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Written by a marketer/decision scientist team, this book explores all aspects of the discipline of direct marketing management --with a focus throughout on the best state-of-the-art practices and supporting research and theory. Covers: Databased Direct Marketing; Planning and Executing Direct Marketing Programs; Offer Planning and Positioning; Mailing Lists: Processing and Selection; List Segmentation; Creative Strategy and Execution; Fulfillment and Customer Service; Developing the Customer Database; Profitability and Lifetime Value; Testing Direct Marketing Programs; Business-to-Business Direct Marketing; Direct Mail Campaigns; Catalog Marketing; Telephone Marketing; Direct Response in Print Media; Direct Response in Broadcast Media; and The Interactive Media. For Direct Marketing and Marketing Communications professionals.

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CONTENTS

Preface = xvii

PART 1 THE BASIS OF DIRECT MARKETING

 CHAPTER 1 Contemporary Direct Marketing = 1

  A Definition of Direct Marketing = 2

  The Special Competencies of Direct Marketing = 4

   Precision targeting = 4

   Personalization = 5

   Call for immediate action = 5

   "invisible" strategies = 5

   Measurability = 5

  The Decision Variables of Direct Marketing = 6

   Offer = 6

   Creative = 6

   Media = 6

   Timing／sequencing = 6

   Customer service = 7

  Generic Objectives of Direct Marketing Programs = 9

   Selling products or services = 9

   Generating and qualifying sales leads = 9

   Building and maintaining customer relationships = 10

  The Media of Direct Marketing = 11

   Telephone = 12

   Direct mail = 12

   Broadcast and electronic media = 13

   Space advertising in print media = 14

   Speciality advertisements in print media = 14

   Specialty advertisements in various media = 15

   Consumer concerns about privacy = 15

  Direct Marketing as a Global Industry = 16

  Summary = 18

  Discussion Questions and Exercises = 18

  Suggested Readings = 18

 CHAPTER 2 Planning a Direct Marketing Program = 19

  A Hypothetical, but Realistic, Example = 20

  The Elements of a Direct Marketing Program Plan = 21

   Establishing communications objectives = 22

   Evaluating the marketplace = 23

   Evaluating past performance = 24

   Developing the communications strategy = 25

   Developing creative execution and prototypes = 30

   Determining the budget = 31

   Establishing the program implementation timetable = 31

   Establishing program evaluation rules and methods = 34

  The Role of Service Agencies in Planning and Executing Direct Marketing Programs = 34

