marketing`

For online ads, conversion are calculated as

#sales/#clicks

Units needed to be sold to hit profit goal formula:

(Fixed costs)(1+profit target)/ unit margin

Worldview affects 3 things;

1, *Attention*: the consumers worldview determines if the consumer even bothers to pay attention 2. *Bias*: grudges and wishes can color/filter the info that you learn about a new product 3. *Vernacular*: customers care about HOW something is said as much as WHAT is said; ex- the choice of media, tone of voice, words used, smell

3 Characteristics of Effective Offers

1. "Believability*: If its too good to be true, it probably is. 2. *Involvement*: Must attempt to get consumer involved, maybe create a sense of urgency? 3. *Creativity*: the most creative offers usually get the highest response

Types of tests: 1. *List Tests* 2. *Offer Tests* 3. *Creative Tests* 4. *Contact Strategy Tests*

1. *List Tests*: Compare relative performance of different database customer lists 2. *Offer Tests*: Which offer has more turnovers; Free shipping vs. Discounted shipping, or Percentage Discount vs. Dollar discount 3. *Creative Tests*: Different images, typography, layouts 4. *Contact Strategy Tests*: Determine how often you can contact customers and gauge the sales and profits and measure unsubscribes

8 Uses for a Customer Database:

1. *Profile Customers*: develop geographic, demographic, social, psychological and behavioral profiles of your customers 2. *Retain the best customers*: 80/20 rule 3. *Thank customers for their business*: customers expect to be satisfied with their purchases but having a dialog ensures they are 4. *Ability to Cross-Sell and Continuity Sell* 5. *Customer Communications Programs*: send targeted communications to your customers AND gain valuable feedback from customers about your communications and products 6. *Perform Market Research* - conduct research to better understand your customers by conducting surveys and other types of research to get feedback on new products, programs, etc. 7. *Generate New Customers*: by developing profiles of new and existing customers, you can better determine what types of people you should target to become new customers - Referrals is also a great way to generate new customers! 8. *Send Customized Offers*: this is a reason why having more updated information is important

Types of Customers: -defs for each -which is most valuable? 1. Suspect 2. Prospect 3. Customers 4. Clients 5. Advocates

1. *Suspect*: prospective customer you think may have a need or a want for your company's product or service 2. *Prospect*: - qualified "hand-raisers" who have identified themselves as having an interest in your products or service (www, 800, etc.) 3. *Customers*: have placed an order with your company, Can be single buyers since you don't know if they will return 4. *Clients*: repeat customers with whom you have a relationship (multi-buyers) 5. *Advocates*: most valuable customers as they generate the most revenue for your company

3 key components of direct marketing

1. Direct communication 2. Multipul Media 3. Measurable response

According to All Marketers are Liars: There are only two things that separate success from failure in most organizations today:

1. Invent stuff worth talking about 2. Tell stories about what youve invented

5 Essential Elements to the Offer

1. Product 2. Offer 3. Medium 4. Distribution Method 5. Creative

80/20 rule

80% of an organization's business comes from 20% of its customers so it's critical to know who the top customers are and focus on them, which is possible through customer databases

According to All Marketers are Liars: the _______________ of a story determines whether it will survive scruitiny long enough for the consumer to tell the story to other peope

Authenticity

R/F/M (Recent/Frrequency/Monetary)Model

By capturing the date, volume and amount of purchases, marketers can determine the future potential of each customer

Designing the Test: Busch Gardens Example (show page 99) Offer Test example

Compare 2 offers: 1 with a flap offering a free Christmas Town ticket 1 without the flap and special offer Send offer without flap to 25% of list; 75% with flap Results: 30% higher response for group with flap Conclusion by Busch Gardens: "Cost of printing mailer with flap justified by increased sales"

"Subscribe and Save" is known as ____________ selling

Continuity-selling

Conversion Rates

Conversions are an action that you've defined as valuable to your business, such as an online purchase or sign-up -Rate at which prospects become customers (buy something!)

a list of customer names to which the marketer has systematically added additional information

Customer Database

in ___________________Programs, Since data is collected directly from the customers, it's more likely to be accurate thereby increasing the effectiveness of targeting

Customer Loyalty example: Lance's Kimpton Hotels Karma Club online booking process

Southwest Airlines Rapid Rewards is an example of a

Customer Loyalty/Retention program

this is a key tool in maintaining a long term relationship, and Allows marketers to target best prospects and customers, build relationships and maintain loyalty

Database

A frame _____________ a world view

Embraces

The first step in database development is

First step: Determine why you want to build the database Examples: Develop more effective promotional activities Sell different products or services Introduce new products or services Advertise upcoming sales or events Thank customers for their patronage Introduce new staff members/employees

_________________ are the words and images and interactions that reinforce a bias someone is already feeling. -ex: "Firearm Safety" vs. "Banning Handguns"

Frames

Gross Margin formula and Net Profit forumula

Gross Sales -COGS ___________________ Gross Margin - Promo cost ___________________ Net Profit

Break Even -def -formula

In simple terms, break even is how many sales are required to cover the costs of the marketing promotion Fixed Costs/Unit Margin

Lift

Increase in the average response rate by adjusting one of the independent variables -Examples of independent variables that could result in lift are depth of discount and free shipping -Usually lift in sales/profitability is a more important factor

Based on _________________, marketing expenditures should be assessed for their potential to create long-term customers not just generate sales

Lifetime Value of Customer (LTV)

Increase in the average response rate by adjusting one of the independent variables is called a _____

Lift

Should you try to change a person's worldview? Why or why not?

