Campaign Critique

BUS302

Direct Marketing and Sales Promotion

Learning objectives

• Understand and explain the characteristics of direct marketing

• Understand types of sales promotions

Direct marketing

• The objective of direct marketing (DM) is to encourage purchases (or other immediate responses).

• DM aims to seek out the ‘best prospects’ to achieve the objective.

• DM is an interactive process that does not merely pass on information.

• In DM, when frequency increases, awareness falls dramatically (unlike other forms of advertising).

Objectives of a direct marketing campaign

• Objectives will vary from campaign to campaign, but general objectives exist to receive:

• orders for a product

• entries in a competition

• enquiries

• registrations for a launch event

• visits to the company website

• expression of interest.

Crowdsourcing

• Crowdsourcing is a recent phenomenon that involves the audience functioning in roles that would normally be assigned to employees.

• Crowdsourcing involves two-way engagement with the audience.

• Activities could include:

• designing the product

• offering their story about the product’s value

• creating a promotional campaign.

Direct marketing media

• Different forms of media exist for direct marketing:

• postal mail (p-mail) advertising (delivered by the postal service)

• electronic messaging (email, blogs and social media)

• television

• print media

• door-to-door.

Creative for direct marketing

• Direct marketing has two basic creative elements:

• copy (the words) – aims to: • get attention • develop interest • offer proof • motivate consumers

• overall look • Does it conform to the existing brand design guidelines? • Is the style in keeping with the brand’s positioning? • Does the visual reflect the quality of the product? • Does it fit to the restrictions (size, weight, colour, etc.)? • Does the style reinforce the key copy messages? • Does the design aid attention, interest, proof and action?

Databases and fulfilment

• Databases are a fundamental ingredient of direct mailing advertising.

• Databases can contain information related to:

• current customers

• prospective customers

• buying behaviour

• geographic segmentation

• demographic segmentation

• psychographic segmentation.

Database objectives

• Databases need to be kept up-to-date to ensure the advertising can:

• optimally target current and prospective customers

• allow for customised messages

• create long-term relationships with customers

• enhance advertising productivity

• calculate the lifetime value of a customer or prospect.

Lifetime value analysis

• Each entry in the database should be considered a long-term asset.

• Each asset has an associated net present value (NPV), which translates into the profit a company can expect from the average new customer over an expected number of years that customer is retained on the list.

• Two functional elements of NPV are the retention rate and average yearly sales.

Mailing lists

• For both postal mail and electronic mailing, the maintenance of lists is critical.

• Lists help in segmenting customers for specific messages.

• Data can be acquired from various sources, including internal or external (such as purchasing from other companies or purchasing lists from companies dedicated to creating and maintaining mailing lists).

• Example: Disney (US) has a list of 31 million customers, gathered from the company’s various entities.

Data mining

• Data mining is the technique of using customer data to deliver a high level of segmentation.

• Data mining involves using the information in databases to form relationships.

• Example: a credit card company can use data from purchases to estimate when a repeat purchase is needed. This data can be sold to companies, which can then use direct marketing to those prospects.

Fulfilment

• Fulfilment is often the final link in the DM chain.

• It is the logistical act of serving a response, and includes:

• recording responses

• providing contact information

• picking, packing and despatching

• invoicing

• forecasting

• analysing and reporting

• filling of envelopes and postage.

Sales promotion

• Interchangeable with the word ‘promotion’.

• Two type of sales promotions:

1. franchise building; creates loyalty and long-term activity; e.g. loyalty cards

2. non-franchise building; short-term strategy, no time for customers to build loyalty; e.g. sale price on a product.

• Manufacturers use this technique to encourage purchasing of the brand.

• Can be directed at trade, retailers or distributors.

Push versus pull strategies

• An example of different emphases.

Most consumers fall somewhere between the two extremes

Consumers loyal to one

brand

Consumers mostly

loyalty to a brand

Consumers with some loyalty to a

brand

Consumers only

responsive to

promotions

Loyalists – consistent purchase patterns; will buy the brand regardless of whether the brand is on special

Switchers – even when all brands are on sale, they may switch brands

Responsiveness to promotional deals

Increased sales do not mean increased profits

• Consumers are generally highly responsive to deals.

• During periods of discounting and coupons, sales will increase (revenues increase), but this may not lead to an increase in profits.

• The increase in promotional costs can outweigh the increase in revenue.

• The profitability of the promotion lies in the consumers’ responsiveness.

Types of consumer promotions

Sampling Experiential marketing

Coupons and vouchers

Purchase premiums

Special prices Bonus packs

Rebates Sweepstakes Continuity programs

Overlay and tie-in

promotions

Retailer promotions

Trade promotions

• Directed to intermediaries in the distribution channel.

• The purpose of trade promotions is to:

• introduce new or revised products

• increase distribution of new package or sizes

• build retail inventories

• increase or maintain shelf space

• increase display space outside normal shelf space

• counter competitors’ promotions.