Design Direct Response Offers

DM is part of Marketing
Assessment: Report + Action Plan + Flyer (2 methods of DM, Harvard Style)

Direct Marketing Explanation of Definition

Direct marketing is an interactive system of marketing which uses Interactive
one or more advertising media to affect a measured response and/or  One on one (marketer to Customer)
transaction at any location One or more advertising media
It has also been called:  Can use a combination of media
 Directed Marketing Measurable response
 Relationship Marketing  Measures everything (In & Out)
 Integrated Marketing Transactions at any locations
 Can take place on the phone, mail, home or store

Visit library: beware of the date of the materials What type of people? Target
Better after Y2003 What’s the best type/media for it?
Newspapers in Australia (3 types): National / State base / Local

Six keys to Direct Marketing Success

Right Products and Services Right Formats (Good looking)
 Quality  Endless
 Value Right Tests (Test it in the right time, right way & right target)
Right Media (How you get the message out) Right Analyse
 Mailing Lists
 News Print ? What is important to consumer?
 Broadcasting QUALITY!!
Right Offer (What comes with your product?)
 Overcome Human Inertia (Plan to do sth. but never do/do it BIAS:
later) Make people buy now! Don't let your own opinion affect the Fact!

Who / What Organisations use DM?

 Insurance & Financial services  Collectibles (eBay)
 Tourism  Clothing Fundraising
 Books & Music  Computers
 Training ……

Customer Service: a Time-Honoured Practice DM

The secrets of a Successful Corner Store:
Knowing the customer Knowing customer needs and likes
Informing the customer of the best stock Attending to product quality and availability
Adding value for good will (Give for free) Maintaining customer contact

The Ages of Printing Catalogues

15th Century: 19th & 20th Century:
 Book Catalogues  Catalogues
18th Century:  Mail-Order
 Book Catalogues  Direct Marketing Methods
 Nursery Catalogues
Strengths of DM
Can provide more information Controllability
Targets audiences Ability to fine tune
Generates a response Comparative cost
Results are easy to measure Good ROI

Weaknesses of DM
Poor community perception (Junk mails) Careful: how much/often you do it
Poor brand image (SPAM mails??)
Perceived risk (Don’t promise sth. You can’t delivery/do)
 Of sight unseen
 PO Box
 Fraud

Opportunities:
Fills the distribution gap
Targets geographically dispersed customers
Fast delivery

The Offer
No key is more important than the offer  Mailing list
You can have the right:  Media
 Product But it will not be successful without the right offer.

Components of an offer
Product Price Promotion
Time Payment terms
<$75 don’t get receipt all the timeOPT IN OPTION?

Alternatives or options
Incentives Risk reduction Shipping and Handling
Multiple offers Discounts
Risk from the Customers & on the Seller
Pay $20 for extension of warrantee
Need to think from both sides

Risk Management, 4 steps process:

1. Identify the risk
2. Assess the risk: Look into 2 things: (1) Consequences; (2) Likelihood (chance it can happen)
3. Treat the risk
4. Monitor / Check the risk

Time
Time limits and urgency to the offer >Magazines
One time commitment  Automatic shipment plan
 One off purchase >e.g. once a month
Continuity offers >Give the purchaser the choose
 Fixed term purchase >Silence denotes acceptance
Price
Penetration price
 Low price for high volume sales Competitive price
Skimming price 1) $20->$15 $15 Meet
 High margin 2) $20->$20 $15 Ignore it
Test to determine the best long term price 3) $20->$10 $15 Beat it
Is it competitive?
Is it perceived as good value?

Payment terms
COD One off payments or multiple payments
 Cash on delivery Credit card orders are always larger using a card (a large
 Less popular amount)
Credit cards Multiple payment term may lead to bad debts

Promotion For sb. who might use that product

Give away Samples Seldom make non users buy
Gifts Providing something extra Converts highly probable to buy

Risk Reduction
Customers can not inspect prior to purchase Warranties
Guarantees: (be careful!) Free Trial or samples
 100 years / Life time (whose life time?) / 12 months Money back

Incentives
Gifts (should be related), for:  Introduce a friend offer
 New business Samples
 Repeat business Discounts
 Order size

Some basic offers

Free information Conditional sale >>First issue free Get a friend
Sample Till forbid
Free trial Time limit

More offers
Contests Negative option Life time membership
Discounts Positive option Fee gift

Open up to mail Australia Post

ABS  Australia Social Trends Demography

Products
How to present the product? Define the products image
How to position the product? – How a potential consumer may Package: Protect the product, advertising…
perceive the product offer in a comparison to other offers Look & Presentation are very important
Think: If you change the price or place etc., do I need to change product or other aspects? Not necessary.

