The document discusses direct marketing and its various forms. It defines direct marketing as connecting directly with targeted consumers to obtain an immediate response and build lasting customer relationships. The major forms of direct marketing include direct mail, catalog marketing, telemarketing, direct response TV marketing, and various digital technologies like online marketing. Online marketing involves company efforts to market products and services over the internet, and many companies have adopted hybrid click-and-mortar business models. The document also outlines some public policy and ethical issues surrounding direct marketing like privacy concerns.

1. Direct Marketing
Building Direct Customer
Relationships
Session 1
Dr. Rohita Dwivedi

2. Rest Stop: Previewing
the Concepts
• Define direct marketing and discuss its benefits to
customers and companies.
• Identify and discuss the major forms of direct
marketing.
• Explain how companies have responded to the
Internet and other powerful new technologies with
online marketing strategies.
• Discuss how companies go about conducting online
marketing to profitably deliver more value to
customers.
• Overview the public policy and ethical issues
presented by direct marketing.

3. First Stop
Background
• Success: Since its inception in 1995,
Amazon.com has grown to sales of more
than $19 billion today, and profits have
increased 18-fold, with 50% of sales
coming from overseas.
• Merchandise: Amazon has expanded its
merchandise beyond books to include
music, videos, electronics, tools,
housewares, shoes, groceries, and more.
Amazon boasts, “We have the Earth’s
biggest selection!”
Amazon.com – The Wal-Mart of the Internet
How Did They Do It?
• Customer-driven: Amazon offers a better
store, easier shopping, greater variety, more
information, and low prices. Small retailers
can sell via Amazon. Innovative services
include Amazon Prime, Kindle, music
downloading, and shopping applications for
iPhone.
• Customization: Amazon’s site greets
customers by name and offers personalized,
relevant recommendations. Users can share
opinions and reviews, chat online, and
more.

4. Direct
Marketing
• Direct marketing:
• Connecting directly with carefully targeted
individual consumers to both obtain an
immediate response and cultivate lasting
customer relationships.

5. The New
Direct-
Marketing
Model
• The new direct-marketing model:
• Direct marketing has undergone a dramatic
transformation.
• Most firms use direct marketing as a
supplemental channel or medium.
• For many companies, direct marketing
constitutes a new and complete model for doing
business.
• Some firms employ the direct model as their
only approach (e.g., Geico, Amazon, eBay).

6. Growth of
Direct
Marketing
• Direct marketing:
• Fastest growing form of marketing.
• 10% of U.S. economy ($2.1 trillion) is generated
by direct marketing sales.
• Direct marketing sales are expected to grow at
5.3% annually through 2013.
• Direct marketing continues to become more
Web-oriented and Internet marketing is the
fastest-growing form of direct sales.

7. Benefits of Direct
Marketing
• Benefits to buyers:
• Convenient.
• Easy to use.
• Private.
• Ready access to products.
• Ready access to wealth of
comparative information.
• Immediate and interactive.

8. Benefits of Direct Marketing
• Benefits to sellers:
• Powerful tool for building customer relationships.
• Offers a low-cost, speedy way to reach markets, including
business markets.
• Offers lower costs, improved efficiencies, and speedier
handling of channel and logistics functions.
• Offers greater flexibility.
• Gives access to buyers that could not be reached through
other channels.

9. Customer Databases and Direct
Marketing
• Customer database:
• An organized collection of comprehensive data about
individual customers or prospects, including geographic,
demographic, psychographic, and behavioral data.

10. Forms of Direct
Marketing
• Major forms of direct marketing:
• Face-to-face selling.
• Direct-mail marketing.
• Catalog marketing.
• Telemarketing.
• Direct-response TV marketing.
• Kiosk marketing.
• New digital technologies.
• Online marketing.

11. Forms of Direct
Marketing
• Direct-mail marketing:
• Involves sending an offer, announcement,
reminder, or other item to a person at a
particular physical or virtual address.
• Largest direct marketing medium.
• Well-suited to one-to-one communication.
• Use of traditional forms may decline as
marketers switch to newer digital forms.
• Can be used effectively in combination
with other media, such as Web sites.
• Often perceived as “junk mail.”

12. Forms of Direct Marketing
• Catalog marketing:
• Direct marketing through print, video, or digital catalogs
that are mailed to select customers, made available in
stores, or presented online.
• Catalog marketing trends:
• More and more catalogs are going digital:
• Minimizes costs, and web space is unlimited.
• Allows real-time merchandising.
• Print catalogs are still the primary medium.
• Drives web traffic and can create an emotional
connection to the consumer.
• Expected catalog sales in 2013 = $182 billion.

13. Forms of Direct
Marketing
• Telephone marketing:
• Accounts for 17% of all direct-marketing driven sales.
• Used in both consumer and B2B markets.
• Marketers use outbound and inbound calls.
• Outbound: Sell directly to consumer.
• Inbound: Toll-free ordering or order faxing.
• Do-not-call legislation has impacted
the telemarketing industry.
• Many telemarketers have shifted to other forms of
direct marketing.

14. Forms of Direct
Marketing
• Direct-response TV marketing:
• Direct-response television advertising (DRTV):
• TV spots that are 60 or 120 seconds long.
• Infomercials:
• A 30-minute or longer advertising program
for a single product.
• Home shopping channels:
• Entire cable channels dedicated to selling
multiple brands, items, and services.

15. Forms of Direct Marketing
• Kiosk marketing:
• Information and ordering machines generally found in
stores, airports, and other locations.
• E.g., in-store Kodak kiosks allow customers to transfer
pictures from digital storage devices, edit them, and
produce high-quality color prints.