  Summary = 35

  Discussion Questions and Exercises = 36

  Suggested Readings = 36

PART 2 DIRECT MARKETING DECISION VARIABLES

 CHAPTER 3 Offer Planning and Positioning = 37

  Elements of the Direct Marketing Offer = 37

   The required elements = 38

   The optional elements = 42

  Considerations in Designing the Offer = 45

   Objectives and the offer = 45

   How many objectives of what types? = 47

   Designing offers for different target markets = 49

  Planning Offers for Multistep Programs = 50

  A Few More Words about Costs = 51

  What Motivates You to Respond? = 52

  The Importance of Positioning = 54

   Positioning alternatives = 54

   The process of developing a positioning strategy = 56

   A few last thoughts on positioning = 60

  Summary = 61

  Discussion Questions and Exercises = 61

  Suggested Reading = 61

 CHAPTER 4 Mailing Lists : Processing and Selection = 62

  Types of Lists = 63

  The List Rental Process = 65

   Mailer(list renter) = 66

   List owner = 66

   List broker = 66

   List compiler = 66

   List manager = 67

   Service bureau = 67

   List rented agreements = 68

   List processing = 71

  Data Overlay or Enhancement = 72

   Real- world example = 73

   Predetermined clustering enhancement programs = 74

  Merge／Purge = 77

   Aspects of list suppression = 77

   Quality of merge／purge systems = 78

   Payment allocation to the merged(and purged) lists = 81

  Economics and Selection of Mailing Lists = 82

  Summary = 84

  Discussion Questions and Exercises = 85

  Suggested Readings = 85

  Appendix = 85

 CHAPTER 5 List Segmentation = 88

  Illustrating the Advantage of Segmentation = 89

   A simple example = 89

   A more derailed example = 90

  Factors Affecting the Benefits of List Segmentation = 92

  Segmentation Characteristics = 93

  Segmentation Techniques = 94

   A simple technique = 95

   Multiple regression analysis = 96

   Multiple discriminant analysis(MDA) = 99

   Log linear modeling／logistic regression = 99

   Cluster analysis = 101

   Automatic interaction detection = 101

   Chi square automatic interaction detection(CHAID) = 102

   Classification and regression trees(CART) = 103

   Neural network analysis = 104

  Comparison of Segmentation Techniques = 105

   Technique comparison study by Blattberg and Dolan = 105

   Technique comparison study by Carter = 106

   Sample size and "salting" study by Berger and Magliozzi = 107

   Stepwise regression study by Magliozzi and Berger = 108

   Neutal network analysis and MRA comparison study by Lix and Berger = 110

   Study comparing LLM and MRA for "prospecting" by Lix, Berger, and Magliozzi = 111

