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17

Principles of Marketing

Direct and Online


Marketing: Building Direct
Customer Relationships
Learning Objectives

After studying this chapter, you should be able to:


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 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 Model


2. Growth and Benefits of Direct Marketing
3. Customer Databases and Direct
Marketing
4. Forms of Direct Marketing
5. Online Marketing
6. Integrated Direct Marketing
7. Public Policy Issues in Direct Marketing

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The New Direct-Marketing Model

Direct marketing consists of direct


connections with carefully targeted
individual consumers to both obtain an
immediate response and cultivate
lasting customer relationships
No 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 Databases

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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Forms of Direct Marketing

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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Forms of Direct Marketing
Catalog direct marketing involves
printed and Web-based catalogs

Benefits of Web-based Challenges of Web-based


catalogs catalogs
Lower cost than printed Require marketing
catalogs
Difficulties in attracting
Unlimited amount of
merchandise
new customers
Real-time merchandising
Interactive content
Promotional features

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Forms of Direct Marketing

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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Forms of Direct Marketing

Benefits of telephone Challenges of Web-based


catalogs
direct marketing Unsolicited outbound
Purchasing telephone marketing
convenience Do-Not-Call Registry

Increased product
service and
information

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Forms of Direct Marketing

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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Forms of Direct Marketing

Kiosk marketing involves placing


information and ordering machines in
stores, airports, trade shows, and other
locations

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Forms of Direct Marketing

Digital direct marketing technologies


Mobile phone marketing
Podcasts
Vodcasts
Interactive TV

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Forms of Direct Marketing

Mobile phone marketing includes:


Ring-tone giveaways
Mobile games
Ad-supported content
Contests and sweepstakes

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Forms of Direct Marketing

Podcasts and Vodcasts 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 consumers convenience

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Forms of Direct Marketing

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

Online Marketing Domains

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

Online Marketing Domains

Consumer to consumer (C2C) occurs on


the Web between interested parties
over a wide range of products and
subjects
Blogs
Offer a fresh, original, and inexpensive way
to reach fragmented audiences
Difficult to control
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Online Marketing

Online Marketing Domains

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

Types of Online Marketers

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

Types of Online Marketers

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

Types of Online Marketers

Internet service providers (ISP) 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

Types of Online Marketers

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 Marketing

Types 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
More options for customers
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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

Setting Up an Online Presence

Types of sites
Corporate Web site
Marketing Web site

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Online Marketing

Setting up an Online Presence

Corporate Web site is designed to build


customer goodwill and to supplement
other channels, rather than to sell the
companys products directly to:
Provide information
Create excitement
Build relationships
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Online Marketing

Setting Up an Online Presence

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

Designing Effective Web Sites

The seven Cs of effective Web site design


1. Context
2. Content
3. Community
4. Customization
5. Communication
6. Connection
7. Commerce

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Online Marketing

Designing Effective Web Sites

Context is the sites layout


Content is the sites pictures, sound, and
video
Community is the sites means to enable
user-to-user communication
Customization is the sites ability to tailor
itself to different users or to allow users to
personalize the site
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Online Marketing

Designing Effective Web Sites

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 sites capabilities to
enable commercial transactions
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Online Marketing

Designing Effective Web Sites

The eighth C
To 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

Placing Ads and Promotions Online

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

Placing Ads and Promotions Online

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

Placing Ads and Promotions Online

Other forms of online promotion


include:
Content sponsorships
Alliances
Affiliate programs
Viral advertising
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Online Marketing

Placing Ads and Promotions Online

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, an e-mail message, or another
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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Integrated Direct Marketing

Integrated direct marketing involves


the use of carefully coordinated
multiple-media, multiple-stage
campaigns

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Public Policy Issues in Direct
Marketing

Customer irritation, unfairness,


deception, and fraud
Privacy
Security

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Public Policy Issues in Direct
Marketing

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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Public Policy Issues in Direct
Marketing

Invasion of Privacy

The concern is that markers may know


too much about consumers and use
this information to take unfair
advantage
Sale of databases
Microsoft

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Public Policy Issues in Direct
Marketing

A Need for Action

California Online Privacy Protection Act


(OPPA)
Childrens Online Privacy Protection Act
(COPPA)
TRUSTe

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The End