Chapter 19

1. Direct Marketing Channels-

Catalogs: In catalog marketing, companies may send full-line merchandise catalogs, specialty
consumer catalogs, and business catalogs, usually in print form but also sometimes as CDs, videos, or
online.

Direct mail: Direct-mail marketing involves sending an offer, announcement, reminder, or other item
to a person. Using highly selective mailing lists, direct marketers send out millions of mail pieces
each year—letters, flyers, foldouts, and other "salespeople with wings." Some direct marketers mail
audiotapes, videotapes, CDs, and computer diskettes to prospects and customers.

Telemarketing: Telemarketing is the use of the telephone and call centers to attract prospects, sell
to existing customers, and provide service by taking orders and answering questions. Telemarketing
helps companies increase revenue, reduce selling costs, and improve customer satisfaction.
Companies use call centers for inbound telemarketing (receiving calls from customers) and outbound
telemarketing (initiating calls to prospects and customers).

Web Sites: Companies must design Web sites that embody or express their purpose, history,
products, and vision. A key challenge is designing a site that's attractive on first viewing and
interesting enough to encourage repeat visits.

Email marketing: If a company does an e-mail campaign right, it can not only build customer
relationships, but also reap additional profits. E-mail uses only a fraction of the cost of a "d-mail," or
direct mail, campaign. Microsoft spent approximately $70 million a year on paper-driven campaigns.
Now, it sends out 20 million pieces of e-mail every month at a significant savings over the cost of
paper-based campaigns.

Mobile devices: Japanese carrier NTT DoCoMo Inc. began posting ads on mobile Web sites in 2000
and displayed 1.5 billion ads in 2006. Mobile ad spending was an estimated $871 million worldwide
in 2006, most of which went into text messages. But new dual-mode phones will make it increasingly
easy to blend cell phones with wireless Internet service. With cell phones' ubiquitous nature and
marketers' ability to personalize messages based on demographics, the appeal of mobile marketing
is obvious.

2. Public Issues in Direct Marketing-

Irritation: Many people don't like the large number of hard-sell, direct marketing solicitations.
Especially bothersome are dinnertime or late-night phone calls, poorly trained callers, and
computerized calls by auto-dial recorded-message players.
Deception/fraud: Some direct marketers design mailers and write copy intended to mislead. They
may exaggerate product size, performance claims, or the "retail price." The Federal Trade
Commission receives thousands of complaints each year about fraudulent investment scams or
phony charities.

Invasion of privacy: It seems that almost every time consumers order products by mail or telephone,
enter a sweepstakes, apply for a credit card, or take out a magazine subscription, their names,
addresses, and purchasing behavior may be added to several company databases. Critics worry that
marketers may know too much about consumers' lives, and that they may use this knowledge to
take unfair advantage.

3. RFM Formula for Selecting Prospects-

Most direct marketers apply the R-F-M formula (recency, frequency, monetary amount) to select
customers according to:

Recency: How much time has passed since their last purchase.

Frequency: How many times they have purchased.

Monetary Amount: they have spent since becoming a customer.

Suppose the company is offering a leather jacket. It might make this offer to the most attractive
customers-those who made their last purchase between 30 and 60 days ago, who make three to six
purchases a year, and who have spent at least $100 since becoming customers. Points are
established for varying R-F-M levels; the more points, the more attractive the customer.

4. Types of Telemarketing-

Telemarketing is the use of the telephone and call centers to attract prospects, sell to existing
customers, and provide service by taking orders and answering questions. Telemarketing helps
companies increase revenue, reduce selling costs, and improve customer satisfaction. Companies
use call centers for inbound telemarketing (receiving calls from customers) and outbound
telemarketing (initiating calls to prospects and customers).

Telesales: Taking orders from catalogs or ads and also doing outbound calling. They can cross-sell
the company's other products, upgrade orders, introduce new products, open new accounts, and
reactivate former accounts

Tele-coverage: Calling customers to maintain and nurture key account relationships and give more
attention to neglected accounts.

Tele-prospecting: Generating and qualifying new leads for closure by another sales channel

Customer service and technical support: Answering service and technical questions.
5. Other Media for Direct Response-

Television- Direct Response Advertising: Some companies prepare 30- and 60-minute infomercials
that attempt to combine the sell of commercials with the draw of educational information and
entertainment. Infomercials can be seen as a cross between a sales call and a television ad.

At home shopping channels: Some television channels are dedicated to selling goods and services.
On Home Shopping Network (HSN), which broadcasts 24 hours a day, the program's hosts offer
bargain prices on such products as clothing, jewelry, lamps, collectible dolls, and power tools.
Viewers call in orders on a toll-free number and receive delivery within 48 hours. Millions of adults
watch home shopping programs, and close to half of them buy merchandise.

