Chapter 17 ADV318J

At the most basic level, internal and external lists facilitate the two fundamental activities of the direct marketer. What are they?

Internal lists are the starting point for developing better relationships with current customers, whereas external lists help an organization cultivate new business. (17-2a)

Since ___ ___ takes dollars from activities that have been the staples of the traditional ad agency business, it is easy to see why pure advertising agencies view direct marketing with some disdain.

direct marketing (17-4)

True or false: Direct marketing programs cannot identify prospects for future contacts and, at the same time, provide in-depth information to selected customers.

False (17-1b)

True or false: Once an organization gets to know who its current customers are and what they like about various products, it is in a much weaker position to go out and seek new customers.

False; it is in a much stronger position (17-2d)

A second type of list enhancement involves incorporating information from external databases into a house list. What are the four categories of information this enhancement includes?

-Demographic data -Geo-demographic data -Psychographic data -Behavioral data (17-2b)

What's a critical factor when it comes to infomercials?

A critical factor is testimonials from satisfied users. Celebrity testimonials can help catch a viewer as he or she is channel surfing past the program, but celebrities aren't necessary, and, of course, they add to the production costs. (17-3e)

What's the rule of thumb in regards to infomercials?

A good rule of thumb in a 30-minute infomercial is to divide the program into 10-minute increments and try close a sale three times. Each closing should feature the toll-free number or the Web address that allows the viewer to order the product or request more information. (17-3e)

Another key aspect of direct marketing programs is that they often are designed to do what?

Another key aspect of direct marketing programs is that they often are designed to produce immediate, measurable response. (17-1)

What did L.L. Bean realize about long-term relationship with customers?

Bean realized that long-term relationships with customers must be based on trust, and his guarantee policy was aimed at developing and sustaining that trust when he could not interact with customers face-to-face. As an astute direct marketer, Bean also showed a keen appreciation for the importance of building a good mailing list. For many years he used his profits to promote his free catalog via advertisements in hunting and fishing magazines. (17-1a)

How can marketers get around the "do not call" list?

By using the lead card. The lead card asks unsuspecting consumers to send in a postcard to receive free information about a product or service. By replying this way, consumers unknowingly forfeit their protection from telemarketers that "do not call" was supposed to provide. (17-2e)

From the consumer's standpoint, direct marketing's growing popularity might be summarized in a single word, ___.

Convenience; Dramatic growth in the number of dual-income and single-person households has reduced the time people have to visit retail stores. (17-1c)

Describe creative selling

Creative selling requires considerable effort and expertise. Situations where creative selling takes place range from retail stores through the selling of services to business and the sale of large industrial installations and component parts. The most complex and demanding of the creative selling positions are in business-to-business markets. (17-4a)

This emphasis on producing and monitoring measurable effects is realized most effectively through an approach called ___ ___

Database marketing (17-1c)

___ ___ and ___ are the direct marketer's traditional media.

Direct mail; telemarketing (17-3)

The appeal of ___ ___ is enhanced further by the persistent emphasis of marketing managers on producing measurable effects.

Direct marketing (17-1c)

How is direct marketing interactive?

Direct marketing is interactive in that the advertiser is attempting to develop an ongoing dialogue with customers. (17-1)

Engage customers, seek their advice, furnish helpful information about using a product, reward customers for using a brand, and in general foster brand loyalty are all objectives of what type of programs?

Direct marketing programs (17-1b)

What is e-commerce?

E-commerce is any purchase transaction consummated between a consumer and a marketer. Marketers encourage e-commerce by encouraging people to visit their website. (17-3c)

Companies can address customers' concerns about privacy if they remember two fundamental premises of database marketing. What are they?

First, a primary goal for developing a marketing database is to get to know customers in such a way that an organization can offer them products and services that better meet their needs. Second, developing a marketing database is about creating meaningful, long-term relationships with customers. If you want people's trust and loyalty, would you collect personal information from them and then sell it to a third party behind their back? (17-2e)

What did Select Comfort have to do to build their brand?

First, it had to overcome the perception that this is just a very expensive air mattress. Second, it had to shed the association with late-night and Sunday morning cable TV to be accepted as a high-quality product found in upscale shopping malls across the United States. (17-4c)

The DMA's definition also notes that multiple media can be used in direct marketing programs. What are the two reasons why this is important?

First, we do not want to equate direct mail and direct marketing. Any medium (including mobile media) can be used in executing direct marketing programs, not just the mail. Second, as we have noted before, a combination of media is likely to be more effective than any one medium alone. (17-1)

How have state and federal laws responded to the public opinion on privacy invasion?

In response to public opinion, state and federal lawmakers have proposed and sometimes passed legislation to limit businesses' access to personal information. For instance, consumers' desire for privacy was clearly the motivation for the launch of the Federal Trade Commission's Do Not Call Registry (recall the discussions on similar topics in Chapter 4). It proved to be a popular idea with consumers but has many opponents in business, including the DMA. (17-2e)

What are the disadvantages of direct mail?

It can cost 15 to 20 times more to reach a person with a direct mail piece than it would to reach that person with a television commercial or newspaper advertisement because of the cost-per-contact advantages of mass media. In addition, in a society where people are constantly on the move, mailing lists are commonly plagued by bad addresses. Each bad address represents advertising dollars wasted. (17-3a)

A ___ ___ represents an organization's collective memory, which allows the organization to make the kind of personalized offer that once was characteristic of the corner grocer in small-town America.

