Chapter 1

Examining the History and Processes

of
Direct and Interactive Marketing

Dr. Ranea Al Majanni

 The Scope Of D & I Marketing
 Direct Marketing is stealing business away from
traditional advertising.
 High-Tech marketing developments are dramatically
changing how marketers create and communicate
Customer Value.
 Direct Marketing model is changing the way companies
think about building relationships with customers.
What is Direct Marketing
 DM is a database-driven
interactive process of
directly communicating
with targeted customers or
prospects using any
medium to obtain a
measurable response or
transaction via one or
multiple channels.
 Characteristics of Direct Marketing
1. Customer/prospect databases that make targeting possible
2. A view of customers as assets with lifetime value
3. Ongoing relationships and affinity with customers
4. Data-based market segmentation
5. Measurement of results and accountability for costs
6. Interactivity with customers on a personalized and individualized
basis
7. Multimedia direct response communication
8. Multichannel fulfillment and distribution
 Historic Comparison Between Direct and
Traditional Brand Marketing

Direct Marketing Traditional Brand Marketing

Direct selling to individuals with customers Mass selling with buyers identified as broad groups
identifiable by name, address and purchase behavior sharing common demographic and psychographic
characteristics
Products have the added value of distribution Product benefits do not typically include
direct to the customer, an important benefit distribution to the customer’s door
The medium is the marketplace The retail outlet is the marketplace

Marketing controls the product all the way through The marketer typically loses control as the product
delivery enters the distribution channel
Advertising is used to generate an immediate Advertising is used for cumulative effect over time
transaction … an inquiry or an order for building image, awareness, loyalty and benefit
recall. Purchase action is deferred.
Repetition of offers, promotional messages, toll-free Repetition of offers and promotional messages are
numbers and web addresses are used within the used over a period of time
advertisement
Customer feels a high perceived risk – product Customer feels less risk – has direct contact with
bought unseen. the product
Factors Contributing to the
Growth of Direct Marketing
1. Printing Technology
2. Credit Cards
3. Personal Computers
4. Changing Lifestyles/Working Women
5. Negative Aspects of Retail Shopping

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Publishing as Prentice Hall
The Processes of Direct and
Interactive Marketing
 Primary goal:
 The creation and cultivation of a customer
 Basic assumption :
 Customer and prospect responses are
measurable
 Customer data drives all DM strategies
 Multiple channels are used to serve the
customer
Copyright© 2010 Pearson Education, Inc.
Publishing as Prentice Hall
The Direct and Interactive Marketing
Model Prospect/Customer Database

Marketer

Direct Multi-Channel
Measurable
Communication Response Fulfillment
Hi-Tech Elect. Print and/or Direct Web Physical
Media Media Media Transaction Mail Store

Target Customer/Prospect
Components of the Direct and
Interactive Marketing Model
 Direct Communication
 Multiple Media
 Measurable Response
 Database
 Customer Relationships
 Multichannel Fulfillment/Distribution

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Publishing as Prentice Hall
 Primary Users of DIM
 Product and service enterprises
 Customer and industrial enterprises
 Profit and non-profit organizations
 Fundraising organizations
 Political action groups

Copyright© 2010 Pearson Education, Inc.

Publishing as Prentice Hall
 …!
o re
i n gM
lo p
ev e
D
Print Media Broadcast Media
 Laser printing
 Personalization
 Television
possibilities  Radio
 Computerized  Cable & satellite
typesetting
 Advances in printing
technology
 Direct mail
 …!
o re
in gM
o p
Electronic Media De v el

 Toll-free telephone calling

 Wired and wireless telephones
 The Internet and the World Wide Web

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Publishing as Prentice Hall
High-Tech Digital Media
Applications
 E-mail marketing
 On-line market research
 Web advertising
 E-branding
…!
ore
g M
pi n
l o
e ve
D

Copyright© 2010 Pearson Education, Inc.

Publishing as Prentice Hall
High-Tech Digital Media Formats
 Blogging (personalized modification to
webpage)
 Search Engine Marketing (SEM)
 Online Social Networking
 Mobile Marketing
 With new digital formats emerging
almost daily!

 Database-Driven Marketing:
 Drive prospects to websites
 Engaging them in transactions
 Ex: Amazon.com
High-Tech Digital Media Formats
 Amazon.com:
 Customers who bought this book
also bought…
 Our auction sellers recommend…
 Look for similar books by theses
subjects…
 This book is especially popular in
theses places…
 We’ve included the top five titles
for your browsing pleasure
below…

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Publishing as Prentice Hall
The E-Commerce Economy
 Interactivity:
 Measurement and accountability is
possible!
 Information and interactivity
 Extended opportunities for Direct
Marketers:
 Profiling customers - determine their
…!
prospects – customer relationship - o re
in gM
o p
e v el
D
Customer Affinity
 Database technology made it possible
to track customer transactions and
actions
 Lifetime Value of a Customer (LTV)…

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Publishing as Prentice Hall
 Customer Value
Customer Value =
Perceived Benefits
– Perceived Sacrifice (Cost)
Product benefits
Service benefits
Relational benefits Monetary costs
Image benefits _ Time costs
Energy costs
Psychological costs
Customer Relationship
Management (CRM)
 The creation and cultivation of
customers so that these generate
ongoing responses/transactions
and profits
Lifetime Value of a Customer
(LTV)
 The discounted stream of revenue a
customer will generate over the
lifetime of his/her relationship with an
organization
Interactive Relationships and
Customer Affinity
 Relationships or affinities with
customers can be developed to such a
degree that loyal customers trust and
buy the company’s brands above all
others.
 Example: Airlines
 Loyal Customers =
equal greater profits!
 Trends of D M
 Direct Marketing is a way of life
 Online shopping
 Store locations, called "bricks"
 Non-Store, on-line retailers, called "clicks“
 interaction of bricks and clicks through internet as result of technological
advancements.

 Catalogs (Internet traffic, recognition and loyalty)

 Direct marketing has become characterized as multimedia and

multichannel.
Trends in DIM
 Creating In-Store Traffic
 Directing Online Traffic
 Membership (Affinity) Clubs
 Issues of Privacy and Security

Copyright© 2010 Pearson Education, Inc.

Publishing as Prentice Hall
Creating ln-Store Traffic
 Boosting store traffic and generates added direct
sales
 Convenience of shopping by mail, telephone, or
Websites
 "shop" from catalogs or on the Internet, but prefer
to make their purchase in the store
 why?
1. see and feel the merchandise
2. check colors
3. get a proper fit
4. take immediate delivery.
 Directing On-Line Traffic
 Traditional retailers who have opted to also sell on-line
 Retailer directs Promotions to store customers
 Promotions offering
 Exclusive benefits (price discounts)
 utilizing a variety of media to get their attention and to describe
the benefits they offer.
 The same can be done to direct traffic to Web
sites
 Ex: Internet pioneer Amazon.com mastered the art and
science of direct marketing
 (lifetime value of a customer)
 Membership (Affinity) Clubs
 Frequent buyer programs
 store clerks can access a database of the individual
customer's reading preferences and prior purchases
 encourage store traffic and continuity of customer
relationships with reward points (Gold Crown
Card from Hallmark cards)
Issues of Privacy and Security
 Fulfill customer preferences
 targeting of relevant messages and media minimizes or
"junk" advertising
 Information privacy
 use of data culled from interactive customers and their
transactions alarms privacy advocates
 Harm individuals as a result of data disclosure
 It is costly to send irrelevant direct mail
advertising to those not interested