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CHAPTER 14
DIRECT MARKETING
Chapter Overview
One of the most rapidly growing areas in marketing is direct marketing. A variety of direct response
media are used to convey the communications message. In this chapter we examine the role of direct
marketing in the promotional mix. We discuss the objectives sought in direct marketing programs (noting
that these may often differ from the communications objectives discussed earlier). We also discuss direct
Learning Objectives
2. To know the strategies and tactics involved in direct marketing.
4. To determine the scope and effectiveness of direct marketing.
Chapter and Lecture Outline
I. DIRECT MARKETING
A. Defining Direct Marketing—Direct marketing involves a total set of activities by which the
seller attempts to elicit a direct action response—for example, a purchase. As such, it employs
B. The Growth of Direct Marketing—Direct marketing has grown tremendously in the past few
years as a result of a number of contributing factors:
• the catalog
• the use of consumer credit cards
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C. The Role of Direct Marketing in the IMC Program—Direct marketing activities support and are
supported by other elements of the promotional mix.
1. Combining direct marketing with advertising—Direct marketing is in itself a form of
2. Combining direct marketing with public relations—Private companies may use telemarketing
3. Combining direct marketing with personal selling—Nonprofit organizations often use
4. Combining direct marketing with sales promotions—For example, many local merchants
send out mailers announcing sales and promotional offers.
D. Direct-Marketing Objectives—Direct marketers most often seek a direct response. This response
E. Developing a Database—One of the most important parts of the direct marketing program is the
development of a database. The database is the foundation from which direct marketing decisions
evolve. Figure 14-2 demonstrates how database marketing works, while Figure 14-3 demonstrates
factors to be included in both consumer and business to business databases. Databases are used
to perform the following functions:
• Improving the selection of market segments
F. Direct Marketing Strategies and Media—Direct marketers generally pursue either a (1) one-step
approach or a (2) two-step approach in developing media strategies. In the one-step approach,
1. Direct mail—Mail order sales exceeded $44 billion in 2009, meaning that more monies have
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2. Catalogs—Over 13.5 billon catalogs were mailed in the year 2009. The text lists some
interesting examples of articles available through catalogs on page 481.
3. Broadcast media—Two broadcast media are available to direct marketers: TV and radio. The
4. Infomercials—The lower cost of commercials on cable and satellite channels has led
5. Teleshopping—The major shopping channels in the United States—QVC, and the Home
6. Print media—Magazines and newspapers are difficult media to use for direct marketing
7. Telemarketing—Almost $334 billion dollars worth of sales took place through telemarketing
phone calls in 2009. Telemarketing has been hurt by the do not call lists, though the
business to business sector remains strong.
Professor’s Notes
II. DIRECT SELLING
Direct selling involves the direct, personal presentation, demonstration and sales of products and services
to consumers in their homes. The text discusses three forms of direct selling including:
1. Repetitive person-to-person selling—Amway/Mary Kay
3. Party plans—Tupperware/PartyLite Gifts
A demographic profile of the direct salesperson is provided in the chapter.
Professor’s Notes
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III. EVALUATING THE EFFECTIVENESS OF THE DIRECT MARKETING PROGRAM
In addition to some of the effectiveness measures employed by other marketers, direct marketers also
employ a measure based on cost per order (CPO). Using CPO the marketer knows almost instantly
whether or not the advertisement is working.
A. Advantages of direct marketing are cited including: (1) selective reach; (2) segmentation
Teaching Suggestions
As noted, direct marketing is a rapidly growing field. Students typically think of this area in terms of
direct mail, and sometimes the 800 and 888 number ads that appear on television. It is a helpful and
Answers to Discussion Questions
1. 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)
Over the years home shopping channels have developed an image of a place for shut-ins and
women in their 40’s and 50’s. The products offered were typically in the low to midrange price
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2. What is customer relationship management? Discuss how direct marketing can be
employed to improve customer relationship management. (LO1)
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
3. 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).
Infomercials—often referred to as long-form commercials—typically range from 30 to 60
minutes, and are often made to appear as television programs. Infomercials have
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4. 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)
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
5. 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)
Years ago, some pundits predicted that the Internet would lead to the eventual demise of
traditional media, including TV, newspapers, and direct marketing—including catalogs.
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While one might think that everyone wants everything online, this is not always true.
Traditional catalogs are a good example of this. For one, the catalog arrives in the mail—
solicited or unsolicited. Many consumers become aware of companies for the first time
through this method—as opposed to surfing online. Secondly, many consumers find the
6. The number of telemarketing centers in the United States has decreased in the past few
years. Why has this occurred? (LO3)
To cut down on the intrusion of telemarketers, the FTC started a “do not call list” in
which consumers could register to have telemarketers stop calling them. With all of its
Over 148 million people have already signed up for the do not call list, and the cell phone
list continues to grow. Telemarketers in violation have been prosecuted and fined—
making many consumers happy. At the same time, many businesses and organizations
alike are not pleased with the lists. They contend that lost sales, and the inability to call
7. Explain why direct marketing has been so successful. Do you see this trend continuing
into the future? (LO1)
There are a number of reasons why direct marketing has been successful. Many of
these bode well for its future success as well. Reasons for the rising success of
direct marketing can be attributed to a number of factors:
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• The changing marketing environment. The increased use of credit cards, lack of
time, and acceptance of mail-order products by consumers have all increased the
effectiveness of the direct marketing medium.
databases. As noted, Kimberly Clark can literally track babies through childhood,
changing the products advertised and the appeals as the child gets older.
