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What are the essential advantages of direct marketing? Be able to list and apply the 8 Elements of Successful Direct Marketing as described by the Instructor.

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The Offer, The List, Creative, Involvement, Format (Concept), Seasonality, Ease of Ordering, Analysis

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Direct Marketing

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a database driven interactive process of directly communicating with targeted customers using any medium to obtain a measurable response or transaction via one or multiple channels.

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Brand Marketing

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marketing that boosts knowledge of a company or product's name, logo, or slogan.

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Customer Relationship Management

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a business strategy to select and manage customers to optimize value

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Multichannel Distribution

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refers to a marketer using several competing channels of distribution to reach the same target customers.

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B2B

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business to business is the process of providing goods and services to industrial market intermediaries, as opposed to ultimate consumers

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industrial goods

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products that are generally used as raw materials or in the fabrication of other goods.

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political micro targeting

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combining groups of voters based on information about them accessible through databases and the Internet to target them with specific messages.

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customer database

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a list of customer names to which additional information has been added in a systematic fashion.

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customer loyalty programs

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programs that encourage repeat purchases through program enrollment processes and the allocation of awards and/or benefits, sponsored by the organization or firm.

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source data

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the information contained in a customer database

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transactional data

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the information contained in a customer database

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recency/frequency/monetary

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a mathematical formula used to evaluate the value or sales potential of customers or prospects

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match code

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abbreviated information about a customer record that is constructed so that each individual record can be matched, pairwise, with each other record.

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multi-buyer

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an individual whose name/address appears on two or more response lists simultaneously.

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nixie

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mail that has been returned to the US Postal service because it is undeliverable as addressed.

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seeding

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the process whereby a direct marketer places decoys, which are either incorrect spellings or fictitious names, on a customer list to track and identify any misuse (salting).

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salting

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same as seeding (placing decoys to track misuse)

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stealth marketing

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communications secrecy in that direct marketers can communicate with small market segments or individual customers without competitors or other customers having knowledge of it.

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cross-selling

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an important characteristic of direct marketing where new and related products (or even unrelated) are offered to existing customers.

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continuity selling

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offers that are continued on a regular basis (club offers--weekly/monthly/yearly)

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database analytics

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the direct marketer analyzes customer information housed within the customer database to draw inferences about an individual customer's needs.

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data mining

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the process of using statistical and mathematical techniques to extract customer information from the customer database to draw inferences about an individual customer's needs and predict future behavior.

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database enhancement

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adding and overlaying information to records to better describe and understand the customer.

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micro targeting

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the creation and direct delivery to customers of customized winning messages, proof points, and offers, and accurately predicting their impact.

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partner relationship management (PRM)

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the generation of greater value to customers through companies' cooperation and close work with partners in other companies or departments.

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cause related marketing

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a commercial activity by which businesses and charities or causes form a partnership with each other to market an image, product, or service for mutual benefit.

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house lists

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lists of an organization's own customers (active and inactive) and responders.

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response lists

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lists of those who have responded to another direct marketer's offer.

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compiled lists

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prospect lists that have been generated by a third party or market research firm via directories, newspapers, public record, etc. These individuals do not have a purchase response history.

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list owners

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those who describe and acquire prospects (as market segments) who show potential of becoming customers.

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list brokers

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those who serve as intermediaries who bring list users and list owners together.

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list managers

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managers who represent the interest of list owners and have authority and responsibility to be in contact with list brokers and list users on behalf of list owners

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list compilers

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organizations that develop lists and data about them, often serving as their own list managers and brokers.

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service bureaus

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groups that provide data processing, data mining, outsourcing, online analytical processing, etc. to support the interchange of lists and database information.

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key code

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a unique identifier placed on the response device or order form prior to mailing a promotional piece to track and measure results.

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hotline names

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the most recent names acquired by specific list owners, but there is no uniformity as to what chronological period "recent" describes.

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market segmentation

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a marketing strategy devised to attract and meet the needs of a specific sub-market where the submarkets are homogeneous.

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market segments

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placing people (customers or potential customers) into homogeneous groups based on certain attributes such as age, income, stage in the family life cycle, etc.

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product differentiation

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a strategy that uses innovative design, packaging, and positioning to make a clear distinction between products and services serving a market segment.