NO you shouldnt; its too expensive and time consuming -just identify a population with a certain worldview, frame your story in terms of that world view, and you wine

Offer Test -def -National Geographic example -What was NG's Independent and Dependent variables

National Geographic sends out to 18million households, and they sent atleast 10% of their mailing list 3 different offers to test which of the offers had the highest conversion rates INDEPENDENT: product or service; price structure; some other attribute DEPENDENT: number of subscriptions and amount they paid

Compare 2 offers: A)1 FREE single day ticket for a friend B)50% OFF single day ticket for a friend Results: 75% of the people who responded did to the FREE offer Conclusion by Busch Gardens: "Free offer was a significantly higher motivator to generate a visit" *What's wrong with with model?*

Needs to take into account the profitability of each

ROI for a promotion Formula

Net Profit / Promo cost

Story Board Steps

Objectives Setting Major Ideas Characters Plot Message

Cross Selling

Offer new related or unrelated products to an existing customer -ex: "customers who bought this also brought..."

Continuity Selling

Offers that are continued on a regular basis (weekly, monthly, etc. ) -"Subscribe and Save"

Partner Relationship Management (PRM)

PRM is where companies work closely with other companies to generate greater value to both of their customers ex: Washington Post and XM Radio: WP sent out direct mail pieces targeting urban young professionals with a contest to win an XM portable receiver and 3 months service

Which pricing strategy is this: offer a product at a reduced price to *increase sales volume*

Price Penetration strategy

Which pricing strategy is this: only capitalize on the limited number of customers who will pay a premium, thereby maximizing *profitability* per order

Price Skimming

Up Selling

Promotion of a more expensive product over the one currently being considered

When a new customer is acquired, there's no way of knowing what kind of customer they will be, but marketing principles indicate that the cost of acquiring a new customer usually results in a positive __________ long-term

ROI

The _________________ indicates the means by which the data was collected

Source *Code*

the information contained in a customer database

Source *Data*

4 Steps of *Planning* the Offer

Step 1: *Establish the Objectives of the offer*: -ex; Maximizing Profitibility (Subcriptions or Buying more stuff) Step 2: *Attractiveness of the Offer* -Determine how much you can afford to offer in terms of discounts or free products Step 3: *Reduce the Risk of the Offer* -Make it safe for people to buy via money-back guarantees, etc. Step 4: *Creative Appeal* -Make the offer look enticing

Steps of *Creating* and Offer

Step 1: *Market Research* -understand your customers needs you are trying to fulfill Step 2: *Terms of the Offer* -product sizes, colors, specifications, accessories, personalization Step 3: *Target the Offer* -what am i selling, to whom, why am i selling it now, what do i want my prospect to do? -Positioning -Step 4: *Test the Offer* -test all aspects to ensure their viability; test one feature at a time, code your tests to measure them, keep accurate records, analyze results and take action Step 5: *Execute the Offer* -all systems go; product is in stock in all skus, packaging on hand for shipping, manpower in place to fill orders, any free offer/products available

In direct marketing, success is measured by

Success is measured by lifetime customer value

According to All Marketers are Liars: Frames are

a way you hang a story on to a customer;s existing world view; elements of a story painted to leverage the worldview a consumer already has; applies to anything an anyone -example: Krispy Kreme's phrase "Hot Donuts" by adding "hot"

According to All Marketers are Liars: No marketing succeeds if it cant find an audience that...

already wants to believe the story they are being told

Marketers must determine the particular source data needed to collect in order to

attain the organization's goals

Loyalty programs not only reward their passengers' continued business but also provides an excellent mechanism for

collecting data

Direct marketers must ________________, _______________, and ______________in order to make good business decisions to maximize profitability and meet organizational objectives."

conduct tests, measure response rates and analyze results

Companies will use __________ to capture specific information about your buying habits to personalize your content such as retargetted ads, etc.

cookies

____________ are one of the key elements in what differentiates direct marketing from general (or brand) marketing

databases

Online registrations is a key method companies use to

gather data

Direct marketing definition

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.

Affiliate marketing

is an advertising model where a company pays compensation to third party publishers to generate traffic or leads to the company's products and services. The third party publishers are referred to as affiliates and the commission fee incentivizes them to find ways to promote the company

According to All Marketers are Liars: Customers only notice things when....

it changes

Testing

manipulates 1 or more controllable factors (independent variables) to determine their influence on various events or outcomes (dependent variables)

Positioning strategy -def -what step in creating an offer is this in

marketing strategy that enables marketers to understand how each consumer perceives a company's product or service -step 3: Targeting the Offer

When new customers are gained, the __________________________________________________ generated is also gained, not just the revenue from the sale

net present value of the future profits

Customer Communications Programs

send targeted communications to your customers AND gain valuable feedback from customers about your communications and products

"People clump together into common worldviews, and your job is to find a previously undiscovered clump and frame a story for those people" is an example of _________

targeting

Value Proposition

the Offer; "What will I get?"

Organic search engine optimization (organic SEO)

the methods used to obtain a high placement (or ranking) on a search engine results page in unpaid, algorithm-driven results on a given search engine

example of General Mills changing their worldview

they saw that people were responded to Atkins and the new importance of healthy breakfast for their kids and GM changed their sugary cereals to whole grain

(cost-per-impression - CPM)

when you paya site for an ad every time it is displayed on someones computer

Paid Search marketing

you advertise within the sponsored listings of a search engine or a partner site by paying either each time your ad is clicked (pay-per-click - PPC) or less commonly, when your ad is displayed (cost-per-impression - CPM)