sales
organization gather information about the prospect in preparation for a sales call.
Figure 11.13 identifies typical information to be gathered.
Understanding the prospect’s business, customers, and needs will be extremely helpful.
The Sales Presentation
The types of sales presentations used typically fall into one of these categories: (1) stimulus-
response, (2) need-satisfaction, (3) problem-solution, and (4) mission-sharing.
A stimulus-response sales approach, often called a “canned” sales pitch, uses specific
statements (stimuli) to elicit specific responses from customers.
The need-satisfaction sales approach strives to discover a customer’s needs during the first
part of the sales presentation and then provide solutions to those needs.
The problem-solution sales approach requires employees from the selling organization to
analyze the buyer’s business. It usually involves a team of individuals, such as engineers,
salespeople, and other experts.
In the mission-sharing approach, two organizations develop a common mission. They then
share resources to accomplish that mission. This partnership resembles a joint venture.
Handling Objections
The most common methods of handling objections are listed in Figure 11.14.
With the head-on approach, the salesperson answers the objection directly.
The indirect approach method allows the salesperson to never really tell the customer he
is wrong. Instead, the salesperson sympathizes with the customer’s viewpoint and then
provides the correct information.
When the customer’s objection is partially true, then salesperson may utilize the
compensation method. With this approach the salesperson replies “yes, but ...” and then
explains the product’s benefits or features that answer the customer’s objection.
The sales rep can use a feel, felt, found method. The salesperson allows the customer to talk
about fears or worries. In response, the salesperson can relate personal experiences or
experiences of other customers who had the same fears and worries and how the product
resulted in a positive experience.

Closing the Sale
Figure 11.15 identifies some of the most common sales-closing methods.
In direct close, the salesperson asks for the order outright.
The trial method approach means the salesperson solicits feedback that provides
information regarding what will be the customer’s reaction, without asking directly for
the sale.
Another alternative is to summarize the product’s benefits and how it meets the customer’s
needs prior to asking for the order.
Sometimes a salesperson asks a serious of questions along the way, ensuring the customer
will continuously respond “yes.”
A salesperson can also assume the customer will say yes.
Follow-Up
Keeping a customer happy after the purchase will result in repeat business, customer loyalty,
and positive referrals.
Quality follow-up programs are cost effective ways to retain customers, which is much
cheaper than continually finding new customers.
Objective 11.6: How should database marketing and personal selling

programs be adapted to international settings?
International Implications
One decision is whether data should be country-specific, especially when two nations share a
small geographic space.
Direct marketing programs must be adapted to local conditions, technologies, and delivery
systems.

MyMarketingLab
Go to mymktlab.com to complete the problems marked with this icon .
Important Note to Professors:
The MyLab feature at Pearson will grant you access to the Integrated Campaigns in Action
within the Instructor’s Resource section.
The authors’ blog for professors and students may be found at http://blogclowbaack.net/
Both methods contain actual print materials produced for the campaign. Broadcasts
material such as video ads, TV ads, and radio ads are embedded using YouTube and
Pearson servers.
These features bring to life the exciting process of building integrated advertising and
marketing campaigns. Most important, you will have access to insights and background
information from the agencies and the companies involved in how the campaigns were
created.
IMPLICATIONS FOR DATABASE MANAGERS

(Note to professors—these materials are not in the text. They provide a method for you
to summarize the chapter in a different way.)
Insist on the right equipment to do your job:
 Computers
 Scanners for cash registers
 Software packages such as CACI Coder/Plus (for geocoding)
Develop a high quality staff. Train and retrain employees frequently. Stay on the cutting edge
of technology and information management techniques.
Get to know the entire marketing department. Generate discussions in which you spell out the
items you can provide:
 Customer locations by geographic area

 Demographic information about key buyers
 Buyer profiles
 Attitudinal tendencies of buyers
 Characteristics of businesses most likely to make purchases
 Tendencies of business buyers, especially the decision maker

Attend meetings and ask to be invited into discussions where data may be applied:
 Advertising creatives
 Promotions managers
 Advertising account executives
 Sales managers
 Customer service managers
 Conversations with others in the market channel (wholesalers and retailers)
Constantly remind yourself of the goals of the database program. Make sure they are
consistent with the firm’s IMC goals and major theme.
Constantly re-evaluate the effectiveness of various direct marketing programs. Be innovative.

