Major Channels for Direct Marketing 323
Global consumers in Asia and Europe are also catching on to the catalog craze.
A full 90 percent of L.L. Bean’s international sales, for instance, come from Japan.
One reason why Bean and other American catalog firms have flourished in Japan is
that they offer high-quality merchandise aimed at specific groups. Consumer catalog
companies such as Tiffany & Co., Patagonia, and Eddie Bauer are also entering
Europe, as are business catalog firms such as Viking Office Products.^10
Of course, by putting their catalogs on the Internet, catalog companies have bet-
ter access to global consumers than ever before. They also save considerable printing
and mailing costs while being able to offer unique services. In its latest attempt to
Table 6.5 Steps in Developing a Direct-Mail Campaign
Step Description- Set objectives Establish objectives by which campaign success will be measured,
such as producing orders from prospects, generating prospect
leads, strengthening customer relationships, and informing and
educating customers for later offers.An order-response rate of
2 percent is considered good for many products. - Identify target markets The best customer targets are those who bought most recently,
and prospects who buy frequently, and who spend the most. Consumer
prospects can be identified on the basis of such variables as age,
sex, income, education, previous mail-order purchases, purchase
occasions, and lifestyle; business prospects can be identified on
the basis of buying center role and other variables. Once the
target market is defined, the direct marketer needs to obtain
specific names by acquiring mailing lists and building databases. - Define the offer According to Nash, the offer strategy consists of five elements:
the product, the offer, the medium, the distribution method, and
the creative strategy. Fortunately, all of these elements can be
tested. In addition to these elements, the direct-mail marketer has
to decide on five components of the mailing itself: the outside
envelope, sales letter, circular, reply form, and reply envelope. - Test the elements Direct marketing allows companies to test, under real
marketplace conditions, the efficacy of different elements, such
as product features, copy, prices, media, or mailing lists. - Measure results By adding up the campaign costs, the firm can determine in
advance the needed break-even response rate, net of returned
merchandise and bad debts. Even when a specific campaign fails
to break even, it can still be profitable over the customer
lifetime, because of increased awareness and future intention to
buy.A customer’s ultimate value is not revealed by a purchase
response to a particular mailing but by the expected profit made
on all future purchases, net of acquisition and maintenance costs.
Sources:Based, in part, on information in Bob Stone,Successful Direct Marketing Methods,6th ed.
(Lincolnwood, IL: NTC Business Books, 1996); and Edward L. Nash,Direct Marketing: Strategy,
Planning, Execution,3d ed. (New York: McGraw-Hill, 1995).