Even more offers

Secret gift Multi product (pack)
Add on Flexible terms (e.g. payment methods)
Deluxe alternative (upgrade) Exclusive (e.g. special offer for you)
Guaranteed buy back (e.g. Bought a computer, if you come & Promotional videos
buy a new one 3yrds later, we buy your old computer back by Always personalize
$xxx)

Objectives of offer
Attract new customers Raise funds (share holding)
Repeat business Company markets for potential business
Sales leads (follow up for sb. who wants/might be interested)

Positioning
What type of product it is and the cycle of the product How often the product is used
Competition (meet/ignore/beat) Who will be the users and why will they use
Product features/benefits

Function of MR in Direct Marketing

Provides guidance towards better decisions The decisions involve both: Planning & Monitoring
MR: Market Research

Planning Monitoring
MR can be used in: Is part of fulfilment
Idea Generation Processing & servicing order
Prospect Lists Requests for information

Idea Generation
All offers start with an idea or concept Each Offer is unique
DM offers are often totally Novel (No resemblance to anything Ideas come from all levels of the organisation
else)

3 Techniques to generate ideas

Group Individual Sample Survey
Note: Research doesn't’ design offer or develop advertising

Brainstorming
Working Session
5 to 10 people
From within the company (Who can join? Marketing/Sales/Financial/Customer Service/Technical)
Moderator (Guidekeep the direction, but don’t give his own opinion)
 Guides discussions (Encourage everyone to talk)
 Keeps interest high (Create interests)
 Ideas flowing (Put/Write down all the ideas)

More Brainstorming
Don’t Criticise: inhibits ideas (Always encourage ideas, encourage people to talk about their ideas)
 The objective is to gain as many ideas as possible Produces ideas quickly and cheaply
Regardless of relevancy as ideas can be scratched latter Triggers creative thinking

Focus Groups (Cost money)

Similar to brainstorming Group consists of consumers (Individual/Companies)
Working session Not company employees
7 to 11 people Recruited by MR agency (They have (name) list)
Moderator keeps discussion on track Very popular

Focus Groups focus on

Assessing alternative offer strategies Managers & Creative reps can made contact to consumers
What variables account for consumer choice Members may not be a good sample of population (The total
Idea Generation number of your target market)

Avg. age of TAFE students: 22-year-old

Individual Techniques Morphology

Morphology: study of change Designing products Mostly used for new product development
Two steps: (combinationoffer) Product Design
1) Identify relevant factors Designer generates a grid representing the possible combinations
2) Develop all combinations of these variables
Then choose the combination with the best potential of being
transferred into $

For next week:

SWOT – OFFER Test:
List all the items you want on the Action Plan: 1) Design the test method
 Target Market 2) Test the offer
 Secondary research 3) Evaluate the test
 Do SWOT analysis 4) Change offer if needed.
 Test
…

Offer: e.g. Phone:

 $500  Colour covers  Gty 3yrs
 Bag  Apps  Water resistant
Test: send 100 flyers and see the responses

20% responses (expected response)

18%, 20%, 22% OK, we can use it
10%, 16%, 25% Change offer (?):
 too low responses: $500 à $400; cancel bag; 3yrs à 1yr
 too high response: $500  $550

Media / Message Testing

Test program in advance to reduce risk of failure Testing media (solutions to selection or allocation)
Testing on message helps to fine tune How & When? Where & Timing?

Prospect Lists
Definition:
List of names  Interest
Addresses  Characteristic
Other information Make sure the information is correct (gender, name etc.) and
About people or organisation updated (phone number, address etc.) and age, income…
They have a common interest

Different types of Lists

Business Consumer Internal External

Business Lists
A list of individual or companies based on a:
Business association Membership Purchase
Interest Subscription Inquiry

Consumer Lists
A list of names and addresses complied or resulting from a common inquiry / buying activity indicating a general or specific buying interest

Internal Lists / House Lists

Advantages:
Built on company records Data includes:
Can specify:  Last purchase
 Customers  Frequency of purchase
 Prospects  Dollar volume
 Former customers  Items purchased
Have the strongest full (fulfilment, easiest people to get result
from)

Disadvantages:
Need maintenance Diverts staff from more important functions
Updating  Specialised staff is expensive
 People move Time consuming
 Stop ordering
 Die

Information Sources
Records Complaint logs Magazines
Inquires Trade directories Business cards

Some Information Needed

Customer:
 Name  Mobile  Purchasing pattern
 Address phone  Customer type
 Fax/email  Product type

Flyer, careful about:

Size Font style/size
Shape Information: X too much X too little
Colour Entry points