Try new approaches and new media.
Make sure your database management program is carefully aligned with the firm’s website.
Use the website in direct marketing programs, whenever possible.
Consider the use of permissions marketing programs for your organization. Make sure the
data you would receive is unique and valuable.
Seek out cost information for frequency programs. Develop techniques to see who collects
incentives, and whether or not the benefits of the program outweigh the costs, especially
with regard to competitive efforts.
REVIEW QUESTIONS
11-1. What is the primary benefit of database marketing?
Enhancing customer loyalty is the primary benefit of database marketing.
11-2. Give examples of data and analyses that can be found in a standard marketing
data warehouse.
These include customer names and addresses; email addresses and digital records of
visits to the company’s website; histories of every purchase transaction; histories of
customer interactions such as inquiries, complaints, and returns; results of any
customer surveys; preferences and profiles supplied by the customer; marketing
promotions and response history from marketing campaigns; appended demographic
and psychographic data; and database coding such as lifetime value and customer
segment clusters.
11-3. Why are customer email addresses so useful?

Email provides cost-effective channels of communication to be used in building
relationships with customers.
11-4. What is the purpose of customer preference profiles?
Customer preference profiles have specific information about each customer’s

personal preferences. They are constructed in various ways, including customer
surveys and through information provided on an application for a loyalty card. When a
company initiates a contact with a customer, the information goes onto the database,
along with the customer’s response. This information provides a rich history of what
works and what does not. It further allows for customization of communication
methods for each customer, which leads to the highest probability of success.
11-5. How do you calculate the cost of acquiring a new customer?
It can be calculated by dividing the total marketing and advertising expenditures by

the number of new customers obtained.
11-6. How might a financial institution cluster their customers?
A financial institution might cluster their customers by the number of accounts or the
types of accounts.
11-7. In location data tracking, what is meant by the term “hashed”?
“Hashed” refers to the process of anonymizing data so that specific individuals

cannot be identified.
11-8. Explain how consumer profile information is used when sending

communications to customers.
Building customer profiles leads to more individualized messages being sent to them.
Cookies are uses to facilitate building profiles.
11-9. What is trawling?
Trawling is the process of searching the database for a specific piece of information
for marketing purposes.
11-10. Describe a permission marketing program. What are the key benefits of this
approach?
A permission marketing program is where the company only sends promotional

information to consumers who give the company permission to do so. The benefits

are that consumers do not believe they are receiving unsolicited junk mail. Response
rates are generally higher, and costs are reduced when permission is given first.
11-11. What are the keys to an effective permission marketing program?
The steps involved in developing an effective permissions marketing program are:
 Obtain permission from the customer.

 Offer the consumer a curriculum over time.
 Reinforce the incentive to continue the relationship.
 Increase the level of permission.
 Leverage the permission to benefit both parties.
11-12. Describe a frequency program.
A frequency program is an incentive plan designed to cause customers to make repeat

purchases. The program should add value to what the product offers or provide a
unique new feature. Next, the more effort a customer expends to participate in a
frequency program, the greater the value of the reward should be. Also the program
should be designed to maximize the customer’s motivation to make the next
purchase.
11.13. What is customer relationship management?
Customer relationship management (CRM) is a program to build long-term loyalty

and bonds with customers through the use of a personal touch facilitated by
technology.
11-15. What is meant by the term share of customer?
The term share of customer refers to the percentage of expenditures a customer

makes with one particular firm compared to total expenditures in that product
category.
11-15. What is direct response marketing?
Direct marketing programs are designed to develop closer relationships with

customers through direct contact.
11-16. Explain how response lists and compiled lists are used in direct mail programs.
A response list consists of customers who have made purchases or responded to

direct mail offers in the past. A compiled list provides specific information about
customers who meet a specific demographic profile.

