Principles of Marketing

Direct and Online 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. A Case study of HSBC Online mortgage lead generation 4. How customer behavior and technology will change the future of financial services

Chapter Outline
1.
2. 3. 4. 5. 6. 7.

The New Direct-Marketing Model Growth and Benefits of Direct Marketing Customer Databases and Direct Marketing Forms of Direct Marketing Online Marketing Integrated Direct Marketing Public Policy Issues in Direct Marketing

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

One-on-one communication in which offers are tailored to the needs of narrowly defined segments. Seeks a direct, immediate, and measurable consumer response. Can take many different forms.

Forms of Direct Marketing

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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Powerful tool for building customer long-term customer relationships Enables true micromarketing efforts

Advantages of Direct Marketing

Can reach prospects at just the right moment

Provides access to buyers unreachable through other channels Minimizes wasted reach Effectiveness is easily measured

Telemarketing

Used in both consumer and B2B markets Outbound or Inbound Inbound consumer telemarketing and outbound business-to-business telemarketing remain strong despite DNC legislations

Telemarketing the end of an industry?

Do-Not-Call legislation forbids most telemarketers to contact phone numbers registered on its Web site $11,000+ fine per DNC violation DNC legislation effectively prohibits cell phones telemarketing (cannot call cellphones using auto-dialers)

Direct-Mail Marketing

Involves sending a marketing offer to a pre-qualified prospects address Addresses obtained from customer lists List sources

Companies develop their own databases (i.e. Williams Sonoma) Buy a list from a list broker Internet accounts and warranty or product registrations

Higher cost per prospect reached, but yields higher quality prospects than mass media Easy to measure results The junk-mail problem

Catalog Marketing

Originally a way to reach rural and off-thebeaten-path prospects. Nowadays most paper catalogs have gone digital (i.e. online) Expected catalog sales in 2008: $200 billion. Advantages and disadvantages

Paper vs. Online

Direct Response TV Marketing

Direct-Response Advertising:

TV spots that are 60 or 120 seconds long.

Infomercials:

A 30-minute or longer advertising program for a single product. Entire cable channels dedicated to selling multiple brands, items, and services.
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Home Shopping Channels:

Copyright 2007, Prentice-Hall Inc.

Direct Response TV
HSN The Home Shopping Network is a direct response marketers dream. Products shown on the channel can be ordered via a 1-800 number or over the Internet from the HSN Web site.
www.hsn.com
Copyright 2007, Prentice-Hall Inc. 13-14

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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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

Catalog direct marketing involves printed and Web-based catalogs
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

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

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

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

Forms of Direct Marketing

Kiosk marketing involves placing information and ordering machines in stores, airports, trade shows, and other locations

Forms of Direct Marketing

Digital direct marketing technologies Mobile phone marketing Podcasts Vodcasts Interactive TV

Forms of Direct Marketing

Mobile phone marketing includes: Ring-tone giveaways Mobile games Ad-supported content Contests and sweepstakes

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

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

Online Marketing
Marketing and the Internet 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

Online Marketing
Online Marketing Domains

Business to consumer (B2C) Business to business (B2B) Consumer to consumer (C2C) Consumer to business (C2B)

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

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

Online Marketing
Online Marketing Domains Consumer to business (C2B) involves consumers communicating with companies to send suggestions and questions via company Web sites

Online Marketing
Types of Online Marketers

Click-only marketers Click-and-mortar marketers

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

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

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

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

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

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

Online Marketing
Setting Up an Online Presence Types of sites Corporate Web site Marketing Web site

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

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

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

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

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 userto-user communication Customization is the sites ability to tailor itself to different users or to allow users to personalize the site

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

Online Marketing
Designing Effective Web Sites The eighth C To keep customers coming back, the site needs to constantly change

Online Marketing
Placing Ads and Promotions Online Forms of online advertising Display ads Search-related ads Online classifieds

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

Online Marketing
Placing Ads and Promotions Online Search-related ads are ads in which textbased 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

Online Marketing
Placing Ads and Promotions Online Other forms of online promotion include: Content sponsorships Alliances Affiliate programs Viral advertising

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-ofmouth marketing and involves the creation of a Web site, an e-mail message, or another marketing event that customers pass along to friends

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

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

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 email environment

Integrated Direct Marketing

Integrated direct marketing involves the use of carefully coordinated multiple-media, multiple-stage campaigns

Public Policy Issues in Direct Marketing

Customer irritation, unfairness, deception, and fraud Privacy Security

Public Policy Issues in Direct Marketing

Irritation, 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

Public Policy Issues in Direct Marketing

Invasion 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

A Need for Action

California Online Privacy Protection Act (OPPA) Childrens Online Privacy Protection Act (COPPA) TRUSTe

HSBC Hong Kong website A Case Study

HSBC online 2000 Mortgage product page for retail business in Hong Kong By 2002, 8-10 leads per month were coming through Direct Financial Services via the website Cumbersome for users, information on potential value of the property, the location of the property, your average monthly income & expenditure, how much you wanted to borrow, personal details

2002, revamp of mortgage website (6 months), Team Simplified and relevant steps Specific team to follow the leads No mktng launch or online advertising I week, 178 leads, end of month 800 leads 2003, HK$20 million of mortgage business had been generated from Web leads It wasnt the case of build it they will come, because they were already there. It is simply a case of think of how the customer behaves

Invested more than twice on staffing, remodelling vs Internet, social networking? More staff working in traditional brand advertising vs digital, social networking Is there an innovation team to manage customer initiatives ? Marketing Budget exceeded Digital media?

Do you prevent customer facing staff from using Facebook and Twitter? Are your CEO, Marketing Head and Head of Customer advocacy on Twitter? Do you know what % of visitors click on login vs other sections?

Thank You