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 catalogs Challenges of Web-based

• Lower cost than printed catalogs
catalogs • Require marketing
• Unlimited amount of • Difficulties in attracting new
merchandise 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
consumer’s 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 company’s
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 site’s layout

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

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 site’s 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)
• Children’s Online Privacy Protection Act
(COPPA)
• TRUSTe

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The End