11-17. Explain the two ways infomercials are presented as parts of a direct response
program.
On television, infomercials can be part of an overall network (Home Shopping) or

prepared for more traditional channels.
11-18. Describe relationship marketing and the four types of referral marketing.
In relationship selling, the goal is to create a customer for life, not for a single
transaction.
Experience referrals directly result of a company’s work and typically come from
current and former customers.
An expertise referral is made by a non-client.
Reputation referrals are provided by non-clients. They are based on the reputation
that a company holds in a community or industry.
The final type method for generating leads is a network referral. These referrals are
the least attractive because the prospect has limited knowledge of the company.
11-19. What steps are involved in the personal selling process?
Generating leads, qualifying prospects, knowledge acquisition, the sales presentation,

handling objections, closing the sales, and follow up.
11-20. Identify the four types of sales presentations that typically used by sales reps.
(1) stimulus-response, (2) need-satisfaction, (3) problem-solution, and (4) mission-

sharing
11-21. What types of sales closing methods are available to salespeople?
(1) The direct close, or directly asking for the sale, (2) trial method, soliciting
feedback first, (3) summarization, (4) continuously ask questions with the answer
“yes,” (5) assume the sale has been made and move forward.
CRITICAL THINKING EXERCISES

Discussion Questions
11-22. Assume you are the account executive at a database marketing agency. A local
music retailer with four stores has asked you to develop a database for the

company. What information should be in the databases? How would you build
a data warehouse and where would you obtain the data? Be specific.
Student answers will vary based on their personal response. Refer to the MyLab for
an opportunity to assign this question, and all starred MyLab questions, to a student
discussion board.
A database developer would seek to achieve the two primary objectives of database
marketing: to identify customers and build relationships. It would be important to the
kinds of data that would be best for the music retailer. Do they carry sheet music,
instruments, and offer repair services? Do they provide music lessons? Are all their
products sold online? Do they have institutional buyers, such as local schools? The
type of information needed would come from high school band teachers, from in-
store purchases, from internet visits to the company’s website, from band contests
(where groups of band are in the same location), and possibly other venues.
11-23. The Chic Shaque sells contemporary fashions, bedding, bath, gifts and home
décor items in its 14 stores. Explain each of the data coding processes of lifetime
value, customer clusters, and location-data tracking. For each coding method,
describe how the Chic Shaque could use the data coding process in its database
marketing effort.
discussion board.
Lifetime value is the figure that represents the profit potential of a customer
throughout the lifetime of a relationship. It can be for a specific individual or for a
customer segment.
Customer cluster coding can be used to group customers into clusters based on a wide
variety of criteria.
Location-data tracking is the newest form of data analytics and is based on

information provided by mobile GPS technology. Mobile phone companies can
track customer locations and combine it with profile information.
11-24. Hickory Outdoor is a retail store that sells fishing, hunting, camping, and other
outdoor type of equipment and supplies, including various items for a number
of outdoor sports. The company has built a database of its customers over the
last five years. This means the marketing team can use data mining to improve
its marketing efforts. Suggest ways data mining can be used. What type of
marketing programs would you suggest based on data mining? What other
types of marketing programs can be developed from the database?
Data mining normally involves one of two approaches:

1. Building profiles of customer groups
2. Preparing models that predict future purchase behaviors based on past purchases
Both of these would have value in identifying customer types (family camping versus
camping on a hunting trip) and ways to reach them.
11-25. Karen’s Formal Dress is a retailer specializing in formal and wedding wear. She
has a database with more than 3,000 names of individuals who have purchased
or rented formal wear. She would like to develop a permission marketing
program. How can the marketing team encourage individuals to give permission
to receive marketing materials? Once the company has the customer’s
permission, how can the relationship be continued to make it beneficial to both
the consumer and to Karen’s Formal Dress? Describe the methodology Karen
should use in her permissions marketing program to include types of materials,
methods of distribution, and incentives.
A permission marketing program might be helpful for wedding coordinators and

planners as well as individual customers. They would need to be somehow driven to
the site just as wedding plans begin to develop. Frequency programs may work for
coordinators and planners but do not make much sense for individual customers, who
should plan to only marry once. The same true is for customer relationship
management programs.
11-26. A primary reason for developing a frequency program is to encourage

customers to be loyal to a business or brand. For each of the following products,
discuss the merits of a frequency program. What types of incentives would
individuals need to join the frequency club and then participate in the program?
a. Local restaurant
b. Auto repair service
c. Printing service
d. Clothing retailer
discussion board.
11-27. Suppose you have been hired as a marketing intern for Centric Federal Credit
Union and asked to develop a direct response marketing campaign. For each
direct response marketing method, describe how Centric could utilize it. Be
specific with the description of the campaign in terms of how and where you
would obtain names and type of media outlets used. When you have finished,
rank the methods of direct response marketing in terms of their desirability for
Centric. Justify your ranking.