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product positioning

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a marketing strategy that enables marketers to understand how each consumer perceives a company's product or service based on important attributes (aka positioning).

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NAICS

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North American Industry Classification System-an industrial classification system using a 6 digit code that focuses on production activities.

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GPS

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Global Positioning System-a segmentation tool that associates latitude and longitude coordinates with street addresses.

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GIS

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Geographic Information System-a computer system capable of obtaining, storing, analyzing, and displaying geographically referenced information known according to position.

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demographics

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identifiable and measurable statistics that describe the consumer population.

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reference groups

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the people a consumer turns to for reinforcement.

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reference individual

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the people a consumer turns to for advice.

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psychographics

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the study of lifestyles, habits, attitudes, belief, and value systems of individuals.

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cookie

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an electronic tag on the consumer's computer that enables the Web site to follow consumers as they shop and recognize them on return visits.

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test

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a term that direct marketers may use for experiments.

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experiment

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a procedure designed to measure the effect of change (often called a test by direct marketers)

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independent variable

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a controllable factor in an experiment.

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dependent variable

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a variable on whose outcome or effect the research is interested

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control group

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a group of subjects on which the experiment is not conducted.

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random assignment

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a component of a valid experiment that refers to the fact that both control and experiment group subjects must be assigned completely randomly so that differences between groups occur by chance alone.

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matchback

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the procedure by which an order response is tracked back to the starting place (catalog or offer) from which it was generated.

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split test

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a test where at least two samples are taken from the same list, each considered to be representative of the entire list, and used for package tests or to test the homogeneity of the list.

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hypothesis testing

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an assertion about the value of the parameter of a variable (researcher decides) on the basis of observed facts such as the relative responses to a test of variation in advertising.

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null hypothesis

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the statistical hypothesis that there is no difference between the means of the groups being compared.

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type 1 error

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results when the decision maker rejects the null hypothesis (even though it is true)

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type 2 error

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occurs when the decision maker accepts the null hypothesis (when it is not true)

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chi-square test

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a statistical technique for determining whether an observed difference between the test and the control in an experiment is significant.

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degrees of freedom

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the number of observations that are allowed to vary.

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CLTV

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the discounted stream of revenue a customer will generate over the lifetime of his or her relationship or patronage with a company.

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market penetration

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the proportion of customers to some benchmark

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break even

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the point at which the gross profit on a unit sales equate to the cost of making that unit sale.

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conversion

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the movement of a prospective customer to a definite buying customer.

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conversion rate

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the rate at which leads are converted into sales.

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gross sales

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total sales made

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cost of goods sold

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all costs related to manufacturing or producing a good or service

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variable costs

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costs that vary with production and number of units sold

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fixed costs

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costs associated with a business that do not vary with production or number of units sold

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unit margin

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the amount of money each sale provides to cover fixed costs

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allowable margin

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the amount of money that can be spent to get an order while still permitting some left over for media costs and the designated profit to be made.

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net profit

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the amount of money the company retains after the fixed costs are subtracted from the gross revenues and before taxes.

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cost per inquiry (CPI)

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(aka CPL lead) promotion costs divided by the number of inquiries (people who responded but didn't order yet)

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cost per response (CPR)

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the total promotion budget divided by the total number of orders and/or inquiries received.

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return on investment (ROI)

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a popular tool of measurement in business, this is the net profit divided by average amount invested in the company in one year

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offer

answer

the terms under which a specific product or service is promoted to the customer

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positive option

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the process whereby the customer must specifically request shipment of a product for each offer in a series

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negative option

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the shipment of a product is sent automatically unless the customer specifically requests that it not be.

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til-forbid (TF)

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an offer that prearranges continuous shipments on a specified basis and are renewed automatically until the customer instructs otherwise

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up-selling

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the promotion of more expensive products or services over the product/service originally discussed or purchased.

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price skimming

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a strategy used when the objective of the price is to generate the largest possible ROI where the price must be set at the highest possible level to "skim the cream" off the top of the market and only target a select number of consumers who can afford to buy the product/service.