16. Forms of Direct
Marketing
• New digital direct marketing technologies:
• Mobile phone marketing:
• Mobile ad spending is expected
to grow.
• Podcasts and vodcasts.
• Interactive TV (ITV):
• Viewer engagement is much
higher than with regular TV ads.
• Online marketing is the final form of direct
marketing.

17. Online
Marketing
• Online marketing:
• Company efforts to market products and
services and build customer relationships
over the Internet.
• Marketing and the Internet:
• Usage continues to grow with Internet
household penetration equaling 72.5%.
• 33% of American consumers chose the
Internet as the second-most-essential
medium in their lives.
• Online marketing efforts are expanding.

18. Online Marketing
• Click-only companies:
• So-called dot-coms, which
operate only online without
any brick-and-mortar presence.
• Types of click-only firms:
• E-tailers (Amazon).
• Search engines and portals
(Google).
• Transaction sites (eBay).
• Content sites (ESPN).

19. Online
Marketing
• Traditional brick-and-mortar companies
that have added online marketing to their
operations.
Click-and-mortar companies:
• Almost all traditional companies have set
up their own online sales and
communication presence.
• Many click-and-mortar firms are having
more online success than their click-only
competitors.
Trends:

20. Online Marketing
• Online marketing domains:
• Business-to-consumer (B2C).
• Business-to-business (B2B).
• Consumer-to-consumer (C2C).
• Consumer-to-business (C2B).

21. Online Marketing
• Business-to-consumer (B2C) online marketing:
• Businesses selling goods and services
online to final consumers.
• Trends:
• Online buying continues to grow.
• The Internet influences 35% of total retail
sales; 50% of U.S. households shop online.
• B2C consumers differ from off-line
consumers because customers initiate and
control the Internet exchange process.

22. Online Marketing
• Business-to-business (B2B) online marketing:
• Businesses using B2B Web sites, e-mail, online
catalogs, online trading networks, and other
online resources to reach new business
customers, serve current customers more
effectively, and obtain buying efficiencies and
better prices.
• Most major B2B marketers offer online
product information, purchasing, and support.
• Many firms use the Internet to build stronger
customer relationships.

23. Online Marketing
• Consumer-to-consumer (C2C) online marketing:
• Online exchanges of goods and information between final consumers.
• Auction sites such as eBay offer marketplaces to buy or exchange
goods.
• Blogs and forums facilitate information interchanges.
• Marketers are tapping into blogs as a medium for reaching
carefully targeted consumers.
• Firms should monitor blogs for what is being said.

24. Online
Marketing
• Consumer-to-business (C2B) online
marketing:
• Online exchanges in which
consumers search out sellers,
learn about their offers, and
initiate purchases, sometimes
even driving transaction terms.
• E.g., GetSatisfaction.com allows
users to post questions, voice
complaints, or deliver
compliments to companies.

25. Online Marketing
• Conducting online marketing:
• Creating a Web site.
• Placing ads and promotions
online.
• Creating or participating in online
social networks.
• Using e-mail.

26. Online Marketing
• Corporate Web sites:
• Designed to build
customer goodwill,
collect customer
feedback, and
supplement other
sales channels, rather
than to sell the
company’s products
directly.
• Marketing Web sites:
• A Web site that
engages consumers in
interactions that
move them closer to a
direct purchase or
other marketing
outcome.

27. Online Marketing
• Online marketers should pay careful
attention to the seven Cs of effective Web
site design:
• Context.
• Content.
• Community.
• Customization.
• Communication.
• Connection.
• Commerce.
• Constant change helps encourage repeat
visits.

28. Online Marketing
• Placing ads and promotions online:
• Online advertising has become a major medium.
• Forms of online advertising:
• Banner ads.
• Interstitials.
• Pop-up or pop-under ads.
• Rich media ads.
• Search-related ads (contextual advertising).

29. Online
Marketing
• Placing ads and promotions online:
• Other forms of online promotion:
• Content sponsorships (sponsoring special content).
• Alliances and affiliate programs (work with firms to
promote each other).
• Viral marketing (Internet version of word-of-mouth).

30. Online Marketing
• Creating or participating in online social
networks:
• Also called web communities.
• E.g., MySpace, Facebook, YouTube.
• Marketers can participate in existing online
communities or set-up their own.
• More focused niche social networks are
emerging which can be used to target
special interest groups.

31. Online Marketing
• Using e-mail:
• 79% of all direct marketing campaigns
employ e-mail.
• Enriched e-mail messages can grab
attention.
• Spam accounts for 90% of all e-mail sent.
• Permission-based e-mail marketing is key.
• E-mail can produce an ROI 40-50% higher
than other forms of direct marketing.

32. Public Policy and
Ethical Issues in
Direct Marketing
• Irritation, unfairness, deception, and fraud:
• Direct marketing excesses may offend consumers.
• Direct marketing has been accused of taking unfair
advantage of impulsive or less sophisticated buyers.
• Internet fraud and phishing are growing concerns.
• Internet shoppers have online security concerns.
• Marketers often find it difficult to restrict access by
vulnerable or unauthorized groups.

33. Public Policy and
Ethical Issues in
Direct Marketing
• Invasion of privacy:
• Database marketing allows customers to
receive offers closely matched to their
interests.
• Critics worry whether marketers know TOO
much about consumers.
• Online privacy (particularly for children) is of
particular concern.
• If marketers don’t prevent privacy abuse,
legislators may step in.

34. Rest Stop:
Reviewing the
Concepts
• Define direct marketing and discuss its benefits to
customers and companies.
• Identify and discuss the major forms of direct
marketing.
• Explain how companies have responded to the Internet
and other powerful new technologies with online
marketing strategies.
• Discuss how companies go about conducting online
marketing to profitably deliver more value to customers.
• Overview the public policy and ethical issues presented
by direct marketing.