discussion board.

customers through direct contact:
 Mail
 Catalogs
 Statement stuffers
 Telemarketing
 Mass media (tv, radio)
 Email
Student rankings will vary.
11-28. Examine the forms of direct response marketing shown in the graph in
Figure 11.10. Which ones have you responded to in the past? Which ones are
most likely to influence your purchase decisions? Which ones are the least
likely? Explain for each method your personal responses over the last year.

customers through direct contact:
 Mail
 Catalogs
 Statement stuffers
 Telemarketing
 Email
Student answers will vary.
11-29. Interview five individuals. Ask each person whether they have ever received any
sales calls on either their landline or their mobile phone. If they have had such
calls, have they ever bought anything as a result of the call? Was the call from a
business they were already buying from or had bought from in the past? What
are their views about telemarketing? Do they feel that it is sufficiently regulated
in your own country? Share your own findings with the rest of the class.
Student answers will vary. Telemarketing is fairly common around the world. There
are varying degrees of protection and regulation. Call lists exchange hands for
significant sums of money.

11-30. Formal and staged sales presentations at hotels and other venues are fairly
common across the world. How are the potential customers identified and
persuaded to attend? What kinds of incentives are offered? Are they common in
your own country? Do you know anyone that has attended one? Were they
persuaded by the slick sales presentation?
Student answers will vary. These will typically be high ticket items such as time
shares, jewelry and watches, technology, and property deals. Incentives usually
include food and drink, and guaranteed discounts.
11-31. According to the Arabian Gazette, it is word-of-mouth marketing through

referral networks that still remains the best approach to connect with customers
across the Middle East region. Formal referral networks are fairly new to the
Middle East; informal ones are still the norm. In the role of a business aiming to
create a formal referral network in the Middle East, how would you begin the
process?
Student answers will vary. The article suggests that “hard contact” networks aim to
ensure that all partners meet around once a week and build a relationship that focuses
on referring business to one another.
INTEGRATED LEARNING EXERCISES
11-32. Pick one company that sells clothing. Go to the company’s website. What
evidence do you see of database marketing and of personalization of the
website? Describe a database marketing program that the company could use to
reach consumers such as yourself.
Student responses will vary by the site chosen.
11-33. Agencies such as Selligent (www.selligent.com) suggest that personalized email

marketing campaigns can generate an uplift of 600 percent in revenue. They
point to the fact that personalized emails are 29 percent more likely to be
opened and enjoy a 41 percent higher click-through rate. How would you build
a personalized email database?
Student answers will vary, but customers should be encouraged to sign in or register
with the brand. They should also be encouraged by being offered relevant,
personalized content and branding.
11-34. Describe each of the database marketing communications methods identified

in the chapter. Go to the Web site of Sole Rebels (www.solerebels.com).
Discuss each of the database-driven marketing communication methods
presented in the chapter in relation to Sole Rebels. Explain the importance of

each and describe how Sole Rebels could use each to enhance its
communications with visitors to its Web site.
Student answers will vary. There are some useful clues and ideas at
www.solerebels.com/pages/solerebels-101#12.
11-35. According to the Economist Intelligence Unit, the Chinese retail market is
expected to be worth $8 trillion by 2022, double the worth of the U.S. retail
market. In 2015, Chinese consumers spent more online than any other country’s
buyers. Suggest how you would begin to create a targeted database of Chinese
consumers. What obstacles might stand in your way of collecting and
organizing the data?
Student answers will vary, but the main problem is the reluctance of Chinese
consumers to interact directly with overseas suppliers. Language, use of search
engines, currency, payment methods, and several other key issues are reasonable
considerations.
11-36. A shock decision in 2015 saw the European courts judge that U.S. corporations
could no longer legally hold CRM data on European customers. Data
aggregators such as Facebook, LinkedIn and Google, which sell user data to
businesses, have split their operations so that servers in the U.S. no longer hold
the data. Investigate how this ruling has affected other global corporations.
Following four years of negotiations, the final version of the General Data Protection
Regulation Act (GDPR) was signed in December 2015. A summary of its impact and
likely outcomes can be found at www.computerweekly.com/news/4500270456/EU-
data-protection-rules-affect-everyone-say-legal-experts.
11-37. Gulf News distributes some 75 million copies per year across the United Arab
Emirates. Each day, 120,000 copies are distributed, mainly to households and
offices. This makes the newspaper one of the most effective direct-marketing
delivery methods in the region. Examine their Web site (gulfnews.com) and
identify what they can offer and how they target consumers.
Student answers will vary. The material on the website is comprehensive in terms of
the range of options, pricing and market penetration.
11-38. Sending out cold emails is just as bad as making cold sales calls; it rarely does a
business much good to contact potential customers that they have never had a
relationship with in the past. So what are the options? How would you avoid
buying a poor-quality mailing list for direct marketing? What should you look
for in a mailing list to determine its quality?