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price penetration

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a strategy used if the direct marketer wants to maximize sales volume

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price elasticity

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the relative change in demand for a product given the change in the price of the product

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motivations

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needs that compel a person to take action or behave in a certain way

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positioning

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a marketing strategy that enables marketers to understand how each consumer perceives a company's product or service based on important attributes

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big idea

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the idea that becomes the company's logo, slogan, or tagline. It is the highlighted unique selling point or creative expression that is the focal point of a whole promotional campaign.

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copy appeal

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the essential theme, which generally stems from fundamental human needs, of the whole promotion or campaign.

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layout

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the positioning of a copy and illustrations in print media to gain attention and direct the reader through the message in an intended sequence.

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involvement devices

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devices used in direct response advertising to spur action by involving the reader; ex: tokens, stamps, punch-outs, puzzles, etc.

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storyboards

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a series of illustrations that show the visual potion of a TV commercial

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direct mail

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the leading printed medium that direct marketers use for direct response advertising

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self-mailer

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any direct mail piece mailed without an envelope

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solo mailer

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direct mail pieces that promote a sing product or limited group of related products

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classic format

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a direct mail package consisting of an outer envelope, letter, circular, order form, and a reply envelope.

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chit

answer

an additional enclosure card or separate slip of paper that highlights a free gift or some other information

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letter

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the principal element of a direct mail package that provides the primary means for communication and personalization

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catalogue

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a multipage direct mail booklet that displays photographs and/or details of products/services along with prices and order details.

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coupon

answer

an offer by a manufacturer or retailer that includes an incentive for purchase of a product or service in the form of a specified price reduction

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cooperative mailings

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provide participants, usually noncompeting direct response advertisers, with opportunities to reduce mailing cost in reaching common prospects

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stuffers

answer

printed offers of products and services that are inserted in the envelope with invoice or statement.

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package inserts

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printed offers of products and services that arrive when the recipient receives an order that he or she had purchased

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take-one racks

answer

an alternative method of print distribution where the printed material is placed on a display rack.

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insert

answer

a popular form of print advertisement commonly used in a magazine or newspaper

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bingo card

answer

in insert or a page of a magazine that is created by the publishers to provide a numeric listing of advertisers

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run-of-paper (ROP) advertisements

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small advertisements that appear in the regular section of the newspaper where positioning of the ad is at the will of the newspaper

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preprinted inserts

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newspaper advertisements that are usually printed ahead of the newspaper production and are distributed with the newspaper

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Sunday supplements

answer

mass circulation sections that are edited nationally but appear locally in the Sunday editions of many papers

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Ad Note

answer

a small sticker that is placed on the front page of the newspaper that can be pealed off without damaging the newspaper

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multivariate test

answer

applies hypothesis testing onto multi-variable systems (consumers on websites)

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source code

answer

the media, media vehicle, or means by which the person has responded to become a customer

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cohort

answer

In statistics and demography, a cohort is a group of subjects who have shared a particular event together during a particular time span.

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kill file

answer

per-user file used by some Usenet reading programs to discard summarily articles matching some unwanted patterns of subject, author, or other header lines.

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suppression (kill file)

answer

a function where criteria are provided to serve as basis of eliminating duplicate or unwanted records from a list or database order.

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merge purge

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a computerized process used to identify and delete duplicate names/addresses within various lists

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append

answer

Adding additional data to a file. This can include adding outside data to a customer file such as a wealth score, or demographic information such as age or

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queries

answer

reservations or doubts

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control package

answer

the direct mail package that used as the baseline for measuring performance of test packages with different offers, content, or formats.

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dedupe

answer

to remove duplicates from a list, especially a mailing list

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According to your professor what are the four elements of a direct response offer. Be able to plan a direct response offer. What is the importance of a guarantee in direct marketing?

answer

measurement, testing, sampling, roi enhancements

question

Be able to identify and describe direct marketing creative technique used in direct mail. What are some motivations used in direct mail? What is an involvement device

answer

color, font, format, involvement devices/coupons, discounts, something to get the consumer involved

question

What are some of the advantages of direct mail and what are some disadvantages? Are some marketing objectives that catalogs do not achieve costs effectively?

answer

What do you mean by "are some marketing objectives that catalogs do no achieve costs effectively"? Are you referencing how one of the disadvantages to DM is issue of remnants or products printed on pages that do not ultimately cover the costs of the print ad?

Direct Marketing Chapters 1-7 – Flashcards

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