CONTEMPORARY DIRECT & INTERACTIVE MARKETING

Transcription

1 SECOND EDITION CONTEMPORARY DIRECT & INTERACTIVE MARKETING Lisa D. Spiller Christopher Newport University Martin Baier Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

2 TABLE OF CONTENTS Preface xix Acknowledgments xxi About the Authors xxv Part 1 The Foundations of Direct and Interactive Marketing Chapter 1 Examining the History and Processes of Direct and Interactive Marketing 1 The Scope of Direct and Interactive Marketing 3 Characteristics of Direct and Interactive Marketing 4 Definition and Description 4 The Convergence of Direct Marketing and Brand 5 History and Growth of Direct Marketing 7 The Birth of Mail-Order Catalogs 7 Mail Order Diversifies 8 Print Media 8 Broadcast Media 8 Electronic Media 9 High-Tech Digital Media 9 Factors Affecting the Growth of Direct Marketing 10 The Processes of Direct and Interactive Marketing 11 Who Uses Direct and Interactive Marketing and How 15 Users of Direct and Interactive Marketing 15 Applications of Direct and Interactive Marketing 16 Trends in Direct and Interactive Marketing 18 Creating In-Store Traffic 18 Directing Online Traffic 19 Membership (Affinity) Clubs 19 Issues of Privacy and Security 19 Summary 20 Key Terms 21 Review Questions 21 Exercise 21 Case: Cheryl&Co. 22 Chapter 2 Building Databases, Selecting Customers, and Managing Relationships 27 Customer Database 29 Database Development 30 Customer Loyalty Programs 30 vii

3 viii Table of Contents Examples of Loyalty Programs 31 Source Data 31 RIFIM Assessment 32 Database Maintenance 34 Match Codes and Merge-Purge 34 Multibuyers 37 Keeping Records Current 37 Database Security 38 Information Privacy 38 Proper Database Storage 38 List Seeding 39 Database Uses and Applications 39 Using a Customer Database 39 Performing Database Analytics 42 Database Enhancement 45 Internal Data Enhancement 45 External Data Enhancement 46 Customer Relationship Management 47 Customer Value 48 Lifetime Customer Value 50 One-on-One Personalized Marketing 50 Partner Relationship Management 51 Summary 52 Key Terms 53 Review Questions 53 Exercise 53 Case: Smithfield Foods 54 Chapter 3 Developing Lists and Discovering Markets 59 Lists as Market Segments 62 A Perishable Commodity 62 Types of Lists 62 Development of House Lists 65 The List Industry 65 List Users 65 List Owners 66 List Brokers 68 List Managers 68 List Compilers 68 Service Bureaus 69

4 Table of Contents ix Evaluation of Lists 69 Measurement of Results 69 Response Differences Attributable to Timing 69 The Nature of Market Segmentation 70 Product Differentiation 70 Product Positioning 71 Segmenting Business Markets 71 The Bases for Market Segmentation 73 Geographic Segmentation 73 Demographic Segmentation 73 Social Factor Segmentation 74 Psychographic Segmentation 74 Behavioral Market Segmentation 75 Using Multiple Segmentation Bases 75 ZIP Code Areas as Market Segments 77 Geographic Structure 79 ZIP+4 80 Clustering Areas to Segments 80 Availability of Statistical Data 81 Summary 81 Key Terms 82 Review Questions 82 Exercise 82 Case: Lillian Vernon 83 Chapter 4 Planning and Creating a Value Proposition: The Offer 88 What Is the Offer? 90 The Offer as a Component of Direct Marketing Strategy 91 Elements of an Effective Offer 91 Planning the Offer 92 Step 1: Establish Objectives of the Offer 93 Step 2: Decide on the Attractiveness of the Offer 94 Step 3: Reduce Risk of the Offer 96 Step 4: Select a Creative Appeal 96 Components of the Offer 98 Product or Service 98 Pricing and Payment Terms 98 Trial or Examination Period 99 Guarantees 100 Sweepstakes and Contests 100 Gifts and Premiums 100 Time Limits 101

