Direct and Online Marketing:

Building Direct Customer

Relationships

17
Principles of Marketing
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
Benefits of Web-based catalogs
Lower cost than printed
catalogs
Unlimited amount of
merchandise
Real-time merchandising
Interactive content
Promotional features
Challenges of Web-based
catalogs
Require marketing
Difficulties in attracting new
customers

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Catalog direct marketing involves printed
and Web-based catalogs

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
direct marketing
Purchasing
convenience
Increased product
service and
information
Challenges of Web-based
catalogs
Unsolicited outbound
telephone marketing
Do-Not-Call Registry
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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 I nternet

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
I rritation, 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
I nvasion 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