Videotext: The consumer's TV set is linked with a seller's catalog by cable or telephone lines.
Consumers can place orders via a special keyboard device connected to the system. Much research
is now going on to combine TV, telephones, and computers into interactive TV

Kiosks:A kiosk is a small building or structure that might house a selling or information unit. The
name describes newsstands, refreshment stands, and free-standing carts whose vendors sell
watches, costume jewelry, and other items. The carts appear in bus and rail stations and along aisles
in a mall. The term also covers computer-linked vending machines and "customer-order-placing
machines" in stores, airports, and other locations. All of these are direct-selling tools.

6. Designing an Attractive Web Site-

All companies need to consider and evaluate e-marketing and e-purchasing opportunities. A key
challenge is designing a site that is attractive on first viewing and interesting enough to encourage
repeat visits.

Context: Layout and design.

Content: Text, pictures, sound, and video the site contains.

Community: How the site enables user-to-user communication.

Customization: Site's ability to tailor itself to different users or to allow users to personalize the site.

Communication: How the site enables site-to-user, user-to-site, or two-way communication.

Connection: Degree that the site is linked to other sites.

Commerce: Site's capabilities to enable commercial transactions.

7. Online Ads-
Banner ads: Banner ads are small, rectangular boxes containing text and perhaps a picture.
Companies pay to place banner ads on relevant Web sites. The larger the audience reached, the
more the placement will cost.

Microsites: A microsite is a limited area on the Web managed and paid for by an external advertiser/
company. Microsites are particularly relevant for companies selling low-interest products such as
insurance.

Sponsorships: Sponsorships are best placed in well-targeted sites where they can offer relevant
information or service. The sponsor pays for showing the content and in turn receives
acknowledgment as the sponsor of that particular service on the Web site.

Interstitials: Interstitials are advertisements, often with video or animation, that pop up between
changes on a Web site.

Search-related ads: The hottest growth area has been search-related ads. Thirty-five percent of all
searches are reportedly for products or services. Search terms are used as a proxy for the
consumer's consumption interests and relevant links to product or service offerings are listed
alongside the search results from Google, MSN, and Yahoo!.

Content-targeted advertising: content-target advertising, links ads not to keywords but to the
content of Web pages.

Alliances & Affiliate programs: Companies can set up alliances and affiliate programs. When one
Internet company works with another one, they end up advertising each other.

8. e-Marketing Guidelines-

If a company does an e-mail campaign right, it can not only build customer relationships, but also reap
additional profits.

Give the customer a reason to respond: Companies should offer surfers powerful incentives for
reading e-mail pitches and online ads, like e-mail trivia games, scavenger hunts, and instant-win
sweepstakes.

Personalize the content of your e-mails: IBM's iSource is distributed directly to customers' office e-
mail each week, delivering only "the news they choose" in terms of Announcements and Weekly
Updates. Customers who agree to receive the newsletter select from topics listed on an interest
profile.

Offer something the customer could not get via direct mail: Because e-mail campaigns can be
carried out quickly, they can offer time-sensitive information. Travelocity sends frequent e-mails
pitching last-minute cheap airfares. Club Med uses e-mail to pitch unsold, discounted vacation
packages to prospects in its database.

Make it easy for customers to "unsubscribe.": It is important that online customers have a positive
exit experience. According to a Burston-Marsteller and Roper Strach Worldwide study, the top 10
percent of Web users who communicate much more often online typically share their views by e-
mail with 11 friends when satisfied, but contact 17 friends when they are dissatisfied.

9. Designing a Sales Force-

Sales force objectives: Companies need to define the specific objectives they want their sales force
to achieve.

Sales force strategy: Companies must deploy sales forces strategically so that they call on the right
customers at the right time and in the right way. Today's sales representatives act as "account
managers" who arrange fruitful contact between various people in the buying and selling
organizations.

Sales force structure: The sales force strategy has implications for the sales force structure. A
company that sells one product line to one end-using industry with customers in many locations
would use a territorial structure. A company that sells many products to many types of customers
might need a product or market structure.

Sales force size: Once the company clarifies its strategy and structure, it is ready to consider sales
force size. Sales representatives are one of the company's most productive and expensive assets.
Increasing their number will increase both sales and costs.

Compensation:
To attract top-quality sales reps, the company has to develop an attractive compensation package. Sales reps
want income regularity, extra reward for above-average performance, and fair payment for experience and
longevity. Management wants control, economy and simplicity.

10. Types of Sales Representatives-

Deliverer: salesperson whose major task is the delivery of a product (water, fuel, oil).

Order taker: salesperson who acts predominantly as an inside order taker (the salesperson standing
behind the counter) or outside order taker (the soap salesperson calling on the supermarket
manager).

Missionary: salesperson who is not expected or permitted to take an order but whose major task is
to build goodwill or to educate the actual or potential user (the medical "detailer" representing an
ethical pharmaceutical house).