5 Table of Contents Creating an Offer 102 Step 1: Perform Market Research 102 Step 2: Determine the Terms of the Offer 103 Step 3: Target the Offer 104 Step 4: Test the Offer 105 Step 5: Execute the Offer 106 Popular Offers 106 Summary 108 Key Terms 109 Review Questions 109 Exercise 109 Case: Old American Insurance Company 110 Part 2 Integrated Marketing Communication: The Message and Media Decisions in Direct and Interactive Marketing Chapter 5 Planning and Creating Compelling Message Strategies 113 Creative Research 115 Message Objectives 116 Copywriting and Graphics Techniques 117 Features versus Advantages versus Benefits 117 Writing the Copy 119 Using Design and Graphics 122 Creating Messages for Specific Media 124 Direct Mail 125 Catalogs 130 Print Advertising (Magazines and Newspapers) 133 Broadcast Advertising (Television and Radio) 135 Telephone Promotion 137 Internet 138 Summary 141 Key Terms 142 Review Questions 142 Exercise 142 Case: Barely There 143 Chapter 6 Designing and Employing Print 147 Direct Mail as a Print Medium 149 Market Segmentation 149 Catalogs 150 Syndication Mailings 152 Coupons 152 Cooperative Mailings 153

6 Table of Contents xi Statement/Invoice Stuffers 154 Package Inserts 155 Take-One Racks 155 Magazines as a Print Medium 155 Market Segmentation 155 Categories of Magazines 157 Advantages and Disadvantages 158 Position and Timing 158 Newspapers as a Print Medium 159 Market Segmentation 159 Categories of Newspaper Advertising 160 Advantages and Disadvantages 162 Position and Timing 163 Summary 163 Key Terms 164 Review Questions 164 Exercise 164 Case: Newport News 165 Chapter 7 Developing and Utilizing Electronic Media 170 Television 173 Market Segmentation 173 Characteristics of Television Time 174 Direct Marketing Uses of Television 174 Television Home Shopping and Infomercials 175 Advantages and Disadvantages 177 Radio 177 Market Segmentation 177 Rate Structure 179 Advantages and Disadvantages 179 Telephone 179 Inbound versus Outbound Calls 180 Advantages and Disadvantages of Telephone Marketing 182 Telemarketing Technology 183 Planning a Telemarketing Program 184 Preparing the Telephone Scripts 184 Training Telephone Operators 185 Media Measurement 186 Summary 187 Key Terms 188 Review Questions 188 Exercise 188 Case: CEICO 189

7 xii Table of Contents Chapter 8 Crafting and Applying High-Tech Digital Media 196 The Internet 198 Growth of Internet Marketing 198 Internet Retailing 199 Business-to-Business Internet Transactions 199 Differences between the Internet and the World Wide Web 200 Advantages and Disadvantages 201 Applications of Interactive Media 202 Marketing 203 Online Market Research 206 Web Advertising 208 E-Branding 210 Increasing and Measuring Site Traffic 27 7 Web Site Promotion 211 Search Engine Marketing 212 Creating Web Site Stickiness 213 Media Measurement: E-Metrics 214 New High-Tech Formats and Strategies 215 Blogging 215 Online Social Networking 215 Mobile Marketing 216 Summary 217 Key Terms 217 Review Questions 218 Exercise 218 Case: TreadMoves 219 Part 3 Response, Measurement, and Metrics of Direct and Interactive Marketing Chapter 9 Fulfilling the Offer and Serving the Customer 227 Fulfillment 230 What Is Fulfillment? 230 Traditional Fulfillment Standards 230 The Fulfillment Process 230 The Offer 231 The Response 231 Processing 231 Shipping 232 Billing 232 Customer Service 232

8 Table of Contents xiii Fulfillment Options 232 In-House Fulfillment 233 Outside Fulfillment Centers 240 Online Fulfillment 241 Delivery Options 242 U.S. Postal Service 242 Alternative Delivery Systems 243 Fulfillment Problems 243 Sources of Fulfillment Problems 243 Ways to Avoid Fulfillment Problems 244 Call Centers 245 In-House Call Center 246 Outside (Outsourcing) Call Centers 246 The Importance of Customer Service 248 Evaluating Customer Satisfaction Level 250 Keeping Customers Happy 252 Summary 254 Key Terms 254 Review Questions 254 Exercise 255 Case: FLOWERS.com 256 Chapter 10 Conducting Research and Utilizing Tests to Measure Performance 264 The Nature of Research 266 Surveys and Experiments 266 Problem Structure 269 What to Research and Test 270 Data: Types, Sources, and Collection 270 Secondary Data 270 Primary Data 272 Experimentation as Testing 273 Designing the Experiment or Test 274 Tracking Responses and Measuring Test Results 275 Samples and Estimations 278 Random Samples 278 Determining the Sample Size 279 Measurement of Difference 281 Hypothesis Testing 281 Types of Errors in Hypothesis Testing 282