Student answers will vary. There are several ways of checking the quality of the list,
such as age, test bounce rate, and relevance to the product or service being sold.
11-39. Suppose you are the marketing manager for a chain of clothing stores opening
in Singapore aimed at the youth market. Select five different database agencies
you could purchase likely leads from and explain why they were chosen.
Identify the different services offered by the agencies that would be of interest to
you. Explain how that service could be used in your direct response marketing
campaign.
Student answers will vary. They can use a search engine to identify and then to select
suitable agencies for the task.
11-40. Use the internet to find three companies or organizations that offer advice to
salespeople. Write a report about the methods the sites suggest and how those
tactics compare to the materials presented in this chapter. Use screenshots to
enhance your report and provide the URL of the three companies.
Student answers will be based on the websites they identify. This is an effective
exercise to share in class.
11-41. In your own words describe each of the methods of handling objections and
closing sales presented in this chapter. Go to YouTube and locate two videos,
one that discusses handling objections and the other that discusses how to
close sales. Provide the URLs of the two videos. Describe the methods
presented in the videos and how it is similar or different than the information
presented in the textbook.
discussion board.
Student Project: Creative Corner

The first part of the assignment is to create a leaflet that encourages the company’s target
market to book a table and join the loyalty program. The second part is to develop an e-mail
promotion service that offers a birthday present to members in the database.
Blog Exercises
Access the authors’ blog for this textbook at the URLs provided to complete these
exercises. Answer the questions that are posed on the blog.

11-42. Database marketing: http://blogclowbaack.net/2014/05/12/database-
marketing-chapter-11/
11-43. Direct response marketing: http://blogclowbaack.net/2014/05/12/direct-
response-marketing-chapter-11/
11-44. Personal selling: http://blogclowbaack.net/2014/05/12/selling-chapter-11/
These exercises provide you with an additional tool to engage your students.
CASES
Case 1 Salon Sensational
11-45. Identify the types of data Jennifer should collect from her customers and how
she could obtain it.
She would want the same information as any business: The operational database
would contain the transactions individuals have with the firm. The marketing
database would contain information about current customers, former customers, and
prospect, plus information regarding various marketing efforts used to reach them.
The goal would be to identify customers and build relationships with them, which
would be especially important in this type of business.
11-46. Suppose Jennifer wants to start a loyalty card program to build her database.
Design a flyer that could be handed to customers of the salons encouraging them
to join the loyalty program. What benefits would customers receive? In
exchange, what information would Jennifer request from each customer?
Student answers should note that all of the information from operational and
marketing databases would be valuable.
11-47. Once the database is built, what database-driven marketing communications

should Salon Sensational send out to individuals in its database?
The database should send personalized communications, create customized content,

and be useful in trawling programs. In-bound telemarketing probably would not be
helpful to this company.
11-48. Which direct response marketing programs would be helpful to Jennifer? How
would they be of value? Explain how Jennifer could use each to increase
purchase frequencies and visits to her salons.
The choices include the following:

 Mail
 Catalogs

 Stuffers
 Telemarketing
 Email
Student answers will vary. Catalogs would be found in the salon.
11-49. What types of personal selling tactics should stylists use? Which should not be
used? Why?
Relationship building would be the key. Hard sell would work against the stylists.
11-50. What methods for overcoming objections would best serve Salon Sensational
when selling hair care products?
With the head-on approach, the stylist answers the objection directly.
The indirect approach method allows the stylist to never really tell the customer
she is wrong. Instead, the stylist sympathizes with the customer’s viewpoint and
then provides the correct information.
When the customer’s objection is partially true, then the stylist may utilize the
compensation method. With this approach the salesperson replies “yes, but ...”
and then explains the product’s benefits or features that answer the customer’s
objection.
The stylist can use a feel, felt, found method. The salesperson allows the customer to
talk about fears or worries. In response, the salesperson can relate personal
experiences or experiences of other customers who had the same fears and worries
and how the product resulted in a positive experience.
Student responses will vary.
Case 2 The Travel Agency Dilemma
11-51. How might database marketing, including the data warehouse, data coding and
analysis, and data mining, help a travel agency create and enhance
relationships with customers and potential customers?
The data warehouse would contain all of the customer data. Data mining would use
computer software to analyze customer types of purchasing patterns. The company
could use geocoding to find places where clusters of customers are located and then
calculate lifetime values of various customer groups (including possibly businesses).

Relationships would be built by providing quality, personalized service that saves
customers money on travel by finding the best deals or the ones that are the best in
terms of quality.
11-52. How could data-driven marketing programs including permission marketing,

frequency programs, and customer relationship management systems be of use
to travel agencies?
Permission marketing would grant the agency the ability to contact clients when
special travel deals arise. Frequency programs would allow for discounts and perks
to the more frequent customers. Customer relationship management could help the
agency better understand client special needs and respond to them, such as a
handicapped traveler, one with small children, business travelers, and so forth.
11-53. Discuss each of the direct response marketing techniques in relation to

marketing of travel agencies.
Direct mail could be used to seek out new customers or maintain relations with
current clients.
Catalogs could be developed for specific areas (Bahamas, Hawaii, etc.) displaying
hotels and other travel amenities.
Direct response mass media can be used for special travel events, such as a cruise
with a local celebrity or sports team.
The internet could provide offers when special rates or events occur. Many sites
such as Travelocity use such enticements.
Direct sales are offered through phone calls, emails, or other contacts with
customers.
The company should only use inbound telemarketing to interact with customers.
Outbound calls would not be successful.
11-54. What personal selling tactics are most important to travel agency employees as
they work with customers and potential customers?
Relationships marketing and referrals would be keys.
11-55. Discuss the pros and cons of each of the methods of handling objections in
personal selling in relation to a couple who are hesitant to purchase vacation to
one of the Caribbean islands.
With the head-on approach, any anxiety about traveling there should be directly
confronted by the salesperson.
The indirect approach method allows the salesperson to never really tell the
customer he or she is wrong. Instead, the salesperson sympathizes with the
customer’s viewpoint and then provides the correct information. This would be
used to allay any fears or concerns about price, convenience, safety, etc.
When the customer’s objection is partially true, then salesperson may utilize the
compensation method. With this approach the salesperson replies “yes, but ...”
and then explains the product’s benefits or features that answer the customer’s
objection.
With the feel, felt, found method, the salesperson allows the customer to talk about
fears or worries. In response, the salesperson can relate personal experiences or
experiences of other customers who had the same fears and worries about travel the
Caribbean and how the trip was a positive experience.
11-56. Discuss the pros and cons of each of the closing methods in personal selling in
relation to a couple who are hesitant to purchase vacation to one of the
Caribbean islands.
In direct close, the salesperson asks for the order outright but risks alienating the
potential customer.
The trial method approach means the salesperson solicits feedback that provides
information regarding what will be the customer’s reaction, without asking
directly for the sale. This may lead to never doing the “ask.”
Another alternative is to summarize the product’s benefits and how it meets the
customer’s needs prior to asking for the order. Again, at some point, in this
circumstance, the customer would need to be asked to place an order.
Sometimes a salesperson asks a serious of questions along the way, ensuring the
customer will continuously respond “yes.” This might build excitement but make the
customer feel pressured.
A salesperson can also assume the customer will say yes, which could lead to some
confusion if the person hasn’t made up his/her mind.
Student choices will vary.