Technician: A salesperson with a high level of technical knowledge (the engineering salesperson who
is primarily a consultant to the client companies).

Demand creator: salesperson who relies on creative methods for selling tangible products (vacuum
cleaners, cleaning brushes, household products) or intangibles (insurance, advertising services, or
education).
Solution vendor: A salesperson whose expertise is in the solving of a customer's problem, often with
a system of the company's products and services (for example, computer and communications
systems).

11. Sales Tasks-

Prospecting: Searching for prospects, or leads.

Targeting: Deciding how to allocate their time among prospects and customers.

Communicating: Communicating information about the company's products and services.

Selling: Approaching, presenting, answering questions, overcoming objections, and closing sales.

Servicing. Providing various services to the customers—consulting on problems, rendering technical

assistance, arranging financing, expediting delivery.

Information gathering: Conducting market research and doing intelligence work.

Allocating: Deciding which customers will get scarce products during product shortages.

12. Managing the Sales Force-

Recruiting & Selecting: At the heart of a successful sales force is the selection of effective
representatives. Selecting sales reps would be simple if one knew what traits to look for. One good
starting point is to ask customers what traits they prefer. Most customers say they want the rep to
be honest, reliable, knowledgeable, and helpful.

Training: Today's customers expect salespeople to have deep product knowledge, to add ideas to
improve the customer's operations, and to be efficient and reliable. These demands have required
companies to make a much higher investment in sales training.

Supervising: Companies vary in how closely they supervise sales reps. Reps paid mostly on
commission generally receive less supervision. Those who are salaried and must cover definite
accounts are likely to receive substantial supervision.

Motivating: The majority of sales representatives require encouragement and special incentives.
This is especially true of field selling. Most marketers believe that the higher the salesperson's
motivation, the greater the effort and the resulting performance, rewards, and satisfaction—and
thus further motivation.

Evaluating: The sales force's reports along with other observations supply the raw materials for
evaluation. There are several approaches to conducting evaluations. One type of evaluation
compares current performance to past performance.
13. Workload Approach to Determining Sales Force Size-

Once the company establishes the number of customers it wants to reach, it can use a workload
approach to establish sales force size. This method consists of the following five steps:

1. Customers are grouped into size classes according to annual sales volume.

2. Desirable call frequencies (number of calls on an account per year) are established for each class.

3. The number of accounts in each size class is multiplied by the corresponding call frequency to
arrive at the total workload for the country, in sales calls per year.

4. The average number of calls a sales representative can make per year is determined.

5. The number of sales representatives needed is determined by dividing the total annual calls
required by the average annual calls made by a sales representative.

14. Components of Sales Force Compensation-

Fixed Amount: The fixed amount, a salary, is intended to satisfy the need for income stability.

Variable amount: The variable amount, which might be commissions, bonus, or profit sharing, is
intended to stimulate and reward effort.

Expense allowances: Expense allowances enable sales reps to meet the expenses involved in travel
and entertaining.

Benefits: Benefits, such as paid vacations, sickness or accident benefits, pensions, and life insurance,
are intended to provide security and job satisfaction.

15. Steps in Effective Selling-

Prospecting/ Qualifying: The first step in selling is to identify and qualify prospects. More companies
are taking responsibility for finding and qualifying leads so that the salespeople can use their
expensive time doing what they can do best: selling. Companies can qualify the leads by contacting
them by mail or phone to assess their level of interest and financial capacity.

Preapproach: The salesperson needs to learn as much as possible about the prospect company
(what it needs, who is involved in the purchase decision) and its buyers (personal characteristics and
buying styles). The salesperson should set call objectives: to qualify the prospect, gather
information, make an immediate sale.

Approach: Another task is to decide on the best contact approach, which might be a personal visit, a
phone call, or a letter. Finally, the salesperson should plan an overall sales strategy for the account.
Presentation: The salesperson now tells the product "story" to the buyer, following the AIDA
formula of gaining attention, holding interest, arousing desire, and obtaining action. The salesperson
uses a features, advantages, benefits, and value approach (FABV).

Overcoming objections: Customers typically pose objections during the presentation or when asked
for the order. To handle these objections, the salesperson maintains a positive approach, asks the
buyer to clarify the objection, questions the buyer in a way that the buyer has to answer his or her
own objection, denies the validity of the objection, or turns the objection into a reason for buying.
Handling and overcoming objections is a part of the broader skills of negotiation.

Closing: The salesperson attempts to close the sale. Salespeople need to know how to recognize
closing signs from the buyer, including physical actions, statements or comments, and questions.

Follow-up: Follow-up and maintenance are necessary if the salesperson wants to ensure customer
satisfaction and repeat business. The salesperson should schedule a follow-up call when the initial
order is received to make sure there is proper installation, instruction, and servicing. This visit or call
will detect any problems, assure the buyer of the salesperson's interest, and reduce any cognitive
dissonance that might have arisen.