Marketing database (17-2c)

What's the best vehicle for coming to know the current, best customers?

Marketing database development (17-2d)

Describe the role of order takers

Order takers deal with existing customers who are lucrative to a business due to the low cost of generating additional revenues from them. Order takers can also deal with new customers, which means that the order takers need to be trained well enough to answer the basic questions a new customer might have about a product or service. Order takers are responsible for communicating with buyers in such a way that a quality relationship is maintained. (17-4a)

Products that are higher priced, complicated to use, require demonstration, must be tailored to user needs, involve a trade-in, or are judged at the point of purchase are heavily dependent on what?

Personal selling (17-4a)

Finally, when a sales force is deployed for the purpose of supportive communication, it is not charged directly with closing the sale. Rather, the objective is to what?

Rather, the objective is to provide information to customers, offer services, and generally to foster goodwill. (17-4a)

With what type of transaction data, it is a simple matter to calculate the value of every customer to the organization and identify customers that have given the organization the most business in the past?

Recency, frequency, monetary (RFM) analysis. Past behavior is an excellent predictor of future behavior, so yesterday's best customers are likely to be any organization's primary source of future business. (17-2d)

What's the importance of sales people?

Salespeople can play a critical role as well in cultivating long-term relationships with customers—which often is referred to as a customer relationship management (CRM) program. They are also instrumental in ensuring customer satisfaction. Salespeople no longer simply approach customers with the intention of making a sale. (17-4b)

Describe system selling

System selling has emerged because of the desire on the part of customers for "system solutions." Large industrial and government buyers, in particular, have come to seek out one or a small number of suppliers that can provide a full range of products and services needed in an area. Rather than dealing with multiple suppliers, these buyers then "system buy" from a single source. This trend in both buying and selling emphasizes the customer-relationship-management aspects of selling. (17-4a)

What's the advantage and disadvantage of telemarketing?

Telemarketing will give best results over the long run if it is used to maintain constructive dialogues with existing customers and qualified prospects. On the other hand, telemarketing is expensive on a cost-per-contact basis. Further, telemarketing does not share direct mail's flexibility in terms of delivery options. When you reach people in their home or workplace, you have a limited amount of time to convey information and request some form of response. (17-3b)

What are the advantages of direct mail?

The advantages of direct mail stem from the selectivity of the medium. When an advertiser begins with a database of prospects, direct mail can be the perfect vehicle for reaching those prospects with little waste. Direct mail as a medium also lends itself to testing and experimentation. (17-3a)

What is the importance of netiquette?

The key premise of netiquette is to get the consumer's permission to send information about specific products or services, or, to use the current buzzword, they must "opt in." (17-3c)

What is the most common use of direct marketing?

The most common use of direct marketing is as a tool to close the sale with a customer. (17-1b)

The next step in the evolution of a database is what?

The next step in the evolution of a database is list enhancement. Typically this involves augmenting an internal list by combining it with other externally supplied lists or databases. External lists can be appended or merged with a house list. (17-2b)

How long are infomercials?

They range in length from 2 to 60 minutes, but the common length is 30 minutes. (17-3e)

True or false: Although many types of businesses and not-for-profit organizations are using direct marketing, it is common to find that such direct marketing programs are often not carefully integrated with an organization's other advertising and IBP efforts.

True! (17-1b)

True or false: One of the most straightforward list enhancements entails simply adding or appending more names and addresses to an internal list.

True! (17-2b)

True or false: Developing a marketing database involves pursuing dialogues with customers and learning about their individual preferences and behavioral patterns.

True! (17-2c)

True or false: Developments in telecommunications have also facilitated the direct marketing transaction.

True; After getting off to a slow start in the late 1960s, toll-free telephone numbers have exploded in popularity to the point where there is no company website or a catalog that does not include an 800 number for interacting with the seller. (17-1c)

True or false: The final phase of the DMA's definition notes that a direct marketing transaction can take place anywhere.

True; The key idea here is that customers do not have to make a trip to a retail store for a direct marketing program to work. Follow-ups can be made by mail, over the telephone, on a mobile device, or via a computer on the Internet. (17-1)

Once basic awareness was established for sleep number, what was simultaneously happening?

While all this brand building was taking place, targeted consumers continuously received direct mail pieces that were seeking to close the sale. A person typically doesn't buy a $1,000 mattress online or over the phone, but a visit to one of the company's 400 or so retail stores is another matter. There, well-trained sales personnel patiently helped each customer find his or her sleep number, while reinforcing the importance of deep, restorative sleep. Of course, it is also the job of that salesperson to work to close the sale (17-4c)

Frequency-marketing programs have three basic elements, what are they?

a database, which is the collective memory for the program; a benefit package, which is designed to attract and retain customers; and a communication strategy, which emphasizes a regular dialogue with the organization's best customers. (17-2d)

More liberal attitudes about the use of ___ and the accumulation of ___ have also contributed to the growth of direct marketing.

credit; debt (17-1c)

To recognize and reinforce the behaviors of preferred customers, marketers in many fields are offering ___-___ ___ that provide concrete rewards to frequent customers

frequency-marketing programs (17-2d)