• Advances in technology. Direct marketing no longer means just catalogs and
direct mail. Videotext systems, home shopping channels, the Internet and other
innovations have allowed for more successful direct marketing efforts. Even the
8. Discuss some of the factors that contribute to the negative impact of direct marketing. What
can be done to improve direct marketing’s image?(LO1)
Perhaps the major problem associated with direct marketing is its image. Putting
aside all of its other advantages, image problems continue to plague the industry,
making it difficult to shed the “junk mail” role.
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These problems stem from all direct media. In direct mail, one’s mailbox is full of
unwanted catalogs, ads and solicitations. The very mention of telemarketers evokes
negative images, and around election time are still incredibly intrusive and annoying.
A number of steps have been taken to improve upon this image. The DMA—the direct
marketing trade association—has established guidelines for appropriate actions, and
has worked closely with academia and industry as well as the government to help
eliminate many of the problems. Recent legislation such as the do not call list goes a
9. Direct marketers are some of the most successful when it comes to measuring the
effectiveness of their programs. Give reasons why this may be true. (LO4)
Because most direct marketing seeks a behavioral response, it is easier for direct marketers
to determine if their messages are working or not. Simply put, direct marketers figure out
what it costs for the product, add in the commercial message cost and media and the put it in
the marketplace. If the sale orders exceed the costs, the campaign has been successful.
10. Explain how companies use database marketing. Name some of the companies that may have
your information in their database. Explain how this information is used to reach you. (LO2)
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One, if not the, most important factors in the success of direct marketing is that of developing
and maintaining a database. Sources for names to include in a database come from a variety
of sources, including customers themselves. When you fill out a warranty card, provide
In addition, sophisticated companies spend much time and effort in analyzing their databases.
Through their databases they can track sales, determine the impact of sales and promotions,
and profile their customers. By selling the names to others, another revenue stream is
developed for the company.
Additional Discussion Questions (not in text)
11. What is the difference between the one and two-step approaches to direct marketing? Give
examples of companies that pursue both methods.(LO2)
In the one-step approach, the direct marketer is trying to get a sale immediately upon
exposure to the direct communication. For example, the commercials that ask you to call an
800 number “right now” and place an order would be an example of the one-step approach.
Companies selling magazines, gimmicky items, psychic networks, etc. typically use this
method.
Chapter 14 – Direct Marketing
12. Describe the various forms of direct response advertising. Discuss some of the reasons for the
success of direct response advertising. (LO3)
The text discusses the various direct response media. Without repeating this discussion here,
a. Direct mail—everything from postcards to mailers for supermarkets detailing weekly
sale items
There are a number of reasons for the growth and success of direct response media, including:
Consumer credit cards—the use of consumer credit cards continues to increase, reaching all time
highs. The ease of use of these cards increases the ability to conduct direct marketing activities.
So long as this use remains high, and there are no indications that it will change, direct marketing
will continue to thrive.
Miscellaneous factors—all of the miscellaneous factors discussed in the chapter continue to hold
true in regard to their impact on direct marketing. No less important is the image of direct
marketing itself. Unfortunately, the industry still has image problems, and the Internet has
contributed to these problems through fraud and deception.
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13. What is the difference between direct marketing and direct selling? Describe the various forms of
direct selling and some of the characteristics of the industry that make it unique.(LO3)
Direct selling might best be considered as a form (or subset) of direct marketing. Both deal
directly with the customer, seeking a response. However, direct marketing assumes a broader
There are three forms of direct selling including:
Repetitive person-to-person selling—The salesperson visits the buyer’s home, job site or other
location to sell frequently purchased products or services (for example, Amway).
14. What are the characteristics of the infomercial watcher? In viewing this profile, does it surprise
you? Explain why or why not. (LO1)
Typically, when we think of the infomercial watcher, we think of someone with a lot of time on
his or her hands, insomniacs, or very heavy TV watchers. Given the times of day infomercials are
shown (early morning, very late at night, Sunday morning, etc.), this would seem to make sense.
Interestingly, the infomercial buyer may be none of the above. Those who watch (and buy from)
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15. The catalog has become an important part of the shopping lives of many consumers. Describe
different groups that you think might find catalogs useful in the consumer market, and explain what
aspects of catalogs would attract them to this medium.(LO1)
While it is difficult to eliminate any group from consideration as a catalog user, one might use
examples of two extreme types, with everyone in between having their own reasons for use. These
two types include:
IMC Exercise
Direct marketers’ print catalogs are often complemented by web sites on the Internet. However, some
companies treat them as separate businesses. Have students bring in examples of catalogs and websites
for the same company. Are these two direct marketing tools working together or are they separate entities
competing with one another? Have the students explain how a company might use a catalog and a web
site on the Internet to complement one another as part of its direct marketing efforts.
Chapter 14 – Direct Marketing
AdForum Exercise: “Direct Marketers Use of Other IMC Media”
(See Advertising and Promotion Playlist, Chapter 14)
Some of the largest users of direct marketing also employ television commercials and other media to
market their products. Go to the AdForum playlist and answer the following questions:
1. What is the objective(s) that the advertisement is trying to achieve?