   Shepard's comparison of neural network analysis and logistic regression = 113

  Other Considerations in Choice of Segmentation Technique = 114

  Summary = 116

  Discussion Questions and Exercises = 116

  Suggested Readings = 116

 CHAPTER 6 Creative Strategy and Execution = 117

  What is Creativity and Who Has It? = 118

   A definition of creativity = 118

   The creative process = 118

  Developing Creative Strategies = 121

   The program objectives = 121

   Problem definition = 123

   Key selling concept = 124

   Desired action = 125

   Message strategy = 126

   Rough creative rendering = 129

   Program execution and evaluation = 129

   A final word of warning = 130

  Creative Execution = 130

   Direct-response copy = 131

   Graphics = 132

   Layout = 133

  Evaluating the Creative Product = 134

  A Word about Business-to-Business Advertising = 134

  What about Creative Awards? = 136

  Summary = 136

  Discussion Questions and Exercises = 137

  Suggested Readings = 137

 CHAPTER 7 Fulfillment and Customer Service = 138

  Elements of Fulfillment = 139

  Order-Form Issues = 140

  Receiving Orders = 141

   Mail orders = 141

   Telephone orders = 142

  Processing Orders = 143

  Inventory Policy = 143

   Inventory costs = 144

   Inventory management = 143

  Warehousing Issues = 146

   Site selection, sizing, and configuration = 147

   Receiving = 147

   Storing and stock location = 148

   Picking = 149

   Packing = 149

   Shipping = 149

  Custorner Service = 150

  Planning and Control = 154

   Data collection = 154

   Standards = 155

   Reports = 156

   Planning = 156

  Using an Outside Contactor for Fulfillment Services = 156

  summary = 157

  Discussion Questions and Exercises = 159

  Suggested Readings = 159

PART 3 SPECIAL TECHNIQUES OF DIRECT MARKETING

 CHAPTER 8 Developing and Using Customer Databases = 161

  What Is a Database? = 165

  An Example of a Marketing Database = 165

  When Is a Database Cost Effective? = 167

  The Components of a Database System = 169

  A Definition of Database Marketing = 173

  Issues in Establishing a Customer Database = 173

  Making the Database Cost Effective = 176

  A Word about the Future of Database Marketing = 177

  Summary = 178

  Discussion Questions and Exercises = 178

  Suggested Readings = 178

 CHAPTER 9 Profitability and Lifetime Value = 179

  Revenue, Profit, and Contribution = 180

   Introduction to Customer Lifetime Value = 180

   Performance measure for profit and contribution = 183

  Costs = 183

   Illustrative example of use and misuse of fixed costs = 184

  Profit and Loss Statements = 186

  Summary = 190

  Discussion Questions and Exercises = 191

  Suggested Readings = 191

  Appendix : Customer Lifetime Value = 192

   Determination of CLV = 192

   Types of customer behavior = 193

   Customer Die time Value models = 193

   Conclusions = 201

 CHAPTER 10 Testing Direct Marketing Programs = 202

  What Should Be Tested? = 203

  Sampling = 204

  Estimation and Sample Size = 204

  Economics of Sampling = 206

  The Testing Process : Hypothesis Testing = 208

   Choose the variables to be tested = 209

   Set up the hypotheses = 210

   Choose a significance level = 212

   Design the test = 213

   Determine the sample size = 213

   Specify the decision rule = 214

   Conduct the rest = 214

   Record the test results = 215

   Make the decision = 215

   Set of testing steps = 216

  The Need for Efficient Test Designs = 216

  One-at-a-Time Designs versus Factorial Designs = 217

  Analysis of Variance = 220

   Sum of squares = 222

   Degree of freedom = 223

   ANOVA summary table = 224

   Interpretation of the ANOVA table = 226

  An Example with Interaction Present = 227

  A Word about Testing in the Real World = 230

  More Sophisticated Experimental Designs = 230

  Summary = 233

  Discussion Questions and Exercises = 233

  Suggested Readings = 233

 CHAPTER 11 Business-to-Business Direct Marketing = 234

  Business-to-Business Direct Marketing Process = 236

  Lead Generation and Management Process = 238

   Step 1 : Generating sales leads = 238

   Step 2 : Qualifying sales leads = 241

   Step 3 : Distributing sales leads = 242

   Step 4 : Monitoring and tracking leads = 243

   Lead-generation programs for dealer networks = 246

  The Business-to-Business Database = 247

   The media of business-to-business direct marketing = 251

   Doing business on the Web = 254

   "The direct model" = 262

  Summary = 264

  Discussion Questions and Exercises = 264

  Suggested Readings = 264

PART 4 DIRECT MARKETING MEDIA

 CHAPTER 12 Developing Direct Mail Campaigns = 265

  Special Charactistics of Direct Mail = 266

  "Junk" Mail = 267

   Common direct mail fm-mars = 273

  The Classic Direct Mail Package = 275

   The outer envelope = 276

   The letter = 278

   The brochure = 281

   The reply device = 282

   Other inserts = 285

  Other Aspects of Direct Mail Marketing = 288

   Personalization = 288

   Timing and sequencing of mailings = 289

   Scheduling execution of a mail-order package = 291

   Working with suppliers = 291

  After the Successful Direct Mail Package-What Then? = 294

  Summary = 295

  Discussion Questions and Exercises = 295

  Suggested Readings = 295

 CHAPTER 13 Catalog Marketing = 296

  The Development of Catalog Marketing = 276

  The Appeal of Catalogs = 299

