BSAD 113 DIRECT MARKETING Lars Perner, Instructor 1

DIRECT MARKETING

Economics of eliminating intermediaries

Services provided by intermediaries

Circumstances favoring direct marketing

Opportunities for segmentation

BSAD 113 DIRECT MARKETING Lars Perner, Instructor 2

Is “Eliminating the Middleman” A Good Idea?

Intermediaries usually perform services more efficiently than you can

Optimal length of challens• May change over

time

BSAD 113 DIRECT MARKETING Lars Perner, Instructor 3

Services Provided By Intermediaries

Breaking bulk Financing Contact with

customers Consolidating

goods Distribution Services

BSAD 113 DIRECT MARKETING Lars Perner, Instructor 4

Types of Direct Marketing

Direct sale to consumer• supposedly

eliminates “fat” from distributors (e.g., Dell)

Catalog retailers• Specialty• Convenience

Customizers• e.g., Expedia

(Travel) Promotional

• Infomercials Combinations

• e.g., Geico

BSAD 113 DIRECT MARKETING Lars Perner, Instructor 5

Circumstances Favoring Direct Marketing

Large absolute margins (e.g., Dell)

Need for customization

Large inventory Need to target

narrow segment

BSAD 113 DIRECT MARKETING Lars Perner, Instructor 6

Means of Segmentation in Direct Marketing

Income Past purchases Ethnic surnames Credit history Hobbies/interests

(magazine subscription lists)

BSAD 113 DIRECT MARKETING Lars Perner, Instructor 7

Sources of Info for Direct Marketing Segmentation

Phone books--often contain both names and addresses; yellow pages

State registrations (vehicle, driver’s licenses)

Past purchases (from company or outside)

Professional and school directories

Magazine subscription lists Credit rating bureaus

BSAD 113 DIRECT MARKETING Lars Perner, Instructor 8

Advanced Segmentation Techniques in Direct Marketing

“Merge-Purge”• merge: add lists together;

add purchased lists to own customer list

• purge: sort of duplicates• special software allows for

standardization of addresses (“phonetic” matching possible)

BSAD 113 DIRECT MARKETING Lars Perner, Instructor 9

Sources of List Value

Recency Frequency of

purchase Value of past

purchases Geography (zip

code as surrogate for lifestyle)

Gender identifiability