MyMarketingLab
Go to mymktlab.com for the answers to the following Assisted-graded writing
questions:
11-57. Karen’s Formal Dress is a retailer specializing in formal and wedding wear.
She has a database with more than 3,000 names of individuals who have
purchased or rented formal wear. She would like to develop a permission
marketing program. How can the marketing team encourage individuals to
give permission to receive marketing materials? Once the company has the
customer’s permission, how can the relationship be continued to make it
beneficial to both the consumer and to Karen’s Formal Dress? Describe the
methodology Karen should use in her permissions marketing program,
including the types of materials, methods of distribution, and incentives.
11-58. In your own words describe each of the methods of handling objections and
closing sales presented in this chapter. Go to YouTube and locate two
videos, one that discusses handling objections and the other that discusses
how to close sales. Provide the URLs of the two videos. Describe the
methods presented in the videos and how they are similar to or different
from the information presented in the textbook.
BONUS CASE
LINCOLN MEDICAL SUPPLY

Sara Holmes has just taken on a unique dual role in her job at Lincoln Medical Supply.
She was to be in charge of the marketing database for the company and also would serve
as liaison with the advertising firm and marketing group that provided promotions for the
organization. Sara was told her input would be heavily counted on to help with key
decisions to build the size and scope of the company in the next several years.
Lincoln Medical Supply was located in Lincoln, Nebraska. The company served both
retail and business-to-business markets by selling and servicing various types of medical
equipment, from items as basic as ankle braces to those as sophisticated as fetal monitors.
The company had achieved a great deal of success simply through the sheer demand for

various products, but the management team was concerned that no coherent marketing
plan had ever been developed.
Sara was told that the company had three basic customer groups:
• Retail walk-in buyers
• Physicians’ offices
• Hospitals
Retail customers purchased the lower cost, less intricate items, such as braces, bandages,
and cold packs. Physicians bought more elaborate equipment and also provided referrals
for patients. Hospitals ordered the big-ticket items. Each customer type generated a solid
source of revenue for the organization.
Sara’s first challenge was to develop a database for each type of customer. Her
potential sources for retail customers were insurance forms (many filed for insurance to
pay for the items involved) and sales ticket information requested from each person.
Doctors’ offices could be sources of a great deal of information, but the company often
had to “push” the staff to provide statistics on numbers of patients, types of expenditures,
and other key facts. Hospitals could be assessed through internal company reports and as
well as by accessing data from external sources.
Following the simple generation of data, Sara would need to decide if all this
information should be compiled into one overall data warehouse, or if it should be
separated by customer type. Clearly the needs of each group were different, and therefore
it seemed plausible that the marketing tactics used for each customer type would also
vary. At the same time, Sara wanted a consistent message sent out that Lincoln Medical
Supply stood for consistent, high-quality, and excellent service advantages. She knew the

name “Lincoln” didn’t help because so many companies in the city also used the name
(e.g., Lincoln Electric Supply, Lincoln Party Favors, and so forth).
Sara held a meeting with the marketing team. The group told her the primary goal was to
build greater brand equity in the name because a new medical supply house had just
opened near one of Lincoln’s biggest hospitals. Next, the company’s leaders wanted to
know how to get walk-in buyers to purchase more items and how to expand purchases
from the other two segments of the business at the same time. The leaders discussed the
use of catalogs and an internet site to widen the scope of product offerings. They also
considered the possibility of opening satellite locations in Omaha (50 miles away), Grand
Island (90 miles west), and North Platte (400 miles away). They wanted to develop an
understanding of the type of individual who would venture into a medical supply store,
what the person might buy, and what the person would not buy. They also needed to
know if they were meeting the needs of physicians and hospitals. With all of these
challenges in mind, Sara took a deep breath and started working.
(1) Name the sources of internal and external data for all three types of customers.
Retail walk-in buyers can provide internal data when they give their names and
addresses during the purchase. External data can be collected from credit reports and
companies that specialize in providing additional information.
Physician’s offices provide internal data when they complete credit applications and
make purchases. External data may be available in the marketing channel and from
specialty companies who catalog information about various physicians and clinics.
Hospitals provide internal data when making purchases. Government sources may
render some external information along with commercial database services.
(2) What types of data should Sara collect from each type of customer?
From retail buyers, Sara should collect information regarding how often the customer
purchases medical equipment, where it was purchased, and why the customer did or
did not purchase from Lincoln Medical Supply (price, service, and availability are
three major considerations for walk-in buyers). From physicians offices she should
collect information regarding what the office specializes in, how many patients are
treated, and how often supplies are purchased. Sara should collect much of the same
information from hospitals.
(3) How can Sara meet the goals imposed on her by the marketing group?
Sara can meet her goals by developing a marketing database for her company that
would collect the right forms of data and organize them in a manner that would be
easily accessible. She should play a major role in helping the marketing group to
develop a successful IMC plan. For retail customers, name recognition is important.
Loyalty may be established by pointing out the long history the company has in the
city and to fight off the competitive threat of the new supplier. For physicians and
hospitals, targeting specific needs where the company has a competitive edge through
price, availability, service agreements, or quality would be one key. The same data
would be valuable for all satellite operations.
(4) What kinds of marketing programs could be developed from the data that Sara
generates? Should the data be separated by customer type or combined into one
major database? Why or why not?
The data should be separated by customer type because the products purchased are
different and the amount purchased also would vary. The marketing program should
be based on any advantages the company holds over the competition, including
location, price, brand recognition, quality, service, or other features.
(5) Is Lincoln Medical Supply a candidate for a CRM program? Why or why not?
Due to the amount of repeat business with physicians offices and hospitals, Lincoln
Medical is a logical place to install a CRM program. Done correctly, a CRM program
can develop a high level of loyalty among the firm’s best customers.

