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This Blog Post's Table of Contents

Performance Marketing Checklist #6: Direct Response Product Planning.

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This Blog Post's Table of Contents

Before you embark on a performance marketing program, you need to know what the benefits of your product are, who will purchase the product (the target market), where to reach prospective customers, how many there are, and how much they are willing to pay.

The next section will help you make a particularly important planning decision – you will decide whether or not your product is suited to direct response selling, i.e. performance-based marketing activities in paid media which elicit a direct action by the recipient of the message, e.g., filling out a lead or order form on the landing page or calling the phone number placed in the TV, radio or print ad.

Is Direct Response Right For Your Product?

It has been said over and over that virtually any product can be sold via direct response. Think of a mundane product available at any local market – say, a bag of onions. Your first response might be that such a product is bound to fail as a direct response product because it is so easily and economically available locally.

Yet a specialized farm sells “gourmet” onions by mail quite successfully, using Facebook advertising to target affluent users. This example demonstrates the truth of the statement that almost anything can be sold through direct response.

However, certain products are generally easier to sell and easier to ship. Before you continue with your campaign, use this checklist’s part 1: Verifying Product Suitability for Direct Response Sales.

The questions there deal with issues that may not be immediately apparent as potential problems, but it will help you weed out unsuitable products even before you get into such questions as costs, profit margins, prospects or buyers traffic sources, production, and the like.

YesNoComments
1. Is this product one that customers could buy elsewhere?
2. Do you intend to charge a comparable price to other outlets?
3. Is your source of supply for this product dependable?
4. Do you require special packaging for shipment?
5. Does the item require special handling in warehousing and shipment? (Is it fragile or perishable?)
6. Will you be able to sell other, related products to purchasers of this product?
7. Are traffic sources, email lists and other direct response media available to reach the target market?
8. Does the product fit with the rest of your product line? (Quality, market, customer perception.)
9. Is this a fad product with a limited life?
10. Are returned products reusable?
11. Will you be responsible for honoring guarantees or warranties?
12. Are there special government regulations you will have to observe?
Worksheet 1. Verifying Product Suitability for Direct Response Sales

Once you have decided that your product is suited to direct response selling, you are ready to begin preliminary product planning. There are three questions critical to proper planning. They are as follows:

  • Have all product benefits been clarified?
  • Has the target market been identified?
  • Can the target market be segmented?

Use the next three parts of the checklist to answer these questions.

Defining Product Benefits

Why should people buy your product? Determining the consumer benefits of your product is key to conducting a successful performance marketing campaign. Use checklist’s part 2, Determining Product Attributes and Benefits, to describe all the benefits your customers will gain from using your product.

Remember, product features – the special attributes that your product possesses – are not benefits. They only become benefits when you can translate them into characteristics that improve your customers’ performance.

For example, a salon-quality shampoo may have the product attribute of superior rinseability. This attribute must be translated into a benefit that is of importance to the user – clean, shiny, healthy hair.

Do not expect prospective customers to interpret what product attributes mean to them. In direct response campaigns, the customer benefits must be clear and attention-getting from the start.

Product AttributeBenefit to Customer
1.
2.
3.
4.
5.
6.
Worksheet 2. Determining Product Attributes and Benefits

Identifying the Target Market

Identifying the target market is not always a painless process. First you must recognize the target market’s attributes so that you can build a profile of your intended customers.

Checklist’s part 3, Establishing Target Market Profiles, will walk you through the basics of building a picture of your target market. It is broken into three sections:

  1. Demographics. The vital statistics of age, gender, income, and education of your target market allow you to plan all aspects of your direct response campaign. Families with young children vary dramatically in their purchasing habits from older couples whose children have all left the family home. You must clearly identify which groups are most likely to be interested in your product or service.
  2. Psychographics. Psychographics refers to lifestyle, and your target market will probably have a unique lifestyle. You may be interested to know your potential customers’ travel habits or their interest in photography or computers.
  3. Location. Another aspect of your target market that may be valuable to know is where they live. If your strategy includes supporting retail sales, you will want to know where the outlets are located. If climate affects sales, you will need to know where to focus your promotional efforts. The more you know about your customers, the more effective your campaigns can be.
DescriptionUnit SalesSales ($)Percentage of Total
1. DEMOGRAPHICS
Age:
Under 18
18-29
30-39
40-49
50-59
60-69
70-79
80 and over
Gender
Male
Female
Undisclosed
Income:
Up to $30,000
$30,000-50,999
$51,000-80,999
$82,000-110,999
$111,000-150,999
Over $151,000
Education:
8th grade
High school diploma
Some college
College degree
Graduate degree
2. PSYCHOGRAPHICS
Frequency of Use:
1 time
2 times
3 times
4 or more times
Competitive Brands Purchased:
A.
B.
C.
D.
Method of Payment:
Credit card
Cash on delivery
PayPal
Local payment system
Wire transfer
3. LOCATION
Region 1
Region 2
Region 3
Region 4
Region 5
Region 6
Region 7
Region 8
Region 9
Region 10
Region 11
Region 12
Worksheet 3. Establishing Target Market Profiles

Identifying Target Market Segments

Once you have identified your target market using checklist’s part 3, you should attempt to divide that market into segments. These segments will be people with similar demographics, psychographics, or geographies or some combination of the three. If you can segment them, you may find that you can tailor your sales message to each segment for a greater response.

It is important to remember that too small a segment size may be cost prohibitive. For example, if it costs $1,000 to create a new landing page for one segment, and your most optimistic estimate is that you will gain an incremental sale of $900 to that segment, that strategy should probably be abandoned.

After you segment your target market, if some of the segments are too small to warrant the extra expense and effort of tailoring your campaign to them, see whether you can combine some of them so that the tailoring process pays off.