  The Crowded Catalog Marketplace = 303

  Developing and Marketing Catalogs = 304

   Developing the catalog concept = 304

   Defining the target market = 305

   Image and postitioning strategy = 305

   The marketing strategy = 308

   Merchandise selection = 309

   Pricing decisions = 311

   Customer acquisition = 312

   Retaining catalog customer = 315

  Catalog Design = 317

   Size of the catalog = 318

   Catalog format = 318

   Merchandise arrangement = 320

   Visual presentation = 321

   Catalog copy = 322

   The order form = 323

  Producing the Catalog = 323

  Catalogs and Retail Stores = 323

   Success factors = 324

   Cost factors = 324

   Operating philosophy = 325

   Synergy = 325

   The globalization of catalog marketing = 326

   Reasons for catalog failure = 327

  Summary = 327

  Discussion Questions and Exercises = 328

  Suggested Readings = 328

 CHAPTER 14 Telephone Marketing = 329

  The Example of Grolier, Inc. = 330

  What Does Telemarketing Do Especially Well? = 331

  What Are the Potential Downsides of Telephone Marketing? = 332

  A Definition of Telephone Marketing = 333

   Acceptance of telemarketing by consumers = 334

  The Basic Types of Telephone Marketing = 335

   Scripted telephone marketing = 335

   Guided telephone marketing = 335

   Professional telephone marketing = 336

  Developing Telephone Marketing Programs = 337

   Preparing the telephone script = 337

   Scripts versus surveys = 338

   Enabling conditions for telephone marketing = 338

   Integrating the telephone with other media = 339

   Integrating the telephone with a database-building program = 343

  Establishing an Outbound Telemarketing Program = 343

  Establishing an In-House Telephone Marketing Center = 345

   Obtaining the support of top management = 346

   Setting goals and objectives = 346

   Intergrating telephone marketing with other promotional activities, including the field sales force = 347

   Developing scripts and guides = 347

   Recruiting and training telephone personnel = 347

   Supervising and motivating reps = 348

   Integrating telephone and computer systems = 349

   Designing a productive work environment = 351

   Developing measurement systems = 353

   Reporting and controlling the operation = 353

   Global telemarketing = 354

  Summary = 355

  Discussion Questions and Exercises = 356

  Suggested Readings = 356

 CHAPTER 15 Direct Response in Print Media = 357

  Magazines as a Direct-Response Medium = 359

   The contemporary magazine environment = 359

   Magazines as a mail-order and lead-generation medium = 361

  Which Magazines? = 361

   Circulation = 361

   Special services = 362

   Editorial policy = 366

   Receptivity to direct-response offers = 366

   Which magazines... one more time = 367

  Designing and Executing Direct-Response Space Ads in Magazines = 367

   The elements of a direct-response space ad = 368

   Size and color = 369

   Timing and frequency = 369

   Response patterns = 370

   Shopping and classified pages = 370

   Magazines and the Internet = 371

  Direct Response in Newspapers = 373

  Newspapers as a Direct-Response Medium = 374

  ROP Advertising in Newspapers = 375

  Freestanding Inserts = 375

   Advantages of FSLS = 376

  Newspaper Supplements = 376

  Total Market Coverage = 377

   Database marketing services = 377

   The lifetime value of a newspaper customer = 378

   On-line newspaper publishing = 380

  Summary = 381

  Discussion Questions and Exercises = 381

  Suggested Reading = 381

 CHAPTER 16 Direct Response in Broadcast Media = 382

  The Development of Direct-Response Television = 383

   Enable conditions for direct- response television = 384

  When to Use Direct-Response Television = 385

   DRJV formats = 386

  Media Planning for Direct Response = 386

  Creating direct-Response Spots = 389

  Testing Direct-Response Spots = 390

   Successful use of direct-response television = 390

  Infomercials = 391

   Infomercial viewership and purchasing behavior = 392

   Product and infomercial fit = 393

   Planning and producing infomercials = 395

   The economics of infomercials = 396

   Examples of success = 397

   The future of infomercials = 398

  Home Shopping Channels = 398

   The origin of home shopping channels = 398

   The home shopping product mix = 399

   The format of home shopping channels = 399

   The audience for home shopping channels = 401

   Other home shopping channel developments = 401

  Direct-Response Radio = 402

   Early direct-response radio = 402

   Radio today = 403

   The radio audience = 403

  When to Use Direct-Response Radio = 405

   Recent developments in direct-response radio = 405

  Summary = 407

  Discussion Questions and Exercises = 407

  Suggested Readings = 408

 CHAPTER 17 Interactive Media = 409

  The Demographics of the Internet = 410

  Which Marketers Are on the Web = 412

  How Marketers Are Using the Web = 414

   The Web marketing process = 414

  Advertising on the Web = 425

   Measuring the effectiveness of Web advertising = 426

  Using the Web to Provide Customer Service and Support = 429

  Using the Internet to Sell Goods and Services = 432

  What Really Makes a Site Work? = 434

  Privacy and the Internet = 435

  Summary = 439

  Discussion Questions and Exercises = 439

  Selected Internet Research Sites = 441

  Suggested Readings = 441

INDEX = 443