Marketing Chapter 4 Action And Interaction Direct Response And Promotions Has Difficulty Perceiving Real

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Chapter 4: Action and Interaction: Direct Response and Promotions

has difficulty perceiving real differences between brands. A problem is that many

shoppers are overwhelmed with loyalty programs. A study found that only 50% of

members are active users.

 Marketers like membership programs because they also generate information for

customer databases, which can be used to more specifically target customers with

promotions and advertising materials.

Partnership Programs

Another promotion tool that crosses the lines is the partnership program. Co-marketing

involves manufacturers developing marketing communication programs with their main

retail accounts, instead of for them. With this type of partnership, the advertising and

sales promotions build equity for both the manufacturer and the retailer.

Co-branding

 When two companies come together to offer a product, the effort is called

co–branding. Both companies are equally present in the product’s design and

promotion, and both get to build on the other company’s brand equity.

Tie-ins and Cross-Promotions

Integrated Communication and Promotion

 As technology has provided more and better ways to interact with customers, the

challenge to direct marketers has been to integrate all the various media platforms and

do so with a consistent brand voice that reflects brand integrity.

 Instead of treating each medium separately, DRC programs seek to achieve precise,

synchronized use of the right media at the right time, with a measurable return on

dollars spent.

Chapter 4: Action and Interaction: Direct Response and Promotions

 A common problem is that direct-marketing messages, promotions, and advertising

messages often do not reinforce one another as well as they should because the three

functions often are handled by different agencies who don’t talk to one another.

DATABASES AND WHY THEY ARE IMPORTANT TO INTERACTION

 At the heart of direct-response communication and other types of promotion that

support interaction with consumers are massive lists called databases. Databases

keep track of current customers and prospects, including their contact information and

characteristics that predict their willingness to respond.

 The practice of behavioral marketing means that individuals are targeted based on

what they have done in the past, such as products they’ve bought, shows they have

watched, and sites they have visited. Messages targeted on behavior are more than

twice as effective as more general advertising in converting website visitors to

buyers.

Data Mining

 The practice of sifting through and sorting information captured in a company’s

database in order to target customers and maintain a relationship with them is called

data mining. Such information includes profiles based on demographics, lifestyle,

and behavior, as well as basic contact information.

 How is data mining used? It is used for prospecting to find the most interested

prospects. Data mining is also used to spot trends and patterns and profile prospects

based on key characteristics of current customers.

Issues and Ethics: Privacy

 One of the unexpected facts about life with social media is that your friends and

associates can share information about you on all of their online social networks. It’s

a new life in the ‘nothing’s private anymore’ universe.

Chapter 4: Action and Interaction: Direct Response and Promotions

The lack of privacy on social media is an issue, particularly when it is combined with

gathering of marketing information. Larry Ellison, president of Oracle, points out that

when a company launches a product, it is easy to look at a Facebook or Twitter feed

and find out what you and other users are saying about that product. That may sound

like good research being used to collect useful insights, but privacy activists see huge

problems with these practices.

 The unknown tracking is the problem with cookies, little files installed on user’s web

browsers without users’ knowledge, to track their online behavior. The use of cookies

is increasing as the number of data trackers collecting information on consumers has

increased. Research shows that 100 of the most popular websites had 6,485 cookies.

Most were installed by third party users, not the websites themselves.

 David Rittenhouse, an expert in digital marketing, believes that “at this moment, in

my opinion, consumers have no idea how much data is being collected on them from

their web browsing.”

END-OF-CHAPTER SUPPORT

REVIEW QUESTIONS

4-3. What are the advantages and disadvantages of direct-response marketing

communication?

Because DRC is designed to generate immediate responses, this means it is also easy to

tell quickly if the messages are meeting their objectives. Unlike mass media advertising

and public relations, the effects of DRC are more immediate and more measurable. Also,

direct-response marketing opens up the door for interactivity. Interactivity, or two-way

Chapter 4: Action and Interaction: Direct Response and Promotions

and mobile media eliminate the cost of message delivery. Other disadvantages include

the annoyance associated with direct-response marketing, such as too many catalogs,

junk mail, and calls during dinner, and the fact that many consumers are still reluctant to

purchase a product sight unseen.

4-4. What are the five primary tools of DRC media and how are they used?

Beyond personal selling, the five primary tools of DRC media are direct mail, catalogs,

direct-response advertising, telemarketing, and internet direct response.

Direct-mail is communication for a product, service, or nonprofit organization that is

addressable, meaning that it can be delivered by mail or electronically to a specific

person or business. Most direct mail is sent using a third-class bulk mail permit, which

requires 200 identical pieces. The response rate for direct mail can vary from .01 to 50

percent, but it’s typically in the 2 to 3 percent range. Because of the high level of non-

response, direct mail is also a fairly costly tool in terms of cost per impression.

