Deck 14: Direct Marketing

Question 1

What is customer relationship management? Discuss how direct marketing can be employed to improve customer relationship management. (LO1)

Answer 1

Customer relationship management (CRM)  requires that the marketer develop and maintain a significant amount of information about its clients. The aim of CRM is to establish a relationship  with one's customers through affinities, personalized communications and product/service offerings.
In a CRM relationship the seller and customer act as partners, working together to the betterment of both parties. To be successful, direct marketers must have a full understanding of the customers' needs and wants, as well as a history of their relationship. This is where database marketing comes in. In CRM, a database is a must. Only through the utilization of this database can the marketer truly understand the customer, helping them solve their problems and take advantages of opportunities through product offerings and services.

Question 2

What is an infomercial? What are some of the reasons that infomercial have been so successful. Which types of products and services to you think are likely to be candidates for successful infomercials? (LO3).

Answer 2

Marketing by direct means in the field of advertisement and commercials involves direct-response advertising and support advertising. Direct-response advertising involves offering a product that will solicit sales of the product. Direct response television includes direct-response ads, infomercials and teleshopping programs designed to attract the viewers and make them purchase the product.
An infomercial is used to refer to a form of advertisement that promotes a product/service in an informative way. It is generally lengthier and is expected to fit into a half-hour or one-hour timeslot. Infomercials are otherwise known as paid programs and have gathered interest among the viewers. Infomercials have also been able to improve the business of several companies.
Infomercials have been attractive and beneficial to the company in several ways:
• They create high-volume and high-action scripts that are expected to increase interest in the viewers.
• They create awareness in customers about a problem that they didn't know that they previously had.
• They promise to offer a long-term solution to the problem of the viewer, instilling a sense of reliability and preference to that product/service.
• They are endorsed by celebrities, which tends to increase the probability of product purchase.
There are several types of products/services which are likely to be successful candidates for infomercials. Some of them are listed below:
• Retail stores can do the listing of infomercials as it is likely to be frequently visited by people of all age groups.
• Domestic products/services are likely to attract home makers who might find it interesting to use these products to reduce their workload, in order to spend more time on other useful tasks.
• Weight-loss programs are likely to gather the attention of people since numerous people are becoming health-conscious.
• Beauty and personal care products/ services are also likely to attract more people especially women, where there is an increased stress on beauty and personal care.
• Exercise equipment are also expected to be successful candidates for infomercials since more people are becoming health-conscious.
• Health-related products/services could also use infomercials for advertising their products, since many people see health as being of utmost importance.
These products/services are expected to attract customer attention and enforce them to make a purchase decision by infomercials.

Question 3

Direct marketers are very good at determining the effectiveness of their programs. Many direct marketers now measure the impact of the program on the consumer funnel. Explain how direct marketers measure effectiveness, and how they now use the consumer funnel for this purpose. (LO4)

Answer 3

Direct marketing provides one of those rare instances where we can ?measure the impact of advertising on sales. By definition, direct response asks for ?an immediate behavioral action. Effectiveness is measured by sales, or as one expert put it "if you continue to see the ad on TV then it works". More ?specifically, the effectiveness is measured using a formula called cost per order (CPO) , in which the advertiser calculates the cost per ad (production and medial costs), the return sought and a break even. As long as the ad continues to generate profit, it continues to run. Direct marketers have also been successful in isolating ?the effectiveness of certain elements of their programs. Through research, they ?have been able to show that in a specific market, one TV channel may be more effective than another, one model and/or one message may be more effective, etc. Direct marketers are constantly evaluating various print alternatives to test ?effectiveness.
Some direct marketers understand the value of direct marketing in impacting the movement through the consumer funnel as well. Direct marketing can be used to create awareness and interest in the product or brand. It is also effective in helping ?the consumer to evaluate products and services and stimulate trial. Marketers ?know that it is not uncommon for a consumer to find out about a product or service through direct mail, or an infomercial, and then go to the store to find out more about it or make a purchase.

Question 4

As the Internet continues to grow in popularity, some marketers predict that the print catalogs will cease to exist, replaced by Internet catalogs. Others disagree. Explain some of the reasons why this situation may or may not occur. (LO1), (LO2)

Question 5

Explain what is meant by Customer Lifetime Value. How does this formula benefit the direct marketer?

Question 6

A study by the Harvard Business School has shown that e-mail marketing is much more effective than traditional direct mail in that it provides a much greater return on investment (ROI). Explain some of the reasons why this would be.

Question 7

Direct marketing has been an effective tool for marketers for a long time. Provide some reasons why direct marketing has been so effective. Do you think this trend will continue?

Question 8

Explain why digital catalogs will not drive the traditional catalog into extinction. Cite some of the advantages of maintaining a traditional print catalog.

Question 9

While a very effective medium, direct marketing also has a number of distinct disadvantages. Discuss some of these, and what marketers could do to decrease them.

Question 10

As noted in the text, a number of home shopping channels now offer a variety of upscale products. Discuss reasons why you think this will work to their advantage. Are there any disadvantages to this strategy? (LO1)