9 xiv Table of Contents Statistical Evaluation of Differences 282 A Priori versus a Posteriori Analysis 284 Structuring and Evaluating an Experiment 284 Opportunities for Experimentation 286 Summary 287 Key Terms 287 Review Questions 288 Exercise 288 Case: The American Heart Association 289 Chapter 11 Understanding the Industry's Environmental, Ethical, and Legal Issues 292 Environmental Issues 294 The DMA's Environmental Resolution and "Green 15" Program 295 Ethics of Direct Marketing 297 The DMA's Guidelines for Ethical Business Practice 297 The DMA Corporate Responsibility Department 298 Basic Consumer Rights 299 The Right to Safety 299 The Right to Information 299 The Right to Selection 299 The Right to Confidentiality 299 The Right to Privacy 300 Legislative Issues 300 Intellectual Property 300 Security 301 Privacy 301 Privacy Legislation 301 Privacy Protection Study Commission 302 Privacy Today: Antispam Laws 303 Annoyance and Violation 304 Type of Information 304 Consumer Privacy Segments 305 Corporate Response to Privacy 306 The DMA Commitment to Consumer Choice 306 The DMA Online Privacy Principles 308 Third-Party Privacy Intervention: Infomediaries 309 Regulatory Authorities of Direct Marketing 310 Federal Communications Commission 310 Federal Trade Commission 311

10 Table of Contents XV U.S. Postal Service 313 State and Local Regulation 313 Private Organizations 313 The Future: Self-Regulation or Legislation 313 Self-Regulation 313 Legislation and Permission Marketing 314 Summary 314 Key Terms 315 Review Questions 315 Exercise 315 Case: The Telephone Consumer Protection Act 316 Chapter 12 Exploring and Adapting Direct and Interactive Marketing Strategies around the World 320 Direct and Interactive Marketing around the World 323 Differences between Domestic and International Direct Marketing 323 Making the Decision to Go International 324 Step 1: Assess Your International Potential 324 Step 2: Conduct Marketing Research 324 Step 3: Select Your Trading Partners 326 Step 4: Develop an International Direct Marketing Plan 327 Step 5; Begin International Direct Marketing Activities 327 Modes of Market Entry 327 Exporting 327 Licensing 328 Joirit Venture 328 Contract Manufacturing 329 Direct Investment 329 Management Contracting 329 International Direct Marketing Infrastructure 329 Lists and Databases 330 Fulfillment 330 Media 331 Creative 333 Geographical Area Analysis 334 Canada 334 Europe 335 Latin America 338 Asia 339 Egypt 340

11 xvi Table of Contents Africa 340 Summary 341 Key Terms 342 Review Questions 342 Exercise 342 Case: Globalizing an American Catalog 343 Chapter 13 Applying Direct and Interactive Marketing Math and Metrics 348 Using Math and Metrics to Determine the "Right" Target Market 349 Determining Customer Value 349 Calculating Customer Lifetime Value 350 Determining the "Right" Customer to Target 351 Analyzing Market Penetration 352 Measurement Is the Key 353 Calculating Response Rates and Conducting Break-Even Analysis 353 Calculating the Impact of a Lift 355 Determining Conversion Rates 356 Planning the Direct Marketing Budget 356 How to Begin: Estimating Costs 357 The First Calculations: Margins, Fixed and Variable Costs 358 Net Profit and Breaking Even 360 Cost per Inquiry/Cost per Order 361 Return on Investment/Return on Advertising Investment 363 Budgeting for Tests 365 Summary 366 Key Terms 367 Review Questions 367 Exercise 367 Case: SafeLife 368 Part 4 Applications and Future Directions of Direct and Interactive Marketing Chapter 14 Examining Direct and Interactive Marketing Applications in a Variety of Sectors 371 Business-to-Business 373 Characteristics of Industrial Demand 374 B2B Applications 375 How to Identify B2B Market Segments 378 Nonprofit Organizations 382 Nonprofit Applications 382 Fundraising 386 Media Strategies 392

12 Table of Contents xvi i Political Organizations 395 Governmental Organizations 396 Sports Organizations 400 Summary 402 Key Terms 403 Review Questions 403 Exercise 404 Case: Peninsula Society for the Prevention of Cruelty to Animals 405 Comprehensive Cases Casei: McDonald Garden Center Case 413 Case 2: Coldwell Banker Professional, Realtors Case 426 Appendixes Appendix A: Developing a Direct and Interactive Marketing Campaign Featuring The Martin Agency 439 The Martin Agency 439 Campaign Development Process 440 Initial Consultation 440 Campaign Planning Meeting 441 Strategic Development 441 Creative Development 442 Campaign Execution 443 Tracking and Learning 443 Conclusion 445 Appendix B: Careers in Direct and Interactive Marketing 446 Select Direct and Interactive Marketing Career Positions and Descriptions 446 Careers in Direct and Interactive Marketing in Agencies 459 Direct and Interactive Marketing Career Resources 462 Glossary 463 Index 471