Direct-Response Advertising

Direct-response advertising uses a variety of print, broadcast, and online media to deliver

its offers. A direct-response commercial on radio or TV can provide the necessary

information for the consumer to contact the organization. Radio’s big advantage is its

highly targeted audience. As more national marketers move into the medium of

Chapter 4: Action and Interaction: Direct Response and Promotions

Telemarketing

Telemarketing is a form of personal sales, but a lot less expensive. A typical

telemarketing campaign usually involves hiring a telemarketing company to make a

certain number of calls using a prepared script. Callers work in call centers, which are

rooms with large banks of phones and computers. Most calls are made from databases

Internet Direct Response

4-5. Define sales promotion and explain how it differs from other marcom areas.

Sales promotion is defined as the set of activities and communication programs that build

excitement in the market for a limited period of time to stimulate trial, increase consumer

demand, or improve product availability. This can be used to prompt three different

audiences – consumers, sales representatives, and the trade – to take action. A traditional

4-6. Explain the three audiences for sales promotion and how they are reached.

Sales promotion strategies are designed to motivate action among three audiences:

consumer, trade, and sales force. The first two – customer sales and trade support – have

Chapter 4: Action and Interaction: Direct Response and Promotions

Consumer sales promotions are directed at the ultimate user of a good or service. They

are intended to provide an incentive so that when consumers go into a store they will look

4-7. Why are sponsorships and events used by marketers?

Sponsorships occur when companies support an event, such as a sporting event, concert,

or charity, either financially or by donating supplies and services. Major sponsorships

typically cost a lot of money and are used because they generate excitement for both

consumer and trade audiences. They include sports, entertainment tours and attractions,

Chapter 4: Action and Interaction: Direct Response and Promotions

gathering of marketing information. Larry Ellison, president of Oracle, points out that

when a company launches a product, it is easy to look at a Facebook or Twitter feed and

find out what you and other users are saying about that product. That may sound like

good research being used to collect useful insights, but privacy activists see huge

problems with these practices.

This unknown tracking is the problem with cookies, little files installed on user’s web

browsers without users’ knowledge, to track their online behavior. The use of cookies is

increasing as the number of data trackers collecting information on consumers has

increased. Research shows that 100 of the most popular websites had 6,485 cookies. Most

were installed by third party users, not the websites themselves.

Privacy is particularly an issue with data mining. Some see it as a ‘privacy paradox.’

Personal information is necessary to narrowly identify your target and by collecting

personal information, direct-response marketing becomes more efficient, with consumers

getting fewer unwanted contacts. But at what point is efficiency of targeting

compromised by privacy concerns?

4-12. Discuss permission marketing. What strategies can be used to overcome the

problems of spam?

Because spam is a huge problem for legitimate email marketers, many are now using an

approach called permission marketing. This approach attempts to address the spam

DISCUSSION QUESTIONS

4-13. Kali Johnson, a recent college graduate, is interviewing with a large garden-product

firm that relies on television for its direct-response advertising. “Your portfolio looks

very good. I’m sure you can write,” the interviewer says, “but let me ask you what is it

about our copy that makes it more important than copy written for Ford, or Pepsi, or

Pampers?” What can she say that will help convince the interviewer she understands the

special demands of direct-response writing?

4-14. One of the smaller, privately owned bookstores on campus is considering a direct-

response service to cut down on its severe in-store traffic problems at the beginning of

each semester. What ideas do you have for setting up some type of direct-response

system to take the pressure off store traffic?

The bookstore could adopt any number of direct-marketing techniques to reduce

crowding in the store when students purchase books and supplies at the beginning of

each semester.

4-15. You have just been named product manager for a new FDA-approved

pharmaceutical, a diet pill, that helps reduce hunger. Should you use a push or pull

strategy to introduce this new product? Prepare a short paper that explains your point of

view.

Any new product must be made available on store shelves before consumers can

purchase it. Ensuring shelf space is the task of push strategies. Diet pills, however, fall

into a highly competitive product category that, without promotional support on the pull

Chapter 4: Action and Interaction: Direct Response and Promotions

Katla’s “Message in a Bottle” campaign creatively integrated direct-response

communication, sales promotion, digital marketing, and personal selling to create a

solution to this company’s unique marketing challenges. It succeeded at raising

awareness and stimulating interest in the brand, as well as maintaining interaction with

customers without becoming intrusive. Lessons to be learned include: don’t be afraid to

mix the old with the new, using a wide variety of promotional tools is not a problem as

long as they deliver one unified message, and a successful marketing communications

campaign does not necessarily require traditional media advertising. Ideas regarding

changes to the current campaign as well as ideas for a new one will vary among students.

TRACE NORTH AMERICA CASE

Read the TRACE case in the Appendix before coming to class.

4-19. What are the chief advantages and disadvantages of direct-response communication

with this target audience? Of promotions and other multiplatform efforts?

4-20. Create a set of five direct-response materials, promotions, and multiplatform efforts

that you believe will make this campaign more effective.

Hands-On Case

P1-1. After reading about Green Works® in the case and on the web, do you think this

product line is a believable attempt by Clorox to improve the environment? Why or why

not?

P1-2. Does Green Works® represent an attempt to mirror a trend in society or create

one?

P1-3. Had you been the product manager, would you have put the Clorox name on Green

Works® products, as the company did? Explain your response.