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Chapter 11

Database and Direct Response Marketing

1. Database and direct response marketing

Copyright © 2018 Pearson Education Ltd. Page 11- 1

Questions for Students:

1. Have you ever shopped at Sephora? Describe your experience.

2. What other products primarily targeted to women would be well served by

Databases are also used to support personal selling.

Figure 11.2 summarizes the tasks involved in database marketing.

Building a Data Warehouse

A data warehouse holds all customer data.

Copyright © 2018 Pearson Education Ltd. Page 11- 2

• Customer names and addresses

Email, Mobile, and Internet Data

Purchase and Communication Histories

Personal Preference Profiles

Customer Information Companies

Information may be provided by outside firms, such as Knowledge Base Marketing,

Copyright © 2018 Pearson Education Ltd. Page 11- 3

CACI Coder Plus is a commonly used software to record customer activity.

Question for Students: Are these tactics invasions of privacy?

Database Coding and Analysis

The goal of this process is to be able to personalize marketing messages to customers.

Lifetime Value Analysis

Location Data Tracking

Data mining is a program used to develop a profile of a firm’s best customers.

Data mining normally involves one of two approaches:

Copyright © 2018 Pearson Education Ltd. Page 11- 4

Objective 11.2: How can database-driven marketing communication

Database-Driven Marketing Communications

 It is the cheapest form of communication.

In addition to personalized communications, data can be analyzed in order to customize

As an example, Netflix can make movie suggestions based on past rentals.

Copyright © 2018 Pearson Education Ltd. Page 11- 5

Objective 11.3: How do database-driven marketing programs create sales

Database-Driven Marketing Programs

The most common database-driven marketing programs are

In a permission marketing program, the company only sends promotional information to

 Response rates are often higher.

Keys to Success in Permission Marketing

The marketing material should be relevant to the consumer receiving it.

Figure 11.5 lists the steps of permission marketing, as follows:

1. Obtain the permission of the consumer.

Copyright © 2018 Pearson Education Ltd. Page 11- 6

Permission Marketing Enticements

 Sweepstakes or chance to win (41 percent)

Reciprocity is a sense of obligation to the company.

A frequency program, or a loyalty program is an incentive plan designed to cause customers

1. To develop loyalty in customers

Figure 11.8 identifies the benefits of loyalty programs cited by customers.

Figure 11.9 shows the common objectives of frequency programs:

 Maintain sales, margins, or profits

Copyright © 2018 Pearson Education Ltd. Page 11- 7

Question for Students: Do you use frequency programs? Which ones?

Customer Relationship Management

Customer relationship management programs allow companies to use databases to customize

The two primary metrics of CRM are

1. lifetime value of the customer

 Fail to identify markets

Copyright © 2018 Pearson Education Ltd. Page 11- 8

Direct Response Marketing

A list of methods to carry out direct marketing is provided in Figure 11.10.

The most common form of direct marketing is through the mail.