Now use checklist’s part 4, Segmenting Markets, to list and quantify each segment.

Target Market SegmentsSize of SegmentComments
1.
2.
3.
4.
5.
6.
7.
8.
Total Target Market
Worksheet 4. Segmenting Markets

Qualifying Market Segments & Quantifying Objectives by Market Segments

Next, try this brief reality check to make sure that your segmentation efforts can be translated into useful information. Once you have divided your target market into discrete segments, make sure you have the resources available to enable you to reach them. Answer these questions:

  • Are traffic sources or other resources available to reach the target market?
  • Is the target market large enough to warrant your time and expense?
  • Is the target market willing to pay the price you require to purchase the product?

To answer these questions, you will need first to estimate the base cost of implementing your performance marketing program to its core target market. You will then have to estimate the incremental costs to be incurred if you decide, in addition, to target specific segments of that market.

The costs may include preparation of copy and web development of your landing pages, as well as the costs of acquiring traffic sources, media planning, and optimizing for each segment.

Look at checklist’s part 5, Qualifying Target Segments. In Column B, estimate the additional cost likely to be incurred by targeting each additional segment. In Column C, estimate the maximum increase in sales targeting that segment will result in. If Column C does not significantly exceed column B, it may be best to abandon that segment or combine it with another segment.

ABCD
SegmentAdditional Cost RequiredMaximum Sales IncreasePursue or Abandon?
1.
2.
3.
4.
5.
6.
7.
8.
Worksheet 5. Qualifying Target Segments,

Checklist’s part 6, Quantifying Marketing Objectives by Target Market Segment, provides another method of checking your sales goals against the market segments you have decided to target.

You will give each market segment a sales objective, in units, and multiply the units sold by unit price, to derive the anticipated revenue from each market.

You will then be able to judge which segments of the market are most important for the company’s total revenue and adjust your advertising and marketing plans accordingly.

Segment NameSegment SizeUnits SoldUnit PriceRevenue
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Totals:
Worksheet 6. Quantifying Marketing Objectives by Target Market Segment

Educating Consumers About Your Product

Before you create a performance marketing campaign for any product, be sure that you can answer these two questions.

  • Is this a product that will be accepted immediately by your target market?
  • Is this a new product or technology that will require extensive explanation or demonstration?

If you answer yes to the second question, this means you will need to educate your potential customer to the product, its features and benefits, before they will buy.

Checklist’s part 7, Calculating the Cost of Educating Customers, will help you factor in the cost – in both time and dollar terms – of educating customers.

Customer Education ExpensesCost ($)Time
Webinars and other online events
Product blog or content site
Social media presence
Professional media press releases
Consumer media press releases
Offline conferences or trade shows
Media events
Testimonials
Professional reviews
Professional free samples
Other:
Totals:
Worksheet 7. Calculating the Cost of Educating Customers

Pricing Products

The price of any product must be set high enough to cover costs and make a profit but low enough so that customers are willing to purchase the product. The checklist below compares the gross profit of different price strategies.

Generally, as you lower the price, the number of units you will sell will increase – to a point. Use checklist’s part 8, Pricing Strategy, to calculate the gross profit expected from each product price.

Price VariablesSales (Units)Sales ($)Cost of Goods SoldGross Profit
Price A:
Price B:
Price C:
Price D:
Price E:
Price F:
Worksheet 8. Pricing strategy.

In addition to calculating gross profit, you must take into consideration the prices charged by your competitors for the same or similar items. If customers perceive your product as having a higher value than those of your competitors, you might be able to charge a higher price. Checklist’s part 9, Competitive Price Comparison, will help you settle on the right price.

1234
Your Price (a)Competitor’s Price (b)Price Differential (c)Customer Acceptance (d)
A.
B.
C.
D.
E.
F.
Worksheet 9. Competitive Price Comparison

Explanatory notes:

A – the price to the customer for the product (all rows use same price).

B – Each row is a different competitor’s price to the customer.

C – Column 1 – Column 2. This may be a positive number (if your price is higher than your competitor’s), or negative number (if your price is lower than your competitor’s).

D – How the customer perceives the price differential between your price and your competitors’: fair, somewhat high, very high, somewhat low, very low.

Product Lifecycle

Every product has its own distinct life cycle. Your product’s lifecycle stage should affect how it is marketed. The matrix below shows how to tell what stage your product is in, based on the rate of sales growth, the level of sales expense, and the fate of profit.

Lifecycle StageRate of Sales GrowthSales ExpenseProfitability
IntroductionSlowHighNone
GrowthHighHighLow
MaturityModerateModerateHigh
DeclineSlowLowModerate or None (= Discontinue)
Lifecycle matrix

Using the matrix, you should be able to decide which of the four lifecycle stages your product is in.

Next, use the checklist’s part 10, Lifecycle Expense Analysis, to estimate the cost of keeping the product as part of a performance marketing campaign through the rest of its lifecycle.

Introductory / Growth / Maturity / Decline StageBudgeted ExpenseActual Expense
Facebook ads, Google Ads
Print ads
Telemarketing
Content marketing
SEO
Online events
Social media organic activities
Publicity
Sales promotion
Other
Worksheet 10. Lifecycle Expense Analysis

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The expert's thoughts on direct response - growth hacking - performance-based marketing activities - DIRECT MARKETING

About Me, Rafal Lipnicki.

the direct / performance marketing consultant with a strange sounding name

Who.

Not your usual "guru" but a real-world performance marketing & innovation consultant based in Europe and an experienced senior executive at leading multinational companies.

What and Where.

I am a consultant for hire, working remotely and on-site all over the world (but Europe is always preferred). See my consulting services page for details.

How.

Contrarian advice most of the time. Document-based audits, workshops, one-off projects, mentoring programs, and more.

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